AfroInvestors Summer Edition 2016 by Casa Foundation and Partners

SUMMER ISSUE 2016

AfroInvestors THE FUTURE OF AFRICA

The New Middle Class: Bridging Economic Disparities

SUMMER 2016 | afroinvestors.com

afroinvestors.com | SUMMER 2016

A Note from Africa

AfroInvestors

These are interesting yet pensive times for Africa. The precarious state of the global financial markets, the Brexit

Editorial Team

debacle, the looming economic crunch in Africa and its toxic implications calls for serious introspection in these times. The Brexit dillema begs for strategic initiatives to avoid a future meltdown. AfroInvestors researchers indicate that while Britain has started the process of tackling its Brexit issue, many external factors remain for its trading African partners, particularly the oil-reliant states namely Nigeria, Angola,

Publisher: Olutoyin Oyelade Supervising Editor Rizalyn Vale

Zambia, South Sudan, and DR Congo. These economies are already battered and bloodied by dwindling oil prices with

Editorial Assistants

consequences of currency devaluation and deficit account

Amanda Armstrong

balances. AfroInvestors research provides a compelling report to showcase a resilient Britain that could bounce back post Brexit but where does that leave Africa? In this edition, AfroInvestors focuses on the African young and middle class as major advantages that could be maximized to steer clear of its current headwinds. Investors continue to question the possibility that the headline risks that plague Africa could be mitigated, but private sector analysts

Emily Vanderburg Graphic Designer Ife Oyelade Graphic Consultant Joe Figliola JR Graphics

believe that the ingenuity of Africaâ&#x20AC;&#x2122;s middle class could be the panacea to its woes. The question is what can investors

Researchers

expect from Africa in its current state?

Earlyn Etienne Kunle Akingboju

Further, this summer edition presents a situation analysis of the Democratic Peoples Republic of Korea? Where is North Korea headed after its missile build-up? This report shares encouraging news from the diversified economies of Kenya, Tanzania, and Rwanda. These countries have shown economic stamina to withstand the headwinds and tailwinds buf-

Editorial Board Olusola Oyelade Rizalyn Vale Adekunle Adegbulu

feting even bigger economies. The absence of the oil curse,

Olutoyin Oyelade

the blessing of a mixed bag, or the emergence of Silicon

Ayo Teriba (Advisor)

Savannah high tech Hubs appear to have done the trick for entrepreneurs. At the Drivers seat of these firms are young and rising start-ups, which believe there must be gold in the Waste back at Homeland. AfroInvestors creates a must-read report on these interesting opportunities for Investors. Enjoy this summer edition with us and send your comments on how Middle-class groups might bridge economic disparities. Perhaps â&#x20AC;Ś Africa might see real changes and sustainable benefits soon. God Bless AfroInvestors Olutoyin Oyelade Publisher

Contributors Rizalyn Vale Abimbola Abiola Ade Akintayo Kayode Fayemi Nate Suppiah Molly Brister Kelly Brian Murray Olutoyin Oyelade John Culmer Chioma Umeha SUMMER 2016 | afroinvestors.com

TABLE OF CONTENTS

INFRASTRUCTURE

AFRICA : A LAND OF OPPORTUNITES

Africa: Hospitality and Entertainment Rescue Economy

AFROINVESTORS Great Britain: The Brexit Dilemma / page 12 Turning Africa’s Waste to Gold / page 38 Friends of Africa 2015 / page 46 Ghanaians In Canada: A Legacy at 59 / page 47 Financial Times of London Hosts Emerging Market Investors in London/ page 49

Africa’s New Middle Class:

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COUNTRY FOCUS

North Korea: The Democratic Peopleâ&#x20AC;&#x2122;s Republic

SOCIAL IMPACTT

Casa Foundation 2016 Programs and 2015

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AFRICA : A LAND OF OPPORTUNITES

Africa’s New Middle Class The New Middle Class: Bridging Economic Disparities focuses on the dual economic priorities for most African nations; the reduction of poverty, and the role of strong consumer demand in driving economic growth.

John Kayode Fayemi

Indeed, Africa has enjoyed a period of

ding to the African Development Bank,

sustained economic growth, largely

this is a 100% rise in less than 20 years,

driven by rising commodity prices and

and in my opinion, a testament to how

stable democratic governments, which

African economies are transforming lives

provide an incentive for both direct and

and lifting its poorest people out of the

portfolio investors to bring capital into

bracket of abject poverty.

Africa. Over the last decade, 6 of the 10

In my country Nigeria, the election of a

fastest growing economies in the world

The recent reversal of the coup

first time power was

are African, with the

d’etat in Burkina Faso facili-

transferred between

region now growing

tated by the Economic Com-

alternative

at an average of 4%

munity of West African States

parties was an impor-

annually,

according

(ECOWAS) is a testament to the

tant milestone for the

to the World Bank

tangibility of the change that

rest of the continent.

Group’s 2014 sub-Sa-

has come to stay.

With Nigeria setting a

haran

new Government, the

report.

This

political

democratic example

growth means Africa now has the fastest

for the continent, the stage is set for her

growing middle class in the world, with

and other leading economies on the con-

313 million people, indeed, 34% of the

tinent to consolidate this period of sus-

entire population on the continent, now

tainable growth, despite the short term

spending over 2 dollars per day. Accor-

headwinds, as commodity prices mode-

afroinvestors.com | SUMMER 2016

rate. The recent reversal of the coup dâ&#x20AC;&#x2122;etat in Burkina Faso facilitated by the Economic Community of West African States (ECOWAS) is a testament to the tangibility of the change that has come to stay. I must state clearly that this is not time for backslapping and celebrations. Africa is at crossroads that can make or mar its

Over the last decade, 6 of the 10 fastest growing economies in the world are African, with the region now growing at an average of 4% annually, according to the World Bank Groupâ&#x20AC;&#x2122;s 2014 sub-Saharan report.

future. While we acknowledge that 34% of all Africans now live above poverty, we have not done enough; almost two-thirds of that group could easily fall back into poverty, while two out of every three Africans, still live below 2 US dollars per day. As recent events in Burkina-Faso reminded us, stable democratic governance should not be taken for granted; and the need for strong inclusive growth over the long term is necessary to effectively curb the insurgency being witnessed in many countries, none more than my country, Nigeria. To understand the importance of the task ahead, we must interrogate the future of the African youth. More than 200 million Africans or 20% of the continentâ&#x20AC;&#x2122;s population are aged between 15 and 24. With this demographic expected to grow beyond 320 million people in 15 years, the youths will form the majority of the rising middle class, who will drive consumption, savings and connect the continent to the world. To make this comparison clearer, Nigeria is estimated to have 31% of its population between 10 and 24 years and South Africa, 29%; compared with more developed countries like China (22%), United States (20%), Canada (18%), and

SUMMER 2016 | afroinvestors.com

Germany (15%), the available future work force in Africa becomes clearer. If the last century was Asia’s, this is poised to be Africa’s, with a rising work force and a captive market for growing consumer demand. It is therefore important that policy direction in African countries must focus on enhancing the skills of these young people, creating an environment that provides jobs, ensures the territorial integrity of nations, develops the infrastructural platform that unlocks long-term growth, and provides the right technology to compete with more developed nations. In addition, we must seek the road less travelled, and broaden trade relations within the continent. Despite the presence of various sub-regional institutions, trade within Africa still constitutes less than 20% of the region’s international trade. When compared with Europe’s 60% or Asia and North America’s 40%, it is clear African nations need to depend on one another a lot more. When you consider the land locked nature of most African nations, the situation becomes even more dire; one can infer that a substantial percentage of what is reported as regional trade, are actually goods being re-exported by road. How do we improve this? We must pay attention to infrastructure development. By improving power supply for example, a lot of the finished goods that come from raw materials found on the continent can be produced here, instead of moving out as cheap exports, only to return as ex-

afroinvestors.com | SUMMER 2016

We must seek to reduce the percentage of poor households from over 60% to below 30%. Apart from this, we must also ensure growth is inclusive and ensure household income resilience, by growing the percentage of Africans who spend their income on non-essential items from below 15% to at least 25%.

pensive imports. There is also a need to harmonize the multiple

growth is inclusive and ensure household income resilience, by

trade agreements that hinder trade and encourage the use of

growing the percentage of Africans who spend their income on

informal trade routes like “Little Mogadishu” in East Africa. By

non-essential items from below 15% to at least 25%.

streamlining trade agreements and ensuring consistency and

It is increasingly obvious that a strong correlation exists be-

standardisation, the opportunity for arbitrage is minimized, and

tween inclusive growth and stability. At the January 2015

incentives are created for regional integration. Today, there are

meeting of the United Nations Security Council, the UN Secre-

limited success stories, mainly from South Africa and Nigeria;

tary-General Ban Ki Moon said, “Development that excludes a

our tomorrow must be more inclusive and not limited to brands

part of the population can be socially corrosive. It can contribu-

like MTN and Shoprite in South Africa; or Dangote Group and

te to crime and create a sense of hopelessness and alienation.”

now Innoson, in Nigeria. To equip our youths for the future, we

I am fully aligned with that statement and Africa is probably

must review how they are trained, and pay attention to shif-

the most obvious example. The period of sustained growth has

ting technology trends to remain competitive. We are seeing

coincided with a reduction in civil wars and violent changes in

a trend of technology based businesses, who seek to replicate

government. This is why government across the continent must

solutions from other markets on the continent. While some like

ensure inclusive growth is a major policy objective, and should

Konga, Nasper or Jumia are able to expand to several countries,

be on the front burner of regional discourse. Despite a steady

we are not seeing enough. We need to support the skill and

GDP growth in excess of 4% annually, African economies have

tenacity of these entrepreneurs with the right infrastructure.

struggled to show a consistent rise in human development. The

For example, with broadband bandwidth still expensive, the

UNDP data for 2014 shows only 5 countries achieved high hu-

growth of online entertainment of video based businesses will

man development (above 0.7), with 38 countries still within the

remain muted; logistics also remains a challenge, with the cost

low human development level, below 0.55. My country, Nigeria,

of moving goods within limiting the competitiveness of African

with a steady GDP growth of over 6%, is yet to achieve a rating

businesses.

higher than 0.5. This is not surprising, since despite impressive

Ladies and Gentlemen, the moderation of commodity prices

growth numbers, the unemployment rate remains at 8.3%, with

has brought our economic and social limitations into sharp

another 18.3% underemployed. This is a clear sign of uneven

focus. Government budgets are at risk with potential rising

growth, and highlights the challenges that lie ahead of African

deficits, while many currencies have experienced devaluation.

governments.

From Algiers to Yaoundé, the conversations must be consistent.

In conclusion, though the regional growth underpinning the

We must minimize conflicts and ensure stable governments;

“Africa Rising” narrative is undeniable, significant headwinds

the environment must be a keen area of focus, since droughts

still exist. I expect this decade, and perhaps the next, to signal

affect our ability to feed the people and create wealth from

a period of policy coordination to drive sustainable inclusive

Agriculture. We must pursue policies that ensure financial and

growth that guarantees economic prosperity for more than 300

economic stability and cut unproductive spending. The need to

million young Africans. As Pope Francis said, during his speech

soften import demand is immediate, but as investment projects

at the just concluded United Nations’ Sustainable Development

mature, the trade balance will become more export friendly.

Goals Summit, “economic and social exclusion is a complete

The real marker of regional success will be defined by how many

denial of human fraternity and a grave offence against human

Africans are lifted out of poverty in the next decade or so. We

rights.” These words not only remind us of the task ahead, they

must seek to reduce the percentage of poor households from

place a heavy price for failure, which makes the task even more

over 60% to below 30%. Apart from this, we must also ensure

important. Please let the debate continue.

SUMMER 2016 | afroinvestors.com

“economic and social exclusion is a complete denial of human fraternity and a grave offence against human rights”

About the Author: HE Kayode Fayemi is the Minister of Solid Minerals in the Federal Republic of Nigeria with a mandate to develop Nigeria’s Mining sector for investment and export. Before then, he was Governor of Ekiti, Nigeria. As Executive Governor till 2014, Fayemi unlocked the opportunities in a landlocked region to foreign investors. Today,the State of Ekiti boasts of the major legacy investment projects in South Western Nigeria including the Main Civic Centre with library facilities, re- development of the only Warm SpringResorts, and the first WaterParks Resorts in the Country. HE Fayemi earned a Doctorate in War Studies from the prestigious King’s College, University of London, England

afroinvestors.com | SUMMER 2016

SUMMER 2016 | afroinvestors.com

COUNTRY FOCUS

afroinvestors.com | SUMMER 2016

BREXIT: CREATING AN UNCERTAIN WORLD SUMMER 2016 | afroinvestors.com

AfroInvestors Research with John Culmer

In a surprising and highly consequential turn, British

voters have now opted to end their membership in the European Union (EU). However, we stop short of deploying the words “shocking” or “devastating”, as we had long maintained that the risk of Brexit was in the realm of 35% to 40%, and the long-term economic and financial market consequences – while significant – are not as outsized as some imagine (RBC Research 24th june).

The immediate financial market response has been

quite large, with the pound down by as much as 15%, the British stock market down by as much as 9% and the British 10-year yield lower by as many as 36 basis points. However, these moves have already been partially unwound and we suspect the long-term market effect will ultimately prove smaller than these initial moves. While there are very real economic and financial market consequences that emerge from this decision – mainly, the extent to which financial conditions tighten – the most important developments and risks are political in nature.

Global markets now face a plethora of new risks and

today’s Brexit could have wide reaching repercussions, both for Britain and the world.   The 24th of June, 2016 would be marked “ the most volatile day in sterling’s history”- this is after the pound fell almost 12% as it became clear that initial market optimism about a remain vote was woefully misplaced. We’ve seen a fairly substantial rally from today’s lows but this could end up creating headaches for the Bank of England (BOE), which may not be able to rely on massive currency weakness as a natural pressure release valve for the economy. If sterling rallies much further the BoE is likely to be forced into easing in the near future, especially if the economy slips into recession as many models indicate it could.

AfroInvestors research did a comparative analysis of

the implications of Brexit on Investors taking a view of reports of Analysts at RBC asset management, Monex, Emerging market

afroinvestors.com | SUMMER 2016

analysis and bring you the highlights of these reports.

Another Black Saturday 1.13am-24th June, 2016: The most volatile day in Sterling’s history

1.13am-24th June, 2016: The most volatile day in Sterling’s history

John Culmer, a Senior Analyst

with Monex, UK asserts that It’s been historic night for Britain, and the most

of Japan (BOJ) have been placed in dire

already seeing murmurs of other exit

volatile trading session in sterling’s his-

straits by today’s events. Both economies

movements that are likely to create un-

tory, with GBPUSD falling more than 11%

are threatened by deflation that the ECB

certainty about the union’s viability, and

from this morning’s high of 1.5018 to

and BOJ have almost run out of ammu-

weigh on the single currency.

reach its lowest level since 1985. Culmer

nition in fighting, so today’s EUR and JPY

insists that though markets are striking

strength against the US dollar will prove

implications of today’s decision are for

a slightly calmer tone after the carnage

extremely unwelcome. Combined with

the future of the United Kingdom itself.

of the Day, Britain’s decision to leave the

the today’s downturn in crude oil prices,

Scotland and Northern Ireland voted

European Union has created an uncer-

we could see desperate action from the

decisively in favour of remaining in the

tain new world. Reports indicate that the

BOJ in particular, or perhaps even Shinzo

European Union, and it’s entirely possi-

European Central Bank (ECB) and Bank

Abe’s government. In the eurozone, we’re

ble that they will seek to leave England

But perhaps the most worrying

SUMMER 2016 | afroinvestors.com

and Wales as a rump Kingdom, as Nicola

more losses in store. On the immediate

Sturgeon strongly hinted was possible

horizon, UK markets open at 08:00 BST

today. As the UK grapples with its di-

and futures are pointing to huge losses

Parsing the Results

vorce from the EU the potential of inde-

for the FTSE 100. Volatility has not been

pendence referendums in Scotland and

confined to sterling, however. The Nikkei

reported that A slim 51.8% majority of

Northern Ireland, andacross Europe, are

is trading more than 6% down from open,

Britons voted to leave the EU. This was wi-

throughout today’s trading session.

RBC Assets research analysts

likely to weigh heavy on a

thin the margin of error

local and global economy

British pollsters have struggled lately to predict run-

for recent polls, but de-

that’s already struggling

of-the-mill election outcomes, let alone one-off events

viated significantly from

with slow growth and low

such as this, without a good understanding for the

the market’s expecta-

variable willingness of the voters on each side of the

tion as past referen-

issue to reveal their preference.

dums have had a strong

inflation.

Questions Arising?

tendency to favour the

The first question for markets

as the yen has surged, at one point brea-

status quo, and indeed

is where the bottom is for sterling. With

king below 100.00 on USDJPY. Risk assets

both the 1995 Quebec and 2014 Scotti-

GBPUSD reaching a low of 1.3307 in the

are trading down slightly, with crude oil

sh referendums experienced a large six

aftermath of the first news networks ca-

benchmarks comfortable below $50, but

percentage point swing toward the sta-

lling the referendum, it may be prema-

there is not yet any evidence of a major

tus-quo from the final polls to the actual

ture to assume sterling does not have

risk off event, although one may develop

vote. This clearly did not occur today.

Anticipating

the

outcome

correctly was always going to be a challenge. British pollsters have struggled lately to predict run-of-the-mill election outcomes, let alone one-off events such as this, without a good understanding for the variable willingness of the voters on each side of the issue to reveal their preference. From an accounting perspective, a number of explanations have been thrust forward for this surprising outcome. Weather in the heavily pro-EU southeast of England was quite poor, potentially damaging voter turnout. But turnout was similarly uninspiring in the pro-EU bastion of Scotland. Meanwhile, the “leave” camp enjoyed a greater fraction of the vote than anticipated in areas

afroinvestors.com | SUMMER 2016

generally expected to lean their way. In the end, it is simply the case that “leave” managed more votes than “remain.”

Why have British voters opted out? There are a number of plausible explanations. •

The “leave” camp has tended to focus on the allu-

re of greater national sovereignty and the advantage of escaping the serial crises that have plagued the EU. These are legitimate reasons, even if the economy and financial markets are somewhat damaged by the decision. •

To the extent that there has been a worldwide

shift in sentiment – as also demonstrated by the U.S. presidential election and a host of other political developments globally – it may also have to do with the feeling that globalization has not been all it was made out to be, and that many have been left behind in an increasingly winnertake-all world. This naturally manifests in a desire to up-end the status-quo.

Economic Implications

The economic effects of Brexit can be broken into

ongoing, short-term and long-term consequences: 1.

The ongoing effect is that high policy uncertain-

ty surrounding Brexit has already interfered with U.K. business investment over the last few quarters, undermining the rate of economic growth. This had been a key factor in our previously downgraded U.K. 2016 growth forecast from 2.5% to 2.0%. 2.

The short-term effect is that the U.K. is now at

greater risk of a temporary recession (with a roughly 60% probability) as the recent abrupt financial market declines combined with increased risk aversion stall economic growth in the short run. Business investment should remain poor and the large U.K current account may prove somewhat more difficult to finance. 3.

In response to the referendum result, we are now

tracking British GDP growth of just 1.25% across 2016 (including a mild recession in the third and fourth quarters)

SUMMER 2016 | afroinvestors.com

and then roughly similar growth in 2017. Note that the U.K. will

complete offsets. But the precise effect depends enormously on

not actually leave the EU for several years, so this drag is not

what sort of subsequent relationship the U.K. negotiates with

due to higher tariffs or diminished immigra-tion but rather re-

the EU.

presents an anticipatory effect by businesses and households. The long-term effect is only moderate, but not insignificant.

Markets in the Short Run â&#x20AC;¨

The central tendency for economic models when

modelling Brexit is that the British economy will be roughly

realm of our expectations. We continue to operate on the as-

two percentage points smaller than otherwise within a decade.

sumption that markets will first overreact, and then re-claim

Some models claim much more problematic consequences, but

some of their losses. Arguably, this is already happening in most

a handful argue that the impact could even be slightly benefi-

markets, though it is not entirely clear whether markets could

cial.

again suffer lower lows before sus-taining a more enduring re-

Overall, the impact should be somewhat negative due

bound. Either way, there are certainly investment opportunities

to higher tariffs, less immigration and the slight diminishing

to be captured as all of this plays out. The pound fell by as much

influence of London as a financial hub. This means that Brexit

as 15% ver-sus the U.S. dollar but has since reclaimed a portion

hardly prophecy â&#x20AC;&#x2DC;s economic stagnation for the U.K., though it

of that decline. It is nevertheless lower than at any other point in

does unhappily shave as much as a quarter percentage point off

the past thirty years. And in contrast to some of the other finan-

growth annually over the com-ing decade.

cial variables, it would not be surprising if the pound shed some

further ground over the next year.

Potential savings on transfers to Brussels and grea-

ter regulatory sovereignty are attractive, but do not constitute

The financial market response has been within the

afroinvestors.com | SUMMER 2016

The British FTSE 100 fell by 9% but has since reclai-

med part of that drop. The U.K. 10-year yield fell by as much as 36 basis

Brexit is not: it should not trigger opaque, cascading losses on the

points, but has since bounced to a small ex-tent. Given  understanda-

order of the 2008-2009 financial crisis. There is certainly room for

ble risk aversion paired with growing expectations that the Bank of

losses-and it’s possible some investors may be found offside on

England will cut rates by as much as 50 basis points,this is arguably

the large currency move in particular. But banks do not appear set

within the range of a normal initial response as well. International mar-

to be undermined, and the Bank of England is offering additional

kets are reacting, but only moderately.

liquidity to ensure that this is avoided. Similarly, the scope for glo-

bal contagion – while material – is not as dramatic as during the

The U.S. dollar is up just over 2% versus a broader set of tra-

ding partners. This, along with the additional uncertainty surrounding

financial crisis.

the implications of Brexit, is likely to strengthen the Fed’s conviction to remain on the sidelines for some time. Reflecting this and greater risk

Markets in the Long Run

aversion, the U.S. 10-year yield is lower on the day, though still higher

than the all-time lows reached in 2012.

effects. Over the long run, the impact on the stock market and

U.S. stock markets opened roughly 3% lower, and remain vo-

bond market should be considerably less. We figure that a two

latile. The Canadian dollar is roughly 1.5% softer versus the U.S. dollar

percentage point hit to the level of British GDP over the long run

– a notable but not overly conse-quential move. Unsurprisingly, gold

should roughly map onto a two percentage point hit to the pre-

prices are 5% higher due to greater global uncertainty.

sent value of future corporate earnings. This is a fancy way of sa-

In general, significant pullbacks in global stock markets tend

ying that the British stock market should logically only be around

to present opportunities for longer-term investors, although volatili-

2% weaker than pre-Brexit once the dust eventually set-tles. For

ty can persist for weeks or months.It is important to recognize what

the bond market, higher uncertainty and a more dovish central

It is important to distinguish short-term from long-term

SUMMER 2016 | afroinvestors.com

bank promise to keep yields lower for

erupts, that isn’t exactly the case today.

some time, but in the end it is not ob-

This is because Labour leader Jeremy

vious that yields will be permanently

Corbyn is also under threat, with a vote

lower. After all, a weaker pound may tri-

of confidence scheduled regarding his

gger higher inflation, and slower growth

leader-ship. He had also campaigned for

tends to mean bigger fiscal deficits and

“remain” despite personal misgivings. Gi-

higher debt loads.

ven the closeness of the vote (just 51.8% for Brexit) and the opposition of Brexit

Political Implications

bythe two dominant parties and the ma-

Let us start with the domes-

jority of British MPs, it is conceivable that

tic U.K. political implications. As widely

an election will be necessary somewhere

expected, Prime Minister Cameron has

along the way. We do not present this as

responded to the Bre-

our

base case, but it is a

xit vote by announ-

substantial risk. Given

cing his resignation

Scotland’s clear prefe-

by the early October

rence for the EU and

Conservative

Party

convention. This was inevitable both because he has wound up on the losing side of the outcome and also because he was the one who promised a referendum to

Already, the EU has indicated that a set of favourable concessions delivered to the U.K. in early 2016 are no longer valid and that no informal negotiations will begin until the U.K. has formally invoked Article 50.

the ongoing fermentation of secessionist sentiment,

another

Scottish referendum must now be above a

50%

probability,

with a strong possibility that – like Russian nesting dolls – the

voters. It would have

U.K. is itself then dis-

been difficult for the

sected. The equiva-

U.K.

undertake

lent risk for Northern

subsequent negotia-

Ire-land is smaller, but

tions with the EU led by an anti-Brexiter.

not trivial.

Former London mayor and prominent

Brexiter Boris Johnson has been pegged

International Consequences

as an early leader in the battle to become

the next Conservative leader (and Prime

maining EU members are large. Economi-

Minister), though he is said to be unpo-

cally, much depends on how frightened

pular internally with Conservative MPs.

markets become and whether they start

While the other side of the aisle normally

to price in a further breakup of the EU.

makes hay when a political crisis like this

Presuming these fears are contained, the

afroinvestors.com | SUMMER 2016

The consequences for the re-

This can theoretic be exten though i also poss negotiat could be

This can theoretically be extended, though it is also possible negotiations could be wrapped up quickly. We do not put much likelihood on the latter outcome, as the EU is unlikely to can offer favouetically rable terms tended, to the U.K. h it is possible iations be

economic impact is probably about one-quarter as large, meaning perhaps 0.25ppt less growth in each of 2016 and 2017, and ultimately around a 0.5ppt loss in economic output over the next decade. Politically, this is an enormous development for the EU. Not only does the EU lose an important centrist voice at the table, but the risk of an eventual EU breakup is surely much higher than it was before the British referendum. It is some conso-lation that the core of the EU – the Eurozone – is still unbroken, but a bad precedent has nevertheless been set. Given the number of far right, far left and populist par-ties balking at EU oversight, this may not be the last such referendum. And polls suggest that a worryingly large fraction of voters are fed up with the EU in other nations, too. If the U.K. – a country that avoided the worst of the financial crisis and largely sidestepped subsequent European debt crises – is opting out, it is quite easy to imag-ine others being highly tempted to follow. Spain has an election this weekend, Italy has a (non-sovereignty) referendum in the fall and both France and Germany have major elections next year. Austria just recently avoided electing a far right government. Outside of Europe, the Brexit vote is another reminder that voters are no longer content with the status quo. This has implications for the U.S. presidential election and beyond.

Next steps for the U.K. Britain’s exit from the EU is hardly complete. There is much left to be done. To exit, the U.K. must invoke Article 50 of the Lisbon Treaty. This should be delayed until after the October Conservative Party convention when a new Conservative leader has been selected. The invocation itself should be reasonably straight-forward, but one cannot completely rule out the possibility that it is put to a vote and that MPs either vote for their personal preference (with the majority against Brexit) or view a 51.8% win as demonstrating insufficient conviction to warrant breaking the union. One way or another an exit should still be managed, but there is the risk of an election along the way should the situation become messy. Once Article 50 of the Lisbon Treaty has been invoked, there will be a two year period of negotiations regarding the terms of exit and any subsequent relationship between the U.K. and EU. This can theoretically be extended, though it is also possible negotiations could be wrapped up quickly. We do not put much likelihood on the latter outcome, as the EU is unlikely to offer favourable terms to the U.K. This would be partly out of spite, partly because of the need to dissuade other members from exiting, and partly because the U.K. just doesn’t matter to the EU as much as the EU matters to the U.K. (exports to one another are 3% versus 13% of GDP, respectively). Already, the EU has indicated that a set of favourable concessions delivered to the U.K. in early 2016 are no longer valid and that no informal negotiations will begin until the U.K. has formally invoked Article 50.

SUMMER 2016 | afroinvestors.com

The U.K. desire for a made-to-measure deal that pro-

vides free trade in goods and services, limited immigration, complete autonomy over regulations and no financial transfers to Brussels would be a guaranteed non-starter. No other associated country enjoys this combination of features. This suggests quite long negotiations. Additionally, the U.K. will have to negotiate new trade deals with all of the countries tha the EU has relationships with. This presents a particular challenge for the U.K. as its government no longer possesses considerable depth in this area given that the EU has long handled these matters. When negotiations with the EU are finally done – perhaps in the fall of 2018 – all 27 remaining EU nations plus the U.K. will have to legislate the change, and each will require a parliamentary majority. This will be tough sledding.

Conclusion

This Brexit vote constitutes a significant surprise,

though not an utter shock. We have long talked of high policy uncertainty and geopolitical risks being challenges to

John Culmer is a Senior Account manager with Monex Europe Monex Europe is a foreign exchange

economic growth. It appears these challenges have intensi-

company providing currency exchange

fied somewhat, and it highlights that voters today are willing

services to private and corporate clients

to take risks that they normally wouldn’t entertain. We must

globally. Based in the City of London,

watch Europe even more closely for evidence of other coun-

we provide same day, spot and forward

tries beginning to push their way out of Europe. This is proba-

foreign exchange contracts to a client

bly a multi-year monitoring process given the glacial rate at which these sorts of things progress.  All the same, Brexit does not constitute the end of the world. This is a country pursuing

base of FTSE-listed companies, financial institutions, SMEs, government agencies and non-profit organisations. One of the reasons our clients come to us is

slightly less close relations with the rest of the world. While

that we are able to provide them with

the initial market reaction has been quite large, the long-term

more competitive pricing structures

effects should be somewhat smaller. Similarly, while the British

than those available from existing

economic outlook is now materially diminished, the immedia-

banking relationships and other service

te hit to Europe is considerably smaller and the effect elsewhe-

providers.

re in the world should be quite limited unless global financial conditions deteriorate in an outsized way in response to the vote. Consequently, we believe that Brexit will present opportunities for investors who can withstand heightened volatility over a short- to medium-term investment horizon.

About the Author:

afroinvestors.com | SUMMER 2016

Brexit does not constitute the end of the world. This is a country pursuing slightly less close relations with the rest of the world.

SUMMER 2016 | afroinvestors.com

COUNTRY FOCUS

afroinvestors.com | SUMMER 2016

NORTH KOREA: THE DEMOCRATIC PEOPLEâ&#x20AC;&#x2122;S REPUBLIC UNLEARNING IN THE LAST FRONTIER

SUMMER 2016 | afroinvestors.com

Kevin Virgil

afroinvestors.com | SUMMER 2016

Kevin Virgil took a trip to the last place

and fascinating of my entire life. Due

he’d expected to go. His rare first-

to some outstanding contacts and no

hand account cautions against getting

small amount of luck, I was granted

sucked in by the propaganda machine

incredible access and able to witness

– North Korea’s ... and America’s. As

things that most of the foreign visitors

my flight began its descent into thick

who make it here never have an op-

cloud cover, I shifted nervously in my

portunity to see. Believe me, I’m hyper-

seat. I had only been airborne for a

sensitive to the risk of being used as

short time, and the experience had

a propaganda tool. And it’s true that I

been pleasant enough – but I’d no idea

didn’t venture far beyond Pyongyang

what would come next. In the past few

to bear witness to rural North Korea.

years my job has taken me to some in-

These are merely some snapshots of

teresting places – and a fair few war

life - what I saw and experienced – at

zones. I enjoy the travel, and the pro-

times beyond the influence of our of-

cess of discovery – but this time I was

ficial chaperones. Applying the same

wondering just what I had gotten my-

hard-headed analysis I would to any

self into. Because this time, I was flying

other country I visit, it’s my judgment

into North Korea.The next five days

that our perceptions of this reclusive

would be among the most surprising

country are fast being outdated by a

rapidly changing reality. And since opportunity exists whenever information is asymmetric, this is certainly a place worth watching. Two years ago my perspective on North Korea was quite likely similar to yours – which means that I didn’t really have one. I assumed that travel to the country was forbidden for Americans, as it has been until recently with Cuba. In reality, anyone can go, though obtaining a visa is a challenge unless you’re with an organized tour group. And most of these tours keep you isolated from “real” North Koreans. I’m professionally involved and interested in frontier markets, but the DPRK – the Democratic Peoples’ Republic of Korea, its own

“In reality, anyone can go, though obtaining a visa is a challenge unless you’re with an organized tour group.”

preferred name – seemed beyond the pale even for someone like me.

I had no reason to doubt the

traditional Western media’s portrayal of a reclusive banana republic; a criminal state run by a family of insane kleptomaniacs; a belligerent nuclear terrorist nation of brainwashed peasants on the brink of starvation, etc, etc. North Korea is routinely referred to as the unhappiest place on Earth. Then, two years ago, I had a fascinating conversation. It happened while I was attending an investment conference in Hong Kong. I had become bored with the series of speakers who were droning on about resource mining opportunities in Mongolia – a country whose government at the time was making every effort to be as inhospitable as possible to foreign investors. As I poured my third cup of coffee that day, I started chatting with another delegate who clearly shared my cynicism. Then I commented, only partially in jest, that Asia was becoming bereft of true frontier markets. “Don’t

SUMMER 2016 | afroinvestors.com

FACT NORTH KOREA’S GDP PER CAPITA IS $1,800 AND RANKS 194 IN COMPARISON TO OTHER COUNTRIES. NORTH KOREA’S GDP IS BARELY 3% OF SOUTH KOREA’S ESTIMATED $1 TRILLION GDP AND 47.8% OF NORTH KOREA’S GDP COMES FROM THE INDUSTRY SECTOR.

be too sure about that,” said my new

past five years, and things are chang-

Korea occupies a strategically impor-

friend. “Have you ever looked at North

ing quickly under the new leadership.

tant location for both Russia and Chi-

Korea?”

I nearly spit my coffee out

It’s a different place than it was five

na - and even for Mongolia. But even if

through my nose. “That’s pretty fun-

years ago, and the rate of change is

it were possible for foreign countries

ny,” I responded. “You should go share

accelerating. Right now, it reminds me

to invest – and Western sanctions

your idea with the Bloomberg TV crew

of where China was in 1995.” By this

make that very difficult – the maniacs

over there. I’m sure they’ll love it.” “I

point it was obvious that my interlocu-

in charge could never be trusted. After

know it sounds crazy,” he persevered.

tor was either serious, or barking mad.

all, they’re starving their own people!”

“But I’ve been traveling there for the

“Come on!” I said. “I realize that North

afroinvestors.com | SUMMER 2016

“Don’t be too sure about that either,”

Korea – create roaring economies that

is glorious.’ They see their neighbors

replied my contact. “Those people in

have enriched both the elites and the

creating wealth, and they don’t want

charge aren’t as isolated as you might

working class. Leaders of today’s DPRK

to be left behind.” “Listen,” he contin-

think. For the past twenty years they

regime remember the famous quote

ued. “You can choose to believe me,

have watched surrounding countries

from the 1980s, when Deng Xiaop-

or not. All that I’m saying is you should

like China, Vietnam – and, yes, South

ing declared to China that ‘to get rich

keep an open mind. It’s never wise to

SUMMER 2016 | afroinvestors.com

believe everything you hear on the BBC.” I had to admit that his point was valid. I have frequently railed against the inaccuracies, and sometimes outright lies, published by major media outlets about other countries I’ve visited. And up until that time, I had never actually met a North Korean. Maybe this was worth looking into. “I’ll send you a white paper that I just wrote for one of my clients,” he said as we shook hands before leaving. “Just read it, then call me if you want to discuss.” I caught my first glimpse of the North Korean landscape as my Air China flight descended through thick cloud. It was a damp November day, and

FACT

the rice fields were soaked from a recent rain. I saw small farmhouses and a few apartment blocks on the final approach before we landed at Pyongyang International Airport. Its use of the word “international” is legitimized

NORTH KOREA’S EXPORTS INCLUDE FISHERY PRODUCTS AND AGRICULTURAL PRODUCTS SUCH AS RICE, CORN, POTATOES, SOYBEANS, CATTLE, PIGS, PORK, AND EGGS.

by two routes to Vladivostok and Beijing, where I was flying in from. Our plane was full, mostly with Europeans. Few were from China or Asia. I heard Russian, French and Italian spoken as we disembarked directly at our gate. I was expecting to enter a dank, crumbling building, full of scowling immigration officers in olive green uniforms. In fact I had deleted the data from my mobile, thinking they’d probably scan or clone it. But instead, I stepped into a shiny new, immaculate arrivals terminal. And while the immigration

ate problems for a hapless traveler.

subjects its foreign visitors to. Our

After departing the search area, we

bags were scanned and searched, and

met our escort for the week – a senior

a record taken of all electronic devic-

official from the Ministry of External

es we carried. One of my two trav-

Economic Relations. This is the DPRK government

The road was in good condition – not great, but certainly better than I have experienced on the main route from other airports, such as Ulaanbaatar, where the Mongolian potholes would swallow small cars.

officers

were in uniform, and didn’t appear to be much in the mood for jokes, they were both courteous and professional – quite a relief

compared to what the American TSA

afroinvestors.com | SUMMER 2016

agency

tasked

with encouraging foreign

invest-

ment. It would be hard to think of a more dif-

el companions warned me to check

ficult

that I didn’t leave anything behind. It

MEER was created last year in a bu-

job,

mused.

seems that even a business magazine

reaucratic reshuffle to better manage

discarded in your hotel room can cre-

the granting of business licenses and

exclusive rights. There are a few North Korea-watchers out there, among them Singapore’s Choson Exchange, who believe that the MEER’s very creation is a clear sign of the government’s intent to initiate market reforms. Our MEER man escorted us to cars for the 30-minute drive into Pyongyang. The road was in good condition – not great, but certainly better than I have experienced on the main route from other airports, such as Ulaanbaatar, where the Mongolian potholes would swallow small cars. One of my travel companions, who visits the DPRK frequently, commented that the number of cars on Pyongyang’s roads has picked up considerably in the past couple of years. It did seem fairly busy. Yet more traffic was taking place on the adjacent footpaths, where hundreds walked or rode bicycles. As we entered Pyongyang, two things immediately struck me. First, the city is ridiculously clean. Singapore has nothing on this place when it comes to hygiene and order.Every morning I went for a run along the Taedong River, and saw small armies of people – young and old – sweeping the streets with straw brooms, or raking leaves off the grass. On one occasion I saw an old man beating the falling leaves out of a tree so that he could pick them up. I was told that everyone contributes in this effort; residents are assigned specific dates to clean their neighborhoods. My second thought was that the DPRK, like most Communist regimes, has a fixation for enormous monuments – like this one, which was our first stop. These statues, of the country’s first two rulers, Kim Il-sung and Kim Jong-Il, are each over 12 meters tall. After paying homage to the former ‘Dear Leader,’ we made our way to our home for the week – the Pyongyang Koryo Hotel. This is the quintessential ‘commie’ hotel – a 44-story behemoth complete with two revolving restaurants on the rooftop. We headed through the cavernous lobby and checked in.

About the Author: Kevin has been a frontier markets explorer and investor for over fifteen years. His previous experience includes work as a military officer, diplomat, and corporate finance roles with UBS and Merrill Lynch. In addition to his work at Frontera he is the founder of Pathfinder Capital, an investment manager specializing in both listed and private placement opportunities in frontier markets. Contact: www.frontera.vc

Kevin’s North Korean journey continues tomorrow...

SUMMER 2016 | afroinvestors.com

INFRASTRUCTURE

Africa: Hospitality and Entertainment Rescue Economy AfroInvestors Research & Chioma Umeha

afroinvestors.com | SUMMER 2016

Creating New markets in En-

party, dance, enjoy movies and drink...

the possibility of a games resort with the

tertainment & Leisure

why won’t they engage other forms of

regular bowling, games, and food to go

entertainment that offer therapeutic be-

with the center. They zeroed in on the

nefits to their families? AfroInvestors re-

highbrow, elitist community in a part of

search indicates that games such as hun-

Lagos, Nigeria to attract the crowds. The

ting, water leisure, jogging, bowling, and

center only lasted a few months. Howe-

rowing are “sports” that Africans generally

ver, the “pepper soup” (hot and spicy

don’t play. The question is why are these

soups) and music center next to the out-

forms of entertainment not common in

let filled out daily to exuberant patrons

Africa? We finally got a clue.

“all dressed and cashed up”. Another fe-

A group of Investors initially explored

llow in the USA shared his experience

There is a general assumption

that Africans don’t know how to relax or have fun, and even if they did, their idea of fun will be described as expired or gross when compared to the “cool hangouts” that abound in today’s entertainment sector. But... wait a minute, African’s love to eat,

New Perspectives, New Benefits However, things might be changing.

to offer significant respite to the

Following

general lull in employment creation

Tourism stakeholders, a news media

in the middle markets and could

report indicated that some returned

increase

Diasporans and the new breed of

produce more entrepreneurs that

entrepreneurs became interested in

would support such ventures. After

developing the entertainment and

all, there is a general belief that

leisure sector. They researched into

the more individuals

why there were no entertainment

leisure resorts, the more they are

centers

likely to spend on food, drinks,

various

that

meetings

could

compare

the

opportunities

patronize

to Disneyland in that Region.

accommodation,

transportation,

These entrepreneurs were widely

entertainment, and gifts. These

reported to have called for such

assertions indicate that the leisure

leisure resorts to boost the tourism

sector if developed effectively, has

sector in Africa. Their dream was

a potential to offer an iterative cycle

to replicate a Disneyland Park type

of economic production that could

resort in the country to not only

become a panacea to the African

transform the region into a tourists’

job challenge. The sector could also

destination but also, to boost the

improve the productive capacity in

foreign exchange income base of

the agriculture sector (on account

their economies, while expanding

of food production), multiply food

other sources of income outside of

courts across the Nation, increase

government controlled resources.

economic

Talks of new opportunities in

become a major income earner for

leisure sector development appear

the private sector.

development,

and

SUMMER 2016 | afroinvestors.com

about his cousins that flew in regularly

sion of Walt Disney, a man inspired by the

the world. Today, Disneyland has a larger

for a vacation only to spend half their

gaps and challenges witnessed during

cumulative attendance than any other

time shopping. One then wonders why

several visits to various amusement parks

major Resort in the world. Disneyland

Africans see leisure as more of the “exter-

with his daughters in the 1940s. Walt was

has welcomed over 1 billion guests since

nal” effects of food, dance, and drink and

determined to offer the markets a better

it opened in 1955. It has created millions

less of the therapeutic effects that positi-

alternative to the centers he saw and he

of jobs, logistic suppliers for customized

vely enhance the well-be-

food, drinks and games

ing of individuals.

What’s the Big deal in Fun?

“Last year, Disneyland’s 11 parks around

services. The resort now

the world provided nearly a third of its $45

boasts of one of the

billion revenue and 20.7% of its $10.7 billion

Let us take a

operating profit. ”

largest machinery for creating entertainment services, renewing and

look at Disneyland Park in

updating payment sys-

the USA and its history and growth over

conceived the idea of Disneyland with

tems, managing vaca-

the years. Originally, Disneyland was in-

the help of a consultant for his project.

tions and other hospitality systems, waste

troduced as the first of two theme parks

Walt bought a 160-acre site for his project

management, movie making and securi-

built at the Disneyland Resort in Ana-

in 1953 in a remote location that people

ty systems, amongst other products and

heim, California. The resort was opened

could travel to for a holiday and really

services. Disneyland maintains several

in July of 1955 under the direct supervi-

get a rest from the hustle and bustle of

theme parks, cinema houses, swimming pools, hotels and food centers. It creates memories and kids just love to be there with parents, not just tagging along (as many times as possible), but also learning to enjoy the taste of the fun, to unwind. The resort employs over 149,000 staff across its resorts (including cast members on set). In 2014, Disneyland’s 11 parks around the world provided nearly a third of its $45 billion revenue and 20.7% of its $10.7 billion operating profit. New research has uncovered some of the secrets to this success.

Disneyland Paris, which was

once seen as a poor relation to its bigger United States resort, is now one of the top performers. In fact, it has generated more than $700 million in profits since

afroinvestors.com | SUMMER 2016

opening in 1992 and made $85.7 million in 2014 . According to the 2013 global attractions attendance report from the industry regulator, AECOM Economics and the Themed Entertainment Association (TEA), Disney attracted 132 million guests in 2014. Given this report, what is next for Africa?

A New Solution for Africa: Splash World

The good news is that West

Africa recently received the first version of Disney- SplashWorld. SplashWorld is a state of the art Water Parks, the first of its kind, with full slides, lazy River, and theme Parks, in West Africa. the resort is located along Ikogosi Warm Spring road in Ikogosi- Ekiti, South Western, Nigeria. The resort is an initiative of InVcap an African focused Private Equity firm with offices in Canada and Nigeria. According to Ade Akintayo, Vice President of InVcap, the leisure center opened in December 2015 to the public. Akintayo explained that as part of its developmental and investment program for Africa, InVcap took a leap of faith with some of its partners to invest in Nigeriaâ&#x20AC;&#x2122;s tourism zone, Ikogosi in the South Western region of Nigeria. Akintayo further explained that SplashWorld sits on a 15-acre land area at Ikogosi-Ekiti. The resort presents a wonderful and exciting experience to lovers of nature. A combination of mountains, tropical forests, and natural sceneries creates the serenity that outdoor lovers would enjoy. As the first Waterpark (with full water leisure facili-

SUMMER 2016 | afroinvestors.com

ties) in West Africa, SplashWorld offers the best of the tropics in hospitality, entertainment, leisure, food, and drinks. From

“Splash World has also customised the leisure

the spicy thrills of the locals to the appe-

experience with business to accommodate families on

tizing finger licking bites of the Orientals, the hot international grills of the west,

holidays to host friends to parties and commemorate

and the virgin cocktails of the south,

special occasions. ”

SplashWorld has all that local and international tourists will enjoy. SplashWorld

ted as one of the first developmental pro-

Water Parks displays the intriguing view

jects to boost economic development in

of mighty mountains covered in natural

Nigeria, starting with the South Western

vegetation with the added fun of Lazy

Tourism hub at Ikogosi. The resort will

Rivers, Water Slides, Water Rides, raining

provide jobs to people, business expan-

Mushrooms, Children’s Water Playhouse

sion opportunities for existing compa-

in a quiet setting. Splash World has also

nies, and developmental opportunities

customized the leisure experience with

for start-ups. SplashWorld will offer top

business to accommodate families on

rated services to its clients and partners

holidays to host friends to parties and

as the first point of call for Tourism in Ni-

commemorate special events at its out-

geria and West Africa.

infrastructure, health, and education

door garden center. Splashworld offers

sector. For all enquiries kindly send your

a banqueting and conferencing facility

jor shift in the leisure and entertainment

that allows its clients to hold meetings

trajectory of Nigeria because no other fa-

during vacations or host parties while

cility of this magnitude has been located

having fun. Its 300-seater conference hall

in the country or developed by Investors.

and 1000 seater external facility for open-

While one wishes the SplashWorld team

air entertainment and other group gathe-

the very best success in its new venture,

rings will add zest to all events.

it is our hope that their investment in the

SplashWorld welcomes Nige-

South Western region will be the first of

rians and international tourists to join in

many projects and that it will become a

the fun, rides, entertainment, and food as

model to attract other Investors into Ni-

it tells the world what it means to enjoy

geria to improve economic development

the benefits of relaxation and the out-

and to diversify the income base of the

doors. InVcap’s spokesperson, Ade Akin-

economic activity within the West Afri-

tayo indicated that InVcap has identified

can region as Disneyland has done in the

locations within and outside Nigeria for

U.S.A.

its investment purpose and has commenced execution of these developmental initiatives. SplashWorld resort was initia-

afroinvestors.com | SUMMER 2016

Splashworld park resort is a ma-

About the Author: The AfroInvestors Research Team is a group of young talented entrepreneurs drawn across various professions in the

emails to research@casafoundation.ca

SUMMER 2016 | afroinvestors.com

INFRASTRUCTURE

Turning Africaâ&#x20AC;&#x2122;s Waste to Gold

HE Abimbola Abiola 38

afroinvestors.com | SUMMER 2016

www.afroinvestors.com

“Deconstructing sludge through oxidation processes may be a better option, but has proven very challenging technically and economically.”

The developed world has come

clean up the water. There are three types

environment by, for example, leaching

a long way from simply dumping raw

of sludge. The first is primary sludge – the

into the water table under a landfill. Bur-

sewage in the nearest convenient spot

incoming solid material that settles out

ning it is a very energy intensive option

and hoping Mother Nature will do her

in the treatment plant’s sedimentation

and the market for compost has become

work. In cities, modern sanitation autho-

tanks early in the treatment process. It

very limited.

rities spend huge amounts of money to

consists of about three percent solids and

convey sewage from the point of origin

97 percent water. The second is secon-

gh oxidation processes may be a better

to treatment facilities. The objective of a

dary sludge – bacterial biomass recove-

option, but has proven very challenging

treatment facility is to separate the raw

red from the biological treatment process

technically and economically. Globally,

sewage into clean water and solid mate-

later in the treatment process. It consists

the process has several variants, with the

rials, or sludge, and then return the clean

of about one percent solids and 99 per-

Zimpro method, developed in the 1950s,

water to the environment via a series of

cent water.

being the original technology. Newer

water purification processes. That leaves

The two sludge streams go

supercritical water oxidation processes

the problem of what to do with the solid

through several concentration and water

rely on extremely high temperatures and

materials.

removal processes to produce dry slu-

pressures to accelerate this breakdown.

The raw sewage goes through

dge cake. The standard way of dealing

However, Crown Research Institute, Scion

several stages of sanitation. Aerobic and

with dry sludge is either by landfilling,

introduced a new process--The Scion pro-

anaerobic bacteria play a major role in

composting, or (rarely) burning it. Sludge

cess, named STOP (Scion Thermal Oxida-

breaking down the organic material in it.

cake contains concentrated nutrients and

tion Process) to reduce the volume of a

They also work in the treatment system to

other contaminants that can enter the

given stream of biowaste by more than

Deconstructing sludge throu-

SUMMER 2016 | afroinvestors.com

90 percent through deconstruction and by-product recovery.

The company’s name comes from the Egyptian Arabic words

The remaining solid material might be used as a phosphorus

“roba bekya”, which means “old stuff”, and is commonly heard on

fertiliser if suitable. If not, it goes to landfill – but even so takes

the streets of Cairo as rag-and-bone men call out for unwanted

up a fraction of the space and has almost none of the negati-

household items.

ves of the traditional landfill solution. The process appears quite

successful.

across four warehouses, and sells $2.4m of electronic waste per

According to Scion scientists, the key to the system’s

year.Along the way Mr Hemdan has overcome challenges inclu-

success is to control the thermal deconstruction process to yield

ding not being able to fulfil orders, overextending himself, and

by-products for downstream uses, rather than just making the

the backdrop of political upheaval and social unrest in Egypt

waste into ash, water, and carbon dioxide. The STOP technolo-

since the Arab Spring. Afroinvestors research presents Dr. Abim-

gy’s other advantage is that it is amenable to treating very wet

bola Abiola’s insights on other categories of Waste products, its

wastes that would not be suitable for incineration. It does this

uses, and benefits in economic development.

Today, the Egyptian businessman employs 20 people

in a manner that recovers value while still destroying fractions

that might carry disease, cause toxicity, or are not readily bio-

What is Composting? Historical Perspective, Benefits

degradable. The oxidative conversion of complex organic ma-

•

terial in the STOP system generates simple organic molecules,

duction of compost from organic material.

such as acetic acid, that can then be converted to a range of

•

Similar to soil humus

end products, such as biofuels, biodegradable plastics, and

•

Aerobic process accelerates the decomposition of or-

a carbon source for the enhancement of denitrification in the

ganic matter

wastewater treatment system. The nitrogen and phosphorus in

•

the solid waste are also converted into clean nutrient-rich frac-

gical succession Art of Composting

tions that can be used for downstream fertiliser manufacture. In

•

Egypt, BBC World cites a new Start-up company, Recyclobekia,

Waste treatment (vs. disposal)

as making waves in the electronic waste recycling industry. is

•

Recyclobekia is headed by Mr Hemdan, a 25 year old who star-

ted out as an engineering student, and together with 19 other

What are the Benefits of Composting?

people from his university entered an entrepreneurship compe-

Some of the benefits of Composting are as follows:

tition called Injaz Egypt. Up for grabs for the winner was $10,000

•

Reducing organic waste going into landfills

(£7,000) to help develop their start-up idea.

•

Reducing, recycling and reusing, waste

Mr Hemdan just had to think up his own business proposal, and

•

Aiding environmental remediation

inspiration came from something he saw on TV.

•

Recycling nutrients- crop production

•

Reducing pollution- air, water and soil

According to Hemdan, “I was watching a documen-

Controlled biological process which leads to the pro-

Different groups of microorganisms involved in ecolo-

High speed, predictable, controllable, A century old,

Applicability to different waste stream, Product quali-

tary about electronic recycling, and I realised there was a lot of

Other benefits to agriculture, horticulture, oil and gas and fo-

potential in extracting metals from mother boards - gold, silver,

restry include:

copper, and platinum,” It was a booming industry in Europe and

•

the US, but no one in the Middle East was doing it.”

perties

It was at that moment that the idea for Recyclobekia was born,

•

Killing weed seeds in raw manure

and Mr Hemdan went on to win the competition.

•

Reducing erosion

afroinvestors.com | SUMMER 2016

Improving soil physical, chemical and biological pro-

•

Promoting vegetation establishment (in reclamation projects)

•

Media for horticulture

•

Disease suppression

Improves crop productivity by: •

Supplying nutrients and organic matter

•

Improving water retention in soil ◦ suppressing soil borne di-

seases Composting benefits public health by: •

Reducing air and water pollution

•

Providing biological control of disease agents

•

Removing refuge areas for rodents

•

Developing countries- water pollution, rodents attacking

crops, spread of disease, limited crop production Composting is an economic benefit because: •

It reduces disposal costs (i.e. feedlot manure)

•

It produces a saleable product

Tipping fees •

Intellectual property and patents

•

Non-tangible benefits ◦ improving public relations

Summary •

Composting provides environmental, economic and public

health benefits and has numerous applications: o

Municipal waste

Industrial Waste

Agricultural and Forestry Residues

Livestock Manure Remediation/Reclamation

Horticulture industry

About the Author: HE Dr. Abimbola Abiola is the Canadian Representative to the Republic of Suriname As the Head of Diplomatic Mission, Abiola oversees the implementation of the Strategic Plan of the IICA and OAS, while working with the Government of Suriname to develop and implement agricultural policies. Before his appointment, Dr Abiola (Ph.D) was Director, Applied Research and Lead Scientist for the Olds College Centre for Innovation (OCCI). He later became the Chair, Of School of Innovation, Olds College. The Inter-American Institute for Cooperation on Agriculture (IICA) .

SUMMER 2016 | afroinvestors.com

AfroIn

THE FUTURE O

Connecting Businesses to Investment Opportunities. Distribution: 62% Financial Services Professionals; 23% Global Business Decision Makers; 15% Investors in Emerging Markets who are active High Net Worth investors, working in Global Markets. 64% of our Readers have invest42 afroinvestors.com | SUMMER 2016 ed for at least 10 years. Download a free copy at AfroInvestors.com; View copies at Embassies and Chambers of Commerce in Canada, Ghana and Nigeria.

Investors

E OF AFRIC A

Advertise with us ..... Let your Brand be Seen 43

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SOCIAL IMPACT

CASA FOUNDATION

IN THE COMMUNITY Casa Foundation continued with its mandate to improve the living conditions of the needy in our communities. In line with our Mission to alleviate poverty and provide reliefs to the less privileged, Casa Foundation supported various charitable organizations in Canada and Africa through its annual donation events and participated at their various fund raising initiatives.

By Rizalyn Vale CasaFoundation Council The Vision Casa Foundation: Advancing Education and Relieving Poverty Community Impact

Education Support Programs:

•

Book donation to postsecondary institutions

•

Scholarships & Grants to International students

•

Seminars and Conferences:

•

Friends of Africa (Economic Development)

•

Emerging Leaders Roundtable

•

Business Finance Roundtable

•

Public & Private Sector debates;

•

Town Hall meetings

afroinvestors.com | SUMMER 2016

•

AfroInvestors: Research publications on business

opportunities Community Support (Relief) Programs: •

Donation Support to GTA Shelters

•

Mother and Child Medicare: Kids- 0-5 & Families

•

Equipment Donation to Teaching Hospitals

Advancing Education Casa Foundation Scholarships: September 11, 2015. Casa Foundation signed aMemorandum of Partnership with Canadian Institutions-Centennial and Sheridan Colleges, to provide scholarships to International students. 2015: Book Donation: November 6, 2015. Casa Foundation presented Books on Medical sciences, Math’s,

and English to Achimota

her annual donations

Medicare Program:

College, Accra Ghana. Read

in Canada and Africa as

Nov 6, 2015: In Lagos,

more Book Donation

follows:

Africa, Casa Foundation

•

Family Life Sup-

held its Mother and Child

2015: AfroInvestors: Octo-

port Center,

Medicare program to en-

ber 3, 2015. CasaFounda-

•

hance health care services

tion launched its Business

Army,

investment magazine to

•

provide research informa-

Foundation, Nigeria

tion on business oppor-

•

tunities to leaders and

Ghana

Canada Salvation

to children aged 0-5 and Canada Culbeat Achimota College,

their mothers

About the Author: Riza is a Senior Research Consultant in Manilla, Philippines where she graduated with a Masters in Development Management. She is a graduate of Lagos Business School’s

entrepreneurs.

(FOA) Economic Develop-

2015: Book Donation to Achimota College, Ghana

ment Conference held on

Book Donation: November

the 3rd of October of 2015

22, 2015: Casa Foundation

in Canada.

completed its Book Drive

Business Partnership

for Achimota College,

meetings held with repre-

Accra Ghana. The book

sentatives of the Govern-

donation event featured

ment of Ontario and dele-

a selection of books on

gates Friend of Africa Hall

Medical sciences, Litera-

of Fame: Dr. Mary-Anne

ture and Mathematics. The

Chambers and Hon Jim

Vice Principal of Achimota

Karygiannis were inducted

College received the books

sector institutions. Riza consults

into FOA Hall of Fame by

on behalf of the College.

for foundations and civil Society

the Chair, Casa Foundation

library. Achimota College

groups and continues to facilitate

Arc. Olusola Oyelade.

has produced the last 6

community focused programs in

Presidents in Ghana and

Education, Health, and Children’s

2015: Friends of Africa

Relieving Poverty

other African Presidents

Shelter Support, Medicare,

including Robert Mugabe

Donations Donation

of Zimbabwe.

(Pan African University) Senior Management Program and Business management Studies from Damelin Management College, Pitermaritzburg, South Africa. She was a Senior Executive of Prilla Group in South Africa and Dufil Prima Group in Nigeria. In the Philippines, her research work focuses on social development with particular interests in public

rights.

Support: Casa Foundation Charities continued with

2015: Mother & Child SUMMER 2016 | afroinvestors.com

African DIASPORAN Business Meetings with Hon. Elvis Afriyie Ankrah, Minister of the Presidency, Republic of Ghana

SOCIAL IMPACT

FRIENDS OF AFRICA (FOA) 2015 FOA 2015 witnessed a gathering of professionals, entrepreneurs, business owners, and public sector leaders from vertical sectors in North America and Africa to participate at the roundtable sessions on the theme The New Middle Class. In attendance were: Jim Karygiannis (MP, Canada 2014), Dr.Mary-Anne Chambers- Minister of Univ,Training& Coll (2007), Yinka Oyebode, Special Adviser Solid Minerals, Nigeria, Wayne Floreani, VP, Mine Africa, Nate Lowbeer-Lewis, MD, CPCS Development, Helen Hillman of the Ontario Government, Njeri Rionge, MD/CEO of NBRC Inc., Kenya, Chris Janssen, CEO-Textbook for Change, Canada, Sergei Kaznadi CEO, MercedesBenz, Toronto, Joe Sebeh of CTC World, Paul Tamale, WorldLeo Group,Emmanuel Duodu, President Ghanaian/Canadian Association, Jefferson Sackey VP, Multimedia Group, Ghana

afroinvestors.com | SUMMER 2016

SUMMER 2016 | afroinvestors.com

SOCIAL IMPACT

GHANAIANS IN CANADA: A LEGACY AT 59 :Ghanaians In Canada celebrated her 59th Independence Anniversary in Toronto. The Celebration was a weeklong event with 4 unique programs to bring out the best of Ghana’s Culture, Business, and People. Casa Foundation was a proud Sponsor of the event.

Olutoyin Oyelade of Casafoundation with Dr Sulley Gariba, Ambassador of Ghana to Canada

The Audience

Ghanaian Traditional Dancers

Dr. and Mrs Sulley Gariba at Ghana’s Independence Celebrations

afroinvestors.com | SUMMER 2016

FINANCIAL TIMES OF LONDON HOSTS EMERGING MARKET INVESTORS IN LONDON The Financial Times/EMPEA annual Summit on Private Equity in Africa held at InterContinental Park Lane, London. FT Live hosted Investors to Dinner at the event.

SUMMER 2016 | afroinvestors.com

afroinvestors.com | SUMMER 2016

Friends of Africa (FOA) An Economic Development Summit The Friends of Africa (FOA) offers a platform to facilitate collaboration and investment partnerships between infrastructure providers and investors in North America and Africa. The FOA Economic Development Summit hosts participants from the public and private sectors. Through Roundtable discussions, breakfast and informal meetings, the relevant authorities in these sectors are brought together to discuss and proffer solutions to challenges in the real sector of these economies, while providing a robust platform for business ideas and opportunities. The Breakfast and Roundtable Sessions focus on: -Economic and Infrastructure Development discussions -Promoting strong networks and creating partnership opportunities for Entrepreneurs -Facilitating Business mentoring. The Infrastructure and Business Leadership Sessions: Improve knowledge sharing, networking, learning exchanges between business leaders across various verticals. These sessions also provide an opportunity to explore available funding options for business expansion and the growth of the private sector. It offers presentation of development ideas at the One on One sessions with Investors and global decision makers. Business Development Initiatives include: -Steps to Starting new businesses for young entrepreneurs -Discussions with business leaders in the private/public sectors across various professions -Networking event for Emerging leaders: discussing small business development systems -Connects to available funding options to support SME business development initiatives. For additional Information on Speaking, Sponsoring, and Partnership opportunities at Friends of Africa Conferences visit casafoundation.ca/Friends-of-Africa or send an email to FOA@casafoundation.ca

SUMMER 2016 | afroinvestors.com

afroinvestors.com | SUMMER 2016