5 EU-AFRICA BUSINESS FORUM · 2017-04-28 · 4 5Th EU-AFricA BUsinEss ForUm 31sT mArch – 1sT April 2014, BrUssEls roundtable n° 2 SuPPly of riSk caPital for new enterPriSeS 37

5TH EU-AFRICA BUSINESS FORUM

31ST MARCH – 1ST APRIL 2014, BRUSSELS

Summary of Proceedings

Sum

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Summary of Proceedings5th EU-Africa Business Forum

Towards a private sectorenabling environment

A Facility financed by theEuropean Development Fund

The views expressed in this report do not reflect the official views of the European Union nor that of the ACP Secretariat

Design by www.nuances.mu

3

LiSt of acronymS 6

Executive Summary 7

i. Plenary SeSSionS Programme 9

Panel 1 on engaging buSineSSeS in incluSive and SuStainable growth: how can blending be uSed to Partner with the Private Sector? 11

1.1. About Plenary Panel 1 12

1.2. Summary of the Panel Discussion 12

1.3. Panel Conclusions and Recommendations 13

Panel 2 on doing buSineSS in africa: imProving the inveStment climate and how can SmeS be SuPPorted 15




Panel 3 on cloSing the Sme funding gaP: Strengthening financial SyStemS (revamPing the caPital market) 19




Panel 4 on inveStmentS and PartnerShiP for Productive work for youth 23




Panel 5 on the role of bankS in SuStainable and incluSive growth 27




ii. roundtableS Programme 31

roundtable n° 1 SuStainable energy for all: innovative SolutionS for africa 33

1.1. Roundtable Rationale and Speakers 34

1.2. Summary of the Roundtable Discussion 34

1.3. Roundtable Recommendations 36

Table of contents

4 5Th EU-AFricA BUsinEss ForUm 31sT mArch – 1sT April 2014, BrUssEls

roundtable n° 2 SuPPly of riSk caPital for new enterPriSeS 37




roundtable n° 3 incluSive modelS in agri-food chainS 41




roundtable n° 4 creating PartnerShiPS to bring e-SchoolS to rural africa: offering incubator-backed Seed and early Stage funding 45




roundtable n° 5 Scaling uP inveStmentS in renewable energy through incubator-backed inveStment fundS 49




roundtable n° 6 ict for agriculture: the digital SPringboard for incluSive agriculture 53




roundtable n° 7 infraStructure and conStruction: Private Sector inveStment and ParticiPation in tranSPort corridor: uSing innovative Project delivery mechaniSmS for economic and Social develoPment 57




roundtable n° 8 raw materialS and governance: managing natural reSourceS for incluSive develoPment in africa 61




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roundtable n° 9 Promoting growth, innovation and acceSS to healthcare and PharmaceuticalS through eu-africa buSineSS cooPeration, including local Production of generic medicineS in africa 65




roundtable n° 10 Social entrePreneurShiP 69




roundtable n° 11 riSk management 73




roundtable n° 12 foStering buSineSS oPPortunitieS in the uSe of SPace ServiceS 77




iii. sUccEss sToriEs And invEsTmEnT piTchEs 81

1. PreSentation of SucceSS StorieS 82

1.1. SME Success Stories Session – Rationale and Speakers 82

1.2. Summary of the Session 82

1.3. Success Stories – Key Messages 85

2. eu- africa inveStor meeting: PreSentation of inveStment PitcheS 86

2.1. EU-Africa Investor Meeting Rationale and Objectives 86

2.2. Session Summary 86

2.3. Investor Meeting Recommendations 88


AfdB African Development Bank

ama African Medicines Regulatory Agency

amrhAfrican Medicines Regulatory

Harmonization Program

aSecnaAgency for Aerial Navigation Safety in

Africa and Madagascar

au African Union

auc African Union Commission

ati African Trade Insurance

bot Build Operate Transfer

ca Contracting Authority

car Central African Republic

ceo Chief Executive Officer

cic Climate Innovation Centre

comeSaCommon Market for Eastern and

Southern Africa

db Design-Build

dbo Design-Build-Operate

devcoDevelopment and Corporation-

Europeaid

dfis Development Finance Insitutions

dg Directorate General

earScEuropean Association of Remote Sensing

Companies

ec European Commission

edf European Development Fund

edfi European Development Finance

institute

efPiaEuropean Federation of Pharmaceutical

Industries and Associations

ega European Generic Medicines Association

egnoSEuropean Geostationary Navigation

Overlay Service

eib European Investment Bank

eic European International Contractors

eu European Union

ewba Egyptian Women Business Association

gdP Gross Domestic Product

grmf Geothermal Risk Mitigation Facility

hr Human Resources

ictInformation and Communication

Technology

ifc International Finance Corporation

iPos Initial Public Offering

iPS Industrial Promotion Services

jadeEuropean Confederation of Junior

Enterprises

kaa Kenya Airport Authority

mdgs Millennium Development Goals

ngos Non Governmental Organisation

oagSOrganisation of African Geological

Survey

oda Official Development Assistance

PaP Priority Action Plan 2020

Pida Programme for Infrastructure

Development in Africa

PPP Public Private Partnership

r & d Research & Development

recs Regional Economic Communities

rfid Radio Frequency Identification

roi Return on Investment

Scb Standard Chartered Bank

Smes Small Medium Enterprises

unidoUnited Nations Industrial Development

Organisation

who World Health Organisation

lisT oF AcronYms

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Executive Summary

T he 5th EU-Africa business Forum ended on April 1st 2014, following two productive days, where about 1,180 participants took

part, from across Africa and Europe, in 5 plenary panel discussions, 12 roundtables, a session on “success stories” and an investor

meeting. In the latter event, 10 countries were given the opportunity to present their investment opportunities to a panel of

high-level investors.

The high profile of participants, combined with quality networking and debate opportunities, enabled discussions to be successfully

conducted, with much appreciation from participants, and far-reaching ideas to spawn. The wide spectrum of Roundtable topics

covered a wide range of key development challenges and areas of opportunity and offered a highly attractive learning platform

for forum participants. Conclusions and recommendations emerged from each roundtable, providing lists of priority actions for

consideration notably in the Joined Africa-EU Strategy.

With abundant resources, a growing middle-class and young population, Africa is seen by most as a continent of opportunities

where return on investment is high, albeit risks are perceived to be high too. The emerging middle-class in Africa needs support,

and should be supported, as it is a future market for finance providers. Also, today’s challenges, as impoverished population and

fragmented markets, need to be turned into assets. Today investment is coming where talents already are, but there is an

increasingly urgent need to invest in developing and nourishing Africa’s young human talent pool. Concrete initiatives have also

been suggested to boost skill development, including student networks.

Business leaders squarely put the responsibility of transformational changes in the hands of African leaders to turn opportunities

into sustainable and inclusive prosperity. The recipe for sustainable and inclusive development must rest mainly on increased

investment in human capital and the creation of a more favourable ecosystem for entrepreneurs, including for social

entrepreneurship. This will entail notably a major overall of the education system and in support to private sector development.

The latter is best achieved through business incubators and accelerators, as well as business centres in rural areas linked to science

and technology.

This proposed shift of emphasis on the creation of skills and more favourable ecosystems for entrepreneurs must be supported at

the global level by macro-economic and political stability, as well as improved business and investment climate. In particular, there

is need to strengthen the legal and judicial system, secure land rights, develop collateral registries, provide incentives for informal

activities to become formal, and create enabling frameworks for investments to flow into priority sectors.

It is noteworthy that business leaders posit that Africa can fund a larger part of its development by mobilizing own resources and

creating the conditions for stronger private sector involvement. This requires a change in the paradigm of partnership so that all

partners work together on a long-term and sustainable basis. Regarding foreign investors, African governments are advised to

educate decision-makers on the potential of the continent and its realities. The use of grants from donors to leverage private

sector funding is a tool that can be used with care to avoid undesirable effects.

At the local level, leaders have proposed a set of concrete actions to mobilize African resources for development. These actions

comprise the establishment of a pan-African stock exchange, repatriation of money parked outside and funnelling resources of

pension and sovereign wealth funds for infrastructure and SME development, addressing the banks’ intermediation problem,

provision of long-term finance and the mitigation of bank risks, and setting up a technical assistance programme to strengthen

the banks equity base and their technical capacity.


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i plenary sessions programme

The 5th EU-Africa Business Forum’s programme brought some of the best business and entrepreneurial

talents across Africa and Europe together, in focused discussions on key topics relevant to addressing

the biggest challenges facing private sector development in Africa.

The plenary sessions ensured that all Forum participants could engage fully in debates, as all involved

were well informed on the key issues and trends in the private sector, promoting a practical and realistic

approach to the discussion. like other Forum sessions, the plenary sessions were private sector led,

featuring handpicked panellists of experts in a wide range of business, investment and development

fields. They ensured a high-quality discourse, clarifying all the different economic actors’ positions and

helping to develop concrete recommendations that are both and all parties play a part in taking Africa

to the next level.

The plenary session topics covered 5 main areas of concern: blending as a tool for partnership with

the private sector, improving the investment climate, closing the smE funding gap, investments and

partnership for productive work for youth, and the role of banks in sustainable and inclusive growth.

These topics ensured that all participants came out better informed of the new and innovative

opportunities available for fostering inclusive and sustainable growth, both social and economic,

in Africa.


11

pannel 1

on engaging businesses in inclusive and sustainable growth: how can blending be used to partner with the private sector?

12 5TH EU-AFRICA BUSINESS FORUM 31ST MARCH – 1ST APRIL 2014, BRUSSELS

On engaging businesses in inclusive and sustainable growth: How can blending be used to partner with the private sector?

Pannel 1

1.1.

About Plenary Panel

As the first plenary panel session of the event, following the

welcome speeches and keynote interview, Panel 1 covered an

important financial subject for Africa - the use of blending.

Too often, the African private sector has shied away from

financing development projects, partly due to the perceived

political risks and concerns that such projects could fail and in

the process damage corporate reputations. But private sector

involvement in financing development projects is instrumental

in generating economic growth and new jobs. Moreover, the

experience of initiatives such as the EU-Africa Infrastructure

Trust Fund - which has at times secured a leverage factor of

12 euro of private financing for every EIB euro of infrastructure

grant financing – serve to underline the potential of blending

in attracting private sector financing.

Moderated by Isabelle Kumar, a journalist from Euronews,

the panel of speakers for Plenary Session 1 comprised:

Siegmar Pröbstl, the CEO of Siemens Africa, Pim van

Ballekom, the Vice-President of the European Investment

Bank, Dimitris Tsitsiragos, the Vice President of International

Finance Corporation for Europe, Central Asia, the Middle East

and North Africa, and Andris Piebalgs, European

Commissioner for Development.

1.2.

Summary of the Panel Discussion

Andris Piebalgs, European Commissioner for Development,

opened the discussion by stating that blending, from the EU

policy perspective, represented a means of increasing impact.

Over the past decade, the EC has attached increasing

importance to investment support, using grants to increase

investment in Africa, while mitigating the risks. Examples are

the launch of the EU-Africa Infrastructure Trust Fund

investment facility as well as a neighbouring facility in North

Africa. With 2 billion euro input, the EC has succeeded in

mobilising roughly 40 billion euro in investment. Another

example of effective use of blended finance has been in

Mauritania, Senegal and Cape Verde, where small EC grants

have made it possible to attract bigger investments in

renewable energy such as the Cape Verde wind farm project.

IFC holds about 20% of its portfolio in Africa, hence implying

significant potential for blending. Dimitris Tsitsiragos,

Vice-President of IFC, summarised the IFC’s approach to the

use of blending, namely the importance for the IFC to support

sustainable projects that do not, over the longer term, become

dependent on grant financing or other development aid. For

the IFC, blending should be used as an opportunity to

kick-start projects and to get them through, to be monitored

and used as examples so that other projects and private and

public actors can follow. On the EIB’s side, Pim van Ballekom,

Vice-President of the EIB, underlined how the EIB welcomes

the changing trend of development aid to involving public

and private investors, to face the formidable challenges.

A good example of this involvement is the EIB investments in

the Turkana wind power project in Kenya, the biggest private

investment in Kenya, based upon the successful EU-Africa

Infrastructure Trust Fund. Although it was a 200 million euro

project, the project would have been harder to complete

without the 25 million grant money invested by the EU.

Mr. van Ballekom strongly endorsed Mr. Tsitsiragos comments

on the importance of project sustainability, and in particular

on the need for African countries to become energy

independent.

The use of blending to kick-start projects was endorsed by

Siegmar Pröbstl, CEO of Siemens Africa, who sees blending as a

mechanism to push projects over a hurdle and to get them

started - blending should not be used in projects that are

13

already bankable, but rather on projects that face some

hindrances or obstacles. For its part, Siemens Africa is keen to

increase blending amongst African countries and through this

help reinforcing inter-African trade. Commissioner Piebalgs also

emphasised how the EC seeks to be increasingly flexible in how

it finances development interventions. Grant financing can in

this regard provide the necessary incentive for opening up the

economy and playing a catalytic role, in the more challenging

cases. For IFC, blending should also be time-bound and not an

open ended type of facility. Mr. Tsitsiragos warned against

certain the uses of blending that lead to market distortions

According to him it is important to set clear and transparent

conditions for the use of blending in project finance so as to

prevent companies or entities to become dependent on aid.

One clear challenge has been the relatively high interest rates

offered by development banks and other institutions, at levels,

which are unviable. The panel members discussed different

options to reduce high interest rates, such as using interest

rate subsidies to tackle the high interest rates in Africa.

Commissioner Piebalgs felt that offering local banks subsidies

to bring down interest rates to reasonable levels in the

agriculture and agri-business sector, was useful by virtue of its

relatively rapid effect. For IFC, the solution to the prevailing

high interest rates lies in creating long-term liquidity for

domestic banks, and focusing on developing local capital

markets. Pim van Ballekom added that even when the EIB is

not a profit-maximising institution, it has to achieve a specific

profit threshold, including covering maintenance costs and

reserves for unexpected expenditure. However, ultimately the

commercial sector working with the EIB is asked to pass on to

the end user, the benefit from the EIB’s investments.

Siegmar Pröbstl referred to blending in a wider sense as a

partnership to promote developmental objectives, such as

providing increased education or promoting increased

regional trade. While blending has traditionally been applied

in infrastructure, panellists identified agri-business and

education as priority areas where partnerships could play a

key role in helping the private sector to grow. The importance

of partnerships was shared by all panel members, with each

panellist agreeing on the need for genuine partnerships. IFC,

which principally does its blending with institutions such as

the European Investment Bank (EIB), sees blending as an

opportunity for more partnerships. Similarly, the EIB depends

on its working partnerships with the African Development

Bank (AfDB) and many other financiers to make effective

investments in Africa. According to Pim van Ballekom such

collaboration helps motivating the private sector to invest in

Africa.

The panellists strongly agreed that the private sector should

be involved in partnership as this blending of private sector

and EC or other institutional investments will go in the areas

where financing is necessary. Indeed part of the challenge of

partners and specialist SMEs is access to finance, and blending

can help ease their access. These SMEs and micro-institutions

are very important for tackling unemployment. Job creation

is indeed a major challenge given that it’s related to stability,

and hence investment possibilities in all sectors.

1.3.

Panel Conlusions and Recommendations

The panellists outlined the following important

characteristics that all blending projects should have:

a. The whole system needs to be transparent, preferably

ensured internally by a general credit committee and also a

sub-committee that looks at blended projects put forward;

b. Partnership among all stakeholders is needed and should be

supported, and there should be accountability, with a

disciplined and reasoned approach;

c. The subsidy is something needed to complete a transaction;

however it should be handled carefully so as to avoid market

distortion;

d. A vision for the long-term project success, no

shortsightedness;


e. Work as teams in order to stop profit interests overriding

development concerns, finding common ground;

f. Trust among partners is crucial to build a strong partnership;

g. It is important to show the variety of what is available in

order to grow investor interest (in particular in the education

sector). This is a 2-way road: offer and demand;

h. Infrastructure and Agri-business are two sectors, which all

the panellists unilaterally agreed had opportunities for

blending, in particular in logistics and agri-infrastructure.

While Agriculture is important and good for tackling

unemployment, an enabling environment is necessary for it

to be successful.

Regarding recommendations, the panellists agreed that governments and fiscal leaders should be

encouraged to take the following roles in order to make the investment climate more susceptible to the

needs of blending and investments in general:

111 Partnership – there is a need to change the paradigm of partnership, and what is needed is all partners

working together with the local commercial counterparts in the target country, that know their client

base, in order form a solid and sustainable basis.

222 Ensure macro-economic stability, political stability and legal certainty, as stability allows for a better

investment climate and allows for vehicles to work, leading to possibilities of building on experiences and

scaling up support.

333 Education is a big challenge in Africa, particularly regarding the vocational training space, where all

partners should be involved - government, industry, public and private education actors - providing a tailor

education programme oriented towards the labour market and promoting entrepreneurship.

444 Create domestic liquidity and long-term liquidity for domestic banks, this is how the costs will come

down.

555 Focus should be on developing the financial local markets.

666 Supporting successful African entrepreneurs, as this is the opportunity and is what will ultimately drive

the continent’s economy and living standards to the next level.

777 The emerging middle-class needs support too, and should be supported, as it is a future market for

finance providers.

888 Provide reliable energy sources and adequate infrastructure, which are crucial to ensure companies

will be able to transport and export their products.

PAN

NEL

1

15

pannel 2

on doing business in Africa: improving the investment climate and how can smEs be supported


On doing business in Africa: Improving the investment climate and how can SMEs be supported

Pannel 2

2.1.

About Plenary Panel

Panel 2 addressed the important issue of doing business in

Africa, and in particular how the investment climate can be

improved. The discussion was partly intended to build on

earlier discussions such as: the Sankalp Forum Concept Note

for the Africa Summit 2014, recently held in Nairobi, as well as

the notes on Recommendation 3 from the Progressive Africa

Panel’s Policy Brief of March 2010 on “Doing Good Business in Africa: How Business Can Support Development”.

The panel comprised Charles Mbire Magezi, the Chairman of

MTN (Uganda), Dr Mohamed Ibrahim, Founder of the Mo

Ibrahim Foundation, Sir Andrew Witty, the CEO of

GlaxoSmithKline, and Ambassador Valentine Rugwabiza, the

CEO of the Rwanda Development Board. H.E. Festus Mogae, the

former president of Botswana, moderated plenary session 2.

2.2.


The panellists detailed out a list of hindrances to doing

business in Africa:

a. The lack of capital and political stability, which leads to

an unpredictable regulatory environment that is

changing too quickly and too often. These changes don’t

allow for the necessary planning for long-term investment.

b. The need for societies that celebrates and rewards

compliant/diligent behaviour (i.e. employees that ‘follow

the rules’) with strong teamwork and individual working

manners supportive of collective processes.

c. Mismatch between labour market needs skills and

Higher Education focus areas: Inherited curricula, which

are modelled for white-collar jobs, but are not applicable

to blue collar work. This accounts for the large existing

skills gaps amongst young African citizens. Some 70% of

Africa’s population depend on agriculture and half of the

population is under 19 years of age - but 27% of

University graduates study humanities and only 2%

study Agriculture! Africa is therefore producing graduates

who will not find work in the area of their studies. An

effective dialogue between the business and education

sectors is required to improve the supply of university

graduates with qualifications matching the labour market

requirements.

d. Much business in Africa is done by the informal sector,

which makes it difficult to measure, and create business

models. Transplanting and implanting business models

that do not reflect the African continent does not work,

and there is a need to generate Africa-specific models – the

best models are the ones made in Africa for Africans.

e. The lack of a single market: The African continent cannot

compete as 54 separate countries. The EU’s most important

achievement remains the creation of the EU Single Market

and free movement of goods between the different cities

and EU Member States – in contrast within Africa, there

are severe border controls - goods, people, services and

capital therefore cannot freely cross frontiers. While some

regional economic communities in Africa are making some

progress, overall political will is lacking. The result is that

intra-African trade is only 12-13%. The European single

market did not come about by public consent; it was

pushed forward by business people.

f. Underdeveloped energy and transport infrastructures,

which result in high costs of doing business and

transporting goods. More investment in transport

infrastructure is required in order to increase the

competitiveness of African business.

17

g. The lack of a long-term vision for investments returns:

Foreign investors have overly short-term timeframes for

investment returns. The lack of a realistic vision on the

time of the investments prevents more investments from

getting off the ground. Economically sustainable

development of African economies and societies requires

investors to take a more realistic and longer-term approach.

For Dr Ibrahim, all good things come out of good governance,

hence the importance of encouraging transparency and

accountability in governance with the Ibrahim Index. When

questioned by the audience about the prizes given to “old

politicians” by the Mo Ibrahim Foundation, Dr Ibrahim stressed

the importance to highlight those African leaders, who were

able to lift their people out of poverty, and by doing so set

examples to be followed. They need to be encouraged to keep

working in civil society. Children should have role models to

look up to.

H.E. Rugwabiza felt that good governance cannot remain

abstract, but needs to be translated into very concrete

indicators. In Rwanda, specific indicators are developed to

monitor specific aspects of the investment climate and

business-friendly process (e.g. time required for companies to

be incorporated, obtain specific permits etc.) and this allows

the Rwandan Development Board and the Government to

improve the business environment, to cut down the number

of days, the costs and the number of procedures it takes to

register a property, or just to file taxes. All this has led to

transparency.

Returning to the topic of Africa’s investment climate and

investment timeframes, the session also witnesses a significant

investment announcement by GSK’s Sir Andrew Witty that

GSK has decided to build 5 pharmaceutical factories in the next

five years in five different African countries. GSK expects the

construction phase to take 2 to 3 years to complete and that

these pharmaceutical plans to be operational for the next 50

years. For GSK, Africa is a long-term investment environment

with many challenges and many opportunities. Two key

elements that need to exist in the countries for appealing

investment are: long term predictability and transparency of

government policy. Furthermore inside the factories, workers

with compliance behaviours are needed.

GSK wants to increase domestic capability and help countries

become less dependent on import. They recognise talent

building and skills development as necessities; this is why

they will pay for 25 chairs in universities across Africa as well

as for the world’s first open R&D lab on Africa’s non-

communicable diseases. GSK announced that it will open the

world’s first lab focussed on African chronic diseases. It will

henceforth be possible for African researchers from across

Africa to come and work in GSK state-of-the-art facilities,

without any obligation to GSK. The objective being to make

treatments available for African diseases.GSK remains open-

minded to governments having a stake in this as its hopes lie

in being part of the infrastructural development of the

continent. GSK is making Africa a priority for the next

20 years, an investment timeframe it considers as a sensible

one for the continent.


The panellists jointly described the following important actions that should be taken by local governments

to improve the investment climate:

111 Investment in human capital: The African demographic dividend needs to be turned into an asset. Today

investment is coming where talents already are, but there is an increased urgency to invest in developing

and nourishing Africa’s young human talent pool. Hence, the importance of getting the right curriculum in place.

222 A need for better infrastructure (transport, roads, energy, etc.), as already mentioned above.

333 Africa needs one pan-African stock exchange to enable enlisting any African company; a truly

African exchange and not a controlled one. Currently in Africa there are about 17 stock exchanges.

Maybe only 7 have enough liquidity to be deployed. Thus the need to create an alternative, low calibre stock exchange that can cater for and understand the smaller entrepreneurs.

444 The main sources of costs must be tackled. There should be emphasis on what makes firms and

companies competitive. Likewise issues that hinder competitivity should be addressed (size of market,

bringing specific technologies). Countries will only become more competitive if companies become more

competitive.

555 Decision makers must be brought to Africa, in order to change their views and investors’ views on

investing in Africa. Many decision makers who pull the trigger on major capital investments in Africa have

not spent time in Africa. African nations need to take a stance on educating other continents of the

potential of Africa and the up and coming generations’ talents.

666 To allow businesses to begin and to capture return, some kind of intellectual property protection will be required. This does not mean having unaffordable prices, but rather a protection to ensure return.

777 Implement projects that are more pro-people, rather than pro-government.

PAN

NEL

2

2.3.Panel Conlusions and Recommendations

19

pannel 3

on closing the smE funding gap: strengthening Financial systems (revamping the capital market)


On closing the SME funding gap: Strengthening Financial Systems (revamping the capital market)

Pannel 3

3.1.

About Plenary Panel

Nearly half of SMEs in developing countries have identified

access to finance as a major constraint - the World Bank

Enterprise Surveys reveal that on average, 43% of businesses

in low-income countries with 20-99 employees, rate access

to finance or cost of finance, as a major constraint to current

operations- compared with only 11% of similar-sized

businesses in developed countries. The IFC estimates that the

total financing gap for formal SMEs outside of the high-

income OECD countries, is potentially as high as some

US$700-850 billion. This plenary session discussed means by

which the funding gap could be addressed.

Hubert Danso, Vice-Chairman and CEO of the Africa Investor

Group, was an obvious choice for moderating the panel.

Attending observers were rewarded with a high-level panel

amply able to elaborate on solutions for closing the SME

funding gap to help accelerate private sector development,

with the presence of H.E. John Dramani Mahama,

the President of the Republic of Ghana, Aziz Mebarek,

the Founding Partner of Africinvest, Admassu Tadesse,

the President and CEO of the PTA Bank, and Jean-Louis Ekra,

the President of AFREXIMBANK.

3.2.


H.E. President Mahama opened the panel discussion by

elaborating on the role of the SME sector as a driver for

economic growth. The focus has therefore been to see how the

sector can expand to create more jobs. Africa’s fast growing

population is a positive factor if it is managed properly, but it

also can become a source of social tension in cases where job

creation is lacking, leading to a growing young unemployed

population. It is thus important to ensure that the SME sector

can absorb this fast-growing youth workforce. President

Mahama emphasised that these jobs do not necessarily need

to be high tech but rather of a certain level of labour intensity.

Thus agriculture is a natural focus as Africa needs to produce

more food for its growing population, as well as developing the

wider agricultural value chain. Nonetheless, ICT is also a sector

of interest as well as many others sectors.

Regarding the role that the public sector can play in increasing

and improving access to finance for SME, the panellists agreed

that closing the SME funding gap require stronger public-private

partnership between Government and banks. The Ghanaian

experience shows a government approach of not directly

investing in SMEs but in creating funds to promote investment in

agriculture and exports, subsidising interest rates, or providing

collateral coverage for SMEs. All panellists agreed that a stronger

public-private partnership required Governments and banks to

have clearly defined roles - governments should not be

responsible for lending, as they are not as qualified as banks to

analyse risk. Panellists also concurred that in order to develop

effective government – bank partnerships, the issue of African

banks’ reluctance to lend to SMEs would have to be tackled.

Solutions worth exploring include governments establishing

funds through which they can subsidise interest rates, and/or

developing schemes to provide collateral support for SMEs, in

order to increase commercial banks interest in lending to SMEs.

Other alternatives to providing collateral support for SMEs

could also be looked at - Jean-Louis Ekra suggested the

following two solutions:

a. To include SMEs in the supply chain: This could be done

by establishing a credit facility around the strongest part

of the value chain, whereby SMEs can obtain contracts

from larger enterprises, that are more creditworthy. This

can create a virtuous cycle whereby stronger creditworthy

21

companies reduce the credit risk of SMEs. This model has

proven successful in the extractive industries such as gold

extraction in Ghana, oil in Nigeria, and copper in Zambia.

b. To increase the use of guarantee institutions such as

the Africa Guarantee Fund, a market-friendly guarantee

scheme aims at easing access to finance for African small

SMEs. Designed and funded in part by the AfDB, the Fund

provides financial guarantees to financial institutions to

stimulate financing to SMEs and unlock their potential to

deliver inclusive growth in the region.

Panellists agreed that both sides of the equation – on the one

side governments and banks and on the other side SMEs – need

to improve their transparency and functioning in order to

significantly increase lending and access to finance for SMEs.

Banks for example need to invest in developing the skills of their

staff to enable them to assess risk in SMEs, create new more

specialist internal departments and structures, with specialist

skills around SME lending. Likewise they should create the

capacity to develop customised financial products for the SME

sector and new ways to reach out and access the SME client

market. Banks should work locally, close to clients with the right

tools and raise capacity and competencies locally. On the other

hand, SMEs also need strengthening and increased structure,

improved skill-sets in management and administration, and

greater understanding of how to make them more appealing to

lenders (early stage partners, such as Business Angels can help in

this process). SMEs also need their business environment to be

improved, in part through public policies that focus on:

i) improving infrastructure; ii) improving the availability of data;

and iii) helping the SMEs to access new markets (in some cases

creating a separate access for SMEs). These changes will allow

SME bankability to improve dramatically. More general changes

will also improve SMEs’ operating environment, such as: i) good

governance; ii) transparency; iii) strengthened human resources,

and more. Changes should also come in smaller scale, within the

SMEs themselves, for example in improving their internal

management and organisation and clear business offers and

marketing and sales approaches.

If SMEs in the trading sector remain at the level of just trading,

creating an ecosystem that supports the emergence of

substantial trading conglomerates that has the potential to

exit through Initial Public Offering (IPO) and accessing African

capital markets will take a long time. SMES should seek to

shift their focus to increasingly provided greater value-

addition. While there has been significant growth in the

number and volume of commodities produced in Africa,

added-value creation has however been rare. For companies

to achieve this transition to added-value, it will be necessary

to have a combination of risk capital and commercial bank

lending in order to have sufficient working capital provision.

Only 8% of IPOs in Africa are from private equity exits. When

they do exit through IPO, they only achieve about 12.6 times

earnings in terms of evaluation. However, it’s not productive to

compare this 8% with the 20%+ in more mature markets, but

rather with the 0% that was the norm just a few years ago. The

industry is going in the right direction. Private equity is looking

for decent earnings prospects, which are in line with the risk.

Not only should the earnings multiple be increased to be in line

with the risk, but the perceived risk should be reduced. The

perceived risk in Africa is higher than the actual risk, which

sometimes is no higher than that of mature markets.

Africinvest’s Aziz Mebarek highlighted the very welcome

development of the number of partnerships coming through,

like never before, particularly for special purpose funding.

However, he outlined an issue of the EDF allocation not

having been spent and that money was returned to Europe

because of an absorptive capacity issue. This money could

have been used by many African institutions. The European

and African private sectors should engage in a strategic

partnership that will lead to exchanges of knowledge and of

expertise. Africa should also be looking at sharing experiences

within its own common sub-regions. This is the time for a real

EU-Africa partnership. The EU should no longer see Africa as a

place requiring aid, but a win-win situation for real partnership.

African governments should no longer look at private sector

as a different sector but as a public private partnership.


3.3.


The Panellists proposed concrete actions to address the SME funding gap to be implemented this year:

111 Intervention of Governments to provide collateral and mitigate the risks for banks. This is particularly

important for early stage SMEs that face the most difficulties, as they are unable to attract commercial

money. Governments and IFIs should provide early stage equity funding to support early-stage SMEs

(incubators), to reduce risks for banks and to enable these SMEs to go to the debt markets on a strong basis.

Put forward a ‘small-business act’ to enable SMEs and help with access to long-term funding.

222 Strengthen the legal system in African countries: Strengthen the legal systems and improving

enforcement (e.g. in terms of impartiality and speed of judgement), is important in terms of also reducing

the perceived risk of SMEs for African commercial banks. Some countries have made good progress, but

much more deepening needs to be done. One specific measure that many countries could contemplate, is

establishing commercial courts to deal much more quickly with commercial litigation.

333 Government subsidies for banking access to finance: Because commercial bank money is short term

and expensive, the only way to change this is for government to subsidise banking access to finance.

444 Government subsidies of the SMEs collaterals will allow them to get access to bank finance, with the

government covering the high risk that represents the SMEs the commercial banks could provide a better

access to financing SMEs/projects.

555 Liquidity and funding for commercial banks: African banks are very liquid - Africa does not have a

volume problem but an intermediation problem. It’s not a question of availability of money. We must

differentiate those banks that are very liquid versus those who have managed to find ways to intermediate

effectively and price credit appropriately. Part of the problem of African capital lies in the fact that it is

overseas, whether it is with Central Banks, pension funds, or elsewhere. African capital should be encouraged

to flow back into the continent towards institutions that have a good track record.

666 Initiative to empower banks with equity and a significant technical assistance programme.

The Belgian development assistance has for example established a programme in Rwanda to strength the

equity base and the technical capacity of the banks. Allowing banks to properly do their job of assessing the

SMEs with the right tools, will help empower banks by reducing the risks they perceive in financing SMEs, to

the benefit of SMEs.

777 Long-term financing instrument: Long-term financing instrument can bring something to the SME

sector, which is without collateral or equity remuneration.

888 Fiscal responsibility in the Government. Banks prefer to buy and invest with government financing

instruments, so create an environment that allows them to expand and to trust in SMEs.

999 Encourage citizens to “come back home” with skills they have acquired abroad, ICT and telecoms technology.

101010 Land rights to be formalised: Traditionally, land systems have been based on trust, not on titling. This

must be moved into a formal system, people’s attitudes have to be changed.

111111 Regularise the informal sector: Provide incentives that encourage and reward informal sector SMEs to

regularise themselves and come into the formal economy.

121212 Develop a collateral registry: Developing a collateral registry would allow SMEs to register collateral and

make it is easier for banks to accept this collateral and provide SMEs with credit.

PAN

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23

pannel 4

on investments and partnership for productive work for youth


Pannel 4Pannel 4Pannel 4

On investments and partnership for productive work for youth

4.1.

About Plenary Panel

With almost 200 million people aged between 15 and 24,

Africa has the youngest population in the world. Among those

who work, many have informal jobs with a low quality of

employment: low earnings, high levels of insecurity, limited

chances for advancement and a lack of social protection. In

Africa, the situation regarding youth unemployment is

assuming in many respects, a crisis situation, with the risk of

having a huge proportions of a whole generation exposed to

marginalisation from economic and social life. At the same

time, there is an enormous potential in terms of a young

labour force.

Erik Nyindu Kimbambe, Director General for France-Belgium-

Switzerland, Voxmedia, was the moderator of the panel. The

panel of speakers comprised a highly qualified and diverse

spectrum of experience, including H.E. Ibrahim Boubacar

Keïta, President of the Republic of Mali, Dr Mohamed Lamine

Dhaoui, Director of Business, Investment and Technology

Services Branch of UNIDO - MLD, Dr Amany Asfour, President

of the Egyptian Women Business Association (EBWA), and

Victor Soto, Vice-President of the European Confederation of

Junior Enterprises (JADE).

4.2.


H.E. Keïta introduced the problem of youth employment,

reiterating that this was a global issue. In Africa, the challenge

of youth employment is closely linked to the fact that a

significant part of Africa’s youth live in isolated rural areas.

This frequently means that these young people have no

education, 27% are illiterate, and therefore their employment

prospects are dramatically reduced. This also means that

they are unable to contribute to their country’s socio-

economic development and shape their own country future

prospects.

All of these factors mean that without further action, Africa’s

youth population will remain in poverty. President Keïta

indicated a number of actions that he considered governments

were obliged to undertake in order to better control the

growth of these populations and their educational and skills

development: i) improve school enrolment and attendance;

ii) verify and control the quality of schooling/education;

iii) emphasise the importance between education and the

needs of the employment market; iv) stimulate job creation

through national initiatives, employment creation actions,

sectorial employment agencies, and youth employment

funds; v) stimulate the launch of programs that encourage

youth employment in agriculture, small scale farming, tourism

and in the environment; and vi) improve the competitive

aspects of local companies in order to improve their growth

and employment creation capability.

Dr Dhaoui expressed the necessity for young people to see

successful ventures in getting youth employed. While human

capital development offers significant potential add value in

production, there is however little investment in human

capital in Africa. African countries are exporting their human

potential outside of Africa, this needs to be addressed as a

3-layered approach, at the macro-level, regional level and

the national level of countries. This can reduce the

unemployment problem. Furthermore, every region should

develop a value chain to identify the high potential and

priority sectors, to allow promising sectors to be singled out

as priority sectors - sectors that can already be clearly

selected are agriculture, ICT, tourism and mining. An example

of prioritising high potential sectors is palm oil in Malaysia,

which has become the leading exporter of palm oil, with

annual earnings of 18 billion dollars and with some

25

1.4 million people employed in this value chain. In Mali, this

could be compared to the leather goods trade, which has

gained considerable recognition worldwide.

Dr Asfour added that the 5 E’s of empowerment, education,

entrepreneurship, economic prosperity and employment can

be used to minimise the problems of youth employment.

Entrepreneurship can be seen as the driver for economic

growth and job creation. Graduates should be approached

early on to encourage and promote an entrepreneurial culture.

An example of how this has been done is the African business

development centre and business incubator, which builds

entrepreneurial culture, create jobs and support SMEs created

by youth and women. There is support for the development of

a business centre with higher cultural awareness, creating

more jobs and real support for SMEs. Many of Africa’s youth

are in the informal sector, because they don’t know how to

transform their ideas into registered businesses. A training

centre can target groups on how to start up a business: how

to write a business plan and other documents that will help

them access funding through better transparency. Another

challenge (and opportunity) to be tackled is micro-enterprises,

many of which do not grow, but we need to help them

graduate from small, to medium and eventually to large

enterprises. Entrepreneurship is not only about creating jobs

for the entrepreneur but also to create jobs for others, thus

resulting in a multiplier effect. In order to reach these students

and encourage entrepreneurship, the following actions/

initiatives were recommended by the panellists:

1. Awareness sessions among students are organised in

universities, during which students are taught how to

register a company, and deal with administrative tasks.

Most students are put off by taxes, dealing with the banks,

bookkeeping issues etc. so there needs to be a focus on

increasing students’ capacity for dealing with institutions,

with banks, authorities, etc.

2. Business incubators for companies/ideas that are starting

out, helping to build their capacities on how to be

competitive, such as providing support and advice in

product development, marketing and marketing tools.

Incubation typically last 12-18 months, after which the

entrepreneurs should have their own company up and

running. However most companies require continued

assistance through mentorship programs to ensure steady

growth.

3. Business networks for students to help develop a unique

experience working close with experienced businesses and

business people for experience, developing skills and more

importantly, acquire a learning-by-doing experience. This

helps to focus the mind-set and the entrepreneurial spirit;

develop soft and hard skills to solve today’s problems. The

positive aspect of this type of initiative is that we do not

need many resources; the projects are driven by young

people’s motivation, however support is still needed from

the government, the institutions, the universities and the

companies. Everybody must be involved to stimulate an

entrepreneurial culture, in this case the needs are less

finance-based, but HR based.

4. For people in rural areas, particularly youth, there needs to

be an outreach strategy. Business development centres

should be established in rural areas, linked to science and

technology, to help ensure that entrepreneurs can benefit

from new technologies in agriculture, as well as other

sectors, in order to avoid products wastage and loss due to

agriculture produce going rotten or unsold. An example is

solar dryers for tomatoes and fruits, tomatoes can be dried

for export to markets such as Italy and Spain.

Mr Soto confirmed that good success stories and their

tracking, helps encourage more youth to follow the path of

entrepreneurship. A good example of this was when students

in Europe realised that many companies they were working

with had interests in Africa. So, as part of their project in 2005,

they helped set up junior projects in Tunisia, Morocco and

Nigeria. The Tunisia one was very successful. As a consequence

of this project, last year there were over 200 students that


wanted to participate in the junior enterprise. Youth feel

empowered by peer-to-peer learning. Youth today need short

term solutions, they need to be able to see clear change, clear

opportunities and, more importantly, they want to be part of

this change, to contribute to tackling these challenges that

face their countries. Being able to contribute in this manner

will motivate African youth even more.

Education, particularly in rural areas, remains disconnected.

President Keïta confirmed that there is a mismatch between

skills taught and the abilities of children in these areas.

Whole areas of cultural know-how have been lost because

schooling is not adapted to the local traditions and

traditional local knowledge that is legitimate in its own

right. Africa needs to start giving more value to its own

learnings and keep record of it.

Another issue is how skills will be developed to fit with the

jobs created, as well as how entrepreneurship is inserted

into education curricula and vocational training for youth.

There is a need for investment in development of skills for

growth and development of countries, as well as a need for

improving collaboration between educational institutions

and businesses. Vocational training should not be considered

as a fad in this respect – one example is the case of some

African countries, where it is impossible to find a highly

qualified plumber or electrician, without having to import

such skilled tradespersons. Given the unemployment levels,

this is a real indictment of the current situation. Africa badly

needs much more in situ vocational training and more

on-the-job training, and the latter can also help in re-skilling.

Africa can learn from Germany’s and Austria’s experiences in

vocational training. It is impossible to work in Germany or

Austria without the proper diploma, but workers are well

paid because their skills and trades are valued and

entrepreneurial culture is valued.

Promoting an entrepreneurial culture is also very important in

terms of, shifting young persons’ attention and focus, away

from working in the public sector - many Africans want to

work in the public sector, which has reached its absorption

capacity. Many graduates have followed a humanities

curriculum and many of those want to be a minister, an

ambassador, etc. To change mind-sets to better match African

countries development needs the 3 S’s must be targeted -

society (family), schooling, and the state.

From a global point of view, Dr Asfour feels that Africa needs

industries, factories, in order to transform the economy, to

add value to products. There are many universities with

scientists and research centres, but very often these are not

linked to factories and industries. Science needs to be linked

with the commercial/private sector; investments should go

into our resources and the diaspora. Then youth should be

trained to work in these factories, which in turn will facilitate

scientific research. This will take Africa to a global level.

Mali has a huge pool of resources and mobilisation of

development that can be used, but there is an issue that the

resources provided are not always good enough. Knowledge

transfer works, Africans need to move beyond the past,

students on strike need to realise they are harming themselves

and the country more than anything else. Africa needs to

make the best uses of its available resources. It needs to learn

perseverance, even in the face of failure, because no one else

will help Africa more than it can help itself.

The recommendations as presented to the Summit emphasised the role of the private sector in tackling

unemployment and social economic development. Acknowledging that unemployment is a major challenge

for both Africa and the EU, the Forum Recommendations to the EU-Africa Summit emphasised the need

to mainstream the role of the private sector in job creation, poverty alleviation and broader social

economic development- a role to be achieved in particular within the post-2015 development agenda.

PAN

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4.3.


27

pannel 5

on the role of banks in sustainable and inclusive growth


On the role of banks in sustainable and inclusive growth

Pannel 5

5.1.

About Plenary Panel

While Africa’s economic growth has accelerated in an impressive

fashion over the past decade, the quality and inclusiveness of this

growth remain a major concern to policymakers, researchers,

development partners, and to the ordinary citizens. Inclusive

growth is influenced by both supply-side and demand-side

factors, and banks, for example, have an important role to play in

mitigating the supply-side processes that prevent poor and

disadvantaged social groups from gaining access to the financial

system. Access to finance for the poor and vulnerable groups is a

prerequisite for poverty reduction and social cohesion, and is

thus a form of empowerment of the vulnerable groups. What role

can co-operative banks play, and can Africa learn from experience

in other parts of the world? While African investment capital was

traditionally invested abroad, this investment capital is now

increasingly staying in Africa - how can it be harnessed to finance

inclusive growth? New donors from emerging countries are also

increasing and diversifying the resources available to Africa to

finance its growth. How can these resources be leveraged to

promote inclusive growth and do banks have a role to play?

Kiprono Kittony, Chairman and Founder of Radio Africa

Limited, was the moderator for Panel 5. Attending observers

were rewarded with a highly qualified and varied panel, with

the presence of Anthony Mothae Maruping, the

Commissioner for Economic Affairs, AUC, Ebenezer Essoka,

the CEO of the Standard Chartered Bank, Boubker Jai, the

Director General of the Group Attijariwafa Bank, and

Fernando Costa Lima, the Board Member of BPI (Portugal).

5.2.


Panellists were first asked if they felt commercial banks had

done their best in harnessing the potential of Africa.

Commissioner Maruping felt that the investment climate and

business in Africa had improved and continues to improve,

helped in part by central banks performing their functions

well to create the necessary climate and encouraging

successful private-public dialogues. This has for example

encouraged keen interest from Asia, who has found the

climate conducive to their business and investment needs.

However, he and the other panellists enumerated the

following key aspects that still need to be worked on:

a. Banks should be aspiring for an accelerated, sustainable

program that will lead to resilient, rapid, sustainable and

inclusive development.

b. In terms of infrastructure, financing banks should be

more innovative, although it is acknowledged that Public-

Private partnerships (PPPs) have worked well in this

domain.

c. Banks need to take better advantage of the

transformation of the dynamics of technology, mobile

financial services, which are redefining how financial

inclusion is occurring across the continent.

d. Regulatory framework: The trade-off between financial

stability and financial access is one part of the wider

financial regulatory question. Central banks and governments

are struggling with the balance on this, but these are

mutually enforceable. Regulations should cover stability,

consumer protection, financial inclusion, financial integrity

and more. Fernando Costa Lima recognised efforts made in

this area by Angola’s and Mozambique’s central banks.

e. Unorthodox coalitions between a) policy makers across

this space in Africa and Europe, b) financial service operators

and banks, c) development actors (private and public sectors

and operators, multilateral institutions, international and

regional IFCs/AFDBs, bilateral institutions…).

f. Banks must themselves be viable. The viability of financial

institutions to be able to authoritatively reflect on their

29

impact on the market, can be ensured by independent

monitoring and assessment. For example, the first ever

report on the impact of a financial institution (Standard

Chartered Bank) in the continent of Africa showed exciting

results, demonstrating that its support had brought

5 million jobs, that is to say 0.6% of the total workforce. It

also demonstrated that SCB was contributing positively to

sub-Saharan African economies’ GDP, having been able for

example to finance 1.2 billion of the region’s entire trade

package and to support tax payments of governments in

sub-Saharan Africa.

g. It is important, for banks that wish to contribute to

sustainable growth, that they do not specialise too much,

banks should support SMEs as well as large corporates and

both rich clients and poorer ones.

h. Banks should work locally, using extension projects and

more ambitious banking networks, to serve clients with

specific training.

i. In order to be able to comfortably support companies and

clientele, banks should keep track records of successes for

others to follow.

j. Partnerships are key to satisfying financing needs, one

bank alone cannot succeed.

k. African banks should model themselves on foreign banks,

holding the typical banking roles of credit risk assessment

and shareholder responsibility.

Mr. Lima assured the audience that if Africa had strong local

banks then they would have the proper financial surface to

finance companies’ and households’ needs. In terms of

infrastructure financing needs, as these are generally huge

investments, local banks cannot afford these. For the most

part, they need to go to the international market for funding

and financing partnerships for big infrastructure projects.

Normally the problem with financing large infrastructure

projects is commercial and political risk, for which there is

often inadequate insurance cover, and this is something that

the multilateral agencies need to address. In terms of direct

investment, attracting foreign capital is hindered by perceived

risk, even though real risk is lower than perceived risk for

example the government in Angola is committed to support

foreign investment and local entrepreneurs.

The focus is on SMEs in Africa, but SME access to finance has

been problematic. Access to credit has always been one of top

10 impediments to investment in Africa, and lending rates

across the continent are higher than in other parts of the

world. Mr. Essoka elaborated that while it is a given that the

rates are higher than in other regions, the players who happen

to suffer higher costs also have less convincing track records.

The solution is simple; central banks should negotiate with

their banking partners. As for SMEs there are plenty of other

options open to them beyond the commercial banks, and

SMEs need to diversify, with venture capital, DFIs, etc. There is

a clear need for international accounting principles, but this is

not going to come quickly. Capital will become more

expensive, as a solution for inclusion, central banks should try

and set regulations for responsible engagement, make a

mobile financial solution for across the continent.

Returning to the issue of high lending rates, African countries

have generally struggled with mismatches between interest

rates and what banks agree to lend at, with huge gaps

between the central bank rates and the rates at which

commercial banks are lending to consumers. The banks

decide for themselves, with the lack of competition being

one impediment, as increased competition would encourage

banks to narrow that spread. The government and relevant

authorities need to make sure financial institutions are

doing their job, promote enforcement and respect for the

rule of law. Most importantly, fiscal policy-makers as well as

central banks, need to make sure that there is price and

financial stability in the economy. In basic functions such as

payments and settlement systems, there must be a

convenient, secure, efficient and regulatory function, as well

as enough foreign asset holdings to increase investor

confidence.

Boubker Jai from Group Attijariwafa Bank stated that good

infrastructure is crucial to inclusive development. To develop


infrastructure, the financial markets have to be developed

with the priority of increasing the production cover.

Mobilisation of investment needs the banking and finance

presence to be fully integrated into the local economic fabric.

In this interest, the number of agencies should be increased.

“Low income banking” is an important shift to make, as banks

are seen as a tool of the rich, not for the average population.

Banks should aim to capture and facilitate this part of the

population and introduce it into the economy, by developing

complementary instruments. Grant banking models should

also be developed; these help fill deficits through retention

and traction in respect to citizens who have migrated to

Europe and the USA. These entail a real economic lift and help

fund projects. Mobilisation is the first trigger; the second is

public -private partnerships that help shoulder efforts to

finance between governments and a certain number of

institutions. All this needs to be formalised following the

financing schemes already available.

There is a revolution in Africa in mobile financial services.

There are tensions around this new banking approach, which

also impacts on inclusivity. The reality is that digitalisation in

the banking industry is here to stay. Collaborative approaches

are possible, in successful cases this can increase revenue, and

for SMEs, this increase can be up to 30%. Another big

challenge is to be able to track the flow of financial resources.

With such change dynamics, it is imperative that all financial

institutions play a role, and more collaboration with mobile

operators is necessary in ensuring that technology is used to

proactively increase inclusiveness. The challenge with

regulations, is that most stakeholders fail to address viable

policy initiative options to encourage responsible uptake of

these possibilities.

If the African Union is to become a monetary union at some

point in the future, comparable to that of the EU, a variety

of pre-conditions and pre-requisites will not be satisfied, not

least in macro-economic convergence. There is therefore a

need for harmonisation of policies and legislation to pave

the way for a single currency, while political commitment is

also needed to achieve this. A monetary union is a signal of

a very advanced stage of integration, what happened in

Europe will happen in Africa one day, as there is strength in

numbers.

To better understand its threat, the 2007 financial crises should

be split in 2 parts. 1) The financial crisis that sent shockwaves

through major countries; African countries were immune to this

as they benefited from being less globalised. 2) Separate to the

world economy, some shockwaves did affect some African

countries, with a sharp decline in oil prices in 2009. Overall the

financial crisis had little effect on African economies, with many

African countries registering very good GDP growth figures

during this period. To avoid such a crisis in Africa, policy makers

should make banks fiscally responsible. Commissioner Maruping

adds that financial isolation was not the only reason for Africa’s

success, proper macro-economic and financial management

was also a factor. The government played their role very well,

diversifying their economies and promoting inter-Africa trade,

which is helping to make Africa’s economies more resilient.

As partnership makes a difference, there is a need to work in

partnership with all stakeholders to make sure that Africa has a

viable business,investment and banking environment.

Specialised SME departments are recommended to see that

for every dollar invested in SMES, there is employment. Social

inequalities are targeted in this way. There is a need to favour

projects with more linkages, to all social groups, to value chains

and with value addition. Women should also be favoured as

priorities for lending and for improved access to finance, as the

rate of return with lending women is much higher.

Mr Kittony concluded that there is a need to get governments and the banking system to work closer, to

collaborate; there is a need for greater financial literacy; a need for financial regulation to ensure that there

is a more stable environment for financial systems to work in; and finally a need for inclusivity and greater

linkages to be encouraged.PAN

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5.3.


31

ii roundtables programme

The 5th EU-Africa Business Forum’s programme was designed to bring some of the best business and

entrepreneurial talent across Africa and Europe together, in focused discussions on key topics relevant

to the biggest challenges facing private sector development in Africa today.

To ensure that the Forum delivered the best possible recommendations, a significant part of the

Forum programme was devoted to 12 theme-based roundtables. like other parts of the Forum, these

roundtables were private sector led, featuring handpicked high-calibre panellists. roundtable chairs

and co-chairs ensured the highest quality of discussion and guided the development of insightful

recommendations, both ambitious and realistic.

The wide spectrum of roundtable topics covered a wide range of key development challenges and

areas of opportunity and offered a highly attractive learning platform for forum participants.


33

roundtable 1

sustainable Energy for All: innovative solutions for Africa


Sustainable Energy for All: Innovative Solutions for Africa

Roundtable n° 1

1.1.

Roundtable Rationale and Speakers

Access to energy is crucial to development and sustainability

should therefore be treated as a key issue. Private-public

partnerships can be an effective solution to energy related

issues. However, due to the specific nature of the African

context, there is a need to find innovative solutions and ways

to integrate these into a proper regulatory framework.

This roundtable was chaired by Bruno Wenn, CEO of DEG,

Chairman of EDFI, as well as two co-chairs who were

Nachman Isaac, Project Finance Director of Olkaria, and

Thomas Gottschalk, Founder and CEO of Mobisol GmbH. The

session was moderated by Marc Eddo, Founder and Managing

Director of Marc Eddo Media. Special addresses were made by

Roberto Ridolfi, Director for Sustainable Growth and

Development, DG Development and Cooperation at the

European Commission and Dr. Benon Mutambi, CEO of

Electricity Regulatory Authority Uganda.

1.2.

Summary of the Roundtable Discussion

The introductory speech of the moderator, Mr. Marc Eddo, set

the tone of the discussion; underlining the importance of

producing sustainable energy, he mentioned the traditional

importance of fossil fuel generation in Africa. Mr. Eddo

contrasted Nigeria, as a typical example of African countries,

where 40% of the production cost goes to energy generation

compared to only 3% in Europe. This has consequences for

businesses, development, healthcare and education. Some of

the most important questions in Africa are how to have

continuous but affordable access to electricity and how to

bring in renewable energy.

Bruno Wenn from DEG further underlined that access to

sustainable energy is crucial not only for Africa but for the whole

planet, and the need for effective collaboration to find sustainable

solutions. He presented the European Development Finance

institute (EDFI): 15 European Development financing institutions

promoting the private sector all over the world, with a joint

portfolio of more than 26 billion Euros, of which one-third is

invested in Africa. EDFI provides long-term loans, mezzanine

financing and equity. In Sub-Saharan Africa, the energy access

challenge is particularly acute, with rapid population growth and

rapidly increasing energy demand occurring against a background

of energy capacity production levels, that have developed very

little since the 1990’s, with only 40% of the population and 8%

of the population in rural areas having access to electricity. This

reality means that many Africans are not only cut from energy

access but are also cut out of economic activity. Power cuts in

Tanzania cost an estimated equivalent of 4-6% of national GDP

every year. Tackling the energy access challenge in Africa will

require an estimated annual investment of approximately

US$ 40 billion, yet current annual investment - at US$ 4.6 billion

US$ - is less than 12% of the required investment level needed,

leaving a huge financing gap to be breached.

Dr. Benon Mutambi, CEO of the Electricity Regulatory Authority

in Uganda, mentioned the key role that effective regulatory

mechanisms play in facilitating investment in the energy sector,

as the solution to bridging the investment gap lies more with

private sector investment rather than public sector financing. Key

concerns would be providing cost recovery tariffs and prices,

together with flexible tariff adjustments, incentive schemes to

attract private investment, combined with the mitigation of the

off-taker risk, and who should be able to pay for the energy. The

combination of these elements would create certainty, enhance

transparency and increase prospects for attracting private capital.

Dr. Mutambi also emphasised the importance of having a clear

mechanism for securing energy access and expansion of the

electricity grid. As an exemple, he cited Uganda’s GET FiT Program

35

to assist Uganda (and other East African nations) in pursuing a

climate resilient low-carbon development path resulting in

growth, poverty reduction and climate change mitigation*. A

third issue mentioned by Dr. Mutambi was that of technical

capacity and skills of the regulatory agencies, in order to be able

to design the flexible tariffs, ensure efficient delivery of energy,

and controlling power wastage.

Mr. Nachman Isaac, Project Finance Director of Olkaria,

described briefly the significance of the Olkaria I Geothermal

Power Station in Kenya, as Africa’s only geothermal IPP.

Referring to the success of Olkaria II and the value of

geothermic energy, Mr. Isaac nonetheless underlined the very

significant costs involved at the prospecting phase, and the

key role played by Kenya’s government through the Kenya

Electricity Generating Company (KENGEN) during this crucial

phase. Possible solutions presented by the co-chair were the

deployment of risk mitigation funds and auctioning off state-

owned projects to the private sector. Thomas Gottschalk,

CEO of Mobisol GmbH, then presented the strategy and

approach of the initiative on solar energy and mobile phones,

making use of two short videos to share with the audience.

The moderator then asked several pointed questions and

made several remarks based on some of the recurring topics

in the earlier Roundtable speeches. Which regulatory

framework conditions are needed to increase private

investment in the energy sector in Africa? This stimulated

input from several panellists. The first came from the Olkaria

representative, who listed two key elements which are fiscal

support and fiscal incentives provided by the host country

and the framework itself – i.e. the need for bankable power

purchase agreements. Transparency was also noted as a key

factor. An additional comment was provided by the special

address that emphasised the importance of standardization

of contracts, as this creates certainty and helps reduce risk.

The second question asked was: What role do public-private

partnerships play? With this question the floor was opened

to the participants to provide their comments, which allowed

for the convergence of various insights. Several participants

confirming their support for PPPs. An additional comment

was made by a German university professor and former solar

company CEO, that a differentiation should be made between

market segments and between power supply for big cities or

rural areas. In other words, different regulations, and a varied

amount of involvement of the government, may be required.

In some cases, involvement of the government should be

limited while letting the private market act. This stimulated a

counter-argument from Mobisol, that cooperation with the

government together with a framework that focuses on off

grid presents tremendous support for uptake. An additional

note was that the execution and operations on the ground are

absolutely key. A related comment came from the DG for

Development and Cooperation that there needs to be a

proper balance between too much and too little regulation. In

this same line of thought, competition is necessary to produce

value for money and the EU supports this.

The moderator further noted the problems of grid availability,

reliability and lack of the grid entirely, as key concerns,

supported by a comment that these issues can represent big

constraints for renewable energy development and

deployment. Again, this comment evoked much reaction on the

part of the various panel participants and observers. This led to

some of the participants sharing their experiences in the field, as

well as some of the specific challenges they had faced. A

representative for Proparco mentioned the need for governments

to make good planning at the level of the sectors. If renewable

energy is not integrated then there will be little confidence from

developers and investors. An additional comment came from the

Executive Director of Aldwych Int. on the challenge of integration

into the grid in the Lake Turkana wind farm project in Kenya. The

public sector could play a big role here to lower the overall cost

power. First-hand experience-based input also came from the

consulting sector that we need to look at Africa as an investment.

Things are not easy for an SME. Human resources in particular

* Under Phase I of Uganda’s GET FiT Program, a portfolio of up to 15 small-scale renewable energy generation projects, promoted by private developers with a total installed capacity of roughly 125MW, will be fast-tracked, thereby helping to add much-needed clean (energy) generation capacity, strengthen regional grids and result in emissions reductions of 11 million tons of CO2.


The roundtable recommendations tackled different aspects necessary for achieving sustainable energy

for all: innovative solutions for Africa:

111 The importance of bringing the African private sector into the sustainable energy development, as a key

partner together with the government to secure the development of sustainable energy across the African

continent, and avoid the danger that the local private sector is excluded in sustainable energy development.

222 The need to have an effective regulatory framework covering the default risk of the grid, and of the

off-taker’s solvency, providing a flexible tariff adjustment mechanism that allows investors to cost recover

their investment.

333 The need to adapt to the existing grid and tackle the challenges in grid access to sustainable energy.

444 The need to build the technical capacity and skills of the regulatory agency.

are an issue, as well as the legal environment. This evoked a

reaction from the chair, who reaffirmed that we need both the

private sector and the public sector and that a partnership is

necessary in the best interest of the local market and the local

people. A few short final comments were made by various

observers, including the potential a platform, could have to help

connect people and make companies aware of initiatives in

financial institutions. Further, the importance of receiving cheap

loans was raised to promote incubation.

As the session started to come to a close one of the special

addresses, Roberto Ridolfi, Director at DG DEVCO, European

Commission, made a final closing speech to confirm the

support of the EU for this sector, stating that the public sector

is ready to do its part in terms of sharing some of the risks in

off grid solutions. He emphasised the importance of effective

public-private collaboration to achieve the desired results, as

well as a need to work with energy utilities.

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1.3.Roundtable Recommendations

37

roundtable 2

supply of risk capital for new enterprises

Roundtable n° 2


Supply of risk capital for new enterprises

2.1.


A supply of risk capital for new enterprises is crucial to

achieving growth in the private sector. Without it, new

enterprises cannot be formed. With it however, growth rates

that are indispensable to the capitalist paradigm are possible.

Thus, the ways investment decisions are made and social

systems are connected to the venture capitalist play an

important role in the performance of the economy. While it

is the primary role of the market to provide sufficient risk

capital, there is an “equity gap” in the risk capital market. This

is a persistent capital market imperfection, preventing supply

from meeting demand - a price that is acceptable to both

sides. Not to mention the emerging of social-economic

institutions in the Venture Capital industry.

Roundtable 2 on Supply of risk capital to new enterprises was

chaired by Paul Van Aalst, CEO of SOVEC and co-chaired by

Ben White, Founder of VC4Africa. In this roundtable there was

a special address from François Moutot, General Director of

APCMA, SG. The investors seated at this round table were

Vincent Kouwenhoven, eVentures Africa-Netherlands;

Candace Johnson, Board member of European Business Angels

Network (EBAN); Marcel Neutel, Senior Investment Manager

of ICCO Investments, Netherlands (a spin off a traditional

NGO). Entrepreneurs participating in the discussion were

Rebecca Enonchong, Founder and CEO of Appstech, Cameroun;

Francine Munyaneza, Managing Director of Munyax Eco,

Rwanda. Government representatives included

Moustapha Ben Barka, Minister in charge of Investments and

private Sector of Mali. Others roundtable participants were Mrs.

Fatou Kiné Diaw, Président de l’Organisation des Femmes

d’Affaires Africaines; Edward Mungai, CEO of Kenya Climate

Innovation Centre (CIC); Saïd Omar Moussa, Immediate Past

President & Honorary President of the Djibouti Chamber of

Commerce, previously President of COMESA, Djibouti;

Dr. Skhumbuzo Ngozwana, Deputy CEO of CIPLA Medpro;

Mamadou Konate, President of the Chamber of Commerce

and Industry, Mali; Nigel Chanakira, Founder of Kingdom

Financial Holdings and former Kingdom Bank, Zimbabwe.

2.2.


Following a brief introductory presentation about the

Roundtable Mr. Paul Van Aalst introduced Mr. François Moutot

who presented a financial analysis of SMEs highlighting

SMEs’ need to access financing and the difficulties

experienced in accessing financing. Mr. Moutot presented

credit intermediation structures as a possible alternative to

bridging the financing gap identified. Such structures could

provide an adapted solution to SMEs needs, through the

following mechanisms:

i) Increasing the development of solutions such as guarantee

loans, by increasing the use of guarantee companies and

mutual guarantees: limiting the exposure of the owner and

company capital, and mutually guaranteeing the borrower

and the lender.

ii) Developing solutions of pre-guarantee links to consular

chambers networks (in Africa and in Europe) to facilitate a

quick validation of the entrepreneur’s financial projects,

with entrepreneurs being able to request a loan based on

this agreement-in-principle.

iii) Develop adapted investing structures that could lend from

few thousands Euros to 50 thousand Euros during the

creation, development or buyout phase.

iv) Creation of specialised crowd funding structures providing

financial knowledge and coaching through the advisors of

the consular chambers.

39

v) Creating national funds from public finances targeting

SMEs that would finance regional platforms of repayable

advances, under the initiative of and managed by the

consular chambers. In parallel, it is crucial to review the

funding application process as to make it more efficient,

fast and less expensive by: i) reducing the delays of

response from the banks to the enterprises; ii) favour a

closer request to the field; iii) improve the existing quoting

system of enterprises that would reflect the well-known

performance indicators (dashboard, backlog, exceptional

events).

Mr Ben White then presented ventureCapital4Africa, an online

community with 15,000 members from 159 countries, all

entrepreneurs and investors, focused on supporting SMEs

between 10,000 and 1 million euro. Mr White explained the

context and assumptions around which the Roundtable

agenda and discussion issues were developed and framed. The

presentation of the framework focused on trying to strengthen

and develop the financial ecosystem, in order to mitigate

some of the perceived risks that investors face when trying to

finance SMEs. Key areas where it was considered that

improvements could be wrought included: i) ways to unlock

local capital; ii) long-term currency funding (difficult to

achieve when international long-term debt financers are

unable to assume the currency or the interest rate risk);

iii) value chain development; iv) looking at fragile states,

specifically the steps to be taken so the private sector can

engage in African countries that are not yet on the

investor map.

Regarding supporting the ecosystem in which the SMEs are

operating, 4 areas were identified by Mr White as needing

attention: i) developing service provider (administrative, legal,

fiscal, marketing, organisations that are actually targeting to

provide services to SMEs; ii) specific associations looking to

take care of the rights and opportunities of SMEs, improving

credit bureaus and collateral insolvency regimes; iii) support

and training at sector levels, as well as with the regulators and

iv) investing in entrepreneurial-driven networks and other

platforms that are linking these entrepreneurs with both the

soft and the hard capital that they require.

The discussion was then opened to the Roundtable

participants, with each of the investors attending the

Roundtable providing their views, on what they considered

the main obstacles: i) reducing investment costs, ii) difficulty

of a specific geography or country, iii) securing local capital

co-financing, and iv) building up the value chain. During the

discussion the notion of impact investor was mentioned, and

though it was not part of the agenda, it was subject to a small

discussion comparing opinions, as there was a whole

discussion on the subject of having impact first and then the

financial return on the loan/investment. From the point of

view of the African entrepreneur the impact first becomes an

additional standard, on top of the criteria of making money,

which is thus unfair to the entrepreneurs. From the investors’

point of view, there are two levels related to this subject - a

theoretical and a practical level - but the bottom line is that

the private sector and the entrepreneurs need to run a

sustainable business that is able to pay employees at the end

of the month. From the point of view of an African incubator,

much is needed to bridge the gap between the different

existing financial supports. The discussion also confirmed the

point made at the beginning by Vincent Kouwenhoven,

namely that the entire phenomenon of venture capital still needs a lot of explaining.


2.3.

Roundtable Recommendations

The Roundtable discussion was able to draw 4 conclusions:

1. Investing in a grassroots effort, building networks from

the ground up that can develop local entrepreneurs over

time and that are the essential foundation for any kind of

investor premise (incubators and innovation centres).

2. Raise awareness and understanding of the phenomenon

of venture capital on the entrepreneur side (the

complexities of investment and the non-request of

reimbursements based on a fixed rate of interest, rather in

direct asset participation).

3. A better understanding on the type of support that is

need from the entrepreneurs, from a proof-of-concept

re-payable grant to growth capital.

4. Coaching of SMEs and coaching of local investors on what

SMEs are all about.

5. Related to the above, investors (either public or pension

funds) as well as entrepreneurs, need to be brought

together and be educated in the different requirements

of their financial environments. This can be facilitated

by business angels and the training can be done by

seasoned entrepreneurs. In order to finance this coaching,

it may be possible to have a directive that pension funds

should send 1% of their profit in capacitating themselves

to invest in SMEs.

The recommendations from the Roundtable presented to the Summit were as follows:

111 Risk systems to rate and build investor trust in Africa such as Fiduciary systems should be supported on a

technical and blended finance assistance basis by IFIs.

222 Skills development: IFIs in Europe and Africa should set up a ten year target to support the number of SMEs

working with EU business to process and become competitive low value manufacturers for both African and

Global markets.

333 The EU and African Private Sector in collaboration with IFIs should develop and implement vocational

training and apprenticeship programmes, partnering with European and African Academia.

444 Blended finance and PRI- programme related investments- should be supported as a partnership between

European and African businesses to initiate supplier development partnership and programmes, in order to

build an entrepreneurial eco-system and fast track the establishment of an entrepreneurial class across

Africa.

555 DFIs should support with venture capital and blended finance African project developers to redress the one

in ten PPIC private sector participation in infrastructure, currently the lowest in the world (60% in Europe)

with a specific goal of increasing it to excess of 40%.

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41

roundtable 3

inclusive models in Agri-food chains

Roundtable n° 3


Inclusive models in Agri-food chains

3.1.


The agri-food sector is highly important for Africa, as well as

Europe indeed. Agriculture is seen as the key focal sector. Many

countries have identified agriculture and food security as key

sectors for key development cooperation programs in Africa.

Sustainable and inclusive value chains are essential to ensure

food security, alleviate poverty, and generate economic growth.

This session was led by the chair Akinwumi Adesina, Minister

of Agriculture and Rural Development for the Federal Republic

of Nigeria, and the co-chairs Guy Stinglhamber, General

Delegate of COLEACP, and Jerzy Plewa, Director-General of

the European Commission’s Directorate-General for

Agriculture and Rural Development. This roundtable was

moderated by Akin Sawyerr, Executive Secretary of AFGEAN.

3.2.


The session started out with some contributions from

Roundtable participants. The Roundtable chair

Akinwumi Adesina highlighted the fact that while Africa’s

economy is growing, there is still a need for increased GDP

growth. To create a model of shared prosperity, agriculture

must be transformed by making the agriculture sector part of

the new wealth-creating economy. Agriculture in Africa has

long been treated as solely part of the development sector and

as a charity; this must change by creating widespread perception

of agriculture as a business and developing agriculture value

chains. Smallholder farmers must be the focus.

The Minister also provided some examples of what has been

done in Nigeria through the development of a growth

enhancement scheme with the introduction of electronic

wallets for farmers, which has helped unlock an instant

revolution by removing the middle-men. Ten critical areas of

focus were suggested as agriculture development actions,

including building strong farmer organizations, improving

standards and product handling, the creation of staple crop

processing zones, investment in critical infrastructure, support

growth of young agricultural entrepreneurs, reinforcing new

strategic partnerships and the empowerment of women

farmers. Mr. Jerzy Plewa, Director-General, European

Commission confirmed that the agri-business sector is of key

economic importance, and indicated he is prepared to extend

expertise in market management, research and innovation

and improving the quality of products. Guy Stinglhamber

from COLEACP further elaborated on Minister’s Adesina’s

earlier point that smallholder farmers must be the central

focus, and that this requires collaboration between the private

and public sectors.

Some practical examples and contributions were given by a

number of participants that echoed some of the challenges

and required actions mentioned during the discussion,

including one from INTERVEG Kenya which detailed the

financial, production and marketing challenges faced during

the start-up process by small scale outgrowers. A board

member from New Vision Agri emphasized the importance of

joint leadership and how to drive a wider agriculture focus

(linking it into the broader economy), with partnerships along

the value chain and leadership from the African government

at the core. From the Belgian company Durabilis, the main

message was that work and trade alone will not lead to

poverty reduction, and that the relationship with workers and

shareholders must also be re-examined. Durabilis’s business

model is about creating shared value through looking at the

main needs, which are access to capital and access to markets,

in combination with employee knowledge and empowerment.

Another positive real-life example came from Bio GSP in

terms of aligning projects with private sector investments.

43

The moderator then introduced 2 key questions into the

discussion:

Q1: How can small holder farmers be brought into the

value chain? Who can be the bridge between these

smallholder farmers and the larger players?

Roundtable Co-Chair Guy Stinglhamber highlighted that it is

imperative for smallholder growers to be recognized as equal

partners with the opportunity to scale up and raise their skill

levels. In order to ensure their best output, smallholder

growers must have confidence in institutions such as NGOs,

donors, associations, etc. Another point raised was that while

investment is necessary, it can have a potential negative

impact, both nationally and internationally, as environment

governance is often weak with small scale farmers, who are

not protected or organized. Therefore investors and

governments need to take people’s tenure rights into account

and safeguard them. Support in innovation, was presented by

the Lagos State Ministry of Agriculture, as an important area,

where the EU can assist African countries in terms of

developing and deploying innovative technologies that can be

adapted for inclusive growth in agriculture. The Commissioner

for Rural Technology and Agriculture added that a large

majority of small scale farmers are women, and should thus

be considered a priority by removing obstacles, which they

face and identify interventions to support them.

Two possible ways of bringing farmers into the value chains

were suggested by the CEO of Eastern Africa’s Farmer’s

Organization. This included focusing development aid on

farmer capacities to participate in value chains, or by allowing

and stimulating farmer participation in policy discussion at

regional and national level, as a way to institutionalize this

process. The representative of the mobile company Orange

highlighted the importance of the mobile phone industry in

providing connectivity to allow access to information and the

provision of services with added value (such as the Call Centre

in Mali). The Nigerian Ministry of Agriculture and Rural

Development emphasised the need for continued support for

the AU framework in order to mobilize political support. The

issues of governance, transparency and accountability were

also raised. Climate change is also expected to become a

significant problem and farmers need to be prepared to deal

with this. The Director of Kenya Horticultural Exporters

proposed that many bridges and capacities for trade and

participation in value chains already exist, and it therefore

ultimately comes down to harnessing the potential of

producers now and ensuring the sustainability of smallholder

farmers, so that business can continue. This requires access to

finance and infrastructure to keep the momentum that has

been created.

Q2: How can the private sector guarantee transparency to

the public sector and ensure fairness?

This question prompted input from several participants, with

contributions including the relevance of the platform’s

approach, the need to allow time for the learning journey to

happen, the use of commodity exchanges and the use of

technology (such as electronic wallets). For Orange, the

mobile phone is offered as an instrument of transparency

because of its traceability. UNIDO stressed that while inclusive

value chains and bringing together small holder farmers and

large scale corporate organizations is the best option, this

expansion faces coordination issues that in turn create a need

to strengthen links in the value chain. Development assistance

needs to address coordination failures, as these are typical in

low income countries. Furthermore, corporate and social

responsibility must be built up so that at each stage, issues

are dealt with as they arise. Investments need to be

transparent from the beginning so the community is aware of

what is going to take place.


3.3.


At the end of the session the moderator went around the

table requesting a short feedback from the participants on

what messages should be passed on to African and European

Heads of State and Government, on how to leverage the

private sector for inclusive and sustainable development.

The messages suggested from Roundtable participations

covered the following points:

a. Shared values are essential for sustainable and inclusive

value chains to ensure food security, alleviate poverty, and

generate economic growth. There is a need to re-think

relationships between stakeholders along supply chains.

b. The focus needs to be on smallholders, women and

young people as they are vulnerable players. This is to

include: (a) ensuring they are engaged in the process, and

(b) obtaining a fair distribution of benefits.

c. Related to the previous point, women have a central role

to play. They rarely default on loans; there could be a place

for affirmative action in micro-finance.

d. While there are significant opportunities for private sector

involvement, there is a need for leadership and effective

public private partnerships to realize these opportunities.

e. Roles should be adequately and effectively assigned and

taken on. Governments should set the policy environment;

businesses should do business! Transparency is crucial on

both sides to generate trust.

f. Finance is a crucial element. It should be catalytic,

relevant and affordable.

g. Support is needed to build local capacities, including

intermediary organizations, farmers’ organizations, local

services and skills.

h. Investment in Research & Development and Innovation

is critical, however this is too often neglected. There are

many success stories with potential for up-scaling, from

new approaches to out grower schemes, to the use of new

technology (mobile phones, e-wallets, RFID).

i. Infrastructure is crucial and new approaches are being

tried out to obtain economies of scale and maximize

impact (e.g. staple crop zones in Nigeria).

j. Land tenure is a major issue and rights are fragile. Private

sector investors must respect and recognize this;

governance & accountability are critical.

k. Climate change must be factored in and support is

needed to mitigate its effects & share risk.

l. Market access and mechanisms are needed to ensure

market demands are reasonable, proportionate, and viable

for smallholders.

The recommendations presented for this Roundtable to the Summit were as follows:

111 There is a real interest and need to unlock local financial sources, such as insurance funds and pension funds.

222 mportance of making large agri-business understand the importance and long-term value in bringing

smallholder agriculture actors into the value chain.

333 Where big business and/or government is investing in large-scale agriculture projects, how to ensure that

appropriate transparency and policies are in place to avoid risks such as resource diversion, disenfranchisement

of smallholders. Mechanisms/solutions that can be put in place to address this challenge include better

provision of data (e.g. electronic wallets for farmers to monitor distribution of subsidized fertiliser).

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roundtable 4

creating partnerships to bring e-schools to rural Africa: offering incubator-backed seed and early stage funding

Roundtable n° 4


Creating partnerships to bring e-schools to rural Africa: Offering incubator-backed seed and early stage funding

4.1.


E-learning is one of key development issues in Africa. Creating

partnerships to bring e-schools to Africa is still a challenge

especially in rural areas. Providing quality of education and

positive general school participation in this part of the world

are goals in Education and E-learning that are still to be realized.

This session was led by the chair Christine Leurquin, Vice

President of SES Global, and the two co-chairs Abdulkader

Bakhrani, CEO of Intersat, and Louis Onyang Otieno, Director,

Legal and Corporate Affairs – Africa Initiatives. A special

address was included as well, H.E. Erastus Mwencha, Deputy

Chairperson, AUC.

4.2.


The SES representative highlighted that there are still many

challenges related to education in Africa. Many of these challenges

still need to be addressed and resolved satisfactorily, to include

the assurance that high quality education is being provided to

every child in Africa. Furthermore, there is a need to decrease the

shockingly high rate of school dropouts and to increase school

involvement. As highlighted during the roundtable session,

E-learning potential not only helps to teach more students

(including in rural areas), but can also improve the level of

education as it can also be used to teach the teachers. The aim of

bring e-schools to rural Africa can be reached through a number of

initiatives, including massive investment in trainings, better and

innovative regulation and improved customs fees. There is also a

need to find ways to ensure sustainable solutions for education

and here African governments must be assisted in developing

their national education systems. An information management

system with different stakeholders must be developed, and a

digital agenda should be introduced to policy makers.

As highlighted by Louis Onyango, the priority for E-learning in

Rural Areas must be to educate young people, not only on

internet usage per se, but also internet usage for education. It is

important however to consider the immediate context and to

identify the reasons, which are at the root of the problem of low

IT penetration in schools. These include financial and development

barriers, commercial risks and lack of business models, and the

ever changing and evolving reality which is Africa. While

technology is changing, the issue is often not technology, but

rather policy. Therefore, the real need is to focus on and invest in

47

policy access. The impact that Microsoft projects in Africa are

seeking to achieve in multiple African countries – including Kenya,

Tanzania and South Africa – is improved connectivity first and

foremost, thereby establishing a link between people and

especially young people who are isolated in rural areas.

During the discussion, there was input from various

participants and observers, who noted that other factors play

into the problem of education in Africa in addition to the

challenge of low access levels. These include low salary levels

for teachers, inadequate or missing teaching materials such as

books, over-crowded school rooms (for example 200 pupils to

a single classroom) and lack of electricity. While there is a

need to improve connectivity, these issues, which in Europe

are considered to be basic necessities, must also be addressed

with equal importance.

4.3.


Sustainable solutions for education and especially E-learning

development in Africa should take into consideration all the

above-mentioned points, so, as to provide a complete and

sustainable solution to the problem of education.

Nevertheless, the recommendations and solutions identified

by the speakers and participants in the Roundtable about

E- Learning and E-schools in Africa and Rural Africa, are the

following:

1. Teach the teachers and Train the trainers: Give to the

teacher in the school a reason to use technology

(e.g. through a teacher training).

2. Intervene on policy and regulation such as taxes issues

and address the situation of imposed fees: In other

words, eliminate the regulatory situation for which fees

imposed by Local Authority and Governments are often

10 times the cost of services provided.

3. Involve relevant and different stakeholders.

4. Tailored Solutions: Tailor the solutions for each country

according to their needs and cultural context.

The recommendations as presented to the Summit were as follows:

111 Licensing and custom fees: Exempt E-schools/E-learning Connectivity equipment from licensing and

customs fees.

222 Create a pan-African programme: Define and fund a pan-African programme in the next 7 years to ease

and accelerate e-schools in all of Africa.

333 Create a favourable policy environment that encourages innovation and investment, including the

development of policies and regulations, that promote access to the internet, and help businesses and

enterprises develop relevant services that are sustainable and scalable over the longer term.

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49

roundtable 5

scaling up investments in renewable energy through incubator-backed investment funds

Roundtable n° 5


Scaling up investments in renewable energy through incubator-backed investment funds

5.1.


There is a huge market for renewable energy in Africa, and

while there has been much progress, energy is still a major

problem. There is a need to introduce innovative financial

solutions to address the obstacles that projects face, including

large start-up costs and effective risk management.

Roundtable 5 was chaired by Ian Cooke, Director of Carbon

Trust and co-chaired by Andrew Reicher, Chairman of

Berkeley Energy Africa. H.E. Aboubacar Baba Moussa, Director

of the Department of Infrastructure and Energy for the AU,

also delivered a special address at the Roundtable.

5.2.


Ian Cooke opened the Roundtable with a brief status report

on progress in the sustainable energy sector across the

African continent, also mentioning that the roundtable

focus would be on off-grid opportunities. The chair also

provided a global, opening question on the constraints and

opportunities for developing renewable energy, and what

the EU collaboration can do to help with these constraints.

The chair also highlighted the need to reflect on transposing

energy models and business models. H.E. Aboubacar Baba

Moussa delivered a short presentation providing the

audience with some facts on the status of energy in Africa.

He stressed the need to address the challenges in terms of

an access model for energy which can be done by working

together on the risks and obstacles, citing the GRMF

(Geothermal Risk Mitigation Facility) as an example of good

practice in moving forward through public-private

partnerships.

The co-chair was very efficient in providing the necessary

stimulus for an active dialogue amongst the participants,

while gently guiding the discussion towards the formulation

of recommendations, and the discussion benefited from the

first hand experiences from participants active in the sector. A

key initial point made was that the main challenge, many

sustainable energy stakeholders face is getting the product

out there and the problem of mandatory large up-front

financing. The co-chair stressed that there is a dire need for

innovative financial solutions, stressing the word

“innovative”, and this point was quickly backed up and

elaborated on with several real-life experiences from

individuals working on various renewable energy projects. A

comment was made on the need for a non-traditional

investor entity that can provide renewable energy

enterprises with funding for proof of concept. Another

Roundtable participant working on turning plant waste

material into something that can be used by industries and

locals in their homes, confirmed these challenges based on his

own experience. The CEO of Oyster Oil and Gas Limited

discussed critical issues in working on electrification of

mini-utilities within the Africa UN Energy Partnership.

The co-chair then oriented the discussion to considering

what could be done to improve the current situation? In

terms of possible solutions the Pan-African Sustainable

Energy Incubation Hub and Fund, was discussed as one

possible model for creating financing for the existing risk

gap that exists for projects across Africa, by facilitating

technical mentorship and rapid financial packages. Another

question asked was how entrepreneurs can access finance

for proof of concept. Input was provided from past experience

by the managing director of a bio gas company, working

through a reactor on a farm. He pointedly indicated how the

discussion should not only revolve around electricity, but

also around gas, as this is essential for the basic need of

cooking. He also mentioned a challenge he encountered,

51

namely that there are not enough reliable partners to

depend on, as the sector is still developing.

Another question was asked by the co-chair: What are

practical ways to get more renewable energy into the grid?

The Lake Turkana wind farm project was cited to highlight

that the financing challenge applies even to large projects

simply because this is high risk financing and there are only

few actors in this business. Other points made were that

i) when addressing the issues of conventional grid

electrification de-risking, is needed for large established

industries to procure innovation, and that ii) more emphasis

should be placed on research and development in order to

adequately manage and operate the system. iii) Possible

solutions proposed were the creation of a common co-

ordination point to interlink private sector projects with

various donors (suggested by the African secretariat for

Sustainable Bio-energy) and the creation by the EU, of a

facility to support the development of these projects to get

them to a bankable stage (suggested by the director of

Pragmaleaf Consulting) and on the use of subsidies (suggested

by the managing director of MunyaxEco for solar energy in

Rwanda) and (iv) by the vice-president of the chamber of

minds, on creating a power solution that works with both

on-grid and off-grid people.

Some additional freestanding comments were made. The

climate change advisor at COMESA made the point that

Africans need energy, and that things are happening with or

without outside support. They are looking for opportunities;

of course problems of renewable energy are not high up on

their list. The CEO of UPePower added that SMEs should

receive ample support from their governments in this sector,

as these SMEs are taking risks and trying to invest in new

technologies. Local integration is part of this, in encouraging a

local industry for these small businesses. A member of

Pragmaleaf Consulting brought up the subject of waste

management, which has been found to be a huge problem in

research conducted on behalf of COMESA, however this is

often overshadowed by the issue of electricity. Further, Oyster

Oil and Gas Limited shed light on the fact that as a market

actor, you often do not know who to talk to and what

development instruments you have at your disposal. There is

thus a need to reach out to partners and stakeholders. This

goes hand in hand with the need for more support in early

stage proof of concept, through new initiatives or existing

ones. The co-chair added that there is a need for guarantee

programmes, but while the first instinct is to look for new

initiatives, it may well prove more advantageous and more

effective to improve coordination of existing initiatives. There

are places to go for information, thus risks should be taken

through these existing initiatives. The special address closed

on this thought stating that now is the time to tackle the

electrification problem and jump on the sustainable energy

topic, through coordination and information sharing, with the

help of good policies, which by necessity includes the Regional

Economic Communities (RECs). The goal should be to achieve

a true partnership with true business collaboration between

Africa and Europe, resulting in a real win-win situation.


5.3.


The roundtable developed the following recommendations, targeted in particular on distributed

generation and the off-grid market:

111 There is a need for capital and for innovative financing of the sector because of the significant funding

gap for product and project development at the feasibility, proof of concept and seed funding stage.

Conventional funding sources do not have the risk appetite to fund early stage market development. Patient

capital is therefore required to nurture long term success in the market, and this requires the provision of

flexible funding to proactively incubate, adapt and demonstrate proof of concept, and pilot projects,

including “first loss” tranches and guarantees for funding structures, and provision of debt which will allow

rapid scale-up of the products and services most in demand from the market.

222 Additional technical and commercial assistance is required to develop, demonstrate and prove

concepts. Such assistance, including incubation support and technical assistance, is an important addition

to the provision of capital and this service can ultimately de-risk early stage business and project

development ahead of commercial investment.

333 There is a need for support collaboration and economies of scale in the market to further stimulate the

market, working with and complementing other public investment activities and programs.

444 Local solutions must be adapted, addressed and developed according to local opportunities.

555 The final recommendation is related to direct efforts towards broader sustainability issues, not just

renewable electricity generation and supply, because this is only part of the need and opportunity. Cooking

– along with related areas such as gas, solid and liquid fuel, waste treatment, agriculture, water supply and

treatment – are all related opportunities to be included.

ROU

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53

roundtable 6

icT for Agriculture: The digital springboard for inclusive agriculture

Roundtable n° 6


ICT for Agriculture: The digital springboard for inclusive agriculture

6.1.


The African Union (AU) has declared 2014 the year of

Agriculture and Food Security. Agriculture is a crucial sector

for Africa, not only because the African population will double

during the coming fifty years, but also because Africa cannot

properly develop if agriculture does not become a central

development focus. Moving African agriculture forward

requires leveraging the potential of ICT in agriculture,

increased focus on value chains, massive investment in

science, innovations and in technology, improved legislation

and better land administration, together with capacity

development of people working in the sector.

The Roundtable was chaired by Lucy Muchoki, CEO of

PanAAC, who along with Co-Chairs Walter H. Mayer, Founder

and CEO of PROGIS, and Rebecca Enonchong, Founder, CEO

of AppsTech, led the roundtable discussion.

Marie-Noëlle Koyara, Minister of Agriculture of Central

African Republic, H.E. Rhoda Peace Tumusiime, Commissioner

for Rural Economy and Agriculture at the African Union,

Said Omar Moussa, Honorary President, Chamber of

Commerce of Djibouti, Catherine Flouvat, CSR Manager

AMEA, France, also spoke during the session.

6.2.


Marie-Noëlle Koyara introduced the importance of the

agriculture sector for African countries, pointing out that one

of the main reasons underlying the current situation in the

Central African Republic (CAR), was an under-prioritisation of

agricultural development. The CAR’s crisis was not a religious

crisis but rather an extreme poverty crisis caused by significant

youth unemployment. This is what led young people to go to

the cities and enrol in the army. Africa cannot develop if

agriculture is not a central point of the debate. The theme is

that in order to develop agriculture the focus should be on

value chains. Only in this way can jobs be created for the

population.

Following this first speech H.E Mrs Rhoda Peace Tumusiime

pointed out that Africa is in need of a transformation

agenda, focusing on utilizing the potential of ICT for

agriculture. This transformation agenda is required in order to

bridge its demographic dividend in the agriculture sector and

to reach the maximum potential. This requires a shift in

thinking and an accelerated process of moving forward,

including large-scale investment in science, in innovations

and in technology, which can in turn develop local human

capital potential. All this cannot be realised unless ICT is

moving forward. Mobile finance innovations are revolutionizing

agriculture in many African countries, for example in Kenya

since 2009, where fair and sustainable advisory services have

increased motivation of young people in agriculture, who are

raising their social status by training others. Many tele-centres

can inform grassroots where the markets are for their

products. ICT, which has played a big role in improving land

administration, is particularly important for land management

information, without which it becomes difficult for banks to

offer credit.

Said Omar Moussa pointed out that in 50 years, the African

population will double, with the attendant need for the

private sector to make an impact on agriculture in Africa

and to improve its quality. ICT has to be used to both finance

and improve production in order to achieve a quantum leap

forward, while access to energy and improved transport is

essential (in contrast, the current situation often sees

expensive energy and transport exceeding production costs).

Another participant stressed that ICT needs to be effectively

used both at individual and at community level, and when

55

discussing the business of agriculture it is important to look at

three aspects in combination with each other: commodities,

finance and information. Within value chains, commodities

and finance flows are very important, but so are information

flows, and while commodity and finance flows are linear

information flows are non-linear. Equity in information access,

transfer and the ability to use information efficiently is

fundamental to promoting agriculture markets and in making

agriculture more inclusive. Beyond inclusive agriculture and

increased use of ICT, good legislation and policies are also

necessary. Capacity development is also an important issue,

as technology needs an environment to develop in, an

environment that supports technology in general, as well as

its entrepreneurs, which form the public policy part.

The Roundtable discussion also focussed on the catalysts for

supporting and promoting entrepreneurship in ICT for

agriculture, for example Facebook for agriculture is creating social networks as a business, much the same as the

agri-preneurs. There is a need for a platform for exchanging

between peers, a platform for sharing recipes and experience,

allowing for information flows that are peer to peer and not

only top down. These needs to be monetized as well, the goal

is to make money from this. Another way is through the use of incubators, as an example an incubator devoted to building

new technologies for agriculture has been launched in

Cameroon. For all this to work it must be sustainable but a

viable business does not mean that the farmer needs to pay

to use these services, as innovative solutions are required

regarding who is going to pay for new innovative solutions.

Another key point made regarding promoting ICT in

agriculture, was the importance that technology needs to be

integrated, because stakeholders need information to be able

to cooperate, and all stakeholders will benefit if indeed they

cooperate. Agriculture is a powerful tool that opens up may

possibilities, for example farmers could become part of

environmental management because they are a source of

information, and this information is needed for environmental

management. Another topic discussed was the issue of how

to make agriculture attractive or fashionable for Africa’s

youth, and here increase use of ICTs can help to make

agriculture look modern and ‘cool’.

Regarding what needs to be done at country level to increase

adoption of ICTs, the discussion addressed the low adoption

of productivity enhancing technologies. There are a lot of

research institutions in Africa, but adoption is low, and one need

is to make ICT adoption simpler for farmers. Moreover, there is

a need for ICT to facilitate the access to the market.

Agri-business incubators are training SMEs to be more effective,

and the ICT sector should work with these incubators, with ICT

experts as mentors and coaches for the training of

undergraduates in these incubators, to increase efficiency. As

per the Vodafone experience, key benefits of using ICTs for

smallholder farmers are the access to information to improve

productivity – for example in Turkey SMS and text-line has

helped farmers by informing them about the weather, crop

diseases, etc. ICT helps improve steps to commercialization.

However, ICT is not the solution for everything, and partnerships

with all parts of the value chain are very important.


6.3.

Roundtable Rationale Recommendations

The recommendation arising from this roundtable was

singular, however it comprised multiple aspects that were

discussed during the session. The focus must be set on

agricultural SMEs (advisory services and industry) to build

their capacity, through advisory and mentorship services,

using proven European ICT technology and international

certification standards. The objectives being to support food

security, traceability, to reduce costs, all based on

environmental standards, and support a guarantee fund for

unlocking local financing support for agro/SMEs from local

and international sources and work out PPP business models

including ROI concepts.

The recommendation presented for the Africa-EU Summit was as follows:

111 Focus must be set on agricultural SMEs (advisory services and industry) to build their capacity, through

advisory and mentorship services, using European proofed ICT technology and international certification

standards, to support food security, traceability, to reduce costs, all based on environmental standards and

support a guarantee fund to unlock local financing support for agro/SMEs from local and international

sources and work out PPP business models including ROI concepts.

ROU

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57

roundtable 7

infrastructure and construction: private sector investment and participation in Transport corridor: Using innovative project delivery mechanisms for Economic and social development

Roundtable n° 7


Infrastructure and construction: Private Sector Investment and Participation in Transport Corridor: Using innovative project delivery mechanisms for Economic and Social Development

7.1.


The African Union (AU) and European Union (EU) share a

common vision for an effective transport infrastructure

network across the African continent, as a prerequisite for

inclusive growth and sustainable development. For African

countries to benefit from the increasingly global economy, an

adequate transport network must be in place to provide

essential and efficient physical access. Over time, Africa’s

transport infrastructure has to grow in line with production

and its changing requirements. The “Priority Action Plan 2020”

(PAP) of the Programme for Infrastructure Development in

Africa (PIDA) aims at enhancing Africa’s inter-regional

connectivity among the major cities, corridor modernisation,

as well as the improvement of the continent’s port, railway

and air transport systems. This Plan has identified 24 priority

transport infrastructure projects worth 25 billion €.

The Roundtable was chaired by Charles Kahuthu, CEO and

Regional Coordinator of the East Africa Chamber of

Commerce, Industry and Agriculture, and Co-Chair,

Hervé Ronot, Deputy-Director General of SOGEA-SATOM,

were keen in their choice of Frank Kehlenbach, Director of

European International Contractors E.V., as a moderator for

their session. Special addresses were given by

Roberto Ridolfi, Director of DG DEVCO, EC, and

Aboubacar Baba Moussa, Director of the AUC. Presentations

were given by Vincent Ladougne, Business Development

Director of DTP-BOUYGUES, Christian Combes, Director of

Development Big International of Eiffage Travaux Publics,

Aboubacar Omar Hadi, Chairman of Djibouti Ports and Free

Zone Authority, Silvester Kasuku, Director General of

LAPSSET and Paulo Ciccarelli, Head of Unit of DEVCO C5,

EC. Michel Démarre, President of the European International

Contractors, also spoke during the session.

7.2.


Mr. Kahuthu introduced the Roundtable topic, pointing out

that one of the main reasons that African regions are being

held back is because of lack of infrastructure. The potential for

PPPs in Africa has still to be fully exploited and this despite the

fact that it could be used where finding funding proves to be

a major challenge. PPP usage is being held back by lack of

institutional capacity, as well as inadequate legislative

frameworks, although there is increasing implementation of

PPP legislation in African countries. For Mr Kahuthu, these

constraints needs to be addressed and Governments should

also consider putting in place the necessary infrastructure, as

well as an attractive fiscal regime to ease the cost of doing

business. Furthermore, transport corridors – these important

corridors that allow traffic and trade across borders, allowing

land-locked countries access to sea ports, need to be

modernised. This is crucial for regional economic development

in view of its many multiplier effects. Transport costs are also

huge, contributing to the need to import many products into

Africa. As public funds alone cannot meet the infrastructure

needs, PPPs are the future and will become an integral part of

the future infrastructure development dialogue. Regional

trade officials and the private sector should be in dialogue

with policy makers to drive this forward.

After a brief introduction to Sogea-Satom, the co-chair from

the Union of French Contractors, made the case for the

European International Contractors (EIC) that large European

contractors can help in both constructing and financing

infrastructure projects. 24 Large transport projects have been

identified in Africa under the PIDA Priority Action Plan, to be

implemented by 2020. Securing funding is the main issue

here, and due to the shortage of public funds, governments

are turning to the private sector. Key options worth exploring

are the application of DB (design-build) or DBO (design-

59

build-operate) as methods of contracting and implementation.

This approach is welcomed by the EAC, as this offers the

potential to attract the private sector and would contribute

to enhanced procurement efficiency. There are some

constraints however, including (i) inadequate legislation,

(ii) insufficient demand (i.e. below the level required to

generate large revenues), and (iii) a local financial market that

is too small to provide the necessary funding.

Furthermore, there are prerequisites for setting up successful

PPPs (and DB and DBO projects), including realistic risk

assessment by the owner and the contractor. EIC emphasizes

that DB and DBO are much more complex projects to

implement than traditional infrastructure projects, and

contractors also need to be present onsite, otherwise

efficiency may be compromised. Another Roundtable

participant emphasised key preconditions, namely the need

for the projects to be of sufficient size and generate sufficient

cash flows; PPPs need to be prepared by competent engineers,

economists and lawyers; and a PPP must allocate the right risk

to the right partner. Further, the affordability of the beneficiary

country to pay back loans received would need to be analysed.

Affordability for the country borrowing is important to

consider and needs to be taken into account. For its part, the

EC is ready to partner with European level banks to set up

equity structures with loans in order for projects to become

viable.

Aboubacar Baba Moussa, Director of the Department of

Infrastructure and Energy of the AUC, recalled the PIDA-PAP

of 24 transport priority interventions along major African

transport corridors. While Africa has many railways, few capital

cities are connected. The trend should now move to “smart”

corridors, which need both input and support from the public

sector.. Mr Moussa urged the private sector to take stock of

the magnitude of this market, in particular in the light of the

promising development prospects for Africa, for which steady

annual economic growth is anticipated over the next

20 years, with the corresponding expected large growth in

demand, in particular in port services. Djibouti is a good

example of such needs.

Following these introductory speeches, a series of power

point presentations followed, highlighting investment

pitches for potential projects as well as the presentation of

successfully completed projects. The chair started with the

presentation and call for investment on the part of the Kenya

Airport Authority (KAA), which is in charge of all public

airports in Kenya, and in particular Jomo Kenyatta International

Airport (JKIA) in Nairobi. Its development programme is part

of Kenya’s long-term development blueprint (Vision 2030)

which has defined a number of flagship projects that are

being implemented. The aim is make JKIA, the largest airport

in all of Africa. Other investments are also being planned at

Mombasa Moi International Airport and at Kisumu Airport.

The director of the EIC presented the following power point

based on the Bouygues construction experience, which is a

world leader in PPP projects and is currently active in

80 countries, of which 20 are in Africa. PPP projects are driven

by the construction phase, with sometimes part of the

operation or maintenance included. The director referred to

the example of France, where infrastructures are being built

under the PPP concept; the public owner assumes the public

service responsibility and transfers those responsibilities,

which can be delegated to the private contractor. The cost of

construction is borne by the annual operating allocation and

spread over a period of 25 to 35 years. BOT (build-operate-

transfer) schemes in land transport projects have all a specific

risk allocation and they require financial support from the

promoter, as they are not financially viable. Ports infrastructure

is difficult to finance under a PPP scheme because it has a

very long life-span, thus PPPs are usually limited to port

superstructure. General key benefits from PPPs are that they

ease the delivery of infrastructure investments and require

less project management resources to be developed

by the state.

A further presentation came from the Eiffage Travaux Publics,

which presented its toll road project Dakar-Diamniadio in

Senegal. The legal structure comprised a special project

company (private company responsible for construction,

operation and financing) – SENAC – with two subsidiaries: a


construction company and an operating company. The risks

were carefully distributed between the owner, the special

project company (vehicle) and the construction company.

Prior to the toll road’s opening, a large-scale communications

campaign explained the benefit of the Dakar-Diamniadio

road to the users, so that they could understand and accept

the toll rate. A presentation then followed from the Chairman

of Djibouti Ports and Free Zone Authority. The port of Djibouti

is currently the only port serving landlocked Ethiopia, but it

has an ambitious development plan to cover several port

facilities spread along the Djibouti coast, as well as

improvements to two railways providing land access to the

port facilities. Developments are financed with the help of

BRICS and US companies.

A presentation of the LAPSSET Corridor Project followed next

by the director of LAPSSET. This is the first, game-changing,

infrastructure project that the Government of Kenya has

initiated and prepared without external assistance, under the

Kenya Vision 2030 Strategy Framework. The project is linking

the west coast to the east coast for trade by train and/or road,

with a view to strengthening Kenya’s position as a gateway

and a transport and logistics hub to the East African

sub-region and the Great Lakes region, thereby promoting

regional economic integration and interconnectivity between

African countries. The project will interlink with other related

services, such as water supply, power supply, etc.

The Roundtable also hosted a presentation on the summary

of the conclusions from the EC (DG DEVCO) DB/DBO

workshop, held prior to the roundtable. These conclusions

included:

i) A general interest of all participants to broaden the type of

EC-supported interventions in ACP countries by considering

DB/DBO approaches as a complement to traditional

project tendering.

ii) There are overall gains to be achieved compared to

traditional DBB (Design-Bid-Build) approach.

iii) Project preparation by CA (Contracting Authority) is more

sophisticated with DBs and DBOs;There is an overall

agreement that DB/DBO procedures have to be

implemented progressively, taking into account the type

of projects and the countries where this would be initiated.

iv) There are some challenges linked to long-term contractual

obligations for DBO contracts; and

v) There must be clear-cut roles and responsibilities between

contractors and CA to be defined at the onset of the

project.

The EIC representative stated that DB/DBO is needed for

various types of projects, for example when the client wants

to avoid having to deal with the (often difficult) interface

between the designer and builder. DB also provides higher

certainty of final construction cost. An additional advantage

of DB is that the earlier involvement of the contractor

reduces overall project implementation time. DBO provides

a mechanism through which, operation and maintenance of

a facility is properly carried out. Finally, there is a

learning-by-doing improvement process, and a mechanism

should be put in place to take stock of experience both at

country and EC levels.

7.3.


Africa needs to engage in more regulatory reforms and capacity

building to create attractive environments for investments and

for private sector participation, and to safeguard investments

from a sustainability perspective. There is a new focus on

projects of regional dimension and no longer on national

projects. Transfer of competence and technology is becoming

a key element of success, and this goes beyond simple

capacity building. The EC is ready to fill the financial gap by

providing subsidies to make a project viable.

The recommendations following this roundtable were twofold; they are the following:

111 PPP is seen as an option to finance infrastructure in Africa under certain preconditions such as economic

viability, proper risk allocation and professional preparation. And

222 EU and Africa partners agreed that ‘Design & Build and Design, Build & Operate’ are complementary to

traditional procurement methods for enhancing implementation efficiency, quality and value for money

for large infrastructure project financing.ROU

ND

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61

roundtable 8

raw materials and governance: managing natural resources for inclusive development in Africa


Roundtable n° 8

Raw materials and governance: Managing natural resources for inclusive development in Africa

8.1.


Natural resources and raw materials present huge

development opportunities for Africa. Through cooperation

between the EU and AU, this potential can be unleashed.

Further, public-private partnerships are also vital to help along

Africa’s structural transformation, as well as to improve the

high level of geological knowledge and extensive skill set

required in this sector.

Roundtable 8 on Raw Material and Governance was held in

the afternoon of day 2 of the forum. The chair’s role was

fulfilled by Luca Demichelli, Secretary General of

EuroGeoSurveys, while the co-chair positions were filled by

René van Sloten, BUSINESSEUROPE Chairman, and

Richard Morgan, International Government Relations Advisor

for Anglo American. Several special addresses were received,

namely from Karel De Gucht, Commissioner for Trade for the

European Commission, Fatima Acyl, Commissioner for Trade

and Industry for the African Union Commission and Gabi

Schneider, president of the Geological Survey for Namibia

8.2.


Luca Demichelli opened the Roundtable by briefly introducing

the topic of raw materials and mining, recalling the EU

conference on raw materials in January 2012. He then

highlighted the actions that were to be given priority, to

include facilitating exploration of mineral resources in Africa,

incorporation between European and African geological

surveys and capacity building to enhance environmental

mining management. He also mentioned the recommendations

that were agreed upon at the conference, which were the

further development of the organization of African geological

surveys, capacity building and the development of a

comprehensive African geological knowledge base. Investing

in Africa requires a focus on demographics, resources and

governance.

The EU Commissioner for Trade presented on natural resources

investment and existing potential. Natural resource

governance is absolutely necessary if opportunities are to be

maximised. He confirmed the EU support in achieving this

objective through the power of its single market and through

the proposal of the integrated EU approach. The latter includes

responsible resourcing of minerals in high-risk areas, through

inter alia a system of self-certification, multiple incentives

and an annual list of companies who work sustainably.

Through a scheme that works at the entry point into the EU

minerals supply chain, the EU is operating in line with the

African mining vision. The African mining vision indeed focuses

on improving prospects for the artisanal mining sector, hence

supporting the protection of small scale mining, which is an

important source of income and employment. The EU wants

to contribute to preserving and developing livelihoods

through artisanal mining. Moreover it is also EU’s objective to

create incentives for the purchase from organizations that

work in conflict areas, where the rate of artisanal

mining is high.

The third presentation, given by Fatima Acyl, AU Commissioner

for Trade and Development, stressed the importance of

estbalishing, an appropriate partnership and dialogue between

the public sector and private sector, to manage resources for

Africa’s development and structural transformation. While

there has been economic growth over the past 10 years, it is

still not adequate for Africa’s continued development, as the

continent requires a higher growth rate for structural

transformation. For the Commissioner, Africa will continue to

face an uphill task for structural transformation, where

large-scale investment is needed and where risks remain.

63

The effective collaboration between the public and the private

sectors on skills development, local content policies,

environment protection and infrastructure (amongst others)

is therefore even more relevant. Commissioner Acyl also

advocated moving from a cycle of commodities and

dependency to a situation, where African economies is based

on a diversified industrial base and innovation.

Commissioner Acyl’s presentation was followed by a

presentation from Richard Morgan, International Government

Relations Advisor at Anglo American. The presentation analysed

the opportunities and challenges of collaboration, for the AU,

EU and the mining sector. It also looked at the development

impact and identification of the overall development footprint.

BUSINESSEUROPE’s Chairman René van Sloten reiterated the

significant untapped potential within the sector to contribute

to Africa’s sustainable and inclusive development and growth.

However he emphasised the role of improved governance as an

imperative to realising this potential, and where the contribution

of both the private sector and public sector, is vital. Raw

materials will continue to play a role in the continent’s

development, and the focus should increasingly be on the

further development of the processing of these resources.

Gabi Schneider, president of the Geological Survey for

Namibia, followed with a speech , wherein she emphasised

the importance for the exploitation of African minerals to be

done in a way that ensures sustainable growth and socio-

economic development, including participation in the value

addition chain and the development of local industries that

will last. Ms Schneider stressed the importance of sharing

information with those who are willing to invest in the sector,

in order that raw materials can be translated into real

development. In this regard, the geological surveys have an

important role to play in providing adequate information to

investors (including digital map production, historical archives,

high resolution surveys, etc.). However, many geological

survey actors lack the capacity to provide this information, as

confirmed by a gap analysis that was conducted by the

Organisation of African Geological Survey (OAGS) and its

partners. The OAGS is attempting to bring African countries

to the same level to bridge this capacity gap, as part of a

wider response to ensuring that African Geological Surveys

can meet the real geological challenges that Africa faces.

During the ensuing Roundtable discussion, a key question was

put to the Roundtable was “What is the role of the AU in the

coordination, gathering and dissemination of geological

data across Africa? Should for example good geological

data be chargeable or free?” The Secretary General of

EuroGeoSurveys and the president of Geological Surveys

Namibia both confirmed that geological knowledge is legally

mandated and that ownership of (African) data rests with the

respective African countries. AU Commissioner Acyl noted

that the importance of geological surveys and that the control

of this information is very sensitive. The issue of the

chargeability of information was discussed, with pros and

cons for both approaches. Other Roundtable contributions

emphasised also the importance of cooperation between the

African and the European Geological Surveys.

A number of Roundtable participants commented on the

need to address local African capacity and indigenous

populations in mining areas and in the industrialisation

process. One European stakeholder form the diamond

industry reiterated that the diamond business strives for

inclusive development in Africa since the creation of the

Kimberley Process Certification Scheme in 2000.

AU Commissioner Acyl emphasised the importance that

within the AU-EU partnership, the EU Raw Material Initiative

cannot contradict the AU’s regional integration. Regarding

African industrialisation, BUSINESSERUOPE’s Chairman

René van Sloten emphasised the advantages of the

development of a single market, not least in helping guide

further investment into the sector. A member of the African

Minerals Development Centre pointed out to the need for a

long term strategy and that within the African mining vision,

developed by heads of state, country-specific visions and

national development goals, also need to be looked at.

In her concluding remark, the AU Commissioner reiterated

vigorously some points that were highlighted and repeated

throughout the discussion. This included her stance on the


The recommendations from this roundtable were thus twofold. These were consolidated as:

111 Environmental protection and local population consultation should always be part of all processes; a good

policy framework is needed to attract investment; geological knowledge and information should be

increased, including strengthening Geological Surveys capacity and geological cooperation; policies

promoting skills development and business education in the sector should be developed; and participation

in the local value chain should be ensured.

222 Public-private partnerships should be facilitated to ensure that resources are sustainably exploited. Both the

public and private sectors should partner together and not be in conflict with each other, for instance in the

case of infrastructure development.

need for an equal partnership that allows for discussion. She

also raised the importance of peace to achieve stability, to

achieve development. Finally, she stressed on the need for the

AU to be involved in data and geological surveys; likewise

discussions thereon need to include the AU minister. The chair

added that information capacity remains a key component in

this discussion.


The overall discussion focussed around the importance of

information in all areas, including geological knowledge,

information on trade, education and business schools

development, ownership of data, information access, access to

data and related pricing policies. Geological cooperation is

considered, as one of the most important and urgent needs to

understand the mineral resources potential of the African

continent and learn how to sustainably develop it. It is also

considered that more precise and comprehensive geological

information will foster businesses and development

opportunities, and will enable African nations to take informed

decisions. The Organisation of African Geological Surveys

(OAGS) has been identified as the body, which is best suited

to coordinate common actions and synergies of individual

African Geological Surveys, and to propose solutions and

actions for improving African countries’ capacity in developing

and controlling geological information. However, as

emphasized above, decision on this issue should be taken at

African Union level. Particular importance was also paid to the

development of the artisanal and small-scale mining,

especially with respect to the issue of conflict minerals.

Education and development of skills, at both university and

business schools level, are considered key assets, requiring

coordination at continental level. Public-private partnerships

should be facilitated to ensure that resources are sustainably

exploited. Finally all agreed that Africa needs a structural

transformation that requires time (although it is long overdue)

and the establishment of long-term integrated strategies.

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roundtable 9

promoting Growth, innovation and Access to healthcare and pharmaceuticals through EU-Africa Business cooperation, including local production of Generic medicines in Africa


Roundtable n° 9

Promoting Growth, Innovation and Access to Healthcare and Pharmaceuticals through EU-Africa Business Cooperation, Including Local Production of Generic Medicines in Africa

9.1.


While the health system structure in African countries is

progressing, a key issue is how the population can have access

to quality medicines. One valuable way to address the

challenges in Africa is to focus on capacity, regulatory, local

production, and local health care.

The session was led by Greg Perry, Executive Director of the

Medicines Patent Pool, who acted as Roundtable Chair. The co-

chairs were Dr. Francois Bompart, Vice-President of European

federation of Pharmaceutical Industries and Associations

(EFPIA), and Nick Haggar, President of European Generic

Medicines Association (EGA). The special address was Nazeem

Mohamed, CEO, Kampala Pharmaceutical Industries Ltd.

9.2.


The UNIDO representative noted that while there has been

progress during recent years, for example with regard to

tackling HIV and malaria, the same progress still needs to be

made for all Africa and for Africa’s rapidly increasing population

in the longer run.

There are currently 4 main arguments to support local

production:

1. Medicines produced in close proximity to patients should

make regulatory oversight and quality insurance more

effective.

2. Locally produced drugs may exclude the possibility of

stock-outs and favourably impact the continuity of supply.

Medicine procurement entities would draw on sources

that are nearby if they existed.

3. A local production base of medicines on the African

continent could help prepare for the dwindling funding for

international medicines purchase. The decrease in present

ODA spending means that the era of donation is unlikely

to last forever.

4. Economic contributions, such as job creation, are to be

expected from such a new industry.

The co-chair introduced the issues related to quality

regulation and product safety. The co-founder of LaGray

stepped in and pointed out that there are limitations within

the pharmaceutical system, and the lack of official mutual

recognition of agreements to normalize collaboration

arrangements. Human capacity is also a big problem, allowing

opportunities for fake and counterfeit medicines to be

produced. This is not only bad for people’s health, but also

contributes to drug resistance, deepens corruption, and puts

money in the hands of criminals, and leads to unfair prices on

the market. The goal should be that the industry is working

within the current pharmaceutical action plan guidelines,

providing quality medicines and safe medicines, to improve

regulatory systems and to improve harmony of regulations.

To ensure the quality of drugs, manufacturers and regulators

have the obligation to work together (the manufacturer is

involved during the drug registration stage but the regulator

also oversees this stage) to ensure pharmaceutical vigilance

throughout the process. One challenge is that African

manufacturers are not rewarded for quality, which is a bigger

concern in the context where their drugs face stiff competition,

in particular from fake and counterfeit medicine. The problem

of rewarding quality was emphasised by another panel

participant, who commented that the lack of an appropriate

market for quality products is a big challenge. This is

particularly demotivating for those manufacturers who have

come up with quality products, as governments tend to go

and buy the cheapest priced drugs. Tackling this issue will also

require a change in culture and mind-set on the part of

67

government, placing quality as an objective. Market

surveillance is thus essential to improve the monitoring of

sub-standard false counterfeit medicines. African regulatory

systems have managed to make progress in certain areas, but

there is a need to focus on the weaknesses of regulatory

systems and there is equally a need to learn from mistakes

made in other regions.

This process requires an organization that looks at

harmonization, and this is where the AU-EU partnership could

be especially beneficial, by promoting standardization with

international regulations. Regarding harmonisation of

standards, the AUC’s pharmaceutical coordinator highlighted

that harmonization of medicines through the Regional

Economic Communities has been a priority. One example is a

harmonization initiative, launched in the 5 member countries

of the East African Community, with technical support from the

WHO, and which has already started showing good results.

Moreover, there has been emphasis on making regulatory

procedures more efficient and effective - the guidelines have

already been agreed upon by stakeholders of the region, and are

subsequently used as a basis for application for registration.

The Roundtable then turned its attention to the health

system structure. A panel participant from the University of

Yaoundé stressed health systems are complex and comprise a

mixed set of objectives, including health insurance, health

care, health equity, equitable income and health financing.

The current health situation in Africa excludes the majority of

citizens and has left the poor behind, and this needs to change.

Africa needs to be accompanied on this path because good

health relies in part on good economics, as well as good

policies. Public private partnership has a crucial role to play in

good health systems, therefore leading to the need to

optimize how the PPPs actually work. Increased EU-Africa

collaboration is critical on universal health coverage, alongside

those countries that mobilize resources and create an EU-

Africa discussion forum. Developing some investment policies

to create investment funds that boost this area of regulation

and quality via the private sector, is something that needs to

be encouraged. Another comment concluded that countries

must elevate themselves and grow to collection systems that

are adapted to health. One pharma industry stakeholder

observed that Africa has been shaped by the HIV Aids epidemic

but this is now changing and there is a need to go beyond a

single disease toward the structured investment and strategic

blueprint that over time will lead to sustainable health care

system as an economic driver. There are also immediate

health care priorities, around capacity and delivery of

unidentified diseases. In terms of middle and long term

planning, it is important to think about health care driving

growth, not just in terms of alleviating poverty related

diseases, but also in terms of creating a thriving and self-

sustaining industry.

The third topic discussed was collaborative efforts to

increase local production. Local manufacturing of

pharmaceuticals is the third highest priority within Africa,

after agriculture and mining. Africa today is heavily reliant in

imports and in order to reduce this overseas reliance, a

number of government policies need to be created so as to

establish a level playing field for production. There are also

significant needs for more technology transfer and to shift to

newer products, but for this, support is required from Europe.

More information is also needed in terms of the market size,

as almost no data exists, and this is important for prospective

investors who will want to know the market size and its

dynamics. Partnering, as mentioned, is important to improve

the regulatory process in Africa, so as to strengthen local

knowledge, and eventually to transfer more technology to

Africa. But partnering in terms of pooling together our efforts,

can lead to more countries and companies having greater

access to key drugs. There is also a political dimension that

goes into local manufacturing, and collaborative efforts to

increase local production, can be progressed through EU

support to the AU to actively encourage the business plan of

the pharmaceutical manufacturing plan for Africa, including

financing and facilitating business linkages – a non-exhaustive

list of such linkages includes for example joint ventures, tech

transfers, and voluntary licencing. The EU and the AU need to


The following recommendations were presented to the EU-Africa Summit:

111 AU – EU political commitment at the Summit to take immediate action in coordination with the WHO to

ban substandard medicines causing health risks:

a. Setting up rigorous product quality testing, pharmaco-vigilance systems and regional bioequivalence

centres;

b. Implementation of the African Medicines Regulatory Harmonization program (AMRH) and

establishment of the African Medicines Regulatory Agency (AMA).

Immediate political commitment is needed from country health authorities to agree on necessary resources

on national, regional or pan-African level.

222 All governments criminalizing counterfeiting of medicines, by e.g. implementing national and regional laws

and signing the MEDICRIME Convention.*

333 Increase EU-African collaboration on universal health coverage alongside those countries that mobilized

resources towards the Abuja commitment of 15% of her national budget for health.

444 Create a Europe-Africa discussion forum for the understanding of the 3 dimensions of Health Systems:

Building Blocks, Health Programs and Performance Drivers.

555 Develop sound national and regional investment policies and create Infrastructure Investment Fund that

boosts local private sector participation in infrastructure delivery, and promotes PPP in this area.

666 European Union to support the African Union to actively encourage the Business Plan of the Pharmaceutical

Manufacturing Plan for Africa (PMPA BP), including financing and facilitating business linkages (e.g. joint

ventures, technology transfers, voluntary licensing and patent pooling).

777 EU and African Union to support countries in developing reliable demand forecasting models of key drugs

and vaccines, that will drive economies of scale and market size necessary for local production.

* See: http://www.coe.int/t/DGHL/StandardSetting/MediCrime/Default_en.asp

collaborate to support African countries and develop reliable

demand, forecasting models of key drugs and vaccines, that

will drive African economies and over time, create the market

scale size necessary for local production.


This roundtable closed with 3 recommendations, which were

as follows:

1. Increasing the EU Africa collaboration on universal health

coverage alongside those countries that mobilize a financial

commitment of 15% of their national budget line.

2. Creating a Europe Africa business forum for the

understanding of the 3 dimensions of the health systems,

namely building blocks, health programs, and performance

drivers.

3. Developing sound national and regional investment

policies and creating an investment fund that boosts local

private sector participation in infrastructure delivery and

promotes public private partnerships in this area.

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roundtable 10

social entrepreneurship


Roundtable n° 10

Social entrepreneurship

10.1.


Societal issues (migration of millions of people from one

country to another, urban population, job creation and youth

employment, health issues, ethical production and

consumption, ecological issues etc.) are challenging for the

public authorities and businesses. But they are also source of

innovation as they push entrepreneurs to develop new

concepts by tapping into the unmet societal needs and acting

in an entrepreneurial manner and through new collaboration

models.

Roundtable 10 was chaired by Mr Bill Carter, Vice-President

for Africa at Ashoka, with the two co-chairs being

Mr Karim Sy, Founder of Jokko Labs, and Mr Bright Simons,

President of mPedigree Network.

10.2.


Key issues relevant to unlocking Africa are potential of social

entrepreneurship were addressed by the Roundtable. These

issues included:

a. Who are “Social Entrepreneurs” and what their distinctive

features are?

b. What are the current trends related to Africa and how has

social entrepreneurship evolved over the last few years?

c. Practical examples highlighting successes of social

enterprises and solutions they are bringing through

applying new technologies, focusing on human capital,

creating collaboration models with businesses etc.

d. Businesses and how they get involved in solving social

issues.

e. Existing support structures and the major barriers for

development of social entrepreneurship in Africa.

A wide range of possible actions that could promote increased

awareness and uptake of social entrepreneurship were

discussed:

a. Create a Social Entrepreneurs Working Group consisting

of the most successful, reputable and ethical social

entrepreneurs in the world, to provide advice to the EU

Commissioners and Heads of Members States, on ways to

foster creative and practical citizen led solutions to social

problems. This should involve practitioners (social

entrepreneurs), who might be appointed for the fixed-term

non-renewable advisor appointments.

b. Develop common infrastructure for the creation of an

EU-Africa network of incubators/ accelerators focused on

social enterprises. (This might for example ensure creation

of a network embedding some 20-25 existing incubators/

accelerators, encouraging them to cooperate to build

common tools; methodologies and encourage cooperation

and peer-to–peer learning.) Initiatives to be embedded

inside secondary and tertiary institutions across Africa and

the EU. This could be an opportunity to exploit and transfer

the experience and expertise of incubators of the European

Union that have managed to develop new social economy

structures and new business models for social enterprises

in the transformation period from state controlled

economies to social market economies.

c. Feasibility study on the highest-impact ideas that social

entrepreneurship can tackle and supporting their scaling.

This can be done based on “Change Nations” event, that

took place in Ireland bringing social entrepreneurs from

variety of areas and linking them to the investors. Europe-

Africa “Change Nations”, by bringing together social

entrepreneurs from Africa and Europe, would offer solutions

across the entire range of countries to interested investors

71

- from South Africa in the south to Sweden in the north and

include the countries of Eastern Europe.

d. Creation of funds: Three specific types of fund creation

were discussed:

i. Matching fund for accelerating investments for social

entrepreneurs working across the EU-Africa.

ii. Seed Social Impact fund especially focused on provision

of initial investment / grants for prototyping for social

entrepreneurs.

iii. Small farmer carbon fund for awards in respect of

carbon sequestration by creating value chains that

create sustainable ways of enhancing organic content

of soil.

e. Creation of an on-line portal collecting data on social

enterprises across Africa (similar to Social Innovation Europe:

https://webgate.ec.europa.eu/socialinnovationeurope/

home), where it would be possible for investors and social

entrepreneurs or individuals interested in the subject to

identify interesting examples.

The roundtable closed with a series of recommendations, which were also presented to the EU-African

Summit:

111 Develop a structural collaboration between the EU and African social enterprises, through a number of

measures, which might include among others: development of a Working Group on the subject

(involving social enterprises and their networks on both continents), development of pan-continental

collaboration networks of incubators/excellence centres to exchange experience, on-line platforms to share

data and knowledge.

222 Accelerate the creation of a social enterprise Incubator/Propellor Network across Europe and Africa, and run

a competition to choose the first 25 Incubator/Propellor Initiatives to be embedded inside secondary and

tertiary institutions across the EU and Africa.

333 Create a 100 million Euro fund that targets African small farmers for awards for carbon sequestration by

creating value chains that create sustainable ways of enhancing organic content of soil.

444 Funding mechanisms to ensure start-up and scaling-up of social enterprises are still to be analysed and

promoted; this includes among others: social impact investment, crowd funding, involving diaspora etc.


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roundtable 11

risk management


Roundtable n° 11

Risk management

11.1.


Roundtable 11, entitled Risk Management, included a chair

and two co-chairs, these were Jean-Christophe Laloux,

Director General Operations at the European Investment

Bank (EIB), George Otieno, CEO of African Trade Insurance

(ATI) and Kevin Kariuki, Head of Infrastructure and Industrial

Promotion Services (IPS).

Risk assessment is an essential part in any project and is at

the centre of investors’ preoccupations. It requires the support

of governments, but the private sector also has a role to play.

Adequate risk allocation to capable parties is another

challenge to face when discussing risk.

11.2.


The chair commenced the session by highlighting the need

for risk allocation to allow a project to move forward. However,

in reality, very often it is difficult to find cooperating parties

and this has stark consequences. Projects do not go forward at

all or they become very expensive. Several opening key

questions were asked: Is risk mitigation the missing link for

investment in Africa? What should the public sector do?

Where should the risks be mitigated? The chair followed

then by elaborating on the EIB, which is the world’s largest

multilateral financing institution, and not strictly a

development bank. The EIB is eager to continue developing

assistance to bring about bankable projects. The co-chair then

took the floor by emphasizing that investors need to know

that their money is not at risk. Aside from risks, there are legal

issues as well as the initial cost of investment. If you must

mitigate the risks it becomes more expensive. ATI is the

highest rated insurer in Africa and has many partners, among

these are governments with whom ATI has good relationships,

and this gives investors peace of mind. The head of IPS

followed with a short speech to identify IPS as a regional

company, involved with infrastructure. IPS tries to align itself

with government policies, while combining a strong

development impact with profit. Sustainability is imperative

to IPS, as well as the demonstration of a strong development

impact. Their goal is to develop a scheme, look for technical

partners for development projects and bring on-board

shareholders. A short power point presentation followed

demonstrating the IPS experience through two project

examples. The desired impact in both projects was achieved,

demonstrating that IPS understands project risk well,

considering these projects were executed in

challenging/complicated parts of the world. In this part of the

world there was the issue of cash cover, thus bringing up the

importance of considering alternative risk mitigation

measures. Government support was emphasized as being

fundamental, as well as the DFI role. There is therefore a need

to blend financing with aspects of grant funding.

The chair then proceeded to bring the initial questions to the

table for discussion. Can a project be brought forward

without risk mitigation, in particular for the case of

infrastructure? Do we need risk mitigation? Is risk

mitigation the missing link? These questions marked the

start of the discussion. The first reaction came from the Africa

Investor sector, and more specifically in the pension and

sovereign wealth funds area, where in absence of risk

mitigation no decision can be made. A new level of intensity

and types of risk mitigation are currently developing, coupled

with a new dynamic in risk market, given that Africa has to be

more sophisticated than others to look at how to articulate

the risk of the project and of the parties involved. This would

include not only looking at the credit side, but also

trustworthiness and capabilities of project developers.

75

This was countered by the chair with another question:

If that is our hypothesis, why can we not decompose the

risk as to allocate that risk to different parties? Another

reaction came then from the Standard Bank, stressing the

need to place risk with those entities, which are best placed

and who are able to manage them. This goes for the private

sector as well as the public sector. It is also about trust and

about finding out where transactions between private sector

and public sector are working. It is about risk allocation, as an

example a commercial bank has the responsibility of

mitigating political risk and will pass the risk on to other

institutions, that are better placed to do that. South Africa for

example has a very successful renewable energy program, the

government has been working with the public sector to put in

place a set of provisions for an enabling environment. This is a

good enabling framework as a basis for further development,

and the same can be done in other countries. Another reaction

came from the Standard Chartered Bank, stating that they are

still in a phase, where there is a need to deconstruct and

allocate risk to the best parties for that. The question remains

how to tackle the very broad concept of political risk in Africa.

One solution is to develop projects as locally as possible and

by raising local currency. The co-chair stepped in again to add

that risk mitigation is necessary to reduce resistance. In the

end, investors can take their money anywhere they want, so

as to attract investment, risk mitigation is necessary.

There was more input from the floor on the issue of guarantees.

Because of the large financial gap, guarantees are the best

instruments to catalyse either private capital (local or

international) or risk capital from other public sources (credit

agencies). Guarantee is in other words an instrument for

adequate risk mitigation. However, risk mitigation will not help

make un-bankable projects become bankable. Therefore

projects need to be able to stand on their own merits.

Development finance also needs to capitalize on other types of

finance. Tapping into other sources of finance is critical and

should be directed toward government officials and local banks

in Africa. Local banks need assistance to become more active.

This will also allow for stronger and longer lasting relationships.

This led to further input from the African Investment sector on

what would be the best ways to form cooperation between

best practices from African institutions that are involved with

financing, and facilitating capital with European counterparts,

so as to create a more business driven industrial type of

engagement. The chair added that in advanced markets it is the

government that is driving the financing of projects, and who

are in direct conversation with the private sector. Governments

have a leading role in determining which projects are procured

in which way. In the end this is about institutional capital. From

the pension fund sector, a comment was that in the UK the

government is putting a lot of pressure on the investors of

pension funds to invest in infrastructure. The pension funds

however are saying this is not investable. The African

infrastructure needs more of an investment class, rather than a

development goal. The chair launched a final discussion

topic - whether there is a possibility to develop an embryo of

an investors club or class of investors who could take a long

term view of this market and who could be long term actors, as

opposed to an on the spot basis. Several comments were made

in this context. A first meeting of all African pension funds and

sovereign world funds – supported by the EU – is being

proposed to look at their capability to invest in infrastructure in

Africa. The focus is on facilitating capacity building. In South

Africa pension funds are being used for infrastructure, the

market is quite developed, with a very stable and well-regulated

environment. There is visibility towards the future and investors

know that they can come in and invest because there will be a

good pipeline of projects going on there for the next years. The

same has to be replicated elsewhere. This evokes the need for

dialogue among various players, because to blend and catalyse

other resources, there needs to be interaction. As for the

partnership between Europe and Africa, these represent two

private sectors. We should look at co-development to build the

skills and have knowledge transfer in order to have an equitable

partnership to define risk around developing projects, and to

foster local project developers. While pension funds are

enormous, there is still a long way to go before infrastructure in

Africa is an asset clause. From a new buyer into an African

project, there was the feedback that there is a need to utilize


the institutions who know risk evaluation like ETAs, that have

capacities, to follow capital and not only traditional export of

goods. There is also the issue of technically insolvent companies

and transportation companies. And finally there is a need for

cost reflective tariffs.

Sustainability goes beyond the risk period and beyond the

average loan, we need to build a way in long term. Of course

the need for a well-structured project is an imperative starting

point, any well-structured project in this part of the world will

receive funding. In sum, trust and political risk are at the heart

of preoccupations of investors. The management of political,

commercial and other risks are at the forefront of all PPP

projects, risks need to be allocated to those who are best able

to manage them and in order to speed up the development of

well-structured projects in infrastructure,

The following actions are recommended:

111 Establish a Platform between government, private sector and DFIs to exchange information, views and best

practice on public-private partnerships and private sector investment in infrastructure, starting with energy.

222 Develop Risk Mitigation Instruments to mitigate political risk, provision of local currency funding, more

long-term funding, and provision of guarantees, which also act as a catalyser for the private sector.

333 Support and strengthen local African project developers, in cooperation with European project developers.

444 Incentivise development finance to leverage more private sector financing as a pre-requisite for intervention

through (blended) lending or grant financing.

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roundtable 12

Fostering Business opportunities in the use of space services

Roundtable n° 12


Fostering Business opportunities in the use of Space services

12.1.


Roundtable 12 focussed on the opportunities for African and

European businesses in the deployment of space infrastructure

and the utilisation of space services. Technology is a fundamental

enabler of social and economic development, and space is the

sector of the future with a great potential for growth and jobs.

Space technologies, infrastructure and services could play a

positive role in Africa, helping to promote development and

growth, facilitate good governance of resources and contribute

to the implementation of policies in various fields such as food

security, health and education, air transport safety and maritime

navigation, not to mention the potential for their use in disaster

management and climate change adaptation.

The Chair for this Roundtable was Matthias Petchke, Director

of ENTR/H EU Satellite Navigation Programmes, and

Co-Chair, and the two Co-Chairs were Amadou Ousmane

Guitteye, Director General ASECNA (Agency for Aerial

Navigation Safety in Africa and Madagascar), and

Han Wensik, President of EARSC (European Association of

Remote Sensing Companies).

12.2.


The Roundtable Chair Mathias Petchke opened the session,

reminding participants that space is an area with significant

potential. Space activities and related programmes count

among key European flagship projects with very high visibility

and there has been political commitment to dedicate impressive

resources to these programs. The European Commission, EU

Member States and the European Parliament, are committed

to pursuing opportunities in the space sector and leveraging

the potential of space-related technology as an enabler. In

order to improve Africa and properly utilise its natural resources

it needs state of the art technology, hence space is a cornerstone

of the strategic cooperation between Africa and Europe.

The Chair underlined the important business opportunities in

space services for African and European citizens in both satellite

navigation and earth observation. For example, in Europe

people have been using the European Geostationary Navigation

Overlay Service (EGNOS) since 2010, improving the

performances of the American GPS. Tomorrow, the evolution of

EGNOS could cover both European and African continents with

common satellites and deployment of on-the-ground stations

in Africa- the social economic benefits of this would derive a

net value exceeding 500 million euros in Africa.

A great many examples of the positive possibilities for Space

services were highlighted; for example, in aviation EGNOS

could optimise transport by air, in maritime facilities ensuring

savings on investments at local level, by reducing the need for

grant facilities of airports and their maintenance. Savings

would be made on fuel (optimised routes), especially for

transport through airports in isolated regions. Air transport

safety would be increased, accidents during approach and

landing would be reduced, and this would encourage increased

public demand for air transport. New airports would also

provide greater reactivity for humanitarian interventions as

well as having more commercial opportunities for airlines

that could add new routes. And this is only in the transport

sector, however satellite usage can also impact land

management for surveying, land management in private and

public sectors is a pillar of African development causing

disputes. Remote sensing and accurate positioning these can

be used as tools for management of natural resources. Earth

observation is used in environmental monitoring, the

biodiversity sector, and the forestry domain, to support the

sustainable use of natural resources. Early warning earth

observation systems have been adapted to monitor crop

conditions, crop development, as well as fire events.

79

Amadou Guitteye from ASECNA focussed on the economic

opportunities in the Space services sector, given its importance

for synergies and partnership between the European and African

continents to be reinforced and encouraged, particularly now in

identifying new opportunities for growth and job creation.

Cooperation between the EU and Africa in the past has seen

satellite services in Africa, gain ground due to political will, a

second stage plan was foreseen (for 2011-2013) to focus on its

use in regional economic development, commerce and

infrastructure. Political will and financing decisions in the

implementation plan has reinforced the EU-Africa partnership

and pushes for further commitment. The implementation of this

has constituted a major technological advance for Africa, which

has necessitated being anticipative, well run and managed, as the

technologies have continued to evolve in their usage possibilities

and, therefore, in their requirements for maintenance.

An important goal for ASECNA’s is to help ensure the

transformation of the Africa-EU partnership into a far more equal

partnership, where Africa has more ownership and does not

remain primarily a consumer. This requires, amongst others, a

transfer of technology and skills, capacity development of African

professionals, to allow African stakeholders to start adding value.

From the European side, Hans Wensink, EARSC, considered that

satellite technology gives African stakeholders a more powerful

medium to monitor their environment and participate in

decision-making. Cooperation between Africa and Europe should

intensify; the challenge in Africa is to take full advantage of the

opportunities and to use them to improve the continent’s socio-

economic situation. The space sector will be instrumental in

achieving the 3 pillars of sustainable development (economic

growth, social development and environmental protection).

Another issue facing the sector is an often widely held perception

that space sector is very rich, but this is not the case.

There is often a strong national interest in launching satellites,

with Nigeria and South Africa for example already having done

so. However, there needs to be a network on which data from

other satellites is freely available, on a free and open basis. Return

on Investment (RoI) here could be huge but this requires that

African governments invest in EO services rather than launch

their own satellites. Companies should lie at the heart of provision

of COPERNICUS services, in Africa too and the launch of

continental programs and initiatives like GMES for Africa is an

opportunity for the business development sector. COPERNICUS

will create a sustainable European satellite network to collect

and evaluate environmental data for civil safety and humanitarian

purposes; it will provide data on environment, agriculture, forestry

and making data available for disaster management. In Europe

public institutions are taking the place of private companies, this

hampers development and ensures that the burden rests on the

shoulders of taxpayers. It should be recognised that if public

bodies are providing these core tasks, they must be adequately

funded, there should be no question of them competing in public

market sector along with the private sector. Companies should

be able to make investment decisions secure in the knowledge

that they will not be undermined by unfair competition. In Africa,

the mining, oil, energy, agriculture, illegal activities (fishing,

logging), as well as activities to enhance agricultural management

and yields, could all be improved by satellite technology.

With the help of the Roundtable participants, the Chair and

Co-Chairs listed a number of key elements for advancing the

Africa-EU partnerships in space technology, and all

partnerships in general:

a. Technology is the enabler - it is Important for science to

be the enabler and driver.

b. Public access to data is a fundamental element to the

transformation of today’s world into a vibrant green

economy.

c. Developing equal partnerships is of prime importance,

not just something which is important between Africa and

Europe, but also within Europe. The space industry consists

of many small players, so to export activities you need

support to develop relationships.

d. Africa must not just be a consumer but be part of the

system. EIB could assist to finance Africa; there needs to be

a legal framework for all these aspects. Lack of continental

integration remains as issue to implementing systems in

the whole continent.


e. Africa can add value too and can be a valid partner. This

should be remembered, on-ground training/capacity

growing should be an integral part of partnerships.

f. Knowledge sharing: Partnerships should be more transparent

and be more ready to share information. Once space service

is declared open, it is accessible immediately. Large

infrastructure that takes time to be developed is unnecessary.

Africa should have the tools necessary to process data.

g. Data should be linked to decision-making mechanisms.

Governments should be informed of the level of aid this

type of cooperation can bring about, in less time than

other technologies that require the installation of heavier

infrastructure.

h. Africa must have access to satellite data (for free). For

the moment the COPERNICUS project is not foreseen to

give access to Africa, this was highlighted as an issue.

i. Skilled personnel: earth observation specialists, ICT

specialist to harness amount of data and business

developers to turn data into services, that fulfil needs of

customers and value.

j. Remain involved in research projects to keep up to date

with innovations, partner with universities, research

institutions, etc. to do this

In any dialogue the intrinsic benefits to both sides should be

highlighted: the most advanced competition is on the SKA (most

advanced scientific equipment in the world) in Africa. SKA will be

instrumental in finding out how data should be managed and

shared, though a clear enabling regulatory environment is

required. Pre-competitive legislation is emerging and is being

recognised in Europe as a key driver, not in Africa yet. The existing

dialogue between South-Africa and the EU on the space policies

and space sciences should be reinforced, South Africa plays a

leading role through the success in SP7, testimony to level of

innovation in Africa which is not sufficiently recognised, this

forms a platform for peer to peer engagement.

Discussion with participant raised the following issues with

working in Africa for external partners:

a. Local partners are hard to find for selling, supporting and

developing projects. There needs to be easier access, better

systems for external institutions to find local partners easily.

Local partners are better equipped to attain/create local market,

and external partners can supply the necessary technology.

b. Skill building: It’s important to have capacity training for

partners on the ground, to train the leaders of tomorrow

so that when this technology and these solutions are

offered, there is a knowledge base that knows how best to

utilise them This could come from through universities or

from a national space agency perspective.

c. Entrepreneurs to make business. Develop local

entrepreneurs so they can consume our data and

information. A lot of research is going on but hardly any

services come out of it, this gap has been bridged at times.

d. Exchange of local and external expertise. Local context

should be taken into account. Certain areas of expertise

are better in specific external countries.

It all starts with partnership. The EU is a natural partner: while

many others are developing their systems under military

leadership, they are doing this as a soft power, with civil

budget and full cost transparency, actively looking for

partnerships abroad. EGNOS will be open.

Recommendations formulated during the Roundtable included:

111 Promoting open-source applications

222 Sharing knowledge, making data freely available on both continents, and

333 Market uptake: openness of the system, when data is freely available, the business community can really go

into it and look for opportunities. From both Europe and Africa. Work on the local dimension at local level,

many benefits to and applications to be drawn at this local level - a wealth of opportunities.

444 Highlight role of GSS in Prague, more and more active in area of applications.

The following consolidated recommendation was formulated for the Africa-EU summit:

Promote cooperation on the development and use of space technology for African sustainable socio-economic

growth, through technology transfer, capacity building, and joint business initiatives; support the development

of satellite navigation infrastructure (EGNOS) and Earth Observation services (GMES and Africa), establishing

the relevant governance and financing schemes.

ROU

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81

iiisuccess stories

and investment pitches

Another exciting feature of the programme was the investment pitches, held in parallel with the

roundtables, where a selection of African countries presented their countries’ specific opportunities,

allowing for a more lucid view for outside investors. The presentation of success stories was an

equally invigorating session, inspiring future action in Africa.


Presentation of Success Stories

Success Stories

1.1.

SME Success Stories Session Rationale and Speakers

Small and Medium Enterprises (SMEs), represent more than

80% of private investment in Africa, it is the largest employer

on the continent. Ensuring the establishment that allows

SMEs to be engaged in trade, it is an important step towards

more resilient economies and a more vibrant private sector in

Africa. Africa’s regional economies have made substantial

progress: strategic partnerships have been developed to boost

efforts to enhance export competitiveness to market linkages

and export revenues for African SMEs. However, many

challenges are still there, such as limited access to export

training, market information and finance and other challenges

in business environment

The Chair, Ashish Shah, Co-Chair, Ruben Phoolchund,

International Trade Center, Guillaume Razack Kinninnon,

SWCM, Benin, Executive Director, Dan Awendo,

InvesteQ Capital CEO, Purity Naisho, INTERVEG, Marketing

Director, Nigest Haile Goshu, Center for accelerated women’s

economic empowerment (CAWEE), Executive Director,

Aster Reeta Wondimu, Negist, Founder and Director,

Emmanuel Henao, Skilled Africans, Owner, Thomas Duveau,

mobisol GmbH, Head of Business Development, Jyrki Salmi,

Indufor, Managing Director, moderated by Shada Islam, Friend

of Europe, Director of policy.

1.2.

Summary of the Session

Ruben Phoolchund pointed out that there is a need to

reduces the barriers for international trade to include access

to finance, entrepreneurship and skill development,

innovation and technology, compliance with private

standards, addressing standard tariff measures, but also a

need to create a space for public private dialogue, fostering

vocational and capacity training and and help foster women

entrepreneurship.

SME Success Stories – Agri-food

Success Story 1: Guillaume Razack Kinninnon, SWCM.

SWCM has a partnership with Vietnam. This is unusual, as it is

difficult to move beyond the national confines – the business

relationship started when the partner wished to ship some

rice and oil to Benin while Guillaume was looking to ship

cashew nuts from Benin to Vietnam. They made a joint

venture through bank of Vietnam and Chamber of Commerce

of Benin, and in this way the company became a reality. In

terms of my company I established myself only with

4000 euros, we are in Benin and India and Vietnam, and I wish

to be in Europe. It is very easy for Asian people to export and

process their products to Europe, but very difficult for Africans

to process products and export to Europe. Today in Africa

there is a clean environment to process and to produce

agricultural products, with respect for certification

requirements and under the same condition the Asian people

83

process. What is needed in part is that reporters and journalists

cease to report on an old face of Africa that no longer reflects

today’s reality.

Success Story 2: Dan Awendo, InvesteQ Capital: In the venture

capital business the biggest problem for SMEs is not just access

to capital but the knowledge on how to engage with other SME

customers. Access to trade finance is a big impediment for

flourishing of business in Africa. This is a completely new

industry developed from scratch in Kenya, started picking up

competition, because there is a gap that cannot be filled by

either a bank, by downscaling or by a micro-finance institution.

That industry is starting to fill up, offering training to banks to

give them capacity and advice on how they can finance SMEs.

The issue of interest rates is also a big issue for SME customers,

but access is the biggest problem. Regarding lessons learned

the first lesson learned was that promotion of entrepreneurship

needs to start at the earliest possible stage. One of the key

elements to Dan Awendo and InvesteQ Capital’s success is that

in a short time Dan realized it is impossible to run the capital

himself and through the platform he is able to access a lot

more capital to then apply to the business.

Success Story – 3: Purity Naisho, Marketing Director,

INTERVEG: INTERVEG is successful in exporting flowers

from Kenya to international markets. It is able to supply

quality products to customers; in production they have

trained the staff. Part of the training, is to train their

employees to train the farmers to produce products that are

safe for the market, also certification required by the market,

BRC for example, to supply safe products to the customers.

This is an assurance from customers and a way to penetrate

the market. Train the staff to increase their skills and identify

their skills and place them accordingly, it is the way to keep

the staff for a long time that brings consistency in operations

also. Regarding lessons learned a key learning point was

that while in Kenya it can be difficult for ladies to be

entrepreneurs, but if you have an idea and plan and the will, being a female will not stop you.

SME Success Stories - Economic Empowerment of Women

The discussion then turned to the topic of economic

empowerment of women.

Nigest Haile Goshu, Center for accelerated women’s

economic empowerment (CAWEE), executive director,

Ethiopia: Speaking about her SME’s core offer, noticed that

after a lot of experience working for government - with focus

on informal sector – she noticed that there were not a lot of

funding made available for the informal sector for women.

Her organisation is looking for fruitful change, generating

foreign currency, and creating jobs for these women. We provide them trainings that are how the ITC partnership has helped us. Through business counsellors, training etc. you

need to educate in the use of email, websites. Many of them

have dynamic websites now.

Aster Reeta Wondimu, Negist, Founder and Director

described how at the outset the business was started with

one weaver at home, and has grown to now employ

50 employees, with a further 250 working on an outsourcing

basis. The initial capital was 400 euros, and the initial market

focus has grown from one country to exporting also to

14 countries outside, across Europe, Japan, and the USA. The

company uses the internet to attract customers, so a lot of

their work comes through internet and they participate at

trade fairs and bazars. They combine traditional and modern

designs.

Emmauel Henao, Skilled Africans, recalled how his web

company started as professional social network, linked to

‘Africa.com’ to create opportunities through the network, but

this proved to be insufficient. At this point the orientation

changed, and the name was changed to ‘skilled africans.com’

to help the customers to better identify their professional

identity. The reality is that young professionals in West Africa,

have a job that they have not really chosen, so the professional

identity has become shaken, and the need is to better know

what they want to do, what they should do, to fill the gap.

Nigest Haile Goshu pointed out that women still face

difficulties to become entrepreneurs: supply side constraints is

a challenge they face now, and it is important to provide them


with the tools to take part in trade. They have designed curricula

to train them on export. 68 were employed because their

capacities were reinforced. They give them marketable skills in

training program. The target is building their supply capacity,

bringing youth and poor, give them training. The focus is on

vulnerable women, particularly with HIV/AIDS. Aster Reeta

Wondimu recalled that when she was growing up, women

were always trained for textile work and how she wanted to

develop this skill and provide work for various women. A lot of

benefits go to the women when they also learn about export as

well. While the nature of their society does not allow them to

leave the house and go out and work, this training on trade

helped with that. Emmanuel Henao commented on some of

the innate strengths and advantages that women can bring to

entrepreneurship, commenting that young girls and women

often seem more proactive and curious. Once they are in a

position to move forward, they may move forward better and

take opportunities better than a man, but the key is that

women first need to be placed in that position.

SME Success Stories - New Technologies

Thomas Duveau, Head of business development, mobisol

GmbH noted that simply, in most countries over 85% do not

have access to electricity. Several developments over last

years, use of a) Mobile phones and b) Price of solar energy has

decreased. Mobile payments are popular in Africa, It’s a very

powerful aspect of empowerment to have access to finance

without going through a bank. Mobile phones have replaced

landlines, and in terms of financial transactions mobile phones

replace the bank, decentralized solar energy replaces the need

for a grid. At household and village level solar energy does

exactly what is needed.

Jyrki Salmi, Managing Director, Indufor, runs a consulting

company, helping the client solving their problems and

planning their investments, operating for 35 years in Africa,

mainly in Eastern and Southern Africa. They are providing

services for bigger companies that are then using SMEs or

sub-contractors. All over the world, there are companies

investing in Africa from US, Asia and Latin America. They are

advising companies. We don’t need to control all the production chain; we use SME and local communities to produce some of raw material. Number of public sector

projects providing training for SMEs in Africa.

85

Some of the key messages and learning from these success stories includes:

111 Some of stories, not only is making private sector vibrant but also making contribution to development,

creating jobs.

222 There is an increased thrust in Africa to look for new partnerships with regard to South-South trade and

collaboration.

333 Increasingly African companies want to capture a larger share in the value chain.

444 For African businesses to grow and scale-up, it is important to take a “shared value” approach.

555 Some stories (e.g. Mobisol) show that technology can help countries and continents leapfrog. No

conventional development models for Africa should be thought.

666 Education and vocational training engaging private sector is crucial to contribute to development.

777 Develop “marketable” skills for young people, to ensure that skills supply match the demand for skills by the

private sector.

888 Women’s economic empowerment is not only a choice but an obligation. Womens’ economic empowerment

can help reap rich development dividends.

999 There is a lot of scope for building regional value It is therefore important to invest in “multipliers” in African

countries who can provide sustainable local capacity building services.

101010 Entrepreneurs are important but there is to ensure availability of an enabling environment with right

regulatory framework, policies etc.

111111 There is potential to cooperate through regional value chains. For example, cotton from Tanzania can be

transformed into fabric/textile in Kenya and finally be used to create fashion accessories in Ethiopia. This is

the best way to promote intra-African trade.

121212 Market-readiness is the second step after supply capacities have been improved through improved sourcing,

supply chain management, product design, quality, packaging of their products.

131313 Technology and innovation are key drivers of growth and competitiveness in Africa and can help the

continent to leapfrog to new levels.

SUC

CES

S ST

OR

IES

1.3.

Success Stories Key Messages


EU- Africa investor meeting: presentation of investment pitches

EU- Africa investor meeting

2.1.

EU-Africa Investor Meeting Rationale and Objectives

The session was moderated by Isabelle Kumar, Euronews, and

it was coordinated by Ricardo Ridolfi. The speakers in this

session were primarily the investors on the one hand, which

was made up of 12 CEOs and Managing Directors of

investment outfits of different varieties, public, private,

equity, debt, etc. On the other hand 8 African Government

delegations (represented at Ministerial level or above) gave a

short presentation regarding the prime investment needs of

their country.

The EU-Africa Investor Meeting is an innovative concept with

the objective of bringing together high-level government

decision makers and experienced international investors. The

session took place on April 1st, on the second day of the forum.

By its very nature, the exercise spanned across many sectors

of the respective economies, beginning with a general

approach and then going into more detail for a specific project

or area of interest. Each country was allocated 20 minutes,

first a representative from a specific country was to shortly

highlight either their own investment climate or a particular

project. Then time was allowed for short and direct feedback

from investors.

2.2.

Session Summary

To follow are comments from investors from the country

presentations.

For Ghana Mawuena Trebah, CEO Ghana Investment Promotion

Council, gave a concise and organized oversight of areas which

provide opportunities for investment. The energy sector

presents opportunities. The oil and gas area is relatively new.

Infrastructure has been the single focus for the IPC in 2013,

especially roads and transport systems in terms of maintenance.

Railways and port facilities are especially important so Ghana

can act as a trade hub. There is much property development to

be done in terms of real estate and low cost housing units.

Agriculture and agro-processing is at the heart of the economic

growth agenda, especially in terms of creating more value

87

addition, not only export out of the country. Ghana has been

successful as a point of political stability for the tourism sector

(medical tourism). Manufacturing has also been a successful

area of value creation. There are also many opportunities in the

services sector as a result of the ICT and the telecommunications

space. The SME environment has been a major contribution to

GDP. Investors respond and bring up the issue of the macro-

economic uncertainty and difficulties with the indebted

situation. The presenter points out the broader trends and the

need for time to address these issues to create systems and

control for investors’ security. In relation to investing in the SME

sector, Ghana is looking to produce a credible database, to

share with the investing community to provide comfort in the

search for partnership. There is an existing great opportunity for

renewable energy generation, with a government investment

commitment of between 20% and 30%. An issue was raised

with regards to Basel III compliance, where there is a need to

balance financial stability with access to finance.

For Djibouti, a member of the office national du tourisme de

Djibouti participated in the session. After a short presentation

on Djibouti, its strategic positioning, its favourable legal and

regulatory framework and its own investments in modern

infrastructure (ports), the opportunities in Djibouti were

presented. Fishery related export is one. Also there is great

potential for renewable energy (wind, geothermal, solar). Real-

estate and social housing is another potential area of

investment. Also, tourism is becoming a flourishing sector.

The investors react to the presentation. A question was raised

about the target group in the renewable energy sector. The

presenter responded that there is a massive potential for energy

provision, to Djibouti itself but also to several neighbouring

countries. More feedback on the investor side was that much

depends on the proactivity of investors (example of the active

Chinese investors). European investors are invited to be more

proactive, Djibouti does not want a monopoly of investors,

rather a variety of investors, to add quality.

Ambassador Nelson Ndirangu, Director of the Department of

Economic and International Trade from the Ministry of Foreign

Affairs of Nairobi, presented on Kenya. Kenya is a country

where you can be guaranteed high returns because of the

nature of the projects, your investment is guaranteed. We are

part of an initiative where the three trading blocks will be

connected, thereby enlarging the market. There are very

strong macro-economics of the country, with a vibrant stock

exchange. Kenya also offers an inviting environment for the

private sector. The regulatory framework is constantly being

improved. Kenya has a vision 2030. There are many investment

opportunities, translated into 182 flagship projects, across

diversified areas, including recent discoveries oils and minerals,

with ongoing discoveries. New constitution insulates the

economic performance and drive from the political pillar. This

gives the investor confidence that the investment will not be

at risk. Specific sectors are agriculture, as well as tourism. We

are adding more facilities. In manufacturing, SMEs are being

aided to become the drivers of growth. All this is done for

Africa. The investors react positively, with much praise and

enthusiasm for the country, it is widely considered to be a

champion for the private sector, both in terms of track record

and current investment climate. There are large geothermal

projects and still much great potential, as well as the largest

wind project (Lake Turkana). The mini-hydro and biomass

sector also has potential opportunities. The scale is right also

in consideration of political and economic integration within

the East African Community.

The Minister of Foreign affairs and International Cooperation

spoke for Botswana. Emphasis was on the private sector to be

in charge of business. Good governance structures, ideal

location, political stability, safety, are brought forward as

strong points of the country. Wildlife management and

tourism is highlighted as an attraction to the country.

Numbers are provided in support of the positive investment

potential. Botswana is looking at export potential across

African borders, also in terms of power and energy.

In response to this presentation, the biggest challenge that is

brought up by one of the investors is scale. Need for scale of

market, to make Botswana more attractive to private


investors. Money that is used for training is completely

deductible. Right now, there are opportunities for clean energy

and the country is open for innovative solutions and is looking

for such solutions. There is a commitment to a bigger regional

market to better attract investors and Botswana is moving

towards the elimination of borders, but it takes time and

negotiation. Many are scared of the unknown.

For the Ivory Coast the Prime Minister’s presentation fuelled

the positive perception that Ivory Coast has experienced great

economic development after a crisis of almost 10 years.

Important projects under PPP format are being pioneered. The

economy is making general and sectorial transformations,

allowing for a good environment for investments. Questions

were raised regarding when the next currency devaluation

might occur and what type of investors the country is looking

for, and what place SMEs could have. This is answered that

with the present growth, the devaluation is not a reality or an

issue. SMEs are envisioned as an important part of the future

development. Another question regarded what the country

thought to do for employing the young population, this was

addressed with the investment in education and training, as

well as in the health sector.

The delegation of Mali called out to the investors to assist

them in their path of reconstruction. Political stability and

economic growth are highlighted, with strong institutions, as

well as the country’s rich culture. The dynamic private sector

and the many opportunities in several sectors are also brought

to the forefront. Investment opportunities are in agriculture,

livestock, mining, energy and tourism. Positive testimony of

investment was brought to light. Other investors responded

equally positively, particularly AFREXIMBANK. SMEs are

experienced with good rates of growth and particularly prolific

in the field of IT. Energy, transport, telecommunication and

infrastructure are prospective areas that will help with the

transformation of Mali. The end-goal in Mali is to increase the

added value locally in the production chain. The mining sector

requires better exploitation.

The President of Madagascar’s intervention underscored the

country’s commitment to attracting foreign investment and

to re-launch its economy. Good governance is very important

to guarantee investment. The industry – both small and large

– is ready for investors. The country offers opportunities in

mining and eco-tourism. A few more words were said on the

new political regime in Madagascar. There is thus an overall

good investment environment. Textile industry, agriculture,

livestock and fishery areas, ICT, infrastructure, energy are all

sectors that offer much potential. Contributions were made

to encourage the continuing development of “economic free

zones”. The country is taking on a positive trend, which is

being perceived and appreciated. There is a strong political

and economic will to develop the country.

For Ethiopia, a presentation came from the Ministry of Foreign

Affairs. Ethiopia’s economy was elaborated on, as well as

some statistics regarding population, export, production,

growth rates and the progress in terms of MDGs. Ethiopia is

shown as an attractive place for investors, with moderate risk

but high opportunity. Top investors are listed. Manufacturing,

infrastructure, agriculture and agro-industry, mining, oil and

gas, and tourism are promising sectors. A first response came

from the Standard Chartered Bank raised the issue of it being

turned down a banking license in 1997 and wanting to

operate in the country, the Minister answered this by

proposing that the Ministry of Foreign Affairs be the starting

position. The issue of promotion of SMEs was also raised,

being the focus together with smallholder farmers.

2.3.

Investor Meeting Recommendations

By the nature of the exercise, it is difficult and only relatively

useful to attempt to draw concrete recommendations.

Nevertheless, it important to note that throughout the

exercise, the underlying message was a consistent and shared

sense of willingness, expressed by all parties involved, to

continue to deepening investment relations. The investors

flagged their principal concerns and, overall, consistently

committed to increasing their investment effort in the

interested countries and in Africa more generally. On their

side, the presenting governments expressed their

unconditional commitment to furthering dialogue with

investors, from public and private sectors, with a view to

continue to ameliorate the investment climate and safeguards

for foreign investors within their countries. Other than shared

general enthusiasm in view of increasing foreign investment

toward the presenting countries, consensus was that this

exercise also facilitated the addressing of more specific issues

of direct concern to certain investors, with regards to a

particularly country, in a favourable and enabling context.

European Development Fund

Towards a private sector enabling environment

Sum

mar

y of

Pro

ceed

ings

5TH E

U-A

FRIC

A B

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S FO

RUM

BIZCLIMRue Belliard, 2051040 Brussels, BelgiumTel: + 32 2 669 98 25Fax: + 32 2 660 97 86

[email protected]

www.acpbusinessclimate.org

Documents

5 EU-AFRICA BUSINESS FORUM · 2017-04-28 · 4 5Th EU-AFricA BUsinEss ForUm 31sT mArch – 1sT April 2014, BrUssEls roundtable n° 2 SuPPly of riSk caPital for new enterPriSeS 37