OctoberFirst African Business Opportunities Newsletter, June 2010

On May 31st, 2010, posted in: News by
Welcome to OctoberFirst Consulting’s newsletter. Inside you’ll find articles and information on investment opportunities in Africa. Should you wish to discuss these further, do contact us.
This newsletter is published by Mr Frank Aneke, OctoberFirst Consulting, PO Box 83, Liverpool NSW 1871, Australia.
Telephone +61 (02) 9773 6672, email info@octoberfirst.com.au
This publication is supplied for information purposes. Some articles in this publication have been supplied by third parties and OctoberFirst Consulting does not take responsibility for any inaccuracies in these articles.

In this issue….

Agribusiness.

Kenya: Lack of Fingerlings Holds Back Ambitious Fish Farming ProjectEthiopia: Leather processing set to be a major source of revenueNigeria: Country can generate $1b annually from bamboo products

Environment & Renewable

Nigeria: Country packages incentives for investors in petrochemicals, fertiliser, | Africa losing billions in clean energy dealsSouth Africa: Invest in Green Economy – Patel

Telecoms & ICT

Egypt: ICT sector helps Country grow by 5.8% in Q1South Africa: Skills Gap Has IT Firms Worried Over SurvivalNigeria: Country Launches Vision 2020 ICT Blueprint

Mining & Energy

Uganda: Scramble for Minerals BeginsNigeria:  New gas price to impact on power supply Mozambique: Businesses Urged to Invest in Mining Potential

New Investment & Trade

Nigeria: NNPC, Chinese firm to build $28.5bn Greenfield refineriesAfrica: Changing Economy Opens Door Wider for Africa InvestorsKenya floats fresh tender for faster cross-country railway

Interview of the Month

Only Africans can transform Africa, says Ezekwesili, World Bank Vice President.

Country Stats: Angola


Kenya: Lack of Fingerlings Holds Back Ambitious Fish Farming Project

by Ouma Wanzala

Lack of fingerlings–young fish– is delaying roll-out of more fish ponds under the Sh22 billion constituency-based stimulus plan, putting a further blot to the economic rescue plan that was mooted last June, but failed to kick off.

The fish farming project–which included the construction of 200 fish farming ponds in 140 constituencies at a cost of Sh1.12 billion– was to create 120, 000 new jobs.

It was aimed at putting money into people’s pockets at a time when many businesses were reporting lower sales and profits on the country’s soft economy.

However, the government sponsored Economic Stimulus Programme plan did not hit its target due to low pace at which the government released money and lack of capacity at the local level to spend the billions of shillings that Treasury plans to send to the constituencies. Only Sh5 billion has so far been spent out of the Sh22 billion.

Fisheries minister Paul Otuoma said that his ministry has a shortage of about 24 million certified tilapia and catfish fingerlings to support the fish farming plan.

Only 4,000 out of 14,000 fish ponds in the first phase that have been stocked with fingerlings across the country.

“Breeding of good and quality fingerlings requires time and that is why we seem to be moving slowly, but it’s our hope that we will complete the project as planned,” the fisheries development minister told Business Daily.

Dr Otuoma said he is banking on the government-run Kenya Marine and Fisheries Research Institute to ensure quality fingerlings are sold to farmers, a move that will boost production at a time when the sector is facing low volumes.

Statistics at fisheries ministry indicate that in 1999 the country harvested 1.2 million tonnes of nile perch variety though stocks have dwindled to 300 metric tonnes.

Lake Victoria is among the water bodies that have recorded a decline from 200,000 metric tonnes in 1999 to about 114,000 metric tonnes in last year, with no signs of stocks recovering soon.

The farming project is also grappling with lack of fish food. “We are working with various companies that deal in feed production to ensure that they adhere to the required standards.”

Private players such Dominion and other 25 manufacturers have been brought on board to ensure that the fingerlings and food are enough to meet the demand.

The current capacity of fish feed in the market is 14,000 metric tonnes while the ministry requires about 100,000 metric tonnes in coming months.

“We are actively engaged with feeds manufacturers to produce quality fish feeds that will result in better fish growth,” he said.

Dr Otuoma said his ministry will be seeking additional funds from treasury to enable fish farmers who are in areas which cannot hold water for long buy lining to put in the fish ponds.

“Even though treasury has zero-rated those lining its not enough as most Kenyans who are keen on fish farming do not to be left behind.”

Kenya has potential to harvest more the commodity with over 1.14 million hectares of land viable for fish farming.

If the potential is fully exploited, production could be increased to 11 million metric tonnes per annum and fetch Sh750 billion.

Dr Otuoma said the current production is only 4,220 metric tonnes with a total area under aquaculture production standing at 722 hectares.

If successful, the project is likely to employ 280,000 youths and who will earn Sh700 million.

Delay in training extension officers to monitor good farming methods at the grassroot levels is also dashing hopes of rural poor benefiting from project.

Source: Business Daily (Nairobi)     Images: farm1.static.


Ethiopia: Leather processing set to be a major source of revenue

Ethiopia is the 10th largest producer of livestock in the world and the biggest in Africa with an estimated 78 million cattle, sheep and goats.

The leather industry: It is the second greatest contributor of export earnings after coffee. Given the existing abundant livestock resource, it has the potential to become a major source of revenue. The country produces two of the world’s finest and most sought after varieties of leather, and its goatskins are widely recognised in international markets for making high quality suede for fashion products.

Leather products: The majority of Ethiopia’s leather products reach markets including Italy, UK and China in a semi-processed form. The government recognises the real rewards are to be found in processing leather locally, and is supporting business enterprises which are keen to maximise leather products for export.

Investment opportunities in leather industry

• Tanning up to finishing
• Manufacture of luggage items, handbags, saddles and harness items
• Manufacture of footwear, garment and integrated tanning and leather goods
• Partnerships with investors to develop technology and design.

Source: TradeinvestAfrica      Image: analoguedigital.com


Nigeria: Country can generate $1b annually from bamboo products

NIGERIA can generate more than N1 billion annually from bamboo products. This was disclosed by the President, African Network for Bamboo and Rattan, Alhaji Bello Dogon-Daji.Dogon-Daji.

The president told newsmen in Abuja that this could be achieved only if the government gave the necessary support to bamboo stakeholders.

He noted that China generated more than five billion dollars during the last decade from bamboo production with the active support of the government.

He, however, noted that it would require collaboration between stakeholders and the three tiers of government, as no individual or non-governmental organisation (NGO) could venture into bamboo production alone.

He said: “Bamboo can be used as biogas. It is edible; it can be used to make ceiling board, carpet, mat, chairs, tables, beds, tooth picks, blinds and many other things,” he stressed.

He explained that bamboo plant grows naturally in rain forest zones and in the riverine areas in the Southern part of the country.

Like any other plant, he said, bamboo, with over 500 different species, could be developed by cultivating it from nursery level.

“Here, in Nigeria, we have commenced the programme of cultivating the tree at Bwari Area Council,” he said, adding that the potential of the plant is grossly under-utilised in Nigeria, as it is only used for scaffolding at construction sites and for making cane chairs and baskets.

Source: Compassnews      Image: tytyga.com


Nigeria: Country packages incentives for investors in petrochemicals, fertiliser

By Samuel Ibiyemi, Houston, Texas (USA)

Nigeria Federal Government has packaged fresh incentives for investors in the United States of America, Europe and Asian countries willing to establish petrochemicals, fertiliser and ethanol plants in Nigeria under the Nigeria Gas-Master Plan.

This is to ensure the elimination of gas flaring in the Niger Delta and increase domestic utilisation of natural gas in the country which is needed to create wealth and increase contribution of the oil and gas industry to gross domestic product (GDP).

The gas flaring deadline has been shifted many times from the January 1, 1984 date provided in the principal Act which was later shifted to December 31, 2008, before it was again postponed to December 31, 2012

The Minister of Petroleum Resources, Mrs Diezani Allison-Madueke, who made the disclosure at the Nigerian stand at the Petroleum Technology Association of Nigeria (PETAN) during Offshore Technology Conference (OTC) in Houston, Texas, in the United States of America (USA), noted that attraction of investors in gas projects was one of the issues that brought her to the USA.

She disclosed that various meetings had been scheduled with prospective companies that would bring their resources to Nigeria to establish petrochemical and fertiliser plants so as to ensure that Associated Gas (AG) being flared in the Niger Delta by international oil companies (IOCs) becomes a source of revenue generation to the Federal Government.
Allison-Madueke gave the assurance that incentives had been packaged for the investors so that it would be possible for the government to boost revenue from gas.

A senior official of the Petroleum Ministry said: “We are also not limiting our search for investors to the US because we are also talking to investors in Europe and other parts of the world.”

However, investigations revealed that investment in the petrochemicals sector in Nigeria had continued to suffer setbacks since 2006 when the Niger Delta militants resumed attacks on oil facilities and gas pipelines.

This has also affected the execution of the $2.5 billion gas to petrochemicals complex at Lekki, in Lagos State, by Eurochem Technologies of Singapore, designed to consume 220 million cubic feet per day (mmscf/d) of gas.

Source: Tribune Nigeria          Image: linde-engineering.com


Africa losing billions in clean energy deals

By Wendell Roelf

CAPE TOWN (Reuters) – Africa stood to loose billions of dollars because a lack of economic incentives and inadequate regulatory regimes made the continent unattractive for wind power companies, a top industry official said on Thursday.

Eduardo Gonzalez, Spain’s representative to the Global Wind Energy Council (GWEC), said the world’s poorest continent fares worst among other regions when it came to wind power generation.

Wind installed capacity in Africa and the Middle East is seen rising to about 5.1 gigawatts in 2014 from 1.5 GW in 2010, lower even than in the Pacific region, where capacity was seen rising to 6.4 GW in four years time from 2.9 GW this year.

“In the absence of the right wind measurements, political stimulus, regulatory framework and economic support, heavy investments in the renewable sector are going somewhere else,” Gonzalez told Reuters on the sidelines of an African wind energy conference.

Gonzalez said the GWEC estimated that total global new investments in clean energy projects would top $200 billion in 2010, rising from last year’s $162 billion.

Global wind energy supply is expected to rise by 160 percent over the next five years with China and North America leading the low-carbon push, the GWEC said in April.

Gonzalez said Africa had “extremely good” wind potential, especially in the Gulf of Suez in Egypt, in Morocco towards the western Sahara and in the Western Cape of South Africa.

South Africa’s wind industry is the least developed with less than 10 MW of capacity in comparison to 400 MW in Egypt.

Promise was also shown in Tanzania and Kenya, where power utility KenGen last month invited companies to carry out feasibility studies on nine new wind sites as it seeks to diversify its energy mix.

“However, very little wind measurements have been taken in Africa and in order to develop projects we need measurements,” said Gonzalez.

He said African countries, fearful of expensive feed-in tariffs, should rather consider tax credits to encourage private investment as it moved to build its renewable energy sectors.

AFRICAN WIND INVESTMENTS

Gonzalez, also the communications manager for Spain’s largest power utility Iberdrola, said they expected a final answer from Egypt next year on a 400 million euro 300 MW wind project bid in the north African nation.

“By the third quarter of 2011 we expect an answer,” he said, adding that, if successful, the company would install the wind turbines and operate the Gulf of Suez wind farm for 20 years.

However, he said Iberdrola would not invest in South Africa, the continent’s biggest economy, until there was stability in the regulation of the wind energy sector.

South African power utility Eskom intends procuring a 100 MW wind farm, which could be scaled up to 200 MW, as it tries to lure investors in the renewable sector after introducing attractive feed-in tariffs.

“When there is a stable regulation for the wind sector in place with the right support mechanisms, we and the rest of the investors will flow down to South Africa… Until we see a stable regulation of the wind energy sector we won’t come to South Africa, as simple as that,” Gonzalez said.

Source: Reuters    Image: Reuters


South Africa: Invest in Green Economy – Patel

Johannesburg — Economic Development Minister Ibrahim Patel says moving to cleaner energy sources will hold enormous opportunities for the country’s economy.

He was speaking on the sidelines of a Green Economy Summit currently taking place at the Sandton Convention Centre.

Patel said in order to address huge unemployment challenges in the country, South Africa had a responsibility to explore new innovative ways to grow the economy.

“Green Economy gives us an opportunity to achieve our economic development goals and it’s something we have to explore,” Patel said.

He said organisations like the Industrial Development Corporation were ready to finance entrepreneurs who are willing to embark on green economy industry.

The IDC has began to calculate the potential size of green economy and Patel said preliminary research covering areas such as solar bio-fuels shows that almost 300 000 jobs can be created by the industry in the next few years.

The green economy sector has attracted more than $17 billion in China and more than 1.2 million people are currently employed in the sector. Germany has managed to create about 200 000 jobs using throughput technologies aimed at reducing carbon emissions.

Patel said South Africa will be learning from the countries where the move to green economy has led to massive job creation.

The country’s mining industry has also committed to achieving green economy objectives by promising to promote “responsible” mining that would not leave behind negative environmental impacts.

“I firmly believe that this new approach is a global imperative, not only for sustainable mining but also for sustainable development in general,” said Mineral Resources Minister Susan Shabangu.

Shabangu said old mining technologies and outdated mindsets towards labour issues had created unnecessary and painful social consequences and environmental damages.

“To avoid these preventable outcomes, we have embarked upon a process of multi-stakeholder engagement involving all role players in our mining sector,” she said.

Source: BuaNews (Tshwane)


Egypt: ICT sector helps Country grow by 5.8% in Q1

By Agency Reporter

The 11.3 per cent growth achieved by the information and communications technology sector helped Egypt grow 5.8 per cent in the first quarter of this year.

Egypt‘s Economic Development Department revealed the growth was at its fastest pace in almost two years and is expected to hit as high as 5.3 per cent in the fiscal year ending June, up from 4.7 per cent in the previous year.

Egypt is a major outsourcing destination in the Middle East and has seen huge investments by companies like Sykes Enterprise and Stream Global Services last year. Egypt‘s Information Technology Industry Development Agency has also signed a Memorandum of Understanding with Intel Corp to use Intel‘s technical expertise to develop products and technical solutions.

The Chief Executive Officer, Egypt‘s Information Technology Industry Development Agency, Dr Hazem Abdelazim, said, “We have had a positive start to the year with new companies investing and local companies developing and expanding their capabilities and services. We are confident that the sector will continue to grow during the remainder of 2010 and that we will see more multinational companies expanding and outsourcing their business to Egypt.”

Egypt continues to invest in its infrastructure, intellectual property and piracy. In the 2009 Business Software Alliance and IDC Global PC Software Piracy Study published last week, Egypt‘s piracy rating stayed at 59 per cent for the second year, despite overall global levels rising in 2009.

”Reducing piracy continues to be a challenge for the sector globally. Our rate remains lower than some other destinations,” said Abdelazim.

The 11.3 per cent growth achieved by the information and communications technology sector helped Egypt grow 5.8 per cent in the first quarter of this year.

Egypt‘s Economic Development Department revealed the growth was at its fastest pace in almost two years and is expected to hit as high as 5.3 per cent in the fiscal year ending June, up from 4.7 per cent in the previous year.

Egypt is a major outsourcing destination in the Middle East and has seen huge investments by companies like Sykes Enterprise and Stream Global Services last year. Egypt‘s Information Technology Industry Development Agency (ITIDA) has also signed a Memorandum of Understanding (MoU) with Intel Corp to use Intel‘s technical expertise to develop products and technical solutions.

Dr Hazem Abdelazim, CEO of the Egypt‘s Information Technology Industry Development Agency, said: ”We have had a positive start to the year with new companies investing and local companies developing and expanding their capabilities and services. We are confident that the sector will continue to grow during the remainder of 2010 and that we will see more multinational companies expanding and outsourcing their business to Egypt.”

Egypt continues to invest in its infrastructure, intellectual property and piracy. In the 2009 Business Software Alliance and IDC Global PC Software Piracy Study published recently, Egypt‘s piracy rating stayed at 59 per cent for the second year, despite overall global levels rising in 2009.

”Reducing piracy continues to be a challenge for the sector globally. Our rate remains lower than some other destinations,” said Abdelazim.

Source: Punch Nigeria    Image: austrade.gov.au


South Africa: Skills gap has IT firms worried over survival

By Sue Blaine

Johannesburg — THE shortage of South Africans with information technology (IT) skills is so acute it is making some South African businesses worried that they will be unable to survive, researchers say.

Last year 75% of the 157 businesses surveyed by online newspaper ITWeb and the University of the Witwatersrand’s Joburg Centre for Software Engineering said the IT skills shortage was either having a major impact on their business or was affecting their viability, and in 2008 all 115 of the South African companies surveyed made this claim. With SA emerging from recession, it is arguable that this year the number making this claim could once again increase. (The 2010 survey is under way).

Despite the expansion in SA’s telecommunications industry, and the way in which technological change has increased global demand for high-end IT skills because the various separate technologies such as voice, data and video are converging in new technologies, the numbers graduating in SA with high-end IT skills is not increasing significantly, says Sandra Burmeister, CEO of recruitment specialists Landelahni Business Leaders.

“We need a higher-skilled professional, but (business) is training for their immediate needs … We are getting technicians, not engineers and designers,” she says.

Part of the problem is that technology changes so quickly that there is traction between the number of suitably skilled professionals in the new technologies, and those with skills in existing technologies, says Burmeister.

If the survey’s results are extrapolated across the whole sector it looks like SA needs about 72000 more people with IT skills, says Centre for Software Engineering applied research unit manager Adrian Schofield.

But, between 1996 and 2007 SA produced 17705 information and communication technology degree and diploma graduates, while in 2005 only 823 graduated with a degree in electronic engineering, and only 596 were awarded a computer science degree. In 2006 these numbers were 916 and 540 respectively and in 2007, 928 and 502.

The crisis is set to continue, or deepen because technology is advancing at what Burmeister calls “a blistering pace”. A ccording to the International Labour Organisation, it is “the single biggest driver of skills shortages globally” — SA business is in competition with global competitors for the world’s best and brightest graduates, including South Africans.

Graduate recruitment is getting more aggressive every year, says Prof Sonia Berman, head of the University of Cape Town’s computer science department.

IT graduates have choice — 69% of those surveyed in the 2010 South African Graduate Recruiters Association candidate survey released yesterday said they had received several job offers, second only to teachers, of whom 100% say they had several job offers.

This comes as no surprise to Intel International legal and corporate affairs vice-president Shelly Esque .  It is only because her company is so widely spread across the globe that it can overcome the skills shortage, she says.

“We’re lucky. We can go where the talent is. We can open offices all over the world, but we’re almost unique. For countries this is at crisis stage,” she says.

Intel has poured billions of dollars into improving maths and science teaching worldwide and has “upskilled” more than 7-million teachers precisely because too few high-schoolers chose to study these subjects, with at least maths a prerequisite for a career in computing and technology .

Source:  Business Day Image: africabusinesssource.com


Nigeria: Country launches Vision 2020 IT blueprint

By Joshua Uma

Nigeria Federal Government recently launched the Vision 2020 Information Communication and Technology development implementation blueprint. A document it says if fully implemented, will breach the developmental gap between Nigeria and the rest of the world.

While unveiling the document at the 2010 Nigeria Summit organised by the National Information Technology Development Agency (NITDA), President, Goodluck Ebele Jonathan, who was represented by the Minister for Science and Technology, Professor M.K Abubakar, pointed that with the unveiling of these blueprint, the nation has entered into the next critical stage which is implementation.

“The document cannot implement itself, therefore it’s imperative that NITDA and all stakeholders should properly understand and follow the stated step by step plans of implementation in other to achieve the desired outcome.

“The role of ICT in the sustainability of development cannot be over emphasis in the need to breach the gap between Nigeria and other developed countries of the world.

“Therefore, the event  and the theme of this summit which is ‘National Information Communication Technology For Implementations For Vision 20-2020′ as put together by NITDA is very apt going by the present aspiration and need for the nation to be among the 20 leading economies by 2020.”

Additionally, the president called on the management of NITDA to develop proper mechanism in other to realize their goals through the implementation of the introduced blue print. He also called on participants to avail themselves of the opportunity provided by the summit to brain storm and proffer a way forward for the nation.

Source: Leadership (Abuja)    Image: ceejaycommunications.com


Uganda: Scramble for minerals begins

by Ibrahim Kasita

Kampala — Foreign firms are rushing to get hold of mineral deposits as prices continue to rise due to economic recovery.

Firms from China, India, Australia and South Africa have shown interest in exploring and producing the minerals.

“We have really attracted significant investors both abroad and local ones. They are all doing well,” Joshua Tuhumwire, the commissioner in charge of geology department in the ministry of mineral development, said.

The revelations come shortly after an aerial survey report confirmed that Uganda is endowed with copper, iron ore, cobalt, tin, gold as well as platinum.

There is anticipation for Foreign Direct Investment in the mineral exploration sector in the Great Lakes region as China looks for raw materials to oil its growing economy.

China’s entry into Africa is seen as catalyst for renewed interest in Africa by the European Union and US to undermine China’s emerging influence due its non-political interference policy on investments in Africa and the potential for monopoly access to energy and mineral resources.

China is not alone in searching for mineral supply. Already the Russians have installed a 1.5m gold refinery in Kampala to process gold within Uganda as well as from the region.

Source: New Vision  Image: racismandnationalconsciousnessnews


Nigeria: New gas price to impact on power supply

By Bassey Udo

The federal government yesterday announced a new price regime for gas in the domestic market to stimulate investments and boost gas supply to the power sector and industries.

This forms part of a two-point agenda contained in the Nigerian Gas Master plan which the federal government hopes will position Nigeria competitively in the global gas export market and secure the final investment decision for Brass LNG by the end of the year.

The minister of Petroleum Resources, Diezani Alison-Madueke, said the new arrangement has received the support of President Goodluck Jonathan who has directed for its immediate implementation. She also said that the operators in the oil and gas industry have been very receptive of the development.

Mrs Alison-Madueke who gave some details of the new pricing regime said the price of gas-to-power will grow from the current level of two cents per million British thermal units (Btu) to $1.50 per million Btu by end of 2011, and $2 per a million Btu by the end of 2013, while any increment beyond 2014 would be by inflation.

The British thermal unit or Btu is a traditional unit of energy equal to about 1.06 kilojoules, used in the power, steam generation, heating and air conditioning industries.

Pointing out that the new pricing regime would be capped by export parity, Mrs Alison-Madueke maintained that at no time would the Power Holding Company of Nigeria (PHCN) be made to pay more than the price export projects are paying for gas.

“In essence, should export prices (on a netback basis) fall below the new prices structure above, the lower of the two would be paid by the power sector,” she explained, adding that the price review would be attached to growth in gas supply.

Contractual agreements

On contractual agreements, the minister said the government has commenced an elaborate and comprehensive development of gas supply and purchase agreements, as well as gas transmission agreements for the nation’s domestic market. Besides, she said the template agreements that would move the country’s process of gas supply and purchase to the global level have been finalised, while negotiations are on ongoing between the PHCN and the supplier companies to resolve all discrepancies. “I expect that within the next four-six weeks, government would be in a position to execute these landmark agreements between the power sector and the gas suppliers as a demonstration of the steady progress being made in the development of the sector,” she said.

On current gas supply to the power sector, the minister announced that all critical pipeline repairs that affected the smooth performance of the industry last year have been completed, while all the country’s gas plants are currently operating close to full capacity.

Source: 234next Nigeria      Image: 1.bp.blogspot.com


Mozambique: Businesses Urged to Invest in Mining Potential

Maputo — Mozambique’s Minister of Mineral Resources, Esperanca Bias recently invited foreign businesses to exploit the enormous potential that Mozambique possesses in the mining, hydrocarbon and energy fields,

Speaking at the closing session of a two day International Conference on Mines and Energy in Maputo, Bias said that Mozambique’s enormous mineral and energy wealth could enable it to pay a key role in the region, the African continent and the world.

“I would like to invite all those who are not yet investing in Mozambique to dedicate part of their investments to this country”, she urged.

She hoped that the two day conference had enabled potential investors to get to know something of Mozambique and its potential.

The challenge now facing the government, she said, is how to use natural resources in a sustainable manner, and guarantee that their exploitation allows the harmonious development of Mozambique. Those resources should be used as the driving force for Mozambique’s sustainable development.

Bias assured her audience that the country possesses favourable legal framework for the development of natural resources.

One concern raised by participants was the need for electricity to make major new projects viable. The southern African region is running short of electricity, and this has put energy-intensive industrial projects, such as a third phase to the MOZAL aluminium smelter, on the outskirts of Maputo, on hold.

It is thus ever more urgent to press ahead with the energy generating projects currently on the drawing board – such as the Mphanda Nkua dam on the Zambezi, a second power station at the existing Cahora Bassa dam, and coal fired power stations drawing on the immense reserves of the Moatize coal basin in Tete province.

Source:  Image: austrade.gov.au


Nigeria: NNPC, Chinese firm to build $28.5bn Greenfield refineries

By Obinna Ezeobi

The Nigerian National Petroleum Corporation and the China State Construction and Engineering Corporation Limited recently signed a Memorandum of Understanding to raise $28.5bn for the construction of three new Greenfield refineries and a petrochemical complex in different locations in Nigeria.

A Greenfield refinery is one that is low in carbon emissions, almost to zero level, and complies with the new clamour for environmentally-friendly infrastructure in line with the Kyoto protocol.

The projects will be executed under a Contractor Financing and Supplier Credits scheme from the China Export and Credit Insurance Corporation and a consortium of Chinese banks.

One of the refineries will be sited in Lekki, Lagos, while another plant will be located close to the Brass Liquefied Natural Gas in Bayelsa State so that it can leverage on the feed stock that will be produced by Brass LNG and other industries that will be co-located there.

The third one will take advantage of the dredging of the River Niger at Lokoja, Kogi State.

However, the search is still on for a suitable location for the petrochemical complex along the National Gas Corridor, based on the Nigeria Gas Master Plan.

The interest of the CSCEC in the project is to expand its presence on the African continent and establish its footprint firmly on the growing Nigerian oil and gas landscape, according to the Vice-President, Overseas Operations of the company, Mr. Yu Zhende.

The Group Managing Director, NNPC, Mr. Shehu Ladan, expressed hope that the project would stem the flood of imported refined products into the country, currently estimated at $10bn annually.

He further explained that on completion, the three Greenfield refineries would have 750,000 barrels of crude oil per day refining capacity and position NNPC to engage profitably in the international trading of refined petroleum products.

Similarly, the proposed petrochemical complex will source natural gas from the Nigerian Gas Master Plan corridor to produce polymers, solvents and gas-based fertilizers to boost agricultural production.

According to the GMD, “The China State Construction and Engineering Corporation will build the plants with loans it will raise from China; 100 per cent of the loan.

“They will take 80 per cent of the share and we will take 20 per cent and all the conditions will be agreed upon.”

On differences that would exist in the management structure of the new plants from the existing refineries, Ladan stressed that the current plants were owned by the Federal Government and being operated by NNPC on behalf of the government.

He said that the Federal Government would not have shares in the proposed plants, but NNPC would buy into them with its own funds.

He said,”The entire budget will be funded by loans sourced by the Chinese partners, so the terms of the loans will be spelt out and the payment period.

”And they will operate the plants together with us. It is only when we pay back the loans after some years that we can perhaps talk about taking over the interest of the construction companies.”

On the timelines for completing the plants, Ladan said plans were afoot to start the first refinery this year and complete it within five years.

He explained that raising the loan would take time, saying the funds could be available, but the terms of agreement would have to be negotiated.

The GMD further explained that with the size of Nigeria, its growing population and sophistication, it was likely that the three planned refineries might not be able to satisfy local consumption very soon.

He said, ”We should also be looking outward to export. Nigeria should be exporting refined petroleum across the West African sub-region and other countries.

“Our dream will be that one day, we will have export oriented refineries and as we locate them at various parts of the county, other state governments will also be called upon to join.

“It is not like we are closing the door of participation to other state governments.”

The GMD also highlighted the technical capability of CSCEC, noting that it was currently ranked as the sixth largest engineering and construction company in the world.

Source: Punch Nigeria         Image: evworld.com


Africa: Changing economy opens door wider for Africa investors

by Simon Freemantle

Since the turn of the century, several irreversible shifts have taken place in the global economy.

One such adjustment, which has been accelerated by the recent global financial meltdown, is the rise to prominence of the south.

In a recent speech, World Bank president Robert Zoellick declared the end of the ‘Third World’, saying such crude divisions are no longer applicable within an ever more multi-polar world economy given the dramatic rise of markets throughout Asia, Africa and Latin America in the course of the past decade.

These shifts are further seen in the increasing clout of developing nations on the global multilateral stage, with the G20 (which includes countries such as China, India, Mexico and South Africa) ousting the G7 and G8 to firmly position itself as the core body responsible for negotiating issues of international economic consequence.

These shifts are perhaps most evident when considering global trade volumes.

Developing economies’ world trade has increased 4.5 times, from $2.7 trillion to $11.9 trillion since 1999.

The swiftest progress has been trade between developing nations, which amounted to near $5 trillion in 2008, accelerating by 23 per cent per annum since 1999.

Meanwhile, the advanced economies’ share of the developing world’s total trade has declined from 75 per cent in 1999 to 60 per cent in 2009.

Furthermore, a quarter of world trade growth since 2002 is made up by south-south trade growth.

In contrast, intra-advanced economies trade is contributing a declining share to world trade growth.

With advanced economies creeping out of the recession, emerging markets are well positioned to deepen their collective importance in the years to come.

To be sure, while a wide range of emerging markets have engineered this structural change, it has arguably been the BRIC economies of Brazil, Russia, India and China, which have, both led the change.

Since 1999, Brazil, Russia, India and China alone have seen their share of global economic growth expand from less than eight per cent to more than 25 per cent in 2008.

The BRICs now account for around 15 per cent of world’s GDP.

Meanwhile, the G7′s share of the world GDP has shrunk from 80 per cent in 1998 to 64 per cent in 2008.

Between 2000 and 2008, Russia, India, China and Brazil each saw their global trade volumes expand at average annual growth rates of 25 per cent, 22 per cent, 19 per cent and 15 per cent, respectively, far outstripping world trade growth of 10 per cent per annum.

As a result, the BRICs’ collective share of world trade doubled from 6.9 per cent in 1999 to 14.2 per cent in 2008, and has accounted for at least a quarter of world trade growth since 2002.

Broken down, China – world trade accounted for 61 per cent of the BRIC – world total in 2008, with Russia accounting for 13.8 per cent, and India and Brazil accounting for 11.5 per cent and nine per cent, respectively.

Africa has played and continues to play a vital role in the nature and pace of these emerging market developments.

The BRICs have each acknowledged the importance of nurturing deep diplomatic and commercial ties with Africa in order to guarantee long-term economic growth.

Inspired by Africa’s abundant natural resources, strategic significance, and burgeoning consumer markets, the BRICs have actively engaged the continent since 2000, resulting in gains in bilateral trade.

BRIC-Africa trade has increased from $22.3 billion in 2000 to over $160 billion in 2008.

Today, African trade constitutes around 2.9 per cent, 6.4 per cent and 6.3 per cent of China, India and Brazil’s total trade, respectively.

By 2008, on the back of robust individual bilateral trade growth, seven African nations held BRIC trade levels of above 30 per cent of GDP.

China-Africa trade accounts for around two-thirds of BRIC-Africa trade, having increased ten-fold from $10 billion to over $100 billion between 2000 and 2008.

In 2009, China overtook the United States to become Africa’s largest bilateral trading partner for the year given the dramatic slump in US-Africa trade brought about by the global economic downturn.

However, contrary to many cursory analyses, China does not stand in isolation in prioritising contemporary African relations.

Expansion of sectors

For its part, India enjoys deep historical bonds with Africa and sees compelling avenues for expansion for its globally-oriented multinationals, particularly in telecommunications, automotives and pharmaceuticals, across the continent’s rising markets.

Moreover, India, as one of the world’s largest consumers of energy, requires Africa’s natural resources to guarantee and sustain the pace of its domestic industrial expansion.

India-Africa trade has grown dramatically from $4.9 billion in 2000 to almost $40 billion in 2008.

For Brazil’s president Lula da Silva, African countries have been vital allies in his bid to engender deeper south-south ties since taking office in 2002.

By the time President Lula had paid his first official visit to the European Union in 2006 he had already visited Africa no less than six times.

Brazil has also required African energy resources to fuel its impressive domestic growth, and envisages opportunities in spreading a so-called ‘biofuels revolution’ in Africa, thereby providing cogent new avenues for its internationally competitive agricultural firms.

Cultural and historical affiliations also weigh prominently in the success of Brazil in Africa.

In total, 90 million of Brazil’s roughly 200 million population claim direct African ancestry.

Overall, Brazil-Africa trade has accelerated more than eight-fold from $3.1 billion in 2000 to over $26 billion in 2008.

While lagging its BRIC counterparts in overall trade volumes with Africa (around $8 billion in 2008), Russia has made clear its intentions to reinvigorate ties with the continent following the stagnation of bilateral relations which followed the end of the Cold War in 1989.

Last year, Russian President Dmitry Medvedev paid the most expansive visit ever to Africa by any incumbent Russian head of state, securing vital partnerships and signing lucrative deals in Nigeria, Namibia, Angola and Egypt.

While Russia may not require Africa’s natural resources, it has deep vested interests in maintaining strategic ties with several influential countries on the continent.

Moreover, as part of a radical restructuring of the Russian economy, the Kremlin is looking to export technical expertise in, amongst other areas, space and telecommunications.

Signs of growth

Russia also has an eye on securing a stake in lucrative Nigerian natural gas reserves so as to ensure that its grip on gas supplies to Europe is not meaningfully diminished.

Given these priorities, Russia-Africa trade has shown promising signs of growth, having increased at a compound annual growth rate of 14.9 per cent since 1992.

Directly as a result of these vibrant and growing ties with the BRICs, Africa’s marginalised position in world trade is reversing.

While in 1983 Africa’s share of world trade stood at 4.6 per cent, this figure declined steadily to bottom out at 1.7 per cent in 2002, before rising to 3 per cent in 2008, almost entirely on the back of increased trade with the BRICs.

BRIC-Africa trade as a proportion of Africa-world trade grew from 4.6 per cent in 1993 to over 19 per cent in 2008.

Meanwhile, the BRICs share of Africa’s imports more than doubled from 7.9 per cent in 1998 to 18.5 per cent in 2008 and the BRICs share of Africa’s total exports increased from 8.6 per cent in 1998 to 19.7 per cent in 2008.

Overall, since 2003, more than 21 per cent of Africa’s additional cumulative trade has been conducted by BRIC counterparties.

Mr Freemantle is an Economist, CFC Stanbic Bank.   Image: kenyanview.com


Kenya floats fresh tender for faster cross-country railway

NAIROBI (Reuters) – Kenya Railways recently invited fresh bids for a new railway to run between its port city Mombasa and the Ugandan capital Kampala, that will treble train speeds and boost regional trade, after previous bids were too high for its budget.

The railway, which should be operational within three years, is expected to carry 10 times as much freight.

In a statement in regional weekly the East African, Kenya Railways said it was inviting proposals for preliminary design and environmental and social assessment services for the section of the railway between Mombasa and Malaba at the Kenyan border.

The Ugandan government will handle tendering for its stretch of the railway.

The railway, which will run on a standard gauge, is meant to supplement an existing metre gauge railway which was built by the British at the turn of the previous century.

The government says Mombasa’s port handles more than 16 million tonnes of cargo annually and this was forecast to rise to 30 million tonnes by 2030.

Currently, most cargo travels from Mombasa by road to Uganda, south Sudan, Rwanda and Burundi.

The main highway from Mombasa to Kenya’s capital Nairobi and onto Kampala is clogged with heavily-laden lorries, many carrying a single container.

“It is envisaged that the railway line will be extended to Uganda and the Great Lakes Region,” Kenya Railways said in its statement.

The bid documents will be available between May 24 and June 18, with submitted bids expected to be opened on June 25, the company said.

Source: Reuters   Image: Reuters


Only Africans can transform Africa, says Ezekwesili, World Bank Vice President

The World Bank’s Vice President for the African Region finally granted an exclusive interview. With the task of overseeing 46 countries in Africa, Ezekwesili’s responsibility is understandably huge. At the bank’s Spring Meetings that took place last week in Washington DC, it took an ambush for ROTIMI LAWRENCE OYEKANMI to get her attention for barely 45 minutes. Excerpts:

Question: Generally in Africa, intellectuals are quite suspicious of the World Bank. But here we are, the bank is hosting a meeting on how to improve Africa’s Higher Education systems. What informed the decision to hold this meeting and what were the expectations?

Mrs. Oby Ezekwesili.

Mrs. Oby Ezekwesili.

Answer: Frankly, the work of the Bank, alongside other donors, was so focused on primary education. Maybe there was some good reason, but whatever reason it was had out-lived its usefulness because, Africa has seen that it is a continent with huge potentials for growth outside of the primary commodity sector. And so, basic and lower secondary education, where donors had placed a lot of emphasis, had seen some significant improvement across the continent.

We have seen countries like Tanzania, Uganda, Ghana, Burkina Faso and Senegal, doing incredibly well in terms of access to basic or primary education. This means that if you assess Africa’s performance from the MDG3 (Millennium Development Goals), Africa is on a good track. But in terms of secondary education, in terms of technical and vocational education, in terms of tertiary education, science and technology, Africa is not doing well.

The average percentage of the youthful population that ought to be in tertiary level education, in order to see some determinants of economic growth, is at least 25 per cent in the rest of the world. And Africa is at 5 per cent. So, you need very well trained, well-prepared, competitive skilled personnel in Africa, so that they can compete well in the global economy. So, if you are going for a skills agenda for Africa, you have to focus on secondary, technical and tertiary level education. The body of work that we need, in order to give us deeper understandings of the state of higher education – the issues in it, the governance, regulatory environment, the financing options for higher education, the pedagogical issues in the position of learning through higher education – all of these are important. The World Bank is not simply a financing institution. It is a knowledge institution and so, we see how other countries have been able to achieve significant progress in tertiary education.

When we look at what Mexico has been able to do, we learn from that. We look at what progress Brazil or South Korea or India or Singapore has made in tertiary education, there are lessons from it. So, the World Bank uses its platform to bring best practices across the world, and to say that, how does Africa now rebuild the foundations of tertiary education? That was the objective in our minds.

Question: A lot of interesting issues came on accountability, financing strategies and academic regulations during the meeting. How is the World Bank going to make use of all that?

Answer: You see, we like solutions that are pragmatic. Looking at the kind of analysis that was identified, the issues that required redress in the way that tertiary education is being provided, means that we may not know everything that is wrong with the existing system. But we do know that something is not working, because when you look at the ratio of the level of demand and the level of supply, there is a significant mismatch.

In the case of Nigeria, you know the story very well. If you have got almost two million children leaving secondary schools every year, of which 1.2 million of them, on the average, want to go to the University, and then, they take the matriculation examination and you can only provide space for 150,000, then there is a problem. The real question is, how do you match demand and supply? So, in terms of enrolment level, you can’t, if you don’t have an access platform. So, that is one set of problems.

Are we exhausting the possibilities in the existing public institutions? Are we exhausting the possibilities that exist in private provision? These are real issues in terms of the quality and relevance of education. A tertiary education that is not relevant is a waste of resources. You can have graduates with certificates, but absolutely have no value in the market place. That is a major problem in terms of investment in education.

What is going in the telecommunication sector in Nigeria, for instance; the level of skills that the sector, as it emerges into a key source of growth can create, is un-imaginable. Even in the oil and gas sector, there are oil services and gas sector-related services issues, where you can have a huge development of linkage economies.

So, who is preparing? Who is identifying the kind of labour that is required and the kind of training that they should get? These are all issues in the relevance of the knowledge that is being given to the students. And of course, on the issue of accountability, the federal government has spent significant resources in financing public universities, but what level of accountability exists? What do we expect them to produce and how do we measure their performance? Is there a measurement that says, for X amount of money that is provided for universities, this is the indicator that we are going to use in assessing whether government is getting value for money? And I know that the resources are not adequate. So, the inadequacy of the resources to enable them produce quality graduates that relevant to the emerging economy, means that a conversation that needs to happen, to determine the structure of financing. How do you find a mechanism for sustainable financing of public universities?

So, you compete for the public funds. You are not just guaranteed for the public funds, you compete for the public funds on the basis of the quality of performance. And this quality of performance is judged by both the parents and the students, who will look at a university’s records, in terms of the number of the students that gained employment upon leaving that institution. They can then say that, going to this school prepares you adequately for the market to pick you up when you carry its certificate.

These are really complex issues that you pick up and you don’t stop learning. We at the bank are perennially learning. We are trying to learn how to do it and not be ideological. There is no ideology on how you are going to solve these kinds of complex problems. You have to learn from the mistakes of the past, and by the way, you have the mistakes made in the past in the way that the bank handled the issues of education in Africa. You know that the whole attitude that focused on primary education, without thinking immediately that as the products of primary education come out, there is going to be needed to improve the skills of the people for the next level.

There are many youths, as it were, who can read, write and who have the basic knowledge of arithmetic, but beyond that, they need to go to the secondary level; they need to go to the tertiary level, and then, there was not much of investment on those issues over many decades, and so, there was a serious catch-up that Africa needs to do.

Question: Madam, you hosted a seminar on Public Private Partnership, which we know that you are also very passionate about. What impression did you come away with? How will the World Bank create a synergy between this concept and Africa’s development?

Answer: Well, you know, on the Public Private Partnership, it is basically premised on what we know, and what we know right now is that, the budget of many African countries cannot carry their development needs. The (African) governments are spending their resources in the social sector, health, education; they are spending on infrastructure, and they are spending on building institutions in their respective countries. And they get donors’ support. But even if you added the donors’ support and the revenues of government, it still does not mobilize enough for Africa’s development.

I like quoting the deficit in spending on infrastructure. It is currently $42 billion collectively by countries, by bilateral partners and by multilateral partners, like ourselves is spent annually, plus private sector of course. But the deficit, based on our analytical studies is some $48 billion. We say that $17 billion of this, we can find by savings on existing expenditure, meaning that if you made the right policies, if you have the right institutions, and the procurement system, and if you did the pricing is right for infrastructure in the continent, you can squeeze out $17 billion from existing spending in form of efficiency gain.

But, that still leaves you with some $31 billion because we are talking about $48 billion gap. Now, the source of that is going to be mostly a drive for private sector participation in the provision of infrastructure. We knew that this is going to be the major agenda for Africa: how to work with the private sector, to connect public spending on infrastructure to private sector willingness to engage in it. And it is a matter of quantifying risks and allocating risks and the benefits appropriately.

So, how do you do that? You have to have the right legislative environment, the right of type of laws that clarify these risks and these benefits, and then you have to have regulatory environment that is very clear in its interpretation of laws and which shows, with clarity, the rules of the game, so that there is credibility and the private sector can enter into these public private partnerships, knowing that it is not going to get burnt by a reversal of issues after they have been agreed.

It is about the institutions. For instance, in Nigeria, you have the Infrastructure Concession Regulatory Commission (ICRC). That is your PPP institution and you need to have the right capacity within it to regulate all of these. But within the various Ministries that are going to embark on these, because that’s a regulatory commission, it is not the commission that actually does the transaction, but within the respective Ministries and sector, you need to have the kind of skills that know how to put together a PPP transaction. It is usually complex: it requires lawyers, accountants, engineers and all kinds of skills. You must have it on the side of government because, often, private sector has better access to these capacity and then, immediately, government is disadvantaged. You need not to start a PPP initiative without ensuring that you have, in the room on your side of the table, the full range of capacity you need in order to discuss these kinds of transactions.

What we always advise is that the social tariff window, to ensure that access to basic services by the poor is not sacrificed. That is a major component in the way that we advise countries in structuring these kinds of relationships with the private sector. So, it is a growing agenda for us. We have the full range of the experts that can advise countries on these issues, and in the case of Nigeria, we are in fact very delighted that we can help and continue to support the ICRC as it operationalizes the law that brought it into existence.

Question: There was also a roundtable involving your office and the Civil Society Groups. What is that about?

Answer: You know that being someone who is well rooted in the civil society, I appreciate the responsibility of credible civil societies in the process of policy dialogue and in deciding what direction the society must go.

You recall that in all my work in government (of Nigeria), civil society was a key part of it. In education (Ezekwesili was formerly a Minister of Education) we had CSACEFA (Civil Society Action Coalition for Education for All) and this was a coalition of NGOs interested in education. And so, that coalition approach is very important. In being able to work with us here at the World Bank, the stronger the civil society group, the better, because that way, it ceases from being a non governmental individual, and now becomes a properly, self regulated but very credible mix of people with basic knowledge of the sector of their interest.

So we like to see civil society organised along thematic areas. The NGOs that are interested in health ought to be able to come into a coalition, because with a strong coalition, they become a structured group and there is strength in that unity. So, with that, they can engage with both ourselves and the government and hold us accountable for what we are doing with the government in those sectors and what we are trying to do is not just to leave it at the level of occasional meetings to discuss, but it’s actually to give them some opportunity to play a more systematic and structured role in accountability, in project monitoring and evaluation and be able to give us a kind of feedback that looks into our operations.

So that is a major area of social accountability and I am a huge fan of social accountability. I am proponent of it because I always say that we tackle so much on the supply side of governance. So, you know where you build the capacity of government to have institutions, to fight corruption, to have a budgetary process that works, to have a public financial management that is strong; these are all supply sides.

But the demand side is really at the heart of transformation, because the demand side is basically when the society rises and says we demand this accountability of you and in demanding that, what happens is that, there is a pressure on the suppliers, on the people that govern to provide the clear and transparent basis for decision-making. They are able to get feedback from the people who are being served and who are now making those demands.

And then, there is scrutiny. Therefore, because there is that scrutiny, there is accountability. It raises the threshold of accountability when the citizens demand for it. But when the citizens are disconnected, it doesn’t matter what institutions you put in place, whether they work or not would not matter, because nobody is holding you accountable for whether they are functioning. So this social accountability is one mechanism through which we are trying to generate that body, that presence and voice of civil society in making the good governance concept become something that really gets deepened in Africa.

Question: Our Acting President, Goodluck Jonathan met with the World Bank President and asked for assistance in the area of electricity and all other things. What should Nigeria expect?

Answer: Well, Nigeria is one of the 46 countries that I am responsible for in Africa, and so it’s an important line for us, not just because it is Nigeria but because of the importance Nigeria to the continent as a whole. And the regional importance of Nigeria is key for the kind of support that we provide to Nigeria. Access to power is the major bottleneck for Nigeria’s economic growth and productivity. And it is our understanding of this, that the bank has had a very comprehensive programme of support for the Nigerian power sector.

One particular aspect that I am most proud of, which I hope that it is going to be accelerated on the part of the government, was the problem that had to do with the existing gas to power generation. This was a major problem because, first, there was the issue of the legal environment and the fiscal environment, to enable the gas suppliers, meaning the International Oil Companies (IOCs) to agree on a market basis, the pricing for the supply the gas in the first place.

We have been able to bring a company to the table, through what we call the Nigeria Energy and Gas Project. We have been able to put a financing mechanism that enables both the government and the IOCs to negotiate and get firmed up on the supply system for gas to these already generated power, because Nigeria has got power that is generated but is not been activated simply because of gas. So, this particular project that was approved and waiting to be implemented, but it took the Nigerian side a long time. But with the visit of the Acting President, I think there is a sense that they are now going to move with urgency to bring this to realisation. That is going to be key, because the opportunity to really take existing generation can be taken advantage of by doing some of the things contained in many aspects of the advice we had on the table for the Nigerian government, which includes potentially adding probably above 2000 megawatts to existing capacity. So that is significant.

The bank comes in with a lot of knowledge on how other countries have done the restructuring of their power sector. The power sector is in three segments: generation, transmission and distribution. Now, the restructuring of that sector is captured in the Nigerian Electricity Reform Act that brought into existence the Electricity Regulatory Authority and other measures that were taken and the breaking up of the Power Holding Company into the three segments.

Now, all that the government needs to do is to take that Act, because it captures the essence of the restructuring of the sector because all it needed to do in the three years, was to implement the Act that respects its own legislation because it captures the reform for the power sector. The government needs to be very clear, it needs to be more transparent in the way that decisions are made in the sector, in the policy environment of that sector.

See what happened in the telecommunications sector. It could potentially happen on the distribution end of power in Nigeria. It could potentially happen on the generation side of power in Nigeria, while government really focuses its attention on regulation as well as on transmission, because the transmission lends it self less to the participation of the private sector.

Ultimately it does, but the two extreme ends of distribution and generation, the private sector cannot wait to participate, but they will not participate until there is a policy environment that is transparent, that is competitive and that makes it a financially viable sector. By Nigeria implementing the multi year tariff order, it already has signaled that it would follow a smooth path at dealing with the issues of pricing and by having the rural electrification strategy, it is making it clear that it would not price electricity out of the access of the poor, because the poor need access to electricity, the barber needs it, the hair dresser, the woman who grinds pepper, they all need electricity. The rural farmer needs electricity and by having a robust system for ensuring rural access and spending money effectively and efficiently.

So that it is a targeted approach and not an approach that ends up being captured by those that don’t need the money. You can ensure access to the industries and to the richer consumers, properly priced and you can ensure access to the poorer segment of the society and priced in the kind of way that you can subsidize. So, core subsidization ensures that equity in access is not compromised. This umbrella approach to the power sector reform is critical for Nigeria and it is urgent because Nigeria’s growth… Agriculture is 40 per cent of Nigeria’s GDP and this is something most people don’t even know. They assume that oil that is most of the 40 per cent, but it is agriculture.

Can you imagine the productivity that will arise, if the power sector problem is solved? And informal trade in Nigeria is incredible. A lot of these micro businesses require power in order to do well. If you increase the productivity, if you increase the availability, the reliable supply of power to small businesses in Nigeria, the growth rate will inch up significantly and what I appreciate is the fact that the theme of the Acting President is the understanding that they have to act now. There is an urgency of now concerning Nigeria’s power sector.

Question: You have been on this seat for three years. Looking at the totality of your experiences; in private life, in government, and now, do you think Africa can surmount its complex problems?

Mrs. Oby Ezekwesili.

Mrs. Oby Ezekwesili.

Answer: I think that Africa can. Africa really can. It has to be understood that external players will not transform Africa. It is going to take Africans to transform Africa. You see that Africa has done well in those areas where it has demonstrated strong ownership of that particular agenda, and at the heart of it is the issue of value-based leadership. Leadership that is competent, that has character, that has got a capacity in the public sector, because the public sector is critical for Africa.

Africa has to run intelligent governments, meaning that all the institutions, the ministries, the departments, the agencies of government have to be filled up with capable people, who know what the issues of their sectors, have the most relevant knowledge, the cutting edge knowledge of what should happen in the agriculture sector for instance.

What is going on today in the education sector, like what we were focusing on, what should Africa be doing with the infrastructure? What are the complex issues in the power sector? The capacity across the spectrum of government has to be strong, it needs to really reform the public sector, make the public sector a place where it’s mostly capable people that can become civil servants at every level, bringing the different gradation of skills to the issues of policy making.

Policy making took a backstage in the civil service in Africa over that period of aberrant military adventurism across the continent. So, you find that rather than people in civil service being focused on policy formulation, analysis, evaluation and then implementation, and get a feedback on lessons learnt, failures to be avoided and things like that, the public sector became a place simply for procurement. So, public sector just devalued itself so badly and became just an environment to wait for budget and just do budget implementation without any connectivity to the agenda of growth. So getting the public sector right is the way the capture it.

Africans need to get capable states again, capable state institutions, capable leaders of government, and then Africa is not synonymous with risk, meaning that risk is not African. That is what the financial crisis showed, meaning that risk is on the streets of New York as much as it is on the streets of London or Paris or where ever else. So, the whole basic risk perception of Africa is not a deterrent any more because Africa also holds the promise of high rewards for risk.

The embrace of the private sector by African governments is a really important element. Government alone can not provide everything. It was wrong, what was thought of in the past, that government had to be at the commanding height of the economy and provide guarantee for everything for everybody. That was wrong Countries that even followed up that model, look at Russia and China, they understand that the market is an important actor in economic growth and development and so, are embracing the role of the private sector with government being capable. You clarify the roles of the public side and you clarify the roles of the private sector. The private sector side is the best creator of wealth, not the kind of parasitic private sector, that’s not what I am talking about. Not the private sector that exist to prey on the public sector through its inefficiencies and corruption and poor governance, no. I am talking about the private sector that is innovative, private sector that wants to add value, value orientated, and value creating. That kind of private sector drives your growth.

So the role of government in ensuring the emergence of those kinds of private sector is to have the right transparent systems, legislative environment that are not complex and that are not problematic, having the rules of the game, and in practice respecting those rules of the game; having the right kinds of incentives that are very commonly known, equal opportunities, not closing the doors and striking deals, but basically giving full disclosure as to what opportunities exist and what incentives are available.

And then, making sure that investment in basic goods like the public goods, power, water, roads and transportation, all these things are things that matter for the cost of doing business. When Africa invests well in providing this ambience through which these businesses can thrive, then private sector will come. Not only will private sector come from abroad, but the private sector domestically is huge and this is one area where domestic mobilisation often surfaces and we are seeing more and more of it, and Africa needs to do more to deepen its financial market.

So the role of the Securities and Exchange Commission in capital market development and then ensuring that the kind of roles that the Central Bank plays, enables longer term financing to begin to emerge. These are important elements in helping private sector grow.

And then agriculture is the key issue for Africa; agriculture production and productivity. We are beginning to see some progress that before Africa was having negative growth rates in agriculture, right now we are beginning to see more countries grow at levels of 3 per cent and above. But that growth is coming mostly from expansion of access to land. We need to see productivity, and that productivity is possible through better investment in irrigation, in seeds, in new technology and in extension services. And then, we need to have rural linkages.

So, you need to link the food belt to the markets, so the investment in rural bigger roads and things like that are important. You need to have agric- business because a lot of spoilage happens in African agriculture. And then, access to farmers; the small farmers needs access to technology and not just access to the market. We are talking about how do you have distributive and market based systems for their access to fertilizer or to irrigation and how do you deal with land related issues, to give them access where land can also be a source of access to finance for them.

Agriculture is a major issue for Africa. Productivity is determined by how effectively and efficiently your human capital can take a problem and solve it, compared to other countries. The skills that Africa needs to build every year : seven to 10 million youths enter the unemployment market in Africa and what will reverse it would be improving the business environment so that more private sector activities can come. You need to invest in your people, health, education that will improve your human capital. Then you need to basically ensure that your macro economic environment remains stable.

Africa used to run bad budgets, bad foreign exchange markets and bad interest financial markets, so that you had really negative interest rates. But macro economic stability has become a tradition mostly on the continent. So keeping that stability is key, and not spending money you don’t have – that’s imprudent. During the financial crisis, what we generally saw across Africa was a prudent approach. People did not spend money by printing money. And then keeping an eye on the social safety net issues because there are many really poor and vulnerable segments in Africa. Making sure that while we try to attract business and do all of these, that category of people are protected. We should have a variety social protection, like the school feeding initiative, because a child with access to one food a day can guarantee that that child will come to school and learn well. And then, to find a way to interject access to health care systems that we do through interventions in the health system.

The final thing for Africa is that African markets become big when they are joined together. So, regional solutions in infrastructure, in telecommunication, in road transportation and in power, we have regional power pools that we work with all across the continent. So, it is a major agenda for development but Africa has shown through what we saw in the telecommunication sector, attracting $60 billion dollars of investment in less than a decade in that sector. And this was possible because that sector went ahead and did all the deregulation, did the building right institution, the regulatory frame work, passed the right legislations, clarified the roles of public and private sectors. And private capital began to flow into it and the same thing can be achieved in number of other sectors with necessary adjustments.

But Africa’s greatest wealth is not its commodities, Africa’s greatest wealth is the incredible restless energy of its people and it is in that energy that you need to invest. Which is why we keep saying that Africa can, Africa really can, but Africa has really to invest wisely in its people, invest wisely in its public infrastructure, invest wisely in the right institutions and build up capable states that can hold their own with any partners of Africa.

Source: The Guardian,  Nigeria.          Images: i.pbase.com, mygreenroute.org


Country Stats: Angol

Capital: Luanda
Area: 1,246,700 sq km
Total Population 2009: 18.5 Million
Urban Population 2009: 57.64%
Female Population 2009: 50.71%
GDP 2009: US$ 65.5 Billion
GNI Per Capita 2008: US$ 3,450
Inflation Rate 2009: 18.50%
Crude Birth Rate (per 1000) 2009: 42.27%
Human Development Index (scale 0 to 1) 2007: 0.564
Membership Date: 23/06/1980
Cumulative Approvals (1967-2009): UA 369.3 Million

Source: Africa Development Bank

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