All posts by rachel_eaton

Are you considering investing in Africa?

January 27, 2014 rachel_eaton

Isabelle Alenus-Crosby

According to the World’s leading forecasters, the African economy is expected to grow by approximately 6% during 2013/14, while its total GDP is expected to reach USD 2.6 trillion by 2020. The Nigerian stock market alone returned 47.2 % in 2013.

This is great news, but where should one invest?

Let me quickly state the obvious; Rapid urbanisation on the continent means that priority needs to be given to infrastructure (mostly power and transportation). Africa has a growing population of young, globally minded people who increasingly use mobile phones and the internet. The banking industry is expanding with growing income levels, as is consumer demand, and a population explosion requires more schools and hospitals. The African continent is also said to be on its way to become the world’s low-cost manufacturing hub.

A CNBC news reporter recently stated that sub-Saharan Africa, which was once seen as a pure commodity play (or as a part of the world to avoid entirely) is now the place to get big returns on relatively small investments.

The key issue is of course the risk/reward balance. Investment-grade countries like South Africa, Botswana and Namibia might offer lower returns than countries with higher risk like Nigeria, Ghana, Tanzania and Kenya. The bottom-line is that Africa offers numerous opportunities and that they are as varied as the 54 countries of the African Union.

The overall buzz resounding around the globe however, is that the time is now!

Insight

5 things we didn’t know about Madagascar

January 24, 2014 rachel_eaton

Sarah Nicholas

On Thursday morning, we welcomed journalist Emilie Filou for a breakfast briefing on Madagascar – an island which is hugely under-reported in the English language press, and that even Africa experts often know little about. Emilie’s presentation was packed with new information; these are the updates which particularly stuck in our mind:

1. The cost of Madagascar’s political crisis

The political coup in 2009 had a huge impact on the economy – the World Bank estimates that the cost of the crisis has reached about $8 billion. While Madagascar still lags behind its neighbours on the African continent, it is beginning to recover.

2. A turning point?

The confirmation last week (17 January) of Hery Rajaonarimampianina as the first officially elected president of Madagascar in five years has been greeted with cautious optimism by the international community. Hery’s choice of Prime Minister will be the most significant indication of whether anything will truly change under his leadership. If the country can take advantage of its strategic location between growing Asian and African markets and its cheap workforce, it could still return to the pre-coup growth rates of 6-7%.

3. Out of the crisis rises opportunity

– A backlog of 4,000 mining permits and 223 oil exploration licenses have accumulated since the crisis, as well as a huge backlog of infrastructure and construction projects

– Agribusiness is beginning to benefit from new foreign investment, and with 90% of the population employed in agriculture and 70% of the island’s land used for arable, there is great potential in this secto

– Tourism was Madagascar’s second largest cash earner before the crisis. About 70% of the island’s fauna and 90% of its flora is endemic, and both Lonely Planet and Rough Guides cited the island in their ‘Top 10 Destinations’ in 2013 and 2014

4. Challenges remain – national electricity production capacity is 0.5 MW

Madagascar remains one of the toughest markets in which to do business, which will take time and concerted effort from a committed leadership to redress. Corruption is culturally embedded, bureaucracy is burdensome, and – as anyone who has spent time in the country can testify – infrastructure is severely lacking. Electricity supply is unreliable and road density is just 9.7km/1000km², compared to the sub-Saharan average of 31km/1000km². And while Madagascar’s population is young and labour is cheap, education is poor and two thirds of teachers have no formal teaching qualification and often do not speak French – the language of the national curriculum.

5. How to pronounce Hery Rajaonarimampianina’s name

The audience were suitably impressed when the longest name of any head of state tripped of Emilie’s tongue. For those who are still perplexed:

listen to ‘How to pronounce the name of Madagascar’s new president: Hery Rajaonarimampianina’ on Audioboo

Emilie Filou is a freelance journalist specialising in business and development in Africa. Her work has been featured in The Economist, The Guardian and BBC Radio 4’s ‘From Our Own Correspondent’, as well as contributing to the Lonely Planet guide to Madagascar in 2011. She revisited the island in 2013, and is available for commissioned articles and briefings on the country. Email: filouemilie@yahoo.com

Insight

Setting the example

January 22, 2014 rachel_eaton

Isabelle Alenus-Crosby

Quite recently, the five members of the East African Community (EAC) agreed to adopt a single currency, which should go into effect within the next 10 years. Kenya, Uganda, Tanzania, Rwanda and Burundi first came together in 2000 to create a common market and single customs union, modeled after the Eurozone. The aim is to make business a lot easier across East Africa. If their model is a success, then the entire African Union might follow suit.

When 50+ African countries are watching your every move, setting the example can be quite daunting. After all, success could contribute highly to the continued economic success of Africa (no pressure).

Of course, regional integration is a deeply political process and the implementation of a single customs territory has important political aspects.

However, East-Africans are already thinking of themselves as just that: East Africans. There are rumours that Burundi, like Rwanda, wants to adopt English as their common language in order to assure the Union’s success, and all reports following the numerous meetings between the five EAC leaders are very positive. Having spent a considerable time in all five countries myself, I am convinced that the Union will be a resounding success, even if there are quite a few reported delays at the moment.

Rome wasn’t built in a day after all. And neither was the Eurozone.

Insight

Whose Success in Africa?

January 14, 2014 rachel_eaton

Jonathan Berman

“It is Africa’s ambition and no-one else’s that leads Africa. Africa is not a place that success is landing on; it is a place creating success for itself and others.”

I was glad the team at Gong plucked this phrase from my book Success in Africa as the banner for their upcoming event in London. For in London, as in my native New York and my current home, Washington, I find many understand that Africa is succeeding. Few understand why. Almost none acknowledge it’s mostly because of Africans.

In March of last year, a general election campaign was underway in Kenya. Western leaders urged the people of Kenya to refrain from violence. It seemed reasonable, as Kenya experienced horrific violence in its 2007 elections. But no one knew that better than Kenyans. They didn’t need foreign heads of state to tell them about it.

At their best, successful managers of global capital and global businesses do much better in this regard. Their practices allow them to transfer skills, networks and corporate cultures that work in the African context, and are welcomed there by capable partners and stakeholders. I asked some of the CEOs who lead those global companies to participate in Success in Africa, and they shared their perspectives alongside mine.

Of course, no one knows better how to succeed in Africa than Africans. That may seem an obvious point, but consider how often, in any medium, you hear management wisdom from an African? I have worked with corporate leaders in the US, Europe, Asia and Africa. In my view, some of the most visionary and accomplished business men and women anywhere are the ones leading the current transformation of Africa. Emerging continents have been the wellspring of transformative business leaders before. Rockefeller. Carnegie. Tata. From the US in the 19^th century to Africa today, frontier markets have given rise to business leaders uniquely capable of managing uncertainty, generating disruption, and leading breathtaking growth.

Those are skills in demand not just in Africa, but the world over.

Insight

Happy New Year

January 3, 2014 rachel_eaton

Isabelle Alenus-Crosby

The good news is that Africa’s economic outlook for 2014 remains promising with an overall projected growth of 5.3%. Should the global economy recover faster than predicted, then sub-Saharan Africa’s economy might expand by as much as 6.0% according to the IMF. This is consistent with the average long-term trend growth rate of approximately 5.5% between 2000 and 2010.

According to the World Bank, an economic rebound would also scale up investments in much-needed infrastructure (physical and economic) which will lead to policy reforms that will improve the overall business environment. In addition, African market performances in 2013 have proven that investments into Africa can continue to offer a sound return. Investment levels are expected to remain buoyant (again according to the World Bank), with private investments expected to double in areas such as consumption and infrastructure.

Happy New Year indeed!

Insight

Gong’s social media resolution: successes and lessons

December 20, 2013 rachel_eaton

Ella Rychlewski

The second half of 2013 has been about walking the walk when it came to Gong’s website and our social media channels. We kicked off with a revamp of www.gongcomms.wpengine.com, making full use of our Creative resources. Our lead designer Rachel then turned her attention to our social media channels and we expanded from Twitter and LinkedIn to include Facebook and Google+.

Our next step was to involve all Gong members in our social media engagement by a rota, led by our internal social media team (SMT). We felt it was important for everyone to have the opportunity to be the voice of Gong and capture the different perspectives of our multinational team. We then provided hands on training, while the SMT kept an eye on the analytics and general progress.

This has translated into the provision of a wider range of social media services for our clients, from design and training (Continental Reinsurance on Facebook and LinkedIn) to design and management (Garden City on Facebook, Twitter and LinkedIn), as well as content writing and channel management (Homestrings and Olam). Gong also published its first social media briefing note for EMPEA.

And, we have been reminded of a few lessons along the way:

The time required for social media is drastically underestimated and requires specifically allocated resources and channel prioritisation
Sharing the load makes things a lot easier and fosters better awareness of and communication around internal and external goings on
Reaching out to people or organisations during live events amplifies exposure
The conversation about what the company’s tone of voice is and what material is appropriate to post is an ongoing one
Saying it visually makes everything more engaging

Over the Christmas period and in an effort to start the New Year in the same way we mean to continue, we will be sharing the most read and shared material we have published or broadcast over the last six months. So do keep an eye out on our social media channels!

Wishing you all a very happy holiday season!

Insight

Mandela – Hero of Africa’s booming economy

December 11, 2013 rachel_eaton

Isabelle Alenus-Crosby

At Nelson Mandela’s memorial yesterday, President Obama hailed the former South African President as “the last great liberator of the 20th century”.

He is also being remembered for the formidable role he played in building up Africa’s largest economy. Mandela famously believed in the link between economic and political progress, and as a result, South Africa’s gross domestic product grew from less than 1.5 % from 1980 to 1994 to almost 3 % from 1995 to 2003. South Africa is now proudly the “S” in BRICS, and its economy is still going strong 20 years after Mandela first came to power.

Aside from all this, Mandela ensured that South Africa became an important source of economic opportunity for its neighbouring countries too. It can be argued that their successes, in turn, influenced the rest of the continent. Mandela was certainly therefore the great liberator of Africa. According to the latest statistics by the IMF, the continent’s economy is projected to have grown by 4.8% in 2013 and accelerate further to 5.3% in 2014. He didn’t merely bring South Africa into the global economy, but was key in making sure the rest of Africa would also thrive one day.

Last but certainly not least, it is important to note the effect that Mandela had on successive generations of investors, who in order to support him in his struggle against apartheid, came to recognize the power of investment to change things for the better, as well as the impact sustainable and responsible investments could have on anything from fighting injustice to empowering women and combating climate change.

Nelson Mandela has therefore left us with resounding legacies and the world is undoubtedly a much better place thanks to him.

Insight

An important Power Switch

November 19, 2013 rachel_eaton

Isabelle Alenus-Crosby

Africa’s wind and solar power potential have been much in the news since President Obama’s “Power Africa” speech on June 29^th in Cape Town. Investment into renewable energies has always been rather limited on the continent, but this is now changing rapidly. One example is the African Development Bank’s (AfDB) recent approval of a €115m loan to help fund the construction of the 300 MW Lake Turkana Wind Power Project in Kenya. The project is being developed by a conglomerate of investors, while the government of Spain has agreed to lend Kenya $178m in order to fund the construction of a transmission line which will connect the project to the country’s national grid. All electricity will be sold to the Kenya Power and Lighting Company under a 20-year power-purchase agreement.

Strong economies are highly dependent on good energy supplies and in order to achieve global competitiveness, Africa’s economic activity (and thus electricity use) must increase exponentially. It is no surprise therefore that in recent years the continent has seen an increasing number of young entrepreneurs keen to try out their much needed innovation. Many of these concentrate heavily on Solar Energy since Photovoltaic (PV) production costs have fallen dramatically worldwide. According to the U.N., the African renewable energy sector was valued at $750 million in 2004. By the time Obama was making his speech, it had reached more than $5 billion. The latest projection is that by 2020 the value of the African renewable energy sector will reach more than $55 billion (U.N.). While Africa’s wind resources are concentrated in just a few areas, the continent’s solar resources are spread across all of the continent and, for obvious reasons, rank among the world’s most successful.

There are of course many other forms of energy that could contribute in filling Africa’s massive power gap.

Think you have an alternative idea for ensuring energy access in developing countries? With 1.5 billion people currently lacking electricity, Statoil and the Economist Intelligence Unit have joined forces to create The Energy Realities Competition. Enter before December 23^rd for your chance to win: https://event.wavecastpro.com/energyrealities/ or follow #EnergyRealities

Insight

A new era in retail banking?

November 11, 2013 rachel_eaton

Isabelle Alenus-Crosby

More than half a decade after the financial crisis began in the summer of 2007, regulatory reforms, intended to make financial institutions more transparent, are still in the stages of being implemented. As a result, banks are being pulled in many directions at once; the regulators want banks to be prudent, customers want lower banking costs (yet more innovation) and shareholders want them to be profitable.

The number one issue facing retail banks today, however, seems to be the uncertainty that the new regulatory reforms will create once fully established due to loss of revenue. Numerous regulatory changes are already apparent in Europe, with the aim that a single, competitive market for financial services can emerge, with strengthened financial stability and improved efficiency. Governments want to make sure that when banks fail, or make losses, “retail customers aren’t excessively affected and taxpayers’ money isn’t used to bail banks out” (gov.uk).

However, these reforms, which put pressure on profits, are naturally expected to create more competition, at the same time as the 21st century customer is becoming more demanding. Banks therefore need to be continuously on the ball regarding new technologies and trends shaping the industry. In a nutshell, Europe’s retail banks are entering a period of regulatory reform that looks certain to put pressure on revenues, profits and margins. They may even alter banks’ core business models.

This wide range of views is being pursued at The Economist Events’ European Retail Banking Summit, for which Gong Communications is handling the PR. The Summit will bring together over 150 leaders of the retail banking industry, with policymakers, regulators, investors and customers. Together they will explore how European retail banking is on the edge of revolutionary change and how organisations must adapt in order to survive.

You can follow @GongComms and #EUretailbanking for updates from the event.

Insight

SMEs in Ghana: Take it to the bank

November 7, 2013 rachel_eaton

The World Bank Group recently published a 2014 Doing Business Report titled Understanding Regulations for Small and Medium-Size Enterprises in which Ghana topped the ECOWAS region. Overall the report compares the rate of reform among 189 countries as an indicator of how easy it is to start a business from a regulatory perspective.

Last week at The Economist Conferences’ Ghana Summit there was much discussion of the kinds of business Ghana needs to cultivate in order not to fall foul of Dutch Disease* – a term coined by economists to describe negative impacts of natural resource discoveries. More agricultural processing, manufacturing in general and services were highlighted as being of key focus for job creation.

As a services company entering the Ghana market from the UK, our experience is that once you have made your choice about whether to joint venture with a local Director, or create a wholly owned subsidiary, it’s fairly straightforward. The next step is to get yourself a business bank account. But where to start?

According to Wikipedia there are 1,800 banks in Africa. Very few of them are making a play for international business outside of Africa – Ecobank and GT Trust being the two exceptions that spring immediately to mind for their ad campaigns. It would be great if there was a resource that made it possible to compare banks and get recommendations from customers – happy or otherwise.

African banks have a reputation for being conservative and charging high interest rates for business loans (if they give them at all). Here’s hoping that someone will build a website that compares rates and functionality in key areas such as online banking as well as customer service. That’s a great way to give a boost to the ‘missing middle’ of SMEs in Africa and to tip the balance of power back in their direction, enabling them to partner with banks who are the most competitive and who try hardest.

*The Financial Times Lexicon definition of Dutch disease is the negative impact on an economy of anything that gives rise to a sharp inflow of foreign currency, such as the discovery of large oil reserves. The currency inflows lead to currency appreciation, making the country’s other products less price competitive on the export market. It also leads to higher levels of cheap imports and can lead to deindustrialisation as industries apart from resource exploitation are moved to cheaper locations. The origin of the phrase is the Dutch economic crisis of the 1960s following the discovery of North Sea natural gas.