Seven reasons to be optimistic about Africa

Africa Brief: Business News from around the continent

Automotive Manufacturing Plants prepare to expand in Africa

While the South African automotive market looks like it’s in trouble due to high labour costs and a volatile energy sector, to the north of the continent things look better. In Nigeria, almost a dozen new manufacturing plants prepare to launch by the end of the year, signalling a growing demand for new vehicles in this market. CNBC Africa’s Nozipho Mbanjwa is joined by Gavin Maile, KPMG Automotive sector head; Nicholas de Canha, CEO of Imperial Fleet Management and Steven Sutherland, sales director for RSA & at Africa, Mix telematic, to gain insight into Africa’s automotive industry.

Clover looks for new pastures and fast-growing economies in Africa

DAIRY group Clover Industries will wrap up talks with potential partners in the next few months as it seeks to expand into faster-growing economies in the rest of Africa. Although limited opportunities exist in most African countries for Clover’s fresh product range due to the lack of refrigeration and poor infrastructure, the company sells long-life products that could appeal to urbanised middle classes with higher incomes.

“We want a network in sub-Saharan Africa through minority shareholding in existing companies at first… as we grow, we’ll become majority shareholders and eventually make the ‘rest of Africa’ a subsidiary of Clover. We’re looking at Zimbabwe, Zambia, Angola, Mozam­bique, Nigeria, and then East Africa,” Marcelo Palmeiro, the group’s executive for corporate and brand development, said yesterday.

Partnering with a local company negates some risk and provides com­panies with on-the-ground insight. By moving into the rest of Africa, where there was long-term growth potential, Vunani Securities analyst Anthony Clark said, the group was getting its brand known in the hope of keeping a small advantage against multinationals that were too scared to go in at this stage.

“People have the mentality that if it’s Africa, you do something simple or cheap, but that’s not Cloven we want local manufacturing, good quality and distribution. You have to have a full set­up there,” Mr Palmeiro said.

By ZEENAT MOORAD, published in BUSINESS DAY on 25/03/2015

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Egypt, Sudan step closer to Ethiopian alliance

EGYPT and Sudan took an­other step toward co-operating with Ethiopia on the hydro-power dam it is building on the Blue Nile river after the three nations’ leaders signed an accord on Monday

The countries agreed that the river’s waters should be used in a way that did not cause “significant damage” to any of them and that any disputes would be resolved through negotiations, accord­ing to a copy of the “declara­tion of principles” published by Ahram Online, a state-owned Egyptian news website.

“The purpose of the Re­naissance Dam is to generate power, contribute to economic development, promote co-oper­ation beyond borders, and regional integration through generating clean sustainable energy,” according to the agree­ment signed in Khartoum.

The 6 000 megawatt dam on the Nile’s main tributary will be Africa’s largest power plant after its scheduled completion in 2017. Ethiopia said it would benefit the region by generat­ing electricity, reducing floods and storing water for use during droughts.

Sudan and Egypt will re­ceive priority to purchase elec­tricity generated by the dam, according to the agreement. Egyptian officials are con­cerned there will be water shortages during the filling of the dam’s 74 billion cubic me­tres reservoir, a capacity that is almost equivalent to one year’s flow of the Nile.

By William Davison and Ahmed Feteha, published in THE STAR BUSINESS REPORT on 25/03/2015

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Mining law to provide stability for investors

KENYA expects to enact a mining law later this year to provide policy sta­bility in a country ranked by an indus­try institute as one of the world’s least attractive places to invest, Mining Secretary Najib Balala said.

The Mining Bill, before the East African nation’s Senate, is expected to be passed before the fiscal year ends on June 30. It will begin a “new era” for mining in Kenya, Mr Balala said in an interview in Nairobi last week.

“There have been bad practices; we want to change that,” Mr Balala said. “This bill is good not only for the government, but also for the industry as it guarantees them stability, it guar­antees them their rights. It also brings transparency to the process.”

Kenya is overhauling its mining code to increase revenue share from an industry that represents only about 1% of gross domestic product, because poor regulation has deterred invest­ment. Under the law, the government will impose royalty rates ranging from 1% of the gross sales value of industrial minerals such as gypsum and lime­stone, to 10% for coal, titanium ores, niobium and rare-earth elements, and 12% for diamonds.

By ILYA GRIDNEFF, published in THE BUSINESS DAY on 25/03/2015

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Toll roads come to Kenya in five tenders

KENYA plans to start tendering in May for toll-road contracts esti­mated by the government to be worth $2bn to improve the efficiency of the East African nation’s biggest commercial routes, a Treasury official said. The contracts will be in addition to the 45 deals worth about $3.2bn the government will start awarding as early as next week, to double the nation’s paved-road network through an annuity programme.

The government was planning to introduce five toll projects covering about 800km, including a 482km dual-carriage highway between the port city of Mombasa and the capital, Nairobi, Stanley Kamau, director of the public private partnership unit at the Treasury, said.

Kenya is retaining Pricewater-houseCoopers to advise on the deve­lopment and maintenance of the Nairobi-Mombasa highway. It hired Intercontinental Consultants and Technocrats of India for the same scope of work for a 176km highway connecting the capital to the south­western city of Nakuru. The Treasury is drawing from a $40m World Bank loan to do feasi­bility studies for the projects and partly finance land acquisition. Kenya is seeking funds from private sources to support its plans, expand infrastructure and create a regional transportation hub that will help it accelerate economic growth to 10% by 2017 from 5.4% last year.

By Bloomberg, published in THE BUSINESS DAY on 25/03/2015

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SA motor industry offers ‘safe investment’

CONTINUED spending in SA by multinational motor companies shows that the global vehicle industry still sees SA as a safe investment destination, says the MD of BMW SA, Tim Abbott. The government must stick to the principles of the 2013-20 Automotive Produc­tion and Development Pro­gramme (APDP), to retain that confidence, he says.

In its latest quarterly report, the National Association of Automobile Manufacturers of SA predicts that after spending a record R6.9bn in 2014, SA vehicle manufacturers will invest another R7.5bn this year. BMW SA previously invest­ed R2.2bn to build the current 3-Series sedan at its Rosslyn assembly plant, near Pretoria. Though production began in 2012, before the APDP, former MD Bodo Donauer extracted government guarantees that the company would receive the full incentive package — allow­ing the company to claim back about R500m.

The next generation 3-Series is due in about 2019, so BMW Germany will soon start seeking future policy assur­ances from the South African government. Mr Abbott, who replaced Mr Donauer late last year, hopes an APDP review, due this year, will not recom­mend significant changes. By

By David Furlonger, published in THE BUSINESS DAY on 25/03/2015

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About Femi Oke

Relentless passion for creativity and digital acumen to help a professional services firm thrive in the digital space. Femi is an individual with a rich experience on regional African knowledge, its diverse business culture and he understands the continent’s economic drive. He thrives on selfless service and lasting mutually beneficial relationships with colleagues and especially clients encountered in the course of his duties. He is creative, practical and self-motivated with business judgement in corporate, brand and strategic communications, social, digital & traditional media and executive profiling. Roles in the firm include New Media, Digital Communication, Corporate Communication, executive profiling and Brand Management execution. Working on the multi-million dollar Africa high growth market project stands out for femi; besides this, managing all KPMG’s digital communication for the World Economic Forum on Africa is another project that gives him great delight. Femi holds a Masters Degree in Global Marketing from the University of Liverpool.

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