Africa's Investment Environment

5 th KPMG Africa Conversation Series session, has presented a variety of topics related to Africa’s investment environment, and Here are the highlights.

Three mega trends: Tim Bashall, head of strategy at KPMG Africa, said there are currently three mega trends driving investment decisions on the continent: natural resources, the burgeoning African consumer, and infrastructure.

“The first mega trend … is the natural resources game, which is mining, oil & gas and more and more so agriculture as being big investment area opportunities,” said Bashall.

“The second part … is the billion people who are very young and are rapidly urbanising, and responding to the growth opportunity created by the natural resources environment. That is creating a massive middle class who has money to spend, and as a result consumer demand is massive. [It] affects telcos, it affects banks, insurance companies, retail organisations, and food and distribution companies.”

The third mega trend is Africa’s massive requirement for infrastructure. “There is a great need for big investments into power, into transport – whether it be road, rail, ports, airports – to respond to the needs of the natural resources demand and consumer demand,” Bashall explained.

Telecommunications is not saturated: Africa’s telecommunications industry has been one of the continent’s fastest growing sectors over the past decade. Has the sector become saturated, or are there still opportunities?

Henry Obi, chief operating officer of private equity firm Helios Investment Partners, said that although Africa’s coastal areas and cities are well covered in terms of telecommunications infrastructure, the rural areas still offer major opportunities. “There is a large [number] of Africans that live in the rural areas. Now how do you get to the rural customer? That involves a lot of capital expenditure in building up that infrastructure.”

Obi’s firm has invested in Helios Towers Africa, a company that builds mobile communication towers and then leases space on the towers to network operators. “We have seen the opportunity within the telecom space where telecom providers don’t have to roll out their own infrastructure, they can give that to someone else to do, and spend the money on content and providing a better service to the customer.”

Dapo Okubadejo, a partner at KPMG’s Nigeria office, added that although mobile voice services might not offer much growth potential, there are still opportunities in providing data services as well as under-sea fibre optic cables.

Consumer goods hot spots: Okubadejo said that Africa’s consumer boom is driven by the “aspiration of an average African to gravitate towards the middle class”. But which are the best countries to invest in for companies looking to target the African consumer?

Raman Dhawan, MD of Tata Africa, said that when it comes to manufacturing, many of the markets in Africa are still too small to justify establishing factories. “Wherever I go, the leadership always asks me, what are you going to do locally here? What are you going to manufacture? The big problem is the volumes are not there, because each country is separate.” He noted that South Africa and west Africa are the most lucrative markets from a consumer goods point of view.

Obi, however, said that companies should target east Africa from a regional perspective, rather than the individual countries. “There is a lot more integration in east Africa, than in west Africa.”

Skills shortage: Africa has a significant shortage of management and specialised skills. “There is a lack of depth of resources that the world outside of Africa is used to, in terms of actually running the operations that companies are investing in. The human resource risk is a very key risk,” said Bashall

Obi agreed, saying that although many highly educated Africans are returning to the continent, human resources are still one of the biggest challenges facing his company. “We look for the best talent globally … We don’t care where the talent comes from, as long as it is the best talent we can get.”

Source: How we made it in Africa

Six Business Facts about Ghana

Kader Coulibaly is general manager at DHL Express in Ghana. He says the best thing about living in the country is the friendliness of the people. Coulibaly, who is Ivorian by nationality, however, wishes he could speak and understand some of Ghana’s local languages, which is often used in business conversations. Coulibaly believes that foreign investors should take the Ghanaian market seriously because of the country’s strong economic growth and stable political environment.  
 

Accra Mall, Ghana. Photo EnterpriseAfrik

1. Prepare for enough initial cash flow: Coulibaly says that because of high interest rates, borrowing money from banks in Ghana is very expensive. It is therefore critical that companies have ample cash flow to keep their businesses going in the early stages. “When starting a business in Ghana, it is important to come with a sufficient cash flow, because one of the issues in the country is bank interest rates, which are above 20%.”

2. Understanding the local market: With an estimated GDP growth of close to 8% in 2012, Ghana has one of the fastest growing economies in the world. However, Coulibaly says that companies shouldn’t expect an easy ride. “The reality can be far different from the expectations.”
He says foreign investors need to do their homework and choose their local partners wisely. “The biggest challenge to doing business in Ghana at the moment is market knowledge. It is also important to choose the right local business partner because the Ghanaian market is a very particular market, and it is better to have somebody that knows the environment very well.”
Coulibaly adds that companies shouldn’t “cut-and paste” strategies used in other territories.

3. Serving the regional market: While Ghana has a population of around 25 million, Coulibaly says that companies should consider expanding their activities to the neighbouring countries (such Burkina Faso, Benin, Togo and Cote d’Ivoire), which together provide a much larger potential market. “From Ghana you can grow your business throughout West Africa, without any major issues.”

4. Infrastructure struggling under rapid growth: Coulibaly says that Ghana’s business environment is “dynamic but somewhat chaotic” due to the fact that infrastructure – such as energy and water supply – have not kept up with the country’s strong economic growth. “It is sometimes difficult to manage the growth experienced by the country at the moment.”

5. Oil creating opportunities for other industries: Ghana started with offshore oil production in 2011, and the industry has been responsible for much of the country’s rapid economic growth over the past two years.
According to Coulibaly, the oil industry is however creating opportunities for many other products and services, from accommodation to consumer goods. For example in the city of Takoradi – the nearest port to Ghana’s offshore oil fields – there is a need for everything, from supermarkets to hotels. Before the introduction of oil, Takoradi was described as a sleepy town. South Africa’s Protea hotel group recently announced a new hotel in Takoradi, while Renaissance Capital is building a large mixed use development, which will feature shopping facilities as well as residential and commercial components.
Coulibaly says that the downside to the influx of foreign business people into the country is that it has led to a rise in the cost of living, especially related to prices of consumer goods and property.

6. Growth in mining and banking: Despite the rapidly advancing oil industry, Coulibaly says that DHL is currently seeing growth in the mining and banking sectors. Ghana has some of the world’s richest gold deposits.
“We are shipping an increasing number of automotive and machinery spare parts that we can link to the oil industry, but also to mining. A lot of mining projects are starting in Ghana. The banks are also growing and moving into the credit card business, which is creating a lot of activity as far as DHL is concerned,” he explains.

Source: How We Made It in Africa

Africa’s Three Main Business Opportunities

According to various reputable forecasn economy is expected to grow by more than 5% during 2012/13, while its total Gross Domestic Product (GDP) is expected to reach US$2.6 trillion by the year 2020.

In addition, the continent also has the fastest-expanding labour force in the world. Today, there are more than 500 million people of working age (15 to 64) in Africa, and that number is expected to pass 1.1 billion by 2040 – to be larger than China and India.

The rest of the world is taking note of the fact that African countries are trying to improve their business environment as a strategy to attract more foreign direct investment (FDI). One of the key investment drivers is the increasing prevalence of peace, democratic elections and improved governance.

The World Bank ‘Doing Business In’ Survey for 2012 – seen as a benchmark for rating the world’s business environments – tracked Morocco as the top reformer globally during the survey period, with Sao Tome and Principe, Cape Verde, Sierra Leone and Burundi also among the top 10 reformers. Changes in domestic policy in these countries improved the process of dealing with construction permits, protecting investors and paying taxes, among other areas.

The African Development Bank (AfDB), International Monetary Fund (IMF) and other multilateral institutions have done their share by working with investors and recipient governments to improve Africa’s business climate.

Infrastructure

Rapid urbanisation on the continent demands that governments and cities become globally competitive. The biggest need for infrastructure exists in power, transportation (roads, rail, ports, etc), hospitals and schools. The current spend on infrastructure in Africa is about US$45 billion a year. About US$90 to US$100 billion a year is needed, which is a huge funding deficit. This means there are substantial opportunities for the private sector to either invest alone or in partnership with government.

Resources

Africa’s resources are in demand! This is not only restricted to the extractive industries such as mining, and oil and gas. Agriculture is a dominant economic sector in Africa, and concerns around global food security make the continent’s fertile, uncultivated land an enormously important resource.

Consumer demand

Through the phenomenal rate of urbanisation, Africa has a growing population of very young, ambitious, often well-educated, globally minded people who are increasingly moving into middle-income brackets.

Internet users have increased, while the telecommunications sector has seen the number of cellphone users on the continent grow from 11 million in 2000 to almost 400 million today. Undersea data cables are currently being laid at an unprecedented rate, providing exponential bandwidth growth which will drive communications and internet access, particularly through mobile devices.

The banking industry is expanding with growing income levels, increased urbanisation and imperatives of financial inclusion.

To demonstrate that successful projects can be undertaken in African countries, the AfDB has raised its capacity to finance private enterprises and public-private partnerships (PPPs).

Where is FDI going?

FDI into Africa peaked during 2008, then subsequently declined as a result of the global financial crisis.

Of all the FDI targeted at developing countries last year, Africa garnered an estimated 12%. According to the most recent data compiled by the United Nations Conference on Trade and Development (UNCTAD), the biggest inflows during 2010 (most recent complete data) were directed to oil-rich economies (Algeria, Angola, Egypt, Ghana, Nigeria and Libya). In general, the countries receiving the lowest amounts of FDI also recorded the highest volume of outward investment.

FDI inflows totalled US$55 billion in 2010, of which 30% went to north Africa and another 27.5% flowed into southern Africa. According to the World Investment Report 2011, the extent of intra-regional FDI in Africa is limited. Judging from data on FDI projects, intra-regional FDI accounts for only 5% of the total in terms of value and 12% in terms of number.

Who wants to invest and in what?

There are several sectors looking to Africa for opportunity. These include companies operating in mature economies with low or no growth, that need to find new ways to grow, companies operating in the high-growth Brazil, Russia, India and China (BRIC) markets, looking to fuel their growth, companies looking for intra-Africa trade opportunities and companies already operating in Africa that are looking to expand their footprint on the continent.

KPMG has identified three main categories of opportunity in Africa – infrastructure, resources and consumer demand.

There is a need for personal banking services, small and medium-size business financing, micro-finance, development finance and opportunities for trade finance houses.

The food and drinks sector needs to expand to keep up with the rapid rate of urbanisation and the needs of this growing middle class, as does the retail sector. Formal retail penetration is among the lowest in the world throughout most of Africa, providing significant opportunities for the sector.

 

Considering investing in Africa?


When considering the opportunities and challenges in Africa, it is important to remember:

Africa is a continent and not a single country. There are 55 countries at different stages of development with different agendas. However, the majority of these belong to regional groupings, which implies different cross-border arrangements between states, depending on membership of these groups.

Africa is not isolated and is rather, an integral part of the global interconnected world. This implies that, whatever happens, the global economy affects Africa, and issues in the developed world impact Africa.

Finally…

The key issue here is the risk/reward balance which investors need to understand. Investment-grade countries like South Africa, Botswana and Namibia might offer lower returns than seen elsewhere on the continent, though this is associated with a lower risk. Other countries with higher risk like Nigeria, Tanzania and Kenya could offer higher rewards in return.

Regardless of who the investor is, Africa continues to offer numerous opportunities in the post-global financial crisis world, though the options are as varied as the countries themselves.

Dapo Okubadejo is director and head of financial advisory services at KPMG in Nigeria

Source: How We Made It in Africa

Five African ‘Economic Boom towns’ to invest in

South Africa’s economic hub Johannesburg is often cited as a classic example of the ‘boom town’ effect. The discovery of gold in the 1880s led to a gold rush that transformed the dusty settlement into South Africa’s largest city in a matter of 10 years.

Across Africa there are towns experiencing rapid development, largely off the back of newfound resources such as minerals, crude oil and natural gas. To produce this list of African boom towns How we made it in Africa sought the insight of Brett Abrahamse, a director at Johannesburg-based real estate consultancy Terrace Africa.

Abrahamse says that the towns below offer attractive opportunities from a property development perspective – especially for hotel and retail developments. While the challenges and expenses of working in Africa’s more remote locations may eat away at profit margins, these towns should be on the radar of investors and developers looking for a first-mover advantage.

1. Tete (Mozambique)

The remote town of Tete, situated in the centre-west part of Mozambique, is the heart of the country’s new coal mining industry. The area around the town has some of the world’s richest coal reserves.

Rajat Kohli, Standard Bank’s global head of mining and metals, called it the world’s last substantial untapped coal reserve. “About 100 million tons per annum of coal could be produced within the next five years, and that figure could even go further,” he said at a conference last year.

Mining companies operating in Tete Province’s Moatize basin include Rio Tinto as well as Brazil’s Vale.

The coal mines are linked via rail to the port of Beira. Brazilian mining giant Vale has also announced plans to build a railway line from its Moatize mine to the north-western port of Nacala to export coal.

Tete is booming due to mining activity in the area. However, according to Abrahamse, the town has very few formal supermarkets and hotels, creating significant opportunities for more developments. Carlson Rezidor has announced that it will soon launch its new Park Inn by Radisson hotel in Tete.

2. Solwezi (Zambia)

Solwezi is the core town in the ‘new’ Zambian copper-belt and is also the capital of the North-Western province. From humble beginnings as a trading station servicing the nearby mines and employees, the town has now mushroomed into an important node. Solwezi has seen significant growth in recent years, driven by copper and nickel mines, which are run by First Quantum and Barrick Gold.

Abrahamse says that Solwezi has also experienced an increase in mining-related services and business activities. In addition, trade on the Congolese border 12 kilometres away is further boosting development and business activity in the town. The current airport is being upgraded, and will soon be able to accommodate Boeing 737s, which should see an increase in flights to Solwezi.

According to Abrahamse, there is a strong demand for more retailers and hotels in Solwezi. “There is a dire shortage of formal hotel accommodation in the town and this is evident by the US$200-plus room rate for a two-star room. The current hotel operations at Royal Solwezi Inn and Kansanshi Hotel are running at more than 90% occupancy with extremely high room rates,” he says.

The only formal supermarket in Solwezi is a Shoprite, which cannot alone cater for the growing demand. Abrahamse reckons that Solwezi is in need of small to medium sized commercial property developments with a retail anchor, a hospitality partner, numerous line shops and banking facilities.

First Quantum has also recently begun a new US$1 billion investment in a project called Trident. This consists of three new mines and will have an annual capacity of 300,000 tons of copper per year. The closest town to Trident is Solwezi.

3. Takoradi (Ghana)

Towards the end of 2010 How we made it in Africa reported that Takoradi, a small coastal town on Ghana’s west coast, was emerging as one of the new hot spots for African property developers. At the time there was considerable enthusiasm about the twin city of Sekondi-Takoradi because it was set to be home to Ghana’s emerging oil industry. Takoradi is the nearest commercial port to the country’s offshore oil fields.

Since then commercial oil production has started in all earnest, but developers and retailers have still not fully capitalised on the opportunities.

A few days ago it was announced that the International Finance Corporation (IFC) has provided a loan of US$5.45 million to Alliance Estates Limited, to build the first Protea Hotel in Takoradi. The 132-room, three-star hotel will help meet demand for business infrastructure as more investors are venturing into the oil producing region of Takoradi. “Ghana’s economy has been expanding at a high level, with growth touching 13.6% in 2011. In Takoradi, international hotels are limited, despite increased business traffic from investors interested in developing the oil and gas industry. The Protea Hotel will be amongst the first to provide international-standard rooms, rates and conference facilities,” said the IFC in a statement.

4. Juba (South Sudan)

“Juba, the capital of South Sudan, is one of those penny stocks, those risky ones where it could become the next Nairobi, or it could just muddle along and stay as it is forever,” says Abrahamse.

Last year South Sudan became Africa’s newest country after the region voted in favour of secession from Sudan. The referendum was a core component of the 2005 Comprehensive Peace Agreement (CPA) that ended decades of conflict between the Southern Sudan People’s Liberation Movement (SPLM) and the Khartoum government.

At independence there was much optimism that the South Sudanese economy would finally take off. The region has few industries outside the oil sector and almost non-existent infrastructure. Lately, however, there has been renewed fighting between Sudan and its now independent neighbour, South Sudan, sparking fears of an all-out war.

Although the recent fighting took place far from Juba, Abrahamse notes that the city’s fortunes are heavily dependent on peace between the two countries. He says that political risk is the major issue prospective investors in South Sudan should consider and that each business opportunity should be analysed on its merits. Juba’s potential for development is, however, certain. The city is South Sudan’s main commercial hub and one of the world’s fastest growing urban areas due to oil money.

Last year the South Sudanese government announced that the capital would move to Ramciel, some 250 kilometres away from Juba, closer to the border of north Sudan. It is unclear when this will happen.

5. Pemba (Mozambique)

Pemba is a port city in northern Mozambique. It is traditionally known as a tourist destination, but these days Pemba is an important centre for northern Mozambique’s offshore natural gas fields in the Rovuma basin.

US-based Anadarko Petroleum and Italian oil & gas company Eni, have both recently announced significant gas discoveries in their respective blocks. These discoveries are important because of the size of the reserves as well as Mozambique’s relative proximity to markets in Asia. “This is rather close to the largest potential market for liquefied natural gas (LNG), which is Asia. It is easier to export from offshore Mozambique to Asia than it is from many other places,” Adi Karev, global oil & gas leader at Deloitte Touche Tohmatsu, told How we made it in Africa in an interview earlier this year.

Abrahamse says that Pemba, as is the case with the other towns mentioned in this article, has a lack of accommodation and retail facilities. “An example of the problem with Pemba is there is one five-star lodge that is booked out by the oil companies. The interesting story there is that post the 2008/2009 financial crisis the resorts were struggling, but since they found gas there, these hotels and lodges have been booked out by people working on the gas fields.”

Source: How We Made It in Africa

A vexed Miners Corporate Tax issue in Ghana

By Ekow Essabra-Mensah

  

Katanga copper mining, DR Congo

Tax hikes threaten to eat into miners’ profits, but the government insists they are necessary to maximise the benefits from the industry.

Government in its 2012 budget statement announced that the corporate tax rate for miners is being increased from the current 25% to 35%, while a windfall profit tax of 10% will be imposed. Reactions have so far been mixed -- with mining firms fretting over the impact the measures would have on their earnings and investments even as groups such as the Ghana Mineworkers’ Union celebrate the changes.

But Vice President John Dramani Mahama has now assured mining companies that the new tax initiatives are not intended to be punitive nor a deliberate attempt to cripple the mining sector. The introduction of the new tax measures, according to him, is intended to create an enabling environment for the country to derive maximum economic and social benefits from the industry. “As partners in development, the time has come for the mining sector to contribute its due share to the development of the country,” he said.

Other government officials have sought to assuage miner’s concerns about the new taxes. Seth Terkper, Deputy Finance Minister, in a recent engagement with representatives of mining firms, said: “The changes in the taxes are part of a rationalisation plan. Later on, other natural resource sectors will be brought on board. So, it’s not about targetting mining companies; and they are not meant to be anti-investment.

Civil society organisations are commending government for the bold move, in particular for measures to rationalise fiscal operations in the natural resource sector. Others, especially the mining community that has been hard hit by the proposals, are unhappy and have called on government to take a second look at them.

In the wake of the announcement of the new taxes, Dr. Toni Aubynn, Chief Executive of the Ghana Chamber of Mines, worried that the new reforms could deter mining companies from making further investments in the sector. “Uncertainties must be looked at carefully. The country’s new tax moves have brought forth warnings and cautions about the impact these measures could have, such as making the nation unattractive for future mining efforts and scaring off investors,” he said.

The Ghana Aid Effectiveness Forum, an umbrella-body that brings together national networks on aid and development issues, commended government for the move -- arguing that although Ghana is a resource-rich country, the benefits from exploiting natural resources have been minimal and many communities where the resources are found are mired in abject poverty.

The proposals announced by the Minister of Finance and Economic Planning, Dr Kwabena Duffuor, in the 2012 budget include -- in addition to the hikes in corporate and windfall taxes -- a reduction in the capital allowance rate from 80% to 20% for a period of five years for all mining companies, as is the case in the oil and gas sector.

Other mineral-rich African states that have recently raised mining taxes or royalties include the region's top copper producer Zambia, and Zimbabwe which has the second-largest known platinum reserves in the world.

Several analysts have said the wave of resource nationalism, which coincides with sky-high commodity prices, is one of the biggest political risks to the mining sector in Africa.

In a sign that more actions will be taken, the government has set up a National Re-Negotiation Team to critically review the fiscal regimes and mining agreements with the view to ensuring that the country “benefits adequately and fairly from the gains in the mining sector.”

During the recent global financial crisis, prices of gold, cocoa and oil reached their highest levels ever on the international market. Yet the country did not benefit much in terms of government revenues from the price hikes, particularly from gold, Dr. Kwabena Duffuor argues.

The International Monetary Fund (IMF), believed to be an instigator of these new tax-reform measures, has stated that Ghana has not benefitted enough from rising gold prices. The Fund in a statement encouraged government to continue its efforts to strengthen tax administration. It also supported the adoption of additional tax policy measures, particularly in the area of natural resources where taxation is low in comparison with peer countries.

But Ghana’s private sector umbrella-body, the Private Enterprise Foundation, does not think the issue is necessarily so. PEF President, Asare Akuffo, opined that the corporate tax hike is in order since government and the country should benefit more from the mining sector. He however cautioned government to reconsider the proposed windfall tax on the mining companies.

“Companies thrive on profit; the reality in business however is that there are periods of losses and the savings made in good times are what keep the companies in operation,” Mr. Akuffo said, adding that the windfall tax may be a disincentive for future investments in Ghana’s mining sector.

The Chamber of Mines has warned that the new tax measures need to be implemented ‘scientifically’ because high gold prices do not necessarily mean mining companies are making more money. According to the Chamber, some gold miners are currently producing at US$1,200/oz.

At that rate, their gold mining costs appear to be far above the average for the continent. The average per ounce production cost in “other Africa”, which excludes South Africa, in Q1 2011 was US$647 -- resulting in a record cost/price differential of US$740/oz, according to a gold mine cost report.

Ernst & Young, the global accounting and consulting firm, reported that for 2011-2012 the number-one risk for miners is resource nationalisation (number four in 2010), which involves countries attempting to get more money from their minerals.

The report said resource nationalisation takes many forms, including increased royalties, taxes and mandatory participation whereby governments mandate the involvement of certain stakeholders. The mining and metals sector rebounded quickly from the global financial crisis, making it an early target to restore Treasury conditions, the report said.
2011 marked a period when more governments were aiming at that target. A growing amount of legislation has been implemented and is being considered that attempts to extract more profits from the minerals that miners are extracting. This is a trend that Ernst & Young predicts is only likely to increase.

Insight into Africa’s Investment environment

The recent KPMG Africa Conversation Series session, has presented a variety of topics related to Africa’s investment environment, and Here are the highlights.

 

Three mega trends: Tim Bashall, head of strategy at KPMG Africa, said there are currently three mega trends driving investment decisions on the continent: natural resources, the burgeoning African consumer, and infrastructure.

“The first mega trend … is the natural resources game, which is mining, oil & gas and more and more so agriculture as being big investment area opportunities,” said Bashall.

“The second part … is the billion people who are very young and are rapidly urbanising, and responding to the growth opportunity created by the natural resources environment. That is creating a massive middle class who has money to spend, and as a result consumer demand is massive. [It] affects telcos, it affects banks, insurance companies, retail organisations, and food and distribution companies.”

The third mega trend is Africa’s massive requirement for infrastructure. “There is a great need for big investments into power, into transport – whether it be road, rail, ports, airports – to respond to the needs of the natural resources demand and consumer demand,” Bashall explained.

Telecommunications is not saturated: Africa’s telecommunications industry has been one of the continent’s fastest growing sectors over the past decade. Has the sector become saturated, or are there still opportunities?

Henry Obi, chief operating officer of private equity firm Helios Investment Partners, said that although Africa’s coastal areas and cities are well covered in terms of telecommunications infrastructure, the rural areas still offer major opportunities. “There is a large [number] of Africans that live in the rural areas. Now how do you get to the rural customer? That involves a lot of capital expenditure in building up that infrastructure.”

Obi’s firm has invested in Helios Towers Africa, a company that builds mobile communication towers and then leases space on the towers to network operators. “We have seen the opportunity within the telecom space where telecom providers don’t have to roll out their own infrastructure, they can give that to someone else to do, and spend the money on content and providing a better service to the customer.”

Dapo Okubadejo, a partner at KPMG’s Nigeria office, added that although mobile voice services might not offer much growth potential, there are still opportunities in providing data services as well as under-sea fibre optic cables.

Consumer goods hot spots: Okubadejo said that Africa’s consumer boom is driven by the “aspiration of an average African to gravitate towards the middle class”. But which are the best countries to invest in for companies looking to target the African consumer?

Raman Dhawan, MD of Tata Africa, said that when it comes to manufacturing, many of the markets in Africa are still too small to justify establishing factories. “Wherever I go, the leadership always asks me, what are you going to do locally here? What are you going to manufacture? The big problem is the volumes are not there, because each country is separate.” He noted that South Africa and west Africa are the most lucrative markets from a consumer goods point of view.

Obi, however, said that companies should target east Africa from a regional perspective, rather than the individual countries. “There is a lot more integration in east Africa, than in west Africa.”

Skills shortage: Africa has a significant shortage of management and specialised skills. “There is a lack of depth of resources that the world outside of Africa is used to, in terms of actually running the operations that companies are investing in. The human resource risk is a very key risk,” said Bashall

Obi agreed, saying that although many highly educated Africans are returning to the continent, human resources are still one of the biggest challenges facing his company. “We look for the best talent globally … We don’t care where the talent comes from, as long as it is the best talent we can get.”

Source: How we made it in Africa

DR Congo targets 6 pct growth in 2012

KINSHASA - Democratic Republic of Congo is aiming for at least six percent growth in 2012, down from estimated seven percent growth in 2011, Finance Minister Matata Ponyo Mapon said on Thursday.

Volatility in global markets represent the biggest risk for growth for the country, Ponyo said at a press conference.

"The risk of a drop in economic activity following a degradation of the global perspective could be amplified by an internal risk of a political nature," he added.

President Joseph Kabila was declared winner of November 28 elections rivals said were rigged. Election observers said the polls were marred by fraud and poor organisation. Full results of parliamentary elections on the same day have been delayed.

"Our dream remains the realisation of double-digit economic growth," Ponyo said. "Everything is possible in the medium-term, which is why the government is already investing in improving the business climate."

Congo has some of the most coveted resources in the world, ranging from copper in its southern Katanga province to tin and coltan used in mobile phones and other hi-tech gadgets. Investors include China, with whom it signed a $6 billion deal to finance the construction of mines and public infrastructure.

Ponyo said the government aimed to bring annual inflation down to nine percent in 2012 from 15.4 percent last year, and to increase foreign reserves from $1.2 billion to $2.1 billion during 2012.

He also said the government was hopeful of unblocking the latest $90 million tranche of a $560 million loan facility from the IMF, delayed over a failure to publish mining contracts as part of an internationally backed transparency drive.

"We've discussed this question with (state mining company) Gecamines, and lately we've discussed it with the prime minister. I believe a solution is on the way," he said.

Gecamines last year refused to hand over contracts relating to joint ventures with international partners, despite ministers promising to publish the deals.

IMF country representative Samir Jahjah said the latest IMF loan, intended to boost the country's foreign reserves, could be delayed until May even if mining contracts are published.

"At this stage we need to have a new government to engage a discussion... We would still need to wait for a new prime minister that is coming from these elections... " Jahjah said.

The electoral commission delayed the results of legislative polls engulfed in allegations of fraud across the country. That has led to fears that the Supreme Court validation of the process - expected in March - could in turn be delayed.

Source: Reuters

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Rwanda exports rise 32 percent in 2011

KIGALI  - Rwanda's exports of goods and services increased by 31.7 percent last year from 2010, thanks to growth in mining, tea and coffee, its minister for trade and industry said.

Fracois Kanimba said the government was working hard to control inflation after it increased for several months right up to October last year when it stood at 7.76 percent.

"2011 was a great year for us," he said in a statement seen by Reuters on Saturday.

Although landlocked, tiny Rwanda constantly punches above its weight in the region, racing ahead of bigger neighbours like Uganda in terms of ease-of-doing business, and going head to head with Kenya in trying to create a world class Information Communication Technology sector.

It expects its economy to expand by 7.6 percent this year after growing by 8.8 percent in 2011 on the back of growth in construction, mining and manufacturing.

Source: Reuters

Ghana Stock Exchange To Trade Gold Fund in January 2012

The Ghana Stock Exchange (GSE) is to begin trading of the Newgold Exchange Trading Fund (ETF) next month.

Trading in the Fund, which was initially scheduled for this month, has had to be postponed to allow testing of applications that will ensure smooth take-off and efficient operation of the Fund.

“The gold Fund is expected to trade on the GSE by next month, though the initial plan was to start in December. The change in date has become necessary to enable us look at various applications. We are currently looking at various applications that will ensure a smooth take-off,” Mr. Kofi Yamoah, Managing Director, GSE, told the B&FT in an interview.

The ETF will give investors the chance to trade indirectly in gold and create excitement in the securities market. It will be traded as an ETF that operates as a listed stock and a collective investment scheme on the exchange.

The Fund will be locked into gold – thereby allowing investors to have exposure to gold without directly allowing them to buy the assets. It will continuously track gold prices and allow investors to invest indirectly in gold bullion through the purchase of units in the ETF.

The Director General of the Securities and Exchange Commission, Mr. Adu Anane Antwi, said each of the Newgold ETF securities is equivalent to 1/100 units of real gold in a secured stockpile of gold bullion.

Trading of the gold fund on the GSE is to improve the depth and width of the capital market, provide more investment variety for the Ghanaian investor, and also provide liquidity to the market as ETF has a guaranteed market-making mechanism.

Mr. Antwi said that “It will lead to a reduction in the overall risk of portfolios in the market, since investment in commodities tends to exhibit low correlation with traditional stock and bond investment.

“It will also introduce the concept of market-making onto the Ghanaian capital market, since liquidity providers will be appointed to buy and sell ETF units when the secondary market does not provide both sides of orders at their quoted prices.”


Source: Business & Financial Time

Investment inflow in mining sector in Ghana hit $770 million

Investment inflow into the country’s mining sector hit $770 million last year, up from the 2009 figure of $726 million.

This brings the total money pumped into the sector within the last 10 years to approximately $6.4 billion.

The investments came from companies that are engaged in gold production, exploration and support services.

Dr Toni Aubynn, Chief Executive Officer of the Ghana Chamber of Mines, who made this known at Etwebo in the Bibiani-Anhwiaso-Bekwai District of the Western Region, said during the period, the mining industry returned 68 per cent of its gross revenue into the economy.

It also paid $364 million to the Ghana Revenue Authority, representing 23 per cent of the authority’s 2010 total collections, Dr Aubynn said at the National Mine Safety week celebration hosted by the Chirano Gold Mine.

He said corporate tax, withholding tax and levies stood at $170 million.

Dr Aubynn said to underline its commitment to society the industry contributed $17.6 million to its host communities and the public in support of various social responsibility programmes.

This, he said, showed the enormous contribution of the mining industry to the growth of the economy.

The interest of the companies in their operation areas has expanded to include social investment projects.

These are implemented through collaboration with the beneficiaries in identifying and funding projects that yield both social and economic returns to the communities, he added.

Source: GNA

Mining Industry to boost Local Businesses in Ghana

To ensure that mining companies in the country increase their local procurement system, the International Finance Corporation (IFC), a member of the World Bank Group, the Ghana Chamber of Mines, and the Minerals Commission have signed a Memorandum of Understanding (MOU), to support the growth of local businesses working in Ghana’s mining industry.

The collaboration will design and implement a local supplier development programme to build the expertise of local businesses working in the mining industry’s supply chains, and promote Ghana as a leading African destination for mining investment.

The agreement was signed at a World Bank workshop held in Accra to discuss a study on increasing local procurement by the mining industry in West Africa.

The workshop brought together policy makers, the private sector, and civil society.

Joyce Aryee, CEO of the Ghana Chamber of Mines, said “Mining firms operating in the country are committed to supporting the development of a programme to improve the capacity of local manufacturers of products and providers of services to create competitive Ghanaian suppliers.”

She added that “Ghana has a large, well-established mining sector which provides jobs, government revenues, and has significant opportunities for local businesses to become suppliers to the mining firms.”

She reaffirmed the Chamber’s commitment towards the initiative, noting that it would go a long way to help sustain and support Ghanaian businesses.

Mary-Jean Moyo, IFC Country Manager for Ghana, said, “Spreading the benefits in the oil, gas and mining sector is an important priority for IFC in Ghana.”

She emphasised that “together with the Chamber of Mines and the Minerals Commission, we are supporting the development of local businesses through training programmes that meet the needs of the mining sector in a sustainable way.”

IFC’s Sustainable Business Advisory works with firms and sectors to develop inclusive, environmentally sustainable and efficient markets.

Building on IFC’s environmental and social performance standards, it promotes sustainable business practices in mining as well as in other sectors such as agribusiness, infrastructure, oil, gas, manufacturing and services.

Source: Daily Guide

African Barrick Gold plans Tanzania cross listing

Gold bars

DAR ES SALAAM  - African Barrick Gold, which has four gold mines in Africa's fourth largest gold producer Tanzania, said on Wednesday it was planning to cross-list on the country's bourse by the end of this year.

The Tanzanian-focused miner, a unit of the world's largest gold miner Barrick Gold Corp, also said it was planning to double output to 2 million ounces by 2024 from a projected 1 million ounces in 2014.

"We have made a commitment to cross-list on the Dar es Salaam Stock Exchange. Our initial plan was to cross-list by the end of September," ABG's Vice President for Corporate Affairs, Deo Mwanyika, told a news conference in Dar es Salaam.

"We are still targeting cross-listing before the end of this year and progress has so far been good," said Mwanyika.

ABG produced nearly 700,000 ounces of gold last year, Mwanyika said, and has a resource of 30 million ounces in Tanzania.

In July, the firm posted forecast-beating output and a 54 percent jump in second-quarter income, despite setbacks including an armed attack on one of its mines.

Source: Reuters

Africa’s key Business Leaders to converge in Accra

Africa’s most influential leaders will be converging in Accra next week to create partnerships and collaborative pathways to achieve effective social change and impact in the region.

The 2011 U-turn Africa Stakeholder Forum, which comes off at the Labadi Beach Hotel on Thursday September 15, will be focusing on the energy sector, as well as the extractive and infrastructural sectors with input from key stakeholders in Ghana, Nigeria and Cameroon.

It will bring together world renowned brands such as Chevron, the World Bank, Shell, the National Petroleum Authority and Newmont.

Speaking to Citi News, the Chief Executive Officer of U-Turn Africa, Mrs Doyin Oluntona was hopeful that communities will be changed after the conference.

“That’s why we are focusing on the energy, infrastructure and extractive industries. We hope that at least for this forum, we can address issues specific to those segments of society and hopefully this time next year we can have feedback saying this is what the forum achieved.

“For example in the oil and gas, Ghana is a new player in the energy world, and we hope that their Nigerian counterparts can come and say ‘these are the mistakes we made – and they are going to be very upfront - we messed up in some areas. This is how we messed up, and we hope Ghana doesn’t go in this direction. That obviously will impact the policies and the way Ghanaian energy industry comes up,” she said.

“For the extractive industry we know Newmont Ghana Gold is doing a lot and we hope they can continue to do that and to even form bigger collaborations to ensure that they are impacting the environment positively. Same thing for the infrastructure.”

According to the organizers, speakers at the event will include Ghana’s Minister of Trade and Industry, Hanna Tetteh; Keli Gadzepo, Executive Vice-Chairman, Co-Founder Databank, Ghana; Dr. Joyce Aryee, CEO of Ghana Chamber of Mines, Alex Mould, CEO National Petroleum Authority, Mr. Andrew Fawthrop, MD/CEO Chevron Nig/Mid Africa Strategic Business Unit.

Others are Randy Barnes, Regional Vice President, Environment & Social Responsibility, Newmont Gold, Ghana; Funkapo Fufeyin, Mgr. Government & Community Relations, (SPDC) Shell Oil Nigeria; Sophia Mbakwe, Group Public Affairs Manager, Statoil Nigeria; and Dr. Nkoyo Attah, DGM CSR & Public Affairs DW, Total E&P Nigeria.


Source: citifmonline.com

GSE calls for Government Policy on Listing of key Companies

The Ghana Stock Exchange is asking policy makers to make deliberate effort to ensure that companies in the mining, banking, telecommunication and oil and gas sectors float some percentage of their holdings on the local bourse to boost market activities.

Mr Frank Adu Junior, Chairman of the Council of the Ghana Stock Ex-change (GSE), called for continuous advocacy to get policy makers to compel companies operating in the mining, oil and gas, telecommunication, banking, insurance and cocoa buying and processing to list 25 per cent of their entities on the Exchange.

“This way, the supply side of the market will see a marked improvement to offer greater variety of safe and reasonable returns to investors, including funds under the second and third tier pension scheme,” he said.

On the financial performance of the Exchange, he said 2010 was a difficult period for the exchange financially mainly because the recovery of the market was slow.

He said though trading volumes picked up, it fell short of the record levels reached in 2008 just before the financial crisis began.

Mr. Adu said whilst there were no new company listings, there were several additional listings during the year.

“On account of that and cost containment, the group, made up of the Exchange and its wholly-owned subsidiary, the GSE Securities Depository, turned round the deficit of the crisis year of 2009, to record a very modest surplus after tax of GH¢ 87,734.

On market performance, Mr. Adu said the GSE All-Share Index went up 32.25 per cent from 5,572.34 in 2009 to 7,369.21 at the end of December 2010 compared to the decline of 46.58 per cent recorded in 2009.

During the year 2010, Mr. Adu said the Council approved a three-year strategic plan for 2011 to 2013 to enable the Exchange to have a greater focus on commercialisation as part moves towards demutualisation.

“As part of the strategic plan for the commercialisation focus, the Exchange wants to adopt new company regulations and to change the Council from a 13-member to a nine member Council,” he said.

Members of the Exchange voted for new company regulations to replace the old regulations.

Source: GNA

Ghana to develop small scale mining industry

The Chief Executive Officer of the Minerals Commission, Ben Aryee said the policy of the government is to develop the Small Scale Mining Industry (SSMI) to become as efficient as its large scale counterparts and the industry will become truly indigenous and self reliant with most of its needs been serviced by local companies.

Mr. Ben made the statement at a workshop organised to develop a framework for Artisanal and Small Scale Mining (ASSM) in Wa, The Upper West Region.

The objective of the workshop is to create a platform for stakeholders to share experiences and develop a comprehensive framework for the Artisanal and Small Scale Mining in the country.

It is also to identify challenges of the Artisanal and Small Scale Mining subsector and suggest workable solutions to address the challenges.

The Chief Executive Officer of the minerals commission Ben Aryee said despite the steady growth in the industry over recent years; it is still bedeviled with significant challenges.

Mr. Aryee penciled the lack of viable areas for such activities which usually leads to haphazard mining and encroachment on concessions of large scale mines, amongst others.

Another challenge according to him is the lack of financial support from financial institutions like the Commercial Banks.

These challenges, he said, lead to the miners using unsustainable mining methods to exploit gold and not observing environmental regulations which invariably lead to environmental degradation, deforestation, air and water pollution and siltation of rivers amongst others.

‘‘It is in line with this policy that the government, with support from development partners, is implementing the National Resources and Environmental Governance (NREG) Programme with one major objective of reducing if not eliminate these negative impacts’’.

‘‘As we invest our time and resources to address challenges facing the sub-sector, it will be irresponsible for any of us to condone illegal small scale mining or galamsey in whatever form’’, he added.

The manager of sectoral policy and planning at the minerals commission, Richard Kofi Afenu posited that activity of illegal small scale mining can be equated to activities of Fulani herdsmen who graze their cattle on people’s farms thereby destroying them.

Mr. Afenu said although in the past, military interventions such as operation gong-gong were carried out to drive away these herdsmen, just as military interventions have been and continued to be used to flush out illegal miners, the problem still exist.

He said it is based on these reasons that a more sustainable measure needs to be adopted to address especially illegal mining activities in the country once and for all.

The Municipal Chief Executive for Wa, Duogu Yakubu called on Azuma Resources Limited who had been given licence to prospect for gold in the some parts of the Upper West region to work hand in hand with the chiefs and people to prevent problems that have occurred elsewhere in the country.