Gateway to Africa, Issue 11, May 2013 by Gateway To Africa

Coega - building economies of scale Destination Mozambique Sumitomo Mitsui

Controlled Distribution UK & RSA Issue 11 \ May 2013

Mozambique hits the jackpot

Business | Entrepreneurship | Innovation | Investment | Lifestyle

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CONTENTS

Regulars

Features

6 News and analysis

10 Sawa Shoes - Tapping into Africa’s sole

Recent developments from Sub-Saharan Africa.

30 Destination: Mozambique We look at the wider picture of South Africa’s eastern neighbour’s recent history and how the discovery of significant oil and gas reserves is changing the economic fortunes of what has been one of Africa’s poorest countries.

Business Life 12 Coega - building economies of scale Ayanda Vilakazi, director of marketing for Coega IDZ tells how they are perfectly placed to service industry and the growing oil and gas trade up the coast.

14 Alumni Oil’s Namibian Venture GTA speaks to Stephen Larkin CFO of Alumni Oil about his mission to find hydrocarbons in Eastern Namibia.

22 Sumitomo Mitsui Anthony Sykes of SMBC thinks about what an African PPP might look like.

Alumni Oil’s Namibian Venture

CEO of Sawa Shoes, Mehdi Slimani tells GTA why his brand of sneakers, which are African-produced, are based on a wholesome philosophy and promote trade over aid.

16 Ericsson’s African programme – Mobile phones and ICT To capitalise on the mobile revolution in Africa right now, the Swedish foreign affairs ministry, together with mobile phone giant Ericsson, are starting an ICT programme in Sub-Saharan Africa. GTA speaks exclusively to the regional head of Sub-Saharan Africa at Ericsson.

18 Cement and the central role

in Africa’s rapid expansion

Africa’s booming construction industry is a major consumer of cement. GTA considers the emergence of new players, mainly from India and Pakistan. We review the inter-industry competition and increased importation of cheap cement from Egypt, which is hampering local growth.

Final word 25 Jonny Steinberg South Africa’s doing just fine Oxford University academic, Jonny Steinberg, speaks to GTA about why the picture for South Africa is not as bad as some would have you believe.

“Our long-term goal is to use the profit from natural gas, after we’ve given the investors their return, to create universal electricity access.” -Stephen Larkin, CFO Alumni Oil

Cement and the central role in Africa’s rapid expansion “We are currently far ahead of our strategic plans. We could potentially hit 60m tonnes of production by the end of 2014” - Aliko Dangote, CEO Dangote Group

Jonny Steinberg South Africa’s doing just fine “[The reason] poor people are voting in such large numbers for the ruling party is because they see that things are getting better ” - Dr Jonny Steinberg, author and lecturer in African Studies

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GatewayToAfrica.com is a multi-platform title for businesses looking to take part in expansion opportunities in Sub-Saharan Africa Editor: Jeremy Kuper Publisher: Gordon Glyn-Jones Art Director: Jackie Lampard Sub Editor: Brett Petzer Contributors: Brett Petzer, Flaminia Giambalvo, Grant Mowatt, Mark Kapchanga, Mamello Masote, Medha Prakasam Illustrator: Jackie Lampard Directors: P Atherton, J Durrant, N Durrant and R Phillips

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Focus on Mozambique We look at the wider picture of South Africa’s eastern neighbour’s recent history and how the discovery of significant oil and gas reserves is changing the economic fortunes of what has been one of Africa’s poorest countries.

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NEWS AND ANALYSIS:

NEWS IN BRIEF Recent developments from Sub-Saharan Africa South Africa wins Offshoring Destination of the Year Award 2013

South Africa attracts BRICS investors

South Africa has won the prestigious European Outsourcing Association (EOA) Offshoring Destination of the Year Award, confirming its status as a leading Business Process Outsourcing (BPO) destination. In 2012, South Africa won the prize for UK Offshoring Destination of the Year. “Being recognised with a second award within a space of 6 months is testimony to the exceptional quality being offered from South Africa to a number of European countries,” said Gareth Pritchard interim CEO of BPeSA. BPeSA is an Investment Agency for the BPO sector in South Africa facilitating growth in the BPO and contact centre industry. As an investment agency for South Africa, the organisation’s core focus is on attracting foreign investment, in order to drive job creation in the country. The BPO & Offshoring market in South Africa continues to grow and is estimated to account for around 18,500 jobs. Having a similar culture and the same language as the UK has put South Africa in a good position when it comes to servicing the UK market. But now South Africa is servicing a number of other European countries as well, including: Germany, France, Netherlands and Switzerland. BPO companies / service providers currently operating in South Africa include: IBM, Capita, Serco, Merchants, WNS, Teleperformance, Aegis and Genpact.

South Africa is attracting new attention from Chinese, Indian and Russian investors – including a planned visit by Chinese buyers who aim to spend R5bn in the country later this year, says Department of Trade and Industry director-general Lionel October. Speaking to SAnews, October said the Chinese government was planning to co-ordinate a buying mission for their retail trading houses and state-owned enterprises in September, and was looking at spending R5bn in provinces across the country. He said his department had signed a range of agreements at the BRICS (Brazil, Russia, India, China and South Africa) summit which took place in Durban in March. These included agreements signed with China for setting up a cement plant in Limpopo province, and another with Chinese conglomerate Cherry to explore the possibility of setting up a ship repair and small ship building facility in Richards Bay in KwaZulu-Natal.

Africa on the move

$46bn

African FDI has gone from $15bn in 2002, to $37bn in 2006, to $46bn in 2012. (The Economist)

Africa has three mobile phones for every four people, the same as India. (The Economist)

Abidjan, Ivory Coast. Image by RyansWorld

IBM and Orange help Ivory Coast commuters arrive on time The Data for Development competition run by French mobile phone giant Orange used 2.5bn anonymised phone call records from 5 million mobile phone users in Ivory Coast to look at how well transport routes were functioning in Abidjan, Ivory Coast’s capital and largest city. Researchers focused on bus routes in the city where over 500 buses, 5000 minibuses and 11,000 shared taxis are used, to get people around town. The project, which took just a month to complete, showed that two additional bus routes were needed and one route needed to be extended. “We found that we could reduce the travel times of people by 10 per cent across the city,” said Olivier Verscheure, a senior scientist at IBM’s research laboratory in Dublin. “If we could have merged the telco data with city data, such as the bus timetables, we could have the potential to completely change the existing network,” he added. “Analysis of public transport and telco data would show how people move in a city and allow planners to create a bike sharing infrastructure from scratch, for example,” said Mr Verscheure. “It is about understanding how people use a city, their movements and the digital signatures left by public transport to optimise the city’s infrastructure.”

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Africa in numbers

<35% of Africans

Live in economies that have grown at more than 4% a year for the last 10 years. (World Bank)

40% of Africans Have some secondary or tertiary education. By 2020, it will be half. (The Independent)

$90m People

In Africa live in households with an income of more than $5,000 a year.

BT and MEDO join forces with the Mambas Mamba Mentors got a global boost last week. BT Global Services and MEDO (Micro Enterprise Development Organisation) organised and sponsored the session, which once again paired entrepreneurs with prospective investors. The session, held at the Standard Bank London offices in the City, saw the regular Mambas – Haji Chana, Adam Laird, Reg Bamford and James Durrant – being joined by a guest investor. Naresh Singh, head of global QC at Eskom UK and a board member of the South African Chamber of Commerce, came along to put the ideas to the test. The session saw at least two extremely promising ideas emerging. First up was Phumlani Gouws of Meridict Systems. Gouws’ company is a communications firm, one of only 22 companies in South Africa to hold IECN and IECS licenses. But it was the idea of Sowertech that proved the most eyebrow-raising. Obakent Matlhoko and Nathi Shabalala have developed an app, AFTA ROBOT, designed for minibus taxi services in South Africa – currently the most widespread form of public transport in the country. The name itself is a reference to the command one gives to the driver to pull over and let passengers out. Mamba Mentors in action

Morgan Tsvangirai, Prime Minister of Zimbabwe

South Africa’s Paramount group to supply security vehicles to Brazil

Zimbabwe government plans to seize land from Impala Platinum

Paramount Group, Africa’s largest privately owned defence and aerospace firm has won a major international contract to supply security vehicles to Brazil. Paramount will supply their Maverick vehicles for use by the Brazilian police and military. “Sharing defence and security equipment represents a new level of international trade cooperation and this announcement not only demonstrates strengthened alliances between Africa and Brazil but the unity of the BRICS alliance,” Paramount chairperson, Ivor Ichikowitz, said in a statement. The deal is part of Brazil’s preparations for hosting both the 2014 Fifa World Cup and 2016 Olympic Games. “The equipment to be supplied by Paramount Group will play a critical role in the security infrastructure for both these events,” Ichikowitz said. “Paramount Group is very proud to have been selected to support the government in this important role and is looking forward to being part of the growth of this dynamic country.”

Zimbabwe’s president, Robert Mugabe, plans to seize 28 000 hectares of land leased to Impala Platinum, the world’s second platinum producer. In a recent document, Mr Mugabe stated that he wants the land, rich in gold and copper, to be used “for the benefit of the public.” The move comes ahead of an election on the 29th of June. “President (Robert Mugabe) intends to acquire … part of the land held by Zimplats Holdings Limited,” the document said. Zimbabwe’s Mines Secretary, Prince Mupazviriho said: “This is a procedural issue, that’s why we gazetted the issue to say if anyone has concerns or an objection it can be raised, but this doesn’t mean we will stop the acquisition of the land.” In January, Impala Platinum signed a deal to sell a 51 per cent stake to Zimplats in order to comply with the indigenisation law, signed by Mugabe in 2010, which obliges foreign companies to give more than 50 per cent of ownership to black Zimbabwean investors.

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NEWS AND ANALYSIS:

India sees major economic potential in Africa Indian companies take advantage of all the continent has to offer by Medha Prakasam The rest of the world seems to be slowly waking up to Africa’s vast potential as a gateway to a myriad of economic opportunities. What might have once been labelled as a continent devoid of any scope in the area of business is now slowly proving its critics wrong. India is therefore upping its stake in the continent. Last month, the fifth BRICS summit was held in South Africa. This was taken as a recognition of the changing dynamics of a once-“hopeless” Africa. The continent now sees the emergence of a genuine middle class, and is expecting an increase in consumer spending from $920bn to $1.4tn by 2020. For Indian companies, Africa offers

Image by Siyabulela Duda

immense growth potential and demand for automobiles, mobile phones and other consumer durables. Here are some of the movers and shakers of Indian business in Africa:

CIPLA The Mumbai-based pharmaceuticals company established its business base in Africa over a decade ago with its three-drug combination for the treatment of HIV/AIDS. In February this year it announced plans to buy its distribution partner Medpro for about $512m. Their head of corporate strategy, Chandru Chawla, was quoted as saying: “We found these markets attractive despite the challenges. We find that the opportunity is increasing exponentially”

TATA Tata, one of India’s largest business enterprises, has been in Africa since the 1970s. And its subsidiary, Tata Africa

Holdings, is the vehicle the company uses to identify development opportunities in the continent. Its operations in Africa include: chemicals, iron and steel production, and vehicle manufacturing, with a turnover of $2.3bn in 2011-12. A spokesperson for the group, Mukund Rajan, says that “the kind of growth that Tata have experienced in Africa in the last decade is a reflection of the potential and promise that this continent has to offer”.

Godrej The diversified conglomerate officially began its final phase of expansion in Africa last year and is growing at the rate of 2035 per cent, without taking into account acquisitions. The $3.3bn group employs about 9000 people in the continent. Chairman-designate of the company, Adi Godrej, said last month that it in order to enhance “South-South” (trade flows between the major economies of the Global South) cooperation, it was crucial to enhance trade and business with Africa.

Export-Import Bank of India (EXIM) The apex financial institution that is now fully owned by the Government of India is releasing a fresh line of credit to Africa over the next year. It is also set to offer more employment opportunities to graduates from universities in Tanzania. This is an attempt to prepare local up and coming young professionals for well-paid managerial positions in the country. Chief executive officer, Dinesh Arora, said in Dar es Salaam over the weekend that higher learning institutions have the responsibility and the potential to bridge the human resources gap in some of the banking and financial sectors in the country. The India-Africa economic relationship stands strong and owes its origins to the two regions’ common past - a dynamic that is based on similar struggles against poverty, illiteracy, unemployment, and colonialism. The economic relationship between India and the continent has surpassed mere trade and investment, and has made its way to the transfer of technology, skills, and knowledge. As Africa’s star now shines brightly, India, one of the largest economies in the world, is increasingly looking to the continent for new avenues of trade.

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Feature:

Trade, not aid: SAWA shoes takes ‘Made in Africa’ global An Ethiopian brand of premium footwear is breaking into global markets and shifting paradigms about what business can do for Africa by Brett Petzer

GTA: What are Sawa shoes and what is the concept behind them? Mehdi Slimani : Sawa is the first sneaker “Made in Africa”. Behind Sawa there is an activist fashion project - we aim to add value in Africa. We start and finish production in Ethiopia, and we source our materials locally, explains Mehdi Slimani CEO of Sawa shoes. “We want to be super clear and honest with our customers: we are neither a charity brand nor a Fair Trade brand. We are...doing normal business with Africa. [We wanted to avoid using] Africa just to glorify our brand, because I think that if you decide to use Africa to sell your products, [you have to go there, and produce there].” “‘Vintage attitude’ is the best description of our line. When I look at our shoes, I always think of the famous picture of Bob Marley playing football in his super-tight Adidas bodysuit. I hope that our shoes will be adopted by people who like authentic products. Sure, our shoes are telling a story, but behind the story we offer a solid product.” “I always say that Sawa is a real action for something and not a reaction to something. In other words, I am not very comfortable when I hear that people buy our shoes in reaction to ‘Made in China’ shoes...I prefer to hear that people buy our shoes because they are comfortable. Sawa will be a success long after people forget where we come from.”

GTA: What is your role in Sawa Shoes? Mehdi Slimani : I am one of the founders. I am involved in SAWA on a daily basis: design, materials sourcing, development, production, sales, communication etc.

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GTA: When did the business start? What was the inspiration? Mehdi Slimani : The business started in April 2009. We wanted to make a sneaker brand with a unique perspective. We decided to focus [on Africa]. This has been a little bit inspired by what Youssou N’dour is doing with his music: staying in Senegal to participate [in the development of the local music industry], when he could easily record his music in New York or London. Sawa is the Youssou N’dour of shoes!

GTA: Where are the shoes available to buy? Mehdi Slimani : We are working with premium distributors worldwide: USA, Japan, UK, China, France, Spain.

GTA: What profit do you receive when you sell one pair of shoes? Mehdi Slimani : The project has not been profitable as yet. Once the project reaches its cruising speed, we will receive a standard profit for the shoe industry (10 to 15 per cent of net profitability).

GTA: What are the challenges of working in Africa? Mehdi Slimani : If Sawa was about exotic fruits, it would have been easier... but it is about premium footwear and in that field, as an African brand, we have to be better than the rest to gain some credibility.

GTA: How many people do you employ and where? Mehdi Slimani : We do not own the factory. In production periods, 200 people work for us. Internally we have a team of 10 people (production supervision, quality control, sourcing).

GTA: You say that you want to avoid using Africa to glorify your brand - what do you mean by that? Mehdi Slimani : I really regret…[the] marketing strategies of some brands. “Buy my socks and we give a pair away in Africa”, etc. That’s… ‘using Africa to glorify oneself ’. Charity is…a real job. If you know how to make a beautiful t-shirt, go and make them in Africa if you really want to help. As a fashion brand you have to help Africa while staying in your area of expertise.

We are now producing our shoes in Ethiopia but the brand was born in Cameroon. In Cameroon, Sawa is the name of the native people from Douala city. We fell in love with the name, it sounds very nice… later we learned that Sawa means ‘together’ in Arabic so it was even more perfect!

GTA: You say that Sawa shoes is activist fashion – what do you mean? What is the feedback that people give you? Mehdi Slimani : It would have been super

easy for us to go to Asia with a sample and order a container of shoes (don’t get me wrong, I do respect Asia). Instead of that we decided to go to a place where many people agree that they should do business, but few do.

GTA: What do you hope to achieve in five years with the business? Mehdi Slimani : I hope SAWA will become a great brand that will spread the “Made in Africa” marque all over the world.

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BUSINESS life:

Coega: Port Elizabeth’s sleeping giant rouses itself Director of marketing for Coega, Ayanda Vilakazi, tells Gateway to Africa Magazine about the massive infrastructure operation that is Coega and how it is perfectly placed to service industry and the growing oil and gas businesses along the east and west coast of Africa.

by Jeremy Kuper The Coega industrial development zone (IDZ) covering 110 km² of land is situated within the Nelson Mandela Metropolitan Municipality near Port Elizabeth, in the Eastern Cape province of South Africa. Coega is one of three major IDZs in the country, all of which are governmentfunded and aimed at increasing jobs, trade and investment in South Africa. The initial development phase to put all the infrastructure in place took 6 to 7 years. This involved ensuring that services such as water, electricity, sanitation, roads were all put in place. Once the infrastructure was set up, the second phase, which began in 2007, involved the process of attracting investors into the IDZ. “So, that process started with a very aggressive drive towards securing tenant[s], as well as attracting other investors into the zone. We are in that particular process even now” says Vilakazi. “We don’t have a major anchor tenant, but our model is that we want to create opportunities for industrialists, people who want to build industries and big plants and factories in the IDZ.”

The next phase “The next phase of the IDZ in terms of investors is to grow their businesses

in the zone, but also to ensure that the zone remains sustainable from a funding perspective,” says Vilakazi. This involves attracting investors who are going to create more jobs and who undertake to train more local people, as well as creating opportunities for small businesses in the Eastern Cape.

Diversification In addition to attracting more investors into the zone and training up more people, Coega has now started the process of diversifying their business. This involved looking at external services. “We have quite a high concentration of civil engineers, architects and very professional skilled people who have been part of the development on the IDZ,” explains Vilakazi. “And now that the IDZ is almost one hundred per cent

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developed, in terms of the infrastructure on the ground, you then have a large [talent] pool, which we are using [elsewhere].” Once the IDZ was completed, the Coega Development Corporation realised that the environment had changed. “It became very clear to us that [we stood to lose] these skilled people, to wherever they may have come from, and [their] skills, that the province so needs…we then took a decision to say: ‘We’re going to retain the skills within the province, within the organisation and we’re going to utilise these skills on new projects.’” “So it’s not something that I would say… we knew we were going to embark upon, but to ensure that [Coega] remained sustainable and [because it] developed these people and trained them, we were determined to ensure that we retained such skills and utilised them on other projects for the IDZ.” As a result, on the external services side, Coega are now an implementing agent for infrastructure development programmes across the country, and particularly for the Department of Roads and Public

Works in the Eastern Cape. In addition to assisting in road building and maintenance in the Eastern Cape, Coega’s engineers are helping to build infrastructure for the Departments of Education and Health in KwaZulu-Natal. In the province, Coega is building new schools, roads and bridges as well as refurbishing existing roads and hospitals. These external services are now used to generate sufficient revenue for the IDZ.

Attracting investors There are around 21 major investors into the IDZ to date, and others are about to buy in, like FAW, the giant Chinese vehicle manufacturing company. The automotive sector is one which Coega is looking to attract to the zone. And Vilakazi adds: “We are focusing very much on the Chinese market in attracting more Chinese investors to locate their businesses in the IDZ.” Other key tenants at Coega include: Famous Brands (in the food retail sector) and Air Products South Africa, a gas distributor and manufacturer of energyrelated products. The food producer Dynamic Commodities, and the Coega Dairy, which supplies supermarket giant Shoprite, demonstrate the range of different companies operating from the zone. The Coega Dairy is a good example of the synergies taking place at Coega, where they have entered into an agri-processing joint venture with Famous Brands to produce cheese in the IDZ. Another interesting partnership is a joint venture between Coega and a German company to produce wind turbines at the IDZ. “In fact, the wind turbine at Coega was used to supply electricity at the 2010 World Cup, to the Nelson Mandela Bay Stadium [which hosted FIFA matches]. So energy is an important area,” continues Vilakazi, who adds that logistics are another important sector, as is business process outsourcing. “In a nutshell, we attract companies of various sizes, so that they can locate. There are projects in the pipeline which are equally big, if not bigger. Petro SA is planning to build a refinery in the Coega IDZ, and that is estimated to be about a ZAR 70bn project and [if completed would be] the biggest oil refinery in Africa, producing something like 326,000 barrels a day.” Another major project involves the construction of a smelter, estimated to cost close to ZAR 70bn. “But,” says Vilakazi “there are also other projects, which are looking at beneficiating, instead of just exporting raw materials…some of the goods will be exported either as semi-finished or

“Most of our investors…are actually local investors – ‘local’ meaning they’re actually African investors in South Africa. So there is a general interest and confidence among South Africans and some small parts of Africa that are locating their businesses here because they believe in the IDZ, that it has the potential.” - Ayanda

Vilakazi, Director of marketing, Coega

as finished products. So from an investor’s point of view that is what we have.” Vilakazi admits that Coega has not yet witnessed a massive influx of oil and gas business from further up the east and west coasts of Southern Africa. But, as he says: “I think a lot of the interest revolves around the value chain that results from having a refinery and getting companies that are interested in Africa, to relocate here from elsewhere, because of the refinery and the smelter.” “Most of our investors…are actually local investors – ‘local’ meaning they’re actually African investors in South Africa. So there is a general interest and confidence among South Africans and some small parts of Africa that are locating their businesses here because they believe in the IDZ, that it has the potential.” “So, I do expect that there will be quite an influx and a huge interest from the rest of Africa to locate their businesses in the IDZ,” Vilakazi predicts. To quote the American author James Earl Jones: ‘People will most definitely come.’

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BUSINESS life:

Alumni Oil’s Namibian Venture Gateway to Africa speaks to Stephen Larkin CFO of Alumni Oil, a British company that plans to drill for oil and gas in Namibia. GTA: How did the Namibian project come about? SL: We were called in by the Namibian government in 2011, to advise them on energy security. They were looking for creative ways to bring about more universal access to energy and to create enough energy themselves…they’re too dependent on neighbouring countries. We were also funded by the African Innovation Foundation in Zurich, to do a pre-feasibility study for a universal solar rollout. Solar on its own would not work, despite the fact that Namibia is the sunniest place on earth, because of the high capital

costs and associated interest payments. We needed to come up with an interim strategy. So we offered to assist them to find onshore natural gas with the lowcost exploration techniques that we’ve developed over the last eight years. Last year the Namibian government signed off on an area of about 5 million acres (bigger than Wales)[to Alumni Oil], where the remote sensing has indicated that there are substantial hydrocarbon resources. Hydrocarbon exploration it is very risky. Alumni is able to use an Enterprise Investment Scheme in the UK, as part of the Grant Thornton-UK Governmentbacked Growth Accelerator Program. The programme is targeting high growth innovation companies and we received a special dispensation from the taxman, which effectively enables us to combine the exploration with a very low-risk project, in biogas, which is guaranteed by the British government. Performance is guaranteed by an insurer, the feedstock supplied by a farmer. And the tax credits it attracts pay for the Namibia exploration costs.

GTA: So you say the two schemes offset each other? Image by Thomas Schoch

SL: Well if we fail on the exploration side, we give the investors a 40 per cent return with their money back after 4 years, from the biogas [which represents 70 per cent of the investment]; the other 30 per cent pays for the high risk/high return exploration..

GTA: And are the biogas returns guaranteed, or are those just projections based on the current market? SL: They are projections based on an

“Our long-term goal is to use the profit from natural gas, after we’ve given the investors their return, to create universal electricity access.” - Stephen Larkin, CFO Alumni Oil

index-linked government feed-in tariff, which is guaranteed [to rise] with inflation, and a performance guarantee, with an external insurance guarantee… in other words if it doesn’t deliver the electricity it is contracted to, an insurer will pay out.

GTA: How much money do you need to complete this oil exploration project in Namibia and how long is it going to take? SL: It’s going to take £5m [for just the oil exploration] and we estimate that it will take 4 years. Under the licence we’ve got 8 years, so there is a 4-year buffer, but we’re confident that we should be able to do it in half that time. If we invest on a 70-30 split - 70 per cent in UK biogas, 30 per cent in oil - the total project would need £17m, with £12m invested in the biogas.

GTA: What kind of investors are you looking for? You mentioned the PAYE. SL: We want to make this opportunity available to as many people as possible. Investors can put in as little as £2,000, where they will get £600 back from the PAYE that they paid last year. All the capital gains are completely tax-free. The investment is also well suited to contractors, we can help them get money out of their limited companies in an ethical, tax efficient way.

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FEATURE:

Ericsson and Swedish government bring ICT know-how to Africa Swedes to help Sub-Saharan Africa expand its burgeoning ICT sector

by Mamello Masote in Johannesburg The Swedes have taken a bold leap into the growing ICT market in Africa. Business Sweden (a collaboration of businesses in the private sector), the technology company Ericsson and the Swedish Ministry for Foreign Affairs recently announced a strategic partnership for a two-year ICT venture in Sub-Saharan Africa. ICT is one of Sweden’s key industries and has helped Sweden become a top-ranked country globally in terms of connectivity, e-governance and ICT innovations. The ICT industry also represents a major source of employment in Sweden, and the officials involved in this venture believe Africa has similar potential. “ICT is a key industry sector in Africa and will increase even more in importance. Sub-Saharan Africa has shown strong growth and seven out of ten of the world’s fastest growing markets are found in this region. Almost 250 million people are expected to have internet access by 2015 in Africa, [and the population is growing, and is] expected to be 1.5bn by 2040,” said Olov Hemström, Trade Commissioner for Business Sweden, explaining the rationale for the venture. A joint report by the World Bank and African Development Bank has already confirmed how ICT is transforming businesses and driving entrepreneurship and economic growth in the Sub-Saharan African region, while enabling access to

education, health care, employment, and information that helps citizens improve their quality of life. “[A country] can’t have GDP growth without ICT investment because ICT drives GDP. We will have about fifty billion connected devices in a couple of years. SubSaharan Africa has a very prosperous future going forward,” said Lars Linden, former head of Sub-Saharan Africa for Ericsson. Fredrik Jejdling, the new head of Ericsson in Sub-Saharan Africa, said data was going to be a huge part of Africa’s mobile story. “I have worked in the Indian market as the regional head for the past three years and I have learnt that mobility is a prerequisite for inclusive growth. Mobile data and broadband will be further-reaching [than the voice revolution]. The funny thing is that [there is] the same pattern in emerging markets as with developed markets with regards to internet usage,” he said. “Between 2000 and 2009, ICT investments [accounted] for 30 to 60 per cent of the GDP growth in many European Union countries. Africa has many possibilities for internet access and surrounding services; the mobile revolution is moving much faster in Africa than in the EU,” added Hemström. This ICT programme aims to share knowledge, and increase collaboration and trade, between 10 of the fastestgrowing ICT markets in Africa and Sweden. The ten countries include: Ghana, Angola, Nigeria, South Africa, Tanzania, Uganda and Zimbabwe. Hemström said high-level conferences would be held in the cities with both public

and private sector participants, to sow a field where new partnerships could be harvested. “Knowledge sharing will bring efficiency into the public and private sectors and it’s a good opportunity for the Swedish business sector,” said Hemström. The programme started in Lagos in November and in April moved to Ghana. One of the unique aspects the project seeks to address, is to bolster e-governance on the continent. Hemström said they had already started with a few projects including a big one with the South African Revenue Service (SARS). Hemström also said the city of Lagos was interested in some e-governance initiatives but that regulation was a constant challenge. He added that Swedish regulators were having conversations with ICT regulators in Africa to harmonise the process. “The partnership between government and business creates a strong platform for infrastructure…the collaboration between government and industry is what has made Sweden’s a world-leading ICT industry,” said Anders Hagelberg, the Swedish ambassador to South Africa.

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19th “Western Africa’s UPSTREAM • MIDSTREAM • DOWNSTREAM

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22 - 24 April 2013 nd

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Feature:

Cement competition stiffens up as Dangote enters East Africa A race for market share has turned into a race for profit in a booming region by Mark Kapchanga For the last five years, cement manufacturers in the East African region have been in an expansion drive which seems to be affecting their revenues. Some players have already started to reap the benefits of such an ambitious

plan, as increased production has boosted revenue. But now others have started reporting reduced income owing to fierce competition in the sector. Their account books show that the ventures into new markets have substantially increased financing and operational costs, thereby harming results in the short term.

East African Portland recently announced a pretax profit of $4.3m for the six months to December, compared with a pretax loss of $2.9m during the same period last year. The firm said this performance was boosted by saving about $10m through the reduction of inefficiencies at its plants. Market analysts say there is a possibility of the sector registering zero or even negative growth in the next four years “unless significant demand is created”. “Manufacturers will be under severe pressure to spike consumption, perhaps through reduced pricing and ruthless marketing,” said Francis Mwangi, a research analyst at Standard Investment Bank. There seems to be hope as the East African region is currently experiencing a boom in infrastructure and housing spending. In particular, the East African Community is working on five main transport corridors with a total length of about 12,000 kilometres.

“Currently, East Africa has an annual demand of around five million tonnes of cement. The supply, however, is approximately seven million tonnes.” - Mark Kapchanga

May 2013 \ Feature \ 19

www.GatewayToAfrica.com

Image by Myrabella

The established firms, which have for a long time dominated cement production, are swiftly being displaced by new entrants that are fast upping their game in the market. India’s Cemtech Sanghi recently announced that they would be putting up a world-class cement plant in Western Kenya. The Sh10.8bn cement plant in a semi-desert in West Pokot will have the capacity to produce 1.2m tonnes of cement annually. “The entry of Cemtech Sanghi is

expected to intensify competition in the cement industry as producers wrestle to cash in on a vibrant building and construction industry,” the firm’s managing director Rajesh Rawal said. The company will be the third producer to launch products in recent years, joining Mombasa Cement, Savannah Cement and National Cement. Currently Bamburi Cement is the leading producer, followed by East Africa Portland Cement and Athi River Mining. Cemtech Sanghi, a subsidiary of India’s

Sanghi Cement Group, which owns the world’s largest single stream cement plant producing over 20 million tonnes annually, also plans to construct a Sh2bn coal-powered electricity plant with the capacity to generate 24 MW. In Tanzania, a 50-kilogramme bag of imported cement retails at $7.8 while locally produced brands are selling at between $8 and $9.3. In Kenya, current prices range between $8 and $8.5 per 50-kilogramme bag, while in Uganda, the average price is $12 as of December 2012. Athi River has operations in Kenya and Tanzania while Bamburi Cement produces cement in Uganda. On the other hand, Kenya and Tanzania host Portland cement facilities. In Tanzania, Dangote Cement and Lake Cement are to set up factories while in Rwanda, Cimerwa is expanding its capacity. Dangote is looking at spending $600m to put up a plant with a capacity to produce three million tonnes annually. Dangote Cement controls a number of plants in West Africa, mainly centred in Nigeria. Last year, the firm opened a $1bn cement plant capable of producing six million metric tonnes of cement per year. This elevated the company’s production by about 40 per cent. “With the commissioning of the new plant, Nigeria has been transformed from a major importer of cement to self

20 \ Feature \ May 2013

sufficiency in production and export,” said Aliko Dangote, the president of the company. According to the proprietor, Dangote plans to raise production in Nigeria to around 50m tonnes a year in the next two years. The business magnate hopes to eventually upgrade capacity at the Obajana plant to 15m tonnes per year. This would make it the world’s largest. “We are currently far ahead of our strategic plans. We could potentially hit 60m tonnes of production by the end of 2014, due to aggressive expansion across Africa,” he said. Between 2007 and last year, Mr Dangote – according to Forbes, the richest man in Africa - has invested over $6.5bn into cement operations, which currently accounts for around 80 per cent of Dangote’s businesses. As of March, the Nigerian self-made business mogul had an estimated net worth of $16.1bn. Three years ago, Dangote Group increased its shareholding in South Africa’s Sephaku Cement from 19.76 per cent to 64 per cent. As competition stiffens, the sector is also facing the massive challenge of increased importation of sub-standard products in the region. The East Africa Cement Producers’ Association now say that the imports, mainly from Egypt and Pakistan, should be subjected to a tougher set of tests and regulations, otherwise they could bring down local cement producers. “Cement is a delicate commodity. If the quality issues on imports are not addressed, then we are going to see more buildings collapsing in Nairobi and Dar es Salaam,” said Kephar Tande, the Managing Director of East African Portland Cement Company. Mr Tande said manufacturers would be speaking with the relevant bureaux of standards in the region “to work out particulars that will tighten the requirements on standards and for the packaging of the commodity”.

Aliko Dangote

www.GatewayToAfrica.com

Currently, East Africa has an annual demand of around five million tonnes of cement. The supply, however, is approximately seven million tonnes. “The excess capacity means producers

are incurring costs on investments in factories, with many facilities operating at about 78 per cent capacity for most part of the year.”

Cement firms operating in East Africa Uganda

• Tororo Cement • Hima Cement

Kenya Rwanda

• Rwanda Cement Factory (Cimerwa)

• Athi River Mining • East African Portland Cement • Lafarge Bamburi Cement • National Cement • Mombasa Cement • Savanna Cement

Burundi • Bugarama

Tanzania

• Mbeya Cement • Tanga Cement • Twiga Cement • Athi River Mining

22 \ Business Life \ May 2013

www.GatewayToAfrica.com

BUSINESS life:

How to adapt the PPP model to Africa Anthony Sykes, senior executive at the Sumitomo Mitsui corporation, tells us why not enough thought has gone into adapting public private partnerships (PPPs) to African conditions by Jeremy Kuper

“Every time I go to a conference they say PPP is for infrastructure, but they don’t have a clue what that means. They don’t have a clue how difficult it is, how expensive it is - how demanding it is on capacity both for the lenders, and, more importantly, for the buyer…the country,” - Anthony Sykes, Head of Infrastructure and Deputy General Manager of the SMBC

Anthony Sykes, Head of Infrastructure and Deputy General Manager of the Sumitomo Mitsui Banking Corporation (SMBC), started his career at Morgan Grenfell where he found himself spending a lot of time in Africa looking at public sector issues in the Sudan, Uganda, and Kenya. “That was my first taste of Africa if you like,” recalls Sykes. “And then during the course of my career here at SMBC we also did some advisory work for the roads programme in South Africa, the National Roads Authority.” Projects included South Africa’s N4 highway, the Maputo corridor and the N3 between Johannesburg and Durban. At that stage Sykes had been in charge of Sumitomo’s PPP business for about 10 years and he felt that it was time to do something else. “So I proposed to the bank and they accepted that I should essentially look at Africa from a geographical point of view.” This was a break with the conventional strategy of the structured finance teams in most banks, which focused on Europe, the Middle East and Africa (EMEA) as a whole. In his field of structured finance, the lender is not taking a balance sheet risk,

but a risk on a limited-recourse basis. For example you want to build road and you ask a lender to finance that road project based on the anticipated revenues, i.e. the tolls that users will be paying to drive on that road. “We’d be looking to the cash flow of that particular project to pay the debt. So if the project went belly up we couldn’t then turn to the company and say you owe us all this money.” Sykes emphasises that the crucial question is how to adapt western-style public private partnerships (PPPs) to take account of African circumstances, particularly when it comes to lending for large infrastructure projects. “Every time I go to a conference they say PPP is for infrastructure, but they don’t have a clue what that means. They don’t have a clue how difficult it is, how expensive it is - how demanding it is on capacity both for the lenders, and, more importantly, for the buyer…the country,” he explains. “I mean it’s taken the UK years to build up capacity and that’s a developed country with a very well-educated population. How long is it going to take Uganda to build up a PPP infrastructure that can deal with very sophisticated private sector groups coming in and negotiating with them?” Sykes enquires. I ask him how African countries are going to build the infrastructure they need. “That is exactly the point, that is precisely the issue which I keep on trying to talk about,” Sykes replies. “I only ever say one thing at conferences, and I say it again and again. Do we change the model to make it more affordable and more feasible...in the sense of less expensive, less time consuming, less demanding in terms of resources on the country.” “[Standard] PPPs are hopeless. And yet there are a million and one consultants, advisers, multilateral agencies going around Africa saying this is the future, when it’s not, it’s the past. We know that in the UK, the model is changing daily here and we’re seeing completely new ideas coming to the table, which as far as I know aren’t really being adopted in the African context.”

Credit enhancement Sykes explains how in a post-Lehman world, one of the key issues for banks is intermediating risk. “How are you going to lower risk by credit enhancement? In Africa the source of credit enhancement is going to come from the export credit agencies. The [UK] Export Credits

May 2013 \ Business Life \ 23

www.GatewayToAfrica.com

Guarantee Department may agree to guarantee-finance the purchase of something in Ghana, say. So we’re not taking Ghana risk, were taking UK risk, and that’s do-able, because the UK still, just, has triple A rating.” “So you’ve got that credit intermediation there. OK. And we have a global ECA team looking at the leading Export Credit Agencies around the world.” The next potential sources of credit intermediation are the multilateral agencies. “If you can get a World Bank or Multilateral Investment Guarantee Agency (MIGA) guarantee, that’s a slam dunk. So is a guarantee from the European Investment Bank. And I think those are the main sources of that risk dilution, that credit enhancement. The issue then is how do you build those guarantees into the structure in a way that optimises their use?” But every time ECAs provide a guarantee for a particular country, that will reduce the amount of cover available for that country. “The problem,” says Sykes, “is how do we have a model that minimises the use of the AAA guarantee and allows it to be recycled?”

An emerging markets PPP “First of all you need to risk-enhance African borrowers, and secondly you need to make sure that whatever way you’re doing that is optimised. The length of time that the guarantee is in place must be minimal.” “What we have to try to do is devise a new model. Let’s call it a PPP model, just for the sake of reference, which does a few things in an emerging market context. I think it has to minimise the use of private sector equity. Because private sector equity is very expensive…I think that the returns being required by investors in Africa are somewhere between 20 and 25 per cent, which is extremely expensive.” How can a public sector utility – for instance a water project – be financed on this basis? “You can’t do it,” says Sykes. “It’s going to mean that the water is unaffordable and that’s just not acceptable.”

Private sector built and financed “The public sector is not very good at operating this infrastructure, the private sector is good at that,” says Sykes. “We need the private sector to make sure that things are built properly and delivered on spec, and to time and to budget…and then probably to operate the thing. But we don’t need it to be owned by the private

sector as equity.” “I think we try and minimise private sector equity, in order to make the services more affordable…i.e. to reduce the cost. So that’s the first thing.”

Sustainable use of foreign capital “The second thing”, continues Sykes, “is we need capital from foreign banks, I mean non-African banks, because the amount of investment required is so

enormous – multiple billions of dollars a year. So we need foreign capital and that’s got to come from banks, private sector banks, because it’s much more than can be afforded by the multilateral agencies.” Sykes acknowledges that the African Development Bank has been very active in lending to projects in Africa, but he says if you add all the loans made by the African Development Bank (AfDB): “it doesn’t really make much of a

24 \ Business Life \ May 2013

www.GatewayToAfrica.com

“[Standard] PPPs are hopeless. And yet there are a million and one consultants, advisers multilateral agencies going around Africa saying this is the future, when it’s not, it’s the past. We know that in the UK, the model is changing daily here and we’re seeing completely new ideas coming to the table, which as far as I know aren’t really being adopted in the African context.” - Anthony Sykes dent in the overall required infrastructure investment. We need foreign banks to come in and then we need to get them out as quickly as possible. I think they need to come in to finance construction.” A major advantage of partnering with a large bank such as Sumitomo is the option of flexible drawdowns for projects that are very difficult to time exactly. “The bank debt is very flexible, meaning you can draw down flexible amounts and so bank debt is quite good for financing construction.” Banks also have teams of people whose job it is to monitor loans to projects to ensure that the money is properly applied. “And if construction milestones are not reached then we ask questions pretty quickly…and that’s what’s required,” adds Sykes. “I think in general the public sector doesn’t have the interest or appetite to do that, so you see cost overruns, all kinds of things. So banks are quite good at that construction phase financing. But once that’s completed, once the project is built satisfactorily, and it has been accepted by the African buyer of the project, then the challenge is to get the commercial banks out.”

Selling the equity to local investors The method used by banks to exit their projects and to recycle their capital as quickly and efficiently as possible is to sell the equity on to local investors. Local investors are the best kind of investors to have according to Anthony Sykes, because they use the infrastructure. For example, “somebody who crosses the bridge every day and knows that it is there, notices any problems with it, raises questions and so on. They’re good investors because they’re active. Bad investors are remote investors who don’t really keep an eye on the assets.”

Thinking about PPPs in Africa “What I’d like to see, is African countries saying “this is our new model of financing PPPs, ie financing essential infrastructure, and your banks have the opportunity to lend for the construction period and then to leave or recycle your capital”. That’s what I like to see, because that would make lending in Africa relatively more attractive than in other parts of the world. But I don’t see a lot of discussion going on in Africa [by governments and investors] on this subject. I don’t see anybody really waving that particular flag. And I wish they would, because in the end African infrastructure investment should be taken over by Africans themselves, and the infrastructure finance model should be completely redesigned to allow this” he says.

May 2013 \ Final Word \ 25

www.GatewayToAfrica.com

FINAL WORD:

South Africa’s doing just fine Dr Jonny Steinberg, author and lecturer in African Studies at Oxford University tells us why despite the problems, South Africans have never had it so good.

by Jeremy Kuper & Flaminia Giambalvo

GTA: During a lecture you held at the South African Chamber of Commerce in London, you said that there is too much negativity around South Africa and its future. Could you expand on that. Dr Jonny Steinberg: If you look at the results of the latest census, which came out late last year, the socio-economic data is that of a country that is becoming more stable. In real terms the average income of a black family has gone up by 35 per cent and that’s pretty evenly spread. In that sense there has been incremental improvement. Fifteen years ago only 35 per cent of five to six year olds were in school. That number is now 85 per cent. Fifteen years ago 58.2 per cent of South African dwellings used electricity for lighting. Now it’s up to 85 per cent. [The reason] poor people are voting in such large numbers for the ruling party is because they see that things are getting better. I think that South Africa is a very turbulent place, but it’s important to understand where the turbulence comes from. How do you explain so much discontent when things are getting better for most? I think it emerges from the unequal distribution of South Africa’s rising prosperity. People aspire, and they see people around them rising much faster than they are. So I don’t

think things are going sparklingly well in South Africa, but I also think that this discourse of gloom and impending disaster is wrong.

GTA: You say that the current climate of turbulence is related to the new prosperity, but don’t you think that Marikana reflects workers’ anxieties that sectors such as mining are no longer as central to the economy as before? Dr Jonny Steinberg: That’s one of the things that it is a symptom of, but its implications go far beyond mining. Like many other South Africans, they are angry because people around them, including other workers in the platinum industry, are doing so much better than them. I have students who are interviewing platinum workers who went on strike. Many of them did not want to be platinum workers. Some were educated people who had tried to get jobs in the civil service. The fact that these people became platinum miners at all was a sign of defeat. They went into those jobs angry and got even angrier when they were there. I think this is a sign of what happens to thwarted aspirations when society in general is doing better.

GTA: You were talking about turbulence and violence - do you think the violence is random, or is

it more targeted, perhaps with the view to “settling scores”? Dr Jonny Steinberg: I don’t think it’s about settling scores. It’s about the promise of upward movement. I think that violent crime is triggered primarily by sharp inequality. There hasn’t been a rigorous study about who the carjackers and house raiders are, but anecdotally they are seldom the poorest. They are usually fairly well educated, they’ve been to school, they have a secondary education and they expected to be delivered into the middle class and it hasn’t happened.

GTA: There’s been a lot of debate around BEE and its failure to create broad-based economic advancement for previously marginalised black communitiesshould we scrap it? Dr Jonny Steinberg: I think that BEE’s primary function has been to pact an old white elite and a new black elite by sharing a lot of wealth quickly. It’s certainly cynical, but I’m not sure that South Africa’s transition would have been successful if that pact had not been made. The problem is that BEE has been billed as something that would do much more. It was a cynical agreement dressed up as if it would address all sorts of important things like fostering entrepreneurship and getting capital and expertise to

26 \ Final Word \ May 2013

small business. And so these things are not addressed properly, because BEE certainly isn’t addressing them.

GTA: Do you believe South Africa to be a one-party state? And, if so, is that holding back the country, both economically and politically? Dr Jonny Steinberg: The ANC is a very dominant party and it keeps winning elections comfortably, but its dominance is slipping and it needs to begin governing differently if it wants to stay dominant and that’s a good thing. South Africa’s GDP growth has been too sluggish given its problems and a lot of that is directly attributable to government mismanagement. Part of it is due to the fact that South Africa lost out enormously on the commodity boom because mining regulations were appalling and the relationship between the government and the mining industry was poor. So there are all sorts

www.GatewayToAfrica.com

“I think that BEE’s primary function has been to pact an old white elite and a new black elite by sharing a lot of wealth quickly. It’s certainly cynical, but I’m not sure that South Africa’s transition would have been successful if that pact had not been made.” - Dr Jonny

Steinberg, author and lecturer in African Studies at Oxford University

of reasons - but poor government is one of the reasons at the centre.

GTA: So what is the way forward for South Africa? Dr Jonny Steinberg: I think that we are quite close to a situation in which the

ANC loses its majority in another 2 or 3 big cities besides Cape Town and it will have to govern in coalitions, certainly at metropolitan and provincial levels. This will be a significant moment; it will break the connection between the party and the civil service. Opposition parties are going to be involved, not just in writing policy, but in choosing the future leaders of the civil service and so the bureaucracy will become more than simply an arena of ANC patronage. This will be an important moment.

GTA: What do you think of the Secrecy Bill? And why is the ANC going forward with it? Dr Jonny Steinberg: The ANC is trying to protect itself from itself. The more fractious the ANC becomes, the more it fights its battles by leaking information about internal opponents to the press. So, through the Secrecy Bill, the ANC is trying to save itself from itself.

28 \ Destination \ May 2013

www.GatewayToAfrica.com

Africa in numbers: Focus on Mozambique Average GDP per Capita, PPP (US$)

US$3,781

Cape Verde

US$2,192 Sudan

US$1,637

US$1,255

Ghana

Uganda

US$1,626 PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. In Africa, Mozambique is 17 on the list. There are a number of reasons for this; Mozambique has been gripped by a civil war in previous decades. The country has been recovering and only now is the infrastructure being rebuilt. Until the discovery of oil and gas, Mozambique’s major exports had been agricultural products, which kept it as one of the poorest countries in Africa. (World Bank)

Internet user growth rate

Kenya

US$1175 Rwanda

US$1,406 Tanzania

US$1,503

US$5,728

Zambia

Angola

US$894

Mozambique

US$13,971 US$6,420 Namibia

Botswana

US$5,886

Swaziland

US$13,403

US$10,549

West Africa

East Africa

Southern Africa

Mozambique

Reasons for lack of growth in telecommunications and internet usage • High operation charges and costs • Lack of cellular coverage; only limited to highways and major cities • Lack of competition • Most communication enterprises are state-owned

Mauritius

South Africa

US$1,567 Lesotho

May 2013 \ Destination \ 29

www.GatewayToAfrica.com

Agriculture, value added (% of GDP) Average Growth 2001-2011

Reasons for performance compared to other African countries

Lesotho 0.75

2.5%

Botswana

Mauritius 1.075

2.6%

South Africa

Rwanda 2.9

4.2%

Mauritius

Namibia 1.525

Lesotho

Zambia 5.35

9.5%

Cape Verde

Botswana 2.1

21.3%

Zambia Mozambique 6.325

25.2%

Uganda

Uganda 11.8

27.5%

Kenya

Angola 8,275

29.3%

Sudan

Sudan 17.575

29.3%

Mozambique

Ghana 16,275

30%

Tanzania

Kenya 21.85

23.2%

Ghana

Tanzania 19,225

14.6%

Rwanda

Nigeria 79,925

47.5%

Ethiopia

South Africa 51,521

50.8%

Sierra Leone

Average New Mobile cellular subscriptions between 2008-2011 (Millions)

• Agriculture is Mozambique’s leading sector. • Major exports are agriculture products Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. A number of reasons can support Mozambique’s value growth because agriculture is Mozambique’s leading sector and most major exports are agricultural products. (World Bank)

Mobile cellular telephone subscriptions are subscriptions to a public mobile telephone service using cellular technology, which provide access to the public telephone network. Post-paid and prepaid subscriptions are included. This graph shows the growth of Sub-Saharan African countries. Nigeria which has the largest population and South Africa with an advanced telecommunication infrastructure are top of the list. (World Bank)

Natural gas - proved reserves (Cu m) Nigeria Congo Angola Cameroon Mozambique Ethiopia Sudan Namibia Rwanda Equatorial Guinea Cote d’Ivoire Gabon Mauritania Ghana Uganda

0bn

1bn

2bn

3bn

4bn

5bn

This entry is the stock of proved reserves of natural gas in cubic meters (cu m). Proved reserves are those quantities of natural gas according to analysis of geological and engineering data. Mozambique’s ability to attract large investment projects in natural resources is expected to fuel continued high growth in coming years. (CIA World Fact Book)

Sources: CIA Factbook, World Bank and World Economic Forum

30 \ Destination \ May 2013

www.GatewayToAfrica.com

DESTINATION:

Mozambique

Tanzania

Mozambique Zambia

Mozambique is on the rise, find out why. Zimbabwe

by Grant Mowatt Since its independence in 1975, Mozambique has gone through considerable changes. The former Portuguese colony has been marred by the civil war that ended in 1992 and only had its first democratic elections in 1994. However, since independence, Mozambique has struggled to attract investment and it still remains one of the poorest and most underdeveloped countries in the world. Mozambique’s leading sector remains agriculture, and industrial development has been slow to take off because of the destruction of public transport and other infrastructure during the civil war. However, over the last 15 years, mineral discoveries have changed the economic outlook of the country. Discoveries of coal, aluminium, oil and gas have increased FDI and the country enjoyed a

7.5 per cent growth rate last year. Despite this growth, Mozambique still has underdeveloped infrastructure and much of the population remains in poverty. The year 2011 may be remembered as a turning point in Mozambique’s economy, with the first overseas export of coal marking the birth of Mozambique as a world exporter of minerals, and paving the way for the country to secure its future fiscal sustainability through yields from natural resources. The Mozambican government has negotiated with mining companies to hike royalties and taxes to increase government revenues. Mozambique is a member of the SADC and its main trading partners are South Africa, China, Australia and Portugal. According to the US State Department, Mozambique ranks 184th in the human development index and has a per capita income of $1200.

South Africa

Maputo

Mozambican Economy Currency: Mozambican metical Population: 24 Million GDP based on PPP: $1,200 GDP growth (2011): 7.50% Head of Government: Alberto Clementino Vaquina Finance Minister: Manuel Chang Central Bank Governor: Ernesto Gouveia Gove

Mozambican Business

Language: Portuguese (official), Makua-Lomwe and Swahili World Bank Doing Business rank: 146 World Economic Forum Global Competitiveness rank: 138 Investment agency: Investment Promotion Centre; www.cpi.co.mz Legal system: Mixed legal system of Portuguese civil law, Islamic law, and customary law

Getting There

Airlines: South African Airways from Cape Town and Johannesburg Visas: UK – Single entry valid for 6 months costing £40.00 Hotels: £20- £188 per night

8000+

16TH ANNUAL

ATTENDEES

300+

VISIONARY SPEAKERS

300+

12-14 NOVEMBER 2013 CTICC CAPE TOWN SOUTH AFRICA

EXHIBITORS

100+

COUNTRIES REPRESENTED

BUILDING AFRICA’S DIGITAL ECONOMY

COME AND SEE THE FUTURE OF DIGITAL AFRICA... NEW

NEW

2012 SPONSORS INCLUDED:

Don’t miss out on this world-class event. Find out more: www.comworldseries.com/africa

Registration & Programme: www.petro21.com

Advance Notice

25th - 29th November 2013 Cape Town International Convention Centre - South Africa 15th Scramble For Africa: Strategy Briefing - 25th November 2013 10th Africa Independents Forum - 26th November 2013 20th Africa Upstream Conference - 27th - 29th November 2013 54th PetroAfricanus Dinner - 25th November 2013 Celebrating our 20th Africa OIl Week Join us as we celebrate our 20th Africa Oil Week 2013 in Cape Town, where we shall again host the world’s leading meeting on Africa for corporate deal-making and senior-level networking across the oil/gas industry in and on Africa. This is now the landmark Conference occasion for Africa, a meeting with a global reputation, and one of the top world-class Conferences held annually in the international industry Calendar. The event was sold out in 2012 and Conference was host to: • Over 1,200 Delegates from Six Continents - 90 Presentations made during the Week Ministers/Government Delegations in attendance - African and Foreign State Firms/National Oil Companies and State Officials on the Program - 90 Exhibitions In 2013 the conference will take place at a new venue - the Cape Town International Convention Centre - from 25th - 29th November 2013. The venue is able to accommodate 1,500 in the Auditorium and has added capacity for exhibition stands and parallel sessions. The Week includes separately bookable Events plus; Annual Awards - 2 Conference Dinners and Networking Receptions - Champagne Breakfast - BBQ-Braai - Parallel Sessions: Corporate & Investor Showcases. We recommend early bookings/confirmations for Sponsors & Exhibitions, and for your earliest registration/s as delegates to the different events held across the Africa Oil Week during this year’s much expanded event.

Lead Sponsor

Palladium Sponsor

Titanium Sponsor

Platinum Sponsor

Bronze Sponsor

Africa Independents Forum Sponsor

Exclusive International Broadcast Partner