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
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
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
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
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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