How Zuma persuaded ANC to drop the ‘N’ word

THE African National Congress (ANC) has ditched the concept of "strategic nationalisation" in favour of "strategic state ownership" after an 11th-hour intervention by President Jacob Zuma.

He told the drafters of the party’s economic policy resolution at its conference in Mangaung to remove the word "nationalisation" — a bold effort to restore policy certainty for investors and turn around South Africa’s flagging credit ratings.

An attempt by the ANC Youth League to have the word reinstated when the resolution was presented to conference delegates on Thursday, failed.

"The state will increase state ownership in strategic sectors where deemed appropriate, on the balance of evidence ," the resolution read.

The state would further increase its participation in the mining sector through equity, using the state-owned mining company as its vehicle.

The resolution implied that there will be higher taxes for the mining industry, but did not specify what form these might take. It said the state should "capture an equitable share of mineral resource rents and deploy them in the interests of long-term economic growth, development and transformation".

Enoch Godongwana, chairman of the ANC’s economic transformation committee, told a media briefing this could take the form a resource rent tax, a "windfall tax" on super profits or another, unspecified, measure. "There will be a tax, what form it will take has not been decided."

The resolution further raised the prospect of export taxes on designated "strategic minerals" deemed important for industrialisation or as key inputs into downstream products. Among those in line for designation are iron ore, coal, base metals and gas.

The party said it wanted to assure investors that "nationalisation was off the table".

"The national conference has refused to be drawn into the (use of) the word nationalisation," said Public Enterprises Minister Malusi Gigaba. "This means that the issue of nationalisation, that we have discussed over the past few months, is off the table.

"We are providing final clarity. There shouldn’t be any expectation from here that we will come out and say we are going to nationalise."

Mr Zuma called the drafters of the resolution — who included Thaba Mufamadi, chairman of Parliament’s standing committee on finance, Mr Godongwana and Mr Gigaba — to an early morning meeting on Thursday. Participants close to the process said the president told them they should take out "that word".

Provincial chairpersons and secretaries were hurriedly briefed before the presentation to the plenary on Thursday and asked to support the resolution.

But global rating agencies are likely to continue sitting on the fence for a while in terms of their assessment of South Africa.

Standard & Poor’s (S&P) MD for Southern Africa Konrad Reuss said on Thursday the agency would wait to see what follow-through action the government took before revisiting its sovereign rating of South Africa, which it downgraded in October. "From our perspective the jury is out — we have to see what it is that is going to be implemented as far as policy action is concerned ."

Anything that would support growth in the economy, deal with social and labour market issues, and support fiscal consolidation, would be constructive for South Africa’s rating, Mr Reuss said.

S&P has put a negative outlook on its BBB credit rating for South Africa, citing the recent wave of strikes, which it said might increase "uncertainties" related to the country’s economic policy framework.

The Black Business Council (BBC) said it was "relieved" that the ANC had "once and for all buried the threat" of the wholesale nationalisation of mines and banks. "The BBC believes the ANC should better manage the perceptions around its economic policy choices and reaffirm the private sector as the appropriate agent for accelerated economic growth and employment creation."

The council believed the role of the state should be to create conducive conditions for good and socially responsible business.

MD of Pan African Investment and Research Iraj Abedian, said the ANC’s economic policy resolution was " more of the same".

"The ANC has always engaged in rigorous, left-sounding debate, or more recently, populist oriented, but when all is said and done there are fairly pragmatic and realistic policy choices ."

The ANC further resolved that there would be no ban on labour brokers. The South African Chamber of Commerce and Industry welcomed the resolution.

" One must take it as an appreciation by the ANC that labour broking has a role to play in job creation," CE Neren Rau said.

"On the issue of nationalisation, it’s good that this has been clarified. It will be positively received by the international community."

Source: BD Live

Have faith in ourselves and in our future

IT WASN’T a great moment for the South African Communist Party (SACP). In 1922, under pressure from declining gold prices, mine owners tried to deracialise job categories to reduce costs by hiring cheaper black workers. This act of grubby capitalism and high morality led to one of the most violent miners’ strike in South African history, of which there have been plenty.

White miners, led by the SACP under the slogan, "Workers of the world fight and unite for a white South Africa", began three months of civil insurrection. The mainly English-speaking communists were inspired by a form of violent Bolshevism, and organised themselves into "strike commandos". They began to engage in violent threats against "scabs", as labour movements do.

The prime minister at the time, Jan Smuts, at first tried to take a nonaligned position, saying if there was a strike, the "government would draw a ring round both parties, do its best to maintain law and order, and let the two parties fight it out". His "unaligned" position was typical of his legalistic, eminently "proper" way of conducting government business. He was presumably also influenced by the desire to retain the political support of the miners, on the one hand, but maintain the enormous income generated for the state by the mines on the other.

As it happened, events overtook him. The workers interpreted this neutral position as support for the mine owners, since he wasn’t putting pressure on mine owners to enforce the colour bar. The result was mayhem; on March 7, the entire reef went on strike and there was blatant sabotage and vandalism. Railway lines were blown up and telephone lines cut. Black miners were arbitrarily attacked because of fears of a black backlash. On March 10, Smuts declared martial law.

Also typical of Smuts, once he decided to go to war, was that he was absolutely ruthless. He used tanks, artillery and air support. The Benoni strikers’ position was machine-gunned from the air and the mine hall was bombed, says the NewHistory website. On March 17, the trade unions called off the strike.

It was never clear how many miners were killed, but what we do know is that it must have been a lot, since the death toll on the other side was very high: 72 soldiers and policemen. In total, 81 civilians were killed and 650 people were injured. The courts were jammed after the strike: 853 people were tried on various charges, 46 of them on murder charges. Eighteen were sentenced to death but the public outcry that followed was such that 14 were reprieved, NewHistory records.

This all happened a century ago, yet some of the basic parameters remain. The first is the truism that SA’s history is demarcated by its geology. The mines, deep and expensive, struggled then as they do now. The link between mining and politics is strong, too. Smuts lost the 1924 election, as the strike had radicalised the population along racial lines. It hardened attitudes and provided the first inklings of the creation of apartheid a few decades later.

But I suspect it did something else too. It created what might be called the default South African narrative: pessimism streaked with nihilism, the country forever on the edge of a nervous breakdown.

Writing in the wake of Marikana, the Financial Times’s former South African correspondent, Alec Russell, really captured it perfectly: "One of the lazier syndromes in the international media of recent years has been the way that every political, social or economic drama of the post-apartheid era, from the rise of the firebrand Julius Malema to the fluctuations of the rand, has been presented abroad as an existential crisis. So, the sort of conflict of interest that in, say, India or Brazil is seen as irksome but not disastrous, is in the South African context routinely depicted as a step on the road to Zimbabwe."

The problem is that it’s not just the international media, it is South Africans themselves. Not everything, not even Marikana, is a step on the road to inevitable calamity. It is time to develop a faith, not only in ourselves but in our future. It is time for South Africans to wipe away the tears, clean up the mess, and stop crying the beloved country.

• Cohen is contributing editor.

Source: Business Day Live

How to reach 200 million people by bicycle?

We have a special preference for the African food and beverage industry. The reason is very intuitive: this is where most of the African household budget goes. If you are an investor that believes in the rise of African mass consumption, the food industry is probably one of the best ways to capture the long term opportunity.

A good example is Fan Milk, Ghana’s leading manufacturer of ice cream and yoghurt. Their story began in 1960 when a Danish entrepreneur created one of the first dairy businesses in Ghana. During the 1980s, the West African region was thriving after gaining independence.

Ghana, with its strong sense of national pride, a developing industry, and a well balanced infrastructure; presented the ideal climate to build a successful business.

After gaining independence, the region faced many political and economic challenges. Fan Milk’s resilience coupled with brand loyalty fuelled their success story and cemented their place in West African culture.
Initially the company only produced pasteurized milk, which they distributed through a unique system of bicycle vendors, pushcarts and kiosks. Today, Fan Milk have expanded and supply products to over 200 million people over 7 West African countries. Innovative distribution techniques have been developed to keep up with the changing economic climate, adding motor bikes and solar powered kiosks to the network.
Although the company has already developed a strong presence, their strategic position in Ghana will further enhance their potential for growth and expansion.They have built a strong brand and a way to ensure capacity so their boat can float on the rising tide of mass consumption.

Gold and cocoa are the main export items from the country and have helped contribute to Ghana’s economic activity. With the onset of oil production, GDP is expected to move into double digits. The benefits of a growing economy will increase the disposable income available to Ghanaian consumers, who will increasingly seek more high end branded food products.

Studies by the US department of Agriculture show that as income grows, consumers shift their food purchases from basic staple foods, to more expensive food products. Subsequently, under-developed countries facing periods of significant growth, will change their spending habits to reflect this trend.
As a result of changing trends, Fan Milk have widened their product portfolio to include ice cream, yoghurt, ice lollies and fruit juice. Fan Milk is , in our opinion, a unique opportunity to tap into Ghana’s successful growth story.

Investors are afraid of the unknown with challenges and issues that are sometimes not easy to understand. To be successful in these relatively new markets, we need to approach them with a fresh perspective, preferably a local one that has room for creativity.

After all, these are frontier markets, they require frontier thinking.

Source: Silk Invest

South Africa, a wealth of opportunity

Business Visual Audio from BIG Media on Vimeo.

Namibia: Windhoek announces a major oil find

Namibia has discovered a major offshore oilfield in its southern territorial water – possibly giving it access to 11-billion barrels in oil reserves.

Production could begin in four years, Mines and Energy Minister Isak Katali announced to Namibia’s parliament on Wednesday (7 July 2011).

The find could put Namibia on par with neighbouring Angola, whose reserves are estimated at around 13-billion barrels and whose production rivals Africa’s top producer, Nigeria. Most of the oil is thought to be concentrated just off the country’s south coast. 

If the estimated 11-billion barrels is confirmed, the development could change the geopolitics of the Southern African region forever, for better or worse. At current prices, 11-billion barrels translates to US$1, 2-trillion in oil revenue, equal to the annual GDP of the entire African continent. That amount of energy could also power Southern African economies for decades, helping to pay for investments in economic infrastructure, education and skills, health, and other pressing developmental areas. More immediately, fuel prices could be reduced across the region, particularly if the oil is refined locally.

However, oil has proved to be a mixed blessing for most African countries. It has tended to lead to a rise in state corruption, and to the growth of often armed cessationist movements in oil-rich regions. Angola and Nigeria provide examples of both developments. 

Katali said that Enigma Oil & Gas, owned by London-listed Chariot Oil & Gas, has identified 11 prospects along the southern coast, adding that first production could begin as early as 2015. Enigma holds 50% equity in the offshore Southern Block, together with Brazil's Petrobras.

According to Katali, another Brazilian company, HRT Oil & Gas Ltd, has raised US$1,3-billion on the Brazilian stock market, with US$300-million earmarked for oil and gas exploration in Namibia. He said that HRT has certified about 5.2-billion barrels of potential reserves.

In his statement to parliament, Katali added that HRT would drill three to four wells in that area as early as next year.

Another find off Namibia’s central coast called Delta Prospect contained recoverable resources of up to 2-billion barrels of oil, by Arcadia Expro (AEN) Namibia and British firm Tower Resources, he said.
Namibia has long been seen as a potential new source of oil, hampered by a lack of exploration to determine the extent of its reserves. Its offshore geology is similar to Brazil, which is seeing a boom in oil.


Source: Southern Africa Report

Final reports expected on coastal power station

An independent expert Is compiling the final environmental impact assessment report for a nuclear power station with a maximum capacity of 4000MW along the coast, with Thyspunt in the Eastern Cape still the most likely location

LINDA ENSOR

Published: 2012/04/12 07:45:09 AM

An independent expert was compiling the final environmental impact assessment report for a nuclear power station with a maximum capacity of 4000MW along the coast, with Thyspunt in the Eastern Cape still the most likely location, Energy Minister Dipuo Peters said yesterday.





The final report was expected to be submitted by the end of the year to the Department of Environmental Affairs for evaluation and a decision on an environmental authorisation.





The fact that Thyspunt is still the preferred location — despite intense opposition from the local community — contradicts the view expressed by Women, Children and People with Disabilities Minister Lulu Xingwana in October that "the development will not proceed". She was minister of arts and culture at the time.





This was because the South African Heritage Resources Agency had refused to approve the heritage impact assessment report on the grounds that the proposed power station would have a negative effect on the heritage of the Khoi San.





Three possible sites have been identified: Bantamsklip, east of Hermanus; Duynefontein next to the existing Koeberg power station; and Thyspunt in the Eastern Cape, on the coast between Oyster Bay and St Francis Bay.





Thyspunt was the site that was recommended by the revised draft environmental impact report released last year on condition that it received the required authorisation and approval.





Studies of the three sites had not revealed any "fatal flaws", Ms Peters said in reply to a parliamentary question by Democratic Alliance (DA) MP Pierre Rabie. If the Thyspunt site was not approved for the first new nuclear station, it was possible that either the Bantamsklip or the Duynefontein sites may be approved.





"With respect to the Thyspunt site, issues have been raised relating to transport, the chokka (squid) industry and debris flow. These issues are being investigated by the specialists and if there are substantive changes made in the respective specialist reports, the public will be provided with the opportunity to comment on these reports. Further work is also being undertaken by the heritage specialists," she said.





Ms Peters said more than one site would be required for the programme envisaged in the integrated resource plan. The plan provides for an additional 9600MW of nuclear energy between 2010 and 2030, giving nuclear a 23% share of the total new energy build and a 20% share of the total energy mix in 2030 from its 5% in 2010.





The minister said Bantamsklip could be used for a subsequent nuclear power station if Thyspunt was used for the first one.





She said the final report from the environmental expert would take into account the public comments received on the revised draft report as well as the 28 specialist studies related to fauna and flora, wetlands, dune morphology, transport, heritage and socioeconomic activities such as the fishing industry, tourism and agriculture.





A few revised specialists’ reports would be made public in a few months’ time.




Questioned by DA MP Jacques Smalle about the planned solar park in Upington, Ms Peters said a process of appointing a consultant to conduct the feasibility study for the project was under way, though it had been delayed for a while.

Africa: The World's Next Great Economic Story

Alexander B. Cummings, Executive Vice President and Chief Administrative Officer,
The Coca-Cola Company

Stanford University's Institute for Economic Policy Research and African Leadership Academy

Palo Alto, California

May 13, 2011

Thank you to SIEPR and the African Leadership Academy for the chance to be part of this important event. It's a chance to explore the amazing potential of a place that is so much a part of my life... so important to our Company... and is so prominent in the world's future.

There is an African proverb: "When the music changes, so does the dance."

The key question for the world is: are we truly listening?

The signs of real and lasting change in Africa are all around us. But they can be obscured by the past... and by a tendency for a benevolent world to focus on the problems... to exclusion of the possibilities.

I've been a part of Africa all my life ... and it's a part of me. Even for me, signs of progress can come in unexpected glimpses.

A few years ago, I flew on Kenyan Airways from London to Nairobi. I had taken the flight many times in the past. But in the past, when we landed, I always felt the captain should not only say "Thank you... but also "good luck".

Good luck on how you would cobble together the rest of your journey... as that was always an open question.

This time, I found myself listening to the flight attendant reading off a list of direct connections...Lagos... Kinshasa... Accra... Maputo... Kigali... Johannesburg... Cairo. As she read the list, it occurred to me: I was listening to a continent connecting and coming together.

And as I was leaving the airport, I realized something else. I turned on my Blackberry to send a message. I hadn't stopped to see if it was actually working. I just assumed it would.

And it did. Those bars that indicated signal strength... also indicated market strength.

Again... a continent connecting and coming together. They were two small signs of very significant progress. They are small additions to a body of evidence that is starting to make a case to the world ... this is the time to become part of Africa's story. Africa is indeed an emerging global player.

I say this with some perspective.

Coca-Cola saw that story taking shape early on. We've been a part of Africa since 1928. We live there, employ there, sell there, buy there, invest there. We are the largest consumer goods company in Africa ... and one of the largest private employers.

Over the last ten years, we've invested $6 billion in Africa. And over the next ten... we'll invest another $12 billion. We don't invest that kind of money based on hopeful assumptions. We see the opportunity to repeat our success in places like Brazil... where aggressive investment has created one of our strongest markets in the world.

We're not alone.

Our largest global customer Walmart placed its bets by buying half of South Africa's Massmart for $2.5 billion. UK's Vodaphone and India's Bharti Airtel are battling for share. Nestle has built more than two dozen factories on the continent... including a new one in the Congo.

The list is growing. It's growing because of the inescapable conclusions from some very impressive numbers:

• In 2008, Africa had a collective GDP of $1.6 trillion - equal to Brazil and Russia.
• By 2020 - aggregate GDP is expected to be $2.6 trillion. The rate of return on foreign investment is higher than any other developing region.
• The Economist and IMF report that from 2000 to 2010, six of the world's ten fastest-growing economies were in sub-Saharan Africa.
• And between now and 2015, it will be seven out of ten.

McKinsey sums up the potential in a report that calls the continent's economic leaders "African Lions," that present the same kind of opportunity as "Asian Tigers." (South Africa , Algeria, Botswana, Egypt, Mauritius, Libya, Morocco and Tunisia.)

Rise of the African Consumer

The world sees these facts. It believes these facts. But it may not fully understand these facts. There is an assumption that they are driven primarily by the extractive industries that mine, drill and harvest... and then take those resources somewhere else to create value.

No doubt... Africa's rich resources are an important part of its story. But the resource-centered view of the future ignores another resource... long term, the most important resource: the African consumer.

We're witnessing the rise of the next great consumer class. Rising incomes allow millions to aspire to things long out of reach.

Their aspirations are made possible by: access, connection and collaboration.

Access

Let's start with access ...

African consumers want the same things that consumers want the world over:

• They want to move beyond sustaining life... to enjoying it.
• Better nutrition, appliances, a car, a computer, travel, a better home. A cold bottle of Coca-Cola.
• Their growing ability to access those wants is clear in a few figures:
• Consumer discretionary income will rise 50 percent over next ten years.
• Already... one in every 10 African is a "solvent consumer"... able to purchase a variety of consumer goods.
• Already... Africa has a 313-million-strong middle class... about 34 percent of the population... on a par with China and India.

By 2030, the continent's top 18 cities could have a combined spending power of $1.3 trillion... concentrating wealth and the ability of marketers to reach large numbers of people efficiently.

Connection

A critical part of access is... connection .

As I experienced coming into Nairobi: the continent is coming together, and linking to the rest of the world. That connection is creating the kind of common experience that allows us to create the communities and enter the conversations that are the heart of a new consumer age.

At the center of connection is the mobile phone.

You can site impressive growth figures... like doubling in cell phone use every year since 2002. But even more impressive is what those statistics mean... how the cell phone will transform economies... and lives... as device and access costs continue to drop.

A project called "Mobile Trends Africa 2020" brought together telecom professionals and entrepreneurs. They were asked how mobile will change Africa. Their predictions touched every aspect of the economy and society.

• Entrepreneurial businesses
• Health care solutions
• Education
• Government transparency
• Greater safety on the streets and in homes... particularly for women.
• Text to speech will allow easier communication across languages.

Some make a good argument that mobile devices are so important to the future... that Africa will develop a large, thriving local industry to provide them. One measure of the digital opportunity is companies like Google, Microsoft, IBM, Cisco, HP and others moving quickly, and investing, to establish a presence.

Collaboration

Finally... collaboration. This is the difference-maker.

Africa's transformation can be a point in time... or a promise of the future. There is historic momentum... but it is far from self-sustaining. The difference between being a world resource and a world market is still in play.

There is a daunting list of problems. And the solutions will not come quickly. Three of the most significant issues are corruption, bureaucracy and the lack of a sufficient number of competent leadership.

Africa still ranks at the bottom of World Bank's ease of doing business survey.

Poverty is pernicious and entrenched. Half the population of Africa still lives on $1.25 a day. Security remains a question. While transfers of power have been more peaceful than in the past, the threat of violence stalks the perimeters of political change.

To address these issues, the collaboration I'm talking about must evolve from the old philanthropic model to one of shared value. It's a recognition that the success of business and the success of communities are a single, inseparable issue.

Creating shared value demands a new and more collaborative connection among the points of progress... business, NGOs, governments and the local communities themselves.

We're seeing that kind of collaboration much more than we have in the past. But if you look at the opportunity to build a better, stronger, safer, more successful Africa as the summit of a mountain... we are just coming out of the foothills.

Let me share with you a quick story of the power of shared value.

Our business model historically relies on big trucks with big loads delivering to big outlets. In many countries with developing infrastructure, that simply doesn't work. Rural roads can be too muddy. Neighborhood streets can be too narrow.

So, we've set up more than 3,200 small distribution centers... that employ 14,000 people... and generate more than $600 million in revenues. We call them Micro-Distribution centers... or MDCs.

Instead of trucks, the entrepreneurs who own the MDCs use bicycles, motorcycles, and hand-carts. In some key markets... such as Kenya, Tanzania, Uganda, Ethiopia and Mozambique... we rely on MDCs for a significant amount of our distribution.

The shared value is obvious.

For Coca-Cola , these small operations are a way to get our products to consumers in areas we might never reach. For the MDC owners and their communities, they mean jobs and income and local stability.

One of our MDC owners is Rosemary Njeri.

She's an amazing woman. Starting with nothing, she has been running an MDC in Nairobi for 10 years. In those 10 years, she has gone from one to 16 employees... two have been able to build their own houses with their income. She's using her profits to invest in real estate.

In 2009, we announced that our goal is to have women like Rosemary own half of all new micro-distribution centers.

We've already surpassed it.

Rosemary figures prominently in another Coca-Cola effort we launched late last year called Five By Twenty. We will empower 5 million women entrepreneurs worldwide by 2020 - small distributers like Rosemary, but also recyclers in India and fruit farmers in the Philippines

Believe in the Continent, Believe in the Opportunity

The future never arrives fully-formed. It comes together in pieces... some according to plan; others random and unexpected. It's been a long and uneven process to get to where we are. And the next steps will certainly bring setbacks along with gains... triumphs along with mistakes.

One mistake we cannot make is allow a vibrant future to be obscured by old assumptions and stereotypes. This is a new Africa. Stronger, better, more hopeful than anything we have seen in the past.

As part of a company, and as a son of Africa, I have the great advantage of seeing progress and opportunity from inside. Certainly, we see the obstacles. But more importantly, we also see beyond them.

Those who will be part of the continent's future will show that kind of vision.

They will move now... move quickly... and move with the confidence that, although uneven at times, Africa is ... the world's next great economic story.

The music of Africa is changing.

The question is: Who will master the dance?

Thank you.

Into Africa - by Wired Magazine

If you want to become extremely wealthy over the next five years, and you have a rudimentary grasp of technology, here's a no-brainer: move to Africa. Seriously.

The internet is only now arriving, and - with a billion people on the continent still mostly offline - there exists a once-in-a-lifetime opportunity to build the next Zyngas, eBays and Groupons for a huge untapped local market.

You need only to look at the map of huge broadband fibre-optic cables currently being laid on both east and west coasts, from Djibouti to Dakar, to understand how quickly and ambitiously an entire continent is being connected. It's like being back in 1995 again, and realising there might just be a market for an online bookshop or auction website.

Don't take my word for it: David Cameron is so keen to give British entrepreneurs a foothold that he recently took a delegation of CEOs to Nigeria and South Africa to highlight "one of the greatest economic opportunities on the planet".

The trip - featuring the bosses of firms such as Barclays and the Royal Mint, Vodafone and Virgin Atlantic - was hailed by Downing Street as "an historic visit to a continent with a trillion-dollar economy and the potential, according to the IMF, to grow faster than Brazil over the next five years".

Much of that growth will come from startups that bring the mobile internet to businesses and consumers who have until now been offline. That's why Cameron's team invited along the British founders of red-hot mobile-money business Monitise, a clever text-messaging system called Frontline SMS - and your own Digital Life columnist with his trusty notebook.

It was, admittedly, a surreal four-day schedule, taking in South Sudan, Rwanda, Nigeria and South Africa that, at the last moment, was squeezed to just two days and two countries (well, there was the small matter of a domestic phone-hacking crisis to distract the prime minister's attention).

But it was long enough to get a sense of the extraordinary opportunities - at a time when McKinsey and Ernst & Young are forecasting that £92bn will flow into Africa by 2015, and that consumer spending will reach £863bn by 2020. No wonder Helios Investment Partners could recently raise a £550m fund specifically targeting the continent.

So where could you make your own tech-based millions? A few obvious markets are primed for explosive growth:

Mobile money: Who needs banks if you can use your mobile to send and receive cash? More than a quarter of Kenya's GDP now passes through a phone-to-phone network called M-Pesa and, in Uganda, MTN Mobile Money has almost two million users.

As Cameron put it in a speech to Lagos Business School, "Today, mobile banking systems mean we can cut out the middlemen and make a direct impact on the lives of small farmers who can produce more food, feed their families, sell more food at the market and in turn purchase more seed."

E-commerce: You don't need a smart-phone, let alone a PC, to shop online. The American startup SlimTrader runs a service called MoBiashara, which lets African consumers shop by mobile on basic phones. And there are more than half a billion of those in Africa.

Business directories: The British startup entrepreneur Stefan Magdalinski - formerly of UpMyStreet and Moo.com - moved to Cape Town a couple of years ago to run a bunch of firms for international media group MIH, including a Kenyan business directory, Mocality, that gave many companies their first online presence. Why? Because he wanted to be where the action was.

Health: Not only do mobile phones turn into blood-pressure monitors and ultrasound devices that can connect rural communities, they can also detect counterfeit medicines: the startup mPedigree works with pharmaceutical companies to let patients text codes on packs of antimalarials to receive confirmation that they're genuine.

Leapfrog tech: If a tiny fraction of, say, Zimbabweans have access to the "big" internet, then why not make the internet accessible via SMS on their 2G phones? That's what Econet Wireless Zimbabwe is offering its five million mobile phone subscribers, turning their mobile handsets into virtual smartphones with technology from ForgetMeNot Africa that turns e-mails and chats into text messages.

Now insert your own big idea here, and book your air ticket. Sure, Africa still faces huge hurdles - in South Africa, eleven million people live below the poverty line, and almost six million have HIV; in Nigeria, 110 million out of a population of 158 million live on less than £1 a day. But when one telco alone, Bharti Airtel, recently announced £8bn in African revenue, you know it's time to abandon our traditional assumptions.

As Cameron said in Lagos, "Which continent has six of the ten fastest growing economies in the world? Africa is transforming in a way no one thought possible 20 years ago... and suddenly a whole new future seems within reach."


And why shouldn't you have a profitable role in that future?

David Rowan is editor of Wired magazine.

African roots create market for SABMiller

Brewer launches low cost cassava-based beer for Mozambican market to capture previously untapped low income earners

WITH the introduction of the first commercially produced cassava-based beer in Mozambique, SABMiller aims to increase its footprint in the relatively untapped home-brew beer market in Africa, which could be four times the size of the traditional market.




Almost half the alcohol made on the continent outside SA was made at a "subsistence" level, CEO Graham Mackay said yesterday at a Johannesburg press conference launching the product. It was a market that paid no tax and had no quality control, he said. "We always looking for new markets and opportunities."




The price of mainstream beer offered by brewers on the continent such as SABMiller and the UK’s Diageo means it is largely inaccessible to a large segment of alcohol consumers and is seen as a luxury purchase.



According to the United Nations, at the end of the 20th century, there were 315-million Africans living on less than $1 a day, which could increase to 404-million in the next four years.




Mainstream beer on the continent costs about $1, while homebrews can cost 85% less.




The informal market had "enormous untapped potential", Simon Hales, analyst at London-based Barclays Capital, said yesterday. "Your usual lager beer in the usual form is still too expensive," he said.




SABMiller will brew its Impala beer in Mozambique with local subsidiary Cervejas de Mocambique. "We hope the Impala brand gets about 10% of the market share eventually," MD of the brewer’s Africa unit Mark Bowman said. "An attractive price is important."




The beer will sell for 75c for a 550ml bottle, compared with the average price in Africa of $1 for an equivalent unit.




The brewer first invested in its Mozambique partner in 1995. Average per capita consumption of beer in the country is around 8l a year, against 60l in SA.




Impala is brewed using 70% cassava — a root vegetable that grows widely on the continent.



SABMiller will make use of the locally grown starch, which will be much cheaper to use than importing alternatives such as maize, Mr Hales said.




"It also enables them (SABMiller) to partner with local farmers and that wins favour with local authorities."



The brewer aims to increase local raw material sourcing in Africa to 50% over the next two years. SABMiller now imports about 80% of its raw materials.




Initially, the Impala brand will be restricted to rural areas — basically where cassava is grown, Mr Bowman said. "We’ll check the commercial success and in five to six months of running this then decide where to expand."




SA, which does grow some cassava, is not one of the markets primed for the product, according to Mr Mackay.




"There’s no discount category beer market in SA."

Source: Business Day

New rail project a game changer in southern Africa

Botswana, through Zimbabwe and into Mozambique and Malawi could prove a game changer in regional logistics and exports and challenge South Africa's dominance in this area.

The proposed 1 100km southern African rail network, which has many links to it, will connect to Ponta Techobanine, a proposed deep-sea port in Mozambique that could compete with the congested Richards Bay Coal Terminal, presently used as the main port for exporting commodities from ­southern Africa.


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Accountability

Zuma helped our democracy pass a crucial test this week

By Steven Friedman

DESPITE the hand-wringing in much of our national debate, our democracy is in much better shape than many people imagine. That is the message of this week’s Cabinet reshuffle and the announcements that accompanied it.




The firing of two ministers and the suspension of the national police commissioner are important steps forward for democracy, which may make it easier to fight corruption. They also highlight flaws in the way many of us understand our politics.




Three ways in which President Jacob Zuma ’s announcements are being analysed all say something important about how not to understand our current condition.




First, some cling doggedly to the stock explanation for anything Zuma or the government does — that it must aim to influence the African National Congress (ANC) leadership election in Mangaung next year.



When Zuma announced an inquiry into the arms deal, or promised to release the Donen report on oil-for-food transactions, we were bombarded with analysis explaining how this was all about strengthening his position and weakening his enemies. This was despite the fact that, in both cases, a much more obvious explanation was available: the government faced court action and may have decided to deflect it. That this was what was happening seems now to be confirmed — the arms deal inquiry will last two years, and so it cannot be used to influence a leadership election only 15 months away.




Nor is there any clear link between the reshuffle and the ANC election. Despite Zuma’s usual attempt to ensure that every faction has been accommodated, none of the changes seems likely to help him.



It remains a mystery why he insists on playing musical chairs with some of his ministers, but it is hard to see how doing this aims to get him re-elected.




ANC presidential politics are important. But they — and the ANC — are not the only political game in town. There are many other factors in our democracy that shape what the government does: citizens’ groups, the media, public opinion and the institutions set up by the constitution. The obsession that everything the government does must be linked to Mangaung ignores the many forces with the power to shape our society.




The reshuffle and the other announcements responded to pressures from society and the institutions — they were not an attempt to influence Mangaung.




While most of this response was positive, some may be less so: a two-year commission may be used to deflect pressure on the arms deal. But they are reminders that we need to take all the forces that shape our democracy seriously and not project all our anxieties onto the majority party.




Second, some reduce what happened to a debate on the virtues and vices of the president. They are divided between those who wax lyrical about his statesmanship and those who grumble that he could have done more, sooner. This repeats another of our fallacies — the obsession with "leadership" and the belief that our future depends entirely on the merits or otherwise of the people in political office.




Zuma did not "do the right thing", to use the public protector’s phrase, because he is a fearless fighter against corruption. If he was, he would have acted far sooner and he and his colleagues would have made it clear that the ministers acted improperly and that the commissioner may have done the same.




It was not easy for him to act: he is of that generation of ANC leaders that is used to showing loyalty to each other in the face of external attack. He is rooted in the politics that allows figures such as Winnie Madikizela-Mandela and Manto Tshabalala- Msimang to win large shares of the vote at ANC elections because they ran afoul of the media or the courts, even though few in the ANC thought they should be leaders.




Zuma has also packed the government’s security cluster with allies from his home province — police commissioner Bheki Cele is one. Until now, members of this inner circle have been guaranteed their positions, whatever else changes in the government.




And so it must have been particularly hard to suspend — and perhaps jettison — Cele.



Zuma acted, then, not because he wanted to but because he was convinced that he needed to act.




But why should this matter?




The issue is not whether Zuma is "good" or "bad". It is that the system worked. That it did so in the face of presidential reluctance makes what happened on Monday more, not less, momentous: it may show that some democratic principles are becoming so ingrained that a president who would have preferred to stand by his colleagues felt he could not.




If constitutional government is indeed taking root, that is far more important than the qualities of the president.




The second lesson, then, is that we need to base our assessment of how the country is doing on whether democracy is taking root, not on whether we have found a super hero to lead us.




Third, there is the "take it for granted" brigade for whom no democratic advance is good enough because we don’t look like an idealised version of western Europe.




Nothing much has changed, they insist, because Zuma did only what he was forced to do and he did not root out every single vestige of corruption.




But the government did not have to do this. Legally, it could ignore the public protector’s reports or denounce them as smears. The ANC would still have won the next election if it did that. That the government listened despite this was remarkable.




There is nothing automatic in any society about the idea that political office-holders should listen to public protectors or, indeed, public opinion.




If this accountability is achieved at all, it requires trials of strength between the political power-holders and those who hold them to account. Any new precedent that makes the government account is a step forward, even if the gain is limited. That a reluctant government with a secure majority agreed to be held to account is a huge step forward for democracy and accountability, even if it did it so half-heartedly.




The public protector clearly understands the limits of her office better than most commentators. Thuli Madonsela is our most active public protector yet and she understood that there was nothing automatic about the accountability her office is meant to instil. She seems to have concluded — accurately — that her only credible weapon was public opinion. Through road shows and media briefings, she galvanised the citizenry — or those sections able to make politicians take notice — and this must have played a key role in Zuma’s decision.




So the third lesson is that democracy does not spring fully formed from a new constitution. It will always be tested as power- holders try to remain as unaccountable as possible and, each time we pass a test, democracy is more secure.




For all the imperfections of Zuma’s announcements, our democracy has passed an important test and this will make it more difficult in future for people in high places to abuse public trust.




Much work remains to be done if democracy is to take root and the government is to account to citizens. But this week’s presidential decisions have made the task more than a little easier.




• Friedman is director of the Centre for the Study of Democracy.

SA Census begins

 The third census since the end of apartheid began on Monday (10 October 2011) and continues to; Census 2011 got underway this week.

The nation-wide headcount will be carried out by 120 000 South Africa fieldworkers and targets 14-million households. The final bill is estimated to be around R2-billion.

A South African census is undertaken every 10 years, in line with international standards.

Residents –citizens or not – are legally obliged to answer the 75 questions in the 14-page form. The questions focus on demographics, migration, health, income, education, employment, fertility, mortality and access to services.

The final data will guide the allocation of state resources and provision of services such as health and education.

First to be counted were the homeless and children born in hospitals from midnight onwards on 10 October.

More difficult to count will be Zimbabwean nationals, many of whom reside illegally in South Africa. The Home Affairs department instituted a four-month Zimbabwe Documentation Process, which ended in December last year, in an attempt to regularise the residence of as many as 1,5-million Zimbabwean migrants. A moratorium – since lifted – was placed on the deportation of illegal Zimbabwean immigrants for the period.

The registration process met with limited success: only 275 000 Zimbabweans applied for residence permits. This can be partly attributed to distrust, widespread in Zimbabwean expatriate communities, of South African immigration and law enforcement officials.

The estimated million-plus illegal Zimbabwean immigrants are therefore likely to avoid the headcount – despite the legal obligation to answer the questions, and a statutory undertaking that no information can be shared or used for other purpose.


Source: SouthernAfricaReport.com

Investing in Africa: All to Play For

Just five years ago nobody would have described Africa as a safe haven. But as accepted safe havens such as the US and European government bonds and equities continue to provide disappointing returns — and the prospect of far worse than that — global investors have been forced to cast their nets wider.

Some of the obvious destinations, such as the popular Bric quartet of Brazil, Russia, India and China, are looking expensive now, though there have been opportunities for quick- witted investors to buy in recent market dips, particularly in India.

SA has been one of those pricey emerging markets, upheld until mid-September by a strong rand.
People in search of high returns now have to look at what are termed frontier markets. These include many countries on several continents, such as Africa’s Nigeria and Kenya, South America’s Argentina, Europe’s Romania and Central Asia’s Kazakhstan.


It should be as natural for SA investors to invest elsewhere on the continent as it is for the British to invest in mainland Europe or Americans to invest in Canada and Mexico, but it is not.

The legacy of the apartheid years means Lagos and Nairobi remain far less known to SA fund managers than London, New York or Hong Kong. SA pension funds can now invest a further 5% of their assets in the rest of Africa, on top of the 25% overseas allowance, but few have taken up the offer. There are some structural issues that make it difficult (see page 36), notably the lack of liquidity in all African stock markets other than the JSE itself.

Eric Kibe, who manages Sanlam’s African Frontier Markets fund from Nairobi, Kenya, says African markets have taken a beating over the past three months. “But this has been due to factors outside our control. The risk appetite of international investors has been reduced because of the threat of a double-dip recession in the US.”

Nothando Ndebele, head of sub-Saharan African research at Renaissance BJM, says that 40% of Africa’s GDP is made up by agriculture yet it is hard for a global fund manager to invest into this sector. “There are parts of the Democratic Republic of Congo that are so rich they can grow three crops a year.”

Mark Mobius, chairman of Templeton Asset Management — once called the Indiana Jones of emerging markets — says that investing in the second tier (the frontier markets) is worth the effort.
In Africa markets are at different stages of development, ranging from Zimbabwe, which opened its first stock exchange in 1896, to Angola, which has a spanking new stock exchange building but no listings yet. Brian Mugabe, head of Africa research at Imara Securities, says SA is the outlier as it is struggling to grow at 3,5% — half the rate of the rest of the continent.

“Angola is growing even faster than the rest so you can appreciate how much excitement the listing of a blue chip such as Sonangol, the national oil company, would create.”

Plus the jobs created for firms such as Imara to trade shares at a generous commission.
Investor relations are also starting to become more professional across the continent, and most listed companies now look to the Big Four auditing firms, plus a few reputable cottage firms such as Grant Thornton, to audit their books.

Nigeria is one of Goldman Sachs’s “next eleven” countries — those it considers to have the potential to become economic giants along with Egypt. (SA didn’t even make the cut.)

“Frontier markets, generally, have companies that are oriented towards their respective domestic economies rather than the global economy, so we believe that they have less correlation to global issues,” says Mobius.

He says Templeton, an early adopter of new markets, is looking at lesser-known economies such as Nigeria, Egypt, Kenya, Botswana, Ghana, Morocco and Tunisia. But though markets in some African countries are developing quite rapidly, they have a long way to go before their potential is fully realised, he adds.

Meanwhile, private equity investments present an alternative channel for direct foreign investment , and private equity companies are looking more closely at the continent . Carlyle, one of the big three global players, recently set up offices in Johannesburg and Lagos.

Within a generation there will be 1,5bn people in the whole of Africa, and China’s population will be in decline.

Ndebele says that financial services will become more sophisticated. There is already a large banking sector in Africa, which dominates most stock exchanges, but very little mortgage finance, while short-term and life insurance are both at an early stage in their evolution.

Though the African Union is not held in high esteem by the outside world, and does not seem to have done a great deal for unity, there is a greater realisation among Africans that economic and political co-operation is necessary and will further the national objectives of all countries on the continent.
Still, there are a lot of negatives , and SA is by no means immune to these.

Ndebele says that in many African capital cities, power cuts are a regular feature. The power infrastructure is awful, she says. “We hear that hydroelectric power is the answer, until the next drought.”

Porous borders and corruption affect SA, but it does not have one of the violence- prone governments that still rule by force on much of the continent. As we know, this has led to poverty and the deterioration of health among segments of the population in certain areas.

But there are some positive developments. Reforms are moving ahead and market economies have been growing and prospering in a number of countries. Ghana, the first in Africa to win its independence, back in 1957, is now, after several false starts, one of the best examples of this. Even blighted Rwanda has had two successful new listings this year.

Mobius argues that the long-term outlook for the continent is bright: “With its substantial wealth in natural resources such as gold, oil, platinum, iron ore, copper and large areas of arable land, Africa is well placed to benefit from increased growth and higher demand in emerging markets such as China and India.”

In 2010, Anand Sharma, India’s minister of commerce & industry, announced that his government planned to invest US$1trillion in Nigeria and other parts of Africa during the next decade.

In Angola, Nigeria and Ethiopia, rapid economic growth has resulted in better living conditions, lower child mortality, higher primary school enrolment and greater access to clean water.

The headline numbers on economic growth are compelling.

The continent, outside SA, is expected to grow more than 7%/year in the next 20 years, due to an improving investment environment, better economic management and China’s rising demand for its resources. SA, if it is lucky, will grow at about half that rate.

More than 100 African companies elsewhere in Africa have revenues in excess of $1bn. Africa also has impressive stores of potential resources, not only in minerals but also in food — 60% of the world’s uncultivated arable land is found on the continent north of SA.

The Bric countries have shown heightened interest . These emerging countries need resources and are willing to invest in infrastructure, which will help African economies.

It sometimes looks as if China may be trying to take over all the plum resources . Mobius says Chinese investments in Africa were subjected to intense media scrutiny in the past, but it only accounted for 2,6% of Chinese outbound investment . More than 70% of its outbound investment was still within Asia in 2009, while 13% was in Latin America.

According to an Ernst & Young survey of African investments, China was one of the top five foreign direct investors in just two sub-Saharan African countries, Ethiopia and Zambia.

Increasingly, Africa is not seen simply as a resources play. The most valuable shares on the exchanges are subsidiaries of the multinational consumer companies such as Unilever Ghana, Heineken’s Nigerian Breweries and Diageo’s East African Breweries.

The big disappointment recently has been Vodafone’s Safaricom, by far the largest IPO in Africa over the past five years. That was mainly because its margins were cut to the bone after a price war with Bharti Airtel.

The demographics are also favourable for growth. No less than 45% of the 1bn -strong population on the continent as a whole is aged between five and 24.

“The rising number of Africa’s youth could have vast potential, if they improve their education and skills. They could be a great asset to drive and sustain the continent’s growth and development ,” says Mobius.

The growing population is by no means an unmixed blessing.

The World Bank estimates that enrolment in secondary education in Africa is between 20% and 35%, compared with 40% in East Asia and 55% in Latin America.

And it is worth remembering that Africa (including SA) accounts for just 1,8% of world GDP — by 2015 it will have crept up to 2,4%. Australia’s share of world GDP will be similar.

GDP per capita in Africa, including SA, will still be only 40% of East Asian levels , though at independence in the 1960s this continent had a higher per capita income than Asia. In 1960 Ghana had a higher income per capita than South Korea.

It will take years to erode the perception that Africa is not a go-ahead continent.

Source: Financial Mail

South Africa targets $17bn investment bonanza

South Africa expects 115 billion rand ($17 billion) worth of investments flowing into Africa's biggest economy over the next three years, the trade and industry minister said on Tuesday. 

Rob Davies told parliament the figure was a “realistic target” and the deals would come from the emerging market BRICS powers as well as Japan, Germany, France, the United Kingdom, the United States and countries in the Middle East. 

“We anticipate that this work programme will translate over the next three years into an investment pipeline of projects valued at R115 billion,” he said. 

The past year saw investments worth 28 billion rand flow into South Africa, creating approximately 13,000 jobs. 

Foreign investors have been cautious about sending capital because of growing concerns over corruption and the country's rigid labour market, which makes producing goods more expensive when compared to other emerging economies. 

Turning to international trade, Davies said the stalled Doha Round of talks could collapse. “Renewed efforts to conclude the Doha Developmental Round this year appear to have come up against major, and perhaps fatal, obstacles,” he said. 

 

Major stumbling blocks include bigger economies wanting greater access to developing countries in the areas of industrial tariffs and services, while emerging states are wary of acceding to this demand without reciprocity.

South Africa recently joined the BRICS grouping that also includes Brazil, Russia, India and China.

Source: Reuters