29 Aug

Is the African mining sector becoming uninvestable?

mining sector

At the recent Africa Forum hosted by Hogan Lovells, in London, a number of common, positive themes came through: Africa is a continent of endless possibilities and opportunities; Africa has significant natural and human resources which can be unlocked for the benefit of all Africans; and the investability of many African countries has improved, for various reasons, including mature banking, finance and legal institutions, investment-friendly policies and regulatory frameworks, and national development plans which demonstrate governmental support for sustainable infrastructure and development.

Why then, within the context of a mostly positive view of investment in Africa, is the question posed whether the African mining and natural resources sector, is becoming uninvestable?

Firstly, positive views of investment in Africa don’t always extend to the mining and naturals resources sector. While it is often acknowledged by stakeholders that the mining and natural resources of a country can contribute meaningfully to growth, development and transformation, there is a growing questioning of the impact of mining on aspects such as the environment, host communities, social structures, tourism, and industries such as agriculture, versus the benefits that often flow from mining and beneficiation operations. As the voices of concern increase and develop, the benefits that flow from mining and beneficiation operations are likely to be questioned, even further.

Secondly, the recent mining policy and regulatory changes in Tanzania and South Africa have brought into sharp focus the fragility of investment decisions relating to so-called frontier markets, such as Tanzania, and emerging markets, such as South Africa.

With a decrease in the number of investable frontier markets (equity and bond markets which are typically smaller than emerging markets and where there is less liquidity) and investment instability in emerging markets, such as South Africa, the recent events in these two countries are more concerning.

Tanzanian president, John Magufuli, signed into law the Natural Wealth and Resources Bill 2017, and the Natural Wealth and Resources Contracts Bill 2017, on 3 July, 2017. These laws, which were fast-tracked though the Tanzanian parliament, in a matter of weeks, have far-reaching consequences for foreign companies with investments in Tanzania, one of the continent’s largest gold producers.

There has been extensive investment in Tanzania’s gold mining industry, with a large percentage of the investment, focused on prospecting operations, which are of course critical in the creation of a pipeline that can be converted into mines, in the future. Many of these investors are listed in Australia, and the Australian Stock Exchange took the drastic step of suspending trading of various junior mining companies, following the announcement of the enactment of the laws, by President Magufuli. The uncertainties flowing from the new laws are likely to impact on these junior mining companies, who are focused on exploration, quite dramatically and it will make capital raising exercises extremely difficult, if not impossible. Where ownership of mining assets in a company are put at risk, this is likely to scare off would-be investors, and make existing investors exercise extreme caution.

Key changes brought about by the new legislation in Tanzania include the following:

  • The Tanzanian government is given the right to re-negotiate or dissolve current mining contracts with multi-national companies
  • The state will be required to own at least 16% of mining projects
  • Export royalties have been increased
  • The Tanzanian government can reject a mining company’s valuation where the government believes that the transfer price is too low, and the Tanzanian government is entitled to purchase the consignment of the minerals, at the price declared by the mining company
  • The right to international arbitration is removed
  • The Tanzanian government is also pushing for compulsory listing of mining companies on the Dar es Salaam Stock Exchange, with the complexities that this will bring, particularly because of the potentially small pool of investors who can take up the public offerings.

While multi-national mining companies with investments in Tanzania continue to engage with the Tanzanian government, some of the multi-national companies have declared disputes with the Tanzanian government and are referring these disputes to arbitration. None of this is good for the Tanzanian mining sector.

On 15 June, 2017, the South African minister of minerals, Mosebenzi Zwane published the “Reviewed Broad-Based Black Economic Empowerment Charter for the South African Mining and Minerals Industry, 2016″, (“Mining Charter 3“).

The response was immediate, dramatic, and far reaching. It is estimated that mining stocks lost approximately R50bn (US$3.8bn) in value, following the announcement, with the rand losing ground, and the Chamber of Mines, the body that represents the majority of the mining companies, launching legal proceedings against Minister Zwane. The grounds of challenge go to the heart of the minister’s powers and functions under the mining legislation and the Constitutionality of Mining Charter 3.

While Minister Zwane has labelled the legal challenge as being anti-transformation, the Chamber of Mines and other bodies representing mining interests have consistently expressed the position that the industry is committed to transformation, that the industry has demonstrated its commitment through the implementation of appropriate programmes of transformation – including in respect of the host communities through the social and labour plans, which are a requirement under the mining laws, but that the targets in the Mining Charter must be achievable, sustainable, and the timeframe should take into account the reality that the mining industry finds itself in, with the spectre of further job losses in the near future (while figures vary, the suggestion is that in excess of 80,000 direct jobs have been lost, in the industry, over the last three to five years. Various South African mining companies have recently announced proposals for further job losses, which may exceed 20,000 direct jobs).

Mining Charter 3 made significant amendments to the transformation requirements under the previous versions of the mining charter. Key changes include the following:

  • Holders of new prospecting rights must have a minimum of 50% plus one black person shareholding
  • A holder of a new mining right must have a minimum of 30% black person shareholding (up from the previous 26%)
  • The 30% black person shareholding in new mining rights must be distributed amongst three beneficiaries, namely a minimum of 8% for employee share ownership plans, a minimum of 8% for mine communities to be held in a community trust, and a minimum of 14% to Black Economic Empowerment entrepreneurs
  • For employee share ownership plans, a minimum of 8% for mine communities to be held in a community trust, and a minimum of 14% to Black Economic Empowerment entrepreneurs
  • A holder of a new mining right must pay a minimum of 1% of its annual turnover in any given financial year to the black person shareholders prior to, and over and above, any distributions to the shareholders of the holder
  • While there is limited recognition of the “once empowered, always empowered” principle, unless the historical Black Economic Empowerment transaction achieved 26% black shareholding or more, the historical transaction is not recognised
  • Where a historical Black Economic Empowerment transaction is recognised, the holder is required to top up the black person shareholding from the existing level to a minimum of 30% black person shareholding within 12 months;
  • Even where a holder of a mining right maintained a minimum of 26% black person shareholding as at 15 June, 2017, the holder is required to top up its black person shareholding to a minimum of 30% within 12 months from the date of publication of Mining Charter 3;
  • Minimum requirements are specified in relation to procurement, supplier and enterprise development. A holder is required to spend a minimum of 70% of total mining goods procurement spend on South African manufacturedgoods, with the 70%, being broken down into specified requirements. A minimum of 80% of total spend on services must be sources from South African-based companies, with the 80%, being broken down, into specified requirements;
  • A foreign supplier (a foreign controlled and registered company, supplying the South African mining and minerals industry with mining goods and services, which does not have at least a Level 4 DTI Code BEE Status, and 25% plus one vote black ownership) must contribute a minimum of 1% of its annual turnover generated from local mining companies towards the Mining Transformation and Development Agency;
  • Employment equity targets are increased, and there are specified requirements from board level, to core and critical skills.

There were glimmers of hope when, following negotiations between the Chamber of Mines and Minister Zwane, Minister Zwane agreed to suspend Mining Charter 3 pending the outcome of the legal challenge initiated by the Chamber of Mines. However, the following week, Minister Zwane published his intention to issue a notice placing a moratorium on all applications for new prospecting and mining rights, renewals of prospecting and mining rights, and ministerial consents in terms of Section 11 of the Mineral and Petroleum Resources Development Act, No. 28 of 2002 (“MPRDA”) (in summary where a right or an interest in a right is to be transferred or there is a change of control, ministerial consent is required).

The minister indicated his intention to issue the moratorium notice under Section 49 of the MPRDA which vests the minister with the authority to issue a notice prohibiting prospecting or mining in respect of certain geographical areas or certain minerals for a particular period, having regard to the national interest, the strategic nature of the mineral in question and the need to promote the sustainable development of the nation’s mineral resources.

The widely expressed view was that the minister had exceeded his powers under Section 49 of the MPRDA by intending to issue a blanket notice. Litigation was again initiated, and at the time of publishing this article, there is uncertainty regarding the status of the moratorium notice.

On a positive note, stakeholders across the spectrum, including the largest, recognised trade unions in the mining industry, have spoken out against the actions of Minister Zwane, and there have been widespread calls for his resignation or sacking.

But this of course does not remedy the turmoil which the South African mining sector finds itself in, and large scale job losses loom.

While the South African and Tanzanian mining sectors are in turmoil, this does not mean that Africa is uninvestable.

Africa has a significant and, often, thriving mining and minerals industry, providing millions of jobs and opportunities. It is also a source of significant foreign direct investment, and the mining sector remains a substantial contributor to the GDP of many African countries with the benefits that this brings to the growth of those economies.

It is likely that demand for certain precious metals will continue to grow, and that the demand for the so-called “battery metals” will grow exponentially. All of this creates opportunities for investors, provided that the investors have a proper understanding of the various risks that are faced in these investment opportunities.

The investability of Africa is likely to depend, significantly, on balancing the growing need for mineral resources while at the same time, addressing concerns that multi-national companies extract value without returning benefits for the host countries, and ensuring that the vast socio-economic benefits that can flow from mining operations, materialise.

Warren Beech is global head for mining at Hogan Lovells in Johannesburg. Jessica Black Livingston is a deputy for mining at Hogan Lovells in Denver.

 

from How We Made It In Africa

29 Aug

Swapping ‘rubbish’ for food in Dunoon

Dunoon

Cape Town – Every Tuesday morning between 09:00 and 11:00, a handful of Dunoon residents gather at the Recycle Swop Shop at Inkwenkwezi Secondary School, bringing material for recycling.

In a long steel container, food and household items, toiletries, and donated clothes line the shelves, GroundUp reported.

Residents are “paid” with tokens according to the amount of items delivered for recycling and the tokens are then exchanged for food and clothes.

For some 30 women, this is their only job and their only way of providing for their families.

Alice Mahase starts her day at 05:00 seeing to her children and household before she sets off to collect plastic, mostly bottles.

‘Something purposeful’

On Tuesdays she delivers it all to the Swop Shop in blue recycling bags.

“I don’t have a job and I don’t want to just sit at home. I have been with the shop for four years and every week I can buy some clothes, food and stuff for my baby”

Louise Vonofakidis, who has run the container shop for five years said this way residents who couldn’t find jobs could still “do something purposeful for their families”.

Groups of friends club tokens together so that they can buy in bulk, she said.

The collected materials are sold to a recycling depot and the money is used to buy the food and household goods for the token system. There is always a shortfall.

Corporate sponsorships help but the organisation has to cover the deficit, which is why the project is in need of more local business support.

Manager Riaan van der Westhuizen and his wife Maria launched the project seven years ago after meeting with Marilyn van der Velden, who started the first Swop Shop in Hermanus.

“The original Recycle Swop Shop started out as a project that uses recycling as a tool to ‘help children help themselves’ and to provide ‘a hand up rather than a hand out’,” said Van der Velden.

The project was adopted by an organisation in Durban, The Domino Foundation, which provided sponsorship and corporate exposure.

Earlier this year, the foundation sponsored a team in the Cape Argus Cycle Tour to raise awareness about the Dunoon project.

The Van der Westhuizens also ran a swop shop in West Bank near Kuilsrivier but due to security and safety reasons, it closed.

Today, the Swop Shop has a presence in Dunoon and at a primary school in Philippi. The project’s goal is to empower the community and benefit their environment.

from News24

29 Aug

Kwale titanium miner rebounds to Sh1.71bn full-year profit

titanium

Base Resources has rebounded to full-year profit of Sh1.71 billion (AU$21 million) for the period ended June 30 from $20.9 million (Sh1.70 billion) loss a year earlier, the Kwale-based miner announced on Monday.

The Australia-owned large-scale mining firm attributed the performance to increased sales volumes, rise in commodity prices and cost management measures.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 81 per cent to AU$109.7 million (Sh8.94 billion) from A$60.6 million (Sh4.94 billion) the year before.

The firm said sales revenue from the Kwale mine exports rose 28 per cent to AU$215 million (Sh17.53 billion) from AU$169 million (Sh13.78 billion) in June 2016, hitting a new record since it made first shipments in February 2014.

Ilmenite volumes rose by a marginal 4.4 per cent to 501,676 tonnes, rutile increased to 91,991 tonnes from 85,536 tonnes, while shipments of zircon climbed to 34,566 tonnes from 33,062 tonnes last year.

The company said it also sold 9,501 tonnes of low grade zircon, volumes which it did not ship last year. The minerals were sold at an average price of AU$338 per tonne (Sh27,560), a 19.86 per cent jump, it says.

In Summary

  • Base Resources attributed the performance to increased sales volumes, rise in commodity prices and cost management measures

source from Nation

24 Aug

Africa: Agriculture a Culprit in Global Warming, Says U.S. Research

Global Warming

New York — Agriculture has contributed nearly as much to climate change as deforestation by intensifying global warming, according to U.S. research that has quantified the amount of carbon taken from the soil by farming.

Some 133 billion tons of carbon have been removed from the top two meters of the earth’s soil over the last two centuries by agriculture at a rate that is increasing, said the study in PNAS, a journal published by the National Academy of Sciences.

Global warming is largely due to the accumulation of carbon dioxide in the atmosphere from such activities as burning fossil fuels and cutting down trees that otherwise would absorb greenhouse gases such as carbon dioxide.

But this research showed the significance of agriculture as a contributing factor as well, said Jonathan Sanderman, a soil scientist at the Woods Hole Research Center in Falmouth, Massachusetts and one of the authors of the research.

While soil absorbs carbon in organic matter from plants and trees as they decompose, agriculture has helped deplete that carbon accumulation in the ground, he said.

Widespread harvesting removes carbon from the soil as do tilling methods that can accelerate erosion and decomposition.

“It’s alarming how much carbon has been lost from the soil,” he told the Thomson Reuters Foundation. “Small changes to the amount of carbon in the soil can have really big consequences for how much carbon is accumulating in the atmosphere.”

Sanderman said the research marked the first time the amount of carbon pulled out of the soil has been spatially quantified.

The 133 billion tons of carbon lost from soil compares to about 140 billion tons lost due to deforestation, he said, mostly since the mid-1800s and the Industrial Revolution.

But the findings show potential for the earth’s soil to mitigate global warming by absorbing more carbon through such practices as better land stewardship, more extensive ground cover to minimize erosion, better diversity of crop rotation and no-till farming, he said.

The world’s nations agreed in Paris in 2015 to reduce emissions of greenhouse gases generated by burning fossil fuels that are blamed by scientists for warming the planet.

President Donald Trump pulled the United States out of the landmark Paris accord in May, saying it would undermine the U.S. economy and weaken national sovereignty.

Supporters of the accord, including some leading U.S. business figures, said Trump’s move was a blow to international efforts to tackle global warming that would isolate the United States.

Source from allAfrica

22 Aug

Nigeria: State Positioned for International Oil, Gas Dominance Despite Challenges

international oil

By embracing a digital revolution in its oil and gas facilities, Nigeria could propel itself from the shadows of persistent underperformance to become a global energy powerhouse. This will be a catalyst for industrialisation and growth in many other economic sectors too.

Digitalisation in the energy sector involves the better use of data to manage and control multiple operations. It drives efficiencies in energy management and automation systems. Importantly, workers in a digital industrial environment enjoy a massive increase in skills and productivity.

Digital development is not confined to new oil and gas facilities. Existing oil and gas infrastructure, from pipeline to refinery, can easily be upgraded to digital automation. This means that Nigeria’s ageing oil refineries in Port Harcourt, Warri, and Kaduna can be optimised with digitalisation.

These facilities were built as early as 1978 but could be made far more efficient and productive, thereby significantly reducing Nigeria’s dependency on imported petroleum products. The benefits of this investment would be measured in billions of dollars.

Effective integration of digital technologies could reduce capital expenditure in the oil and gas sector by up to 20 per cent, cut upstream operating costs by up to five per cent and downstream costs by up to 2.5 per cent.

Nigeria’s best approach will be a combination of local skills and knowledge, and the expertise and experience of a proven international partner able to deliver digital technologies and automation, together with traditional instrumentation and controls, across the entire energy value chain. This further supports backward integration of skills and technical competence in Nigeria’s limited skilled workforce.

A recent PricewaterhouseCoopers (PwC) report suggests that by end-2019 Nigeria could assume the status of the largest producer of refined petroleum products in Africa. The projection sees Nigerian exports exceed 300,000 bpd by 2019 – up 350 per cent from 2016 production of 65,000 bpd.

In this scenario, Nigeria becomes an international trading hub similar to Australia, Russia, Europe, and the U.S. Gulf Coast, while the entire West Africa region becomes energy self-sufficient by 2019, thus eliminating the need to source refined oil products from the U.S. and Europe.

Despite dwindling crude oil sales to the West, West African demand for Nigeria’s crude oil is set to rise dramatically. The region annually consumes 22 billion litres of petrol, and Nigeria’s domestic market accounts for 17 billion of those litres, yet the country still imports around 80 per cent of this energy.

With 37.2 billion barrels of proven oil reserves, Nigeria could easily meet this demand locally through modernisation and continued exploration. The country’s refining capabilities are currently underperforming and notoriously inefficient, due to lack of maintenance and underinvestment in technology.

Nigeria also struggles with ongoing vandalism of its oil and gas infrastructure. Pipeline insecurity has a devastating effect on oil production, with a staggering financial impact. Technology is a significant part of the solution to this challenge, as it enables real-time monitoring of infrastructure and quicker incident responses.

Port Harcourt refinery, for example, has capacity for 150,000 bpd of oil production but has been running at just 10 per cent capacity for the past three years. This is mainly due to its reliance on 1980s technology now regarded as obsolete in the global oil and gas sector.

The consequence is lack of preventative and reactive maintenance, inaccurate forecasts and allocations, and soaring energy costs. To boost productivity and returns, Nigeria’s energy operators should rapidly adopt and integrate digital technology that improves efficiencies and up skills staff.

Instead of being a threat to the workforce, digital technology redefines the role of the worker, and it has the potential to bridge the blue and white-collar worker, to create what is termed the ‘grey-collar’ worker. Humans and machines are therefore not competing for jobs, but working together to create a new type of talent, which is a vital component to sustained sector growth and maturity.

In the near future, Nigeria’s oil and gas operations will have real-time access to data at the click of a button, from any location on earth. This essentially connects a team of global experts collaborating in real-time to drive improvements in exploration and extraction, health & safety, pipeline security, distribution, refining and transportation of the finished products.

And with a potential $300billion added to the African economy by 2026 through the adoption of digitalisation, Africa’s largest economy will receive a significant portion of that figure to advance its burgeoning oil and gas market.

This in turn addresses the triple threat of unemployment, inequality and poverty – paving the way for a society where business success leads to socio-economic advancement, such as new business development and job creation, and essential new infrastructure projects that include schools, hospitals, transportation networks and housing.

To make this a reality, the Federal Government of Nigeria should include a robust digitalisation policy and supporting legislation in connection to its Economic and Recovery Growth Plan 2017-2020 (ERGP), which sets out the medium-term structural reforms to restore economic growth, invest in people and build a globally competitive economy.

One of its key priorities is to ensure power and petroleum product efficiency, which can only be achieved through a digital transition in the oil and gas sector.

Oil and gas operators in Nigeria should be early adopters of technology, their employees should be proactively trained in the application of the new technology, and the industry should be supported by an original equipment manufacturer (OEM) with proven global experience across the entire upstream, mid-stream and downstream value chain.

Tifase is the Chief Executive Officer, Siemens Nigeria, and a key player in the country’s push for investment and growth in the oil and gas sector

Source from allAfrica

14 Aug

Kenya: Focus Shifts to New Leaders On Proposed Coffee Sector Reforms

coffee

The elections are over. And the focus is now turning to incoming leaders and whether they will embrace reforms proposed by a team of experts to turn around the fortunes of the coffee sub-sector.

The proposals, which were on the way to being implemented, were stopped after the High Court declared them unlawful following opposition by the Council of Governors and a group of farmers.

Meru Governor Peter Munya, who was chairman of the Council of Governors at the time the case was filed, is among the leaders sent home in the polls. He lost to Mr Kiraitu Murungi of Jubilee.

The CoG had teamed up with New Farmers’ Association, contending that members of the task force did not involve all stakeholders when arriving at the resolutions.

“I am prepared to work with new governors in the 31 coffee growing areas, hoping that they will support the legal reforms we proposed,” Prof Joseph Kieyah, who chaired the task force, told Sunday Nation on Friday.

During the telephone interview, Prof Kieyah admitted that he found it difficult to work with some governors, adding that reforms cannot be successfully implemented without their support.

County governments play a major role in the agriculture sector, which is devolved, and farmers have been banking their hopes on the units to realise better returns for their harvests.

The proposed legal reforms were aimed at improving production for small-holder farmers and enabling them to access credit facilities.

They were also meant to make millers and marketing agents more accountable to farmers.

Restructuring co-operative societies, which growers use to market their coffee, is also part of the reforms.

Another proposal by the task force was to set aside Sh200 million to brand and promote Kenyan coffee locally and internationally.

Some governors were keen on supporting small-holder farmers in improving their production and remuneration.

In Nyeri, then Governor Nderitu Gachagua (deceased) had come up with an ambitious marketing programme for small-scale farmers where they were supposed to market their crop directly to overseas consumers.

But the initiative came a cropper, making producers incur heavy losses. Mr Gachagua pointed fingers at coffee cartels.

As a management official of Rumukia Co-operative Society in Mukurwe-ini sub-county, Mr Wanyaga Mutahi, explains, farmers have never recovered the losses that saw most societies incur huge debts.

 Source from allAfrica
10 Aug

20 shortlisted for finals of first Africa Architectural Awards

Africa Architecture Awards

The inaugural Africa Architecture Awards last month in Johannesburg, South Africa, shortlisted 20 projects in 32 countries for the finals.

The awards, founded by Saint-Gobain, attracted more than 500 entries, out of which 307 qualified.

Mr Evan Lockhart-Barker, the managing director of the Saint-Gobain Retail Business Development Initiative, said: “The Africa Architecture Awards have been established to highlight the continent’s innovative and collaborative style of solving problems – architectural or otherwise. In sub-Saharan Africa, Saint-Gobain provides a range of solutions and services tailored to local demand.

The 20 projects are divided into four categories: Built, Speculative, Emerging Voices and Critical Dialogue. The winner in each category will receive a trophy, while the overall winner will get $10,000 (Sh1,030,000).

They will be announced at a gala ceremony at the Zeitz Museum of Contemporary Art in Africa in Cape Town, South Africa, on September 28. The architects of the 20 projects will be flown to Cape Town by Saint-Gobain to attend the ceremony.

The following day a public colloquium titled “Celebrating Architecture in Africa” will be held at the Institute for Creative Arts at UCT Hiddingh Campus in Cape

Town to discuss the winning projects and explain why they were chosen.

The shortlist was chosen by a master jury comprising a pan-African panel of architects and industry experts including: Anna Abengowe (Nigeria), Guillaume Koffi (Côte d’Ivoire), Professor Edgar Pieterse (South Africa), Patti Anahory (Cape Verde), Professor Mark Olweny (Uganda), Tanzeem Razak (South Africa), and Phill Mashabane (South Africa).The shortlisted projects are:

BUILT

One Airport Square, Ghana, by MCA Architects
Thread: Artists’ Residency and Cultural Centre, Senegal, by Toshiko Mori Architect
Dakar Conference Centre, Senegal, by Tabanlioglu Architects
Umkhumbane Museum, SA by Choromanski Architects
Out of the Box Partnerships, Ethiopia, by Parallel Solutions

SPECULATIVE
Ecree, Ecowski Centre for Renewable Energy & Energy Efficiency, Cape Verde, by Fernando Mauricio Dos Santos
New Eye Sight Hospital, Republic of Congo, by Boogertman and Partners
Kigali Genocide Memorial, Rwanda, by Mass Design Group
The Territory Inbetween, South Africa, by Aissata Balde
Beyond Entropy, Angola, By Paula Nascimento

EMERGING VOICES
The Embassy of Mantanhas Eclectic Atlases, Cape Verde, by Stephanie Ryder, Graduate School of Architecture, University of Johannesburg
Architecture of Crisis: Windhoek Community Boreholes, by Elao Martin, Namibia University of Science and Technology
Re-think Makoko, Lagos, by Mohamed Waheed Fareed Abdelfatah, Helwan University, Egypt
The Monolith of Kasolo, DRC, by Federico Fauli, Architectural Association, School of Architecture, London.
The Exchange Consulate: Trading Passports for Hyper-Performative Economic Enclaves, South Africa, by Ogundare Olawale Israel

CRITICAL DIALOGUE 
Design Indaba, South Africa, by Interactive Africa
APSAIDAL by Ebano Wey Ekame Ikuga, Spain
Forum de Arquitectura, by Ceica, Angola
The Journey of Design and Critical Dialogue. Securing the Presence of Urban Livelihoods, by Richard Dobson, South Africa
Revolution Room, by Visual Arts Network, SA & Waza Arts Centre, DRC

In Summary

  • The inaugural Africa Architecture Awards held last month in Johannesburg, South Africa attracted more than 500 entries, out of which 307 qualified.
  • The 20 projects are divided into four categories: Built, Speculative, Emerging Voices and Critical Dialogue. The winner in each category will receive a trophy, while the overall winner will get $10,000 (Sh1,030,000).
  • The shortlist was chosen by a master jury comprising a pan-African panel of architects and industry experts.

Read more

08 Aug

Transforming Nigeria’s agricultural value chain

agriculture sector

Agriculture was the mainstay of  Nigeria’s economy before the discovery of crude oil. From 1960 to 1969, the sector accounted for an average of  57.0% of GDP, and generated 64.5% of export earnings. From 1970 to late 2000s, the sector’s contribution to GDP and export earnings steadily declined, because Nigeria’s focus shifted to petroleum exploration. Over the past five years, the Nigerian agriculture  sector has contributed an average of 23.5% to GDP, and generated 5.1% of export earnings.

Due to the recent fall in crude oil prices, export earnings from crude oil has reduced significantly. This has triggered conversations around the critical role agriculture has to play in diversifying the economy.

Increase in yield per hectare, and land expansion, are two factors which determine growth in agriculture. In Nigeria however, land expansion has been the primary driver of growth. Yield per hectare has been low, because of poor and limited farming inputs, such as seedlings, pesticides and fertilisers. Moving further down the value chain, processing and marketing activities have been plagued by poor infrastructure, low investment, and unfavourable government policies.

PwC’s Transforming Nigeria’s agricultural value chain report argues that Nigeria’s agriculture sector requires massive investments to increase production, and to create value addition across the most profitable segments of the value chain. In order to examine Nigeria’s agricultural value chain, the report focuses on cocoa and dairy as case studies. Also, it suggests strategies for upgrading the production and processing segments of the value chain.

According to the FAO, Nigeria is the sixth-largest producer of cocoa globally, with a production volume of 248,000 tonnes of cocoa beans. However, only 30% of the cocoa beans is processed, with the remaining exported. In 2014, processed cocoa generated US$144m. Based on an extensive review of the cocoa value chain, we identify significant scope to increase production by at least 70%, driven by an increased supply of improved seedlings, pesticides and fertilisers.

Cocoa processors are underutilised, as local buying agents (LBAs) and cooperatives prefer to sell cocoa beans to merchants, who offer a higher premium than processors. Introducing an appropriate tariff on cocoa beans exports to disincentivise LBAs and cooperatives from selling to merchants could be a policy for upgrading processing in the cocoa value chain. Dairy on the other hand is a major import for Nigeria. In 2016, it accounted for 6% of the total food import bill. With an estimated annual consumption of 1.7 million tonnes, Nigeria’s milk production is low at 0.6 million tonnes. To close this production deficit, a significant amount of foreign exchange is spent on the importation of milk. In recent years, an average of $480m has been spent on milk imports annually.

In dairy value chain, we have identified production as a key upgrade segment, and suggest breed improvement as a strategy to increase dairy production. Establishment of suitable grazing reserves, provision of extension services, setting up milk collection centres, improved access to pasture and water will also enhance dairy production. To promote import substitution in the dairy industry, a stronger integration between the pastoralists and processors should be encouraged.

This article is the executive summary of PwC’s Transforming Nigeria’s Agricultural Value Chain report.

Via HowWeMadeItInAfrica

08 Aug

Nigeria: Govt Announces 27 Industries to Enjoy Tax Break Under Pioneer Status (Full List)

The federal Nigerian government on Monday released the full list of the 27 key industries and products who will enjoy a tax break

The federal Nigerian government on Monday released the full list of the 27 key industries and products who will enjoy a tax break, being included in the revised list of ‘pioneer status’ incentives for prospective investors.

At the end of the meeting of the Executive Council of the Federation, FEC, last week, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, disclosed the approval given to the 27 industries.

Mr. Enelamah did not, however, list the 27 industries.

The Minister of Information and Culture, Lai Mohammed, later confirmed that the creative industry was among the 27.

Earlier, the trade and investment ministry announced the lifting of the administrative suspension on processing pioneer status incentives, PSI, applications for prospective investors in the country.

Some of the benefits of the pioneer status include tax relief, mainly for corporate income tax.

Here is the full list of the 27 industries to enjoy the pioneer status.

Mining and processing of coal;

Processing and preservation of meat/poultry and production of meat/poultry products;

Manufacture of starches and starch products;

Processing of cocoa;

Manufacture of animal feeds;

Tanning and dressing of Leather;

Manufacture of leather footwear, luggage and handbags;

Manufacture of household and personal hygiene paper products;

Manufacture of paints, vanishes and printing ink;

Manufacture of plastic products (builders’ plastic ware) and moulds;

Manufacture of batteries and accumulators;

Manufacture of steam generators;

Manufacture of railway locomotives, wagons and rolling stock;

Manufacture of metal-forming machinery and machine tools;

Manufacture of machinery for metallurgy;

Manufacture of machinery for food and beverage processing;

Manufacture of machinery for textile, apparel and leather production;

Manufacture of machinery for paper and paperboard production;

Manufacture of plastics and rubber machinery;

Waste treatment, disposal and material recovery;

E-commerce services;

Software development and publishing;

Motion picture, video and television programme production, distribution, exhibition and photography;

Music production, publishing and distribution;

Real estate investment vehicles under the Investments and Securities Act;

Mortgage backed securities under the Investments and Securities Act; and

Business process outsourcing

Via AllAfrica 

07 Aug

Invest in Nigerian agriculture from anywhere in the world

invest in the Nigerian agricultural sector, anywhere in the world.

Farmcrowdy is a Nigerian online platform which allows users (sponsors) to invest in the Nigerian agricultural sector, anywhere in the world.

Sponsors can choose what kind of farms (and crops) they want to invest in. Farmcrowdy then uses the investment to: secure land; engage and train the farmer in best agricultural practices; plant the seeds; insure the farmers and crops; complete the full farming cycle; sell the harvest; and then pay the farm sponsor a return on their investment. Sponsors are able to keep track of the full cycle through updates in text, pictures and videos.

Farmcrowdy founder, Onyeka Akumah, tells us about the risks facing the business and his most exciting entrepreneurial moment.

1. How did you finance your start-up?

We received seed funding from a Lagos-based investment house when we first launched in 2016. This was to get the idea to the market effectively. Following up on that we have also been selected as the only African start-up to participate in Techstars Atlanta this year. The funding from this programme has come in handy to get us to the next level.

2. If you were given US$1m to invest in your company now, where would it go?

3. What risks does your business face?

  • Biological risks which could cause pest and disease contamination. If our farms were exposed to biological risks, it would lead to lower yields and loss of income.
  • Currency fluctuation which can increase the cost of production, and in turn, affect the spending power of our farm sponsors.
  • Government policies which can influence (positively or negatively) our cost of operations and market access.
  • Civil unrest which could affect our farms and farmers
  • Supply-chain risk, including logistics and infrastructure, which could lead to food waste and create post-harvest losses.

4. So far, what has proven to be the most successful form of marketing?

Referrals from one sponsor to another, encouraging them to participate in the agricultural revolution sweeping Nigeria. This has been majorly championed by word-of-mouth testimonials about the success we have had with our farmers and the relationship with our farm sponsors.

5. Describe your most exciting entrepreneurial moment.

My most exciting entrepreneurial moment has been being able to build a company out of an idea that was just on some paper. Seeing this idea grow, employing people to work on it and make something meaningful, and creating value for people we call customers, has been thrilling. This has been the most exciting part of my journey – moving from idea to business, to employer of labour, to value for customers.

6. Tell us about your biggest mistake, and what you’ve learnt from it.

The biggest mistake has been hiring the wrong people in the early stage of the business and working with the wrong technology partners. This can have a devastating effect on the success or failure of your business, and over time I have had to make hard decisions and let people go.

Going forward, we are proud of our current team. We are proud of the passion they bring to change lives and the selfless will to change the world one farmer at a time. I consider myself one of the luckiest people in the world having smart people around me, looking to solve an ambitious but real problem.

[Source from HowWeMadeItInAfrica]

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