Category Archives: Insight

Reinforcing North-South Trade

July 18, 2013 rachel_eaton

Isabelle Alenus-Crosby

At a time when South-South trade is becoming a force to be reckoned with, the North is jumping into action. Is it too late? In this global and growing world, there might just be room for everyone, and I expect that both the US and the EU will regain some footing in Africa in the years to come.

Power Africa, President Obama’s initiative to increase access to low cost energy, and Trade Africa, the initiative to boost trade with and within Africa, have both been written about extensively since Obama’s visit to the continent recently.

President Clinton’s African Growth and Opportunity Act (AGOA) however seems to have been ignored somewhat. And yet, the 2012 Presidential Directive on Sub Saharan Africa, talks about a new and enhanced AGOA, with the potential of making the U.S./Africa trade relationship as significant as the one between the U.S. and the European Union. (The Africa-EU Partnership has also announced that they are entering into “a new phase” with an increase in Trade agreements).

Next month, Washington D.C. will host the 2013 U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum in Addis Ababa. Trade and investment-related issues are top of the agenda and it is expected that the “new and improved” AGOA will finally be revealed in all its glory.

I guess we should therefore expect extensive (although belated) coverage soon.

Insight

Power for Africa

July 8, 2013 rachel_eaton

Isabelle Alenus-Crosby

Until recently, Africa had a small, very wealthy top, a broad base of poverty, and no middle market to speak of. Today the continent is developing into one of the largest mass markets in the world.

However, many Africans are still trailing behind. The new $7 billion “Power Africa” initiative, that President Barack Obama announced on June 30^th, could contribute significantly to push the lower class towards the middle. Increasing electricity production and distribution throughout sub-Saharan Africa is undoubtedly crucial to the entire continent’s success. The fact that Obama put emphasis on “Green Energy” (Solar, Hydrogen and Wind in particular) was very much in line with the rest of his statements that day, which brimmed with clear insight into Africa’s lingering issues.

I have transcribed my three favourite parts of his (now famous) speech and would like to share them with anyone who might have missed this.

“I am proud to announce Power Africa – a new initiative that will double access to power in sub-Saharan Africa… And in partnership with African nations, we’re going to develop new sources of energy. We’ll reach more households not just in cities, but in villages and on farms. We’ll expand access for those who live currently off the power grid. And we’ll support clean energy to protect our planet and combat climate change”.

“Look at Zimbabwe, where the promise of liberation gave way to the corruption of power and then the collapse of the economy. Now, after the leaders of this region brokered an end to what has been a long-running crisis, Zimbabweans have a new constitution, the economy is beginning to recover. So there is an opportunity to move forward — but only if there is an election that is free, and fair, and peaceful, so that Zimbabweans can determine their future without fear of intimidation and retribution. And after elections, there must be respect for the universal rights upon which democracy depends.”

“In much of Africa you see women doing work and not getting respect. I tell you, you can measure how well a country does by how it treats its women.” President Obama also emphasized that Mandela’s values are Africa’s future and that African youth had to seize a “moment of great promise”. Only the current Zimbabwean government lashed out at Obama following the Cape Town address. I guess that in itself is quite meaningful.

Insight

Obama’s African visit

July 2, 2013 rachel_eaton

Isabelle Alenus-Crosby

President Obama’s long-awaited trip to Africa is coming to an end, and he didn’t manage to hide the real reason he was there.

Many Presidents are visiting the continent these days, but the fact that Obama is half white American and half black African means that, in Africa itself, his visit has generated a lot more interest than when (for instance) China’s new president embarked on a trip less than two weeks after taking office earlier this year. What also differentiates Obama from the others is that he makes great speeches, and I especially liked his ideas for a “Power Africa” initiative and “sustainable” African energy strategy.

All through his trip, the President has looked happy, relaxed, and “at home”, despite all the security that he has surrounded himself and his family with. What seems to have been most significant to those he went to visit is that, in all three countries (Senegal, Tanzania and South Africa), Obama emphasised that he welcomes world economies turning their sights to Africa. However, as his trip matures, his real views are increasingly being felt.

African leaders should “pick their international partners carefully”, and “push back against countries that bring in their own workers”, a clear criticism of China. Another clear criticism of China was Obama’s “wildlife and importance of tourism speech”, condemning illegal trafficking. The White House has already issued a statement this morning regarding the launch of a new anti-poaching initiative in Tanzania as of next month.

From the cheers heard yesterday in Dar es Salaam however, it is clear that the word “partnership” is the magic word in Africa these days. When Obama said the West’s goal is to “partner” with Africa, the crowds went wild.

It is important to note that both the USA and Europe are home to large communities with strong African heritages and that Africa and America/Europe often share a common language, making training and technology transfer much more straightforward. Africans know this, and they clearly want it. We also have a common history, for better or for worse. It is Europe’s common history (mostly violent) that unites them now within a European Union that, even though it is still in its infancy, seems to be doing alright despite some teething problems.

The younger generation in Africa, Europe and America have a lot in common through a shared history, that we are coming out of together, and the significance of this cannot be trivialised. This does not mean that partnerships with China are a bad idea. In fact, Africa has already partnered successfully with many countries in Asia, forming the bulk of the South-South trade. Obama’s words should however be a warning to China, one that I’m sure they’ll heed given the investments they’ve made on the continent in the last decade.

The bottom line is that the whole African continent is full of promise. I would therefore like to reiterate what I wrote in my previous blog: A united Africa will be stronger, but I agree that it must choose its partners well. Yesterday afternoon, Obama revealed a venture, dubbed ‘‘Trade Africa,’’ that aims to increase the flow of goods between the United States and sub-Saharan Africa. The initial phase will focus on East Africa — Burundi, Kenya, Rwanda, Uganda, and Tanzania — and in a couple of years, the phase will be extended to the rest of Sub-Saharan Africa.

Let’s hope that this will be a partnership made in heaven, and just one of many.

Insight

The United States of Africa?

June 25, 2013 rachel_eaton

Isabelle Alenus-Crosby

Gaddafi’s dream might live on through an “undercurrent” that seems to be uniting Sub-Saharan African countries

I have just returned from Ghana, the 30th country (or so) that I have now visited in Africa. Even though I was only in Accra, Ghana’s capital, I completely understand why the Ghanaian diaspora is so keen to return home.

Ghana, like many other places in Africa, is buzzing. As I was walking around the city centre, a thought suddenly occurred to me. Now that Africa is increasingly hailed as the “rising continent”, those in the West who are keen to stand out as “experts”, insist on shouting from every rooftop that “Africa is a continent, not a country”. I don’t know who their audience is, pre-teens who opted out of Geography perhaps, but even though I would never claim to be an expert in anything except daydreaming about the beaches of Mozambique, I can’t help but notice increasing similarities between Africa and America.

As a child, when I lived in Tanzania and my parents and I would drive to Kenya (for shopping) or to Zambia (to visit my sister), each country seemed quite different. I don’t feel that way anymore. In my gap year, back in 1996, I drove across the whole of North America (petrol was cheap then), and even though I found the United States to be very diverse, from Alaska to Louisiana, I always knew that I was in the USA. Yet, as soon as I entered Canada I felt that I was in a very different country. Some “undercurrent” seemed to unite all the States I visited, yet it wasn’t present in Canada. I am starting to feel the same way about North Africa/Sub-Saharan Africa. North Africa is significantly different to its neighbours in the South, but driving around Accra last week, I could easily have been in Kampala or Nairobi. The billboards, buildings, street sellers, all have the same “feel” that you simply don’t find in North Africa or anywhere else in the world.

Africa has many languages and cultures, yes, but I am writing this blog from Belgium, a tiny county where 60% of the population speaks Dutch, 38% speaks French and 2% German. The Dutch is divided into hundreds of Flemish dialects that could easily be mistaken for different languages as they don’t even sound the same (don’t get me started on the cultural differences here). Yet every city is similar enough for me to know that I haven’t crossed any of the country’s borders. Europe is very much a continent, united mostly by an agreement between 27 countries not go go to war anymore. 10 minutes into France and you are definitely no longer in Belgium. Even the petrol stations are different by the way they look, the items they sell in the store, and the lavatories. Countries in Asia and Latin America differ as much as those in Europe.

In Sub-Saharan Africa however, petrol stations are quite similar, just like in the US they are quite similar in all 50 states (including Hawaii). This brings me to President Obama’s upcoming trip to Sub-Saharan Africa (which merits a blog of its own – watch this space) on June 26th. He will be visiting Senegal, Tanzania and South Africa, 3 of my favourite countries on the continent. He intends to focus on economic cooperation and I believe that he might expand the African Growth and Opportunity Act, the Clinton-era legislation that provides Sub-Saharan countries with duty-free access to America’s markets for almost all products (except sugar, dairy and peanuts). To Americans, their President will be doing business with “Africa”, plain and simple. While Obama has devoted significant time to emerging economies in Asia and Latin America, he has spent just one day in sub-Saharan Africa since taking office (a 24-hour visit to Ghana in 2009).

I hope that his upcoming visit will give American citizens an updated view of Sub-Saharan Africa, as once the continent becomes more “united”, a process that seems already underway, not only by my humble observations, but also through trade barriers being dropped and increasing political and economic cooperation, it will certainly be a force to be reckoned with. A more united Africa will certainly be able to meet the challenges of globalisation. And America best take note.

They know better than anyone the strength that lies in unity.

Insight

Africa invests in Africa

June 4, 2013 rachel_eaton

Isabelle Alenus-Crosby

A growing number of African countries are rapidly joining the ranks of prominent investors across the continent.

According to the International Finance Corporation (IFC), the rate of FDI projects from emerging markets has grown at a healthy compound rate of over 21% since 2008 (triple the amount from developed markets). The top investors were still India, the United Arab Emirates and China at the start of 2013, but intra-African investment has become very impressive since then. Nobody knows Africa better than Africans, and continued political stability across the continent is making them trust their own. The beauty is that increased economic stability and growth is allowing them to help accelerate the African success story through rapidly increasing cross-border investments.

SA has been at the forefront of the growth in intra-African trade but Kenya, Ghana and Nigeria are also investing heavily this year. From 2014, it is expected that countries like Angola and Mozambique will join their ranks.

The star performers, so far, in 2013, are Ghana, Nigeria, Cote d’Ivoire, Kenya, Tanzania, Zambia, Mozambique, Mauritius, Ethiopia, Namibia, Botswana, Angola and South Africa.

THE World Bank’s investment arm will increase lending to sub-Saharan Africa by up to a quarter in 2014 as private sector companies continue to flock to the region. The IFC is expected to make new investments of USD 5bn and Japan will provide USD 2bn worth of financial support over the next five years to back Japanese-owned development projects on the continent. Europe and the United States are also expected to increase their investments dramatically according to the World Bank, which sees Sub-Saharan Africa’s GDP accelerating to almost 6% over three years, driven by investment and commodity prices.

Roughly half the IFC’s annual lending in the region goes to financial markets and institutions to help improve the flow of credit to smaller businesses, which employ most of Africa’s workers. Another third goes to infrastructure projects and natural resources investments. The expanding sets of SMEs is bringing real economic diversification and are giving rise to internationally competitive companies, thereby providing access to global markets, and consequently higher wages and salaries. This, in turn, leads to the rapid growth of the middle-class and further political stability.

Even the most cautious investors have to admit that all the excitement surrounding Africa is grounded on solid analytical soil. The evidence might be that within a decade Africa will be its own biggest investor. I honestly cannot wait.

Insight

Leading from the Frontier: The 5th Oxford Africa Business Conference

May 20, 2013 rachel_eaton

Sarah Caddy

This weekend saw our dedicated Oxford Business Network Gong team (Tom Griffiths, Sarah Nicholas and me) at the Said Business School, networking amongst 389 delegates incorporating presidents, academics, business leaders, media – and the odd egg-bearing political protestor.

The conference marked the fruition of a six month-long relationship with the business school’s Africa group, sparked during the research we undertook with Jacana Partners, which found that 70% of African MBA students would like to return to Africa to work after studying. Of that number, over half intended to start their own business.

Business was the theme of the day, with Dr. Mthuli Ncube, Vice President and Chief Economist of the African Development Bank, opening the morning’s keynote with the forceful affirmation that: “Africa is a place where business can be found”. He continued by calling for the unleashing of “a class of African entrepreneurs” through joint ventures with foreign investors that would build business and place Africa firmly at the forefront of solving the global economic crisis.

Supporting the endeavours of those entrepreneurs who responded to the Jacana survey, Andile Ngcaba, Chairman at Convergence Partners advised Said’s MBA students looking for jobs in the African technology industry to go and create their own businesses across the continent. In his call to action, he said: “Entrepreneurship is in the mind. Embrace failure; don’t let it punish you.”

Fortunately, the OBN Africa MBA students had no ‘failure to embrace’; the conference, which featured H.E. Paul Kagame, President of the Republic of Rwanda as keynote speaker, was a raging success.

Insight

Oil? Human Resources? Or land?

May 14, 2013 rachel_eaton

Isabelle Alenus-Crosby

Almost one year ago, I entitled one of my blogs “Food for Thought”.

In it I mention that food shortages might soon cease to be a reality in Africa thanks to ”new crops resistant to heat, droughts, and every bug under the sun”, and that according to Harvard University, the entire continent will easily be able to produce enough to feed its growing population within the next decade. In fact, Africa might start exporting food by 2020!

I would like to elaborate on this today.

Africa is the second largest continent in the world after Asia, and with a total land area of more than 3 million hectares, its landmass is more than 3 x that of the USA.

Agriculture and horticulture are crucial economic activities, providing employment for many, and serving as the basis for many industries. With more than 200 million people (50% of the total labour force) active in agriculture a decade ago (WHO), it is estimated that this percentage will increase to 60 % by the end of this year.

As Africa continues to grow in economic significance, combined with the afore-mentioned new technologies, is it safe to assume that land is therefore the continent’s greatest asset?

Insight

Homestrings wins at Africa Diaspora Awards 2013

May 3, 2013 rachel_eaton

Sarah Caddy

Pride of heritage was the flavour of the evening at the Africa Diaspora awards, held in London’s West End on 2 May 2013.

The continent had much to celebrate, with awards presented to the brightest and best from the worlds of Business, Academia, Entrepreneurship, Media and Community. Her Excellency Ms Thandi Modise, Premier of North – West Province, Republic of South Africa, set the tone for the evening with a moving speech on the role played by the African Diaspora in securing the continent’s successful future. “The spirit of internationalism has sustained humanity” she proclaimed, vocally grateful for the benefits that a global perspective can have not only for the individual Diasporans, but also for the separate countries within the continent. Her vision was for a continent that works with its neighbours and international allegiances to build an ever more promising future.

A prime example of her vision in practice is Eric Vincent Guichard, who secured the Entrepreneur of the Year award for his online initiative, Homestrings – an investment platform that facilitates Diaspora investments into their own communities. It was an award we thoroughly toasted, as well deserved of our client!

Insight

President Mahama’s message at The Times CEO Summit Africa was very clear: Invest in people and infrastructure

April 30, 2013 rachel_eaton

Isabelle Alenus-Crosby

Africa’s future as the world’s economic engine rests on investing in its one billion people, President Mahama of Ghana said in a speech at The Times CEO Summit Africa today. “Investments should focus on people, providing them with jobs”.

Mr Mahama delivered his keynote address at the third CEO Summit Africa, which is held every year in London. The two-day summit which was held on April 29^th and 30^th this year, brought together Chief Executives of Africa’s biggest businesses with International Investors. The President’s address also focussed on Ghana’s readiness for business and the opportunities available for partnership with its private sector to expand the infrastructure base of the country.

Most of the continent is going through an unprecedented period of stability whilst an economic revolution is sweeping across it. With more investors coming in every day, Mr Mahama shouldn’t worry. Africa’s equity markets are hot and a virtuous cycle has already emerged. And the good news doesn’t end there. The Economist reported at the start of 2013 that a rapid increase across the full investment spectrum is expected within the next couple of years. People across Africa therefore have good reason to be optimistic. According to the IMF, 84% believe that they’ll be better off in two years.

Another possibility, of course, is that they’ll be much better off.

Insight

More good news for Africa: Consumer spending and private investment is up

April 26, 2013 rachel_eaton

Sarah Caddy

Consumer spending, which accounts for more than 60 % of Africa’s GDP, remained strong last year according to a World Bank report.

The trend was driven by declining inflation across the continent and improved access to credit in Angola, Ghana, Mozambique, South Africa, Nigeria and Zambia. In addition, interest rates were much lower in 2012 than in 2011 and we witnessed a spectacular rebound in agricultural income thanks to stable weather conditions. Especially Guinea, Mauritania and Niger experienced good rains compared to 2011, but less crops failed in general across the continent compared to the previous years.

We also have to add the steady remittance inflows to the good news coming from Africa, currently estimated at $31 billion.

Not to be sneezed at are the increased investments that are supporting the region’s growth performance. In 2012, for example, net private capital flows into the region increased by 3.3 % to a record $54.5 billion; and foreign direct investment inflows to the region increased by 5.5 % in 2012 to $37.7 billion.

The World Bank report also mentioned that exports are increasingly helping the continent’s growth and that the traditional destination of these goods over the last decade is also changing. Since 2000, the overall growth of sub-Saharan exports to emerging markets and other African countries has surpassed that to developed markets. Africans are increasingly selling to and buying from other Africans, which is the best news of all.