David Okwara

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Africa brief: aviation

Africa Brief: Uganda’s oil, Ghana’s inflation, Nigeria’s forex reserves, and more






Uganda will auction 13 blocks for oil and gas exploration when a new bill governing the petroleum sector is signed into law by the President Yoweni Museveni.

Ghana’s producer price inflation rose in December to 17.1% from 15.8% in November, due to increasing gold prices.

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Africa Brief: Delta beer sales, Kenyan oil products, Tanzanian cellular fees, and more











Zimbabwe’s Delta sees lager, premium beer sales rise – Delta Corporation partly owned by SABMiller has been projected to raise its 2013 annual profit by 31%, although the trading update shows the Chibuku sales volumes declined by 10% …

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Africa Brief: Tanzania call costs, Fridays off, Chinese loan, and more











Tanzania bids to cut call costs – Tanzania Communications Regulatory Authority plans to increase the competition between telecoms operators by cutting the interconnection rates telecoms operators charge each other by 69% in March.

Gambian President Yahya Jammeh has declared Friday a rest day to allow for more prayer, social activities and agriculture. This four-day work week will take effect from 1 February.

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Africa Urged to Follow Kenya’s Example

Africa Brief: Kenya fuel pipeline, Mozambique infrastructure, Angola oil exports, and more











Kenya plans to construct a new $300 million (R2.6 billion) fuel pipeline from the port of Mombasa to Nairobi, to replace an older one, and possibly extend it to Uganda. Kenya Pipeline Company said that it was inviting proposals for the design of the 450km pipeline from east Africa’s trade gateway to feed land-locked growing economies, which rely on Mombasa for fuel imports. “The new pipeline is designed to meet petroleum products demand for the region up to the year 2044,” the company said.

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Business in Africa: Fraud and Corruption











Fraud and corruption will always be at the forefront
of the minds of those looking to invest in Africa. In this regard, the recently published KPMG Africa fraud Barometer for 2011 reported some telling statistics about reported fraud on the continent. The Barometer was developed “to form a bigger picture of fraud prevalence on the African continent”, incorporating data from available news articles on Africa and other designated databases. The Barometer compares fraud reports from the six months ended June 2011 to the six months ended December 2011.

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Business in Africa: Some challenges on the road to a promising future











The April 2012 World Economic Outlook report published by the International Monetary Fund presented a sturdy but cautiously optimistic future for the various African economies. Sub-Saharan
 Africa particularly recorded a strong 5 percent growth in 2011 and was one of the regions least affected
by the global financial crisis. With the exception of South Africa, limited financial ties to Europe helped shield the region from the financial havoc that tore through Western economies in late 2011.

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Africa: A Continent of Diversity and Opportunity











Many JSE companies are seeing Africa as the new frontier and an important source of long-term growth, especially those companies doing business in mature markets. The International Monetary Fund forecast the region to grow at 5.5% both this year and next. By comparison, South Africa’s economic growth rate is forecast at just 2.7%.

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Sustainability Megaforces and the Insurance Industry











Many international and local companies have introduced products responding to changing consumer needs and consumer preferences shifting to more sustainable behaviour – these include products targeting new and growing industry sectors, products with a ‘green’ element and products responding to new and increasing risks.

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Using Nigeria’s oil to diversify the national economy

Africa Brief: Pharmaceutical firms, Malawian donor aid, fuel pipeline and more











Oil bunkering – hacking into pipelines to steal crude then refining it or selling it abroad – has become a major cost to Nigeria’s treasury, which depends on oil for 80% of its earnings. Many local Nigerians would obtain these oils and refine the oil to sell to the local and foreign market to make a living even though they know this is illegal. Nigerians can make $60 (about R523) in a day by oil bunkering.

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Sustainability Megaforces: Is the insurance industry prepared?











The insurance industry relies on the ability to make informed predictions of future events as the basis for taking actions in the present. increased severity and/ or frequency of weather events, if not adequately accounted for, will mean that claims exceed levels predicted by actuarial models, and premiums will not be set correctly. Figure 2 illustrates the trends in the number of disasters reported internationally per year.

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Is Nigerian Content Act Indigenising the Oil Industry?

Africa Brief: Growth rate, KFC and Zimplats expansions, sub-Saharan Africa inflows, and more











Excluding South Africa, Sub-Saharan Africa is said to grow at 6.6% this year. When including SA’s 30% weighting in the Sub-Saharan Economy, the growth rate falls to 5.4%. President of the African Bank Donald Kaberuka says the dynamic in Africa is good however, there are risks when you consider the global environment.

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The 10 Sustainability Megaforces











Deepening social, economic and environmental challenges over the last two decades mean that sustainability issues are increasingly prominent in global business. sustainability trends predicted to play out over the next 20 years paint a picture of resource constraints, increasing regulation, shifting competitive landscapes, changes in market size and shifting consumer preferences.

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The Future of LTE in Sub-Saharan Africa

Africa Brief: Vodafone expansion, Zimbabwe’s indigenisation of mines and banks, and more











Africa has turned to one of the biggest profit generators for Vodafone, helping to make up for the European slow down. Africa will be the industry’s fastest growing region by subscribers over the next 5 years as firms build advanced networks and customers switch to broadband. Vodafone reported a R12.9bn EBITDA, which is 15% up from the prior year.

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Africa Brief

Africa Brief: Zimbabwe wildlife conservancies, Chinese Coal of Africa deal, and more











Germany and Zimbabwe will be co-hosting the United Nations World Tourism Organisation’s general assembly in August. Germany is concerned regarding Zimbabwe’s ability to do this as there is continued invasion of protected wildlife conservancies by Zanu (PF).

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Africa Brief: New border post, Zimbabwe maize production, and more











Due to the long queues at the Beitbridge, Zimbabwe Education Minister, David Coltart has suggested a new border post be considered between South Africa and Zimbabwe. SA Home Affairs Minister Naledi Pandor, is aware of the problem and is working on a solution to improve the situation. The South African Chamber of Commerce has raised concern, but does not feel a new border will solve the current problem.

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Africa Brief: Energy, electricity, coal, hotels, and more











Exxon Mobil, US energy producer intends to search for crude and natural gas in South Africa. Dave van der Spuy (resource evaluation manager at Petroleum SA) believes the level of activity and interest in SA is at its highest. With SA being the continent’s biggest oil importer, international energy companies with new technologies are entering SA. Mozambique is another energy province, with the largest gas finds.

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Africa Brief: Global retailers, Sudan, Malawi, Zambia mining, and more











Last year saw the expansion of global fashion brands expanding into South Africa, due to the increasing consumer culture; Africa attracts investments from international companies. Global retailers are looking for new income streams in SA, as it has a relatively untapped market. This puts pressure on local retailers to shorten their merchandise cycle to remain competitive with the other brands. This means a wider variety for local consumers as more brands expand into SA, which previously had a conservative clothing market.

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Africa Brief: Zimbabwe farmers, Airbus, Barclays Zimbabwe, and more











The fight between farmers and the state of Zimbabwe for land has been a prolonged battle, widely seen as executive self-help. The SADC (Southern African Development Community) tribunal was set up for individuals who had exhausted their country’s domestic courts, which was later suspended. It was later decided to amend the protocol for the tribunal which now disallows individuals from approaching it, though it has been much condemned.

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Healthcare systems in Africa











This is a summary of the African countries which, in our opinion, are notable for some aspect of their healthcare systems, whether it be rapid uptake of health insurance, high levels of total expenditure or innovative governance in the public sector…

Botswana: A relatively wealthy country, Botswana is one of the four countries in Africa which complied with the Abuja commitment in 2010 by spending more than 15% of its budget on health. Botswana is also notable for the health profile of its private healthcare spending: only 30% of private health expenditure was out-of-pocket, which is good news for health outcomes although the high HIV prevalence rate still holds life expectancy down.

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Global trends impacting healthcare in Africa











Direct payment at point of use is the least-optimal way of financing healthcare, as in poor countries in particular, dramatic and expensive ailments can push the poor into bankruptcy, or else high costs can dissuade people from seeking desperately needed medical care. So, according to the WHO, two years after Burundi introduced user fees for healthcare in 2002, four out of five patients in that country were either in debt or had sold assets to pay for healthcare.

It is routine for more than 2% of the population of low-income countries to suffer ‘financial catastrophe’– defined as having to spend over 40% of income after food – because of healthcare costs. In the estimation of the WHO, reliance on direct payments has to fall to at most 20% of total health expenditures to bring the incidence of financial catastrophe down to negligible levels.

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Expenditure on healthcare in Africa











After effectiveness, the most important criterion in evaluating healthcare systems is probably expenditure. ‘Who pays how much for what’ determines how many people obtain treatment, and thus the overall health of a population. The world has been taking steps towards a better affordability of healthcare for the poor since 2005, when the (then) 192 members of WHO endorsed a resolution entitled ‘Sustainable health financing, universal coverage and social health insurance’.

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Primary and secondary healthcare in Africa











Efforts to control the three pandemics (HIV/AIDS, tuberculosis and malaria) have made real differences to longevity in Africa and should be applauded. But there are reasons to think that there is too much focus on these three pandemics. In healthcare this kind of focus on a specific health issue is called a ‘vertical’ focus, and many critics think that it too often prevails in preference to a ‘horizontal’ focus that aims to strengthen health systems in a more general way.

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Mortality in Africa











To better understand why lives in Africa are so short, in relative terms, it is important to see what ends lives. (At 34 per 1,000 people per year, Africa’s crude death is by far the highest in the world and more than quadruple the global average.)

Africa’s mortality profile is almost the exact opposite of that of the world as a whole. Under a third of global deaths are caused by communicable diseases, maternal and perinatal conditions and nutritional deficiencies; in Africa the figure approaches two thirds. Only 28% of Africa’s deaths are caused by non-communicable conditions whereas the global figure is 64% (and in Europe the figure is 87%).

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The state of healthcare in Africa











Africa is not a healthy continent. On all indicators of health, Africa lags behind the rest of the world, and behind poor countries of South-East and South Asia that were behind Africa when measured on these metrics a few decades ago. Much of this gap, which has widened since the 1980s is a consequence of the HIV/AIDS epidemic which has hit Africa harder than any region on Earth, but much of it (as well as the sometimes sluggish and ineffective responses to HIV/AIDS) can be blamed on other factors.

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LWOL: Dinesh Kumar discusses the topic ‘What’s trending in Procurement?’

The Cloud storms in as top disruptive force according to KPMG 2012 Technology Innovation survey











When asked to predict future technology transformations over the next three years, more than half of the 668 global technology leaders who took part in the survey pointed to cloud computing (SaaS, IaaS, PaaS) as the biggest indispensable consumer technology …

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Contracting value: Shifting paradigms

Contracting value: Shifting paradigms











KPMG conducted a study which analyses the failures of the most common payment systems within healthcare globally, ranging from fee-for-service and block grants to the current attempts to pay for performance. The report explores the importance of paying for outcomes rather than activities; paying for value and not just reimbursing costs. Policy-makers across the world are rethinking payment mechanisms to instead reward value: high-quality, efficient care. ‘Value’ is a key term in the current crisis in healthcare globally, emphasizing that our problems in containing costs are just as crucial to tackle as our problems in capturing and ensuring quality.

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The business case for cloud computing











Cloud computing has generated significant hype in Africa. But with IT vendors pushing the technology case, few companies have taken the time to look at the value it can offer from a business perspective, says Frank Rizzo, partner in Advisory at KPMG. “With services such as Apple iCloud, Microsoft SkyDrive, and Google Drive popularising the commoditisation of cloud computing, we have reached the point where implementation has become a question for the CEO and not the CIO. Cloud computing is not driven solely by technical experts any more but by business leaders who are looking to leverage cloud computing from an overall business perspective,” says Rizzo.

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Africa Urged to Follow Kenya’s Example

African infrastructure projects receive global recognition











KPMG names six African infrastructure projects among the 100 most innovative global infrastructure projects that make cities liveable and sustainable …

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The 2012 Africa Tax Academy and Transfer Pricing in Africa











The 2012 Africa Tax Academy took place in Nairobi, Kenya, from 9 to 11 July 2012, followed by a client breakfast with presentations by KPMG professionals from different jurisdictions on 12 July 2012.

Approximately 80 delegates attended the conference from countries such as Kenya, Nigeria, South Africa, Uganda, Rwanda, Sierra Leone, DRC, Malawi, Zambia, Botswana, Ghana, Tanzania, but also from Germany and Switzerland.

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Mergers and acquisitions in the global mining industry











The global mining industry has seen an increase in the number of mergers and acquisitions (M&A) recently – driven by demand fundamentals that remain sound across the globe. Deal value during the first quarter of 2012 was dominated by the long-anticipated US$53B Glencore-Xstrata merger proposal, which if successful, would represent the largest mining transaction in history. According to KPMG’s recently published Mining M&A Quarterly Report First Quarter 2012, more than 81 mining transactions were announced during the first quarter of 2012, compared to a fewer than 50 during the previous quarter, representing an increase of 75% in volume-a strong rise even without the Glencore-Xstrata announcement.

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