African Review May 2014

Europe 10, Ghana C1.8, Kenya Ksh200, Nigeria N330, South Africa R25, UK 7, USA $12

May 2014

Transport:Developing Swazilands railfreight network P34

Finance:Ecobank moves towardscashless banking P32

Ensuringcranesafety

P44

P52

Business:Turkish investment inTanzania P26

www.africanreview.com

Developingrenewable

resourcesA

frican Review of Business and Technology

May 2014

Volume 48 N

umber 4

ww

w.africanreview

.com Improving performancein platinum mining P62

ATR March 2014 Cover Spine_Layout 1 4/23/2014 2:45 PM Page 1

S01 ATR May 2014 Start_Layout 1 4/23/2014 2:26 PM Page 2

Managing Editor: Andrew [email protected]

Editorial and Design team: Bob Adams, Hiriyti Bairu, Lizzie Carroll, David Clancy, Ranganath GS, Prashant AP, Rhonita Patnaik,Genaro Santos, Zsa Tebbit, Nicky Valsamakis, and Ben Watts

Publisher: Nick Fordham

Advertising Sales Director: Pallavi Pandey

Advertising Sales Manager: Jane WellmanTel: +44 114 262 1523 Fax: +44 7976 232791 Email: [email protected]

China: Ying MathiesonTel: +86 10 8472 1899 Fax: +86 10 8472 1900Email: [email protected]

India: Tanmay Mishra Tel: +91 80 65684483 Fax: +91 80 40600791Email: [email protected]

Nigeria: Bola OlowoTel: +234 80 34349299Email: [email protected]

South Africa: Annabel MarxTel: +27 218519017 Fax: +27 46 624 5931Email: [email protected]

UAE: Camilla CapeceTel: +971 4 448 9260 Fax: +971 4 448 9261Email: [email protected]: Steve ThomasTel: +44 20 7834 7676 Fax: +44 20 7973 0076Email: [email protected]: Michael TomashefskyTel: +1 203 226 2882 Fax: +1 203 226 7447Email: [email protected]

Head Office: Alain Charles Publishing Ltd, University House,11-13 Lower Grosvenor Place,London SW1W 0EX, United KingdomTel: +44 (0)20 7834 7676, Fax: +44 (0)20 7973 0076 Middle East Regional Office: Alain Charles Middle East FZ-LLC, Office 215,Loft No 2/A, PO Box 502207, Dubai Media City,UAE, Tel: +971 4 448 9260, Fax: +971 4 448 9261Production:Nathanielle Kumar, Donatella Moranelli, Nick Salt and Sophia WhiteE-mail: [email protected]: [email protected]

Chairman: Derek FordhamPrinted by: Wyndeham Grange LtdUS Mailing Agent:African Review of Business & Technology, USPS. No. 390-890 is published 11 times a year for US$140 per year byAlain Charles Publishing, University House, 11-13 LowerGrosvenor Place, London SW1W 0EX, UK. Peridicals postagepaid at Rahway, New Jersey. Postmaster: send addresscorrections to Alain Charles Publishing Ltd, c/o MercuryAirfreight International Ltd, 365 Blair Rd, Avenel, NJ 07001.

ISSN: 0954 6782

Serving the world of business

UP FRONT

3

REGULARS

FEATURES20 Business and Finance

Fostering trade between India and Africa; debit card revolution in Nigeria;stabilising the Kwacha in Zambia; bilateral trade between Tanzania and Turkey;growth of natural gas in Mozambique; economic growth in sub-SaharanAfrica; and boosting cashless banking

34 Transport and LogisticsDeveloping Swazilands rail freight network; and Africas luxury car market

42 PowerBuilding solar PV stations in South Africa; reaping the benefits of wind powerin Kenya; and promoting energy efficiency at African Utility Week

45 ConstructionEquipment giant announces fresh developments; combatting carbonemissions in the cement industry; key equipment dealer discusses Africanoperations; emerging industry trends; the basics of crane safety; providingskills training for youth in South Africa; and constructing Moroccos new high-speed rail link

60 MiningReinvigorating Angolas diamond industry; opportunities offered bymechanised mining; China increases investment in Sierra Leone; and newtelescopic handlers for the industry

04 Agenda:The latest news fromacross the continent

14 Bulletin:Investment and miningdevelopments

73 Solutions:Innovative equipment forindustry

Contents

Europe 10, Ghana C1.8, Kenya Ksh200, Nigeria N330, South Africa R25, UK 7, USA $12

May 2014

Transport:Developing Swazilands railfreight network P34

Finance:Ecobank moves towardscashless banking P32

Ensuringcranesafety

P44

P52

Business:Turkish investment inTanzania P26


Developingrenewableresources

Improving performancein platinum mining P62

Editors Note

Main cover picture: AsherloveInset, bottom left: Dale HesInset, top left: Dimitris Agelakis

Developments within the fields of business, finance, technology, transport, power,construction and mining are key themes within this issue of African Review.Following our regular round-up of the latest industry news, pages 20 to 29 examine the changinglandscape of commercial prospects across the continent, covering bilateral trade, investmentopportunities and growth sectors. On pages 30 to 33, stories focus on financial growth and therising influence of mobile money throughout sub-Saharan Africa.The future of rail transport is examined on pages 34 and 36, while page 38 highlights Africasluxury car market.In terms of power, pages 40 to 44 detail how the upcoming African Utility Week is looking toemphasise energy efficiency, while renewable energy also comes to the fore. The contructionsection (from pages 45 to 58) features the latest developments from Volvo ConstructionEquipment and Mantrac Group, while also offering insights into the cement sector, crane safetyand youth training projects. Pages 60 to 70 focus on mining, exploring topics such as risingforeign investment and mechanised mining alongside detailing the latest innovative solutionsfrom Magni Telescopic Handlers.

Lizzie Carroll, Acting Managing Editor

African Review of Business and Technology - May 2014

Audit Bureau ofCirculations - Business

Magazines


IT IS WITH great sadness that we have to report that David Clancy,

editor of Oil Review Middle East, has died after a long battle with

cancer. David had been with the company for 25 years providing high

quality editing for Oil Review Middle East, Technical Review Middle

East and other magazines before them.

As a result of David's professionalism, knowledge and application,

the titles have acquired a reputation for authoritative and pertinent

content. Throughout his illness, David maintained his

work output, fitting it in between his numerous

sessions of unpleasant treatment. There can be few

people who would show the same resolve.

His expertise and guidance to others and

his quiet sense of humour will be sorely

missed. He leaves behind his wife,

Antonia and two daughters.

In Memory of David Clancy1956-2014

David Clancy


HM King Mohammed VI of Morocco haslaunched construction of Kharroub dam,which has been estimated to cost in theregion of US$197mn.

The project will attempt to consolidatedrinking and industrial water supply in theTangiers-Tetouan region.

Located over the Kharroub river, 45 kmsouth of the city of Tangiers, the dam hasbeen designed to contribute towards theconsolidate of water facilities in northernMorocco in order to meet rising drinkingand industrial water needs.

The hydraulic structure will have astorage capacity of 185mn cubic metres

and has been financed by the state generalbudget and the UAE.

The Moroccan state already has aprogramme in place that will attempt toconsolidate the drinking water supply tothe city of Tangiers and neighbouringlocalities, which has been carried out bythe Office of Drinking Water and Electricity(ONEE), with investments worthUS$166mn.

The programme will aim to benefit more1.7mn people by 2030 and constitutes theexpansion of the El Hachef plant for thetreatment of water coming from the '9April 1947' dam.

The European Union (EU) has announced it willmake a contribution of US$95mn towardsEgypt's Improved Water and Waste WaterServices Programme.

The project, which will be built in two phases,has been estimated to cost more than US$1bnand will aim to improve and expand existingwater and wastewater treatment plants.

EU officials said that the first phase of theproject would improve access to water to threemillion people in the Gharbeya, Sharqeya,

Damietta and Beheira governorates. Thesecond phase will cover Qena, Sohag, Assiutand Minya governorates in Upper Egypt,aiming to provide water to one million peopleand improve water services for four millionpeople.

The EU has committed to implementingvarious water sector projects across Egypt,which will benefit the Ministry of Housing andthe holding company for water andwastewater. The organisation has said it was

keen to establish an improved regulatorysystem and management resource process fordrinking water quality reporting and auditing,customer services, water companyperformance measures, and licensing.

Egypt's Ministry of International Cooperationrecently signed a new agreement, IWSP II, witha number of European organisations, which willsupply Egypt with US$349mn to improve waterand wastewater services for nearly 15.3mnEgyptians.

4

NEWS

GE and Sonelgaz have signed anagreement to build a US$300mnmanufacturing complex in Algeria's Batnaprovince.

The complex will produce gas turbines,steam turbines, generators and controlsystems constituting blocks of power, whichwill generate 2,000MW of power from 2017.

To build and operate the complex in AinYagout, a new joint venture (JV), GeneralElectric Turbines Algeria, will be established,of which 51 per cent will be owned bySonelgaz and 49 per cent by GE Industrial, asubsidiary of GE.

Amara Benyounes, minister for industrialdevelopment in Algeria, said, "It will be one ofthe biggest plants of GE in the world. This alsoshows that foreign investment is returning."

Algeria has been seeking to increaseproduction capacity to put an end tofrequent power cuts, especially during thesummer.

GE invested US$2mn last year in Algeria tobuild gas turbines with Sonelgaz. The currentagreement between GE and Sonelgaz followsthe international tender for the supply ofequipment for power generation, in whichbidders were required to commit to anindustrial complex for the production of itsequipment in Algeria.

Kharroub dam will be located 45km south of Tangiers


Agenda / NorthGE signs US$300mnmanufacturing facilitydeal with Sonelgaz

EU to provide US$95mn for water project in Egypt


Construction begins on Kharroub dam


Ugandan-based mobile serviceprovider MTN has rolled itsContactXchange service, which will allowusers to share contact details with a caller."The service prompts customers to sendtheir contact details after a call, thereforeenabling customers to effortlessly share,and update contacts as well as connectinstantly with each other. The key messagehere is convenience for our customers.MTN Uganda is keen on developingproducts and services which add value tothe lives of customers," Ernst Fonternel,chief marketing officer of MTN Ugandastated.This service is available on the MTN menu,allowing users to send their details locallyand internationally, including receiving andadding contacts to the existing phonebookfree of charge, stated the company."In the ever fast paced world we live in, it isour role to come up with time saving andyet cost effective solutions that help ourcustomers achieve their goals," Fonterneladded. MTN Uganda recorded 8.8mn subscribersacross Uganda in December 2013, themobile operator revealed.

Approximately 3,000 businesses in Ethiopia willbe expected to benefit from a 5.5mn Br(US$283,000) project that will attempt toempowering small-scale, non-state businesses.

The two-year project, supported by the CivilSociety Fund and funded by the Ethiopiangovernment and the European Union (EU), willlook to develop market chains, while alsooffering entrepreneurs with training andmarketing opportunities.

The project has been designed to support

Micro and Small Enterprises (MSEs) who havefaced a number of business constraints inrecent years.

According to Akalewold Bantirgu,programme manager of the Civil Society Fund,the Addis Ababa Chamber of Commerce &Sectoral Association (AACCSA) was selected outof a total of 154 applicants by EUrepresentatives to receive part of the fund, ofwhich it will take a seven per cent chunk of thetotal sum.

6

NEWS

Proflight Zambia has partnered with Fastjetto strengthen its route network across EastAfrica, with new routes to be launched to 15destinations across Zambia, Malawi andTanzania.

Keira Irwin, commercial director forProflight Zambia, said "We havestrengthened our partnerships with anumber of airlines recently, [such as]Emirates, Kenyan Airways and EthiopianAirlines as well as Precision Air.

"We are willing to bring in more inclinedpartners on board to widen our routenetwork that serves the existing travellingpublic and hoping to expand in small

regional destination ourselves."Proflight will maintain its current domestic

routes in Zambia and its link to Lilongwe inMalawi, from Lusaka, while Tanzania low-cost

airline Fastjet will primarily service the air linkbetween Dar es Salaam and Lusakabeginning in May 2014, as well as localTanzanian routes from Dar es Salaam.

Kenya will begin construction on the Mombasa-Nairobi standard gauge railway once fundsrequired to start the project have been released by China from a loan deal that should be finalised inJune 2014, according to Kenyan Deputy President William Ruto.

Ruto said that Chinese Prime Minister Li Keqiang would sign the "commercial agreements" duringan upcoming visit to the East African country.

"The initial preparations are on course. We have made budget allocations for compensation andother suppliers and come 2018 the railway will at least be working up to Nairobi," Ruto remarked.

Phase one of the US$14bn project will cost US$3.8bn. Kenya has set aside US$254mn from its2014 budget for the railway development levy, as well as dedicating 1.5 per cent of all imports,which raised more than US$173mn for the levy.

The railway will stretch from Mombasa in Uganda to Kigali in Rwanda, and Juba in South Sudan.

ContactXchangelaunched by MTN Uganda

Proflight Zambia has teamed up with a number of international and regionalairlines in recent years (PHOTO: Dylan Walters/Wikimedia Commons)


Agenda / EastProflight Zambia and Fastjet to set up new routes

Ethiopia businesses set to benefit from Civil Society Fund

Kenya to begin construction onUS$14bn railway line



S02 ATR May 2014 Agenda_Layout 1 4/23/2014 10:04 AM Page 7

South Africa's Transnet Freight Rail(TFR) has signed an agreement withBombardier Transportation South Africa(Pty) Limited for the supply of 240electric TRAXX locomotives worthUS$1.2bn.

According to TFR, the order is part of alarger agreement for more than 599 electricand 465 diesel train engines from fourdifferent suppliers the largest locomotivesupply deal in the country's history.

TFR will use the 240 TRAXX Africadual-voltage electric locomotives for itsgeneral freight business, withBombardier Transportation South Africa(Pty) Limited set to produce the newlocomotives in South Africa until theend of 2017. The first delivery of thelocomotives, designed for speeds of upto 100 km per hour, will be expected inApril 2016.

Lutz Bertling, COO of BombardierTransportation, said, "This landmarkorder demonstrates how BombardierTransportation continues to grow localroots in key emerging markets such asSouth Africa. The evolution of mobility isa global promise to drive economicgrowth with products and a supplychain that benefit the communities inwhich we operate."

Bombardier Transportation SouthAfrica (Pty) Limited has said that itwould seek suppliers and sub-contractors as it gears up to build thetrains, with more than 60 per cent of thecontract set to be executed locally.

8

NEWS

Israeli investment company Leviev Group (LGC)has plans to begin mining phosphate offNamibia's coast by 2018.

LGC is planning to demonstrate a processingplant at the port of Luderitz a harbour townin southwest Namibia. The project will bedeveloped by LGC's subsidiary, LL NamibiaPhosphates.

Phosphate is a major crop nutrient, alongwith potash and nitrogen. Environmentalconcerns led the Namibian government topreviously impose an 18-month freeze on newpermits for marine mining, despite thepotential for deep sea mining to open the wayfor new resources that could replace depletedland mines.

Erez Mishal, vice president of businessdevelopment and operations at LGC, said,"Through a demonstration, we would addressenvironmental concerns, allow full-scaleconstruction to proceed so production canbegin in 2018, and maybe even obtain alicence." The Namibian cabinet, however,approved a recommendation in September2013 that a moratorium on issuingEnvironmental Impact Assessment (EIA)

clearance certificates on bulk seabed mining for industrial minerals, base and rare metals in Namibian waters, be in place for a minimumof three years.

LGC has estimated that it can mine twomillion tonnes of phosphate rock per year, at adepth of 300 metres, adding that it wouldprovide finances worth US$20mn in thepreliminary stages, before seeking an industrypartner to complete development that wouldcost in the region of US$800mn.

LGC said the project would offer the lowestphosphate rock production costs in the worldat a projected US$16.61 a tonne, supported byan acid-based processing technique thatreduces the need to remove impurities firstfrom the rock.

The African Union Commission (AUC) has partnered with the Ministry of Information,Communications and Technology of the Kingdom of Swaziland and Internet Society (ISOC) toset-up an Internet exchange point in Swaziland to keep local internet traffic within the localinfrastructure.

"The Internet Exchange Point in Swaziland will contribute to bringing efficiency in therouting of intra-country internet traffic and hence faster and more secure exchange of intra-country internet traffic," , said AUC editorial officer Tankou Azza Esther.

The African Union (AU) has recently expanded capacity building support to assist in theestablishment of internet exchange points in 24 member states including Swaziland.

"In addition to the capacity building support, the AU has so far donated equipment andservices to set up and launch the Internet Exchange Points in Namibia, Burundi and Swaziland,"the commission stated.

"The total cost of the support extended to realize each internet exchange point is US$63,000.The Kingdom of Swaziland is the third Member State to launch the Internet Exchange Pointwith the support of the African Internet Exchange System Project of the AU," it added.

Bombardier wins SouthAfrican rail contract

LGC hopes to be able to mine phosphate of the coast ofNamibia by 2018 (PHOTO: Laika ac)

Bombardier will work with local companies on thedesign and construction of the locomotives


Agenda / SouthLeviev Group targets phosphatemining off the Namibian coast

African Union rolls out Internetexchange point in Swaziland



Computer Warehouse Group Plc(CWG) has revealed its auditedfinancial results to the Nigerian StockExchange for the year ending 31December 2013, with the resultsrevealing that the company's revenuesrose by 10 per cent to US$128.4mn, whileProfit After Tax (PAT) soared by 81 percent to US$3.7mn.

Upon reviewing the figures, AustinOkere, the group CEO, said in 2013 CWGconsolidated its operations by investingin new systems and processes which hasresulted in the percentage growth.

Okere also stated that CWG plannedto make a number of furtheracquisitions as part of its pan-Africanexpansion strategy.

"This shall give CWG a cost leadershipposition while delivering superior serviceto its customers. We shall continue tomake investments that would make CWGa global brand to behold. The focus inthe future would be to continue growingthe brand through initiatives directedtowards empowering the Africanentrepreneur," Okere said.

"This would be done by making ITavailable to SMEs on a subscription basis,thereby lowering the entry barriers to theuse of information technology. It is also asocial impact investment," he added.

JCB India Limited has introduced the JS360'snew Dieselmax 672 engine, which will beexported to Africa and Middle East.

The company stated that the new enginecould provide up to 25 per cent fuel savingsover the outgoing model, while a closed box-section revolving frame would increasestrength and reduce stress on the machine.

JCB India Limited, a 100 per cent subsidiaryof JCB UK, has been looking to expand inAfrica, according to recent reports. Thecompany has been manufacturing excavatorsranging from 8T to 22T, which are currentlyoperational in West, East and South Africa.

Jaswinder S Vilkhu, AVP of export sales atJCB, said, "Our biggest market in Africa hasbeen South Africa and Algeria but we haveconsolidated our position in East and WestAfrica as well, and the market is improving."

JCB India Limited has announced that itwill also introduce a larger Excavator JS360soon, which will be useful for large-scaleoperations like mining and earth works inIndia.

Vilkhu added that JCB attended the CIIAfrica India conclave in New Delhi in March2014 for the first time and the response was"tremendous".

10

NEWS

Temporary power generation firm Aggreko hasannounced its aim to double its output in Cted'Ivoire to 400MW within the next two years,targeting increasing power demand arisingfrom the country's growing economy.

Cte d'Ivoire has registered GDP growth ofclose to nine per cent and has invested heavilyin its long-neglected power infrastructure in aneffort to boost output and maintain its rapideconomic expansion.

Marc Vatel, operations director of Aggreko inAfrica, said, "We hope to double our electricityproduction in one or two years as we have thatcapacity."

The West African country, home to offshorenatural gas reserves, supplies power regionally

to Ghana, Burkina Faso, Togo and Mali, and hasplans in place to add Liberia, Sierra Leone andGuinea to its power grid.

The nation's total electricity capacity standsat close to 1,600MW, which the governmentaims to push to 4,000MW by 2020. Exports toits neighbours have, however, declined inrecent years as domestic demand hasoutpaced new power generation.

"Our cooperation with the Ivoriangovernment could legitimately increase as ourpower station functions with gas, producingcheap, clean energy with Ivorian gas," said Vatel.

Aggreko recently began supplying 50MW ofemergency power to Conakry, the capital ofneighbouring Guinea.

The Federal Ministry of Works in Nigeria has started the renovation of an 80 km stretch ofhighway from Obajana through Kabba to Ilorin. The project is expected to cost NGN8.22bn (US$50.7mn) and will be completed within a 36-month time period, according to works minister Mike Onolememen.CGC has been awarded the construction contract and is expected to open major links tothe continent's largest cement factory in Obajana, as well the Ajaokuta Steel Plant.Onolememen said, "The road connects Kogi and Kwara States, while also serving as aconnector highway that links the North-South Arterial route A1 (Lagos-Ibadan-Ilorin-Kaduna-Katsina) to the North-South Arterial route A2 (Warri-Benin-Lokoja-Abuja-Kaduna-Katsina)."

CWG reveals 81 per centgrowth on PAT

CWG founder and CEO Austin Okere (left) speakingwith Ngozi Okonjo-Iweala, Nigeria's minister offinance and coordinating minister of the economy(right)


Agenda / WestAggreko to double Cte d'Ivoire output

JCB India to export new excavatorengine to Africa

Renovation work starts on Nigeria road



12

NEWS

June10-11Connecting West AfricaDakar, Senegalwestafrica.comworldseries.com

10-11Cloud World Forum AfricaJohannesburg, South Africaafrica.cloudworldseries.com

10-12East Africa Oil & Gas SummitLondon, UK eastafrica-oil-gas.com

17-19Card, ATM & Mobile Expo AfricaLagos, Nigeriawww.cardatmandmobilexpo.com

18-20Africa Energy ForumIstanbul, Turkey africa-energy-forum.com

22-24Africas Big SevenJohannesburg, South Africawww.exhibitionsafrica.com

22-24SAITEXJohannesburg, South Africawww.exhibitionsafrica.com

24-25ZIMECLusaka, Zambiawww.zimeczambia.com

24-25VAS Africa 2014Johannesburg, South Africavasafrica.comworldseries.com

July1-2Africa RailJohannesburg, South Africawww.terrapinn.com

1-2Africa Ports and Harbours ShowJohannesburg, South Africawww.terrapinn.com

2-4Water AfricaAccra, Ghanawww.ace-events.com

2-4West Africa Building &ConstructionAccra, Ghanawww.ace-events.com

2-4Cape Industries Showcase 2014Cape Town, South Africawww.exhibitionsafrica.com

2-4Refrigeration and Air ConditioningExhibitionCape Town, South Africawww.exhibitionsafrica.com

23-25Mine EntraBulawayo, Zimbabwezitf.net/mine-entra

Events / 2014

The Africa Energy Forum (AEF) will return in June looking to addressthe issues facing the growing demand for energy across thecontinent and the requirements of this vital industrial sector.

The event, which this year celebrates its 16th anniversary, will actas an international gathering place for governments, African powerutilities and the global energy industry, providing each stakeholderwith the chance to discuss the future of the continent's powerinfrastructure.

Set to take place in Istanbul, Turkey, the event is expected toattract a wide ranging list of professional experts who will be able todeliver knowledge and information on how the energy sector canmeet the demands of an economically vibrant continent.

Described by organisers Clarion Events as "the biggest and mostinteresting conference on African energy in the world", AEF 2014 willfeature new workshops on 'Mastering Communications, ManagingExpectations' for public and private sector organisations, as well as hostinga national pavilion from Kenya showcasing how the country's powerindustry will hope to deliver 5,000MW within a time period of 40 months.

The 'Africa Talks' platform will include presentations from the likesof Standard Bank and Azura Power, while the Special Session willfocus on nuclear power within the political agenda.

The event will also look to engage the next generation ofengineering, legal and financial experts by bringing a number oftalented students to AEF as part of the EnergyNet StudentEngagement Initiative (ESEI).

Among the key industry players in attendance at the event will be anumber of government representatives and global power investors,and leading manufacturers and suppliers from across the energyindustry. The list of confirmed speakers at the event set to share theirexpertises and experiences includes Salvador Namburete, minister forenergy in Mozambique; Prof. Sospeter Muhongo, minister for energyand minerals in Tanzania; Turkish minister for energy Taner Yldz; andNeside Tas Anvaripour, director of business development at theAfrican Development Bank.

Following the 2013 edition of AEF, Alex Katon, executive director ofInfraco Africa said, "AEF is the only event that I would recommend forthose wishing to develop, finance and build power projects in sub-Saharan Africa."

AEF will take place from 18-20 June 2014 at the Hilton IstanbulBomonti Hotel & Conference Center.

africa-energy-forum.com

AEF set to address the continent's energy challenges

African Review of Business and Technology - May 2014 www.africanreview.com


S03 ATR May 2014 Bulletin_Layout 1 4/23/2014 10:08 AM Page 13

14

NEWS

Bulletin / InvestmentGrowth in Africa set to hit 5.2per cent in 2014Strong investment and household spending

is helping fuel economic growth in sub-

Saharan Africa, which has been forecast to

rise from 4.7 per cent in 2013 to 5.2 per cent

in 2014; according to the World Banks twice-

yearly analysis report Africas Pulse, rising

investment in infrastructure and natural

resources, along with strong household

spending has aided Africas economic

prospects with notable growth evident in

resource-rich countries such as DR Congo and

Sierra Leone, steady growth noted in Cte

dIvoire, and rebounding buoyancy in Mali's

economy supported by the country's

improving political situation.

Cape Verde joins Africa FinanceCorporation Cape Verde has joined Nigeria and a number

of other West African countries, including

Ghana, Chad and Liberia, as the latest

member state of the Africa Finance

Corporation (AFC); Cristina Duarte, Cape

Verde's minister of economy and finance, who

signed the Instrument of Accession and

Acceptance of membership of the AFC on

behalf of the country, said, "I am very pleased

to formalise Cape Verdes membership of the

AFC Cape Verde and the AFC have enjoyed a

very productive and collaborative

relationship over the last few years."

Nigeria could "learn from the US in terms of

expertise".

Atlas Mara Co-Nvest to acquireAfrican BankAtlas Mara Co-Nvest, the investment

company backed by the former Barclays chief

executive Bob Diamond, has agreed to take a

majority stake in ABC Holdings, which

operates the African bank BancABC, and to

acquire its controlling shareholder ADC

African Development Corporation for close to

US$265mn in cash and shares; the deal marks

the first acquisition made by Atlas Mara since

it was formed last year by Diamond and

entrepreneur Ashish J. Thakkar, and led

Diamond to declare, "Our objective is to build

Africa's premier financial services group

leveraging the access to capital, liquidity and

funding that we at Atlas Mara can provide."

South African credit providertargeted by France's largestbank

France's largest bank BNP Paribas has started

negotiations on the purchase of a South

African consumer credit provider owned by

Standard Bank and Foschini; BNP Paribas

started talks to buy RCS Investment Holdings,

which was formed as a joint venture between

clothing retailer Foschini, who owns a 55 per

cent stake, and Standard Bank, for US$254mn

and follows BNP Paribas' 2011 purchase of a

controlling stake in the securities unit of

South African-based Cadiz Holdings.

EU and African leaders look toincrease trade and investment ties Leaders from across the EU and African have

called for a "fundamental shift" in cooperation

at a recent meeting in Brussels where leaders

from both continents pledged to deepen

trade and investment ties by developing more

productive supply capacity, building up

markets, and implementing infrastructure and

governance reforms in Africa; the summit was

the EUs largest ever summit, bringing

together more than 60 heads of state, and led

to a joint declaration that stated, "We are

convinced that trade and investment and

closer economic integration on each of our

continents will accelerate growth."

Nigerian prince calls for furtherUS investmentA Nigerian prince has called on the US

government to reverse the trend of US

companies ceding investment opportunities

to Chinese investors in the West Africa

country, which recently overtook South Africa

as the continents largest economy; in an

interview with The Washington Times, Prince

Adetokunbo Sijuwade, whose family holds

royal status in a region in southern Nigeria,

said the Obama administration should

increase its focus on Nigeria, asserting that

China had surpassed the USA in most major

sectors of the Nigerian economy and that

Cape Verde has become the latest African nation to jointhe Africa Finance Corporation (PHOTO: Quiebrajano)


BNP Paribas is France's largest banking (PHOTO:jyhem/flickr.com)

Atlas Mara Co-Nvest co-founder and former Barclayschief executive Bob Diamond (PHOTO: World EconomicForum)


16

NEWS

Bulletin / MiningDe Beers targets 1.16 millioncarats in NamibiaOtto Shikongo, CEO of DEB Marine Namibia

a 50-50 venture between De Beers and

the Namibian government has said the

firm will hit its production target of more

than 1.16mn carats in the ongoing financial

year; DEB Marine's projections could prove

to be a key indicator of the steady recovery

of the Namibian diamond industry, which

has been recovering following the slump

the global diamond industry experienced

from 2008 to 2009 due to the global

economic crisis, with its production target

for this year expected to be within the same

margin as last year's production.

Expansion resumes at UnkiPlatinum Mine Anglo America Platinum's Zimbabwe

platinum mining arm, Unki Platinum Mine,

has resumed its expansion, which was

temporarily put on hold in 2013 following

the fall of global platinum prices, after a

twin-decline shaft system was put in place

to provide staff access to the underground

energy and iron ore mining in Sierra Leone,

on which exploration works began in 2011

and mining has been scheduled to start in

2017; Kingho signed a Memorandum of

Understanding (MoU) with Sierra Leone's

Ministry of Mines & Mineral Resources in

May 2013 and said it could spend between

US$6-10bn to mine an estimated 30mn

tonnes a year of iron ore in Sierra Leone,

but stated it would not go it alone on the

project.

Botswana mining bodyannounces iron ore discovery The CEO of Botswana Chamber of Mines,

Charles Siwawa, has announced that

mining giant Rio Tinto may have found

"huge" iron ore deposits in southern

Botswana; the discovery, located in Werda,

is believed to be an extension of South

Africas Sishen deposits, which are currently

mined by Anglo Americans Kumba Iron

Ore, and Rio Tinto will continue exploration

work in the area near Botswanas border

with South Africa, on which it has been

working for the past three years.

mine; according to Anglo America

Platinum's media and external relations

manager Mpumi Sithole, Unki Platinum

Mine was currently operational as usual and

studies have been underway to determine

the optimal expansion of the mine to a

level that would contribute to a significant

reduction in the company's operating cost

base.

Tanzania to set aside funds forsmall-scale miners The Tanzania government will put set up a

set aside more than US$1mn towards the

development of the country's small-scale

miners, following an announcement by

Prof. Sospeter Muhongo, the country's

minister for energy and minerals; Muhongo

said the government had made the move in

order to aid small-scale miners carry out

their operations with the use of better and

modern tools, in order to increase

productivity, raise incomes and improve

Tanzania's overall GDP.

Mining production falls inSouth Africa Mining production decreased by 4.8 per

cent year-on-year in February 2014,

according to the latest Mining and

Production Sales statistical release from

Statistics SA, with the department noting

the largest negative growth rates were

recorded for PGMs at -35.8 per cent,

building materials growth rates dropping

by -10.3 per cent and diamonds falling -8.4

per cent; in addition, seasonally-adjusted

mining production decreased by seven per

cent during the same period, the

department added.

Potential partners piling upfor China Kingho's investmentin Sierra Leone China Kingho Energy Group has claimed to

have more than 10 interested parties for its

US$6bn-plus investment in infrastructure,

Namibia's diamond industry suffered a prolonged slumpfollowing the 2008-2009 global financial crisis (PHOTO:Swamibu)


China Kingho could mine an estimated30 million tonnes a year of iron ore inSierra Leone (PHOTO: Peter Craven)


S04 ATR May 2014 On the Web_Layout 1 4/23/2014 10:36 AM Page 17

The European Investment Bank (EIB) has signed a US$2.8mn deal with the African Trade InsuranceAgency (ATI) to boost training within Africa's energy sector.An institution with expertise in risk mitigation on investment, ATI will use the grant to obtainspecialist skills for underwriting energy sector projects.Over the years, EIB has shown interest in investing in the energy sector, including in the LakeTurkana Wind Project the largest project of its kind in Africa.africanreview.com/energy-a-power/power-generation

EIB signs energy training investment agreement with ATI

EIB has invested in a number of energy projects includingthe Lake Turkana Wind Project in Kenya (PHOTO: AndreaKratzenberg/freeimages.com)

18

WEB SELECTION


African Review/On the WebA selection of product innovations and recent service developments for African businessFull information can be found on www.africanreview.com


Strong economic growth in Mozambique has contributed to asignificant business surge at information provider and recordmanagement company Metrofile Records Management Mozambique.According to company sources, the Mozambican economy grew by6.5 per cent in the first six months of 2013, compared to the sameperiod last year, with the strongest growth of 23.3 per cent recorded inthe financial services sector.africanreview.com/financial/business

Economy boost for Metrofile's business in Mozambique

New Kush Exploration & Mining (NKEM) and the state government ofEastern Equatoria have begun the first gold mining exploration in threecounties of the Kapoeta region in South Sudan.Anthony Viljoen, director of NKEM said, "We have been granted alicense of operation to undertake gold mining and exploration in thestate by the central government in Juba. New Kush has conductedwide-ranging consultations with leaders in the counties of KapoetaNorth, South and East."africanreview.com/construction-a-mining/quarrying

Gold mining begins in South Sudan


19African Review of Business and Technology - May 2014www.africanreview.com

WEB SELECTION

The Industrial Development Corporation (IDC) of South Africa hasannounced that it will invest in Nigeria's mining sector.IDC said that it was prepared to partner with local investors inthe development of project plans, financing and executing,provided the cost is not less than US$10 million.Ashley Petersen, senior business development manager of IDC,Africa Unit, said, "Nigeria's huge population and naturalendowment places it as a destination for sustainable investment."africanreview.com/construction-a-mining/quarrying

South African firm to aid Nigerianmining sector

Kenya Airways has acquired the first of the nine Dreamliner 787 jetsit expects to receive from Boeing by July 2015.Under the Mawingu Project, Kenya Airways (KQ) has embarked on a10-year fleet expansion plan, increasing its capacity and boosting itsair traffic market share in Africa."The next Dreamliner delivery shall be in July, then August,September and the final one for this year in October when we willtake a break until next year," observed KQ chief executive officerTitus Naikuni.africanreview.com/transport-a-logistics/aviation

Kenya Airways takes delivery of firstDreamliner

Pharmaceutical major GlaxoSmithKline (GSK) is to invest US$216 millionin Africa's healthcare sector, which includes the development of a lab,expansion of manufacturing facilities and training of communityhealthcare professionals.GSK will invest US$41 million in creating the world's first research anddevelopment open lab for non-communicable diseases in Africa, whichwill improve the understanding of NCD variations across the continent. Possible research topics could include the apparent higher prevalence

of treatment-resistant hypertension and aggressive breastcancers in young women. These insights will help

prevent and formulate treatment strategies sothat scientists and academics can develop newmedicines to address the specific needs ofAfrican patients, the company stated.africanreview.com/manufacturing/industry

GSK to invest US$216 million in Africa's healthcare sector

Kenya Airways will take delivery of nineDreamliner 787s by July 2015 (PHOTO: Boeing)

GlaxoSmithKline will invest US$41 million to create an open lab to research non-communicable diseases in Africa (PHOTO: Ian Wilson/flickr.com)


India and Africa have a lot to give and learnfrom each other. According to the recentlyreleased McKinsey report, India can aspireto quadruple revenues from Africa toUS$160bn by 2025, by developing itspresence in sectors like IT services,agriculture, infrastructure, pharmaceuticalsand consumer goods. These are areas whereIndia has a unique value proposition andAfrican nations have high needs.

With this quid pro quo perspective, theannual CII-EXIM Bank Conclave on India AfricaProject Partnership was held recently in NewDelhi, India.

Media partner African Review spoke withNoel Tata, the chairman of CII AfricaCommittee, to gather more in-depthknowledge of the business that took placethis year

Its been a decade since CII Africa IndiaConclave showcased its first edition. Howhas the journey been so far?The event has gone from strength tostrength since it was launched in 2005,organisers said. This year we organised the10th edition of the Conclave, which is amilestone for any international meetinvolving such a large number of countries.

The conclave, which was initiallyconceived to promote Indian exports toAfrica and identify the development needsof African countries, saw the annual eventacquire several new dimensions down theyears to become the most powerful platformfor cementing bilateral and multilateralbusiness collaborations.

To illustrate this, in the first nine editions,985 projects worth US$172bn werediscussed; 4,684 delegates from Africa and4,292 delegates from India participated inthe deliberations. This year, over 500delegates from 45 African countriesparticipated in the Conclave and 549projects worth about US$85.37bn werediscussed.

The conclave is also known for its highlevel participation. Every edition has seenthe presence of heads of state and

government of African countries. This year,Dr Motsoahae Thomas Thabane, PrimeMinister of The Kingdom of Lesotho, PartnerCountry of the Conclave, andrepresentatives from DR Congo, namely theFocus Country, were present at the meet.

What are the business opportunities inAfrican countries that were opened up atthis summit? Which countries have beenextremely responsive and eager to let Indiainvest in Africa?African leadership has always recognised thecritical role of Indian government andindustry in promoting economicdevelopment in the region. This year, theAfrican delegates laid particular emphasison Indian private sector participation in theirrespective countries agriculture andindustrial sectors. As a case in point, DrMotsoahae Thomas Thabane, Prime Minsterof The Kingdom of Lesotho, said that Indiasdevelopment model is ideally suited toAfrican economies. He cited education andtraining, science and technology,infrastructure development, and agricultureand food security as the most promisingareas for bilateral partnerships.

Likewise, the Republic of Congoleadership said that Indian privatecompanies could play a key part in theAfrican countrys march to become anemerging economy by year 2025.Agriculture and agro-processing, mining, oil,building and construction, tourism, hotels,and financial services were cited as areaswhere Indian investments could make a bigdifference.

Uganda called for Indian investments inthe countrys oil and mining sectors. Thecountry has made significant oil discoveriesand has huge reserves of minerals likecobalt, uranium, graphite, etc. Mozambique,one of the fastest developing economies insub-Saharan Africa, sought Indianinvestments in areas like agriculture,telecom and communications, financialservices and trade. Countries like SierraLeone, Sudan and Zimbabwe also madesimilar pitches for Indian investments.

What are the incentives provided to Indianprivate companies operating in thecontinent?While there are no specific incentivesoffered to Indian companies investing in

10th CII-EXIM Bank Conclave on India Africa Project PartnershipADVERTORIAL

20

Africa, India ties get better over the years

Arancha Gonzalez, executive director of International Trade Centre; Anand Sharma, minister of commerce andindustry, Government of India; and Dr Motsoahae Thomas Thabane, Prime Minister, Kingdom of Lesotho, inauguratethe 10th CII-Exim Bank Conclave on India Africa Project Partnership


S05 ATR May 2014 Advertorial_Layout 1 23/04/2014 14:53 Page 20

Africa, the African leadership underlined theadvantages that India will derive byparticipating in Africas industrialisation.They pointed to the immense potential forIndia in tapping Africas mineral andhydrocarbon resources. Africa also has alarge youth population that can be trainedfor industrial activities. So, Indiancompanies looking to globalise theiroperations could consider Africa as a basefor connecting with different geographies.

What are the major sectors in Africa that CIIis looking at aiding, besides mining, oil andgas and agriculture?Manufacturing is clearly a focus area forIndia-Africa partnerships. CII is activelyinvolved in furthering partnerships in thisspace. IT/ITeS, education, healthcare, non-conventional energy development, drugsand pharma, and R&D are some of the otherareas that hold much promise for cross-border collaborations.

What has the business growth rate been inthe continent since the CII Africa IndiaConclaves inception? What are the sectorsrapidly growing in Africa?Africa as a whole has maintained healthy GDP

growth since 2005. The region recorded 6.1per cent GDP growth in 2005, 5.9 per cent in2006, 6.3 per cent in 2007, and 6.6 per cent in2008. Even in the difficult years following theglobal economic meltdown, Africamaintained reasonably good GDP growth,such as 5.4 per cent in 2009 and five per centin 2011. 2012 saw a significant spike with 6.6per cent GDP growth but it dipped to 4.8 percent in 2013.

In terms of sectoral growth, Africa hasderived the benefits of rising global

commodity and fuel prices. Now the time hascome for the region to diversify its economiesand drive industrial growth.

What steps is the organisation taking toincrease more presence in the continent?CII has played a catalytic role instrengthening the India-Africa ties. CII worksto strengthen Brand India in Africa bybuilding long-term, sustainablepartnerships between the two regions.

The CII Africa Committee drives CIIsengagements with Africa. The committee,having both large and small enterprises asmembers, develops strategies to improvebilateral economic, industrial and traderelations, and addresses areas of concernwhile presenting recommendations andprobable solutions for deeper bilateralengagements. The Committee also draws upnew guidelines and checklists for differentbilateral industrial cooperation activities.The focus areas are: Promoting Brand India Finance and banking Consulting and investment promotion Knowledge management and skill

development Agriculture and allied services

ADVERTORIAL10th CII-EXIM Bank Conclave on India Africa Project Partnership


The summit has also set the ground for

Africa to effectivelyutilise concessional

financial flows fromIndia for supporting the

development of itsinfrastructure industry

and services


10th CII-EXIM Bank Conclave on India Africa Project PartnershipADVERTORIAL

22

What is the objective of the India AfricaForum Summit?The summit is guided by over-arching goalsstraddling economic cooperation, politicalunderstanding, cultural ties, among others.Here, I will touch upon the economicdimension. Africa and India have reiteratedthe mutual desire to expand bilateraleconomic cooperation and trade andinvestment linkages. The summit has alsoset the ground for Africa to effectivelyutilise concessional financial flows fromIndia for supporting the development of its

infrastructure industry and services. Besides, India and Africa have reaffirmed

their commitment to cooperate forincreasing agricultural output andachieving the Millennium DevelopmentGoal of halving the proportion of peoplewho suffer from hunger and malnutritionby 2015. At the summit, leadersemphasised the importance of harnessingthe latest scientific research for raisingproductivity and for the conservation ofland and the environment to ensure foodsecurity. Hence, India has agreed to

collaborate in the implementation of theComprehensive Africa AgriculturalDevelopment Programme (CAADP).

Indian government and industry hastaken up major capacity building initiativesin Africa following the summit meetings. AsAfrica moves towards rapidindustrialisation, there is a growingrecognition that SMEs offer significantavenues for supporting industrialisation,generating employment and enhancinglocal capacities. This is another focus areafor bilateral cooperation.


JCB India Limited started operations in 1979and today it is the fastest growing company inthe Indian earthmoving and constructionequipment industry. The company is a pioneerin the industry and has been recordingexcellent growth rates year-on-year. JCB Indiais a 100 per cent-owned subsidiary of JCB UK.JCB is looking at aggressively creating astronghold in the African market place.

JCB machines can be seen working onalmost all sites in construction, mining, plantand hiring. JCB has more than 375 modelsmanufactured globally catering to variousapplications. JCB India has three factories in

India and is constructing another plant inJaipur. Worldwide, JCB has 22 factories.

Talking about the company strategy,Jaswinder S Vilkhu, AVP export sales, said,Our biggest markets in Africa have beenSouth Africa and Algeria, but we haveconsolidated our position in East and WestAfrica also and the market is improving. Westarted exporting machines into Africa fromPune as well as Ballabgarh plants in the lastthree years.

JCB India is also introducing a biggerExcavator JS360 soon which will be useful inmining and earth works applications in India.

This machine is highly productive and is veryeconomical to operate.

The JS360s new DIESELMAX 672 engineprovides up to 25 per cent fuel savings overthe outgoing model, while a closed box-section revolving frame increases strengthand reduces stress, according to thecompany website. Subsequently these willbe exported into Africa and the Middle Eastfrom India.

Vilkhu also added that JCB India has beenmanufacturing excavators ranging from 8T to22T which can be seen operational in East,West and South Africa.

Jindal Steel and Power Limited (JSPL)forayed into Africa in 2006 and currentlyhas business interests in mining and powerprojects across the continent withpresence in more than 13 countries.Hervinder Singh, senior vice-president mining at Jindal Steel and Power, said, Ourmain focus is on the mining and powersector in Africa with plans to manufactureand export value-added products as well.

Talking about the companys expansionplans, he mentioned that the vision is tobe a US$20bn company in terms ofturnover by 2020. JSPL has an operationalmine in Mozambique, which producesthree million tonnes of semi-hard cokingcoal and thermal coal. We have plans toexpand to 10 MTPA, and we are alsoworking on having our own port jetty andrailway connectivity. We also own a coaldeposit in Botswana and have planned apit head power plant once thepowerpurchase agreement (PPA) is finalised.

With regards to South Africa, thecompany has an operational 1.3 MTPA

anthracite mine at Kiepersol. We are alsodeveloping an iron ore project in Melmoth,South Africa, where most of theexploration has already been carried outand currently detailed work and feasibilitystudies areunder progress. In Namibia,Jindal Steel and Power owns concessionsfor exploration of iron ore and manganese.In Senegal, the company has signed a MoUfor a power project and is at an advancedstage of finalisation of a PPA.

The company said that it is very bullishwith its development in the region.However, Singh cautions that despite thegrowing interest in Africa, there are majorconcerns related to supportinginfrastructure in terms of ports, rail androad networks. He mentions that thepolicies in the African countries are not yetfully developed. Most countries are veryyoung, having recently attained freedomand have a long way to go. Whileevaluating investments one has tocalibrate and mitigate the risk factors inthese countries.

Kirloskar Brothers Limited (KBL) made amarked presence at CII Africa-India Conclave2014. Chairman and managing director ofKBL, Mr Sanjay Kirloskar firmly believes thatIndian companies operating in Africa would dowell by tapping the skill-sets of availabletalent and nurturing their capabilities throughan intensive industrial training programmes.A trained local workforce is a key to Africassustained industrialisation. He also pointedout that Indian AAA technologies have greatrelevance in Africas industrial sector.

Talking about business in Africa, Mr Kirloskarsaid, Weve been supplying farm equipmentin Africa since 1960s or even earlier than that.In the 1930s when a Dutch company exportedour sugarcane crushers and a large number ofdiesel pumps into East Africa, Kirloskarbecame a generic name in the African region.In the year 1978, we established our base inKenyaand made investments in manufacturingfacilities in 2003 and 2008 in South Africa.Mr Kirloskar added that he sees hugepotential in Egypt, Sudan, Ethiopia, Senegaland all over southern Africa.

JCB India gears up for further push in Africa

Jindal Steel and Power: Drilling its way into the heart of Africa

KBL looks for humanconnections in Africa


BUSINESSNigeria

23

Encouraging financial inclusionMasterCard debit cards will be issued in Nigeria under a new 10-year deal

African Review of Business and Technology - May 2014www.africanreview.com

Anew debit card issurance agreementbetween MasterCard and Ecobank hasrecently been signed in Nigeria.The deal follows a licensing agreement

made between the two organisations inJanuary 2014 to provide MasterCard paymentsolutions across 28 sub-Saharan Africancountries.

Patrick Akinwuntan, executive director -domestic banking at Ecobank Group, said,Electronic payment platforms provide a cost-effective way to improve financial inclusion inAfrica, which is at the core of the vision ofEcobank. In teaming up with MasterCard, weare providing our customers with a best ofbreed solution, combining local marketknowledge and proven technological

expertise with the economies of scale.Nigeria is currently on a drive to accelerate

the adoption of electronic payments, withvarious stakeholders including the CentralBank of Nigeria launching consumereducation campaigns.

Nigerian banks, for example, working withthe Nigeria Interbank Settlement Scheme(NIBSS), have commenced a consumerawareness campaign to explain the benefits ofelectronic payment platforms, with the aim ofincreasing acceptance of the method.

Jibril Aku, managing director of EcobankNigeria, said, In Nigeria, increasedurbanisation, a growing labour force and therise of online shopping are fuelling demand formore convenient payments.

Using electronic payments to penetrate thecountrys unbanked population of nearly80mn also represents a market with huge,untapped potential.

Daniel Monehin, division president - sub-Saharan Africa at MasterCard, commented,We envisage a world beyond cash in Nigeriaand Africa, where consumers can enjoy thesecurity, efficiency and convenience ofelectronic payments. Our vision can onlybecome a reality through collaborations withkey industry stakeholders, such as theEcobank Group.

Working together with governments,financial institutions, merchants andbusinesses, we will be able to help modernisethe payment industry in Africa, he added.


Recent developments in Zambias foreignexchange market have raised concernsamong numerous stakeholders,including the public.

In line with the government policy, thecentral bank continues to pursue a flexibleexchange rate policy which it believes is vitalfor achieving timely macroeconomicadjustment. It is in this regard, that from timeto time, as and when necessary, it isimportant that the bank intervenes.

As a way of stabilising the volatile Kwacha,the Bank of Zambia (BoZ) has injectedUS$70mn (about K385mn) into the financialsector, the government has revealed.

This is part of a number of interventionsbeing undertaken by the central bank tostabilise the Kwacha against majorconvertible currencies, particularly the USdollar.

According to the Treasury Information,Kwacha trading against the US dollar hasdepreciated by over one per cent. TheMinistry of Finance indicates that the BoZ

supplied US$70mn to the market in a bid tosupport the local currency.

The exchange rate of the Kwacha againstthe US foreign exchange market have raisedconcerns dollar depreciated by 1.33 percent during the week closing at K5,7853from K5,7095 recorded on February 18,2014. This was largely driven by increaseddemand for dollars, coupled with lowersupply, the brief says. Another interventionto be effected in March this year is theincrement of the statutory reserve ratiofrom eight to 14 per cent.

The Bank of Zambia has tightenedmonetary policy by raising the statutoryreserve requirements from eight to 14 percent for non-government deposits. Thismeasure is effective March 10, 2014 and isaimed at reducing the high levels of liquidityin the banking system and should supportgreater stability in the exchange rate, thebrief read.

Isaac Muhanga, assistant director offinancial markets at BoZ, said that the Kwacha

is expected to recover the losses followingthe statutory reserve intervention and policyrate to about 10.25 per cent.

The central bank has raised the policy rateby 50 basis points to 10.25 per cent effectiveMarch 2014, from the 9.75 per cent inFebruary 2014. This has been attributed tohigh inflationary pressures that havecontinued on the upward trajectory from 7.3per cent in January to 7.6 per cent in February.The 7.6 per cent is higher than the 6.5 per centtarget set by government for the year 2014.

However, while the interventions areexpected to mitigate the Kwacha volatility,the response by financial institutions isexpected to determine the currencysdirection.

Meanwhile, the Kwacha, which has beenin the past months traded on a downwardstrend, is anticipated to recoup the losses inview of the market witnessing significantUS dollar inflows from corporatationsmeeting their month-end tax obligations,financial analysts have said.

ZambiaBUSINESS

24

Zambia looks to stabilise KwachaBank of Zambia pumps US$70mn into the countrys economy tosupport domestic business growth

The Bank of Zambia has tightened monetary policyby raising the statutory reserve requirements from

eight to 14 per cent for non-government deposits


S06 ATR May 2014 Report - Business_Layout 1 4/23/2014 11:40 AM Page 24

The Kwacha on 7 March 2014 breachedK6 to a dollar, a record low, for the firsttime in over two decades, financial analystshave said.

BoZ explains that the depreciation trendin the exchange rate observed over time isdue to a combination of domestic andinternational market developments.

The consistent economic growth thatZambia has recorded over the years has ledto a steady increase in imports, particularlycapital goods critical for sustaining suchgrowth. Although exports have alsocontinued to show impressive growth,demand for imports has relatively beenstronger, thereby contributing over time tothe exchange rate depreciation.

In addition, Zambias increasedintegration with the world economy,achieved through liberalising its externalcurrent and capital account transactions,has implied that international economicdevelopments have had a significantimpact on the exchange rate. Morerecently, for instance, it is important toobserve that the US Federal ReserveBoards decision to reduce the amount ofUS dollar liquidity supplied through itsquantitative easing programme has

broadly affected several emerging markets,including Zambia. Specifically, the FederalReserves course of action has led to fearsof slower growth of major emergingeconomies, particularly China.

Consequently, the price of copper,Zambias major export earner, remainedsubdued, thereby undermining investoroptimism. Further impact has also been

felt through a slowdown in portfolioinvestment inflows, which have hithertoplayed an important role in financing ourcurrent account deficits.

Financial market analysts say the localunit is expected to gain against thegreenback owing to expected increaseddollar supply in view of the month-end taxobligations by corporates.

BUSINESSZambia

25African Review of Business and Technology - May 2014

Although exports have also continued to showimpressive growth, demand for imports has beenrelatively stronger, thereby contributing over time tothe exchange rate depreciation



Being rich in natural resources, Tanzania has been attractingvarious Western and Asian countries to invest and trade withboth the government and local private companies. For example,an oil and gas industry delegation from the UK recently visited thecountry to explore the growing investment opportunities for Britishbusinesses. And the Finnish Prime Minister Jyrki Katainen led abusiness delegation of 27 companies to the east African nation,seeking to open up trade relations with the Tanzanian governmentand various companies.

Amongst the most prominent and proactive nations is Turkey, whois determined not to be left behind in the pursuit of investmentopportunities.

In an exclusive interview with African Review, Turkish ambassador toTanzania Ali Davutoglu advised both local and internationalcompanies to focus on making huge investments in the country ratherthan concentrating on trade so that Tanzanians could benefit fromtheir resources.

The Turkish envoy reported that Turkey is actively encouraginginvestment projects in Tanzania, and that it is doing so in order tobenefit society as much as to realise business potential. Turkey isaiming to use investment in Tanzania to help solve the nations youthunemployment problem.

Mr Davutoglu stated that youth unemployment is a critical issue inTanzania and that both local and international companies shouldmake more investment in order to create job opportunities. Accordingto various studies, at least 50 per cent of the worlds population isunder 25 years of age and Tanzania has the 10th largest youthpopulation in the world, with a rate of more than 50 per cent youthunemployment. Whilst new entrants to the labour market, fromschools and colleges, stands at approximately 700,000 annually, it isestimated that only three per cent gain formal employment, with theremaining 97 per cent participating in the informal sector.

According to the envoy, the Tanzanian economy presently needsinvestment as much as trade, if not more. He said that investmentcreates employment, the importation of technology, increasingrevenues and income to both investors and employees.

What we need is a win-win situation in this area, there should be afocus on investment that will help Tanzanians and bring income to theinvestors as well, he added.

Tanzania's trade and investment potentialMr Davutoglu said Tanzania was among the prime candidate countriesfor Turkish trade and investment. He added that the two countrieshave been working together since the 1980s. Turkey exports various

construction materials such as iron, steel, tiles, and PVC doors andwindows to the East African country. Moreover, the country importsspare vehicle parts, as well as electronic goods. According to theenvoy, there are at least 20 Turkish companies in Tanzania that arefocusing on the importation and distribution of various products fromTurkey. Moreover, there are big companies in the mining andconstruction sector. From Tanzania, the principal exportation is in theleather, cotton and tobacco sectors.

Commercial and economic relations between the two countriesgained momentum following the opening of the Turkish Embassy in2009. The volume of bilateral trade rose to US$156mn by 2012, up by400 per cent as compared with 2004. Moreover, Turkish companieshave managed to penetrate various areas, being well-known formanaging construction projects and managing to bid on and winsome big construction tenders in the country.

He stressed that the Mafia Island airport, which was underrenovation, was completed by the Turkish company Kuanta

TanzaniaBUSINESS

26

Seeking solutionsthrough bilateral tradeTurkey and Tanzania continue to enjoy good commercial and politicalrelations, as Turkish ambassador to Tanzania, Mr Ali Davutoglu, reveals inan interview with African Review

Turkish Ambassador to Tanzania Ali Davutoglu



BUSINESSTanzania


Construction and that other companies are also engaged in variousconstruction projects like road and power stations, for example, and arebidding for the renovation of other airports in the country.

The envoy said that in recognition of the potentiality of Tanzania indoing business, his government was encouraging Turkish companies tocome to Tanzania for investment opportunities. The aim was to enableboth Tanzanian and Turkish companies to operate in the country byforming a joint venture or through a public-private partnership (PPP)policy. The Turkish deputy minister of energy and natural resourcesMurat Mercan visited the country in February 2014, together with abusiness delegation, precisely to support this initiative, bringingtogether local investors and Turkish companies.

Investing in energyAccording to ambassador Davutoglu, Turkish companies are basicallylooking for investment opportunities in various areas includingrenewable energy in coal and many other areas. Inadequate electricpower is seen as a main challenge to Tanzanias economic growth. TheTanzania Electric Supply Company (TANESCO) is responsible for thesupply of 98 per cent of electric power in the country. However itgenerates only 773MW to the national grid.

The countrys power generation system encompasses the use ofhydro, thermal and gas power. The envoy suggested that the nationalgrid should be enlarged by generating more power from differentsources such as coal, gas and other sources. He said there must bediversity on power generation. According to the envoy, the governmentmay take immediate measures on implementing renewable energyprojects also besides focusing on gas projects alone. He added that theTanzanian deputy minister for energy and natural resources is in a goodposition to talk about Turkish involvement in gas and oil explorationprojects as well as renewable energy projects in Tanzania.

Tourism and tradeThe establishment of Turkish Airlines direct flight from Istanbul to Dares Salaam and Kilimanjaro has been a boost to the tourism business inthe country. The envoy said the establishment of the direct flight hasopened up business between Tanzania and other European countries.

According to Tanzania National Park (TANAPA), Tanzania received6.73mn tourists between the 2001/2002 and 2011/2012 seasons. Theincreasing number of tourists in recent years such as 2011 (1,019,027tourists) and 2012 (945,794 tourists) have contributed in one way oranother to the establishment of Turkish Airlines direct flights into thecountry from Istanbul.

Florence Mugarula

Turkish companies are basically looking forinvestment opportunities in various areas

including renewable energy in coal



Mozambique is on the cusp ofbecoming a leading player in thenatural gas market - the country sitson an estimated 1.27 trillion metres of provennatural gas reserves. It has also beenproducing gas for a couple of years in 2011it generated 3.8bn cubic metres of naturalgas from Pande and Temane. 3.3bn cu m ofthis was pumped to neighbouring SouthAfrica through petroleum company Sasols861km gas pipeline and the rest was set asidefor domestic consumption. However, it isexpected that Mozambique will startexporting natural gas on a much larger scalein the form of liquefied natural gas (LNG) by2018.

This imminent explosion of the natural gassector is due to a number of natural gasdiscoveries made by leading oil and gascompanies like American firm Anadarko andItalian company Eni in Mozambique'sRovuma basin since 2010.

We have made tremendous progress overthe last couple of years. We have secured170mn square metres, which willaccommodate initial projects as well asexpansion projects in Area 1 and Area 4, saidJohn Peffer, country manager of AnadarkoMozambique. He added that his companyrecently submitted an environmental impactreport to the Mozambican government,which it expects to be approved in May 2014.The company is also in talks with thegovernment about the contractualframework for projects.

In March, Anadarko announced that it hadinked long-term supply deals with Asianbuyers. There is a lot of interest in themarket. We have found buyers for two-thirdsof volumes for first project, added Peffer. Thecompany hopes to sign such agreements inthe future, as it feels these deals are essentialto raise capital for large scale LNG projects,which have de-risked Anadarkos LNG plans,according to the companys CEO. Since 2010,Anadarko has drilled more than 20 deepwaterwells in its Offshore Area 1 Block, a 2.6mnacre area in Mozambiques northerndeepwater Rovuma basin. As a result, it hasdiscovered around 1.2 to 1.9 trillion cu m of

recoverable natural gas. In addition,Anadarko is moving forward on its plans fordevelopment of commercial LNG onshore.The initial cargoes are anticipated to be readyby 2018.

Meanwhile, Enis Area 4 gas field, also in theRovuma basin, is believed to have 2.1 trillioncu m of gas in terms of potential reserves,making it Enis biggest gas discovery to date.It could also be the largest ever deepwatergas find. Eni is making steady progress raisinghuge amounts of capital it needs for LNGprojects. It recently announced that Bank ofAmerica Merrill Lynch will advise on its plansto sell a 15 per cent stake of its gas fields,which could raise nearly US$5bn. Thedevelopment comes after Eni sold a fifth of itsoffshore gas site to Chinas CNPC in 2013, adeal worth a solid US$4.2bn.

The Mozambican government is alsoworking to ensure that the legal frameworknecessary for this emerging new oil and gasindustry is put in place. We need to finalisethe decree law and its components with thegovernment. They have the same timeline as

us, and they recognise the need to get thingsdone in the next couple of months, said Peffer.

The technical challenges are notnecessarily that tough, however, according tothe Andarko country manager.

In terms of the technical challengeoffshore, we have done it before in the Gulf ofMexico so we are very confident. And interms of getting the product onshore, there isa lot of progress being made in terms ofinfrastructure roads and ports especially.Furthermore, we have actually done a projecton a similar scale in Algeria. From a logisticsperspective, that was more difficult becausewe were working thousands of miles from thecoast, explained Peffer.

This is a project management challengeand we have picked contractors, who areamong the most experienced LNGcontracters in the world, added Peffer. Theproject has a simple design in terms ofpumping the gas. So, although this is amassive project, conceptually there isnothing special about it. We see it as a verystraightforward operation."

Mozambique BUSINESS

28

Natural way forward Mozambique looks poised to emerge as a formidable force in natural gas production in Africa

The Mozambican government is working to ensurethat the legal framework necessary for the emerging

oil and gas industry is put in place



Asia is set to be the biggest market forMozambican natural gas. Peffer cites Japan,Korea, Taiwan and Thailand as particularlyinterested. In January, Japans Ministry ofEconomy, Trade and Industry announcedthat it has agreed to carry out high leveltalks with Mozambique this summer aboutthe LNG sector. India is also an importantpotential market for Mozambican LNG. InJanuary 2014, India and Mozambique signeda MoU; India has promised demand startingat four trains of LNG, which will thenincrease to eight.

Energy firms are typically positive aboutthe regulatory environment in which they areoperating in Mozambique. The existingcontract that we have with the government interms of the exploration and production ismodern and fair. The government is alsomaking necessary changes to the legalframework. For example, it is updating thepetroleum law in Parliament right now.

The situation in Mozambique is unique inthat there has been a lot of industryparticipation in legislation. We have beenasked to comment on changes and they havetaken on board our input, which in the endmakes the legislation more fit for purpose,elaborated Peffer.

Nonetheless, there is a need to furtherdevelop Mozambiques oil and gas laws,according to Peffer. We need a decree lawspecific to LNG law that deals with issues likesale purchase agreements and projectfinancing something beyond what thepetroleum law provides, feels Peffer.

According to Pedro Couto, a managingpartner at Mozambican law firm CGA, theexisting PPP law does not cater to gasprojects. As a result, the government ispreparing new legislation, which willhopefully clear up some key issues."

Couto feels that participants in the oil andgas sector have a number of other concernslike taxation and the Mozambican law thatdoesn't allow an extensive level of localparticipation in oil and gas projects, thoughhe argues that the latter does not necessarilyput Mozambique at a disadvantagecompared with other gas-producingcountries.Corruption is another big cause forconcern as well.

Some have also questioned whetherinterest in shale gas, especially in the UnitedStates, could harm global demand for naturalgas in the long term. Not only is the UnitedStates set to become the energy self-sufficient by 2035 due to shale according to

some estimations, but the worlds leadingeconomy is set to start exporting to Asia too.Korea and Japan have already signed longterm agreements with the United States.Nonetheless, those in the natural gas industryin Mozambique seem unperturbed.

I think people working in shale gas aregoing to struggle to make it a truly globalphenomenon outside of the United States,said Peffer. I dont think we will see wide-scale exploitation of shale gas outside the USin the foreseeable future.

With Tanzania also set to start exportingnatural gas after a series of major discoveriesby Statoil, ExxonMobil and BG and OphirEner, some have questioned whetherMozambique and Tanzania may now belocked in a zero sum race to become the firstcountry in eastern Africa to pump out naturalgas on a large scale.

Peffer is confident that Mozambique willbeat Tanzania in the scramble. From what Isee I think it is fair to say that Mozambiquewill be the first out of the two to producenatural gas. Mozambique also seems to havea competitive price advantage. In Tanzania,the gas seems to be spread in multiple blocksand multiple operations, as well as longerpipelines, which adds complexity," he said.

BUSINESSMozambique



The World Bank cautioned on 12 April 2014 against anycomplacency in tackling Africas enduring developmentchallenges. The warning came even as the World Bank praisedAfrica for being on course to mark 20 years of substantial growth, withthe region forecast to post a GDP growth rate of 5.1 per cent in 2014.

The last two decades have been very good for Africa whichcontinues to reverse decades of decline vis--vis other regions of theworld, said Francisco (Chico) Ferreira, chief economist for the Africaregion at the World Bank. He was speaking at the Spring Meetings ofthe World Bank and International Monetary Fund (IMF) inWashington, DC.

Speaking at the same event, Benno Ndulu, governor of the CentralBank of Tanzania, said Africas last two decades of growth represent aquantum jump especially when compared with the average annualgrowth rate of 0.8 per cent posted by the continent over a 34-yearperiod, from 1960 to 1994.

Ndulu said, Sub-Saharan Africas economy used to be comparedto Belgiums, only to point out that Africas economy was smallerthan Belgiums. According to Ndulu, The GDP of sub-Saharan Africa(SSA) is now US$1.7trn, while Belgiums is US$500bn, meaning thatthe SSA economy is now three times bigger than Belgiums. TheAfrican economy, he added, is now bigger than Australias(estimated at US$1.5 trillion) and is about the same size as theeconomies of Canada and India.

Africas problem going forward is not only to invest more, but toinvest better, according to Jean-Claude Brou, the industry andmining minister for Cote dIvoire, who spoke on behalf of PrimeMinister Daniel Kablan Duncan.

Africas growth is not yet a tide that is lifting all boats. While themiddle-income countries in Africa have risen from six in 1995 to 23 in2013, inequalities have expanded and Africans today enjoy less thanone-twentieth of the living standards of Europeans.

All is not bad news, though. Africas GDP per capita has expanded 40per cent since 1995. Some of the fastest per capita growers includeEquatorial Guinea (15.7 per cent increase in the last 17 years); Liberiawith a 23 per cent increase over the last seven years; Mauritius with amore than 3.9 per cent increase for the past 29 years; and resource-poor Burkina Faso, whose per capita income has risen over the last 18years.

Sources of Africas growthAfricas growth is widespread and has, almost everywhere, beeninvestment-driven (rather than consumption-led), according toChico Ferreira, increasing the possibility of impacting moreAfricans than otherwise.

Thanks to the improved performance by the continents so-called

population giants (Nigeria, Ethiopia, Kenya, etc.), 60 per cent ofAfricans now live in the 22 fastest growing countries. A majority ofthe 22 countries 13 countries in all are resource-rich (five ofthem oil producers). However, and happily, fast growth is not apreserve of resource-rich African countries. Nine of Africas 22fastest-growing economies are non-resource-rich countries.

Even countries emerging from violent conflict (such as Angola,Mozambique, Uganda, Rwanda, Liberia, Sierra Leone, etc.) havebenefitted from what the World Bank vice president for the Africaregion, Makhtar Diop described as the catching up effect.

Four major changes are unfolding at sector level across Africa,

DevelopmentFINANCE

30

Africa growing fromstrength to strength A tale of growth, inequality and promise in the sub-Saharan region

Benno Ndulu, central bankgovernor of Tanzania Caption


S07 ATR May 2014 Report - Finance_Layout 1 4/23/2014 11:31 AM Page 30

according to Ferreira. First, African agriculture is growing fasterthan agriculture anywhere else. Second, growth seems to bebypassing Africas manufacturing sector now accounting for onlyseven to eight per cent of GDP and performing at about the samelevel as in other developing countries. Third, Africas naturalresources sector has tripled its contribution to growth. Fourth, thegrowth in Africas services sector has been enormous and is boundto be a lot higher than estimated now, given the recent rebasing ofthe Nigerian economy.

Growth has also been fuelled by a higher contribution fromtaxation, according to Ndulu and by a better integration of Africa withinternational trade, according to Ferreira.

Wanted: More pro-poor growthSo far, Africas growth has, sadly, not been inclusive and has had alower impact on poverty reduction in comparison to otherdeveloping regions, according to the World Bank. The richestAfricans have seen their fortunes increase by eight per cent overthe last decade, while the poor have seen theirs increase by onlyone per cent, Ferreira said, adding, While growth is essential forpoverty reduction, it is not sufficient.

Ndulu called for Africas growth to be made more pro-poor, job-creating, supportive of the integration and employment of Africanyouth and women. He urged African leaders to foster wealthpreservation by investing revenue earned from extracting naturalresources (depleting them in the process) in the much-neededstructural transformation of African economies.

Boosting shared prosperity and curbing inequality can use the helpof a redistributive tax policy that puts money back in the wallets of

the poor, said Diop citing the success of a similar policy in Brazil.Brou called for action to boost regional integration and intra-

African trade which, according to him, currently accounts for lessthan 20 per cent of Africas total trade, being far below the 60 percent and 50 per cent figures reported respectively for intra-Europeanand intra-Asian trade.

In addition to calls for African countries to maintain macro-economic stability, panelists stressed the positive impactinvestments in value-added agribusinesses can do for a continentthat is still heavily dependent on agriculture. In order to have themost impact on poverty, growth must create jobs, especially foryouth and women. Investments must also aim to reduce theexorbitant costs of energy and transportation, which render Made inAfrica goods less competitive globally.

Projecting Africas Future GrowthLooking into the future, panelists at the event were unanimous inagreeing that Africa can be expected to grow in the foreseeable future,judging among others from the ever growing number of naturalresource deposits being discovered on the continent.

Besides extractives, the modern services sector holds greatpotential for boosting Africas growth, according to Ferreira.

We need to promote labour-intensive industrialisation andtechnology-driven innovations, said Ndulu, stressing the leap-frogging potential technology and cheap, young labour offer anAfrican continent that needs to do everything to preserve the gainsmade in peace and stability over the past decades and avoid theturning back of the arms of the clock effect that violent conflict hason Africas development.

FINANCEDevelopment


weiler GmbH, Rheinstr. 40, 55435 Gau-Algesheim, Germany, Tel: +49 6725 9195 490, Fax: +49 6725 9195 491, [email protected], www.weiler.net

The PREMIUM SUPPLIER of the PRECAST CONCRETE INDUSTRY machines & equipments

competent engineering

high German quality

modern technology

individual solutions

after sales service

over 60 years of experience

worldwide acting

TURNKEY PRECAST CONCRETE PLANTSFloors, walls, columns, girders, beams, stairs, piles, posts, lintels,

weiler. we are made in Germany.

CONSULTATION, ENGINEERING & MACHINERY FOR THE PRECAST CONCRETE INDUSTRY

MEET US AT:TOTALLY CONCRETE,

JOHANNESBURG27-28 MAY 2014

BOOTH 318


S07 ATR May 2014 Report - Finance_Layout 1 4/23/2014 11:31 AM Page 31

The lightning-quick expansion of pan-African banking group EcobankTransnational saw the companys profitsgrow by a staggering 65 per cent in 2013, agrowth which prompted suspicion amongstrivals and resulted in the removal of CEOThierry Tanoh in March 2014.

But shortly prior to Tanohs dismissal andamid calls for the group to reign in itsbreakneck expansion pace Ecobank hadalready entered into partnerships withbanking and telecoms giants, which will seeits impact stretching even further into Africa.

In Ecobanks most recent financial report,the company revealed that profit earningsfor the first nine months of 2013 totalledUS$300mn. The group is already the leadingindependent regional banking group inWest and Central Africa, and has quicklycrossed the borders from its home territoryin Togo, to maintain a presence in 32countries across Africa today.

Ecobanks highly successful business modelis centred largely around capitalising on thedeveloping continents rapidly-emergingtrends, including the transition to a cashlesssociety and an increased dependency onmobile phones.

A deal struck with MasterCard in January aspart of an MoU signed between the twobankers, marks MasterCards biggest evermulti-country licensing contract, allowingEcobank customers in

Documents

African Review May 2014