african investment summit

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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

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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


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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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Zbabw o ra or o: BBy stellA mAPenZAusWA


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

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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

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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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6


mtn o p p o $8 bo o aqo: ceO

By helen nyAmBuRA-mWAuRA AndZAndi shABAlAlA


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

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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

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pr ak mar 26, 2012.

REUTERS/EldSOn chAgARA


8/21

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saar carr xpa so AraBy helen nyAmBuRA-mWAuRA And

BenOn OluKA


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

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car a g bak a-growg AraBy helen nyAmBuRA-mWAuRA


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

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pak a 2013

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10/21

10


tooa arg growg or ark AraBy tOsin sulAimAn


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


11/21

11


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


12/21

12


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.


13/21

13


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

to continue reading
http://users/alisonvictor/Dropbox/Troy%20+%20alison/Reuters%20African%20Investment%20summit/sh%20HD/Users/alisonvictor/Library/Caches/Adobe%20InDesign/Version%207.5/en_US/InDesign%20ClipboardScrap1.pdfhttp://www.reuters.com/article/2013/04/09/us-africa-summit-ghana-idUSBRE9380GX20130409http://www.reuters.com/article/2013/04/09/us-africa-summit-ghana-idUSBRE9380GX20130409http://users/alisonvictor/Dropbox/Troy%20+%20alison/Reuters%20African%20Investment%20summit/sh%20HD/Users/alisonvictor/Library/Caches/Adobe%20InDesign/Version%207.5/en_US/InDesign%20ClipboardScrap1.pdf


14/21

14


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


15/21

15


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


16/21

16


Ara r pa o or oraBy PAscAl letcheR


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


17/21

17


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

To read all stories
http://link.reuters.com/ger37thttp://link.reuters.com/ger37t


18/21

18


so Ara p Gawa o Ara ag: o a agr

By ed cROPley


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
http://www.reuters.com/article/2013/04/12/us-africa-summit-safrica-idUSBRE93B0QA20130412http://www.reuters.com/article/2013/04/12/us-africa-summit-safrica-idUSBRE93B0QA20130412


19/21

19


Ara bak pra r wgBy helen nyAmBuRA-mWAuRA


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


20/21

20


Ara rg o r arr barga w ca

By dAvid dOlAn


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


21/21

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