Monthly Archives: September 2016

30 Sep

Loan Agreement will increase Access to Finance for Ethiopian Businesswomen

The United States Agency for International Development (USAID) and the Swedish International Development Cooperation Agency have signed a new loan portfolio guarantee agreement with Enat Bank. The agreement guarantees up to 50% of losses on $10 million in loans, allowing the bank to offer more loans to women entrepreneurs and expanding the its capacity to lend to small- and medium-sized businesses.

Access to finance is the most critical constraint that Ethiopian businesses face, according to the 2015 World Bank Enterprise Survey. The challenges are especially strong for women.

The Development Credit Authority (DCA) is a broad financing authority that allows USAID and our partners to leverage private sector resources to have a greater and more sustainable impact in supporting economic growth. For every dollar spent on DCA guarantees, an average of $10 of private credit can be mobilized. The program improves loan terms for under-invested sectors of the economy that have little or no access to credit. The DCA instrument reduces risks and encourages private banks in Ethiopia to invest in local businesses and projects. The DCA program has enabled more than $50 million in financing for borrowers in Ethiopia since 2004.

The loan agreement with Enat Bank will build upon the success of previous loan guarantee agreements in Ethiopia. Enat Bank and borrowers covered under the guarantee will also receive training in business skills, business plan development, and market development through the loan guarantee program.

“The guarantee agreement will essentially bolster the lending capability of the bank to the inclusion of the most deprived, but economically potent women who can transform their businesses as a result of the injection of loan funds,” said Wondwosen Teshome, the bank president. “The desire for a loan, particularly by those dubbed as ‘the missing middle,’ is quite enormous and we have a firm trust and belief that women in this category have the potential and ability to use the credit in a way that benefits themselves, their community, the financiers and the country at large.”

Speaking at the ceremony, USAID representative Stephen Morin said, “I am excited about this new partnership as it will strengthen the financial sector in Ethiopia, particularly for women. Working together, we can create a more inclusive and robust economy that meets our shared goals of empowering women and eliminating extreme poverty in Ethiopia.”

The American and Swedish aid agencies expect the credit guarantee will demonstrate the viability and profitability of lending to women owned businesses. This should encourage greater private lending to women-owned enterprises in the future.

Distributed by APO on behalf of U.S. Embassy Addis Ababa, Ethiopia.

30 Sep

B2B market in Africa to show $1 trillion growth by 2025

According to the World Bank, 35 of 47 economies in sub-Saharan Africa took at least one step in making it easier to do business in their country in 2015. Rwanda implemented a credit-scoring service; Kenya launched government-run company registration services; Madagascar strengthened minority-investor protections; and Equatorial Guinea took the registration procedure for new businesses from 16+ steps down to four, and the processing time from 120+ days to 10.

As new businesses are created and developed, and oil-based economies work to diversify in the face of low oil prices, business-to-business (B2B) opportunities throughout Africa will thrive. In their report, Lions on the Move II: Realising the Potential of Africa’s Economies, McKinsey Global Institute stated an increase in the number and size of African businesses means that, “While the consumer story has generated headlines, the relatively unsung business-to-business market represents an even larger opportunity.”

McKinsey expects B2B demand to grow by US$1tr, bringing the figure to $3.5tr by 2025. African companies spent $2.6tr on the B2B market in 2015 – 40% of which was in South Africa and Nigeria.

“Half of that total was spent on input materials, 16% on capital goods, and the remainder on a wide range of services, including business and financial services, transportation, and information technology and telecommunications services,” according to the report.

This spending pattern is expected to continue in the coming years, with spending on services growing fastest, at 3.5% annually.

Factors driving the opportunity

In the report McKinsey lists three factors that are expected to drive company spending over the coming years. The first is structural changes, and has to do mainly with the formation of new businesses and intra-Africa trade. The report predicts that as more legislation and reforms such as Equatorial Guinea’s are put into place, productivity and the opportunity to scale and access funding across Africa will increase, and in turn, so will the demand for B2B services. Additionally, cross-border trading within trade blocs will spur local production and services, and ultimately, once again, B2B spending on the continent.

The second factor listed by McKinsey is ‘Urbanisation and business clustering’. The appearance of more and more business clusters throughout Africa is thanks to its rapid urbanisation. According to McKinsey, these clusters, “Stimulate productivity, innovation and creation of new businesses,” in turn further increasing the need for B2B spending. […]

Read the full story here: How we made it in Africa

29 Sep

Joint Statement 7th South Africa – United States Annual Bilateral Forum

The Forum meets annually to review cooperation between the two nations across a range of sectors

PRETORIA, South Africa, September 28, 2016/APO/ —

The Department of International Cooperation and Relations hosted the United States Mission in Pretoria for the 7th Annual Bilateral Forum (ABF), on 28 September 2016. The Forum was co-chaired by the Chief Director: North America and Regional Organisations, Ambassador Peter Goosen and the United States Deputy Chief of Mission, Ms Jessica Lapenn.

The ABF takes place under the auspices of the South Africa – United States Strategic Dialogue, which was established in 2010 by the former United States Secretary of State, Hillary Clinton, and the South African Minister of International Relations and Cooperation, Maite Nkoana-Mashabane. The Forum meets annually to review cooperation between the two nations across a range of sectors, covering areas such as education, agriculture, health, protocol and administration, economic development, trade and investment, energy, water, environment, transportation, science and technology, defence, and safety and security.

During the event, officials from the various Working Groups aligned to line-function Departments engaged in a broad dialogue with their counterparts from the United States Embassy and the various United States agencies represented in South Africa to review existing cooperation, track progress and ensure better alignment of development cooperation with South Africa’s domestic priorities.

The Departments of Telecommunications and Postal Services and Small Business Development participated for the first time in 2016 to begin a discussion on future cooperation in these two areas.

Both Amb. Goosen and Ms Lapenn underscored the importance of the ABF as an important instrument to measure the tangible progress being made in the growth and strengthening of bilateral sectoral cooperation. In particular, they noted the successes achieved in the areas of safety and security, wild-life trafficking, science and technology, education, health and water.

Distributed by APO on behalf of U.S. Embassy Pretoria, South Africa.

29 Sep

Tanzania scales up competitive ranking ladder

TANZANIA competitiveness ranking has improved, moving up nine places to 116th position from 125th in the past four years.

According to this year’s Global Competitive Report released in Dar es Salaam yesterday, Tanzania ranks 116 out of 138 countries. Briefing journalists on the report, Acting Policy Research for Development (REPOA) Executive Director, Dr Lucas Katera, said that Tanzania has been moving up for the past four years, an indication of good performance in the country’s economy.

Mr Katera told reporters that in 2013/2014, Tanzania ranked 125th out of 148 countries, while in 2014/2015 it moved four places up, raking 121st out of 144. He added that in 2015/2016, the competitiveness ranking slightly improved to 120th out of 140 countries, while in this year’s report, the country has moved up four places to 116th out of 138 countries.

“Although we are still lagging behind, here are some improvements in the country’s economy; the government needs to improve the business environment to attract more investors,” Mr Katera advised.

According to the report, Tanzania has been performing well in government stability, attracting more investors “as they are assured of their safety, improved public health, good labour regulations, policy stability and market cycle’’.

He noted that Tanzania was a member of various regional blocs such as the East African Community (EAC) and Southern African Development Community (SADC), hence guaranteeing a market for investors.

Dr Katera, however, said that there still were some challenges, which called for government action to improve the business environment in the country to attract more investors.

The challenges include access to financing, multiple taxes, poor infrastructure, corruption and bureaucracy in business registration. “The Global Competitiveness Report has helped us understand the drivers of growth.

This edition has come at a time of stalling productivity, the main determinant of future growth,” Mr Katera observed, A researcher with REPOA, Mr Cornel Jahari, said the research was conducted in Dar es Salaam and targetted large and small scale entrepreneurs.

He added that 100 business groups were involved in the research, including companies employing between 1 and 50 people and those employing from 51 people and above.

The report shows that Rwanda is the most competitive country in the EAC zone and third most competitive country in the sub-Saharan Africa after Mauritius, which ranks first, and South Africa, which ranks second. Kenya climbs to 96th, Ethiopia holds steady at 109th while Nigeria slips three to 127th.

The top three countries in terms of competitiveness in the world are Switzerland, Singapore and USA respectively.

The Global Competitiveness Report’s ranking is based on the Global Competitiveness Index (GCI), which was introduced by the World Economic Forum in 2005. According to the report, competitiveness is defined as the set of institutions, policies and factors that determine the level of productivity of a country.

GCI scores are calculated by drawing together countrylevel data covering 12 categories – the pillars of competitiveness – that collectively make up a comprehensive picture of a country’s competitiveness.

The 12 pillars are institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training and goods market efficiency. Others are labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

Published by Daily News

28 Sep

Department for International Trade London & ERDF Trade take London businesses to Nigeria and Ghana

Representatives from energy, infrastructure and education & training companies will be participating in the Department for International Trade (DIT) London trade mission to Nigeria and Ghana, taking place 25-30 September 2016.

This year’s mission will be led by Carl Woolf, International Trade Adviser, Department for International Trade, London Region.

Commenting, Carl Woolf said: “We are delighted to bring UK companies to these two markets. British companies, mainly from London, will be visiting Lagos and Accra with a view to establishing long-term business relations and gain deeper understanding of business practices in both markets. “Our delegates, who bring a wide range of products, service and expertise, will be meeting with their Nigerian and Ghanaian counterparts who represent a variety of companies and organisations. I welcome this opportunity to develop trade links between West Africa and UK delegates.”

As part of the European Regional Development Fund’s (ERDF) ‘Global Growth’ Project, the mission aims to enhance the competitiveness of London SMEs in international markets. The mission participants have a range of objectives, including looking for local representatives, qualified distributors or agents and clients.
Notes to editors

About the Department for International Trade:

  • The Department for International Trade has overall responsibility for promoting UK trade across the world and attracting foreign investment to our shores.
  • We are a specialised body with significant new trade negotiating capacity, taking on the responsibilities of UK Trade & Investment, along with the relevant trade functions of the former Department for Business, Innovation and Skills. We also have oversight of UK Export Finance and UKTI’s Defence and Security Organisation.
  • DIT works to promote UK exports of goods and services, to support a growing economy that creates wealth for all, supports jobs and meets our wider national interests; deliver the best international trading framework for the UK outside the EU, including through building our capacity to negotiate and administer a national trade policy; and maximise opportunities for wealth creation through supporting Foreign Direct Investment, with a renewed focus on outward FDI (overseas direct investment).

About the European Regional Development Fund (ERDF)

The European Regional Development Fund is responsible for management of the EU funding which stimulates regional economic development.

Distributed by APO on behalf of British High Commission Accra.

28 Sep

Africa’s Position on Post Africa Growth and Opportunity Act (Agoa) Forum Report

The African Ministers of Trade tabled an Africa position in the 15th Africa Growth and Opportunity Act (AGOA) Forum, held on 26 September 2016 in Washington DC, United States. The position is on the report titled “Beyond Agoa: Looking to the future of the U.S. – Africa Trade and Investment” issued by the US on 22 September 2016, as required by Congress in line with the AGOA Extension and Enhancement Act of 2015. The Forum is an annual event that alternates between Sub-Saharan Africa and the United States; the 16th Forum will be hosted by Togo.

The Ministers said they consider the Report as a start of a conversation on trade and investment relationship beyond AGOA. The African side will study the Report with a view to develop a position that is in line with the continental agenda and its objective to industrialise.

AGOA is a non-reciprocal preferential programme that provided duty-free quota-free treatment to Sub-Saharan African countries into the United States market. The Ministers expressed a concern that the report is orientated towards a high standard reciprocal trading arrangement that covers a range of policy areas that may have implications for Africa’s efforts to industrialise and promote economic transformation.

African Ministers of Trade initial response included the following:

1.         Sub-Sahara African (SSA) countries are concerned by the absence of asymmetry and differentiations in commitments in the US proposals and emphasize the need to take into account differences in levels of development.

2.         SSA is also concerned by the proposed scope of the agreements envisaged by the US, which goes beyond agreements negotiated by African countries thus far. In addition the commitments on policy issues will limit the policy instruments that are necessary to promote industrialization and diversification. Sustainable development of the African continent will depend on its ability to promote economic transformation and move away from heavy reliance on primary products.

3.         Any trade and investment relationship with the US should assist the continent to industrialise in line with Agenda 2063 and contribute to regional integration

4.         They emphasised the importance of creating an AU Task Force to develop Africa’s strategy for trade and investment relationship with the US. The strategy will take into account challenges facing African countries in taking advantage of AGOA. To this end, the US is encouraged to provide incentives to its companies to invest in the continent to improve productive capacity to increase AGOA utilisation.

5.         The relationship with the United States should be structured to support regional integration in Africa.

The Ministers also expressed their concern on the level of underutilisation of AGOA preferences by Sub-Saharan African countries. Under-utilisation is due to stringent standards and rules of origin which make it difficult for African products to meet the US market. In addition, African countries are unable to leverage the US market due to productive and supply-side capacity constraints. In this regard, African countries have prioritised industrial development, the development of regional value-chains and regional integration. The Ministers have thus called on, among others,

1.         The United States to encourage its companies to invest in the Continent in support of industrialisation agenda and to create productive capacity that will enable Africa to take advantage of the trade preferences.

2.         In addition, trade and economic cooperation arrangements should mainstream Africa’s major economic development initiatives in the Agenda 2063 including BIAT/CFTA, PIDA, AIDA, CAADP and other regional integration programs and projects that have been designed to contribute to Africa’s transformation.

3.         Power Africa, an initiative of the US is welcomed and the US is urged to expand the program to cover trade related infrastructure beyond the power sector.

4.         US institutions in-charge of SPS and TBT related matters should work closely with AGOA eligible countries to provide capacity building to enable African countries to meet US standards within a timeframe of 3 to 5 years.

5.         The US government is urged to bring greater flexibility in the application of rules of origin. The Ministers emphasised that AGOA eligible countries should be included in the list of designated countries under the Trade Agreements Act (19 U.S.C.& 2501 – 2581) that require the US Government to acquire only US made or designated country end products.

Distributed by APO on behalf of The Department of Trade and Industry, South Africa.

27 Sep

Norway to establish Embassy in Mali

The Government has recently stepped up Norway’s efforts to promote stabilisation and conflict resolution in the Sahel region. Developments in Mali in the time ahead will be of great importance for the region as a whole. Norway’s contribution to the UN mission in Mali (MINUSMA) has added an extra dimension to Norway’s efforts in the Sahel. Earlier this year, Minister of Foreign Affairs Børge Brende and Minister of Defence Ine Eriksen Søreide visited Mali for political talks and for meetings with Norwegian military personnel.

‘Norway’s efforts in Mali are part of our focus on fragile states and on countering violent extremism. Promoting peace and stability in the Sahel will be important for fostering growth and development, and for preventing high rates of migration from the region in the future,’ said Mr Brende.

Mali is one of the focus countries in Norway’s development policy, and Norway wishes to be a long-term partner with a view to promoting peace, security and development in the country.

‘Our future cooperation was a key topic when I met Mali’s Foreign Minister, Abdoulaye Diop, this week in connection with the UN General Assembly. Mr Diop welcomed the news that Norway is to establish an embassy in Bamako. The authorities in Mali have wanted a Norwegian diplomatic presence in the country,’ said Mr Brende.

Norway’s engagement in Mali dates back to the time of the drought in the country in the 1980s. Broad cooperation was established, involving Norwegian civil society groups and international partners, to prevent famine, poverty and conflict in the region. Since then, Norway’s engagement has been expanded, and today includes efforts to promote education, peace and reconciliation, and support for processes of stabilisation and democratisation. Norway’s participation in MINUSMA has strengthened the Government’s peace efforts in the region. The Norwegian Embassy in Bamako is due to be opened in the summer of 2017.

Distributed by APO on behalf of Royal Norwegian Ministry of Foreign Affairs.

26 Sep

Nigerian Government Support can help Small Businesses

With the Nigerian economy in recession, support for Small & Medium Businesses could be one of the key ingredients to carrying the country through these tough times. Assisting them should become a priority for big business and government.

That’s according to Magnus Nmonwu (twitter.com/MNmonwu), Regional Director for Sage in West Africa (Sage.com/Africa), who says that Small & Medium Businesses in Nigeria face challenging times, even as the economy slides. In addition to the country entering a recession – defined as a decline in GDP over two consecutive quarters – the upcoming Communication Service Tax Bill could also affect Nigerian businesses.

Yet Nigerian businesses and entrepreneurs are creative and resilient – and might play an instrumental role in lifting the economy out of recession, given the right support and business environment. “Nigerian entrepreneurs and business owners are the engines that drive the country’s economy,” says Nmonwu.

“During recessions, big companies are able to adjust by downsizing and cutting costs. Small businesses, however, keep going and carry the losses. They need our support, as they can contribute to turning the economy around, far more quickly.

“It is important that government and other stakeholders listen to entrepreneurs’ concerns as they seek to grow and contribute to the economy. We have embraced the responsibility of helping to amplify the voice of small business, because we also started small and understand the challenges entrepreneurs of small face in such times.”

With the recession biting, Small & Medium Businesses face the reality that consumers won’t have as much money to spend and that investors and business partners will taper down investment. Given that Nigeria has an estimated 37 million micro, small, and medium-size enterprises making a significant contribution to GDP and employment, this sector should be treated as an economic priority, Nmonwu says.

Communication Service Tax

Another concern on the horizon is the looming Communication Service Tax Bill 2015, which is currently with the National Assembly. If passed into law, the law will require that consumers of voice, data, SMS, MMS and pay TV services pay a 9% tax on their tariffs for using these services.

This is in addition to other taxes people already pay for mobile and Internet access – 5% VAT, 12% import duties on ICT devices, and 20% tax levied on SIM cards, amongst the series of taxes. The Alliance for Affordable Internet, Nigeria Coalition, estimates that the tax could prevent more than 50 million Nigerians from affording a basic broadband connection.

“Nigerian entrepreneurs depend on their mobile phones and the Internet to run their businesses,” says Nmonwu. “The tax could potentially raise the cost of doing business and hold back Nigeria’s integration into the global digital economy by excluding people from broadband access.”

Nmonwu says that it is understandable that the government needs to raise new tax revenues in the wake of falling commodity prices. However, this should ideally be done in a way that nurtures the growth of the Small & Medium Business, technology and services sectors – especially at a time Nigeria needs to diversify its economy beyond oil

Emphasis should be placed on creating new tax revenues. For example, a conditional tax amnesty could encourage smaller businesses who have not compiled with tax laws to fall into the tax net. By making short-term sacrifice of potential tax revenues, government could bring more businesses into the formal economy and help them grow into enterprises able to employ more people, approach banks for financing and pay taxes.

Financing small businesses

“In this regard, we are encouraged to see some of the moves that government, multilateral financing institutions and other stakeholders are making to support entrepreneurs,” Nmonwu adds. In particular, he welcomes the Central Bank’s launch in May 2016 of a modern online collateral registry, supported by the World Bank. The registry will enable low-income earners and micro-entrepreneurs to secure loans against movable assets such as machinery, livestock, and inventory.

Other bodies providing small businesses with financial support include:

  • Bank of Industry, which supports new or existing companies, seeking expansion, modernization or diversification;
  • The National Economic Reconstruction Fund (NERFUND), which provides medium-to-long-term financing for viable small and medium enterprise; and
  • Bank of Agriculture (BoA), which provides financial support for all agricultural in addition to rural micro enterprises.

“Funding is one of the major challenges entrepreneurs face in Nigeria, so these are great initiatives,” Nmonwu says. “We would welcome similarly innovative interventions to address some of the other challenges small businesses face such as complex tax and remove regulations and general business red-tape.”

The Nigerian government is also to be commended for establishing a range of organisations and initiatives to support Small & Medium Businesses. For example, the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) identifies Nigerians who are interested in entrepreneurship and provides them with training in entrepreneurship and vocational skills.  Entrepreneurs meet regularly to share ideas about growing their businesses under the umbrella of SMEDAN.

Nmonwu says: “Entrepreneurs make life-sacrifices. They are dreamers and innovators. They take risks to pursue their passions and, on this, Nigeria’s prosperity can or should be built /developed. They deserve a bigger voice and we will always work hard to champion this noble cause.”

Distributed by APO on behalf of Sage.

26 Sep

South African Treasury aims to extend tax incentives

The Treasury has proposed a two-year extension of the employment tax incentive and a five-year extension of the learnership tax incentive, both of which, it says, have yielded positive results.

The proposals are contained in the latest draft of the Taxation Laws Amendment Bill, released for public comment on Sunday.

The employment tax incentive was due to expire at the end of December and the learnership tax incentive at the end of September. The Treasury has proposed that they be extended to end February 2019 and end March 2022, respectively.

Take-up of the employment tax incentive, aimed at encouraging youth employment, has been strong, with more than 32,000 employers claiming the incentive for 686,402 employees in the 2014-15 tax year. The total value of claims between January 1 2014, when the incentive was introduced, and March 31 2016 was R6bn, substantially exceeding Treasury projections.

“Preliminary research suggests that the incentive has had a positive impact on the number of net new jobs created,” the Treasury said. However, researchers have expressed doubt about this success, with early research by the University of Cape Town’s Southern Africa Labour and Development Research Unit in 2015 questioning whether the incentive had created any new jobs.

Labour federation Cosatu is strongly opposed to the incentive, which subsidises the wages of any new employee between the ages of 18 and 29 who earns R6,000 a month or less. The draft bill proposed by the Treasury will introduce a monetary cap of R20m on the value of employment tax incentive claims per employer per annum in order, the Treasury said, “to more effectively target the incentive towards those employers that are creating new jobs, and to also mitigate the total tax revenues forgone”.

You can read the full article here : http://bit.ly/2cEJHGl

23 Sep

Trade and industry department to lead business mission to Nigeria

The Department of Trade and Industry, (the dti) will undertake a business mission to Nigeria from 25-30 September 2016. The mission will be led by the Chief Executive Officer of the recently launched initiative of the dti, Trade Invest Africa (TIA), Ms Lerato Mataboge. Officials from the dti’s Black Industrialists Programme and representatives of Plastics South Africa will be part of the mission.

The Minister of Trade and Industry, Dr Rob Davies says the objective of the mission will is to seek trade and investment opportunities in Nigeria with the aim of establishing relations to position South African business in leveraging the identified opportunities for the mutual benefit of both countries.

Davies adds that this collaboration between TIA, the Black Industrials Programme and Plastics SA is key in addressing issues such as access to markets, the promotion of industrialisation, sustainable growth and transformation.

“Through the support of black-owned entities in the manufacturing sector, the business mission to Nigeria aims to enhance the efforts of the Black Industrialists Programme and ensure that the support for black industrialists increases in order to improve their participation in the manufacturing industry,” says Davies.

According to Davies, Plastics SA has identified Nigeria as an important market for the growth of the South African plastics industry and TIA aims to facilitate increased access to the Nigerian market in this regard.

South Africa and Nigeria are considered to be the leading economies of the African continent. Total trade between these countries accumulated to R 220 billion from 2011 to 2015.

During this period, vehicles, base metals, machinery, plastics as well as chemicals ranked as the top five exports sectors to Nigeria respectively, while imports were led by mineral products, base metals, plastics, machinery and vehicle equipment.

Sectors targeted for the mission are, infrastructure, energy, agro-processing, plastics, chemicals and automotives.

Enquiries:
Sidwell Medupe-Departmental Spokesperson
E-mail: MSMedupe@thedti.gov.za
Issued by: The Department of Trade and Industry