African nations set to approve huge free trade deal (CNN)

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by Alanna Petroff   @AlannaPetroff

The African continent is on the cusp of something big.

Fifty-five nations are negotiating a free trade deal that will cover more than 1.2 billion people across Africa, from Morocco all the way to South Africa.

Their leaders are planning to give political backing to the deal in late March, and launch a free trade zone for goods and services before the end of 2018, according to a spokesperson for the African Union, an organization that represents all 55 countries.

The Continental Free Trade Area (CFTA) could eventually be extended to create common policies on investment, competition and intellectual property.

It covers economies with a combined GDP of around $3.4 trillion.

The deal is designed to replace a patchwork of smaller trade agreements and bring countries closer together, following the pattern set by the European Union.

Like the EU, African nations hope one day to allow the free movement of people across the continent. An African central bank and single currency could follow within 10 years, said Prudence Sebahizi, the CFTA’s chief technical adviser.

Analysts are still crunching the numbers for what the CFTA means for economic growth and prosperity. The United Nations estimated in 2012 that the CFTA could boost trade within Africa by about 50% over the course of a decade.

Growth is very uneven across the continent and has generally slowed over the past few years, down to 3.5% in 2017 from a recent peak of 7% in 2012, according to the International Monetary Fund. It is forecast to rise in the coming years, but not by much.

“The potential for the agreement to support the continent’s development is huge,” said Danae Kyriakopoulou, chief economist at the Official Monetary and Financial Institutions Forum (OMFIF), a financial think tank in London

Two of the biggest economies — Nigeria and South Africa — support the deal, according to the African Union, which works to promote economic and political integration. Nigeria is chairing the negotiations while South Africa has sent big delegations to each round of talks, it added.

But some experts are cautious about the prospects for success.

John Ashbourne, an Africa economist at Capital Economics, is a self-professed CFTA skeptic. He worries that the free trade zone could be “unworkably large” and may have limited benefits.

“While tariffs are a big problem, there are also very tangible reasons why intra-Africa trade is low. The infrastructure needed to facilitate intra-regional trade is poor, and most countries don’t produce many finished goods that their neighbors want,” he said.

That’s reflected in relatively weak trade ties between African countries.

“In absolute terms, African countries traded almost twice as much with the European Union as they did with each other in 2016,” said the OMFIF’s Kyriakopoulou. “This defies one of the principles of trade economics: that proximity matters.”

In a recent article in the Financial Times, Niger’s President Mahamadou Issoufou listed several obstacles to boosting continental trade, including “border delays, burdensome customs and inspection procedures.”

But the potential rewards are simply too big to ignore, he added.

“With the continent’s economy expected to grow to $29 trillion by 2050, the CFTA may evolve to cover a market that is larger than NAFTA today,” he wrote, referring to the North American Free Trade Agreement between the U.S., Canada and Mexico.

see CNN for more information http://money.cnn.com/2018/01/19/news/economy/africa-free-trade-deal-cfta/

 

(AfDB) Annual Meeting: “Africa must think big, act big and deliver big.” (The Africa Report)

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The African Development Bank’s (AfDB) Annual Meeting in Lusaka got its official start on its second day and confirmed the principle that big personalities mean big waiting around.

By Marshall Van Valen in Lusaka

Sierra Leonean Kelvin Doe built his own radio station out of electronics waste at age 13

The marquee at the convention centre was filled to capacity as a group in a nearby hall waited an hour and twenty minutes for the heads of state due to launch the ceremony to arrive. The sitting around was punctuated by wailing sirens as official convoys belatedly showed up.

Following on from the ‘big’ theme, AfDB president Akinwumi Adesina opened the meeting by setting out the stakes: “Africa must think big, act big and deliver big.”

A group of African leaders – including Chad’s President Idriss Déby, Nigeria’s vice-president Yemi Osinbajo and host Zambia’s President Edgar Lungu – followed with a roundtable about energy and climate change.

They reached a consensus that while preserving the environment is important, governments must develop electricity production with the resources that are on hand, be they coal, peat or uranium. The moderator tried to hold those leaders to account and challenge them on what they are doing about the lack of electricity in their respective countries.

While there where banners of Zambia state electricity utility ZESCO – with the motto ‘Powering the Nation’ – that lined the road to the AfDB conference site, President Lungu was left explaining why a drought has lead to “severe power rationing” that is hurting industrial activity and leading people to invest in expensive and polluting technology, like diesel generators.

The AfDB approved finance of $70m for the rehabilitation of the Zambia and Zimbabwe’s crumbing Kariba Dam in late 2014, highlighting the lack of regular spending to improve the electricity infrastructure.

So now there are other ads competing with ZESCO’s advertising. Some of Stanbic Bank’s Lusaka billboards offer loans of up to 100% for generators to fight load shedding.

Agriculture and youth were other major themes of the day, and one moment broke through the talk of challenges and struggles. Adesina invited Sierra Leonean Kelvin Doe – who at 13 built his own radio station out of electronics waste and was then invited to an academic programme at the prestigious Massachusetts Institute of Technology – to the stage to congratulate him on his ingenuity.

With tears in his eyes, Doe shook hands with the line of presidents and other leaders, eliciting ahs and applause from the audience. However, at a later session on youth and appointment, Doe stood up to point out that there were very few young people at the meeting and to ask the assembled gray-haired leaders to engage with those who are not as big as them.

Read the original article on Theafricareport.com : Big and small affairs at the second day of the AfDB’s Annual Meeting | North Africa

Africa’s CEOs look to innovation and technology to boost growth (IT News Africa)

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Africa remains one of the preferred frontiers for investment opportunities and doing business, according to a report released by PwC Africa. Growth and foreign direct investment has continued in Africa amid the recent global economic uncertainty.

By Staff Writer (IT News Africa)

Africa’s CEOs look to innovation and technology to boost growth. (image credit: accountancyage.com)

This is confirmed by PwC’s Africa Business Agenda survey, which shows that Africa and the emerging markets remain a vital growth opportunity for CEOs. The Africa Business Agenda compiles results from 153 CEOs and includes insights from business and public sector leaders from across Africa.

Hein Boegman, CEO for PwC Africa, says: “CEOs in Africa are ramping up their efforts to innovate and find new ways to do business on the continent in a move to stimulate growth in a challenging and uncertain global business environment.

“The global financial and economic crisis has revealed Africa’s vulnerability to a number of external economic shocks. These include the decline in commodity prices fueled by the economic slowdown in China; a marked decline in the demand for commodities; and the collapse in value of the emerging market currencies against the US-dollar in anticipation of an interest rate hike.

“Notwithstanding a multitude of challenges, many of which are cyclical, we remain confident that Africa’s prospects remain positive. Africa’s business leaders have the opportunity to pursue new business opportunities on the continent, more particularly in the light of rapid innovative and technological advances that have the potential to transform and shape industries.”

Africa’s CEOs are critically aware of these issues and the impact they may on their businesses. CEOs believe global economic growth is unlikely to improve and will stay the same in the short and mid-term; nonetheless they remain confident that there are opportunities for growth over the next 12 months (78%), and 9 out of 10 believe they can deliver growth in the next three years.

The global business environment has become increasingly complex and challenging. The report shows that CEOs in Africa share many of the same concerns with their peers globally. The top three concerns include exchange rate volatility (92%), government response to fiscal deficit and debt burden (90%) and social instability (80%).

CEOs in South Africa have similar concerns as their counterparts on the continent, with the report showing that there are uncertainties about government response to fiscal deficit and debt burden, social instability, and high unemployment or underemployment.

Across the continent, shifting demographics, rapid urbanisation, rising disposable income and technological change are all influencing growth opportunities and strategies. Africa’s CEOs rank technological advances (75%), demographic shifts (52%) and a shift in global economic power (58%) as the top three defining trends that will transform their businesses over the next five years. In addition, new advancements and breakthroughs in frontiers of R&D are opening up more opportunities for businesses.

Our survey of CEOs reveals four common priorities among Africa’s business leaders: diversification and innovation; addressing greater stakeholder expectations; effectively leveraging growth catalysts like technology, innovation and talent; and measuring and communicating shared prosperity.

Catalysts for growth
In Africa, the environment is constantly changing and the growth opportunities are unparalleled. After more than a decade of urbanisation, Africa is poised for a digital revolution. Increasingly, organisations are using technology to challenge business models and disrupt competitors in markets. Technology was seen by CEOs in the survey as the best way of assessing and delivering on customer expectations by implementing customer relationship management systems (69%), interpreting the complex and evolving needs of customers through data and analytics (56%), and improving communication and engagement by means of social media (58%).

Corporate governance has also brought IT to the fore. In South Africa, the draft King IV report recognises that information technology (IT) has become an integral part of doing business today.

Going forward, CEOs in Africa indicated that they will be more actively looking for partners, while keeping an eye on costs. Partnerships and alliances feature prominently in their plans, with more than half of Africa CEOs (56%) planning to enter into strategic alliances over the next 12 months. In addition, 16% say they intend carrying out cross-border merger and acquisition (M&A) activities in the next year. Looking at investment prospects, China (22%), Kenya (22%), Uganda (20%) and South Africa (18%) remain the countries Africa CEOs view as most important for growth in the next 12 months.

While many organisations across the globe are expanding or seeking to expand in Africa, the availability of key skills stands out as a key concern for CEOs both in Africa and South Africa. More than half of Africa’s CEOs expect to increase their headcount over the next year. ‘The talent trends that we are seeing suggest that the market is becoming more and more competitive,” Boegman adds. As a result companies are having to review their talent management strategies. Around half plan to invest more in their leadership pipeline and focus on developing their institutional culture.

Stakeholders’ expectations
Across Africa boardroom agendas are changing, with many additional focus areas being brought to the table. The corporate landscape continues to undergo constant change, with companies being confronted by shareholders and other institutional investors who demand explanations around financial reporting and performance. In the process business is encountering a range of challenges in responding to wider stakeholder expectations. These include: additional costs to doing business (62%), unclear or inconsistent standards or regulations (45%), and customers’ unwillingness to pay (35%).

Dion Shango, CEO for PwC Southern Africa, says: “More successful companies tend to be collaborative and collective in their engagement with stakeholders. Business leaders need to have a business rationale for engaging and collaborating with stakeholders, while being acutely aware of the risks posed by not engaging with all relevant stakeholders.

“One of the most significant benefits of engaging and collaborating with stakeholders is that an organisation may be able to engage new markets in Africa and speed up the introduction of new products and services.”

Trust is also emerging as an important differentiator in the business community. Building trust helps organisations to attract investment and build stakeholder loyalty. It is concerning to note that 65% of Africa CEOs are somewhat or extremely concerned about the lack of trust in business. Corruption is also seen as a major threat by businesses (86%). The private sector has taken the initiative to fight corruption by calling on government and regulators to enforce legislation and codes of business practice.

Communicating shared prosperity
It is positive to note that Africa CEOs are increasingly recognising the importance of reporting on non-financial matters. In addition, most Africa CEOs surveyed not only believe that success is dependent on more than just making money, they also believe that their organisatiions should do more to report on the broader impact of their activities and how these activities create value for stakeholders.

Shango concludes: “Africa and South African CEOs have built on the experience of the past few years and are better prepared to deal with the host of challenges and uncertainties. CEOs have and also continue to reshape their business strategies to take advantage of new opportunities for growth, both in existing and new markets.”

Read More at IT News Africa

Investing in African banks (The Banker (Africa))

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Having undergone a series of consolidations, and operating in a region with a young, largely unbanked population, Africa’s banks are attracting the attention of investors from all over the world. However, choosing where to invest remains a challenge.

By James King | 4/01/2016 9:00 am

As investment opportunities go, banks in Africa are a good bet. Today, the growth momentum of the continent’s banking sector is attracting the interest of international lenders, private equity groups and sovereign wealth funds, among others, who are looking to capitalise on the high returns on offer. With growing frequency, these investors are executing big-dollar deals to gain an all important foothold in the continent’s market.

This trend marks an encouraging departure from the resource-dominated investments of previous years. In a reflection of Africa’s social and economic development, investment flows are becoming more diverse as new growth stories begin to emerge. For the continent’s financial services sector, and its banks in particular, these developments bode well.

Opportunities abound

“The Africa opportunity has traditionally been thought of in terms of natural resources. More recently, it has become a consumer-driven play, propelled by the dynamics around urbanisation, income growth and consumption,” says Philip Lindop, head of African investment banking at Barclays Africa.

These changing investment preferences have emerged as awareness of the opportunities in the African banking sector have grown. Over the past decade, the continent’s regulators have tightened up capital requirements, leading to a consolidation of lenders in many jurisdictions. According to Mr Lindop, this has created a greater number of top-tier institutions suitable for acquisition.

Indeed, many banks across Africa are still in need of additional funding. Slower economic growth across the region in recent years, coupled with lower commodity prices and a more stringent regulatory environment, are all feeding into the banks’ need to recapitalise. These trends have emerged as many global lenders, particularly from the US and Europe, have been winding down their presence across Africa.

“When you consider who will be investing in these opportunities, it’s unlikely to be some of the bigger European banks. Many of them have sizeable non-performing loan positions to deal with so I doubt they will be putting an Africa strategy at the top of their agenda,” says Linklaters’ Mr Bedford.

Filling the void

As the demands of Basel III requirements, as well as other regulatory burdens, take their toll, a new wave of investors are looking to fill the vacuum. This includes one of the world’s largest private equity firms, the Carlyle Group, and the Middle East’s largest bank by total assets, Qatar National Bank. Collectively, this new cast of players are leaving their mark on the landscape of Africa’s financial services sector. In doing so, they are capitalising on one of the most dynamic growth stories in the world today.

“A few years ago it was primarily South African banks that were looking to expand across the continent. Now there is clearly interest from non-African investors too,” says Chris Low, group managing director of Letshego, a financial services group with a presence across sub-Saharan Africa.

Indeed, data from Dealogic points to the growing interest from overseas investors. Between 2010 and 2015, a total of 59 mergers or acquisitions involving non-African investors and African banks occurred. The total value of these deals hit just over $7.5bn.

Investors are also making the most of the attractive prices on offer as, for a number of reasons, the valuations of banks across Africa have declined in recent times. “In particular, weaker oil prices, tighter monetary policy, more stringent regulations and political dynamics have played their part. These more attractive valuations have stimulated investor interest, specifically [in terms of] private equity and some international banks,” says Adesoji Solanke, a sub-Saharan Africa banking analyst with Renaissance Capital.

Long-term prospects

While attractive valuations have played their part, most investors are keeping an eye on the longer term fundamentals underpinning Africa’s banking sector. According to data from the World Bank, just 34% of adults in sub-Saharan Africa have a bank account, up from the 24% recorded just three years earlier. Additionally, the number of people aged 18 or under is expected to hit 1 billion by the year 2050, while the continent’s total population is expected to hit 2.8 billion by 2060.

On the ground, the prospects are even more promising. “In aggregate terms, banking penetration is extremely low across the continent. But when you remove east and southern Africa from the equation, you find that lending is driven by corporate activity elsewhere. So when it comes to retail lending, the figure is even lower,” says Mr Lindop.

As The Banker’s Top 100 African Bank’s ranking (see page 56) makes clear, the returns enjoyed by the continent’s top lenders are enviable. In 2014, the return on assets of the continent’s biggest banks by Tier 1 capital was 2.2%, while their return on capital was 27.6%. This performance was achieved as total asset growth hit 5% and aggregate Tier 1 capital growth climbed by 3.6% for the year.

“Considering the fundamentals underpinning many African economies, if you can invest in a well-managed and solvent bank with a solid balance sheet then some highly profitable exit routes are likely to open up,” says Mr Bedford.

The hunt for attractive exits is underpinning the recent drive by a number of private equity groups to secure a position in Africa’s banking sector. In November 2014, the Carlyle Group invested $147m in Nigeria’s Diamond Bank, equivalent to a stake of about 18%. This follows a massive spike in interest from the private equity sector in Africa more generally. According to the Emerging Markets Private Equity Association, about $4.2bn was raised to invest in Africa in 2014 alone.

QNB’s move

In general most investors, including banks and other investment vehicles, have an eye on securing longer term operational control of their acquisitions. “On the whole I would expect most investors to pursue minority stakes in African banks only as an entry point. These will likely be executed with the option to pursue a majority stake through another route further down the line,” says Mr Low.

In September 2014, Qatar National Bank (QNB), the Middle East’s largest lender by total assets, bought a 23.5% stake in Ecobank Transnational Incorporated (ETI), the bank with the largest footprint in Africa, in two successive transactions at a value of $220m and $283m. This followed QNB’s 2013 acquisition of Société Générale’s Egyptian unit for $2bn in 2013.

QNB has set itself a target of becoming a “Middle East and Africa icon” by 2017. This strategy is driven in part by increasing competition in the bank’s home market. Meanwhile, the collapse in the price of oil has forced the Qatari government and government-related entities to withdraw some of their deposits, slowing overall deposit growth, as non-essential capital spending has also been cut. These trends, and others, have led to lower growth opportunities in the domestic market.

QNB’s overseas loan book is expected to grow by about 25% per year between 2014 and 2017, compared with just 6% in Qatar, according to research from HSBC. As such, most analysts expect the lender to aggressively pursue further international expansion. Indeed, various sources believe the Qatari lender will ultimately seek to gain full control of ETI in the coming years. How this might transpire, in light of South African lender Nedbank’s recent acquisition of a 20% stake in Ecobank, is being carefully watched.

Diamond’s search 

Meanwhile, former Barclays chief executive Bob Diamond has led a push into the African banking sector through investment vehicle Atlas Mara. In partnership with Uganda’s Ashish Thakkar, whose Mara Group holds a 20% stake in the venture, the ambition is to create sub-Saharan Africa’s ‘premier financial institution’. To achieve this, Atlas Mara is buying up positions in some of Africa’s most promising banking markets.

To date, the group has made five acquisitions with a value of about $500m, providing it with a presence in seven countries. With further acquisitions expected, the aim is to be present in 10 to 15 African countries in the coming years. Yet, the case of Atlas Mara also exposes some of the challenges facing foreign investors who are entering Africa’s banking market.

Since an initial public offering on the London Stock Exchange in December 2013, Atlas Mara has lost about half of its share value. A number of factors have contributed to this decline, from lower commodity prices, to regulatory pressures, to slower economic growth across the region.

“Investing in Africa is difficult since the operating environment changes significantly from one jurisdiction to another. You have to have an understanding of the practical reality on the ground and that takes time,” says Mr Low.

What is more, getting to grips with issues of risk management and loan quality is a further stumbling block. A number of banks in the so-called tier-two and tier-three smaller economies still suffer from legacy non-performing loan positions, while the regulatory environment in these jurisdictions can often be difficult to navigate. Though investors can look to enter more developed markets, this approach comes with its own challenges.

“Investment opportunities in Africa are difficult. You can either enter a market that is more developed and better regulated but face tougher competition, or you can invest in more frontier destinations where operating conditions are more challenging and business volumes are lower but where there is a clearer path in terms of the competition,” says Stuart Bedford, a partner with Linklaters in London.

Tech advancements

Moreover, Africa’s banking landscape is characterised by a high degree of technological innovation. This has emerged partly as a result of the entrepreneurial dynamism that colours much of the continent. But it also has a lot to do with the structure of many markets. Here, both the physical and human geography of a number of African countries lends itself to particular products and services geared around mobile banking.

“Investors need to consider issues around technology and innovation very carefully. It is clear to us that some of the mobile and non-traditional banking channels being developed in Africa are more advanced than in most markets around the world,” says Mr Low.

As such, a further challenge facing investors is combining cutting-edge technology and a low-cost base so that they are able to provide these services in a commercially effective way, according to Mr Low. Data from the World Bank indicates that Africa leads the world in terms of mobile money accounts. About 12% of adults in sub-Saharan Africa have such an account against a worldwide average of 2%.

Above and beyond these operational considerations, issues of regulatory and political risk remain paramount. The sacking of South Africa’s finance minister, Nhlanhla Nene, in early December 2015 is a case in point. Arguably one of the most highly respected public sector figures on the continent, Mr Nene was abruptly relieved of his position by South Africa’s president, Jacob Zuma, in favour of little-known candidate who in turn was replaced just a few days later.

With speculation that the move was politically motivated, it has cast a dark shadow over the continent’s second largest economy. Moreover, that such an incident could occur in the most politically and economically developed state in sub-Saharan Africa speaks of the difficulties to be encountered elsewhere for investors and financial institutions alike.

“Banks are now deemed to be systemically important to both economic development and financial inclusion across the continent. Clearly, strong and independent regulators and institutions are required to oversee their development,” says Mr Lindop.

Where to choose? 

Looking ahead, as opportunities remain abundant, selecting an appropriate investment in Africa may be the biggest challenge of all. “This broader [investment] trend is set to continue. In Nigeria, for example, you have a situation where, unless there is an ease in the capital regulations, some banks will be looking for additional capital in testing market conditions,” says Mr Solanke at Renaissance Capital.

Here, the continent’s investment potential requires weighing up the various pros and cons behind each opportunity. This includes considerations around operating in different economic communities and political zones, including the Southern African Development Community, as well as issues around investing in Africa’s linguistic, demographic and economic centres of power. In the case of the larger banking markets, including South Africa, Nigeria and Kenya, which fall under many of these categories, growing investor awareness has stoked fierce competition.

As margins in these more dominant economies compress, a greater number of longer term opportunities may open in Africa’s smaller markets and among its less sizeable lenders. “Looking forward, there is a lot of opportunity in some of the smaller economies, particularly in the East African Community. [But] there can be a high risk in terms of buying into tier-two and tier-three institutions in Africa,” says Mr Low.

Nevertheless, there may be other ways for investors to tap into the continent’s rising consumer wallet. With larger markets and traditional banking operations expected to become increasingly competitive in the coming years, microfinance lending has the potential to emerge as a new investment opportunity. According to the Microfinance Information Exchange, the number of active microfinance borrowers across sub-Saharan Africa was 4.7 million in 2013, while the gross loan portfolio stood at $7.1bn across the countries that reported data.

A number of microfinance private equity funds now straddle the African continent, while dedicated microfinance providers continue to grow in terms of their reach and scale. But beyond the business case, the implications of greater financial inclusion for the continent’s social, economic and political development are commensurately large. Providing greater numbers of people with financial services will in turn lead to the formalisation of regional economies as well as increased and more inclusive growth.

What is more, greater levels of foreign investment can only help to stimulate, as well as accelerate, the development of products and services in the continent’s financial sector. A broader suite of financial offerings will promote consumer engagement with the continent’s banking sector and create a strong cycle of inclusion, growth and prosperity. With the prospect of further international investments into African banks remaining likely, the outlook for the continent’s financial services sector, as well as a more inclusive growth model, is positive.

Read More at the Banker.com

Watly: The computer that provides clean water, energy, internet access (CNN Africa)

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(CNN) Touted by its creators as the “world’s largest solar-powered computer,” it could offer a quantum leap for development across rural Africa.

By Kieron Monks, for CNN

The Watly machine, created by an Italian-Spanish start-up of the same name, resembles a futuristic space capsule. But its mission is to provide electricity, clean water, and Internet services that could transform lives and economies across rural Africa.
Around 625 million people in Sub-Saharan Africa are currently without electricity — more than two-thirds of the population — while 39% lack access to safe water.
“This is an infrastructure solution for people without access to three fundamental pillars of civilization,” says Watly founder Marco Attisani. “We are (taking) people to the heart of the 21st century.”

Patented technology

The system works by capturing solar energy through photovoltaic panels on the surface of the Watly module, which is converted into electricity through an internal 140 kwh battery.
This powers a patented water treatment system that uses a graphene-based filtering process, before the water is boiled and then distilled. The process can deliver 5,000 liters of safe drinking water each day.
The battery also powers a connectivity hub that provides wireless internet access within an 800-meter radius, and a charging station for electronic and mobile devices.
During its 15 years of service, one Watly can reduce emissions to the tune of 2,500 tons of greenhouse gases, equivalent to 5,000 barrels of oil, its makers say.
Watly has already tested a prototype in rural Ghana, and the next step is to roll out units across the continent, starting with Nigeria and Sudan.

Local partners, international investors

In July, Attisani will present the final design of a scaled up 40-meter, 15-ton machine to potential customers and investors.
“We have support from big corporations but I cannot say their names yet,” says Attisani, citing interest from leading mobile phone and energy companies.
The project has also received 1.4 million euros from the European Union’s Horizon 2020 research funding program.
“The project could have a huge social and economic impact especially in Africa,” an EU spokesperson said. “It aims to bring clean energy and clean water to people in countries that are in desperate need of both vital resources… and ultimately contribute to raising the living standards of potentially millions of people.”
Attisani stresses the need to involve local NGOs and civil society to drive widespread adoption.
“No technology can change the world without a human factor,” says the entrepreneur. “Local partners will care for the logistics, spread the word, play a role in education, and leverage functionality.”

Empowering economies

Beyond subsistence needs, the machines could power a surge of economic growth.
“We expect Watly to be a starting point for local entrepreneurs to start businesses,” says Attisani.
Within eight years, the company hopes to install 10,000 units across Africa, and estimates this will create 50,000 jobs. Many of these will relate to construction and maintenance of the machines and their products, while others will come indirectly through businesses benefitting from a reliable supply of vital services.
Attisani believes the model of providing services through localized, sustainable modules could have far-reaching consequences.
“There are going to be hundreds of companies developing technologies similar to Watly,” he says. “This could create a new economic paradigm worldwide.”
Read more at CNN Africa

Could Cryptocurrencies be the next big thing in Africa? (IT News Africa)

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Mobile money is booming in Africa, and digital currencies are at a close second, due to the same reason: 30% of Africans lack access to traditional financial services such as bank accounts and credit cards.

By Eran Feinstein, Chairman of 3G Direct Pay Group

 

Consequently, they are mostly limited to cash transactions, which impede on their ability to choose where to make purchases and do business. Cryptocurrencies play an important role in the development of technology-driven markets, and as Africa shifts a large portion of its business to technological and virtual endeavors, it is only natural that cryptocurrencies should become significant.

New research from PricewaterhouseCoopers reveals that the acceptance of the cryptocurrency, Bitcoin, has achieved critical mass and, as such, is positioned to disrupt the payments market. For Africa, cryptocurrencies hold many benefits, such as:

Pan Africa – Connecting Africans
Currently, each African country has their own currency, and Africans are unable to even complete transactions in other African countries within the same system, such as M-Pesa: a user in Ghana cannot send an M-Pesa payment to another user located in Kenya, for example.

Economic growth in Africa is often hindered by the lack of regional trade that cryptocurrencies can enable without necessitating the adoption of a single currency such as the Euro. As a decentralized currency with no real authority, cryptocurrencies would enable less expensive and more widely accepted cross-border transactions between African countries than the currently popular mobile payments. While mobile payments are more well-established and trusted in the region, and they do allow for cross-border transactions, they are costlier than cryptocurrencies and do not work across all borders.  Cryptocurrencies enable swift, cheap transactions that will broaden markets and possibilities, both for the individuals and the countries, and contribute to Africa’s growth.

The World at Africa’s Fingertips
Cross border transactions are currently incredibly expensive for those who are lucky to have the ability, but as 30% of Africans do not have a bank account or credit card, world markets are unavailable to them. The surge in usage of mobile phones has introduced Africans to alternative forms of remittance, which have, in turn, been a tremendous boost to business and individuals. However, mobile payments still rely heavily on currencies such as the Dollar or Euro, as well as African eWallets, such as M-Pesa, all of which cause very high currency exchange fees. Cryptocurrencies are decentralized, and thus, have no exchange fee, as they are accepted worldwide, thus both saving the user fees and enabling them to purchase products and services from other countries, which were previously unavailable to them.

Additionally, freelancers will be able to accept payments in the cryptocurrency of their choice, thus facilitating cross-border work. Freelancers will no longer be limited to business in Africa and will be able to work with clients worldwide, as receiving payments will no longer be a challenge. Payments can be sent and received quickly, anywhere in the world, 24/7, without having to account for banking holidays, currency exchange rates, banking fees, and more.

Security, Trust, and Transparency
Cryptocurrencies have no central authority figure, such as a government, and transactions are transparent. While personal information is never revealed, each person has a unique address where their transactions are listed. As such, cryptocurrencies are safe against identify theft, and merchants cannot add fees without the customer’s’ knowledge. Anyone can view all transactions at any given time, but cryptocurrencies are cryptographically secure, meaning they cannot be manipulated by any person or government. Cryptocurrencies cannot be seized and funds cannot be frozen by governments or financial intermediaries, so users can be confident that they have complete control over their money. For many Africans, this level of security and transparency is precisely what they need and demand.

Risk in cryptocurrencies is very low; since transactions do not carry any personal information, cannot be reversed, and are encrypted, the chance of fraud for merchants is very low. Bitcoin carries multilayer protection, including physical access to the computer, meaning the chance of theft is significantly lower than other currencies. Consequently, merchants will be able to do business in higher-risk areas. This also means that companies and individuals that may have been hesitant to work with some African countries will now have the ability to confidently expand their offerings to Africa, as well.

Creation of New Services
The introduction of cryptocurrencies like Bitcoin in Africa can spark numerous technological advances to support its usage. Ideally, people will be able to elect to receive their salary in the cryptocurrency and financial institutions can issue cryptocurrency-backed credit cards. Tipjars, both virtual and physical, can also have an ability to be cryptocurrency-based, which can broaden usage capabilities.

Advances in the field are already taking place in Africa: A Ghana-based IT company has recently created a bitcoin-producing farm, adding capacity to the global pool, thus promoting Bitcoin development in Africa. Companies such as BitPesa enable Africans to convert Bitcoin received overseas into local currencies.

Disadvantages of Cryptocurrencies
While cryptocurrencies boast a plethora of advantages, at the present time, very few businesses, in Africa and worldwide, currently deal with them. As such, adoption and growth in Africa is severely hindered. However, as more international companies begin to accept cryptocurrencies, Africa, too, will be able to reap the benefits. Likewise, cryptocurrencies are currently very volatile, with very few coins available and demand rising daily. However, volatility is expected to decrease with time.

Additionally, public awareness of cryptocurrencies in Africa is currently very low. As people are not aware of them, they have yet to demand their acceptance at local business. However, with an estimated million Bitcoin wallets in Africa at the end of 2015, with nearly one third being used by Kenyans, the potential of cryptocurrency in Africa is clearly high. Therefore, lack of awareness is only a temporary issue.

Finally, since cryptocurrencies are anonymous, it has been known to be used for illicit purposes. Nonetheless, while traditionally Bitcoin was viewed as a black market currency used to cover up illegal activities, its widespread adoption by respected companies has given it validation and enabled it to grow.

Cryptocurrencies can potentially transform Africa by enabling an increasingly open trade in the continent itself and worldwide. Cryptocurrencies facilitate cross-border transactions by providing users with one lone currency and little to no fees. Additionally, the security and transparency of the network will provide Africans with the trust that they do not feel with their local financial institutions. With so many Africans lacking bank accounts and electing to utilize mobile payment platforms like this one instead, cryptocurrencies will undoubtedly transform into the largest game-changer for African economies in the upcoming decade.

Read More at IT News Africa

Could Cryptocurrencies be the next big thing in Africa?

Farewell white-haired men, meet the new rich Africans: young, hip millennials willing to spend (IMG Africa)

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THE profile of a rich African is shifting from older white-haired males to younger, hip millennials who have found new ways to make and keep money in a changing global scene.

There will be 3,933 ultra-wealthy individuals on the continent by 2025, from 2,650 last year, according to the Knight Frank Wealth Report 2016.

South African businessman Sandile Zungu, plays with his son with his newly bought puppies in the garden outside his huge estate in Bryanstown in a past photo. They make it young these days in Africa. (Photo/Per-Anders Pettersson/Getty Images).

Lagos-London is the eighth-fastest growing private-jet route in the world, and if you go to Wilson airport in Nairobi, it’s full of private jets.’

In Kenya, for example, ultra high net worth individuals have increased 122% since 2005, rising 2% in 2015 alone, despite a struggling economy. Some of them are 20 to 30 year-olds. “The ultra-high net worth individual is younger in emerging markets, like China and Africa, than in developed markets,”  Andrew Shirley, editor of the report, told reporters in the Kenyan capital, Nairobi.

By ADELAIDE CHANGOLE

Younger, better educated

The entry of the younger and better educated people into the exclusive club in Africa is also bringing fresh and non-traditional ways in which the wealthy grow and spend their money.

More ultra-rich Africans are buying jets to avoid spending inordinate amounts of time in airport terminals waiting for the next connection to their destination on a continent with poor transport links, according to Shirley.

“The route from Lagos to London is the eighth-fastest growing private-jet route in the world,” Shirley said. “If you go to the Wilson airport in Nairobi, it’s full of private jets.”

Succession

In the past year, Kenya’s CFC Stanbic Bank has had a 40% increase in the number of clients worth more than $1 million, according to Anjali Harkoo, the head of its wealth and investment division.

Part of the wealth shift to younger Africans is due to succession management in family businesses and on inheritance, according to the study. Worried that their children may waste their inheritance, some wealthy people are bringing their children into the fold early to pass on the management and financial skills needed when they take the reins.

“A lot of people say they just don’t feel their children will be responsible enough, that they will just whittle their inheritance away,” Shirley said. “So it makes sense to involve the children at a much earlier age.”

read more at IMG Africa

Africa, preparing to become an Always-On continent (IT News Africa)

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With global cloud traffic expected to quadruple from current levels to 8.6 zettabytes (one zettabyte is equal to a billion terabytes), by the end of 2019, there is significant potential for Africa to capitalise on the move to Always-On.

Gregg Petersen, regional director for MEA and the South Asian Association for Regional Co-operation at Veeam Software, believes the African continent is well-poised to embrace changing business requirements for high availability.

By Staff Writer: IT News Africa

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“While infrastructure is one of the traditional bugbears in Africa, many countries have turned to wireless as a viable alternative to copper connections. This has enabled business to transform into Always-On operations by providing employees and other stakeholders with increased access to data using a myriad of devices.”

Petersen says there has been a big play in Africa around alliance integration with the likes of HP, NetApp, and EMC doing more in their partner programmes.

“For many multinationals, Africa presents a greenfield opportunity. Service providers can come in and implement new technologies without being concerned about legacy solutions. They can therefore immediately virtualise their clients with the associated cost and efficiency benefits happening sooner rather than later.”

For such an African expansion strategy to be successful, Petersen believes, a service provider needs to have a local presence in the countries. People do not want to do things remotely.

“Emerging markets in Africa require a different strategy. Multi-nationals cannot simply bundle them together with countries in Europe with different operating environments and hope to be successful. It is about bridging the availability gap with a new breed of solution and a new way of doing business.”

Petersen says the benefits of Always-On are becoming ever-more apparent. “Always-On brings rapid growth. With the focus moving away from traditional mindsets, the transition to the modern data centre brings with it a breath of fresh air when it comes to data availability.”

By being able to adopt new availability solutions almost immediately, approaches in those countries are lending themselves to be more conducive to Always-On. And with many vendors focusing on solutions that are easy to use, customers have the peace of mind that they can focus on meeting their business deliverables.

“We are entering an incredibly exciting time for the African continent. Significant opportunities are becoming available to solutions providers willing to cater for local nuances and therefore the shift to virtualization is a case of when it will happen, rather than if,” concludes Petersen.

Read More at IT News Africa

(LA Times) Why a congresswoman from Los Angeles is talking about Africa

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From left: Rep. Karen Bass, Sheila Siwela, Zambia’s Ambassador to the U.S., and Tebelelo Mazile Seretse, Botswana’s Ambassador to the U.S. (Tom Williams / CQ Roll Call)

By Sarah D. Wire Contact Reporter

It’s 8 a.m., Congress isn’t in session and Washington’s roads are icy, but more than 100 ambassadors, academics, African emigres and heads of humanitarian groups have crammed into a basement room of the U.S. Capitol for an unofficial meeting about how Boko Haram and other terrorism groups are stunting African progress.

The regular breakfasts are the brainchild of Rep. Karen Bass (D-Los Angeles), who is frustrated by a lack of attention paid to the continent and sees her own constituents with deep interest in policy toward Africa.

“In community organizing, you believe that the best policy is made by having those people that are most affected by the policy at the table. It’s not rocket science. If you do policy in a vacuum it can have unintended consequences,” she said in an interview after the meeting.

Bass first got involved in African policy because of South African apartheid in the 1970s and 1980s when she co-chaired the local Southern Africa Support Committee.

When apartheid ended, and Nelson Mandela was freed from prison in 1990, Bass’ attention shifted to stopping crack cocaine abuse and gang violence in  South-Central L.A. Bass started and ran the Community Coalition, a social justice organization. In 2004, she was elected to the state Assembly and in 2008 was the first African American woman in U.S. history elected speaker of a state legislative body.

“I stopped doing international work and just focused on domestic work. One of the reasons I was excited about coming to Congress is I could do both,” Bass said. “I really took almost a 20-year hiatus away from foreign policy.”

She views it as her responsibility.

“The same way it was my responsibility to figure out how to address the gang and crack intersection in South-Central, I also felt it was my responsibility to help fight to end apartheid and especially the U.S. government’s policies,” Bass said.

When she joined the House Foreign Affairs Committee after taking office in 2011, Bass said it didn’t feel like those actually affected by the committee’s decisions had a voice.

“When I would go to hearings on Africa, you would have no Africans participating, but they are sitting there in the audience while we’re talking about their countries. That just seemed odd to me,” she said.

She is now the highest-ranking Democrat on the House Foreign Affairs Committee’s Subcommittee on Africa, Global Health, Human Rights, and International Organizations. Other Foreign Affairs Subcommittees focus narrowly on one or two subjects.

“That in and of itself to me kind of says that Africa is not a big enough priority to have its own focused subcommittee,” she said. “We could go easily a month or two without having a hearing on Africa [with] so many subject matters.”

Bass said she’s gone out of her way to work with the Foreign Affairs Committee, not supersede it, by having committee leaders co-host the breakfasts or speak.

Foreign Affairs Committee Chairman Ed Royce (R-Fullerton) said a wider group of people are excited about legislation before the committee because of Bass’ breakfast meetings. He’s spoken at a few.

“It’s effective,” he said. “Karen Bass is able to strategically use the enthusiasm of those who participate in the breakfasts in order to try to assist us.”

Royce pointed to several cases, including a bill recently signed by President Obama aimed at electrical infrastructure around the continent, the global anti-poaching act and congressional response to Ebola.

Bass said Africa may seem so far away to her Los Angeles constituents, “but we have a huge diaspora community in L.A.”

Her district includes Little Ethiopia, a block-long stretch on Fairfax Avenue between West Olympic Boulevard and Whitworth Drive.

“Even Little Ethiopia is a commercial strip. It is not like Ethiopians reside in that area. I’m sure some do, but that area’s very, very mixed,” she said.

She plans to talk with Mayor Eric Garcetti and the City Council about a trade mission and also a seminar to connect federal agencies with private businesses interested in investing in Africa, Bass said.

This year she wants to coordinate with the African diaspora living in Los Angeles and hold a policy breakfast in the city so her constituents can be heard too.

“I know there’s a huge Nigerian community, Cameroonian, and there are seven official consulates for seven African countries, and then there’s about another five honorary consulates,” she said. “There should always be a voice. If we come up with a policy we want to bounce it back and forth. You want the people that are most affected also pushing for the policy as well.”

Nii Akuettah, executive director of the African Immigrant Caucus, a coalition of immigrant groups in Washington, called Bass “a big champion for Africa.”

“There is a great deal of good will in the African community here for her and on the continent for her,” he said.

The periodic gatherings draw members of Congress, ambassadors from African countries, emigres or diaspora, and other people who have a stake in the United States’ policy regarding Africa, such as businesses, State Department officials and academics–and often the groups are “not on the same page,” Bass said.

The meetings began as a way to draw attention to reauthorization of the Africa Growth and Opportunity Act. First created in 2000, AGOA gives special market access to certain sub-Saharan countries that maintain legal, human rights and labor standards. In June, President Obama signed bipartisan legislation extending the act until 2025.

The talks continued, with a focus on trade and economic development between the United States and African countries. Topics have ranged from Ebola to elections to electricity, and the July 2014 breakfast was also about instability because of Boko Haram, the northeastern Nigerian Islamist group.

Bass said Boko Haram must be addressed when looking to set policy about Africa’s future.

“You can’t talk about economic development, you can’t talk about the implementation of AGOA in countries without security and in countries that are not stable or are being destabilized because of Boko Haram,” she said.

Bass said many Americans underestimate the threat from the group.

“When you look at the number of people that have been killed by Boko Haram, it’s more than the number of lives lost to ISIS. I think part of our job here is raising the consciousness in the U.S. that just because something is happening on the continent, that doesn’t mean that it does not have international significance,” she said.

It’s her goal to reshape U.S.-Africa relations.

“We still kind of view Africa as a charity case and not as a continent that is a partner. Unfortunately, I think the United States is behind the rest of the world, because the rest of the world sees Africa as much more of a partner than we do,” she said.

The original article was published in the Los Angeles Times.

Africa can no longer be called ‘poor’ overall, but poverty still an issue (CNN)

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(CNN)Poverty in Africa has declined significantly in recent years, showing evidence that the past decade of economic growth has improved the lives of ordinary people.

The findings come from a new report by Afrobarometer, a pan-African, non-partisan research network, which conducted face to face interviews with about 50,000 citizens across 35 African countries.

The trend is very recent: in roughly four years between consecutive surveys, from 2011 to 2015, “lived poverty” fell in 22 of 33 countries surveyed in both rounds.

By Phoebe Parke, for CNN

But while the continent can no longer be considered poor overall, poverty is still a widespread issue, and huge differences remain from country to country.

Marked differences

Mauritius, the least poverty-stricken country, scores 0.10 on the Lived Poverty Index — which measures how frequently people go without basic necessities such as medical care, clean water and food during the course of a year.

On the other hand Gabon, the poorest among the surveyed countries, has a rating of 1.87. The continent’s average is 1.15.

This means that in Mauritius 4% of people went without food in the past year, compared to 74% in Gabon.

The survey highlights differences in access to basic services: while in Liberia 78% of people went without medical care at least once in the past year, in Cape Verde it was just 19%.

“More people are living better lives — that’s good news for Africa,” says Robert Mattes, lead author of the report, and University of Cape Town professor.

“Of course, we’ll need to verify that these trends hold up in our next round of surveys, before we celebrate.”

Poverty is still widespread

Despite low poverty levels in countries such as Mauritius, Cape Verde, Algeria, Egypt and Tunisia, lived poverty is still widespread on the continent.

The report shows that lived poverty actually increased in five countries – most steeply in Mozambique, Benin, and Liberia – and remained stagnant in five others.

On average, in 2014/15 over 40% of people said they went without clean water or food at least once or twice in the past year. 49% went without medical care, 38% without cooking fuel and 74% without cash income.

Governments need to act

Although the general growth in African economies definitely plays a role in the reduction of poverty, Afrobarometer warns there is no systematic relation: the crucial factor in improving people’s lives is “the extent to which national governments and their donor partners put in place the type of development infrastructure that enables people to build better lives,” the report says.

“Where governments do relatively simple things like invest in secondary and tertiary education, build good roads, and other development infrastructure like sewage systems and electricity grids, people are substantially better off,” says Mattes.

Across the continent people’s experiences differed greatly. Those living in Central and West Africa said they often went without basic necessities such as clean water and medical care, whereas North Africa experienced much fewer shortages.

On a person to person level, Africans who were employed full-time, had a high level of education, and lived in an urban area where basic infrastructure was in place, said they were rarely short of basic necessities.

“In other words, if governments and donors build an enabling environment, people seem to find ways to provide for themselves.”

Read More at CNN.com