Africa keeps it interesting for Bayer business development boss
“There are so many more interesting things to tell when coming back from the bush in Côte d’Ivoire or Tanzania or Ethiopia, than coming from a meeting in Brussels or Frankfurt.”
So says French-born Eric Bureau, head of business development for Africa, at Bayer CropScience, a division of the German healthcare and chemicals giant Bayer.
Two years ago the company reviewed its African operations and came up with a plan to significantly ramp up its presence. “A number of multinational companies are looking at Africa with new eyes. Africa is experiencing strong growth in many sectors, and agriculture is clearly also part of that growth,” Bureau told How we made it in Africa at the company’s headquarters in Monheim, Germany.
Selling more seed
Bayer CropScience produces a variety of agricultural chemicals and seeds. In Africa it especially wants to boost seed sales – notably cotton and rice – an area where it has been lagging some of its competitors.
Many African countries however don’t allow the growing of GM crops, and the challenge is to ensure GM seeds don’t find their way into neighbouring countries where they have not been approved. Bayer however is comfortable in Cameroon because the cotton industry is tightly controlled by a government-owned company which distributes inputs to small-scale farmers.
But the lead times for these projects are significant. The company started its first cotton trials in Cameroon in 2012 and expects regulatory approval next year. Sales are only anticipated to start in 2018.
Courting small-scale farmers
Agriculture in sub-Saharan Africa remains dominated by small farmers. And although Bayer’s business traditionally focused on large commercial projects and government tenders, it is now actively targeting small-scale farmers. “This smallholder sector was relatively unknown and untouched by us, and also many of the agricultural input suppliers,” explains Bureau.
Doing business with these millions of small farmers – who live in remote areas with little access to finance – is however easier said than done. Bayer has therefore introduced smaller, more affordable pack sizes and is also involved in ‘demonstration farms’ that highlight the benefits of modern farming technologies.
Competing for talent
Human resources also pose a challenge to Bayer’s African expansion plans. “In many African countries it is difficult… to recruit people who have the skills, the knowledge and also the business approach we are looking for,” says Bureau.
And retaining talent can also be difficult. “Particularly at a time when not only Bayer is investing in Africa, but a number of multinational companies. So there is a clear competition to attract and retain the best people.”
Local manufacturing not yet feasible
In Africa, Bayer CropScience currently only manufactures in South Africa, the continent’s most sophisticated economy. While it has some initiatives to locally refill and repackage products, Bureau says the limited size of individual markets and cross-border trading challenges make full-scale manufacturing in other countries unfeasible.
“Establishing a plant in Africa would only make sense if there is easy access to other countries, and this is not the case today. There is not one single country, apart from South Africa, that can justify a manufacturing unit. The others do not have sufficient market size to justify investment in a plant.”
Feeding the world
The crop protection and seeds industries are fiercely competitive. Bayer’s competition includes generic products from India and China as well as companies such as Syngenta, BASF and DuPont.
However, the gap between Africa’s agricultural potential and actual output is so wide that there is certainly ample room for all players in the market.
Bureau is astonished that Africa still imports $35bn of food every year, especially considering the continent’s favourable growing conditions.
“Africa is certainly part of the solution to feed the planet in the year 2050, or the next century, because there is huge potential to increase the yield of already existing crops.”
Ethio-Djibouti Railway Project Well Underway
Some 55 percent of the Sebeta-Dewele railway project, which is part of the bigger project that would connect Ethiopia with Djibouti, is completed, according to Ethiopian Railway Corporation.
Briefing the 6th Ethio-Djibouti Joint Commission Meeting that opened on Wednesday, October 7, 2014 on the progress of the project on the Ethiopian side, Chief Officer of Ethio-Djibouti Railway, Yehualashet Jemere, said the Sebeta-Mieso 317 km and Mieso-Dewele 339 km construction, including the bridges, anti-pulling test for bolt, static load test, and other civil works are well in progress.
He said about two third of the project was finalized in the past two years. Activities are currently underway to complete the rest of the work in the next 18 months, Yehualashet added.
His Djiboutian counterpart Mohammed Khaire said 50 percent of the project on the Djiboutian side is also finalized.
Ethiopian Transport Minister Werkineh Gebeyehu told ENA that the Sebeta-Djibouti Railway Project is progressing as per the schedule.
The Minister underlined that the railway would add value to the nation’s economy by reducing transportation cost and attracting investors.
The railway will enable Ethiopia to be competitive in the international market by curbing logistical costs caused by the current poor transportation system, Werkineh indicated.
According to him, the railway system will reduce the travel time from Ethiopia to Djibouti by half, to less than ten hours with a designated speed of 120kms/hour.
The railway will have 17 major stations and passes through major cities including Bishoftu, Adama, Metehara and Dire Dawa. The 107km from Sebeta to Adama line is a double track while the rest 549 km is a single track rail, it was learned.
Djiboutian Minister of Equipment and Transport, Moussa Ahmed Hassan, on his part said the project is implemented effectively and is progressing well on both the Ethiopian and Djiboutian side.
Aware of the importance of railway infrastructure, Djibouti and Ethiopia decided to build a new railway line with standard gauge (1.435 m) and electrical traction, the minster stated, further appreciating the Ethiopian competency in railway construction projects.
Bombardier Transportation lands rail contract in Ethiopia
BERLIN – Bombardier Transportation has landed a contract to deliver mainline signalling for a 400-kilometre stretch of rail in Ethiopia.
The order awarded by Turkish construction company Yapi Merkezi, which is delivering the design and construction of the project, has a value of approximately US$45 million.
“This is one of the longest lines tendered as a turnkey project in sub-Saharan Africa,” Yapi Merkezi board member Erdem Arioglu said in a statement Wednesday.
“Yapi Merkezi went through a very detailed selection process to determine its suppliers and subcontractors and Bombardier was selected due to its proven track record and its successful, long-term co-operation with Yapi Merkezi on similar projects worldwide.”
International hotel companies focusing on Ethiopia
Last week government delegations, investors and senior executives from some of the world’s leading hotel brands descended on Ethiopia’s capital, Addis Ababa, for an annual hotel conference. The more than 500 delegates at the Africa Hotel Investment Forum (AHIF), discussed investment opportunities in the region, announced deals and forged partnerships.
The AHIF was initially planned for Nairobi but in June organisers announced it would be moved to Ethiopia due to limited space to accommodate increased numbers of exhibitors.
However, some stakeholders in Kenya believe the move might have been prompted by insecurity and travel warnings against Kenya at the time.
Demand far exceeds supply
Ethiopia is one of the fastest growing economies in Africa and often cited as an attractive destination by business leaders because of its 90m population and vast agricultural resources.
However, Ethiopia has a significant shortage of quality hotel rooms. A September report by Awash International Bank projected demand for hotel nights will hit 1.3m next year. But the East African nation currently has just three international hotel brands, namely Sheraton, Hilton and Radisson Blu.
This is set to change following announcements at AHIF by other players seeking to enter the market. The Wyndham hotel group announced it will open its first property in Ethiopia early next year. The US group has signed a management agreement for a 136-room hotel to be named Ramada Addis.
Adugna Bekele, owner of the Ramada Addis, said the fourth international hotel brand to launch in “one of the most vibrant and economically robust cities of Africa” will have an impact both on employment and investment.
“Once open, Ramada Addis will create job opportunities for over 250 people, serve Africa’s capital city to host its multitude of conference guests, and play a vital role in bringing foreign investment into the market,” said Bekele.
Marriott International also plans to expand into Ethiopia, as well as grow its footprint in countries such as South Africa, Nigeria, Uganda, Ghana and Rwanda. It recently acquired South Africa’s Protea Hotel Group.
Sunshine Business plc, a company owned by Ethiopian business magnate Samuel Tafesse, will open the “two five-star Marriott hotels with a total expenditure of over US$100m”. The company is developing Courtyard by Marriott Addis Ababa and the Marriott Executive Apartments Addis Ababa, which will be targeted at international travelers and executive expats seeking luxurious apartment living with hotel services.
In addition, both Best Western International and InterContinental Hotels Group announced they will launch new properties in Ethiopia over the coming two years.
“Addis Ababa is evolving at pace, with infrastructure such as the Bole International Airport now serving almost 20m passengers a year,” said Pascal Gauvin, InterContinental’s chief operating officer for India, the Middle East and Africa. “This being our first hotel in Ethiopia we will now have a presence in 13 countries across Africa.”
Tanzanian cabinet ratifies Nile deal
The Tanzanian cabinet has ratified the 2010 Comprehensive Framework Agreement (CFA) signed by upstream Nile Basin countries, known as the ‘Entebbe Agreement’.
“The Nile River Cooperation Framework will be ratified by the Tanzanian Parliament in next month,” Minster of State in the President’s Office, Professor Mark Mwandosya, told Anadolu Agency on Tuesday.
He said the ratification will lead to transformation on the Nile Basin Initiative (NBI), into a Nile Basin Commission that will set clear procedures of the Nile River water sharing.
In 2010, upstream states Ethiopia, Kenya, Uganda, Rwanda and Tanzania all signed the Cooperative Framework Agreement regulating Nile water use. Burundi signed on to the treaty in 2011.
The deal aims to replace a colonial-era treaty that gives Egypt and Sudan the lion’s share of Nile water.
“The transformation from NBI which has survived for 15 years will depend upon six member states of the NBI, eight member states ratifying or acceding to the CFA,” Mwandosya said.
In June, Tanzanian Minister of Foreign Affairs and International Cooperation Bernard Kamillius Membe called for a review of the 2010 agreement in order to consider Egypt’s water needs.
Water distribution among Nile basin states has long been regulated by a colonial-era treaty giving Egypt and Sudan the lion’s share of river water.
Ethiopia, one of the upstream countries, says it has never recognized the treaty.
Ethiopia – Universal health coverage for inclusive and sustainable development: country summary report
A low-income country, Ethiopia has made impressive progress in improving health outcomes. The Inter-agency Group for Child Mortality Estimation reported that Ethiopia has achieved Millennium Development Goal (MDG) 4, three years ahead of target, with under-5 mortality at 68 per 1,000 live births in 2012. Significant challenges remain, however, with the maternal mortality ratio at 420 out of 100,000 live births.
The government has introduced a three-tier public health care delivery system to deliver essential health services and ensure referral linkages, with level three as specialized hospitals (one per 3.5 million 5 million population), level two as general hospitals (one per 1 million 1.5 million), level one as primary hospitals (one per 60,000 100,000) with satellite health centers (one per 15,000 25,000) and health posts (one per 3,000 5,000).
One initiative contributing greatly toward universal health coverage (UHC) is the Health Extension Program (HEP) that provides free primary care services at health posts and communities. The country is at its early stage initiating insurance schemes to provide financial protection for its citizens: Social Health Insurance (SHI) for formal sector employees and Community-Based Health Insurance (CBHI) for rural residents and informal sector employees. Public facilities are expected to provide exempted services for free, and there is a fee-waiver system for the poor.
Investors urged to prefer Ethiopia for manufacturing
The industrial zones being built in four major cities of Ethiopia would create opportunities for the expansion of the manufacturing industry, according to Ministry of Industry.
Speaking at a consultative meeting held on Wednesday State Minister of Industry Dr. Mebrahtu Meles said the manufacturing sector is a priority area for the government, particularly at the industrial zones of Diredawa, Hawassa, Kombolcha and Addis Ababa.
Utilizing these, Ethiopia should be a leading nation in Africa in light agro-processing industry by 2025, he said.
Dr. Mebrahtu urged the investors to use the country’s abundant human resources to realize their ambitious goal of benefitting from the sector.
During the last Ethiopian budget year, the country has obtained 68 million USD from export of food, beverages and pharmaceutical goods, it was indicated.
On the other hand, the country earned 76.2 million USD from the export of meat and dairy products during same period.
Nation capable of earning $5 billion from mining, study reveals
Ethiopia has the potential to earn five billion US dollars annually from mining sector, a study revealed.
The study report entitled “Strategic assessment of the Ethiopian mineral sector” was launched on Tuesday, October 07, 2014 at the Hilton Hotel. The study was reportedly conducted by the assistance of the World Bank and other developmental partners from Australia, Canada, Denmark and United Kingdom.
Speaking at the launching ceremony of the study, Minister of Mines Tolosa Shagi said the country has secured more than 2.3 billion US dollars from export of gold, tantalum, opal, marble and other minerals during the last four years.
“The mineral and petroleum exploration conducted so far on limited part of the country both by the Geological Survey of Ethiopia and private companies, showed that Ethiopia is endowed with a favorable geological environment that hosts a wide range of mineral and geo-energy potentials,” he said.
Currently, over 130 companies are working in the solid minerals operations and oil and gas activities, according to the minister.
The minister noted that there is still a need for adequate transport and accountability system in order to manage the resources effectively.
Besides, Ethiopia has not benefited from its mining sectors due to limited geological data and technical and regulatory capacity, he indicated.
Senior Mining Specialist at World Bank, Kirsten Hund said Ethiopia has strong geological opportunity, which enables it to attain sustainable development which needs commitment in working hard in the sector.
Midroc General Manager, Dr. Arega Yerdaw on his part pointed out that the country would benefit a lot from the sector if it could provide fast services and make available plenty of skilled manpower in order to attract investors.
Africa’s mining income reached 120 billion USD in 2012, it was learned.
UPDATE – KEFI Minerals re-activates mining licence application for Ethiopia project as it agrees funding
KEFI Minerals (LON:KEFI) shares rose almost 10% as it re-activated its mining application for the US$120mln Tulu Kapi project in Ethiopia following approval of indicative financing terms tabled by a banking syndicate chosen by the company.
Crucially, Tolassa Shagi, the Ethiopian Minister for Mines, has told KEFI he will fast-track the approval so the work can begin early next year.
This initial programme – including the first phase of community resettlement, roads construction and surface water drainage – is expected to cost US$10mln and will be funded by an early-stage secured loan.
The total capital investment is put at US$120-$150mln. KEFI said it plans to raise US$100mln senior secured debt, with US$30mln coming via a mix of equity and mezzanine finance.
Chairman Harry Anagnostaras-Adams said: “The reactivation of the mining licence application for Tulu Kapi marks an inflection point in KEFI’s history.
“With the recent verifications of our plans and analysis, as well as the approval of the indicative terms for project financing, we can see a clear path towards becoming a gold developer.
“We have the right team and, in Tulu Kapi, the right project to achieve this aim.
“We look forward to our mining licence application being granted so that we can progress to the construction phase and to delivering shareholder value.”
Speaking to Proactive, Anagnostaras-Adams added: “This is effectively a US$200mln project of which US$50mln has already been spent by previous owners. We didn’t spend that money but it has been spent on the project and banks have confirmed that most of the funds should be available from them. We’ve agreed the indicative terms so we’re very confident it will fall into place.”
Referring to the gold price, he noted that if a company’s numbers make money based on the current price of the precious metal, then a firm was well positioned.
He noted that at Tulu Kapi the all-in costs, including capital and production, made “good money” at current prices.
Also today, Kefi unveiled a boardroom shake-up with Anagnostaras-Adams exchanging his non-executive duties with KEFI for a full-time, executive position overseeing permitting, financing and team-building.
This will include appointing an “African-experienced mine builder and operator” as managing director and then the assembling of teams for construction and operations.
Current MD Jeff Rayner becomes the exploration director “with a particular focus on identifying the company’s value-adding stages beyond the construction and start-up of the Tulu Kapi open pit”.
The plan is to mine 86,000 ounces a year at an all-in cost of US$844 an ounce, putting Tulu Kapi at the lower end of the cost curve.
VSA Capital noted Kefi was now focused on updating the definitive feasibility study and the proposed financing.
The major works programme of between US$120-150m for mine development is expected to start during the fourth quarter of 2015.
Shares rose 9.62% to 1.425p.