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7/27/2019 African Investment Summit
1/21
Written o as a hopeless continent a little
over a decade ago, Arica is now proving
the pessimists wrong, as growing con-
sumer spending and a rising middle class transorm
the region. Te boom in several industries, particu-
larly telecoms and banking, has drawn much atten-
tion rom investors. But how sustainable is Aricas
rise? Te worlds poorest continent still aces plenty
o challenges: an overreliance on commodity exports,
woeul inrastructure and endemic corruption in
many countries. Aricas considerable opportunities
and challenges were examined at the Reuters Ari-
ca Investment Summit on April 8-11, when during
closed sessions Reuters reporters in Johannesburg,
Nairobi and Lagos interviewed top newsmakers rom
across the continent.
Africa Rising:Mind the Bumps
1
ReuteRs ARicA investment summit 2013
R E U T E R S / A d R i A n E O h A n E S i A n
7/27/2019 African Investment Summit
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ReuteRs AfRicA investment summit 2013
ig Ara: bp a rwar w o
By PAscAl letcheR
JOhAnnesBuRG, APRil 10, 2013
I you want to ride Aricas business boom,
choose your country well and be ready or
bumps on the road. But the momentum
is upward and you will be rewarded i you
stay the course.
Arican policy-makers and chie execu-
tives o companies operating in Arica are
spreading this upbeat message, qualied
with some caveats, as interest in what was
once dubbed the hopeless continent blos-
soms along with growth rates.
Few doubt that the Arica Rising narra-
tive, which has grabbed the attention even
o traditional skeptics, is based on solid
undamentals: growth outpacing most o
the world, a rising young population o
workers and consumers and global demand
or the continents commodities.
I absolutely believe in a consistent up-
ward trend, said Diana Layeld, Chie
Executive Ocer or Arica o StandardChartered, the London-listed bank which
is investing $100 million in Arica to dou-
ble its business in the next ve years.
But this bullish pitch or Arica, enthu-
siastically echoed by most participants at
a Reuters Arica Investment Summit this
week, comes accompanied with a caution
that the continent remains a volatile, un-
even and challenging place.
I you were to compare it to the emer-
gence o some markets in Asia, youll see ...
more bumps in the road, Layeld said.While hubs like Nigeria and Kenya
project the continents potential, pockets
o instability and ickering violence in old
and new hotspots such as Democratic Re-
public o Congo, Mali and, more recently,
Mozambique, serve as a constant reminder
o a turbulent track record.
Investors in the continent o 54 states -
most o them south o the Sahara - must
also get to know the dierent markets,cultures, and regulatory rameworks. Tat
makes it distinct rom ast growing Asian
giants India and China.
With the best will in the world, nobody
can be a good investor across 44 countries,
said Marlon Chigwende, Managing Di-
rector o the Carlyle Groups $500 million
Sub-Saharan Arica Fund, which has just
signed its second deal.
But we think with a ocused strategy
you can make very good risk-adjusted re-
turns in Arica.
Even in the short term, some investors
are seeing returns: stock markets in Nigeria
and Kenya, west and east Aricas biggest
economies, are both up more than 20 per-
cent this year ater signicant gains last year.
A WHOLE DIFFERENT STORY
Cheerleaders o the rising Arica message stress
that it is not just an economic growth story.
Sub-Saharan Aricas expected GDP
growth - orecast at 5.8 percent this year bythe Arican Development Bank - is the envy
o much o the world as parts o the devel-
oped West struggle to climb out o recession.
But Arica-watchers say the continent is
also marching orward across metrics rang-
ing rom democracy and governance to
economic management and the rule o law.
Tose basic undamentals are either in
place or getting better, said Cliord Sacks,
CEO or Arica o Renaissance Capital,
the Russian investment bank which has
been a pioneer in opening up the business
rontier in Arica.
Sacks and others said the old investors
view o Arica as a pool o oil and minerals
to be tapped as a resource play - while still
signicant, especially or big commodities
buyers like China - is not the ull picture.
Mining represented only 14 percent o
Aricas growth while 53 percent came rom
services such as banking and telecommu-
A gra w ow a ppg oar ara a por o hak a-Wa, t brar 19, 2013.
REUTERS/AniS Mili
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ReuteRs AfRicA investment summit 2013
Zbabw o ra or o: BBy stellA mAPenZAusWA
JOhAnnesBuRG, APRil 8, 2013
Zimbabwe is on track or another
awed election this year unless it
can reresh outdated voter lists, ap-
prove an army o outsider observers and
nd oreign donors willing to pay or the
vote, Finance Minister endai Biti said.
However, postponing the poll to main-
tain a stop-gap unity government between
President Robert Mugabe and Prime Min-
ister Morgan svangirai is not an option,
with the ractious coalition well past its sell-
by date, Biti told a Reuters Arica Summit.
I dont think we are in a position today,
right now, o having legitimate, credible,
sustainable elections, Biti, a leading mem-
ber o svangirais Movement or Demo-
cratic Change, said.
At the rate we are going, it is obvious
that we are going to have another awed
election ... Zimbabweans cannot aord an-
other awed election.Zimbabweans last month approved
a new constitution curbing presidential
powers that critics say have been used by
Mugabe to entrench his 33-year rule. Te
reerendum removed the main barrier to an
election in the second hal o this year ater
a disputed 2008 poll.
But more reorms are needed to reassure
investors who have withheld support over
charges o human rights abuses and elec-
tion-rigging by Mugabes ZANU-PF party
and criticism o policies such as his seizureo white-owned arms or blacks.
Te unity pact between ZANU-PF and
the MDC has gone some way towards ar-
resting an economy damaged by more than
a decade o hyper-ination which rendered
the Zimbabwe dollar worthless.
Ination has slowed to single digits
while growth is seen above 5 percent this
year ater contracting or a decade beorethe unity government was established.
TWO CAMPS
But progress has been hampered by wran-
gling between ministers rom the two
camps and investors are worried about
conicting signals on policies such as the
transer o at least 51 percent ownership in
oreign-owned rms to local blacks.
Te inclusive government has done
well in giving our people a timeout against
the economic ailures o the ZANU-PF re-gime, Biti said. But I think it has outlived
its useulness.
We need sustainable, legitimate, cred-
ible election outcomes in Zimbabwe, and
to me that is our number one actor arrest-
ing the economy.
Te international community would
have to oot the bill or the vote, Biti said,
as Harares coers have been bled dry by a
recent census and the constitutional reer-
endum last month.
For any country, let alone a country like
Zimbabwe with a budget o $4 billion and
a GDP o $12 billion, thats a huge strain,
Biti said.Harare is still struggling with more than $10
billion in arrears to the World Bank, the IMF
and the Arican Development Bank, meaning
it cannot access multilateral unding needed to
overhaul its dilapidated inrastructure.
Te bottom line is that the international
community must accept the obligation on its
shoulders. And by the international commu-
nity I also include South Arica, Biti said.
Aricas biggest economy, which has
absorbed an estimated 2.5 million Zimba-
bweans eeing the political and economicdownturn, would bear the brunt o another
meltdown in its northern neighbor, he said.
But that doesnt mean the international
community should give Zimbabwe a blank
check. I Zimbabwe wants to be part o the
international community, it has to play by
the rules.
Editing by Ed Cropley and Alison Williams
Zbabwa a mr ta B pak a 2013 Rr Ara i s
Joabrg, Apr 8, 2013. REUTERS/MikE hUTchingS
s o:http://reut.rs/14ZhIbk
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so Ara a r a ra bak
baag grow w fao ar wBy stellA mAPenZAusWA And ed cROPley
PRetORiA, APRil 9, 2013
South Aricas central bank has done
reasonably well to balance economic
growth and the need to create jobs
while also pursuing its mandate to keep
ination in check, Finance Minister Pravin
Gordhan said on uesday.
Te comments, in an interview as part
o a Reuters Investment Summit, suggest
President Jacob Zumas administration sees
no need to encourage the bank to boost
growth by loosening monetary policy 12
months ahead o a general election.
Gordhan also said the crisis in Europe was
still a drag on the domestic economy, hurting
exports that are still coping with the allout
rom strikes in the mining sector last year.
Te Reserve Bank let the repo rate at
a historic low o 5 percent last month, but
the Organisation or Economic Co-opera-tion and Development says it has room to
loosen policy urther to assist the sluggish
recovery by Aricas biggest economy rom
a 2009 recession.
Most economists polled by Reuters ex-
pect rates to stay on hold through 2013.
Te bank has kept rates on hold since a
50 basis point cut last July, saying the need
to accelerate growth has been oset by a
deterioration in the ination outlook due
to a sharp all in the rand.
Tey have done airly well to take theeconomic growth and employment situa-
tion into account, Gordhan said.
Tey have been careul about balanc-
ing perceived risks on the one hand with
the necessity to support the economy on
the other hand. Lets see what the next ew
months bring.South Aricas central bank has an in-
ation target mandate o 3-6 percent but
Gordhan in 2010 broadened its responsi-
bilities to include economic growth and em-
ployment, although without specic targets.
EUROPE MAJOR CLOUD ON
ECONOMY
Gordhan in February cut South Aricas
2013 growth orecast to 2.7 percent rom
3 percent due to lower demand both locally
and rom Europe, which absorbs about a
third o South Arican exports.
Europe still acts as a major cloud over
both our own economy and the economies
around the world, Gordhan said, vowing
to maintain a cyclical scal policy that has
allowed South Arica to keep money ow-
ing to social benets and inrastructure.
But President Jacob Zumas government
will not yield to pressure to increase spend-
ing ahead o next years election, despite
growing pressure at the polls rom opposi-
tion parties, he added.
We are one o the ew developing econ-
omies that dont rely on external debt too
much. Its an important prop to the scal
sovereignty we enjoy, Gordhan said. We
will guard that very jealously at all times.
Gordhan also said he saw no immedi-
ate threat to the oreign portolio ows intolocal bonds that have helped plug a current
account decit o more than 6 percent o
gross domestic product.
Te gap, coupled with concerns about
domestic industrial unrest and weak growth,
have put pressure on the rand, which hit a
our-year low o 9.3655 on March 21.
However, increased ows in the last
week have pushed the rand to 8.944 against
the dollar, a ve-week high, as global inves-
tors have sought yield ater the announce-
ment o aggressive bond-buying, or quanti-tative easing, rom the Bank o Japan.
Tere is no immediate danger to those
ows, Gordhan said. At the same time we
are working hard at a global level to en-
sure any retreat rom quantitative easing is
managed in such a way that it doesnt send
shock waves through the global system.
Editing by Matthew Tostevin/Jeremy Gaunt
so Ara a mr Pra
Gora gr rg bg p
pr pro b Gor
coao a iorao s
cap tow brar 27, 2013.. REUTERS/
kOpAnO TlApE/gOvERnMEnT cOMMUnicATiOnS
And infORMATiOn SySTEMS (gciS)/hAndOUT
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W Ara bo o grow 6.5 pr ar: ra bak
By dAniel lynn And diAdie BA
dAKAR, APRil 9, 2013
Growth in the eight-nation West
Arican Economic and Monetary
Union will hit 6.5 percent this year
thanks to a post-crisis recovery in regional
powerhouse Ivory Coast but governments
need to press ahead with reorms, the Cen-
tral Bank chie said.
Speaking as part o a Reuters Arica In-
vestment Summit, iemoko Meyliet Kone
said strong commodities demand rom
emerging economies such as China and In-
dia would help the currency bloc shrug o
the eects o an economic slowdown in Eu-
rope, traditionally its main trading partner.
Te currency blocs $80 billion econo-
my grew by 5.8 percent last year as Ivory
Coast - the worlds largest cocoa producer
- bounced back rom a brie civil war, grow-
ing by 9.8 percent. Ivory Coasts economy
makes up over one-third o the bloc.
Faced with the current slowdown inglobal growth, Arica is an important region
or both emerging and developed econo-
mies, Kone said in an interview. In 2013,
the West Arican Monetary Union expects
growth o 6.5 percent despite the current
diculties in Mali and Guinea Bissau.
Gold- and cotton-producer Mali is
mired in conict as a French-led coalition
battles to eliminate Islamist rebels which
captured the countrys north last year. iny
Guinea-Bissau, meanwhile, is struggling to
organize elections ater a military coup lastyear, which roze crucial aid payments.
Kone appealed or regional governments
to press ahead with reorms to trim decits,
improve transparency, invest in inrastruc-
ture and diversiy their economies away
rom reliance on commodities such as co-
coa, gold and iron.
Kone said the central bank, which cut its
base lending rate to 2.75 percent last month,
also was pursuing schemes to encourageprivate-sector lenders to lower their own in-
terest rates and increase the scant supply o
credit, which the IMF has cited as a drag on
West Aricas growth potential.
With regional governments having re-
duced their debt and decits, thanks partly
to the IMF and World Banks Heavily In-
debted Poor Countries initiative (HIPC),
Kone said their economies would continue
to pick up speed.
In 2014, growth should reach 7 percent or
the rst time, he said. But despite this poten-
tial and the promising outlook, Arican econo-
mies are conronted by important challenges.
Te central bank, which has its head-
quarters in Dakar, serves Benin, Burkina
Faso, Ivory Coast, Mali, Niger, Senegal,
ogo and Guinea-Bissau.
Kone said governments should take steps
to secure regional peace, warning that con-
icts had proven the main obstacle to A-
ricas economic development. He also called
or an improvement in governance to ensureresources were dedicated to ghting poverty,
and improving education and healthcare.
We need to prioritize economic sectors
with high value-added, like manuactur-
ing and new technologies, he said. Tis
would reduce our economic dependence on
exporting commodities.
Member states must improve inrastruc-
ture - particularly roads, energy and ports
- to lower production costs and improve re-
gional economic competitiveness, Kone said.
Whereas member countries had previ-ously invested using their own budgetary
resources, Kone said they must seek private
partners to ease the burden on public -
nances. Te region also needed to accelerate
economic integration, he said.
Integration allows increasing econo-
mies o scale and trade. Not all countries
produce the same things nor have the same
production potential, Kone said. Te po-
litical will is there or these reorms, it justremains to put them into action.
Kone said the bank was pursuing
schemes to encourage more lending and
lower interest rates by banks, which were
oten deterred by the risk o lending to in-
dividuals and small businesses amid scarce
inormation over their creditworthiness.
As a result, interest rates oten reach 7 to
8 percent in the region, hindering businesses.
Te IMF noted in a report on the bloc last
year that only 5 percent o its population had
bank accounts and lending to the private
sector was less than 18 percent o GDP, one
o the lowest levels in sub-Saharan Arica.
We must make banks rethink their ar-
guments or not lowering rates, Kone said.
Were establishing mechanisms to better
coordinate credit distribution and lower in-
terest rates little by little.
He said the central bank was in talks with
private sector lenders to establish credit bu-
reaux, which would amass inormation on
borrowers creditworthiness, giving banksmore visibility on who they were lending to.
Te central bank was also considering com-
piling a database o all the guarantees oered
by borrowers, to make these legally binding,
thereby oering lenders more security.
A report by a panel o experts, approved
by regional leaders last year, contained 43
proposals or increasing credit. Some o
these have already been adopted, such as
increasing the percentage o short-term de-
posits which banks can convert into long-
term loans rom 25 percent to 50 percent.It is quite possible that there are under-
standings between the banks and this con-
tributes to keeping rates at a certain level,
Kone said. Weve explained that high in-
terest rates actually make it less likely loans
will be paid back.
Editing by Richard Valdmanis; Editing by
Michael Roddy
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ReuteRs AfRicA investment summit 2013
mtn o p p o $8 bo o aqo: ceO
By helen nyAmBuRA-mWAuRA AndZAndi shABAlAlA
JOhAnnesBuRG, APRil 10, 2013
MN Group, Aricas largest
listed rm, could spend up to
$8 billion on an acquisition and
is looking or targets on the continent, the
Middle East and Southeast Asia, its chie
executive said on Wednesday.
Te South Arican mobile operator is
also one o around 15 telecom providers to
make it to a second stage o bidding or anoperating license in Myanmar, Siso Da-
bengwa also told the Reuters Arica Invest-
ment Summit.
Growth through M&A is still an im-
portant part o our strategy, he said.
Anything between $4 and $8 billion is
something that we could look at.
Johannesburg-based MN, which has
a market value o $34 billion, has opera-
tions in 22 countries across Arica and the
Middle East.
Te company is now looking to South-
east Asia, and was one o 90 operators to
initially express interest in a license in
Myanmar, which is seen as having a highpotential or growth.
From the remaining roughly 15 candidates,
only around our will be short-listed and even-
tually two will be awarded the licenses.
Dabengwa said he would also be inter-
ested in acquiring a north Arican operator,
to help diversiy earnings.
MN expects to repatriate some 1.2 bil-
lion rand ($135 million) o its unds tied up
in Iran this year, Dabengwa said.
Te company has been in talks with the
Iranian central bank and U.S. authorities on
sending back its dividends without violat-
ing sanctions.
Dabengwa, however, said MN would
exit its Iran operation i there was any clear
indication the U.S. government would im-
pose sanctions on the business.
MN is acing a $4.2 billion lawsuit in a
U.S. court over a rival urkcells allegation
that it used corrupt practices to win the Ira-nian operating license.
An external committee appointed by
MN has, however, ound the allegations
to be alse and Dabengwa said the compa-
nys lawyers were condent the Washing-
ton court would throw out the case because
it did not all under its jurisdiction.
Editing by David Dolan
A or a a mtn op Joabrg Apr 10, 2012. REUTERS/SiphiwE SibEkO
s o:http://reut.rs/16PfKx
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maaw aa fao a 18 pr: a mr
By mABvutO BAndA
lilOnGWe, APRil 8, 2013
Malawi expects ination to slow
to an average o 18 percent this
year, helped by a bumper crop
and strong tobacco prices, its nance min-
ister said, as the destitute southern Ari-
can country continues on a painul path to
righting its nances.
Ken Lipenga also told Reuters he was
optimistic Malawi would be able to meet a
growth target o 5.5 percent this year, adding
it was committed to pushing through struc-
tural reorms and drawing oreign investment.
For the rst time in many years we are
so much looking orward to a bumper har-
vest this year and good tobacco prices, Li-
penga told Reuters in an interview as part
o the Reuters Arica Investment Summit.
Te two will help us prop up the reserves
and a good crop will help stem ination.
Lipenga, a ormer Reuters journalist and
newspaper editor who turned to politics,said he expected ination to average 18
percent in 2013. It averaged 21.3 percent
last year, but this year has spiked as high as
37.9 percent.
Soaring ood and uel prices have been
stoking ination since President Joyce Ban-
da eased the kwachas peg against the dollar
and devalued the currency by 49 percent.
Since taking the helm o one o the
worlds poorest countries last year, Banda
has been working to restore oreign aid
withheld during the nal days o her prede-
cessors tenure ater he picked a ght with
key donors.
Overseas aid traditionally accounts or
about 40 percent o the national budget.
In December the central bank raised the
benchmark lending rate by 400 basis points
to 25 percent in an attempt to stabilize the
kwacha and rein in price increases.
Te policies have pleased donors and
the International Monetary Fund but have
angered many voters who blame Banda orsoaring ood prices.
Our biggest challenge now is to stem
ination and slow the depreciation o the
kwacha, Lipenga said.
In order to correct the past mistakes
and put the economy on a sustained path
to recovery, tough policy decisions - many
o them painul and unpopular - had to be
made to avoid us being another Zimba-
bwe, he said.
Zimbabwe nearly crumbled under hy-
perination beore ditching its own cur-
rency and adopting the dollar in early 2009.
Lipenga said a recovery in agriculture,
manuacturing and retail should help the
economy expand 5.5 percent this year, rom
1.9 percent in 2012.
We will continue implementing struc-
tural reorms designed to remove regulatory
hurdles and improve the investment climate.
Editing by by David Dolan
moor pp o
ora
apa Bar
pr ak mar 26, 2012.
REUTERS/EldSOn chAgARA
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saar carr xpa so AraBy helen nyAmBuRA-mWAuRA And
BenOn OluKA
JOhAnnesBuRG, APRil 9, 2013
Standard Chartered (SAN.L) has
opened two new branches in South
Arica to target Cape own and
Durban-based companies looking to ex-
pand across the continent, its chie execu-
tive or Arica said on uesday.
Te London-listed bank saw 28 per-
cent growth in its South Arican business
last year and is now looking to court local
retailers, many o which are based in Cape
own, and trading houses operating in
Durban, Diana Layeld told the Reuters
Arica Investment Summit.
While Standard Chartered is dwared in
South Arica by domestic powerhouses like
Standard Bank (SBKJ.J) and FirstRand
(FSRJ.J), it is looking to use its presence in
at least 15 Arican countries to win busi-
ness rom companies looking north.
In South Arica, we have seen real op-portunity recently, Layeld said.
Standard Chartered is also scaling up its
business in Angola, where it recently inked
a deal or a 60 percent stake in a joint ven-
ture bank with state-owned insurer ENSA.
Te bank is investing a $100 million
in Arica aimed at doubling the size o its
business in the next ve years. Prot rom
the continent jumped 23 percent to $771
million in 2012.
Layeld also said the bank had submit-
ted a proposal to Harare or Zimbabwesso-called indigenization plan.
President Robert Mugabes government
requires international companies operating
in Zimbabwe to hand over a majority stake
to black Zimbabweans.Local press reported on uesday that
Standard Chartered was one o three com-
panies that could be shut down or non-
compliance o the indigenization program,
citing Zimbabwe government ocials.
We have submitted a plan to the gov-
ernment we believe complies with the in-
digenization requirements and now we are
discussions with them over that plan. Tat
is all the ormal communication we have
had, Layeld said.
South Aricas Standard Bank (SBKJ.J)
said last month it wants to keep a majority
stake in its Zimbabwe business.
Te indigenization program has drawncriticism rom both international investors
and some Zimbabwe politicians, including
Finance Minister endai Biti, who said the
program was awed because most Zimba-
bweans could not aord to participate.
Te problem with the indigenization
model o Zimbabwe is that its based on
certain undamental ault lines, Biti told
the Summit.
Te local people become innocent by-
standers to the Indigenization and Em-
powerment oer.
Editing by David Dolan
saar carr Ara ceO daa la a 2013 Rr Ara i s
Joabrg, Apr 9, 2013. saar carr a op wo w bra so Ara
o arg cap tow a drba-ba opa ookg o xpa aro o,
x or Ara a o ta. REUTERS/MikE hUTchingS
s o:http://reut.rs/10JlRtU
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car a g bak a-growg AraBy helen nyAmBuRA-mWAuRA
JOhAnnesBuRG, APRil 10, 2013
Carlyle Group (CG.O) is looking at
a number o banks in east and west
Arica or a potential investment, its
Arica co-head said on Wednesday, as the
U.S. private equity rm ocuses on the con-
tinents growing consumer market.
Carlyle, which last year invested in a
pan-Arican grain trading rm, has recently
signed a second deal, Marlon Chigwende alsotold the Reuters Arica Investment Summit.
Banking is very interesting today, and
that is the general statement across a lot o
sub-Saharan Arica, Chigwende told the
Reuters Arica Investment Summit in Jo-
hannesburg.
Certainly, there are several opportunities
o ast-growing banks, good management
teams, interesting market positioning.
Although private equity is still at a na-
scent stage in Arica, investor interest in
the ast-growing continent is growing by
bounds, drawn by a commodities boom and
an expanding consuming population.
Carlyle is looking or banks with sound
management teams, and will then considerregional or niche lenders, Chigwende said.
Large private equity deals are still rare
in Arica, where unstable government and
macroeconomic mismanagement have put
o some investors.
But the tide is turning as democratic
political systems start to take root and an
emerging middle class begins to demand
more consumer goods.
Last year Carlyle was part o a group
that invested $210 million in anzanias
Export rading Group, one o the largest
private equity deals in Arica to date.
Chigwende said the Arica und had
signed another deal to be announced soon -
although he declined to speciy the region or
the industry - and was looking at a ew others.
Carlyle launched its $500 million und last
year and ocuses on South Arica, Nigeria,
east Arica and Ghana or potential deals.
It generally looks or businesses in A-rica with an enterprise value, a measure o
combined debt and equity, o around $200-
$300 million, he said.
Te rst three or our transactions that
we are looking at in earnest, the general
themes are ast growth, they tap into the
consumer theme and trade theme, he said.
Editing by David Dolan and Matthew Tostevin
car Grop b-
saara Ara co-
ha maro cgw
pak a 2013
Rr Ara i
s Joabrg
Apr 10, 2013. REUTERS/
MikE hUTchingS
s o:http://reut.rs/ZgU4j9
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tooa arg growg or ark AraBy tOsin sulAimAn
JOhAnnesBuRG, APRil 9, 2013
Toyota Motor Corp (7203.) is in-
creasing its ocus on Arican con-
sumers as private sector growth
reduces its dependence on government busi-
ness, its top executive on the continent said.
Te Japanese automaker, which has a
presence in all 54 Arican countries ater
entering South Sudan last year, expects the
east and west Arican auto markets to grow
by up to 5 percent this year, oyota Arica
CEO Johan van Zyl told the Reuters A-
rica Investment Summit.
In many countries now consumer mar-
keting is becoming very important, he
said, adding that in many Arican countries
oyota previously dealt almost exclusively
with governments.
Te worlds top-selling automaker sold
237,000 vehicles on the continent last year,
giving it a 14 percent market share.
But it aces growing competition romChinese and Indian rivals like Chery Au-
tomobile and ata Motors, which arguably
have more experience in building and mar-
keting budget cars in emerging markets.
However, van Zyl said oyota was also
ocused on aordable cars and its Etios
brand, launched in India in 2010, is tar-
geted at cost-conscious consumers.
Te company is selling about 2,000
Etios cars a month in Arica, where con-
sumers are concerned about quality and
durability as well as cost, he added.People tend to think i you sell things
to Arica, you can sell them inerior things.
I think that will be the biggest mistake you
can make, he said.
Te consumer in Arica is as much
aware o quality than anybody else.
Reporting by Tosin Sulaiman; editing by David
Dolan A or wakg pa ar rf o a tooa ar a opa owroo toko brar
5, 2013. REUTERS/TORU hAnAi
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sABmr o r Ara rkr w owr br prBy JOe BROcK
ABuJA, APR 10, 2013
SABMiller plans to boost beer sales
by 7-9 percent a year by slashing
prices, using more local grains and
cheaper packaging and negotiating better
tax terms with governments, the South A-
rican company said on Wednesday.
On average the Arican continent (in
terms o GDP) will grow 5-6 percent per
annum we think ... we would expect to cap-
ture maybe 2-3 percent (beer volume sales)
above that, SABMiller Aricas Finance
Director Jonathan Kirby told the Reuters
Arica Investment Summit in the Nigerian
capital Abuja.
Kirby said the worlds second-largest
brewer plans to invest $400 million to $500
million a year outside South Arica and
open one to two new breweries in Arica in
each o the next three years, with countries
such as Ghana, Nigeria, Mozambique and
Zambia the likely targets or expansion.Home to some o the worlds astest
growing economies, Aricas thirst or beer
is surging: analysts estimate beer volumes
rose around 7 percent last year. Excluding
the mature South Arican market, growth
reached more than 10 percent.
Tis growth is spurring increased com-
petition. SABMiller wants to gain an edge
over rivals like Diageo and Heineken by
luring consumers who drink cheap locally
made home brew that comprises 75 percent
o alcohol consumed in the region, accord-ing to company estimates.
Arican consumers pay more or beer
brands than the global average, Kirby said,
despite being the poorest continent.
I think price is a key area. Te Arican
consumer will pay on average about $1 a serve
and i you benchmark that against the rest o
the globe that is at the top end, he said.
I we could make beer say 80-85 cents a
serve I think the volume opportunity would
just jump at you.
Kirby said the company was looking at
using cheaper local crops to make its beer
and providing more drat beer to cut the
cost o packaging. Tis has the double eect
o reducing its import bill and stimulating
local economies, which gives the company
more opportunity to negotiate with gov-
ernments on taxes.One o the things we want to try and
do is develop a long term local supply
structure (to reduce) our reliance on expen-
sive imported and highly taried crops,
Kirby said.
He said SABMiller currently gets
around 30 percent o its supplies locally but
plans to increase this to 50 percent within
the next 2-3 years.
SABMiller began selling a beer using the
starchy root cassava in Ghana last month. It
mirrors a similar product launched in Mo-
zambique in 2011, where SABMiller was
able to negotiate a reduced excise tax on
the cassava and produce a brew 75 percent
cheaper than other mainstream beers.
Kirby said the cassava brew now makes up 8
percent o the beer consumed in Mozambique.
Nigeria, Aricas most populous nationwith around 170 people, in which Diageo
and Heineken are vying or dominance,
is the biggest producer o cassava in the
world. Kirby said it was a less viable busi-
ness there because Nigeria already has low
excise on the root.
Reporting by Joe Brock; Editing by Tim Cocks
and Mark Heinrich
A cogo bar workr a o r pa o work, o o r o a oa bar
sABmr op w oo b rg r w o sa agr, Jba mar 18, 2009.
REUTERS/SkyE whEElER
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nw o-r Gaa rgg o paBy KWAsi KPOdO
AccRA, APRil 9, 2013
When Ghana struck oil in 2007,
citizens expected the industry
would bring them better lives
and investors anticipated hety prots rom
a rising Arican economic star. Six years
later, all o them are complaining.
Lower-than-expected production rom
the oshore Jubilee eld and unding a
costly presidential election process in 2012
have let the West Arican nation strug-
gling to deliver promised development
projects while keeping its nances in order.
Te situation underscores the complex
reality o translating raw materials into
prosperity on a continent notorious or the
resource curse o grat, strie and misman-
agement that has hit oil-rich countries like
Nigeria, Angola and Equatorial Guinea.
Newly elected President John Dramani
Mahama is walking a scal tightrope be-
tween ordinary Ghanaians demanding
swit change and investors alarmed by thecountrys ballooning debt.
A stumble could prove politically costly
or Mahama and nancially disastrous or
Ghana as it seeks to retain its access to
credit to und rapid growth.
Because o oil production, rising expec-
tations in Ghana will have to be met. But at
the same time, past policy choices constrain
the room or maneuver and Ghana is toe-
ing a very delicate line, said Razia Khan,
Arica analyst at Standard Chartered Bank
in London.Eschewing the deepest o cuts, Ghanas
2013 budget plotted a middle-o-the road
route intended to trim the decit while us-
ing increased revenues to und a jump in
public spending.
Last month, Finance Minister Seth
erkper unveiled plans to pare the govern-
ments decit to 9 percent o gross domestic
product (GDP) this year rom 12.1 percent
in 2012, while cranking up expenditures by
20 percent.
Tat disappointed economists who were
expecting Ghana to rearm its commit-
ment to a decit o 6 percent o GDP - the
target it set and then widely missed in 2012.
Rating agency Fitch had already down-
graded the outlook or Ghanas credit rat-
ing to negative rom stable in February
ater details emerged o deteriorating pub-
lic nances - a blow to its reputation as a
model o Arican potential.
Or r ar ag oo r r.
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otal public debt rose by more than a
th last year to $18.8 billion, versus $15.3
billion in 2011.
STUDYING UNDER TREES
Rare in a region where coups, civil wars,
disputed elections and strong-arm rulers
are the norm, Ghana has distinguished it-
sel with six peaceul transers o power via
the ballot box.
Tat reputation allowed it to launch a
$750-million eurobond in 2007 and helped
it secure the accolade o hosting Barack
Obama or his rst Arican trip as U.S.
president in 2009.
Across the capital Accra, evidence o
new resource wealth abounds - brightly-
lit multi-storey buildings, cranes looming
over construction sites, well-paved roads
and billboards advertising banks, cars and
mobile phones.
But many Ghanaians remain excluded. An
inux o rural workers hoping or jobs in Ac-
cra, has spawned a sprawl o outlying shanty
towns and spilled vendors across the streets.
Standing in a trash-strewn courtyard,
49-year-old school teacher Monica Quansahwonders where the oil money is going.
Our children are still attending school
under trees, she said. Tose o us in the
city dont have reliable power and water, let
alone those in the regions.
Grace Asantewaa, who voiced hope
three years ago that oil would improve peo-
ples lives, said she had yet to see any ben-
et: Nothing has changed. We are even
worse o than beore because prices have
shot up signicantly, she said behind her
stall o tomatoes and chili peppers at theteeming Agbogbloshie market along a pot-
holed road in the seaside capital.
Mahama won the presidency in Decem-
ber by tapping into public rustration at the
slow pace o change or ordinary Ghanaians.
Among other things, he promised to
build 200 new school blocks within his
rst our years, bolster crumbling water and
power inrastructure, pave roads outside
Accra and sustain economic growth at 8
percent or more.But he was dealt a tough hand.
echnical hitches meant ullow Oils
Jubilee eld, 80 km (50 miles) oshore and
the prime engine or revenue growth, pro-
duced 72,000 barrels per day in 2012, well
shy o a 90,000 bpd target.
A report last month showed Ghana re-
ceived $540 million rom the oil industry
last year, ar short o a projected $774 mil-
lion. About $32 million o that was saved
in Ghanas two-year-old sovereign wealth
und, which was valued at about $72 mil-lion at the end o 2012.
Nigerias oil-ed sovereign wealth und,
by comparison, is worth about $1 billion.
A public pay hike and election spend-
ing ater the sudden death o President
John Atta Mills in July urther squeezed
nances. Simply organizing the voting last
year cost $125 million - over one percent o
planned annual public spending.
Ghana has missed its budget decit
target in every election year since constitu-
tional rule was restored in 1992.
Vice President Kwesi Amissah-Arthur
said the government chose slow scal con-
solidation to balance growth and stability.
An attempt to correct the scal imbal-ance in one year would be extreme, he said.
Wed be putting the brakes on at a time
when we also have the responsibility to
ensure economic growth to create employ-
ment opportunities or our people.
Te West Arican country ranked
among Aricas astest growing economies
in 2011 and attained a lower middle-in-
come status, propelled by the 2010 start up
o oil production.
With reserves o 800 million barrels o
high-quality oil and potential or at leastone billion more, the eld makes Ghana
one o sub-Saharan Aricas top 10 oil pro-
ducers. ullow hopes to produce 120,000
bpd this year and 200,000 bpd by 2015.
TOUGH DECISIONS
Despite the budgeted spending jump, Gha-
na will struggle to ulll the social projects
traoa ar pror ro o a o o rg a a ro arkg ar o w o
proo a takora, Gaa, dbr 15, 2010. REUTERS/hEREwARd hOllAnd
oow Rr so twr:@reuters_summits
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W ngra boo bab propr or r por?
By tim cOcKs
lAGOs, APRil 9, 2013
In the time it takes to read this article,
Nigeria will have added 50 people to
its population, or about 11,000 a day.
While some see these new consumers eed-
ing an engine o prosperity, others ear they
will create a crisis o poverty and unrest.
By 2050, the global Population Reer-
ence Bureau (PRB) projects it will be the
worlds ourth most populous country, with
400 million people - just less than the pro-
jected gure or the United States, but with
only a tenth o its territory.
While Aricas most populous nation has
long had business leaders salivating over its
potentially huge market, especially retailers
o ast-moving consumer goods, it is not clear
whether it can turn a growing population -
already at 170 million - into a richer society
with widespread higher living standards.
Nigeria is oten used by promoters o an
Arica Rising narrative urging investors tobuy into the continents potential to reap a
demographic dividend rom an expanding
population o young people o working age.
Yet in the waterside slum o Makoko, where
100,000 residents huddle together in homes
on stilts that spill right out into the Lagos La-
goon, ew eel on the verge o prosperity.
Were poor, and not much is changing,
said Benedicta Hunkpe, as she stirred a
cauldron o sh stew over smoking char-
coal while children swept along the water
in canoes.Demographers ear a crisis o poverty
and social upheaval could oset gains rom
the birth o new consumers.
Te 3,000 naira ($19) a week that the
55-year-old Hunkpe earns rom selling
sh helps eed her eight ospring and 10
grandchildren; her house sleeps 40 people
at a time.
Te money is never enough, she said. I
wanted my children to go to school to givethem a better lie, but I couldnt aord it.
Skeptics say services and the environment
cant keep pace with a population rising at
2.4 percent a year, according to U.N. gures.
Tey ear swelling numbers o jobless and
uneducated youths threaten the stability o
a country already suering an Islamist up-
rising in the north and oil thet, piracy and
kidnapping by criminal gangs in the south.
I we keep growing our population at
this rate, without also growing our means
to sustain it, we are heading towards ca-
tastrophe, says Owoeye Olumide, a de-
mographer at southwest Nigerias Bowen
University.
We have to do something very ast ...
or we ace more poverty and agitation or
worse - disease, hunger, war.
NIGERIA RISING?
Few investment unds share this view.
Banks like Renaissance Capital believe A-
rican demographics will spur an economictransormation o the sort Asia has seen.
Only sub-Saharan Arica is positioned
to experience 15-20 percent growth in the
crucial 15-24 age range over the coming
decades, which will provide the plentiul
labor orce the world economy will rely on,
the bank said in a 2011 report entitled Te
bottom billion becomes the astest billion.
Tis will provide huge opportunities or
retailers and the auto industry, or which de-
mographic data alone suggest Arica will be
overtaking China within two generations.Nigeria is already a big market or ba-
sic goods, like the soap, beer or our sold
by PZ Cussons, Nigerian Breweries and
Flourmills o Nigeria.
And some are preparing or the next
step up; South Arican supermarket chain
Shoprite has plans or 700 stores in Nige-
ria, up rom only a handul at the moment.
Yet countries that reap the demograph-
ic dividend usually do so only once popu-lation growth starts to slow.
While ertility rates are crashing across
Asia and Latin America - mirroring alls in
Europe a generation ago - in sub-Saharan
Arica they remain high. A 2012 World
Bank study put them at ve children per
woman; in Nigeria, it is 5.6.
Te United Nations predicts sub-Saha-
ran Aricas population will double by 2045
to 2 billion. Nigeria will account or a th o
that, and some ear city inrastructure, edu-
cation and the job market wont keep up.
RUNNING TO STAND STILL
Sprawling around a lagoon and the At-
lantic coast, Nigerias commercial hub o
Lagos - a steamy, tropical city o some 21
million people, according to its government
- receives hundreds o thousands o new ar-
rivals each year rom rural areas.
Te city grows by 672,000 people a year,
state data shows.
Its like were running just to stand still,said Ben Akabueze, the Lagos commis-
sioner or Economic Planning and Budget,
a sharply dressed, bespectacled man whose
phone trills constantly with demands rom
state governor Babatunde Fashola.
You roll out services, then so many
more people arrive, he says. Sometimes
we cant quite cope.
wo thirds o Lagosians live in what are
eectively slums with no reliable electricity or
water. Most crowd into ace me, ace you ac-
commodation squeezing whole amilies intoseven- square meter rooms (75 square eet)
sandwiched together along thin corridors.
Noah Semedi, head teacher at one o
only two schools serving Makokos tens o
thousands, is lucky he can read at all.
My dad has 22 children. I am the last
born in the amily, so I am the only guy
that went to school, he told Reuters at the
wood-hewn school, where 117 children in
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blue and yellow uniorms huddled around
a jetty over the lthy water o the lagoon.
Residents o such areas are a long way
rom consumerism.Te 7UP that Owolala Elijah, 27, a sh-
erman, slurps at a village meeting was paid
or by the local chie - he is rarely able to
aord branded zzy drinks himsel, he says.
A Standard Bank study last year ques-
tioned Nigerias potential as a mass con-
sumer market. It showed that in some o
the urban centers seen as promising, like
Lagos, household incomes are ar below the
threshold or a retail boom.
It ound 93 percent o Lagos households
were in the poorest category, with monthly
income lower than $390, compared with
only 38 percent in Johannesburg.
Only retailers targeting the bottom o
the pyramid, like brewers or Swiss ood
group Nestle, can tap such people, said
Standard Banks head o equity product,
Matthew Pearson.
(Retailers) ... down in South Arica
were most surprised, said Pearson. Re-
ceived wisdom was that the middle class in
Nigeria was a lot bigger than it actually is.Tat suggests retailers like high-end
South Arican supermarket Woolworths,
which set up in Nigeria in 2011, ace a small
market or some time. Strategies targeting
middle-income groups that worked in plac-
es like India and South Arica may not yet
work so well or Nigeria, Pearson said.
DANGERS OF YOUTH
Ocial gures say absolute poverty rose to
60 percent last year, rom 54.7 percent in
2004, worsened by rapid population growth.Some 100 million Nigerians live in poverty.
With that kind o pressure o popula-
tion, the way Nigeria has worked ... would
be very dicult to repeat over the next 20
years without some big catastrophe hap-
pening, said Antony Goldman, head o
Nigeria-ocused PM Consulting.
Te PRF says nearly hal o Nigerians
are under 15, and in the Middlebelt - a
region o central Nigeria populated largely
by minority ethnic groups - violence is com-
mon among youth gangs, with disputes over
scarce land and water. Dozens have been
killed in the past week in Plateau state.
In the Niger Delta, gangs o mostly un-
employed armed youths steal tens o thou-
sands o barrels o oil a day rom pipelines.
And the biggest threat to Nigerias stabil-ity - the norths Islamist insurgency - is driv-
en by its desperate, unemployed youth popu-
lation, said Mohammed Junaidu, a northern
opposition politician and academic, adding
that Nigeria had 12 million children o
school age who were not in education.
Its a combination o ailures o governance
and the ticking demographic time-bomb,
he said. Tey urgently need to paciy these
youths or ace more instability and terrorism.
ROOM FOR OPTIMISM?Te government has or decades tried to
curb population growth through am-
ily planning, but struggles to inuence a
poorly educated population, many living in
remote rural areas, that values having many
children, ocials say.
Nigeria needs an attitudinal change,
says John Adegbite, executive director o
NGO the Planned Parenthood Federation
o Nigeria, adding that only around 10 per-
cent use contraceptives.
Yet those who take a bullish view o
Nigerias economic uture argue that its
growth can still eventually lit large sections
o society out o extreme poverty.
Charles Robertson at Renaissance Cap-
ital says over a third o children go to sec-
ondary school, compared with just 7 per-cent in 1975. Tat is now similar to India
20 years ago, he says.
He also thinks that, as Nigeria and A-
rica become more prosperous, populations
will naturally rise more slowly.
As Arican countries get richer, birth
rates will drop dramatically, he said - as has
happened in India and Egypt. As a result, he
says, U.N. projections or Nigerias popula-
tion by 2050 will be out by tens o millions.
For demographers like Olumide, that is
too complacent.Without a change o reproductive be-
havior, I cant see how we can slow popula-
tion growth, he said. We are just loading
more people onto the table. Very soon, its
going to collapse.
($1 = 157.5000 naira)
Additional reporting by Camillus Eboh in Abuja;
Writing by Tim Cocks; Editing by Will Waterman
cr pa ro o a ak oo war o makoko lago Jaar 22,
2013. REUTERS/AkinTUndE AkinlEyE
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Ara r pa o or oraBy PAscAl letcheR
JOhAnnesBuRG, APRil 5, 2013
Arica is rising not only on the
growth charts o economists.
Te continent that was a byword
or poverty, chaos and bloodshed only a ew
decades ago, providing a media east o am-
ines and wars, is slowly but steadily notching
up gains on the democracy scorecard too.
Last months generally peaceul Kenyan
presidential election - and the Supreme
Court process that conrmed Uhuru Ke-
nyattas narrow win - conounded pundits
predictions that East Aricas biggest econ-
omy would tumble back into the same inter-
tribal violence which bloodied a 2007 vote.
Te Kenyan ballot, ollowing a line o
hotly-contested but broadly smooth elec-
tions last year in Senegal, Sierra Leone and
Ghana, has bolstered what many see as a
spreading embrace o multi-party democ-
racy in Arica.
Combined with better economic man-agement by many governments and a ast-
growing population o young workers andconsumers, this improving political matu-
rity will underpin expected GDP growth
or Sub-Saharan Arica o ve percent or
more this year.
I you peel back Arica Rising, it is
not just growth rates, said John Stremlau,
Vice President or Peace Programs at the
Atlanta-based Carter Center and a veteran
observer o Arican elections, including the
most recent Kenyan one.
In a December outlook or Sub-Saha-
ran Arica, Fitch Ratings called the vote
in Kenya, seen as a political and economic
anchor in East Arica, an important inec-
tion point.
Despite technical glitches and some
localized violence, Kenya passed this test
without repeating the 2007-2008 blood-
letting that killed more than 1,200 people,
helping to mend its image as one o Aricas
most stable democracies.
Standard Bank economist Simon Free-
mantle said the Kenya vote added to a listo recent Arican elections where incum-
bent leaders accepted deeat, such as Zam-bias Rupiah Banda in 2011 and Senegals
Abdoulaye Wade in 2012, or where losing
challengers heeded the verdict o the ballot
box and the courts.
Te momentum, the general thrust is
absolutely positive ... these are all examples
rom very dierent countries ... dierent
geographically, historically, culturally, and
all showing signs o that maturation, Free-
mantle told Reuters.
MOMENTUM POSITIVE BUT
PATCHY
He cautioned that the permeation o elec-
toral democracy across a vast and varied
continent was not uniorm, as Arica has
not completely shaken o some o its old
demons.
Te Arican narrative in many ways is
not a single-track story, its very patchy, he
said.
A rebel takeover in Central Arican Re-
public last month became the latest ash-point o regional instability. Tis sucked in
South Arica which suered a blow to its
ambitions to be the continental superpower
by losing 13 soldiers on a military training
mission killed in conused ghting there.
Frances robust military intervention in its
ormer Sahel colony Mali in January repulsed
a mix o al-Qaeda allied rebels, but at the
same time raised ears o an Islamist jihadist
backlash in North and West Arica, not least
in Nigeria where the government is battling
the northern Boko Haram insurgency.Democratic Republic o Congos east re-
mains a political and ethnic tinderbox and
a surprise attack by pro-secessionist rebels
in March on the second city and mining
hub o Lubumbashi added to the instabil-
ity woes o the central Arican giant.
A raid by opposition Renamo supporters
in Mozambique on Tursday, killing our
policemen, may also worry mining rms ex-
A a ra org o o t saar wpapr owg prooa r or wo
a pra o or Kbra o narob, mar 8, 2013. REUTERS/JUliA
SESTiER
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ploring huge coal and natural gas reserves.
Nevertheless, most Arica watchers say
the continent has unquestionably moved
on rom the time when government changewas more likely to come rom the point o a
gun than a ballot box.
In its 2012 Arica attractiveness sur-
vey, Ernst & Young recalled that between
1960, the milestone year or Arican inde-
pendence, and 1990 there was only one in-
stance o an Arican leader or ruling party
being voted out o oce.
Te continent gained an unenviable
reputation or bloody coups, kleptocratic
Big Men dictators, and brutal civil wars
ought over resources and oten eaturing
child soldiers - an image o chaos and con-
ict that has endured over the years.
Te perception is that Arica is oten
more politically unstable, more corrupt
and more challenging to do business than
anywhere else in the world, the Ernst &
Young survey said.
But it argued the acts now tell a dier-
ent story, noting that most Arican countries
have transitioned, or are transitioning toward,
some orm o participatory democracy.In its 2012 Democracy index, the Econo-
mist Intelligence Unit said elections had be-
come a normal occurrence in Sub-Saharan
Arica, while coups had declined sharply.
Te EIU listed 22 Sub-Saharan Arican
states classiying above Russia on its index,
while 34 were listed above China.
But it noted that despite more inrequent
coups, conict, ailed government and hu-
man rights abuses remained widespread.
TIPPING POINT FOR AFRICAArican Development Bank president
Donald Kaberuka believes Arica, writ-
ten o or decades as a hopeless continent
always begging or aid, has now reached a
milestone moment.
It is not simply a tipping point in the
ortunes o Arica, it is a tipping point in
how the rest o the world looks at Arica
as well, he told Reuters at a summit oBRICS emerging powers last week held or
the rst time in Arica.
As China, India, Brazil and Russia in-
creasingly court Arica, he says this is
changing perceptions o the region rom a
continent o problems to a source o busi-
ness opportunities in inrastructure, nan-
cial services, and agriculture.
Sudan-born telecoms entrepreneur Mo
Ibrahim, who has created a $5 million an-
nual prize to reward good governance in
Arica, points to the record 86 percent Ke-
nya election turnout as a sign Aricans are
embracing electoral democracy as a viable
orce. Tis contrasts with low turnouts in
older western democracies.
ipping the balance towards improv-
ing governance, Ibrahim said, was a criti-
cal mass o Aricas young population who
were better educated and better inormed
than their parents.
Tey ask Why are we like this? Why
arent we like the Europeans and Ameri-cans, why not like China?, he added.
Standard Banks Freemantle said this
increasingly vocal voice and agency o the
people was being strengthened by grow-
ing urbanization and access to technology
across Arica.
Tese dynamics or me are all suggest-
ing that political systems are having to be
more nimble and relevant, he said.
BEWARE EXCLUSION
But Aricas burgeoning growth, swellingpopulation and blossoming wealth - or
some - has a potential weakness in the wid-
ening inequality gap in most Arican soci-
eties today.
I the continents ast-growing young ur-
banized populations eel excluded rom the
material benets o an economically rising
Arica, or i these spoils are appropriated by
ruling elites, then this risks touching o the
same kind o social explosion that caused
the Arab Spring in North Arica.
We have to pay attention to inclusion.
We cannot leave people behind, Ibrahim
said.
He urged governments to turn the eco-
nomic boom into stable, lasting prosperity
by investing in human development, edu-
cation and inrastructure.
Freemantle also warned that Arican
mega-cities like Lagos could become dan-
gerous pressure cookers i visible dispari-
ties in wealth were not tackled by national
and local authorities.
Nevertheless, ADBs Kaberuka sees A-
rica in a bullish mood as the developed
West struggles with economic problems.Clearly, as Frances intervention in Mali
shows, there are still limits to this new Ari-
can spirit o sel assertiveness, and capacity in
security and deense is certainly one o them.
But Kaberuka says Arica can start by
solving its own problems with its own re-
sources. His ADB is planning to launch an
inrastructure bond in the coming months
to raise up to $22 billion or investments
in targeted inrastructure projects, to be
bought by reserves held by member nations
central banks.Arica is coming o age, he said.
Reporting by Pascal Fletcher; Editing by
Peter Graff
Ara i s:http://link.reuters.com/ger37t
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ReuteRs AfRicA investment summit 2013
so Ara p Gawa o Ara ag: o a agr
By ed cROPley
JOhAnnesBuRG, APRil 12, 2013
With its sophisticated banking
system, decent roads and ports
and top notch commercial
courts, South Arica is pumping itsel up as
the Gateway to Arica, the ideal launchpad
or oreign capital into the ast-growing but
chaotic markets to its north.
However, the logic o tapping into the
momentum o a rising Arica and nding
alternatives to a atlining Europe - cur-
rently the destination o nearly a third o
South Arican exports - does not play well
north o Pretoria.
Primarily, the Gateway label grates with
Arican states seldom keen to roll out the
red carpet or the continents economic gi-
ant, still regarded as somehow less Ari-
can, even though apartheid ended nearly
two decades ago.
Can we please stop using this term be-
cause it does not pay any dividends to whatwe are trying to do, said Elias Matsilela,
chie executive o the Public Investment
Corporation, which manages 1.3 trillion
rand ($146 billion) in South Arican civil
servants pension unds, with a mandate to
invest 60 billion o that in the sub-Saharan
region outside South Arica.
In act, it does the reverse, he told this
weeks Reuters Arica Investment Sum-
mit. It would get on my nerves as well i I
werent South Arican.
Te inrastructure premium that SouthArica now enjoys may also be shortlived as
hety investments in telecommunications
and transport in potential rival Arican
hubs such as Kenya start to pay dividends.
Although it is unlikely that $34 billion
mobile phone giant MN (MNJ.J) will
ever ditch its Johannesburg home, chie
executive Siso Dabengwa conceded loca-
tions like Nairobi now oer more to mul-
tinational businesses than 10 years ago.South Aricas days as Aricas biggest
economy - a symbolic but telling label - are
also numbered, with Nigeria, already the
continents biggest oil producer and most
populous nation, due to rebase its GDP g-
ures next year.
Te recalculation is expected to increase
the size o the West Arican nations econ-
omy rom $250 billion to $350 billion, put-
ting it only a shade behind South Aricas
$385 billion.
I Nigeria maintains its annual growth rate
o nearly 7 percent against 3 percent in much
more mature South Arica, it will lay claim to
the top economy spot in less than three years.
FALTERING AMBITIONS
Although the ruling Arican National
Congress (ANC) has long-standing ties to
many Arican nations through its years o
exile during apartheid, it has struggled to
translate that into riends and real inuence
on the vast and varied continent.Pretorias altering continental ambitions
were starkly revealed last month when 13
South Arican soldiers were killed in Cen-
tral Arican Republic - the worst military
casualties since the ANC took power - by
rebels who ousted South Arican-backed
President Francois Bozize.
It was also visible in the huge diplomatic
eorts South Arica had to expend last year to
persuade the Arican Union to accept its can-
didate, Nkosazana Dlamini-Zuma, as head o
the Addis Ababa-based continental body.Relations with Nigeria are suciently
prickly that rows can be sparked by matters
as trivial as District 9, a 2009 science ction
lm that depicted Nigerians as cannibals, or
by a group o Nigerians arriving at Johannes-
burg airport with ake vaccination certicates.
On the South Arican side, too, the oth-
erness is shown by businessmen in Johan-
nesburg commonly reerring to plans or
going into Arica, oblivious to the realitieso their location in same way that Britons re-
er to Europe as something that only starts
on the other side o the English Channel.
Tat is slowing changing as a handul o
large South Arican companies make deep
- and successul - inroads into the business
worlds nal rontier.
Besides MN, now present in more
than 15 Arican markets, notable other ex-
amples are retailer Shoprite (SHPJ.J), A-
ricas biggest supermarket chain, and Stan-
dard Bank (SBKJ.J), the continents biggest
bank by assets with a presence in nearly 20
Arican countries.
South Arican logistics rms are also
starting to set up intra-Arican operations
rather than simply plying the route north
rom Pretoria to Zimbabwe and beyond.
Weve always been a north-south op-
erator but we are also becoming more active
in the east-west axis, said Hubert Brody,
chie executive o transport rm Imperial
(IPLJ.J), citing the improvement in roadnetworks that in colonial days were de-
signed purely to get raw materials rom the
interior to the sea.
In a similar vein, South Arican commer-
cial ties with the rest o Arica are also deep-
ening, with a 29 percent increase in two-way
trade rom 2011 to 2012 to $23 billion.
But numbers do not tell the whole story.
Te rst-world comorts o Johannes-
burg and Pretoria - rom hospitals and
schools to shopping malls and the con-
tinents biggest airport - are still likely tomake them locations o choice or regional
corporate headquarters or years to come.
In South Arica you have a legal sec-
tor, a nancial services sector, a commercial
sector thats enormously well developed
and that will continue to be a huge ben-
et, said Diana Layeld, the Arica head
o Standard Chartered bank.
to continue reading
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ReuteRs AfRicA investment summit 2013
Ara bak pra r wgBy helen nyAmBuRA-mWAuRA
JOhAnnesBuRG, APRil 12, 2013
It took Kenyan lender KCB Group
(KCB.NR) less than a year to break
even ater opening in tiny Burundi, a
country better known or explosive violence
than explosive growth.
KCBs success highlighted the hunger
or nancial services that the biggest local
banks are turning regional to tap.
Stretching beyond home markets, they are
morphing into ormidable competition or es-
tablished international lenders - and becoming
potential acquisition targets or outsiders seek-
ing a oothold on the ast-growing continent.
Its an incredibly exciting phase, said
Diana Layeld, Standard Chartereds chie
executive or Arica, where the global bank
has worked or over 150 years.
What you have seen, particularly in
some o the newer local regional banks, is
an ability to serve emerging mass market
consumers where other nancial institu-tions havent necessarily been able to cover
eectively, she told the Reuters Arica In-
vestment Summit this week.
Despite being in Arica or so long, or-
eign headquartered banks such as Standard
Chartered and Barclays have tended to o-
cus on businesses and the wealthiest.
Arican banks are seeing more opportu-
nities at the lower end o the market. Inno-
vations such as mobile banking oer them
the chance o getting access to more people
more quickly than ever.KCB opened in Burundi in 2012, bring-
ing the number o its east Arican operations
to six. Equity Bank, its bigger rival by market
capitalization, is in ve countries and is also
eyeing southern Arica.
On the opposite side o the continent,
Nigerias Guaranty rust Bank announced
plans this week to make acquisitions in
three east Arican countries. Te $4.4 bil-
lion bank already has six operations outside
its home market.
South Aricas Big Four are also build-
ing up to the north - the biggest, Standard
Bank, operates in 18 Arican countries.
While there is an average o pretty much
one deposit account or every South Ari-
can, according to the latest World Bankdata, that alls to ewer than 220 accounts
per thousand people in Burundi, a 2012
survey showed.
POTENTIAL TARGETS
Growth can be dramatic. Between 2006 and
2009, the number o accounts in Burundis
neighbor Rwanda grew more than 20-old.
Present in the largest number o coun-
tries is ogo-based Ecobank ransnational
, a $1.6 billion lender with branches in 32
nations and plans to enter ve more.It was that wide presence which drew South
Aricas state pension und manager, Public In-
vestment Corporation (PIC), to pay $250 mil-
lion or a stake o nearly 20 percent in 2012.
Its Arican pride to be able to start an
Arican institution rom scratch and grow
it to compete with large global entities,
said Elias Masilela, PICs chie executive.
Although oten still a straightorward
deposit and loan business, Arican banking
is starting to draw the attention o private
equity rms and pension unds as well as
overseas banks seeking access to some o
the worlds astest growing markets.
Carlyle Group is hunting or nan-
cial services acquisitions in both west and
east Arica, according to the private equityrms Arica co-head.
Less than one in our people across
sub-Saharan Arica have a bank account
or have access to ormal nancial services,
Marlon Chigwende said. We are looking
at ways o participating in that space.
Although Aricas poorest are so ar little
touched by the inancial services sector, some
countries have no shortage o banks. Most o an-
zanias 43 million people have no bank account, or
example, but their country has more than 50 banks
- ocused largely on a small urban elite.Tat ragmented banking sector makes
it ripe or consolidation, Standard Char-
tereds Layeld believes.
In any market a decent bank is a poten-
tial target, she said.
Additional reporting by Duncan Miriri in
Nairobi and Chijioke Ohuocha in Lagos;
Editing by Matthew Tostevin
Brokr work o rag foor o ngra ok xag ora apa lago Apr
28, 2010. REUTERS/AkinTUndE AkinlEyE
7/27/2019 African Investment Summit
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ReuteRs AfRicA investment summit 2013
Ara rg o r arr barga w ca
By dAvid dOlAn
JOhAnnesBuRG, APRil 12, 2013
For more than a decade Arican gov-
ernments have rolled out the red
carpet or Chinese investors, trading
oil, coal, iron ore and other resources or
badly needed ports, roads and railways.
But policymakers and executives, wor-
ried the ood o cheap Chinese imports
is sapping Aricas own manuacturing po-
tential, say the continent must drive harder
bargains with China.
Te time has come, some say, to jettison
the view o Beijing as Aricas benevolent
partner, bound by a common resistance to
the meddling West.
Te sad reality is that they are not com-
rades. Teir companies are there to make
prots like everyone else, Zimbabwean
Finance Minister endai Biti told the Re-
uters Arica Investment Summit this week.
Te Arican textile industry has basi-cally collapsed because o cheap Chinese
imports ... Arica needs China but lets cre-
ate an equitable relationship.
Chinas trade with Arica has surged
rom about $10 billion in 2000 to $166
billion in 2011, with much o that an ex-
change o Arican minerals or Chinese
manuactured goods.
Nigerian Central Bank Governor Lami-
do Sanusi warned last month it was time
or Aricans to wake up to the realities o
their relationship with China.It is a signicant contributor to Aricas
deindustrialization and underdevelopment,
he said in an opinion piece in the Financial
imes that rufed eathers in Beijing.
Even in South Arica, the continents
largest and most developed economy, man-
uacturing accounts or just 15 percent o
GDP. It is even lower elsewhere, under 11
percent in Kenya and 10 percent in Nigeria.
AFRICA TO BLAME?
Part o the ault may lie with Arican poli-
cymakers, or not demanding enough rom
their Chinese counterparts at the bargain-
ing table.
I you allow the Chinese to come and
rape you and take whatever they do because
youre just looking at the money they bring,
and i youre looking on a short-term basis,
the country will suer, theres no two ways
about it, said Sipho Nkosi, CEO o South
Arican mining company Exxaro Resources.
Arica must demand that China trans-
er skills and technology to the continent
instead o allowing it to simply export raw
materials, he said.
For some Arican politicians, part oChinas attraction lies in its unwillingness
to criticize local governments over human
rights or corruption, unlike the West.
You cant blame the donor only. You
need to blame the receiving government as
well, said Elias Masilela, the chie executive
o South Aricas government pension und.
Arican governments also needed to do
more to put in place the inrastructure -
including power and transport - that can
support a domestic manuacturing industry,
speakers said.Sensitive to the criticism, China has
been careul to rame its role in Arica as
one that is mutually benecial.
Arica had a long colonial history and
should know the nature o colonialism,
Foreign Ministry spokeswoman Hua Chu-
nying said last month in response to Sa-
nusis comments.
Comparing China-Arica cooperation
to the old colonial Western powers lacks
any sense o logic.
LOAN-BACKED CHARM OFFENSIVE
Beijing has also responded with a charm o-
ensive to ease concerns about its role on the
worlds poorest continent, including lobby-
ing or South Aricas addition to the group
o developing countries now called BRICS.
President Xi Jinping last month visited
Arica on his rst trip abroad as president.
While Xi outlined his Arica policy as
a partnership among equals, China clear-
ly holds the cash: it is oering $20 billion
o loans to the continent between 2013
and 2015.
Chinas strength in low-cost, large-vol-
ume manuacturing has also helped somelocal industries, most notably telecoms,
where handsets and equipment rom the
likes o Huawei and ZE have made mo-
bile phones aordable or millions o A-
ricans.
It probably has been more benecial i
one looks at it rom our industry, said Si-
so Dabengwa, chie executive o South A-
rican telecommunications company MN
Group, told the Summit.
Tey have driven prices down quite sig-
nicantly.
Additional reporting by Ben Blanchard in
Beijing; Benon Oluka and Zandi Shabalala in
Johannesburg; Editing by Pascal Fletcher
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