Income Archives - African Financial & Economic Data

29 Aug

Is the African mining sector becoming uninvestable?

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

How to realistically start a business in Africa with little or no capital

The last decade has seen a tremendous rise in the number of young Africans venturing into business. Although that can be attributed to several factors, advancements in areas such as information and technology have certainly played a major role.

The internet has helped facilitate for an easier execution of tasks which were highly complicated not too long ago. For instance, anyone today can start an online business without any coding expertise or having to hire expensive developers; such a task can be easily accomplished using platforms like WordPress and Shopify.

Marketing campaigns of all magnitudes can be carried out by a non-marketer through social media. Accounting tasks can be performed by a non-accountant through Quickbooks. Information regarding anything can be quickly pulled up using a smartphone and some connectivity.

The challenges that many entrepreneurs are struggling to cope with are often money-related.

Starting a business may actually be the easy part, but how do you scale it? Let us look at a few strategies that you can adopt when starting a business in Africa with little or no capital.

Form strategic alliances

“Every mind needs friendly contact with other minds, for food of expansion and growth.” – Napoleon Hill, The Master Key to Riches.

A strategic alliance is a fundamental element that must be in place before any business can experience exponential growth. There’s only so far that one can go single-handedly. Strategic alliances may comprise of partners, mentors, advisors, skilled employees – essentially anyone whose association can potentially help the business achieve its objectives.

When starting a business in Africa with little or no money, you absolutely need the association of other people to help you grow. Strategic alliances create pools which are comprised of skills, knowledge and the experience of all the minds in the team. With such in place, you may have little reason to outsource work or seek external capital.

A mentor can serve the purpose of a paid consultant. A business partner can help with the internal operations. Another partner can help with marketing. And as the business scales, so do their perks and benefits.

Focus on bootstrapping

The idea of bootstrapping has always been a hot topic in the start-up world, but the concept is applicable to most businesses. What it means is essentially growing a company by only using its internal team and resources.

That means leveraging the skills of each team member instead of hiring, using personal savings as capital instead of seeking a loan, working from home instead of renting an office, etc.

Bootstrapping calls for entrepreneurs to make sacrifices until the company is stable and can afford to stand on its own feet. For instance, they may have to sell their personal belongings to raise money, do the door-to-door sales themselves, endure sleepless nights working, etc.

The idea is to do whatever it takes to get the venture up and running at a budget. Entrepreneurs that use this strategy to scale their operations may in the long run avoid having liabilities such as bank loans or investors that dictate every move.

If bootstrapping is no longer practical

The people closest to us in many cases would like to see us prosper. Some of them would not even mind chipping in if they know that it’s for a good cause. Asking friends and family for money is a daunting prospect for most people, but they are nonetheless a viable source of capital.

Many people fail at raising money from friends and family due to failure from their part in presenting well-defined proposals and business plans, including how they intend to repay their money. They usually present in a casual and informal manner – but that hardly does justice reflecting the seriousness of the matter.

You are more likely to win over the confidence and trust of your friends and family by presenting to them as you would to an actual investor.

Take advantage of free advertising and marketing

Many start-ups in Africa have failed to gain traction due to inadequate marketing budgets. Although marketing expenses are usually one of the highest, there are a number of ways to generate a buzz for without having to break bank.

Platforms like Google and Yahoo often give free ‘trial’ credit to new businesses. And what’s the catch? You just have to sign up to their marketing programmes. For instance, LinkedIn gives users US$50 advertising credit for signing up to ‘LinkedIn Marketing Solutions’.

Google Adwords gives $100 credit after signing up and spending $25, and so does Bing Ads and Yahoo Gemini. Perfect Audience gives $100 dollars just for signing up. That is almost $500 dollars in free advertising credit to help get you up and running.

Another avenue that can be used to advertise inexpensively is social media. From a marketing perspective, social media can represent a gathering of a company’s prospective customers in one convenient location. It really couldn’t get better than that.

Entrepreneurs can leverage social media to get their word out by building highly-targeted followings on platforms such as Facebook and Twitter, and then inducing their marketing messages directly to them.

Even paid social media campaigns often provide a better ROI than campaigns through other mediums. With a budget of $5 per day, Facebook can show an advertisement to an audience of up to 1,000 highly-targeted people.

We are fortunate to be living in an era that is so fertile for nurturing a small business in Africa. But here’s the thing; the easier it gets, the easier it will be for more people to board the bandwagon. That means competition can only get tighter every day. You are better of focusing on working things out using what you have and gaining an early advantage, rather than sitting back and making excuses for your shortcomings.

Emmanuel Soroba is the founder and CEO of FiveSok, editor-in-chief of GrowthStrategies101 and a growth hacker for start-ups and SMEs.

via how we made it in Africa

29 Aug

Africa: A Brief Guide to the Continental Free Trade Agreement

What is the Continental Free Trade Agreement?

The Continental Free Trade Agreement(CFTA) is an Africa-wide free trade agreement (FTA) designed to boost intra-African trade and pave the way for the future establishment of a continental customs union. The CFTA builds on existing Tripartite FTA negotiations amongst three African regional economic communities (RECs): the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africsa (COMESA) and the East African Community (EAC), although it would like to incorporate all other African RECs too.

The decision to establish the CFTA was adopted as early as 2012 by the heads of state at the 18th ordinary session of the African Union (AU), and negotiations officially begun in June 2015. In bringing together all 54 African countries with a combined GDP of more than US$3,4 trillion, the CFTA is an ambitious project that will connect more than one billion people to a variety of cross-continental goods and services through enhanced trade facilitation and greater movement of people and investments.

Why do we need it?

The CFTA stems, in part, from the realisation that regional integration is stultified and not equitably pursued amongst all African regional economic communities (RECs), and that intra-African trade is at critically low levels compared to African trade with outside partners.

The CFTA will address seven priority areas related to trade: policy, infrastructure, finance, information, market integration, boosting productivity and trade facilitation. For the CFTA to be successful there is great need to address a variety of inter-linked challenges, some of which are critical for enhanced intra-Africa trade: diversification of the export base, reducing reliance on raw commodities and enhancing regional integration that would facilitate greater movements of goods, services, people and investment.

Statistics show there is greater need to enhance intra-African trade because African export markets are already diversified and sophisticated – in comparison, greater intra-African trade will afford African countries with a broader market for their manufactured goods. For example, in 2015, African-manufactured goods accounted for 43% of intra-African exports, compared to 19% of exports to external markets.

Similarly, projections by the United Nations Economic Commission for Africa shows that the CFTA has the potential to boost intra-African trade by 52% between 2010 and 2022, while trade in industrial goods will receive the largest boost, increasing by an additional 53% for the same period. Therefore, the CFTA’s role in improving intra-African trade levels will be important for enhanced continental growth, particularly as it will facilitate market access for COMESA, SADC and EAC countries to Central and Western African states.

The CFTA also has an Action Plan on Boosting Intra-African Trade (BIAT), which underscores a framework for regional development, with a particular focus on doubling intra-Africa trade flows between January 2012 and January 2022. The Action Plan is endorsed by the African Union, and implementation of its various programmes will work towards addressing the key constraints hindering intra-African trade, together with promoting sustainable economic development.

In order to achieve deepened African market integration the plan is divided into seven clusters related to trade: productive capacities, infrastructure, finance, market integration, and trade facilitation, information and policies.

Potential challenges

Regional integration and a continental FTA is an ambitious agenda. In order to be successful, there are a number of potential challenges that will have to be addressed. As it stands, the CFTA is designed to address specific bottlenecks that include streamlining countries’ regional memberships – for example, many countries are partied to more than one REC, which allows them to cherry-pick their commitments. Resolving overlapping memberships will go towards expediting regional and continental integration.

Similarly, in order for Africa to become a larger player in international trade, the CFTA will also have to improve the flow of goods and services, together with improving productivity levels, market access and incorporating marginalised members of society.

The CFTA’s success will also depend on how successfully RECs are able to streamline their respective FTAs to be aligned with a future CFTA. One of the essential goals for the CFTA will be to capitalise on previously failed opportunities at regional integration, trade facilitation and similar issues that have been plaguing the African continent at large by providing tangible progress on these fronts. Synergies between bilateral trade and regional trade agreements and the CFTA are essential if regional and continental integration is to have long-term impacts.

The CFTA also needs buy-in from all AU member states, including its smaller and less developed economies. Any implemented agreement has to take into account the needs of both its smaller members and its economic powerhouses: smaller countries need to feel ownership over the CFTA that reflects their interests.

Harmonisation, coordination and trade liberalisation can only work if the CFTA caters for the needs of all AU members and their differences.

In order for the CFTA to have long-lasting impact, capacity building, understanding country-specific realities and implementing plans that encompass a wide array of viewpoints and levels of development and addresses a variety of challenges will be essential.

Lastly, although the CFTA represents a trade-driven agenda, there is a need to address current trends such as the fourth industrial revolution and the digital economy in ways that meaningfully contribute to Africa’s own continental growth. This will help ensure that the CFTA is current and able to address 21st century global developments and challenges.

The CFTA should also have a human-rights based agenda within the free movement of labour paradigm, labour laws and ensure the protection of migrant labourers, particularly in light of growing anti-migration sentiments at a global level.

State of play: where are we now?

As it stands, the CFTA negotiations are set to be finalised this year.

At the second round of CTFA negotiations in May 2016, AU members approved procedural rules governing the CFTA negotiating institutions, while the third round of talks (held in October 2016) focused on the draft modalities for CFTA negotiations on trade in goods and services.

Since February 2017, meetings have commenced with the Technical Working Groups to provide experts with an understanding/overview of the draft text that will be used in further negotiations.

As of March 2017, the CFTA negotiating forum has held five meetings towards finalising the various draft modalities for negotiations, and the end goal is to have the CFTA implemented in October 2017. An ambitious agenda indeed!

Source from allAfrica

22 Aug

Nigeria: Government Joins 71 Countries to Combat Tax Evasion

Lagos — Nigeria has joined 71 other countries to combat tax evasion as the Federal Inland Revenue Service has signed two major multilateral instruments.

These instruments are the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) and the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement‎ (CRS MCAA).

Chairman, Mr. Tunde Fowler, Executive Fowler signed the agreements on behalf of Nigeria in Paris, with Mr. Ben Dickinson, head of global relations and development division of the Organisation for Economic Cooperation and Development (OECD), in attendance.

A statement issued by Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration (CTPA), said the signing of the agreements makes Nigeria the 71st jurisdiction to sign the MLI and the 94th jurisdiction to join the CRS MCAA.

The agreements will give Nigeria automatic exchange of tax and financial information among 101 tax jurisdictions and enhance the country’s ability and those of the other countries to contain tax avoidance and evasion as well as share financial data.

The MLI is a legal instrument designed to prevent Base Erosion and Profit Shifting (BEPS) by multinational enterprises. It allows jurisdictions to transpose results from the OECD/G20 BEPS Project, including minimum standards to implement in tax treaties to prevent treaty abuse and “treaty shopping”, into their existing networks of bilateral tax treaties in a quick and efficient manner.

The text of the MLI, the explanatory statement and background information are available on OECD website along with the list of the 71 jurisdictions participating in the MLI and the position of each signatory under the MLI.

The CRS MCAA is a multilateral competent authority agreement based on Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which aims to implement the automatic exchange of financial account information pursuant to the OECD/G20 Common Reporting Standard (CRS) and to deliver the automatic exchange of CRS information between 101 jurisdictions by 2018.

The text of the CRS MCAA, background information and the list of the 94 signatories are available on OECD website. Saint-Amans explained that the agreements will provide “automatic exchange of tax and financial information among 101 tax jurisdictions and enhance the ability of countries to contain tax avoidance and evasion.

It would be recalled that Fowler has said with the introduction of Voluntary Assets and Income Declaration Scheme (VAIDS), no Nigerian can evade tax payment.

According to him, the board has received positive response so far on the scheme. To improve tax compliance, the Federal Government said tax offenders stand to enjoy 29 per cent waiver on overdue taxes if they take advantage of VAIDS. The VAIDS programme is aimed at reducing tax payers’ liability and creates more awareness on the statutory function of every working citizen to pay tax.

The scheme which started July 1, offers a window for those who, before now, have not complied with extant tax regulations to remedy their positions by providing them limited amnesty to enable voluntary declaration and payment of liabilities.

source from allAfrica

07 Aug

South Africa’s unemployment stays at 14-year high in second quarter

South Africa’s unemployment rate stayed at a 14-year high in the second quarter, with the statistics agency saying on Monday the country was in a “precarious position” of not creating enough jobs to make a dent in poverty.

The unemployment rate remained unchanged at 27.7 percent of the labour force in the second three months of this year, with the absolute number of unemployed down slightly to 6.177 million from 6.214 million, data from the statistics office showed.

Africa’s most industrialised economy has sunk into recession and had its credit rating downgraded to junk by two of the three main credit rating agencies. In July Stats SA said nearly a fourth of all households are in poverty.

Statistician General Pali Lehohla said the real economy, which includes mining and manufacturing, was not creating enough employment.

“We are in a very precarious position as South Africa in as far as exiting poverty. The type of strategy that can make us exit poverty is when people are working,” Lehohla said.

“This kind of poverty cannot be resolved by social grants and the like. That type pf poverty is solved if people are doing work and being productive,” Lehohla said.

Although South Africa’s economy contracted for a second successive quarter in March, economists expect positive growth in 2017, but warn that political turmoil and regulatory uncertainty will continue to hamper investor sentiment.

Chief economist for Africa at Standard Charted, Razia Khan, said agriculture and mining were the only sectors that grew meaningfully in the first quarter of this year but actually experienced job losses in the second quarter.

“With a significant uplift to growth performance unlikely to be on the horizon just yet, there is little to suggest a meaningful pick-up in job creation for some time,” she said.

The rand shrugged off the unemployment print, with market focus on the no-confidence motion against President Jacob Zuma on Tuesday. As of 0825 GMT, the rand was trading at 13.4025 per dollar, 0.13 percent firmer than its close on Friday.

Zuma faces a no-confidence vote in parliament on Tuesday brought by opposition parties. The ruling African National Congress says its members would rally behind Zuma and vote against the motion.

Additional reporting by Olivia Kumwenda-Mtambo, Editing by James Macharia and Angus MacSwan

Article from CNBCAfrica

07 Aug

SA facing a skilled-worker ‘brain drain’ as 7% of whites have emigrated since 2002

South Africa is facing a skilled-worker ‘brain drain’ as 7% of whites have emigrated since 2002.

Figures published in BizNews have highlighted South Africa’s overall population growth since 2002, and life expectancy has risen to 64 (up from 53) in that time.

The rollout of free antiretroviral treatments for HIV and AIDS patients has made a huge difference to SA’s health landscape, and the country is now home to more than 56m citizens; it’s highest ever total.

However, as the population rises, there is a hole right in the middle of that data – the white population is somewhat shrinking, as the calls to find ‘a home from home’ have grown ever stronger and convinced more to leave.

How many whites live in South Africa?

The net emigration of Whites is estimated at 327,000, or about 7% of the population. This has left the number of Whites in 2017, of 4.49m, down by -62,000 in the last 15 years.

In contrast, there has been a 10.18m increase in the Black African population, to 45.11m at present and a 1.05m increase in the Coloured population, up to 4.96m, in mid-2017.

South Africa is facing a skilled-worker ‘brain drain’

The research was carried out by Econometrix’s chief economist Azar Jammine: He feels that the whites leaving the country are able to do so because their skill sets are attractive to lucrative foreign businesses:

“There is an argument for being very concerned about the decline in the population of Whites due to emigration. Many of those who emigrate are drawn presumably from the most highly skilled sections of society and their departure from the workspace is likely to impact negatively on the capacity of the economy to grow at a faster rate.”

“It is debatable whether the inflow of skilled persons from the rest of the African continent is sufficient to counteract the outflow of skills from large-scale emigration of Whites.”

South Africans working abroad

The growth rate in the population of persons between the ages of 15 and 34 has fallen from 2.48% to just 0.18% over this period. With education standards languishing, current figures suggest we will have less people available to adequately carry out the services SA needs to function

07 Aug

Flutterwave raises $10 million to build underlying unified payments infrastructure for African businesses

Flutterwave, the payment company founded by Iyinoluwa Aboyeji, has just raised over $10 million in a series A funding round. Flutterwave is building underlying unified payments infrastructure for African businesses to accept card, mobile money, and bank account payments. In a year of operation, Flutterwave has garnered 10 banking partners across Africa and processed over 14 million transactions worth $1.5 billion in the last 12 months.

Greycroft Partners and Green Visor have led a Series A funding round of over $10 million in Flutterwave. They will be investing alongside existing investors like Y Combinator and new investors like Glynn Capital. The new capital will be used to hire more talent, build out our global operations and fuel rapid expansion of our organization across Africa.

Over a year ago today, Flutterwave was founded to build underlying payments infrastructure for African businesses to accept card, mobile money, and bank account payments in a single place. Without this payments infrastructure it was impossible for African businesses to scale acceptance of digital payments.

Today, the results of our work in enabling rapid growth for African businesses speak for themselves; $1.2 billion in payments processed. Over 10 million transactions. 10 Bank Partners across Africa. All in just a little over a year of operations. Together with you — our community, our investors, our customers, our supporters, our partners and our family — we have built one of the fastest growing payments companies of all time. From Africa.

For a normal company, now would be the time to rest on our laurels, pursue trends and focus on milking our value chain for easy profit. Fortunately, we are not that kind of company. Africa needs us to keep doing the hard things.

The next chapter for us at Flutterwave is building a global payments technology company that changes how the world does business with Africa. This is why we have partnered with Greycroft, Green Visor, Glynn Capital and Y Combinator — the same teams that helped fund and build global payments giants like Braintree, Stripe, Xoom, Square and Visa.

At Flutterwave, we believe that as software eats the world, the digital economy will increasingly become the new global economy. On the internet, anyone can build a global business from anywhere. Yet, for Africans doing business in the digital economy, it is so much harder than it needs to be.

Only about three percent of adults in Africa report having a credit card. Global technology companies like Facebook, Google and Amazon can’t do business across Africa because they are unable to accept more popular local payment methods like bank accounts and mobile money. Only 4% of African businesses accept digital payments. Without global payments infrastructure a business in Kibera, Nairobi cannot scale across Africa and around the world.

Flutterwave’s global payments solutions will make it easier for Africans to participate in the digital economy so you can make and accept payments for whatever you want, in whatever currency or payment method you want, across the globe. If we are successful, we might just inspire a new generation of Africans to flip the question from “what more can the world do for Africa?” to “what more can Africa do for the world?”.

I will end with the words of Dr Kwame Nkrumah, a Pan-African hero who greatly inspires us at Flutterwave.

“Divided, we are weak. United, Africa could be the greatest force for good in the world.”

02 Aug

South Africa Should Consider Help From the IMF to Fix Its Economy

The prognosis that the South African economy is in dire straits is pretty obvious even to the untrained eye. The solution to the country’s present predicament is also pretty much understood. The International Monetary Fund (IMF) has recently produced a comprehensive view which deserves to be considered.

The IMF identifies three key ailments as causes of the country’s anaemic economic growth. These are low consumer and investor confidence and policy uncertainty.

Continued slow growth should be a matter of grave concern and ought to be treated as an emergency.

Thus far the short and medium term outlook suggests that growth outcomes will continue to be pedestrian. What is even more worrying is that over the past four years global economic growth has gained momentum, suggesting that the solution to South Africa’s vanishing growth lies in the country.

The new minister of finance, Malusi Gigaba, recently hinted that South Africa may be compelled to seek assistance from the IMF. I think the conditions are right for serious consideration of the proposal even though IMF programmes are not very popular with politicians.

There are a number of reasons for this. Requests for IMF assistance suggest that those who manage the domestic economy have failed. The fund’s programmes also come with clearly defined milestones, often described as “conditionalities”. But in most instances, these are well-intentioned and aimed at success.

It’s better to enter an IMF programme early before the situation becomes frantic. As medical doctors might argue, it is easier to deal with an ailment in the earlier stages before it reaches an advanced stage.

Desperate situation

The alternative to asking for help now would be continued poor growth outcomes which would have serious social and economic costs.

The country’s poor economic growth record spawned a number of problems.

A shrinking economy means tax revenue shortfalls. The fiscal policy response would be higher taxes or bigger budget deficits.

And then again, interest payments, the fastest growing government expenditure item, would grow even faster. Already, about 11 cents out of every rand goes into servicing public debt.

As the economy shrinks, more and more income would have to be spent on interest payments. Government’s ability to provide a social safety net in the form of social grants and other services, like education and health care, would be much more constrained. The service delivery protests that have become increasingly the norm would become even more widespread as the fiscus comes under serious strain.

Ultimately, the brigade of the unemployed would bear the brunt. Of course, the employed would also suffer because slow growth affects incomes.

Low and anaemic growth dries out consumer confidence. Job losses and subdued growth in incomes as a result of poor growth outcomes and prospects chips away at consumer confidence.

South Africa’s growth performance post 2008 has been very low. Over the past 10 years, the economy recorded an average of 2% growth per year. If this continues it will take more than 30 years to double average incomes in South Africa.

But if the country can increase growth to 5% as projected by the National Development Plan, it would take only 14 years to double average income. The higher the growth rate the shorter the time required to double incomes and bring people out of poverty.

[source from allAfrica]

17 Mar

Orange launches its brand in Burkina Faso and strengthens its positions in West Africa

Orange will pursue its development in mobile financial services and 3.75G mobile Internet, where it was the first operator to launch and is today the uncontested leader in Burkina Faso

Orange (www.Orange.com), one of the world’s leading telecommunications operators, announces today the launch of its brand in Burkina Faso. Less than one year after the closing of the Group’s acquisition of Airtel, together with Orange Côte d’Ivoire, this announcement clearly demonstrates Orange’s ambitions for the West African market.

Orange will pursue its development in mobile financial services and 3.75G mobile Internet, where it was the first operator to launch and is today the uncontested leader in Burkina Faso. Its Orange Money solution for international transfers will be further expanded in the West African Economic and Monetary Union (UEMOA). The expansion of its optical fibre network will contribute to increasing its brand awareness as the leading provider of Internet access and connectivity to enterprises. Thanks to an ambitious network modernization plan and the strength of its parent company’s innovation capability, Orange Burkina Faso will bring an incomparable customer experience to its 6.3 million subscribers.

Bruno Mettling, Deputy Chief Executive Officer of the Orange group and Chairman and CEO of Orange MEA (Middle East and Africa), commented: “It is a great honour for the Orange group to inaugurate its presence in Burkina Faso at a time when the country is resolutely engaged in a vast economic development programme. The arrival of the Orange brand testifies to our commitment to providing the benefits of the digital ecosystem to the entire population of Burkina Faso.”

Ben Cheick Haidara, CEO of Orange in Burkina Faso, added: “Today, customers in Burkina Faso are more demanding and the way they use digital services has evolved; we are at a decisive turning point in the development of the telecoms market. Our ambition is to continue the work accomplished in recent years in the mobile money and mobile Internet fields to make Orange the leading partner for Burkina Faso’s digital transformation.”

The launch of the Orange brand in these countries is also an opportunity to welcome the men and women of Orange Burkina Faso and underline their accomplishments in their daily work to offer an incomparable customer experience.

Orange is present in 21 countries in Africa and the Middle East, where it has more than 120 million customers. With 5.2 billion euros in revenues in 2016 (12% of the total), this region is a strategic priority for the Group. Orange Money, its flagship offer for money transfers and mobile financial services is currently available in 17 countries and has more than 30 million customers.

Distributed by APO on behalf of Orange.

17 Mar

Infomineo reveals rising global interest in the Middle East Africa region from Fortune 500 companies

Overall, there was a 17% increase in the number of companies in MEA in 2016 compared to 2015, with Johannesburg being the leading destination for Africa

The Middle East Africa (MEA) region has become increasingly important for the majority of global Fortune 500 countries, according to a new report released by Infomineo (www.Infomineo.com), a global business research company specialising in Africa and the Middle East.

The report focuses on multinationals looking at entering, or already present, in the Middle East and Africa region. Overall, there was a 17% increase in the number of companies in MEA in 2016 compared to 2015, with Johannesburg being the leading destination for Africa.

The Infomineo analysis includes the regional footprint of multinationals in the MEA region, the most commonly chosen cities, and the factors which influence the selection of the region, country and city – each element revealing the dynamic growth patterns within the region and a clear trend of Fortune 500 companies establishing some kind of presence in MEA.

In 2016, 196 Fortune 500 companies had established a dedicated regional headquarters in the MEA region. In the Middle-East, Dubai is the most popular choice with 138 companies establishing a dedicated entity in the city. There has also been a marked uptick in companies deciding to cover MEA from outside of the region – 38 companies up from 22 have established a regional headquarters in areas such as London, Brussels and Paris. The leading destinations on the Fortune 500 list include Dubai, Johannesburg, Casablanca, Nairobi, Lagos, and Cairo. Egypt remains behind the leaders due to political instability, however, it has seen a 250% increase in Fortune 500 investment since 2015. Germany and France are leading in terms of coverage rate while China has the lowest presence in the region.

Industry type plays a pivotal role in the selection of city and country. Financial services are more likely to base MEA coverage from London, while technology companies are more inclined towards Casablanca or Lagos. The latter city is also the premier location for organisations looking to manage their operations across Western Africa with 12 Fortune 500 companies already established in the region. Automotive and Healthcare tend to have a presence in both Africa and the Middle East, while Technology is more inclined to having a presence from the outside.

Nairobi, in Kenya, is the leading destination for the FMCG companies and tends to be the top choice for organisations looking to service Eastern Africa. Dubai and Johannesburg are the most popular hubs overall, but both Casablanca and Nairobi are rapidly gaining traction and international awareness. Casablanca has the highest growth rate overall, while Dubai has the highest count. The same can be said for London, which has tripled its number of regional HQs in the region, acting as an MEA hub. Given the geographical proximity and the talent pool present in the city, it could be that London is playing the role of a first step into the MEA region, especially for Japanese and North American companies.

There are numerous factors which impact on the organisation’s selection of a specific city. These include the local market potential, maturity of the industry, existing competitors, political stability and the quality of the employment market, among others. Determining the attractiveness of a location along these clear lines assures the Fortune 500 companies of a stable and profitable investment and significantly mitigates risk. The most attractive cities are Dubai, Johannesburg, Casablanca and Nairobi, and at the lower end of the spectrum, Cairo, Paris, Algiers and Cape Town.

Through this analysis, organisations gain a thorough understanding of markets and factors which ensure a steady base of operations from which organisations can expand into the growing MEA market, and establish brand and identity within the growing middle classes. Infomineo has undertaken in-depth analysis and research on the MEA region, revealing the various factors inhibiting or inspiring Fortune 500 uptake. Further data on the analysis can be found here.

Distributed by APO on behalf of Infomineo.