Africa’s top 10 future investment cities
By | August 14, 2014
If you’re looking to do business in Africa, but you’re unsure of which emerging market to tap into, then Kenya, Sudan, Ethiopia and Senegal are among your best bets.
This is according to the latest PricewaterhouseCooper (PwC) Global Economy Watch report which projects that by 2040, sub-Saharan Africa will be the fastest growing economy in the region. It is also expected to be the region with the biggest labour workforce in the world, with high GDP growth rates expected to hit around $140 billion (nearly R1,5 trillion) by 2030.
The so-called ‘Next 10’ cities that economists have identified as ones to watch are: Ibadan and Kano in Nigeria, Addis Ababa in Ethiopia, Ouagadougou in Burkina Faso, Dakar in Senegal, Nairobi in Kenya, Abidjan in Cote d’Ivoire, Khartoum in Sudan, Luanda in Angola and Dar es Salaam in Tanzania.
Targeting cities that are projected to almost double in size in the next two decades is where the real opportunities for investment lie, the report suggests. UN projections indicate that the cities of Dar es Salaam and Luanda could have bigger populations than London has now.
“Cities are the typical entry points for businesses trying to expand in new overseas markets. This is because they enable closer interaction with customers in a relatively small geographic space, which in turn helps contain distribution costs,” the report states.
The PwC report echoes comments made in the International Monetary Fund’s regional economic outlook for sub-Saharan Africa report earlier this year, which stated that overall growth in the region would most likely remain among the top 30% in the world, driven primarily by large investments in infrastructure, mining and maturing investments.
Dr Roelof Botha, an economic advisor to PwC, says several “economic phenomena” in the sub-Saharan Africa region, such as new discoveries in gold and gas, heavy investment in infrastructure development and sustained per capital income growth are attracting global investment.
But, in order for these cities to deliver on their full potential, the report points to three major current “hurdles” that could derail the pace at which the ‘Next 10’ will grow.
The biggest challenge facing African countries is the poor quality of ‘hard’ infrastructure such as roads and railway, followed by inadequate ‘soft’ infrastructure like schools, universities and hospitals and the “growing pains arising from political, legal and regulatory institutions struggling to deal with a bigger and more complicated economy.”
“The challenges that policy makers face is to convert Africa’s demographic dividend into economic reality by overcoming these hurdles. Infrastructure development is a key driver for progress across Africa and a critical enabler for sustainable and socially inclusive growth.”
“However, investors should form their own plans to mitigate these problems by supporting infrastructure skills and development programmes,” Stanley Subramoney, PwC South market region strategy leader said in a statement.
Ethiopia and Japan Held 14th Round Industrial Development Policy Dialogue
Japan and Ethiopia held a five days dialogue that lasted from August 11 to 15 on Industrial Development. The dialogue was held in Addis Ababa and it was the 14th Round of Policy Dialogue on Industrial Development.
According to Walta Information Center this Dialogue was referred to in the Joint Communiqué by Prime Minister Mr. Shinzo Abe and Prime Minister Hailemariam Dessalegn issued on the occasion of the state visit of Japan’s Prime Minister to Ethiopia in January.
The Dialogue has been held since 2000 when the late Prime Minister Meles Zenawi Professor Kenichi Ohno and Professor Izumi Ohno from the National Graduate Institute for Policy Studies requested for it.
The Dialogue has been conducted as part of a technical assistance project by the Japan International Cooperation Agency (JICA). This infers it has been coordinated closely with the “Kaizen” initiative that the Ethiopian Government is implementing across the country with
assistance of Japan. This is also the platform that created the “Champion Products approach,” which is a tool for promoting trade and increasing exports.
The Dialogue attracted many high level officials and was headed by Newayekiristos Gebreab, Economic Advisor to the Prime Minister.
Topics such as the positioning of “Kaizen” in the next GTP2, a direction of scaling up industrial capacity to achieve industrial development and a light manufacturing vision were discussed. In addition to this points Ethiopia should note were also raised.
Other than these, the dialogue also covered topics such as the situation of the “Latest Comer” countries, namely Myanmar, Cambodia and Bangladesh, was was introduced and an active exchange of views and discussions were conducted on policies to encourage more FDI based on
other countries’ experiences or the necessity to implement industrial policy step by step.
4G Nearly in Addis Abeba
– Ethio Telecom will soon be available in Addis Ababa following the completion of an expansion project
Ethio Telecom will begin offering 4G service in Addis Abeba in the coming month following the completion of the Telecom Expansion Project (TEP), with the rest of the country expected to follow within a year.
Ethio Telecom made the announcement during a press conference at its headquarters on Churchill Avenue on August 5, 2014.
The project was conducted in three phases. The first phase involved replacing the old Nokia network – set up in 75 areas including Bisrate Gabriel, Mekanisa, Ayer Tena, Alem Bank, and Alem Gena areas – with a new Huawei network. The second phase involved 239 areas, according to Abdurahim Ahmed, corporate communications officer with Ethio Telecom.
In the third phase, Ethio Telecom built the capacity for providing the 4G service for 400,000 customers by completing civil works, erecting antennas and installing service equipment in an additional 410 sites. In these sites, there will be 210 antennas supporting 4G. A total of 722 antennas were installed making the city’s service coverage reach 100pc, Abdurahim said.
Problems which recently occurred with mobile and CDMA users while attempting to recharge accounts will now be automatically detected, according to Abdurahim. There is a technical team organized by Ethio Telecom and Huawei, a Chinese company which undertook the network project for 800 million dollars, working on the problem resolution of the area according to the officer.
The 210 network antennas among the new 410 networks will support 4G. Ethio Telecom has also acquired generators and batteries to mitigate the power problem, Abdurahim said.
The 4G has a downloading capacity of 150mbit/sec while 3G has a capacity of 42mbit/sec.
The country is divided into 13 telecom centres in a 1.6 billion dollars contract awarded to the two Chinese telecom companies Huawei and ZTE in August 2013.
ZTE has fallen into a tax row with the Ethiopian Revenues & Customs Authority (ERCA), which Ethio Telecom says occurred after the contract was awarded to the Chinese. According to Abdurahim, Ethio Telecom is seeking an explanation from the tax body. ZTE’s management says that it has managed to get the amount required reduced from 920 million Br in tax, interest and penalty to 522 million Br and would continue to make its case until the authority makes further concessions or rejects ZTE’s case.
The new 4G service will be provided to smart phones with 4G capacities, including the iPhone 5, Galaxy s5, and Nokia Lumina, as well as with dongles for wireless networks.
There are two types of dongles that the company provides. The first comes in different capacities, ranging from 2GB, 4GB, 8GB, 10GB, 20GB, and 30GB as Abdurahim stated. The second type has no limit on its capacity.
The network in the Addis Abeba telecom centre was completed in six months, with the remaining 12 circles for the rest of the country expected to be completed by the end of this fiscal year, according to Abdurahim. Circles in areas where there are mega projects, such as sugar factories, will be prioritized, he said. The end of this fiscal year will also see the number of mobile subscribers rise to 40 million and the capacity to 59 million, according to Ethio Telecom’s plan.
Huawei Concluded a Optical Fiber Installation with Eltel
Huawei and Eltel concluded a major contract in Ethiopia. The agreement is for the installation of Optical Ground Wire (OPGW) covering 1, 600 Kilometers on the existing power transmission lines.
The project which is expected to be finalized by the end of 2015, is going to witness Ethiopia’s first ever live line condition installation.
The areas that the project will be carried out are located in Central, Southern, South Western and Western parts of the country.
The entire project is part of Ethiopia’s National Grid Development and Improvement Project. As Eltel concludes its task, the nation will be equipped with a high quality backbone for 3rd party users and enhance the utility’s internal communication capabilities.
Eltel has a decade old experience with delivering electrification projects in Sub-Saharan Africa, including Ethiopia.
New Zealand Company ‘ready’ to invest in Ethiopia
A New Zealand Company called Dairy and Beef Solutions has expressed readiness on Tuesday to invest in Ethiopia.
Dairy and Beef Solutions Ltd of Mr. Derek Fairweather, having talks with Ethiopian State Minister of Foreign Affairs, Dewano Kedir in Addis Ababa emphasized his company’s capacity and productivity and outlined what it could contribute to improve the dairy and beef sector.
State Minister Dewano Kedir briefed the company’s representatives about investment in Ethiopia.
The State Minister made clear the investment opportunities in the sector, the peace and stability of the country and the support and follow-up assistance provided by the government for investors in Ethiopia.
He also underlined the advantages of the huge market and cheap labor available in Ethiopia, adding that the agricultural sector was one of the priority areas of the country’s Growth and Transformation Plan.
Mr. Derek Fairweather appreciated the support he has received from the Government of Ethiopia explaining his company’s preparedness to invest here.
UNDP, Microsoft agree to empower 200,000 entrepreneurs in Ethiopia
The United Nations Development Programme has signed a collaborative agreement with Microsoft East Africa Limited to enhance development activities in the areas of entrepreneurship.
The two organisations have agreed for Microsoft to provide training and mentorship services to Ethiopia’s UNDP supported Entrepreneurship Development Programme (EDP) for 200 thousand entrepreneurs.
These services form part of Microsoft’s 4Afrika Initiative, which looks to accelerate Africa’s economic development and improve its global competitiveness by empowering local entrepreneurs.
Microsoft brings this vision, as well as its vast experience in providing ICT skills, education and curriculum for developing countries, to the deal.
As part of this agreement, senior Microsoft executive volunteers will provide support, including mentoring entrepreneurs on strategy and marketing; support the best innovators and nominate them for the 4Afrika Innovation Grant Award; provide access to Microsoft BizSpark, a global program that provides free software to startup entrepreneurs and help entrepreneurs exchange products and service and gain global recognition through the Microsoft Small and Medium Enterprise (SME) portal
UNDP’s partnership deal with Microsoft also includes a ‘Build Your Own Business’ training, which is designed to help micro and small businesses empower current and aspiring entrepreneurs.
This is UNDP Ethiopia’s first private sector partnership.
“The goods and services offered by Microsoft provides a unique opportunity to unleash the potential of young and budding entrepreneurs. This will help them to play a vital role in the economic growth and transformational development of Ethiopia,” UNDP Resident Representative, Eugene Owusu, said.
“The goods and services offered by Microsoft provides a unique opportunity to unleash the potential of young and budding entrepreneurs. This will help them to play a vital role in the economic growth and transformational development of Ethiopia.”
Eric Odipo, Country Manager of Microsoft East and Southern Africa, agrees. “It is crical to develop the capacity, knowledge and skills of local entrepreneurs who will stimulate local economies. We look forward to working with the UNDP in taking innovative business models to scale.”
Ethiopian Airlines Enters into Codeshare Agreement with United
United Airlines and the largest airline in Africa have entered into a codeshare agreement effective at the end of the month.
Ethiopian Airlines, which already flies a daily nonstop from Addis Ababa to Washington’s Reagan National, is now able to extend its reach in the U.S. while United is able to do the same with connections throughout Africa. Ethiopian actually flies to 83 international destinations across five continents, including 49 cities across Africa.
The new codeshare agreement between the two Star Alliance-member airlines covers the Addis Ababa–Washington, D.C. trunk route. There will be one daily flight from Washington to Addis Ababa departing at 10 a.m., and one flight daily from Addis Ababa to Washington departing at 10 p.m.
In a statement, Ethiopian Airlines Group CEO Tewolde Gebremariam said “We are very delighted to start codeshare flights with fellow Star Alliance member United Airlines. This agreement will enable our two carriers to tap into new market opportunities and to continue to be competitive in the fast-growing U.S.-Africa travel market. It will also give a wider choice of connectivity options to our customers traveling between the U.S. and Africa.”
“United is pleased to join Ethiopian in providing new codeshare options for our mutual customers traveling between the U.S. and Africa,” Jim Compton, United’s Vice Chairman and Chief Revenue Officer, said in a release.
With the agreement, Ethiopian gets access to United Airlines and United Express’ average of more than 5,200 flights a day to 374 airports across six continents.
Business Discussions Between Dow and Ethiopian Stakeholders
A business networking and awareness creation session between the US Chemical Company, DOW and various stakeholders from Addis Ababa was held on Wednesday (August 12) at the Radisson Blue Hotel. Among those attending were officials from the Ministry of Foreign Affairs and the Investment Commission as well as representatives of the Chamber of Commerce and Sectorial Association, the Agricultural Investment Land Administration Agency and the US Company, DOW.
Presentations covered the opportunities and prospects for investment in Ethiopia. The President of the Ethiopian Chamber of Commerce and Sectoral Association, Solomon Arega, and the Commissioner of Ethiopian Investment Commission, Fitsum Arega, detailed the prospects and advantages; and Commissioner Fitsum explained the incentives and tax system arrangements designed to help foreign investors succeed in Ethiopia.
Mr. Ross McLean, Head of the DOW delegation, and John Kolmer, Manager, Human Capital Development for DOW, said they were impressed at the welcoming opportunities available in Ethiopia and spoke of their plans to invest in Ethiopia in the manufacturing sector and in agriculture and chemical industries. Members of the Leadership in Action team from DOW, who will be in Ethiopia for a week, indicated that their presence would encourage other US companies to look towards future investment in Ethiopia.
Allana Potash Engages AMEC to Complete Front End Engineering and Design Studies on Danakhil Project
Toronto, Ontario, August 12, 2014 – Allana Potash Corp. (TSX: AAA) (“Allana” or the “Company”) is pleased to announce that it has engaged AMEC Americas Limited (“AMEC”) to complete Front End Engineering and Design (FEED) on its one million tonne per year MOP Danakhil Potash Project in Ethiopia as preparatory work in anticipation of the completion of project financing and expected start of construction. This work will be undertaken primarily by AMEC’s Saskatoon office and is estimated to take approximately six months to complete. AMEC is an international engineering and project management company to the world’s natural resources industries. AMEC has extensive experience in all aspects of the potash industry and related infrastructure.
The AMEC team will provide FEED services in support of the Danakhil Project and will cover the following facilities:
- Process and process, maintenance and service buildings
- Conveyance to and from the ponds
- Product storage (wet and dry)
- Truck loading
- Power generation and fuel storage
- General roads and other project infrastructure
- Temporary and permanent works camps
- Port facilities including: truck unloading, product storage, ship loader facilities integration
During the FEED engineering phase AMEC will also undertake the following:
- Prepare the Project Management Plan (PMP) including a Work Breakdown Schedule (WBS) and definition of supply and construction scopes and packages.
- Develop a resource-loaded Level 3 project engineering, procurement/contracting and construction schedule, with detailed estimates of construction staffing requirements
- Prepare principal design documents such as design criteria, flow sheets, P&IDs, single line diagrams, site plans, and general arrangements, in preparation for final detailed engineering and construction documentation
- Complete civil, concrete and steel materials take-offs (MTOs) based on 3D modeling
- Complete trade-off and optimization studies related to certain process components, modularization, power supply, materials movement and layout options
- Develop the procurement and construction contracting plan, completing the list of qualified prospective suppliers and contractors
- Initiate procurement with formal Requests for Quotation (RFQ) for long lead items and items required to be rough set as structural steel is erected and modules configured
Farhad Abasov, President and CEO of Allana, commented, “We are extremely pleased to have engaged AMEC to complete the FEED portion of the EPCM work for our Danakhil Potash Project. AMEC brings a wealth of experience in the potash industry including process design, solution mining and construction management to the operation, which we believe will advance our project in preparation for the construction phase. We look forward to working with AMEC to optimize and finalize the project design and advance the project to the next level. The initiation of the FEED work is a first for the potash industry in Ethiopia and represents another milestone accomplishment for Allana and the government of Ethiopia. Allana remains committed to developing the Danakhil Project and the securing the FEED work with a major engineering firm such as AMEC represents a significant achievement for the project. “
Malt Factory To Suspend Production
– Lack of interest by farmers to harvest barley leads to shortage, halting of factory operations
The Assela Malt Factory, the main supplier of malt for breweries in Ethiopia, is suspending production until the middle September when barley ordered from Denmark is expected to be delivered.
“The factory will stop production as soon as it finalises processing the 15,000qt it has in its stock, which will be finished before mid-august,” said Amare Wakjira, managing director of the Factory.
The Factory is located just outside Assela town in Tiya Woreda of Arsi Zone, a region popular for the quality of barley it produces; despite the fact the factory is not getting enough supply from the farmers.
“The main reason for the scarcity of barley is the farmers’ poor interest to harvest barley,” said Amare.
The Company is paying farmers 360 Br more a quintal starting July to encourage farmers to grow more barley; its old price used to be 900 Br to 1,050 Br. Sometime before that Diageo, the owner of Meta Brewery, had bought 70tns of barley from the same market where Assela gets its supply, according to a source working in the industry.
Diageo’s communication office confirmed the purchase but declined to discuss the subject of malt. The office asked questions to be emailed to it, but Menen Wondwossen, corporate relations director, replied saying, “We are not able to comment on this at the moment.”
The Assela Malt Factory sent a Letter of Credit (LC) to Denmark on August 5, 2104, for shipments of 17,500tns of barley, a four month supply, for six million dollars, at nearly twice the price in the domestic market. The Factory expects the ships carrying the barley to arrive at the Port of Djibouti on September 10 and reached to the Factory on September 30, 2014.
The Malt Factory needs 600,000qls of raw malt barley to produce 360,000qls of malt a year, which it supplies to the breweries in installments of 30,000qls to 32,000qls. Its clients include BGI Ethiopia, Harer Brewery, Bedele Brewery Share Company, Meta Brewery and Beer Garden. The Factory sold close to 220qlt for 345 million Br to these five breweries in 2011/12.
Some of these breweries declined to comment on the consequences of the malt factory suspending production.
Dashen Brewery gets its malt from its, Gondar Malt Factory, a sister company, both owned by Tiret Endowment Investment Organizations (TEIO). Gondar Malt Factory started production last year with an investment of 670 million Br, in Gondar town, in the Amhara Regional State, with a production capacity of 16,200tns of malt a year. The company gets barley from Gondar, Gojjam and Northern Shoa. The brewery consumes three quarters of the malt produced by the malt factory.
According to data from the Ethiopian Revenue & Customs Authority (ERCA), 5,425tn of malt was imported in 2003 at a cost of 2.8 million dollars. This number had grown more than 15 fold by last year, forcing the country to spend 47.3 million dollars on the import of malt.
Following maize, wheat, teff and sorghum, barley is the fifth most important cereal crop in the country, and it is produced on about one million hectares of land of which Arsi and Bale contributed close to 20pc.
Asella Malt was established 30 years ago, and remained for long the sole local supplier of malt to the local beer industry, whose production capacity has reached about four million hectoliters. Raya, Zebidar and Habesha breweries are expected to join the industry in coming years.
Starting from July 8, 2014, the Factory increased its prices from 1,695 Br to 1,795 Br a quintal.