10 Nov

Exporting to Nigeria: Tips and insights

Nigeria is still, by a slim margin, the biggest economy in Africa, despite the economic woes of the past two years. A population of anything between 180 million to 200 million people makes its consumer market in particular of great interest to investors, manufacturers and exporters around the world. The country manufactures relatively few of the products it consumes and despite efforts to increase local industry, it remains largely import dependent.

However, despite the multitude of opportunities that Nigeria presents to exporters, getting a product into the market can be a challenging exercise.

Nigeria’s main port complex is in the commercial capital of Lagos, a city of an estimated 20 million people – a major market in itself – but also the shipping gateway for imports and exports for the whole nation.

The facility, comprising the Lagos Port Complex and Tin Can Island Port in the Apapa area of Lagos city, is one of the busiest in Africa. It is also by far the main portal for trade into and out of this large country, processing 97% of containers. The only other port of size, Onne, is focused on the oil and gas industry around Port Harcourt, and there are a few other, smaller, ports.

As a result, there is usually serious congestion at Lagos. The high volumes are just part of the problem. Other challenges include poor infrastructure, inadequate and often poorly functioning equipment, the demands of different agencies located there, onerous bureaucracy and general issues related to officialdom.

Clearance time in Lagos port is between seven and 14 days. Once clearance is complete, it takes, in a best-case scenario, 48 hours to get the product out of the port. However, this can take longer depending on other factors, as currently being experienced with the rebuilding of the access road to the port, and any problems in the manifest or other documents.

Having a competent cargo clearing and forwarding company is vital to navigate the process. Exporting to Nigeria requires detailed knowledge of requirements. A simple mistake in documentation or process can lead to cargo sitting in port for weeks or even months, with hefty demurrage charges.

It is important for an exporter to be on top of any changes in documentation and import requirements. Do not wait for the importer in Nigeria to alert you to what is needed; rather do your own homework.

Read more: Exporting to Nigeria

20 Oct

Investment: Silicon Valley Loses Out on Africa Startups

Silicon Valley is ignoring Africa’s startup scene, passing up an opportunity to invest in creating innovative technology-based businesses on the continent, according to TechCrunch Inc.

“Silicon Valley does not understand the context of Africa, so we see it as an opportunity to fill the gap,” Edward Desmond, chief operating officer at the Verizon Communications Inc. unit, said in an interview Wednesday in the Kenyan capital, Nairobi. “The outside world that is very powerful does not know the innovation and possibilities available.”

African startups raised an estimated $129 million in 2016, according to Disrupt Africa, an African startup information portal. China alone attracted $31 billion in venture capital last year, while the U.S. received $69.1 billion, according to KPMG International’s Venture Pulse report.

Desmond was in Kenya for TechCrunch Battlefield Africa, its first startup pitching event on the continent in the competition’s decade-long history. Competitions by the San Francisco-based technology media property company help early stage enterprises with exposure and to find financing from global investors.

“We are here to connect the money guys around the world with opportunities here,” Desmond said.

Companies that have participated, including Dropbox Inc., have gone on to raise $7 billion in funding since 2007, according to Desmond.

‘Endless Opportunities’

At TechCrunch’s Facebook Inc.-backed Africa event this week, 15 companies shortlisted from an initial 700 that sought funding were in the running for $25,000 prize money. The winner was Lori Systems, which also got the chance to compete at TechCrunch’s Disrupt SF in San Francisco next year.

Lori provides a technology platform that connects truck owners to customers needing haulage, much like Uber Inc.’s system links passengers with taxi drivers. Logistics and infrastructure development offer “endless” opportunities for startups, Desmond said.

Opportunities also lie in agriculture and fintech, sectors in which Village Capital has made 14 investments in sub-Saharan Africa, investing between $25,000 and $50,000 in either debt, equity or convertible debt, according to Adedana Ashebir, Africa regional manager at the Washington-based venture capital company.

Read more: Silicon Valley Loses Out on Africa Startups, TechCrunch Says

19 Oct

Shaping the investment attractiveness of Africa’s hotel sector

According to a United Nations population report, it is anticipated that by 2050, more than half of the world’s population growth will be in Africa. The African Development Bank (AfDB) anticipates that Africa’s middle class will reach 1.1 billion by 2060.

This rise of a substantial middle class across Africa brings at the same time an insatiable taste for modern infrastructure and consumption. The increase in consumer spending power from the younger, modern and more middle-class consumer, means a broad appetite for services from the entertainment, leisure and hospitality industry. With it will come the demand for the types of hotels that you may expect to find only in more developed economies such as the United States, Europe or Asia. Whether it is exquisite room, spa facilities, excellent cuisines – or meetings, wedding venues and other special events, Africa’s growing urban populations are pursuing places to entertain, work and socialise. But how are Africa’s private-equity hotel investors benefiting from the continent’s growing and evolving demographic?

Strong local demand

As the commodity price downturn continues to claim casualties across the continent, countries such as Zambia are benefiting from a combination of a growing tourism sector and rising urban population.

According to the United Nations World Populations Prospects, Zambia’s population is estimated to be over 17 million with an annual growth rate of 3.3%. Much of Zambia’s population is concentrated around Lusaka in the south and the Copperbelt Province in the northwest. With 44% of the population concentrated in a few urban areas, this marks Zambia one of the most urbanised countries in sub-Saharan Africa. The country offers competitive operational costs as well as a motivated English-speaking labour force, making it an attractive investment destination – particularly for private equity investors such as Quantum Global Group.

Through its US$500m investment vehicle which capitalises on emerging opportunities and prime assets in Africa’s hospitality sector, Quantum Global acquired the city landmark InterContinental Hotel Lusaka, which is situated at a prime location in Zambia’s capital.

Read more: Demographics are shaping the investment attractiveness of Africa’s hotel sector

18 Oct

Andela: Africa’s Engineering Talent With Global Technology Companies

Andela, the company that builds high-performing engineering teams with Africa’s most talented software developers, announced on Tuesday that the company has secured $40M in Series C funding. The investment was led by pan-African venture firm CRE Venture Capital with participation from DBL Partners, Amplo, Salesforce Ventures, and Africa-focused TLcom Capital. Existing investors, including Chan Zuckerberg Initiative, GV, and Spark Capital, also participated. The round, which marks one of the largest investments ever led by an African venture firm into an Africa-based company, brings Andela’s total venture funding to just over $80M.

Andela was launched in 2014 to combat the global technical talent shortage by investing in Africa’s most talented software developers. With an estimated 1.3M software jobs unfilled in 2016 in the U.S. alone, it’s clear that the growth of today’s major technology ecosystems is inhibited by a severe lack of talent. To solve this, Andela invests in high potential pools of brainpower across the African continent to help more than 100 partner companies build distributed engineering teams. These partners range from industry leaders like Viacom and Mastercard Labs to high-growth technology companies such as Gusto and GitHub.

With offices in Lagos, Nigeria; Nairobi, Kenya; and Kampala, Uganda; Andela has hired 500 developers to date — the top 0.7% of more than 70,000 applicants from across the continent. Selected developers spend six months in a rigorous on boarding program before being matched with one of Andela’s partner companies as full-time engineering team members. Beyond recruiting elite development talent, Andela is catalyzing the growth of tech ecosystems across the continent by open-sourcing its content and partnering with organizations including Google and Pluralsight to provide resources and mentorship to developers.

“Over the past three years, we’ve helped prove to the world that brilliance is evenly distributed. It’s now time to prove that our model of investing in extraordinary people isn’t just viable, but revolutionary,” says Jeremy Johnson, Co-Founder and CEO of Andela.

Read more: Andela Raises $40M To Connect Africa’s Engineering Talent With Global Technology Companies

18 Oct

Four trend-driven franchising opportunities in South Africa

The resilience and vitality of the franchising industry in South Africa is more apparent than ever, and increasingly becoming a notable asset to the country.

Jeremy Lang, regional general manager at Business Partners, says that the franchising sector continues to grow on all fronts, and is increasingly offering business opportunities for local entrepreneurs and enabling the creation of jobs – something that the country desperately requires as the economy continues to shed jobs.

He points to recent Franchise Association of South Africa’s (FASA’s) statistics which show that, in a year of low overall economic growth, the franchising sector’s share of the country’s GDP in 2017 is reported at R587bn (about US$44bn) and accounts for 13.3% – an increase from the 11.6% of GDP recorded in 2016. The number of outlets (franchisees) reportedly increased from 31,111 to 40,528, and the number of franchise groups (franchisors) also grew from 757 to 845 in 2017.

The sector now also employs 343,319 people – an increase of 14,074 jobs when compared to 2016.

While franchise businesses aren’t entirely immune to the struggles of the economy, Lang says that the sector’s apparent ability to shrug off the economic malaise can be linked to their ‘tried-and tested’ business approach. “The fact that a franchised business has a proven business model gives it a relative advantage over independent businesses which may still be finding their feet through trial and error.

“Similarly, while an independent business has to double down on marketing to draw in reluctant customers, franchised outlets have the added advantage of brand strength and market acceptance.”

He adds that the continued entry into South Africa of overseas franchise systems looking for global expansion, is also driving the sectors growth and creating opportunities for local franchisees.

Commenting on the Business Partners R150m ($11m) Brands and Franchise Fund, Lang says since the Fund’s launch in 2014 the company has noticed increased interest from local existing and aspiring entrepreneurs seeking to own and expand their franchises through finance and mentorship in order to capitalise on franchising’s remarkable ability to grow in tough market conditions.

Read more: Four trend-driven franchising opportunities in South Africa

 

11 Oct

Swedish firm moves Sh253bn Malindi power plan to Tanzania

A Swedish firm that wanted to construct Africa’s largest wind power plant in Malindi at a cost of Sh253 billion has relocated the investment to Tanzania, citing frustration by Kenyan authorities.

VR Holding AB had last year expressed interest in building a 600-megawatt (MW) wind farm in the Indian Ocean waters bordering Ras Ngomeni in Malindi, but Ministry of Energy officials turned down the request citing lack of a framework for renewable energy projects of that scale besides low demand for electricity in the country.

The firm’s executives said they have now switched their focus to Tanzania, which shares the Indian Ocean coastline.
“We have opted to look at offshore solutions for Tanzania,” Victoria Rikede, an executive at the company said.

“Kenya is proving to be a very difficult place and besides the grid is too weak to absorb all the power produced and therefore mini-grids is the solution for now,” she added.
Kenya, East Africa’s largest economy, has recently been losing mega investments to Tanzania, including a crude pipeline deal with Uganda.

Tuesday, Ministry of Energy officials reckoned that a huge power plant would leave the country with excess power that will only force consumers to pay billions of shillings annually for electricity not used.
This would dim the government’s quest to deliver cheaper power through renewable sources.

Documents seen by the Business Daily show that Kenyan authorities, upon receiving the application, had directed the Swedish company to construct a smaller capacity project. “The company was to give us a proposal for a smaller capacity plant of 50 megawatts. They are yet to do so,” said Isaac Kiva, the director of renewable energy at the ministry.
The Malindi offshore location was identified by the World Bank, according to the Swedish firm’s executives.

They put the cost of generating electricity from the offshore wind farm at €3.5 million (Sh423 million) per megawatt.

This means the 600 megawatt offshore wind park would cost a total of Sh253.8 billion, in what would be the single most expensive private-funded project in East Africa.

Read more: Swedish firm moves Sh253bn Malindi power plan to Tanzania

06 Oct

DHL and MallforAfrica team up to further cross-border e-commerce

World’s international express services provider DHL Express has announced its partnership with MallforAfrica, the award-winning global e-commerce company, which will facilitate selling of made-in-Africa products to customers in the United States.

Businesses can do so via the eBay platform powered by MallforAfrica. Through this partnership, DHL locations will serve as drop-off points for products destined for consumers in the United States. This will be the first time businesses in Africa can sell their locally manufactured products directly on eBay.

DHL Express currently handles inbound express delivery for MallforAfrica and has enabled its customers importing from the US to receive their packages seamlessly in Nigeria, Kenya, Rwanda and Ghana. This is a watershed partnership for African businesses as it allows them an avenue to trade on the global stage.

“We have been partners with DHL Express for many years and have tremendous trust in their ability to ship to our customers,” said Chris Folayan, CEO, MallforAfrica. “Both companies have a common goal of seeing African e-commerce businesses thrive on the global stage. We want to contribute to the future of e-commerce growth, African cross-border sales and most importantly, improve the lives of African artisanal arts, designs, crafts and more.”

MallforAfrica is Africa’s largest e-commerce enabler, providing Africans with a platform through which they can purchase items directly from over 200 international online retailers, such as Macy’s, eBay, Ralph Lauren, Net-a-Porter, Carters, GAP, and FarFetch – brands that, would otherwise be inaccessible to the African consumers.

By managing every aspect of the order and return cycle, the MallforAfrica app offers its customers a simple, secure and convenient solution to online shopping directly from the best brands in the world.

“We are proud to be playing a crucial role in connecting African artists with American customers through MallforAfrica,” said Randy Buday, Regional Director West and Central Africa, DHL Express. “We look forward to supporting local artisans across Africa sell into America.”

Read more: DHL and MallforAfrica team up to further cross-border e-commerce to the United States

06 Oct

Hyatt to double its Africa presence and open six hotels by 2020

Hyatt Hotels & Resorts announced on Tuesday that Hyatt expects to double the number of Hyatt hotels in Africa, with six new hotels expected to open by 2020. The developments are expected to see the Hyatt brand enter four new countries on the African continent and are expected to create approximately 2,100 new jobs once open.

East Africa is one of Hyatt’s primary focus areas in the near term, with the region benefiting from continued government investment in infrastructure, an expanding middle class and a growing international recognition of the region’s stability, all contributing to an 11% growth in Sub-Saharan African tourism in the past year alone. According to the UNWTO World Tourism Barometer, the first half of 2017 saw a 14% increase in international arrivals in East Africa over the same period in 2016, with intra-Africa travel up nearly 13% for the same period.

“The development opportunities for Hyatt in Africa are significant, and we see enormous potential in the region. This expansion reinforces our commitment to developing our pipeline in Africa,” said Peter Penev, Hyatt’s Vice President of Acquisitions and Development. “With the introduction of a Pan-African, visa-free passport next year alongside the continued improvement in the connectivity and growth of the region’s airlines, we expect tourist and business travel will only continue to increase. We look forward to working with our local developers and partners to further deliver on our ambitious plan to help grow the hotel industry in East Africa.”

Of Hyatt’s expected six new hotels, four are market entries: Hyatt Regency Algiers Airport, Algeria (late 2018); Hyatt Regency Douala, Cameroon (late 2020); Hyatt Regency Addis Ababa, Ethiopia (summer 2018) and Hyatt Centric Dakar, Senegal (summer 2018). In its established markets, Hyatt is expanding its footprint with Park Hyatt Marrakech, Morocco (early 2019) and Hyatt Regency Arusha, Tanzania (early 2019), each becoming the third Hyatt-branded hotel in each country, respectively. As part of a long-term plan to expand in Sub-Saharan Africa, Hyatt will continue to look for further opportunities across countries like Rwanda, Kenya, Uganda, Mozambique, Ghana and Côte d’Ivoire.

[Via] Hyatt to double its Africa presence and open six hotels by 2020

05 Oct

Comic Relief and Fairtrade back ethical gold mining in east Africa

Comic Relief and Fairtrade have joined forces with the Dutch government to back a $15m (£11m) scheme to support ethical gold mining in east Africa after a successful pilot project in Uganda.

About a fifth of the world’s gold produced every year comes from small-scale mines where millions of people work in hazardous conditions without access to modern technology. They resort to extracting and crushing ore by hand before using water and then highly toxic mercury or cyanide to separate the gold. The ad hoc process is not only harmful for the individuals involved, some of whom are children, but pollutes their local environment. It is also highly inefficient, on average extracting only 40% of the available gold.

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Fairtrade is working with specialist mining consultancy the Dragonfly Initiative in trying to raise up to $4m in investment by 2020 from specialist environmental and social investors, government bodies and big business to help small-scale artisanal mines. Half of the funds will be loans to support investment in better technology and the other half grants to support building the organisational change necessary.

“We are trying to generate a proof of concept which has the possibility to bring economic benefits to thousands of families. We also hope over time to increase supply of Fairtrade gold,” said David Finlay of Fairtrade. At present only about 400kg of the ethical precious metal is produced ever year.

“Miners want to improve standards but it is a real struggle. They want access to finance to acquire equipment and reduce reliance on mercury and enhance the recovery of gold. There will be both an economic and environmental benefit,” Finlay said.

Using a centrifuge device, which costs about $5,000, increased the extraction rate for gold to 70% in the Uganda trial. But introducing the machinery is only part of the answer alongside supporting miners to work in a more organised and safe way.

 

Read more: Comic Relief and Fairtrade back ethical gold mining in east Africa

05 Oct

For many African Businesses There Is a Brexit Upside

African economists and bankers expect more advantageous trade terms, possibly with both the UK and the European Union, after last year’s shock decision to leave.

“For the ordinary African, Brexit is pretty much irrelevant,” says Diane Karusisi, chief executive of Bank of Kigali in an interview with Euromoney Africa.

Diane Karusisi, Bank of Kigali But bankers and people in business across the continent have been thinking hard about Brexit in the year or so since the referendum and while they may disagree over what form Brexit is likely to take, many expect the UK’s split from the European Union to create business opportunities. Once Britain leaves the union, it will have no trade agreements either with individual African countries or with regional African blocs, as British trade had been governed by EU law. That gives Africa an opportunity to renegotiate the terms of its partnership with the UK.

Brexit may also, some say, embolden Africa to negotiate fairer trade terms with what remains of the EU. Criticism Trade terms struck between Africa and foreign parties, including Europe, have come in for criticism. Hippolyte Fofack, chief economist at Afreximbank, says he is no fan of the Economic Partnership Agreements (EPAs) that the EU wants to sign with regional groups in Africa. “The moment Brexit happened, I felt that actually it would provide an entry point to renegotiate the EPAs,” he says.

The EPAs require both parties to open their markets: while this may benefit African economies to some extent, European exporters are likely to be the biggest winners as they could stifle or crush young industries on the continent. The EU has already signed such a deal with six countries of the Southern African Development Community; another, with the East African Community, is in the doldrums. Many in Africa hope that countries in the region will be able to strike new, more advantageous deals after the clean slate for trade terms with the UK and an EU weakened by the loss of one of its largest economies.

Read more: African Businesses See Brexit Upside