SoleRebels is one of the Africa’s most Celebrated Footwear Brands

Bethlehem Tilahun Alemu

An innovative footwear manufacturer that pays fair wages and uses locally sourced materials is helping to transform the economic landscape in Ethiopia. SoleRebels, which was founded by Bethlehem Tilahun Alemu in 2004, has become one of Africa’s largest footwear brands, with its range of artisan-made shoes now selling in 55 countries. In 2011, the company ramped up US$2 million in sales and it is expecting to generate over US$15-20 million in revenue by 2015.

Alemu has become one of Africa’s most celebrated businesswomen. She was featured on the front cover of Forbes magazine in January 2012, and was selected as a “Young Global Leader” by the World Economic Forum 2011. In June 2012, she won the award for “Most Outstanding Businesswoman” at the annual African Business Awards, organised by African Business magazine.

Export-oriented success story
Her success with soleRebels is regularly cited as a sign that Ethiopia is ready to transition from being reliant on foreign aid to being able to direct its economic future by exploiting home grown skills, resources and business opportunities.

The company is also held up as inspiration for Ethiopia’s newly-emerging private sector, particularly as an example of an export oriented success story.

Alemu explained how she set up the company in a small village on the outskirts of Addis Ababa, “Having grown up watching our family and neighbours struggling, we decided to create the ‘better life’ we were all waiting for by harnessing our community’s incredible artisan skills and channeling them into a sustainable, global, fair trade, footwear business.”

She continued, “We selected shoes because we saw that footwear was an excellent platform to begin to share many of Ethiopia’s indigenous eco-sensible craft heritages and artisan talents with the world. Our approach to footwear creation – hand-crafted and eco-sensible – meant we could source and make almost all our materials locally, thereby creating an export product from 100% local inputs.”

Tyre-soled shoes
The soleRebels footwear range includes sandals, flip flops and shoes with soles made from recycled car tyres. Alemu explained that the recycled car tyre-soled shoe has existed in Ethiopia for a long time. “It was the footwear from back in the day when the original “soleRebels” fought off the invading forces and kept Ethiopia as the only African nation to never be colonised! We took this wonderful, indigenous, age-old recycling tradition and fused it with fantastic Ethiopian artisan crafts and excellent modern design sensibilities, and turned it into footwear that has universal flavour and appeal.”

She is proud of the production process, stating that all the company’s styles incorporate as much recycled and sustainable materials as possible, with ingredients like hand-spun and hand-loomed organic cotton fabrics, and natural fibres, including Abyssinian hemp and koba. However, she shuns the term, ‘green business’, stating that she regards it as something of a fad. “We are embracing these deeply sustainable and traditionally zero-carbon methods of production and materials because they are integral parts of Ethiopia’s cultural fabric, a tradition which we grew up within and feel passionate about preserving.”

Workers’ rights
SoleRebels is also setting a high standard for workers’ rights, providing 100% medical coverage for employees and their families and free doctor-run medical checks, as well as providing transport to and from the worksite for workers with disabilities. Alemu insists that workers are treated with respect, noting that on average the company’s 90 employees get paid four times the legal minimum wage and three times the industry average wage for similar work.

Unlike most companies in the apparel and footwear sector, soleRebels does not use a quota system. Alemu explained, “The quota system of work, endemic in the fashion business always struck us as truly demeaning. It is a system that shows no confidence that workers can be incentivised to achieve targets and it creates a hostile working environment. SoleRebels pays all workers based on negotiated wages that are subject to mutually agreed, company-wide goals. This means that we are all in it together in terms of making sure that deadlines are met and that top-notch product quality is always achieved.”

Expansion
In order to meet growing demand, the company is constructing a new production facility and when it is finished Alemu expects the workforce to grow in number to around 300 employees. “Built with indigenous, eco-sensible materials and employing 100% renewable and self-generating power, this first of its kind production facility will serve as a leading innovation centre, allowing us to develop the cultural wealth of the country, while simultaneously expanding and enhancing our own production capabilities.”

Alemu believes that her company can be emulated by others and help foster inclusive, sustainable development in Ethiopia. She said, “soleRebels is living proof that creating innovative world class products and trading them with the world is the best road to greater shared prosperity for developing nations like ours.”

She also sees lessons for the rest of Africa. “Today, Africa accounts for a mere two percent of global trade. If sub Saharan Africa were to increase that share by only one per cent, it would generate additional export revenues each year greater than the total amount of annual assistance that Africa currently receives. We simply need the opportunity to increase our market share, something every good, strong, global business seeks to do.”

Source: How We Made It in Africa

Nigeria to Privatise 10 Power Plants

* Nigeria is privatising mismanaged state assets
* Ten state power plants to be sold in 2014 - adviser
* Electricity shortages are huge brake on economy

By Joe Brock

ABUJA - Nigeria will privatise 10 more state power plants by mid-2014, advisers to the government said on Monday, as part of plans to overhaul the country's feeble electricity sector.
President Goodluck Jonathan pledged nearly three years ago to privatise the bulk of Nigeria's electricity sector, in an effort to end chronic power shortages that are the biggest brake on growth in Africa's second largest economy.


Although Jonathan's roadmap is more than a year behind schedule, the government accepted deposits in April for 10 generation and five distribution companies that were created by unbundling the defunct state electricity firm.

Private firms will take control of these companies by the end of this year, the government says. The sell-off of the state power firm is expected to raise around $2.5 billion.

Nigeria now plans to sell 10 more power plants, all of them gas fired. Private investors must submit their interest in buying the plants on July 19 and preferred bidders will be announced in January next year, before handing over the power plants, advisers on the transaction CPCS told Reuters.

"We expect all the plants to be commissioned before June next year when private bidders should take over," Arif Mohiuddin, a partner at CPCS said.

The 10 plants will have combined electricity generation output of 5,000 megawatts, Mohiuddin said, which would double Nigeria's current capacity.

These power plants make up the National Integrated Power Project (NIPP), a plan set up in 2004 by then President Olusegun Obasanjo as a 'fast-track' solution to electricity shortages.
The fact that only six of these plants have been completed, nine years after the NIPP was formed, is a sign of how slowly electricity reforms are moving, industry experts say.

Nigeria has so far spent $15-$20 billion on the mismanaged NIPP, industry experts say. It is unlikely the sale of the plants will come close to recouping these funds, which could prompt wrangling between disgruntled politicians.

Mohiuddin declined to give valuations for NIPP plants.

A lack of investment in the transmission network, which remains in public hands, poor gas supply and labour disputes threaten to delay progress in boosting power output further.
Despite being the continent's top oil producer and holding the world's ninth largest gas reserves, Nigeria's power output is a tenth of South Africa's for a population three times the size. Sorting it out could seal Jonathan's legacy.

It would also cut business costs by up to 40 percent, add 3 percent to GDP and ease mass unemployment that fuels unrest seen in rampant oil theft in the south and a bloody Islamist insurgency in the north, economists say.

Though government plans to boost power output tenfold by 2020 will not come close to being met, a significant improvement could be felt in 2-3 years, industry experts say.

Source: Reuters

How Africa can raise Long-Term Finance

 By: Paul Frimpong, Associate Chartered Economic Policy Analyst- ACCE-Global 
      Tel: +233 -241 229 548;  Email: py.frimpong@yahoo.com
      University of Ghana

Africa has the potential to be the world’s leading destination of investments. Africa is ambitious to take its rightful position in the global economy. The stakes are high for Africa to control global trade and attract the largest portion of the world’s investment. But the story has always been thwarted one way or the other and the mystery behind it is very clear and starring us in the face. The challenge has always being the incident of poor infrastructure. Africa has the world’s least sufficient infrastructure capacity and this has made trade in Africa very difficult and expensive.

Even though the world has identified Africa as the next best destination to do business, it has always being hindered by poor infrastructure. Economic efficiency is not harmonized due to difficulty in accessing Africa’s markets. Therefore, for Africa to realize its full potential, a fully structured and sustainable infrastructure development is needed. Africa accounts for 12% of the world’s population but only contributes 1% of global GDP and only 2% of world trade.

Although the continent has successfully maintained an average growth rate of between 4 % and 6% for the past few years, Africa accounts for 12% of the world’s population but only contributes 1% of global GDP and only 2% of world trade. Poor infrastructure cost each member country’s growth to reduce by 2percentage point each year and cut productivity by as much as 40%.

According to the World Bank, about $93 billion is needed annually to be able to fund Africa’s infrastructure for the next 10 years. Which is about 15 percent of the region’s GDP. About $60 billion would go to new projects and the rest would go into the maintenance of the existing ones.

According to a development research brief, by the African Development Bank (AfDB), in 2009, less than 10% (in 10 countries) and less than 50% (in 33 countries) of roads in Africa are paved, 40% of the continent’s population lacks access to safe water; 60% of the population lacks basic sanitation an only 30% of the rural population in Sub-Saharan Africa has access to all-season roads. Transport costs in Africa are among the highest in the world; only 30 percent of African population has access to electricity; Africa has the lowest telephone penetration – 14% (the world average is 52%). Africa has the lowest Internet penetration – 3% (the world average is 14%).

These are the challenges staring the continent in the face despite the recent economic prospects projected to be experienced in the next decade and beyond. How then do we as Africans, solve the infrastructure deficit? This is a legitimate question which demand answers from all quarters. The issue of financing Africa’s infrastructure is of course long term in nature. That is why we must critically look at means possible to reach our continental goal of creating a strong socio-economic welfare. Recent activities of governments across the continent have proven again and again that, they cannot single handedly handle the infrastructure deficits, the more reason why it has become very critical for the involvement of the private sector to provide long term capital in this regard.

A recent African economic theory, which has gain attention from the world all over is Africapitalism, coined by Mr. Tony Elumelu, a distinguished business man and African Philanthropist. Mr. Tony O. Elumelu, CON, is an entrepreneur, a philanthropist and the chairman of Heirs Holdings Limited, an investment company that builds sustainable African businesses. He is the creator and the leading proponent of the term Africapitalism. In 2011, he started The Tony Elumelu Foundation, an African-funded philanthropic organization focused on supporting entrepreneurs in Africa by enhancing the competitiveness of the private sector.

Mr. Elumelu has received numerous honours, board, and committee appointments, and in 2012, the government of Nigeria conferred on him the national honour of Commander of the Order of the Niger.

In 2012, Forbes Magazine named Mr. Elumelu one of Africa’s 20 Most Powerful People in African Business, and he was included in New African Magazine’s list of 100 most influential Africans in business. Mr. Elumelu also serves as an advisor to the USAID’s Private Capital Group for Africa (PCGA) Partners Forum.

Why is Africapitalism identified as a philosophy which Africa must consider now in order to secure future economic boom? It is for the simple fact that, it seeks to address the very challenge facing the continent, “Lack of access to long-term financing”. It stresses on the role of the private sector in this regard.

Mr. Elumelu, according to a white dubbed “Africapitalism: the path to economic prosperity and social wealth” described Africapitalism as an economic philosophy that embodies the private sector’s commitment to the economic transformation of Africa through investments that generate both economic prosperity and social wealth. This is to the end of seeing Africans taking charge of the value-adding sectors and ensuring faster economic prosperity. Africapitalism asserts that value creation through entrepreneurship is Africa’s unique path forward — distinct from emerging markets like China with its state-run enterprises, or Korea with its “Chaebol” conglomerates, or India with its large family-run businesses. The philosophy is about long-term investment in Africa, driven by Africa’s own private sector to deliver economic prosperity and improve the lives of Africans. Africapitalism is not capitalism with an African twist; it is a rallying cry for empowering the private sector to drive Africa’s economic and social growth.

Its primary goal is greater economic prosperity and social wealth, driven by Africa’s private sector, its domestic economies, markets, and businesses. This, to an extent is to satisfy three fundamental tenets; wealth creation, funding entrepreneurship and transparent competitive markets. It is in the philosophy that the private sector, both foreign multinationals as well as African business leaders to break free from the historical tendencies of exploitation and extraction of wealth and instead focus on generating profit through wealth creation. Again, it asserts that, governments are not responsible for running industries; they are responsible for providing a supportive environment for businesses to thrive, in markets that are fair, transparent, and open. Their policies should encourage creation of new wealth rather than support the exploitation and extraction of existing wealth

At the heart of Africapitalism is long-term investment that creates economic prosperity, a commercial objective, as well as social wealth. Thus, a private sector approaches to solving some of Africa’s most intractable development problems and the “new” Africa: a reinvigorated private sector solving social problems by building businesses and creating social wealth. It is a drastic departure from the old model of centralized governments managing basic industries, a structure often developed at the recommendation of the well meaning but misguided global development.

Africa’s quest to access long term financing for infrastructure development is what has actually made the theory more useful and practical. Long term financing of infrastructure development by private investors is very difficult because of the lack of a comprehensive market-oriented infrastructure finance system, with clearly defined roles and responsibilities for the public and private sectors, and a clear and transparent system to provide public sector financial support to make infrastructures financially viable.

Again, there is insufficient capacity for project design and implementation. The key bottleneck to infrastructure development has been identified as not capital, but a severe lack of bankable projects which can attract private capital. There is poor accountability, performance-, and contract-management across the continent, all these leading to the inaccessibility of long term finance.

It has therefore become critical, that Africa rethink around the AFRICAPITALISM theory and make it work practically and effectively on the continent.

Politicization/Corruption of "Entrepreneurship" in Ghana

By:  Dominic Mensah 

In the Federalist Papers Alexander Hamilton wrote, "It has been frequently remarked that it seems to have been reserved to the people of [Ghana}, by their conduct and example, to decide the important question, whether [Ghanaians] are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on [greediness, selfishness, banditry, and stupidity]." For the past 56 years, we have as a nation refused to rely on our own powers of reason and judgement, i.e., the freedom of the human mind to determine the goals of our society and what's best best for us.

In view of the "corruption" in the operations at the Ghana Youth Employment and Entrepreneurial Agency (GYEEDA), isn't it an open secret that high profile entrepreneurs team up with government officials (mostly their former classmates and/or closed linked tribesmen and political sponsors) to rape Ghana daily? Isn’t it yet another open secret that Ghanaian politicians hold private business under pseudonyms in order to, contrary to our constitution, offer themselves lucrative State contracts? The whole practice of State doing business with private individuals have always amounted to massive transfers of wealth and welfare in favour of high profile government officials and the so called entrepreneurs. How much Better Ghana Management Limited is truly retaining out of the 80% managerial cost, we will never know. How much of this flows back to government officials, bribery cover-ups, party sponsorships, patronization and so on, interested Ghanaians may never know. But isn't this business in Ghana as usual? If it comes out that some government officials-- past and present-- are involved in this unpatriotic barbaric dehumanizing practice and loss of revenue to the State, would anyone's political career be in jeopardy? Of course, not! Time will eventually erase this disastrous story from the memories of Ghanaian electorates when they are given the illusional privilege once again to choose who's best fit to lead them to another chapter of Better Ghana. Lamenting about the lack of a universal improved business condition for all interested Ghanaians, I shared the following quote from the article "What are the Drivers of Change in Ghana" (Tony Killick et al. 2005) on Facebook two months ago:

"All regimes since Nkrumah, civil and military, have attracted an opportunistic business class seeking advantage by access to state favours of a more or less discriminatory sort. One effect of this type of state-business relationship is that neither party to the relationship applies rigorous performance standards to the other, except perhaps in a crisis...Assessments of Ghana’s economic-growth performance depend a great deal on the time perspective adopted. A particularly sobering way of viewing the growth record is to look at the whole post Independence period. Recent research suggests that by 2000 real per capita GDP had only just recovered to the level achieved in 1960. That is, the average Ghanaian was no better off in 2000 than four decades earlier...Many of these issues have to do with chronic failures on the part of the public service... Complaints continue [...] about the politicization of private business. This phrase refers to the fact that some Ghanaian businesses have become associated with either the NDC or NPP and that, when in office, each party favours its allies and discriminates against those of its opponents. In other words, the pattern of government-business relations remains very much in the patron-client mould. Both organized business associations, such as the Association of Ghana Industries, and individual entrepreneurs generally prefer to cultivate politicians with a view to protection or other special treatment, and not to exercise pressure for better general conditions for investment."

So until the structures of how business and governance are conducted in Ghana are altered, our Motherland as a whole will remain impoverished. And to the faithful journalist, I pray that the Lord grant him the strength, wisdom, knowledge and heart to always serve Ghana. Ghana has become like a chronic unfaithful wife/husband, who deserves to perish but one’s love and commitment keep her/him going somehow instead of giving her up for good. The good journalist is definitely going to need some extra human strength if he’s not going to end up giving up on Ghana, especially when the majority of Ghanaians refuses to recognize his efforts. God “bless” Ghana!

Unemployment in Ghana, The Craziness of the Nonsense

Research stats recently published by various authorities known and unknown has brought to the fore the gravity of the number of idle hands that are strewn in the streets of the country.

The issue of unemployment has assumed a global dimension, resulting into the lead Arab spring in Tunisia. Back home in Ghana it is no different tale to tell. Indeed, it will take the only stranger within the sovereignty of Ghana not to have acquainted the self with this problem. Solution to this pain has eluded our Father Christmas politicians who can promise everything under the sun including long life to the electorate.

However, efforts are been harnessed to how far the situation of unemployment can be done away with or be reduced appropriately. But amazingly, the actions of fellow countrymen and women leave much of slippery ground which will make it an uphill task to deal with. Not to say that the term unemployment is the relative language of those who know nobody. Because, job acquisition is all about whom you know. Without such contacts know and be aware, your search will take you well into your retirement age.
Have you not witnessed instances where no vacancy has been advertised boldly but “some” potential job seekers are engaged? Again, vacancies in most organisations are concealed awaiting the graduation of a certain lady or gentleman. If you doubt this, check the security services, the financial institutions, the Government Ministries, Departments and Agencies (MDAs). They look similar to the nuclear family. Therefore, you need to struggle to gain employment in order to hold down a place for your children, kith and kin as well as cronies. Why should we live this way and how long?

Besides, the age amendment groups within organisations in Ghana are also a contributing factor to the unemployment scare. Unless instances such as mentioned above are dealt with decisively the thought of holding back the tide, cutting the momentum and stemming the storm of unemployment in this country of ours will forever remain a façade.

Nonetheless, patronizing made in Ghana products will go a long way to deflate the swell of graduate unemployment. But as we are witnesses to ourselves, our taste is tailored abroad, thereby offering jobs to citizens of other countries while we hue and cry. Why can’t the taste for Ghanaian products be built among the younger generation, who will grow up with a unique crave for local products. For the reason that, the current call is quite late, for an old dog cannot be taught new skills or tricks.

Additionally, we have become our own trenches in which we fall. The hype of foreign football to the detriment of our beloved local Glo Premier League has impoverished and made our local football unattractive. The rep your jersey which is projected by FM stations will always lead to the enhancement of those brands. Imagine how many Ghanaian crazy soccer fans would be purchasing the jerseys of these European football clubs? It is a whole investment that has the propensity to hoist the brand of European football well above Ghana’s. Hitherto, jobs which would have been created with our local football clubs and stadia would end up abroad. This is not the case in even English football. The Italian Serie A is not shown or marketed in England, so is the La Liga of Spain. The danger of losing revenue and investing in clubs abroad is widely known to them. Can we boast that there is no such knowledge in arms with us? Downrightly, we are growing heavily and building enviable brands abroad which with care and well thought after actions would strengthen our economy.

An argument can be advanced to the effect that, the radio station is trying to make some few Cedis by selling quality air time. But we can start from somewhere by either promoting both at the same threshold or seeking for sponsorship for the local league exclusively for the creation of job here in Ghana for Ghanaians. This could in the distant future be seen as the socially corporate responsible act. Do you know that we collectively owe this nation? Yes we do.

The FM stations, especially Hitz and Joy all of the Multimedia family, cannot take the entire blame as the National broadcaster has equally pulled the plug on creating job with their Mondays flagship programme, “Sports highlights” The programme aired between 8 o’clock to 9 o’clock pm is sponsored by the telecom giant MTN, while the local league is supported by Glo Ghana, another mobile network. Hence, with this brand sponsorship turf war the highlights of the local league cannot be reviewed weekly. This kills interest as European football is reviewed to the delight of ignorant football lovers, but to the detriment of the local premier league. This is taking place on the lop side of the knowledge that, when the local league is nurtured properly we stand to create jobs.

Recently, exercise books and other pamphlets come with pictures of celebrities from athletics, football to acting all from the Americas and Europe. No qualms to the total exhibition and advertisement of personalities from elsewhere, for the reason that, the world has become a global village. But, what this practice actually brings about is mentally schooling our children as to who they should see as superior role models. As the saying goes, train a child in the way he should go and when he grows up he will not depart from it. With these pictures been flaunted before kids, there is the greater probability that, these will grow knowing better such superstars as compared to our own celebs. Indirectly, we are making stars, personalities as well as creating opportunities for others to the demerit of ourselves. Do you think in your wildest dream, the American and European will be ready to market our celebs to the disadvantage of theirs? NO!! Besides, child development is an area the nation needs to be quiet interested. Because, if indeed the developmental stage of a child is not only seen as a critical period, but haven a “tabularasa” – clean slate – mind. Then, there is absolutely no wonder our taste for European football and Western products has become so intense that, it is rendering our stadiums empty, thereby shutting our football and local industries.

The unfortunate is currently happening to Sierra Leonean football as the country had to suspend her second round of local league for a while. As reported by the BBC and published in the Daily Graphic No. 18841, on Tuesday, May 15, 2012, page 62, the Sierra Leone Premier League has been suspended due to lack of sponsorship. Of course if the game in that country is not avidly patronized, how do you expect a company to invest the hard earned resources into such a fruitless venture? Then, value for money had not been achieved. Social corporate responsibility is different from corporate sponsorship. Hence, corporate sponsorship must at all times bring some level of return in the form of recognition to a product or brand in today’s world. Do not forget that, that same country had had the entire football league, from the Premier League to the lower divisions collapsed. Hence, there was no football system going on for some years. Is it returning? Remember, jobs are directly and indirectly lost. Mistakes of the dead are examples for the living.

Are my fellow Ghanaians reading? Dr. Kwame Nkrumah once said our radio will be the “Okyeame” of Ghana’s development and not for the purposes of cheap entertainment.

From: Patrick Twumasi 

E-mail: patricktwumasi@yahoo.com

Youth Unemployment takes shine off Africa's Economic Growth

Unemployed Africans looking for jobs

Africa is expected to grow 4.5% this year and 4.8% next, but more than half of the region's unemployed are aged 15 to 24

Africa is one of the fastest growing regions in the world after escaping the worst of the global financial crisis – but the phenomenon of jobless growth combined with the world's youngest population threatens progress, according to the African Economic Outlook (AEO).

With the number of youths in Africa set to double by 2045, the lack of jobs for young people is "an immense challenge but [is] also the key to future prosperity", said the report, produced by the African Development Bank (AfDB), the OECD's development centre, the United Nations Economic Commission for Africa and the UN Development Programme.

Around 60% of the continent's unemployed are aged 15 to 24 – and more than half of these, many women, have given up on finding work, the report found.

"The continent is experiencing jobless growth. That is an unacceptable reality on a continent with such an impressive pool of youth, talent and creativity," said the AfDB's chief economist, Mthuli Ncube.

Once dubbed "the hopeless continent" by the Economist, Africa rebounded from the global downturn with GDP growth of 5% in 2010, earning its rebranding as the "hopeful" continent by the magazine.

But the economic effects of the Arab spring knocked growth back to 3.4% in 2011, according to the latest estimates in the AEO report. North Africa grew by just 0.5% last year, a fall of 3.6 points from 2010, while sub-Saharan economies expanded by more than 5%.

The continent as a whole is forecast to bounce back to growth of 4.5% this year, although with population growth of 2%, GDP per capita is expected to grow by a more modest 2-2.5%.

The report expects economic growth of 4.8% for Africa in 2013, although it warns of the risks posed by economic storm clouds in Europe – which threaten to constrain growth by hitting demand for African exports, reducing tourist numbers and limiting foreign direct investment and overseas aid.

But high growth alone does not guarantee jobs, and while many young people in poor countries have no choice but to work in insecure jobs for little money, many better-educated youths in middle-income countries are unemployed, discouraged and economically inactive. The AEO warns that while young people bring economic opportunities, they "can present a significant threat to social cohesion and political stability if they do not secure decent living conditions".

The OECD development centre director, Mario Pezzini, said: "In low-income countries, most young people work but are poor nevertheless. In African middle-income countries, on the other hand, such as South Africa or the northern African countries, despite better education, more youth are inactive than working."

The report calls for the removal of obstacles to informal businesses, which make up much of the economy. In rural areas especially, better education in agriculture and new technologies would help address mismatches between the skills demanded by firms and those learned by young people.

"Despite the challenging short-term outlook, the long-term perspective is good if African governments can effectively tackle the hurdles young people face," the report said.

The AEO report called for increased diversification of African economies. While high global commodity costs have benefited resource-rich economies – such as oil exporters Nigeria and Algeria, gold producers including South Africa and Ghana, and copper exporter Zambia – there are fears that it leaves the continent susceptible if the bubble bursts.

Some commodity prices are likely to decline due to weaker demand and increased supply. "Rising export volumes of commodities and manufactured goods have been important drivers of growth," the report said. "But in some countries exports weakened due to lower growth in important trading partners."

Domestic demand was boosted by private investment and infrastructure spending, with "Africa's growing middle class [continuing] to boost consumption, residential construction and private investment".

In Nigeria, which is heavily dependent on oil and gas exports, drivers of recent economic growth include the non-resource sectors of telecommunications, trade and manufacturing, the report said.

For Sudan, diversification has become a priority with the succession of South Sudan, along with 75% of its oil revenues. 

Source: Guardian

World Bank approves US$100m for Commercial Agriculture in Ghana

Pepper farm in Ketu South, Ghana. © EnterpriseAfrik

The Board of Directors of the World Bank today approved a US$100 million credit to support the Government of Ghana s efforts to scale up the development of commercial agriculture nation-wide. The Commercial Agriculture Project seeks to facilitate access to land, strengthen Ghana's investment promotion infrastructure for attracting agri-business investors, and promote public private partnerships and small-holder linkages in the Accra Plains the SADA Zone.

The Government of Ghana is currently implementing a nation-wide Food and Agriculture Sector Development Policy (FASDEP II – 2010 2015) focusing on six priority themes: Food Security and Emergency Preparedness; Increased Growth in Incomes; Increased Competitiveness and Enhanced Integration into Domestic and International Markets; Sustainable Management of Land and Environment; Science and Technology Applied in Food and Agriculture Development; Improved Institutional Coordination.

The Commercial Agricultural Project, which is designed to support the implementation of above priorities, is made up of four main components:

Component 1: Strengthening investment promotion infrastructure and facilitating secure access to land (US$11.8 million; to be complemented by USAID co-financing of US$5.9 million) – This component will promote a secure investment climate that clarifies and strengthens the rights and obligations of investors, government and affected communities, and support an improved mechanism for facilitating access to land by reducing the search costs to potential investors through an expansion of a database of land suitable and available for investors and by building on nascent mechanisms for actively matching potential investors with suitable land owners.

Component 2: Securing Public Private Partnerships (PPPS) and small-holder linkages in the Accra Plains (US$45.4 million) – This component will conclude transactions for PPPs in an irrigation investment in the Accra Plains. The project area includes the existing Kpong Irrigation Project as well as an expansion of an additional 7,000ha under a PPP arrangement, inclusive of commercial anchor farms and associated out-growers.

Component 3: Securing PPPs and small-holder linkages in the SADA Zone (US$29.3 million; to be complemented by USAID co-financing of US$35.0 million) – This component will involve support to the identification and realization of private investments in inclusive commercial agricultural arrangements in the agricultural value chain through PPPs, complementary public investments, and technical assistance concentrated in the SADA zone.

                                                                                                                                                                                                                 

Women harvesting onion in Afienu, Ghana. © EnterpriseAfrik

Component 4: Project management including M&E (US$14.3 million; to be complemented by USAID co-financing US$7.2 million) – This component finances the operations of the project implementing agencies. It will also finance the various monitoring and evaluation and community engagement and communications functions.

According to Chris Jackson, Senior Economist and project Task Team Leader: This project reflects the Bank s continued support for Ghana s agricultural development. By focusing on socially inclusive commercial agriculture it will improve the enabling environment for farmers while also making sure that local communities can participate in new agriculture based opportunities. By strengthening the arrangements by which investors secure land, it will reduce investor risks and promote benefit sharing arrangements. The geographical focus promotes a balanced development between the high-potential Accra Plains and underexploited areas in northern Ghana.

Even thought the project will support the scaling up of commercial agriculture on a national scale, it will have two main ecological areas of focus: the SADA zone and the Accra Plains. In the SADA zone it will primarily support the development of value chains in areas with a good potential for agricultural growth. In the Accra Plain the area targeted includes 11,000ha mainly for irrigated cultivation. In both intervention zones the project will promote contract farming and support the establishment of out-growers schemes for various agriculture commodities.

Hon Kwesi Ahwoi, Minister of Food and Agriculture, states: the project directly supports the Government s Commercial Agriculture agenda, and is a key pillar in our efforts to modernize agriculture. The Accra Plains, the SADA Zone and other ecological belts in the Western and Eastern Corridors have huge potentials which we need billions of dollars to fully harness. While the project will be housed in the Ministry of Food and Agriculture, we shall foster an active partnership between my ministry, the Lands Commission, the Ghana Investment Promotion Center, the Environmental Protection Agency and the Savannah Accelerated Development Authority to ensure smooth implementation .

By supporting out-grower schemes and contract farming arrangements, this project will help connect our small farmers to markets and strengthen key value chains. It will also increase the production of rice and maize to help the country to become self sufficient in these crops, the Minister reiterates.

In addition to the US$100 million being provided by the World Bank, USAID will provide a grant of US$45 million to jointly support the implementation of this project by promoting inclusive market growth and leveraging the resources and expertise of the private sector toward our common pursuit of improving food security in the SADA region of Northern Ghana. This is a key pillar of the U.S. Government s new Feed the Future strategy for Ghana and will seek to build from the experience of Ghana s U.S. funded Millennium Challenge Corporation program which closed at the end of February, 2012. Feed the Future supports country-led processes for food security and agricultural development, and Paul Weisenfeld, USAID s Assistant to the Administrator for the Bureau for Food Security, notes: USAID is proud to support the Ghana Commercial Agriculture Program as a key component of Ghana s strategy to increase food security and agricultural development through inclusive private-sector led growth designed to benefit Ghana s smallholders.

Yusupha Crookes, newly appointed World Bank Country Director for Ghana notes, I am glad we are scaling up our support for Ghana s agricultural sector. Ghana has great potential to become a leading food producer in the West African sub-region. What we all have to do is to put serious traction behind this project to help create more jobs particularly for rural folks and women, and ultimately bring more agricultural products to the markets. 

Source: myjoyonline.com

Venture Capital Trust to fund start ups in Ghana

Small Business owners in Accra. © EnterpriseAfrik

Start ups will from April 2012 have ready capital available from affluent individuals if they are willing to cede part of their enterprise.

Such entrepreneurs should be able to access the one million dollar from the Angel Investors Fund, an initiative by the Venture capital Trust Fund.

The new facility will also provide technical assistance to such startups.

Managers of the fund have settled on 15 investors made of renowned business owners to support these start-ups and small businesses when the fund takes off.

Chief Executive of the Venture Capital Trust Fund, Daniel Doku said after the Angels choose the projects they want to fund, Venture Capital fund will also provide marching fund for the project to begin.

He said the initiative is set to begin in the second quarter next year.

He said the prospective projects cut across all the service industries.

Dishonesty, Cause For Expensive Financing

Alhassan Andani, MD of Stanbic Bank Ghana

Financing experts at a forum on ‘Financing Business Operations in Ghana’ have agreed that dishonesty in the operations of businesses, particularly small- and medium-scale enterprises (SMEs), largely account for the high interest rate financial institutions slap on them.

The Managing Director of Stanbic Bank Ghana, Mr Alhassan Andani, who first articulated the point, stated, “The biggest problem making financial services and products expensive is dishonesty. People consistently misrepresent themselves and the sectors they are in.”

Mr Andani was contributing to a theme “Financing businesses in Ghana”, which was discussed at a forum on Wednesday. The Ghanaian-German Economic Association (GGEA), a grouping of businesses of Ghanaian, German and/or European origin with business interests in West Africa, organised the forum.

The forum brought together financing entities and corporate players, particularly in the SME sub-sector, who may need financing in their operations, and equiped them with vital information to enable them to access financing.

Some of the topics included “Financing Business Operations in Ghana”; “Possibilities for Financing Business Operations in Ghana”; “Assessing the capital market to fund business operations in Ghana”; “The Bank and its Financing Options for Business Operators in Ghana”; and “Funding Start-Up Concerns”.

The GGEA organises such fora regularly to enable its members to have a deeper understanding of regulatory and policy issues that affect their business operations.

Mr Andani expressed concern that some of the professionals did not deliver on their role of straightening the books of SMEs, therefore, banks had to subject such applications for loans from that sub-sector to rigorous checks and apply higher risk premiums for resources they release to them.

He explained that banks looked at several issues before lending, the primary one being the cash flows of the business, as well as a lot of due diligence to establish certain technical issues such as whether the equipment a business intended to purchase was obsolete or in vogue as that would impact of availability of parts for maintenance.

Mr Andani also agreed with other speakers that small businesses needed to be mindful of the type of financing for their operations, as different stages of the businesses required a certain type or mix of financing options.

The Deputy Managing Director of the Ghana Stock Exchange, Mr Ekow Afedzie, reiterated that “appropriate capital is a problem in Ghana as it is the cause of many businesses that have gone under”, explaining that instead of going for medium to long term financing when the business reach the point of expansion, such SMEs still resorted to the bank financing.

He said the stock exchange was one sure place to raise long-term capital to fund expansion, adding that listing on the Ghana bourse was a simple procedure that many SMEs should take advantage of.

Besides the benefit of a stress-free long-term capital, raising capital on the exchange helped SMEs to conform to good corporate governance and adhere to transparency and disclosure policies, Mr Afedzie noted.

The GSE deputy managing director announced that as part of creating a separate alternative market for SMEs and star-ups to raise capital, the GSE in collaboration with some donor partners would set up a revolving fund to enable the target businesses to access in financing their listing expenses, in addition to incentives such a waiver of listing fees.

The West African Head of the German private sector-focused development financier, DEG, Dr Andreas Vo?, explained the various medium to long-term interventions his outfit made in businesses across the world, including a portfolio of €600 million for sub-Saharan Africa in 2010 and over €250 million in Ghana as of last year.

He explained that DEG, a member of the German development banking group, KfW, had medium to long-term financing of anything from €5 million to €30 million for a period of between four and 15 years, adding that the financier was mainly interested in infrastructure, energy, telecommunications, manufacturing and agribusiness which it did through equity participation, debt financing or mezzanine financing arrangements (a hybrid).

The President of the GGEA, Mr Stephen Antwi, called on the government to engage the private sector and inculcate its input into the second phase of the Financial Sector Strategic Plan (FINSSP II).

Mr Antwi stressed that since the plan was directed at the financial sector it would eventually impact on the private sector, the reason they must have their inputs into it at the very beginning in order to own the plan.

Source: Daily Graphic

Burundi sees 2012 GDP Growth at 4.8 pct

BUJUMBURA - Burundi's economic growth will accelerate to 4.8 percent in 2012 and 6 percent by 2014 as the central African country diversifies its agricultural production and boosts investment in tourism and power production, its government said.

Inflation is expected to decline in 2012 while risks to the economy stem from high global oil costs that could fuel imported inflation and bouts of insecurity, the government wrote in a letter to the International Monetary Fund (IMF).

"During 2012, reflecting an improved business climate that will be accompanied by increased private investment, economic growth should accelerate to 4.8 percent, with a slightly declining, albeit relatively high, inflation rate," it said in the letter dated December 19 but made public late on Wednesday.

"Exports of coffee and other agricultural products should increase strongly and offset the expected increase in imports, in particular petroleum products."

The government estimates Burundi's economy grew 4.2 percent in 2011. Year-on-year inflation eased to 14.9 percent in December but the price of essential commodities threaten to add pressure to the rate.

Burundi is enjoying relative peace since emerging from a decade-long civil war, but attacks on civilians and security forces have risen, raising fears of a fresh rebellion.

Its economy is heavily dependent on agriculture revenues, in particular from tea and coffee.

"The government plans to limit the effects of the global crisis on the Burundian economy by adopting a more flexible exchange rate policy combined with prudent fiscal and monetary policies," the letter said.

Source: Reuters

Could 2012 be Nigeria’s year of real reform?

There are many reasons to be negative about Nigeria’s business environment. Issues such religious conflict, corruption, an inconsistent regulatory environment and poor infrastructure could push any investor to rather look at opportunities in other African countries.

Charles Robertson

Charles Robertson, global chief economist at Renaissance Capital is, however, more upbeat about Nigeria’s future. In a recent note to investors, Robertson posed the question whether 2012 could be the start of a radical transformation for Nigeria? “Is this the year when investors should be taking long-term bullish positions in the market? It is beginning to look to us like the answer to both these questions is yes.”

He highlighted three key reform areas for Nigeria: the fuel subsidy, the electricity sector and oil production. “Progress in any one of these areas would justify a more positive approach to the market – while progress on all three would be extremely positive. To our surprise, the latter is happening.”

Robertson offered the following commentary on each of these three areas:

Fuel subsidy: “The reduction of the fuel subsidy has been widely covered in international media. This was costing [the government] perhaps US$7 billion to $8 billion [every year], more than the combined budgets for education, health and agriculture. The compromise, which has seen the retail price of a litre of petrol rise from NGN65 (USc40) to NGN97 (USc60) instead of the targeted NGN140-145 (USc90), will be politically acceptable, we hope, while cutting the scope for corruption and allowing a redirection of funds that should benefit all Nigerians and reduce long-term fiscal risk. We may see further rises in fuel prices in 2013.”

Electricity sector: “The government has just abolished the electricity Power Holding Company of Nigeria (PHCN), which had been a major factor preventing reform of the electricity generation sector, in our view. Nigeria remains woefully underpowered in contrast to other sub-Saharan African countries, as any back-to-back visit to Ghana and Nigeria will demonstrate. The lack of officially generated power means that Nigerian businesses rely on expensive electricity from imported small generators, reducing the efficiency of all sectors of the economy. Note also the possibility of an electricity price hike (with widespread media reports suggesting a rise of 50-100%). We believe any push back on this move by Nigerians is likely to be significantly moderated by the prolonged pain of higher costs associated with generating power from inefficient alternative sources, such as generators.”

Oil production: “The third area of reform progress is the Petroleum Industry Bill (PIB). Over the past few decades, investment throughout the Nigerian oil sector has been governed by a mish-mash of legislation. The PIB aims to unify all the necessary legislation in one bill, providing a clear framework for investment in the energy sector. In January the government promised to put the PIB to parliament by the end of the first quarter of 2012, and a bi-partisan Special PIB Task Force was established on 19 January to help drive this process. The Task Force has been given 30 days from the date of its inauguration to produce a new, harmonised copy of the bill for consideration by the legislature. To some extent, progress is being made in some areas even without the PIB, but its approval would nonetheless improve the energy investment climate.”

In addition, Robertson has high hopes that Nigeria’s new agriculture minister, Akinwunmi Adesina, will boost private sector investment in the sector. He added that a constitutional review might cut down government bureaucracy.

Need for caution?

However, Robertson warned there are risks. “Obviously there is the chance that reform could stall, that the PIB could get stuck in parliament again and that electricity reform could also be delayed. This has happened before.”

According to Robertson there is no guarantee that Nigerians will support all these reforms. “It is sensible for the government to be doing this when oil prices are above $100/barrel, as it can draw on the windfall to ease the pain of reform, but a fall in the oil price would make reform harder to achieve.”

He added that tension between the Muslim north and Christian south could also pose a risk to investors. “We cannot provide a strong conclusion on where Nigeria will head, but we note that the Muslim north is unlikely to want to lose access to the energy resources of the south, and therefore there are strong interests in working to address the country’s challenges on this front.”

Source: How We Made It in Africa

SEC begins work on local-content legislation for the Stock Market

Ghana Stock Exchange display board

The Securities and Exchange Commission, S.E.C has begun work on proposals that could compel foreign companies in operating in the country to list on the Ghana Stock Exchange. The move has been influenced by calls for regulations that will oblige the multinationals to offload part of their shares on the stock market to enable Ghanaians share in their profits.

The proposal has however being opposed by Economists like Kwami Pianim who believe the companies should rather be allowed to take their own decision. But the Director General of the SEC, Adu Anane -Antwi tells JOYBUSINESS the time has come for Ghanaians to share in the fortunes of these foreign companies.

“Most of the organizations may say they do not need our capital but we need them.We are saying let Ghanaians owe a little of your shares, be part of the company then you will even be taken as a socially responsible organization. We just feel that Ghanaians should have some stake in the economic activities that abound in the country” he noted.

Meanwhile, Foreign manufacturing firms operating or coming into the country would have to source at least forty percent of their supplies locally. This is one of the clauses contained in the revised Ghana Investment Promotion Centre Act which is expected to be promulgated later this year.

Mobile operator MTN has already indicated that it has no immediate plans of listing on Ghana Stock Exchange. According to the operator, there are other ways to ensure Ghanaians share in their fortunes.

Source: myjoyonline.com

Zambia sees big Electricity Surplus, could export

LUSAKA - Zambia expects to have a power surplus of about 600 megawatts (MW) by 2016, which should help ease the electricity deficit facing southern Africa, an industry official said on Wednesday.

Electricity pylons in Soweto.

Michael Tarney, managing director for corporate development at Zambia's Copperbelt Energy Corporation (CEC), said although the power situation would be tight for the next four years, Zambia was likely to have a large surplus after that.

"I think Zambia is well placed to export power because there are a lot of generation projects taking off," Tarney said.

About 600 MW of electricity is enough to power around a million homes in an industrialised country like Britain.

Electricity is a major issue in Zambia as the mining sector in Africa's top copper producer is power hungry and growth over the next few years could be constrained by available supply.

Tarney said Zambia would get out of the deficit relatively quickly and become an exporter of power because its generation projects were far ahead of those in the rest of the region.

"It will be very tight maybe to 2015 but I think after that things should improve very fast," he said.

Zambia was this year expected to agree the financing terms for the bulk of the funding for a $2 billion power project which will add 750 MW to the country's generation by 2017, he said.

The Kariba North Bank Extension project which will add 360 MW to the national grid was due to start producing electricity way ahead of the November 2012 target, he said.

Tarney said a 120 MW power station being developed by the Itezhi Tezhi Power Corporation, a company jointly owned by Zambian state power company, Zesco and TATA Africa of South Africa, would start production by 2015.

"We can have a surplus of around 600 MW available by 2016 for export, particularly for hydro power," Tarney said.

Zambia also planned to build two new hydro power plants that are expected to add a total of 247 MW to the national grid and boost regional supply by 2016, Tarney said.

Source: Reuters

World Bank assists West Africa with over $1bn in bonds

The International Finance Corp. (IFC), a member of the World Bank Group is to issue over $1 billion bonds in cedis and CFA francs over the next 10 years to strengthen domestic capital markets in West Africa. 


This follows approval from Ghana and the eight member countries of the West African Monetary Union to establish local currency bond programs to strengthen domestic capital markets and support private sector development in the region. 


IFC has also gained approval for a local currency bond issue in Kenya and is working with the authorities in Nigeria on a similar approval. 


The bonds will be sold in their respective markets to domestic and foreign institutional investors. 


IFC bonds are rated Triple-A by Moody’s Investors Service and Standard & Poor’s. 


Proceeds from the bonds will fund IFC projects that support private sector development in key areas such as infrastructure and access to finance for small and medium enterprises. 


Source: citifmonline.com

Doing Business gets more difficult in Ghana

Kwame Nkrumah Circle, Accra. © EnterpriseAfrik

The ease of doing business in the country has worsened over the past 12 months as local businesses find it quite difficult to open and run a small- to medium-size business when complying with relevant regulations, the World Bank has reported. 

This is in spite of the fact that the country has fewer obstacles in doing business compared to many other countries in the West Africa sub-region.

The World Bank in its 2012 report on “Doing Business” dropped the country’s rankings on the ease of doing business in the world from the 60th position attained last year to 63rd this year.

Yearly movements in rankings -- even though they do not reflect how the business regulatory environment in an economy has changed over time -- can provide some indication of changes in an economy’s regulatory environment for firms, but they are always relative. An economy’s ranking might change because of developments in other economies. 

According to the businesses surveyed by the World Bank, Ghana has loosened grips in all but two of the indicators used in assessing the obstacles businesses go through when doing business in the country including starting a business, dealing with construction permits, registering property, getting electricity, getting credit, paying taxes, trading across borders, enforcing contracts, resolving insolvency and protecting investors.

Though the World Bank’s rankings on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy, still, a high ranking does mean that government has created a regulatory environment conducive to operating a business.

The ease of doing business in a country influences investors’ decision in sitting their investment projects.

Apart from the World Bank, other international organisations have in recent times downgraded Ghana’s competitive edge in attracting investments because of the increasingly difficult environment in doing business. 

The latest Global Competitiveness Index report, released by the World Economic Forum (WEF) in November last year, concluded that the country’s edge in attracting investment and businesses was found to be below that of dozens of other African countries including Rwanda, Benin and The Gambia, pulling an overall index score of 3.65.

The WEF reports that businesses in the country are sweating over access to financing and choking tax rates, corruption and poor ethics in the national labour force which is affecting the global competitiveness of the country.

These developments indicate that there are other weaknesses demonstrated in a number of areas which equally require attention to move the country to a higher level of competitiveness. 


Source: myjoyonline.com

Related Article:

Euro Zone Crisis may slow down Ghana Economic Growth

Euro Zone Crisis may slow down Ghana Economic Growth

The down grade of France by Standard and Poor has deepened the euro zone crisis. This negative economic turmoil in Europe has endangered the economic growth of African countries, specifically  Ghana's economy which depend totally on the export of cocoa, gold and recently oil to Europe. 

EnterpriseAfrik has compiled some facts for Ghanaian entrepreneurs and investors in Ghana and abroad, who are undertaking or willing to execute business projects in the country, to be guided by these economic indicators for 2012

THE ECONOMY AND PUBLIC FINANCES

In revised data released in mid-October, the statistical office said Ghana's economy expanded by 16.4 percent in the second quarter of 2011 mainly on oil production.

Traders in Nima market, Accra. © EnterpriseAfrik

The government lowered slightly its projected growth for 2011 to 13.6 percent from the 14.4 percent programmed in revised budget estimates approved by parliament in July. This is broadly in line with an IMF forecast of 13 percent for the year.

The 2012 budget raises spending by 12 percent to tackle poverty in this election year but aims to increase state revenues and keep the public deficit at 4.8 percent of GDP.

Inflation is predicted to average 8.7 percent for the year and finish 2012 at 8.5 percent, barely changed from the 8.58 percent recorded in December 2011.

What to watch:

A decision by the government in late December to remove fuel subsidy is expected to trigger general price pressures leading to climbing inflation from next month.

- Mounting price pressures. Many analysts suggest rising spending and the weak cedi (see below) could add to inflationary pressures. At present the modest inflationary outlook has allowed the Bank of Ghana to keep its prime rate on hold at 12.5 percent - but the removal of fuel subsidies and the associated general price hikes are enough reasons for the Central Bank to a tighten monetary policy in coming weeks.

- The risk that the euro zone debt crisis may lead to a European recession which would hit trade with Africa.

INVESTMENT

Ghana's relatively strong record on governance and some signs of the emergence of middle-class consumers make it an attractive investment destination for some. Unfortunately the euro zone debt crisis has made many investors much more risk-averse and prompted them to retreat from the African assets to which they were flocking less than two years ago.

The Ghanaian cedi has been among the victims, falling about 10 percent against the dollar on the year for cedi-dollar to trade around new lows of 1.68-1.70 in early January.

The Ghana Stock Exchange's main composite index has shed about 3.5 percent on the year to date, while the once favoured banking sector has taken a bigger hit, the Financials component of the index has slumped 14 percent.

Jubilee oil field, Ghana

In line with other African countries, Ghana has had to offer more attractive yields on its debt to find buyers -- the last auction of five-year bonds on Dec. 8 resulted in an average yield of 15.9 percent compared with 14.25 percent for a first tranche of the same bonds auctioned in August.

Even then, the December auction was only slightly oversubscribed and failed to attract offshore funds.

There are also concerns that Ghana's fiscal environment is becoming less investor-friendly. The 2012 budget increases mining sector corporate tax from 25 percent to 35 percent and introduces a windfall profit tax of 10 percent. At least one miner has raised concerns that this could discourage investment.

What to watch:

- Central Bank intervention. How ready is the Bank of Ghana to support the cedi? The Bank consistently intervened in the last quarter of last year but that has failed to halt the slide so far.

Source: Reuters