Wednesday, March 22, 2017

GUEST BLOG POST: To Power Its Future, Africa Needs ‘Wall Of Money’ By Noluthando Crockett-Ntonga

The hundreds of delegates pouring into the glittering Marriott Marquis hotel for this month’s Powering Africa Summit were experiencing a stark, if unstated, contrast. On a good day this year, Nigeria – the largest per capita of Africa’s 55 countries, produced enough electricity to operate around five ‘eco-friendly’ hotels, the size of the three-year old Marriott.

The market opportunities are massive, participants agreed; the challenges equally large. By the end of two days of discussions, a consensus emerged around three themes:

1) There is a ‘wall of money’ available to electrify Africa with bankable projects
2) There is hopeful optimism that U.S. President Trump’s administration might be supportive, and
3) There are enormous opportunities for those with ideas, stamina and, most of all, patience to make money while doing good – on and off the grid.

“To unlock that wall of money,” says Standard Bank’s head of power and infrastructure, David Humphrey, “Africa has to grow, develop, and become a place where that wall of money is happy to invest, and can take and understand the associated risks.”

Mr. Humphrey’s assessment is underpinned by 150 years of African experience by Standard Bank, Africa’s largest bank by asset.

Power Africa, an initiative to‘light up’ Africa launched by President Barack Obama during a visit to three African countries in 2013, aims to see 60 million newconnections and 30,000 megawatts (MW) “of new and cleaner power generation.”

Nigeria, Africa’s most populace nation, is key to meeting those goals, Andrew Herscowitz, the Power Africa coordinator, told attendees. “If we succeed in Nigeria, we can be successful anywhere in the continent,” he said.

Nigeria has some 12,000 MW of installed generation capacity and can transmit 7,000 MW on the existing grid, he said. Typical output ranges from 3,000 to 4,000 MW, of which only about 2,000 MW is being paid for.

Investors and developers new to Africa often need reminding that there are 55 countries on the continent, which compares in land area to the United States, China, Japan, Mexico, India and eastern and western Europe combined. There are tremendous variations by region and often within individual countries. Some countries have policy, regulatory and community frameworks already in place which make it easier to do business. But ‘easier’ is still not ‘easy’ compared to more developed regions, conference participants noted.

“In economic terms,” says Mr. Humphrey, “Africa is at the crossroads.”

“We’ve seen a lot of progress with democracy and democratic institutions, whether in Nigeria, Uganda, even in The Gambia where [a recent coup attempt] was peacefully resolved. There have been peaceful transitions in Zambia and in Ghana.” Those trends, he says, have made a difference in investor interest.

“Twenty years ago an investor might ask why would I go to Africa”, he says.” Now we’re having interesting conversations at the individual government level and individual client level about how you unlock that potential.”

There’s a lot at stake for Africa’s people. More than 620 million live without electricity. The people of Gbarnway, Liberia, a rural community about 100 miles from the capital Monrovia, illustrate the problems and opportunities. The Liberian government estimated that it could take at least 10 years for the national grid to reach Gbarnway and other rural areas – and that was before the setbacks brought on by the Ebola crisis of 2014-16.

Power Africa’s more than 100 private sector partners have committed to develop some 16,000 MW of generation. These include a number of non-profits focusing on delivering ‘off-grid’ power to Africa’s rural population.

One of these, the National Rural Electric Cooperative Association (NRECA), has committed $400,000 to bring reliable and affordable electricity to Liberia with a solar-diesel hybrid system. The fifty-four-year-old not-for-profit U.S. organization has helped Liberians launch three electric cooperatives and has provided training in maintenance, service provision and financial management.

Gbarnway now enjoys electricity with solar panels that NRECA supplied. Korto Gizzie, a resident, says “We were living in darkness, and living in this place was hard. The houses were dark for the children. But now, we have light here, and this place is just like a city. I am so happy to see a town like this.”

Gizzie’s power came as part of USAID’s Power Africa “Beyond the Grid” project. The Obama administration launched the Power Africa initiative in 2013 with the goal of connecting 60 million people to power by 2030 through public/private partnerships.

One of the questions buzzing among delegates in between panels, round tables and keynote addresses, was the future of the initiative under the new U.S. administration. Power Africa, the initiative housed at USAID, involves many options including development finance and Independent Power Producers (IPPs)—all of which are favourable to businesses. The hope is that President Trump, with his background, might see a good opportunity for U.S. business.

Republican Congressman Ed Royce, Chairman of the House Foreign Affairs Committee, in a Summit keynote, extolled the chance “to create technology and long term power deals while increasing global security and social stability.”

He said that for American companies who maintain their competitiveness, opportunities abound as Africa’s economies grow.

“You can’t run a factory on a generator,” he said, referring to the private generators that currently provide much of the electricity to African homes, schools, clinics, offices and businesses, including banks.

Mr. Royce was lead sponsor of the Electrify Africa Act of 2015, which supports and broadens the Power Africa initiative.

African consumers are driving an accelerating process of renewable energy installations, while African governments and big utility companies are often stuck in the grid paradigm, some delegates said. Almost everyone wants the ability to be connected to a reliable electricity grid. But as a result of Africa’s sheer size, the number of rural residents, and the lack of existing generating and distributing capacity, it is likely that many millions of people will get electricity from emerging, clean technologies including solar, wind, hydro and biogas, before a grid reaches them.

The cost of these technologies is dropping, making off-grid and mini-grid renewable energy affordable, even for the very poor. Some require little upfront capital investment and have the advantage of delivering energy quickly, replacing costly and unhealthy fuel sources like firewood and kerosene.

Noluthando Crockett-Ntonga is a contributor to AllAfrica.

Originally published on PREMIUM TIMES BLOG

Wednesday, July 20, 2016

GUEST BLOG POST: Addressing The Challenges Of African Businesses — Chimezie Uzoigwe

Business In Africa - Image credit - sellbytel/group
Businesses can help build the Africa of the future. What is needed is a smarter leadership that can work together with all stakeholders to address the challenges facing businesses and put Africa on the path to transformation.

By Chimezie Uzoigwe

Businesses are important for wealth creation and development of any society because they undertake huge risks to innovate, create and market value bringing prosperity to themselves and society. The impact of businesses is not just limited to creativity and wealth creation, they foster interactions in communities and ensure the survival of people tied to the business activities. Many believe that business entrepreneurship is Africa’s best bet to attain economic and social development. Leading entrepreneur, Mr. Tony Elumelu, who professes the Africapitalism philosophy believes that “entrepreneurs will play a central role in bringing together private wealth and public need and that the transformative impact of economic growth unleashed by a fully empowered, socially conscious entrepreneurial class will dwarf the results achieved by the previous aid-driven approach to Africa’s development.”

Businesses are contributing immensely to Africa’s development. The African Development Bank estimates that Africa’s private sector accounts for over four-fifths of total production, two-thirds of total investment, and three-fourths of total credit to the continental economy, and employs 90 percent of the employed working age population. Given this position, the optimal performance of African businesses is important as it becomes clearer that the aspiration for a transformed Africa can only be achieved through effective partnership between the public and private sectors.

Africa is attractive for business. Six African countries – Ethiopia, Congo DRC, Ivory Coast, Mozambique, Tanzania and Rwanda are among the thirteen fastest growing economies in the World, according to the World Bank. Africa’s demographics also promise a huge dividend for business. The continent’s one billion, mainly youthful consumers are an increasingly compelling market as consumer spending per capita already matches that of India and China and is expected to reach US$1.4 trillion in 2020. Mckinsey, in a June 2010 article, had noted that the rate of return on foreign investment in Africa dwarfs that of any other developing region. Thus, Africa has continued to draw attention not only from businesses abroad, but also from existing players in the continent.

Despite Africa’s attractiveness for business, there are still many challenges facing businesses in the continent. Doing business in Africa remains largely difficult. Sub-Saharan Africa had a regional average score of 56.28 points out of 100 and a regional rank of 114 out of 189 ranked economies in the 2016 World Bank’s Ease of Doing Business Index. There are still challenges, with respect to the environment, for business, policy, corruption, access to resources, political and economic stability and uncertainties, which hurt business competitiveness.

While many businesses have fallen on the way, the thriving ones have grown to be resilient to these challenges. But this still comes at a huge cost – a loss in business and social prosperity that could have been attained if businesses do not have to invest in adaptation strategies.

Challenges Facing African Businesses
Nigeria is a good case study of how business potentials are unnecessarily undermined by state ineffectiveness. With a youthful population, a growing middle class and a huge consumer base, Nigeria’s business environment is naturally favourable for businesses to excel. But government’s overwhelming presence in some aspects of the economy (doing what she should not be doing) and underwhelming presence in other aspects of the economy (failing where she is needed) is hurting the ability of entrepreneurs to utilize these favourable natural conditions to create wealth. Largely due to state ineffectiveness, entrepreneurs in Nigeria continue to face difficult challenges in the following areas:

• Access To Resources
Finance is key to running any successful enterprise. Lack of access to finance is perhaps the biggest challenge for intending entrepreneurs and a constraint to growth for existing enterprises. Banks generally prefer to invest in government bonds and treasury bills and to lend to influential and billionaire businessmen, most of whom invest majorly in somewhat ‘sterile’ activities like oil importation, rather than lend to SMEs. Thus, government’s overwhelming presence in the economy partly crowds out financing for private enterprises from the banks. Although there are many government intervention schemes for enterprise financing, these schemes are not unified, are poorly co-ordinated and implemented and thus, do not achieve set objectives. For example, many MSME operators have continued to lament the hurdles they face in accessing the Central Bank of Nigeria’s ₦220 billion MSMEs development fund and funds from the Bank of Industry (BOI).

• Weak Enabling Environment
The enabling environment for business in Nigeria is poor. Insecurity is still a major threat to businesses. For example, the Boko Haram insurgency has crippled economic activities in the North-Eastern part of the country. A new wave of militant insurgency in the Niger-Delta has led to the destruction of major oil and gas pipelines and facilities, and caused production shut-in. The implication of this for the national economy can best be imagined. Nigeria also continues to suffer from a severe infrastructural deficit. From poor transportation networks to epileptic power supply, the story is the same. While most businesses operate by generating their own power at huge costs, the situation is usually worsened due to frequent scarcity of petroleum products and the attendant long queues in gas stations. Only a few months ago, many businesses could not run because there was no public power supply, and the state oil company, the Nigerian National Petroleum Company (NNPC) which superintends over a corrupt oil subsidy regime was unable to meet the demand for petroleum products as private oil marketers were unable to access foreign exchange to import the products.

• Policy Challenges
One of the key challenges facing entrepreneurs in Nigeria at present is unfavourable government policies. For example, the ideological posturing of the government on the issue of devaluation and the rationing of foreign exchange by the Central Bank of Nigeria (CBN) for about sixteen (16) months denied many entrepreneurs access to foreign exchange to purchase critical goods that serve as inputs in their operations. Nigeria’s land tenure system is also a key constraint to business success. Getting a governor’s consent for a land an entrepreneur intends to acquire takes many months and years in some states. Even the process of registering a business is very tedious.

• Corruption and Multiple Taxation
The high level of bribery and corruption and a culture of patronage increases the cost of doing business in Nigeria and reduces efficiency in business operations. For example, the foreign exchange crisis which is harming businesses would have been better managed if the country saved and grew its foreign reserves amidst high oil prices instead of mismanaging the oil windfall. Multiple taxation is also harming entrepreneurs, making many to seek to invest in tax havens. In Nigeria, once you set up shop for business, you are confronted with taxes, rents, rates and levies to be paid to different levels of authorities.

• Uncertainty
Nothing kills businesses more than uncertainty but in Nigeria, entrepreneurs face many uncertainties. It took the newly elected President Muhammadu Buhari up to six months to constitute his cabinet. It took a lot of unnecessary drama to get the 2016 budget passed. Thus, the Nigerian stock market that surged and led the gains among world equity markets on the back of the president’s electoral victory almost collapsed due to the uncertainty created by the halt in governance for almost six months. At present, the government’s policy direction remains unclear as many final business and investment decisions are put on hold.

How I Would Address the Challenges Facing Africa’s Businesses
Doing business in Africa is difficult largely because Africa’s leadership has not succeeded on the whole in using the tools of governance and policy to complement the ‘natural’ factors that make Africa attractive for business. Although, modest gains have been achieved through some outstanding reforms in a few countries, the challenges facing businesses remain enormous. Africa’s businesses hold the promise of significant further growth opportunities if these challenges are addressed. With a bolder, stronger and smarter leadership, these challenges can be tackled and the full potentials of businesses unleashed.

As a leader, I would use smart governance and policy tools to address the challenges facing African businesses in the following areas:

Creating An Enabling Environment For Business
The enabling environment for business in Africa is poor. Insecurity occasioned by conflicts is a major threat to businesses. In Nigeria for example, the Boko Haram and the Niger-Delta crises are hurting businesses and the general economy. A commitment to peace and consensus building would be a major priority. Huge investments in infrastructure, especially in power, transport and broadband would be undertaken to enable businesses succeed.

Access to Resources
Financing is key to business success, yet banks prefer lending to governments than businesses in Africa, making the public sector crowd out the private sector in terms of financing. To solve this problem, I would pursue a borrowing policy that has a balanced mix of foreign and domestic borrowing so as to create enough room for businesses to attract financing from the domestic financial markets at favourable rates.

Policy
Government policies can make and unmake businesses. In Nigeria, the government’s reluctance to allow a market-determined naira exchange rate for an extended period and the rationing of foreign exchange denied many businesses access to foreign exchange and hurt their performance. I would pursue public policies that are market-friendly and be consistent with my policies while showing flexibility when it is needed. I would also undertake a reform of the land tenure system to make land more useful for business in Africa.

Corruption and Multiple Taxation
Corruption increases the cost of doing business and yet remains pervasive in Africa. I would fight corruption, especially through building strong institutions that can check corruption before it happens. Multiple taxation would be eliminated by unifying the tax system and adopting technology tools like e-collection to make compliance easier. Tax incentives would also be an important tool I would use to drive business growth.

Other Measures
To support businesses, I would commit to democratic tenets that ensure political stability. Macroeconomic stability would be aggressively pursued to create an investment-friendly climate. My leadership would be clear with its policy direction from the outset so as not to create uncertainties that hamper investment decisions. I would invest in ideas, technological innovation and entrepreneurship and move the economy away from commodity dependence so that businesses and the economy can be shielded from the impact of commodity bubbles. Building and strengthening institutions that support businesses is important as well as building an effective public sector that knows its place (does not do businesses most suited for the private sector) but supports businesses to perform optimally. I would pursue regional co-operation to address common business challenges and promote intra-African trade. I would forge global partnerships with the rest of the World that favour African businesses. I would also be willing to learn and replicate success examples of transformational leadership especially the Lee Kuan Yew Singapore’s story and the East Asian miracle and change the story of doing business in Africa for good.

Businesses can help build the Africa of the future. What is needed is a smarter leadership that can work together with all stakeholders to address the challenges facing businesses and put Africa on the path to transformation.

Chimezie Uzoigwe writes from the University of Benin, and can be reached through Chimezie.uzoigwe@gmail.com.

Originally published in PREMIUM TIMES BLOGS

Monday, February 22, 2016

Cameroon Football Great Milla Giving Plastic Waste The Red Card

Workers pave the ground with recycled cobblestones made of plastic waste, in Yaounde, Cameroon ©Reinnier Kaze (AFP)


Cameroonian footballing hero Roger Milla, the oldest goalscorer in World Cup history, is taking on an even bigger challenge in a very different field -- turning plastic waste into building materials.
The man named the best African player of the 20th century last year embarked on a quest to resolve Cameroon's massive plastic waste problem.
With plastic bags and bottles routinely cast away in the central African country, the waste clogs up rivers, litters roads and blocks gutters.
"We launched this project to fight pollution and create jobs for unemployed youngsters," Milla, who is now 63, told AFP.
The problem has become so bad that in 2014 the government banned "the making, importing, selling or distribution of non-biodegradable plastic packaging".
But some producers resisted, and earlier this month 100 tonnes of plastic packaging were illegally produced and seized in Cameroon's largest city Douala.
With plastic bags and bottles routinely cast away in the Cameroon, the waste clogs up rivers, litters roads and blocks gutters ©Reinnier Kaze (AFP)

Milla, who rose to international fame in the late eighties and early nineties for his trademark goal celebration of a dance by the corner flag, is now creating a new band of followers.
He is forming what he hopes will be a 2,500-strong team of youths to collect and sort plastic waste, the raw materials for his modern alchemy.
The project is being carried out under the banner of Milla's Coeur d'Afrique (The Heart of Africa) association for children, and its new off-shoot focusing on the environment and sustainable development.
Raising awareness
"We have selected a first 25 youngsters and have given them comprehensive training" so they can in turn become trainers and induct others, said Pancrace Fegue, the association's executive secretary.
The pioneer group has already produced thousands of paving stones, used notably for the renovation of the Cameroon handball federation's premises.
In November, Milla's association raised awareness in two Yaounde schools, inviting students to pick up plastic waste in their areas. Within a week the school-children had collected three tonnes of waste.
"We want the pupils and the households to understand that plastic has a new destination," beyond the rubbish bin or the street, said Fegue.
"When we get all the recovered waste back to the warehouses, we start sorting through it," explained Pierre Kamssouloum, the project's technical director.
Not all plastic is suitable. Anything containing chlorine, for example, is sifted out.
Once they've identified the usable plastic, the industrial magic starts.
"The plastic serves as a binder and replaces cement," in the production of concrete slabs, Fegue explains.
The plastic is melted down in a large tank placed over a wood fire.
Sand is then added to the molten plastic and the hot mixture poured into moulds.
These cobblestones made of plastic waste cost 3,500 Central African francs (US$5.40) for a square metre that is five centimetres thick, while the usual cost is 5,000 francs ©Reinnier Kaze (AFP)
The process doesn't need water and the product sets and dries at room temperature within 15 minutes, according to Kamssouloum, as opposed to the 24 hours for the normal sand and cement based product.
Nor do the advantages stop there.
"Our paving stones are cheaper," Kamssouloum said. They cost 3,500 CFA francs (€5, US$5.40) for a square metre that is five centimetres thick, while the usual cost is 5,000 CFA francs.
The new slabs are waterproof and can be used in marshy areas or even to build septic tanks, he added.
Helping street children
Labogenie, a national laboratory tasked with testing construction materials, said the slabs showed "encouraging results", but that further testing was needed.
"The results we've obtained on the issue of these paving stones' capacity to absorb water are interesting," said Paul Mallo Nkongo, Labogenie's chief analyst.
"The idea of recycling plastic waste is beautiful (and) this initiative would allow us to get rid of some waste material," he added.
Milla hopes the project will also help street children re-enter society.
"This project can help me cope better," said Elvis Kake, one of the children involved.
While the environment ministry has pledged it would help by handing over waste non-biodegradable plastic packaging, the project still faces several obstacles before it can take off.

Vehicles to collect rubbish and funds to train the youngsters are still needed, Feugue says.
The city has offered the group a temporary production site, but further down the line the project will need a more permanent home.
Cameroon's international striker Roger Milla was in 2015 named the best African footballer of the 20th century ©Alexander Joe (AFP)

Originally published by AFP