27 Nov

South African Rand, Brazil Pension Saga Top Emerging-Market Bill

Emerging-market investors can almost always count on South Africa to keep them on their toes these days.

Rand-denominated bonds will trade Monday for the first time since S&P Global Ratings lowered the country’s local-currency debt to junk last week. Elsewhere in emerging markets, Brazil’s government is seeking to drum up support for the pension overhaul, Mexico will nominate a new central bank governor and India will release third-quarter economic data.

South Korea and Israel head a list of central banks setting interest rates. Policy makers in Angola, Ghana, Kazakhstan and Mauritius are also due to hold meetings.

South Africa  

Domestic bonds and the rand, among the worst performers in emerging markets this year, are likely to decline on Monday after S&P cut the nation’s local-currency debt to junk and Moody’s Investors Service warned it may do the same.

The yield on South Africa’s rand-denominated bonds due December 2026 has risen almost 80 basis points this quarter, the most since the three months ended December 2015.

India

Third-quarter economic data will show how quickly India recovered from a slowdown caused by a partial cash ban late last year. Gross domestic product increased 6.5 percent year-on-year, according to a Bloomberg survey of economists and analysts, from 5.7 percent in the three months through June.

Mexico

Investors will keep a close eye on who will be nominated as central bank governor as Augustin Carstens prepares to leave at the end of the month. The median forecast of economists surveyed by Bloomberg is for the benchmark interest rate to remain unchanged at 76 percent until the second quarter of 2018. But traders on Thursday increased bets on a rate hike after Mexico’s inflation unexpectedly climbed in the first half of November.

To read the full article, click here.

24 Nov

Global Chocolate Binge Has Olam Predicting Smaller Cocoa Surplus

The world just can’t get enough chocolate.

With “tremendous” demand in emerging markets looking set to continue this season, the world’s third-largest cocoa processor is projecting a sharply smaller global surplus. Excess cocoa supplies that reached a record last season will probably drop to about 50,000 metric tons, said Gerry Manley, head of cocoa at Olam International Ltd.

Demand has picked up in Asia particularly, where countries including the Philippines, Indonesia, India and China are consuming more cocoa powder used in products like cookies and ice-cream, Manley said. And while West African growers may reap a second year of bumper crops, top producer Ivory Coast is unlikely to repeat last season’s record harvest.

“We are very positive on demand,” Manley said in an interview at the company’s London offices Thursday. “We are seeing good demand for cocoa powder across the world, but mainly emerging markets are in a leading position there.”

Benchmark cocoa futures traded in London tumbled 23 percent last year, the biggest decline since 2011, as output climbed to a record in Ivory Coast, while Ghana, the No. 2 grower, also reaped a big crop. The large African harvests helped push the global surplus to 371,000 tons, according to estimates from the Abidjan-based International Cocoa Organisation.

This season, global cocoa processing will probably rise by more than 3 percent, Manley said, adding that the forecast is conservative. Processing exceeded 5 percent growth in 2016-17. About 8,000 new products were launched in the confectionery market last year, Manley said.

Lower costs are boosting demand, with the global chocolate confectionery market expanding 2.3 percent in the three months to June and 2.2 percent the following quarter, the world’s top cocoa processor Barry Callebaut AG said earlier this month, citing data from analytics firm Nielsen. The rebound came after at least six consecutive quarters of contractions.

Underestimating Growth

Changing consumer habits mean some traders may be underestimating growth. Trends including online shopping as well as the rise of artisan shops and bakeries are often missed by traditional data sources, Manley said.

Global cocoa powder demand is forecast to grow at 5 percent and Olam is looking to capitalize on that. The Singapore-based company is investing to increase its capacity to mill cocoa cake into powder in Asia and is also planning a new milling facility just outside Chicago, Manley said. The factory should be commissioned later this month.

Demand for cocoa butter and cocoa liquor, used to make chocolate bars, is also growing and the market is tight despite last season’s record surplus, Manley said. That has helped boost cocoa-processing margins, with the so-called combined ratio — the price of cocoa products relative to beans — reaching the highest in more than a decade this year, according to KnowledgeCharts.

To read the full article, click here. 

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

09 Nov

Aviation as a catalyst for growth in Africa

While Africa has one of the biggest populations in the world, its aviation industry is still small, representing only 2% of the global market. Despite all the major challenges ahead, this is an industry that has very big potential for future growth in Africa.

One of the reasons why African countries seem unable to attract a large amount of foreign investments, is that there is no direct airline connection to reach them. As a result, business travel and costs of doing business become prohibitive. Foreign investors are less likely to travel to distant and not easily accessible places, even if there are great opportunities. As a result, aviation in Africa should be considered a priority sector by the respective African governments so that it can boost the economic development of their countries.

Aviation as a pillar for economic growth 

Being the biggest pan-African airline, Ethiopian Airlines has greatly contributed in making the Addis Ababa Bole Airport an aviation hub and a gateway to Africa. Similarly, for Kenya Airways, the Jomo Kenyatta International Airport in Nairobi is a springboard to access not only the east African region, but also the central and western part of Africa. As for South African Airways, from its Johannesburg base at OR Tambo International Airport, it covers most of the southern African region. Except for South Africa, where its economic growth stagnated in 2016 and eventually fell into recession in the first quarter of 2017, Ethiopia and Kenya grew at a very fast rate of 7.5% and 5.8% in 2016
respectively. In the north, Casablanca, Algiers and Tunis are the major gateways for Europe to access both the Maghreb region and the western African region.

As for the Middle East countries, Cairo is the major gateway to access the major African cities in the northern, eastern and western regions. All these aviation hubs in Morocco, Algeria, Tunisia and Egypt have contributed to the high growth rate of passenger traffic, increasing by 94%, 95%, 75% and 108% respectively from 2005 until 2015, according to data from the World Bank. Aviation is the critical link that not only connects Africa to the world, but also builds bridges among the various African countries. It is only when there are better airline connections, enabling the movement of goods and people, that business activities can flourish. With lower business travel costs, countries can then better attract foreign investors and create better business opportunities.

According to the United Nations Conference on Trade and Development (UNCTAD), the top-five African countries that had the biggest stock of foreign direct investment (FDI) in 2016, are South Africa, Egypt, Nigeria, Morocco and Angola, with US$136.8bn, $102.3bn, $94.2bn, $54.8bn and $49.5bn respectively. Of the five countries, only South Africa, Egypt and Morocco have a major national carrier.

Read more: Aviation as a catalyst for growth in Africa

08 Nov

Belt and Road Initiative – African countries offer major investment opportunities

China’s Belt and Road Initiative (BRI) is stepping up a gear, with new BRI-related projects estimated to be worth US$350bn over the next five years. This is according to a new report by Baker McKenzie and Silk Road Associates – Belt & Road: Opportunities & Risks.

According to the report, various African countries along the BRI have the potential to provide major opportunities for investment. These countries particularly include Kenya, Tanzania, Ethiopia, Djibouti and Egypt.

The report explains how BRI (also known as One Belt One Road (OBOR)) is primarily divided between the overland ‘Belt’, the classically defined Silk Road that stretches from China to Europe, and the new, maritime Silk Road. The maritime Road is a densely populated consumer and industrial opportunity. Like the landlocked Belt, it also connects China and Europe, but differs in that the Road passes through Southeast Asia, South Asia, the Middle East and East Africa, a region that is home to 42% of the world’s population and 25% of its GDP, excluding China.

The report states that multinationals from all countries can expect to find significant opportunities in the maritime Road regions over the coming decades, irrespective of the success of BRI.

Kieran Whyte, head of the energy, mining and infrastructure practice at Baker McKenzie in Johannesburg, says that for investors in Africa, “A big attraction of the Belt and Road Initiative for both governments and project sponsors is that it assists the speed of project implementation. Project stakeholders advise that the whole process is a lot quicker than other options”.

The report outlines East Africa’s integral role in the BRI, owing to Djibouti’s ports, Ethiopia’s manufacturing, and the region’s existing plans to connect rail, road and energy networks. It also details how key opportunities in Africa with regards to BRI will be transactions related to major projects in the power and infrastructure sector and related financing. China’s construction of power plants and transmission lines in East Africa is expected to be a game changer for local industry.

Read more: Belt and Road Initiative – African countries offer major investment opportunities

 

25 Oct

Feed Africa: Adesina to set up fund for young farmers

“I am proud as the Governor of Iowa State to proclaim Dr. Akinwumi Adesina as the 2017 World Food Prize Laureate.” With these words, the Governor of the State of Iowa, Kim Reynolds, officially named President of the African Development Bank (AfDB), Akinwumi Adesina, as the 2017 World Food Prize Laureate, on behalf of the World Food Prize Foundation, setting off an atmosphere of festive celebration at the Iowa State Capitol Building in Des Moines.

Accompanied by Olusegun Obasanjo, former President of Nigeria, and John Mahama, former President of Ghana, Adesina took elegant steps to the podium to receive the award – the world’s highest recognition for food and agriculture, with his wife Grace and his two children, Rotimi and Segun, and a large and distinguished crowd cheering him on. Representatives of the Nigerian Government, Purdue University, his alma mater, friends, associates and Bank staff were among the well-wishers who came in out in large numbers to celebrate the African agriculture icon, known as “Africa’s Norman Borlaug.”

In line with his avowed commitment to a new deal for youth empowerment, Adesina pledged devote the US $250,000 prize money to a fund in support of young African farmers and agriculture entrepreneurs, or “agripreneurs.”

“And so, even though I don’t have the cash in my hand, I hereby commit my $250,000 as a cash prize for the World Food Prize award to set up a fund fully dedicated to providing financing for the youth of Africa in agriculture to feed Africa,” Adesina said.

“We will arise and feed Africa. The day is coming very soon when all its children will be well-fed, when millions of small-holder farmers will be able to send their kids to school,” Adesina said.

“Then you will hear a new song across Africa: ‘Thank God our lives are better at last.’”

The President of the World Food Prize Foundation, Ambassador Kenneth Quinn, paid tribute to Adesina, “whose breakthrough achievements have impacted millions of farmers and those living in rural poverty in Nigeria and throughout Africa…”

Read more: Adesina to set up fund for young farmers, agripreneurs with US $250,000 World Food Prize money

 

20 Oct

West Africa business should turn to solar for their bottom line

“Honestly, I’m surprised this place even runs,” says the technical director of a multinational consumer goods company, with a large factory on the outskirts of Lagos, Africa, as he gestures at the flickering lights above his head.

“Besides the high cost of our diesel power, we have at least six power outages from the grid everyday,” he explains.

This frustration is shared by businesses across west Africa, including in major economies like Ghana, Nigeria, Senegal, and Cameroon.

Distributed solar generation – where households or businesses generate and consume their own solar power rather than obtaining it from centralised power plants – is being touted as a solution to the region’s power problems.

However, so far it has had disappointing traction. Solar currently accounts for less than 1 percent of the generation capacity in west Africa, with no solar generation contracts signed by any businesses prior to late 2016.

A key challenge for solar is that it is impossible to control when the sun will shine. This leads to mismatches between the amount of power produced by a solar plant and the power needed by the consumer.

Also, unlike more developed markets, most African governments do not offer tax credits for solar or net metering credits, which would allow excess power to be sold profitably back to the national power grid.

However, the tide is turning. Solar is finally beginning to deliver on its promise. Three trends have driven the rise of commercial and industrial scale solar in west Africa.

First, affordability has improved dramatically. The price of solar panels have dropped 80 percent over the last eight years.

Second, electricity prices in the region remain at historic highs. The cost of power for large businesses in west Africa typically ranges between 0.14-0.25 $/kWh, compared to a range of 0.09-0.14 $/kWh in Kenya, Tanzania and Uganda.

In places such as Ghana and Nigeria, tariffs have dramatically increased in recent years as cash-strapped governments and utility companies have been forced to reduce legacy subsidies.

Read more: West African business should turn to solar for their bottom line

 

19 Oct

Delivering land rights documentation to Ghanaian farmers

Landmapp, an Accra-based agri-tech start-up, provides landholders (particularly smallholder farmers) with a one-stop-shop land documentation service, allowing them to register their properties under their name. The documentation is compliant with Ghanaian regulations and customary traditions, and can be used as collateral for accessing agricultural loans.

Landmapp uses GPS data to map landholders’ plots, word-of-mouth to verify land ownership, and confirms the landholders’ identities in order to seek certification of land deeds from local authorities.

The company also has a presence in the Netherlands, with offices in Amsterdam.

“Authorities benefit by having a fully verified digital dataset, including biometrics and high-quality surveying. In turn Landmapp helps landholders access relevant services such as finance, leveraging their land document and personal dataset,” noted Simon Ulvund and Thomas Vaassen, the founders of the business.

The duo further answered How we made it in Africa’s questions.

1. How did you finance your start-up?

Initially we had a grant to explore technical feasibility. However, since then we have gone the classic start-up route, raising two rounds of early-stage finance from a mix of angel and institutional investors. Our investors are spread across Africa, Asia, Europe, and North America.

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

Expanding to new markets. Following our successful implementation in Ghana, we’re seeing quite some interest from other markets.

3. What risks does your business face?

Structurally, we can only operate in an environment where there is strong land administration legislation in place and where the judiciary respects land laws. On the customer side, our biggest risks are related to cash constraints, which can significantly affect ability to pay.

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

We use multiple channels and it varies by community. Anything from radio commercials, to working with commodity buyers, the traditional councils and chiefs – and our favourite: getting a slot at the end of Sunday service in churches, where you can present your wares to the whole congregation.

Read more: Start-up snapshot: Delivering land rights documentation to Ghanaian farmers

 

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

06 Oct

Work on the framing of minerals classification system in Africa begins

A pioneering initiative leading towards a framework for mineral resource classification in Africa had has started with deliberations from African geological experts and classification specialists.

Organized by the African Minerals Development Centre (AMDC), the workshop looks into adapting the United Nations Frameworks Classification for Fossil Energy and Mineral Reserves and Resources (UNFC 2009) system based on the tenets of the Africa Mining Vision (AMV).

The new initiative called the African Mineral Resource Classification (AMREC) is envisioned to enhance regional cooperation in sustainable development by providing a classification framework for management of mineral resources on land, continental shelf and seabed within the region.

The UNFC recognizes that establishing a complete picture of the current and future supply base of fossil energy and minerals is necessary for effective resources management.

It also sees development is dependent on careful management of the world’s non‐renewable extractive resources and UNFC‐2009 has an important role to play in this process. On the other hand, the AMV is a mining approach that looks into using mineral resources as catalysts for sustainable development.

In his opening speech, Hamed Ibrahim Mira, Chairman of the Nuclear Materials Authority of Egypt, said, “The framework will help governments manage their natural resources with a sustainable long-term view. In this regard, it is clear that UNFC system could be used to achieve the objectives of the African Mining Vision.”

Harikishnan Tulsidas of the UN Economic Commission for Europe, said, “The availability of these non‐renewable resources over the longer term is of crucial importance to both consumers and producers, particularly as a large and growing population is coming out of poverty.” Guided by the technical specifications of UNFC and the development-driven AMV, the AMREC will serve as a tool to drive Africa’s socio-economic progress. Harikrishnan added that it will be a platform for holistic resource development.

Attended by geological experts from African member states, classification specialists, and participants from the extractive sector; the comments and information gathering from experts will help guide the production of the framework.

The AMREC project will have further discussions on the framing of the requirements towards the production of the final document.

[Via] Work on the framing of minerals classification system in Africa begins

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