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Africa Focused News

REPORT OF WEDNESDAY 16/10/13

by Dario Galluccio

This Blog is sponsored by http://www.reflexecogroup.com

Nigeria: Federal Government woos Brazilians to invest in power

To ensure rapid development of electricity distribution, the Federal Government has appealed to the Brazilian Government to invest in Nigeria’s power sector with a view to revamping the ailing sector. The Minister of Power, Prof. Chinedu Nebo who said this while receiving a Brazilian delegation led by Vice-Minister of Development, Industry and International Trade, Mr. Ricardo Shaefer, said the government needs assistance from around the world to revamp the ailing power sector.

The minister also requested for synergy and co-operation of the Brazilians in Nigeria’s quest to ensure all her nationals are connected to electricity. He said that “Brazil has done well in many aspects of electricity especially in big hydro, biomass, solar, wind and coal. Nigeria intends to learn from the experience of Brazil, as the country has already leap frog in the attainment of development goals.”

In his remarks, the Permanent Secretary in the Ministry of Power, Amb. Godknows Igali, said that opportunities in the power sector is in mega dimension. He added that the nation’s target of moving from over 4,000 mega watts to 40,000MW in the next seven years would require double efforts from Nigeria’s friends abroad.

South Africa: French firms urged to collaborate

French and South African companies have been encouraged to work together on the industrialisation of South Africa and the African continent. Speaking at a business forum on the sidelines of the state visit by French President Francois Hollande on Monday, 14th October, Trade and Industry Minister Rob Davies said that although France was among the country’s top five partners in the European Union (EU), a lot more still needed to be done.

France is among South Africa’s top 10 trading partners. The two countries have significant and sizeable trade and investment relations.

Davies said that what needed to be improved were partnerships between the two countries on industrialisation. He said the African continent was recognised as one of the growing frontiers in the world and that the African region needed to integrate.

South Africa is engaged in a massive infrastructure programme, with the Southern African Development Community (SADC) having also set up infrastructure programmes, and these should form the basis for industrialisation, Davies said.

Ghana: Cocoa products are safe

The Minister of Trade and Indusry, Mr Haruna Iddrisu, has assured the members of the European Union that government would always support measures designed to achieve a high level of health protection in foodstuffs, particularly for the most fragile segments of the population. He said the Ghana Government has been following keenly, ongoing discussions within the European Union with a view to amending various regulations which seeks to set maximum levels for certain contaminants in foodstuffs.

Addressing the ministers and officials at the 12 Joint Session of the ACP-EU Ministerial Trade Committee in Brussels Mr Iddrisu said ‘While recognising the right of the institutions of the EC to take measures to protect human health, my country, and for that matter, the ACP Group, is of the considered opinion that there is the need to ensure proper balance between the necessary and appropriate levels of health protection and the minimum negative impact.

Zimbabwe: Nation to have new diamond miner

The Government has granted a licence to Global Diamond Trekkers to explore for the gems in the Middle Sabi area of Manicaland province, about 100 km south east of the Chiadzwa fields. According to a statement issued by the company, it was given permission to investigate the potential for mining diamonds in the Middle Sabi area. The alluvial diamond concession lies in the Middle Sabi valley, about 167 km south of Mutare in Manicaland province.

Global Diamond Trekkers said it had since engaged a consultancy firm to conduct an Environmental Impact Assessment for the project. The company will in the short term conduct an exploration exercise to determine the extent of the resources. Thereafter it would seek compliance with industry regulator the Kimberly Process Certification Scheme.

Zimbabwe is a notable diamond producer with huge reserves of the mineral especially in the Marange area. The five joint-venture mines in Marange produced a combined eight million carats of the gems last year and generated at least US$684 million in exports.

Industry experts say Zimbabwe has the potential to account for at least 25 percent of global production by the end of the decade.

Nigeria: To take ICT investment drive to Silicon Valley

The Ministry of Communication Technology is holding a Silicon Valley Investment Forum in San Francisco, United States of America (USA), to showcase the untapped potential of the Nigerian ICT sector – its success stories and investment opportunities to the global community.

The three-day forum will showcase the development of Nigeria’s technology sector including policy, economic development and individual success stories of start-ups in the country.

The aim of the forum is to further highlight the potential of the Nigerian ICT sector and increase exposure of ideation and innovation in Nigeria. The forum will showcase Nigeria’s Innovation drive and success stories of start-ups like Jumia, Co Creation Hub, Venia Business Hub, Wakanow.com, Interswitch, Paga etc. Also, a new report on Nigeria’s ICT sector by the Oxford Business Group will be circulated at the forum.

The Minister of Communication Technology, Mrs Omobola Johnson, will speak on the potential of the Nigerian ICT sector and initiatives of the Ministry to accelerate the growth of the sector.

Ethiopia: Growth is impressive – African Development Bank

Ethiopia’s strong, decade-long economic growth made it possible for the country to be on track to achieve the Millennium Development Goals says the African Development Bank (AfDB).

In its latest publication “AfDB and Ethiopia – Partnering for Inclusive Growth” the Bank point to huge investment in infrastructure and commercialization of agriculture as major causes for the average 11% annual growth over the past nine years, making Ethiopia the biggest economy in East Africa.

The Bank lauded the government’s development policy that lead to broad based growth and a considerable reduction in poverty, noting pro-poor policies accounted for 69% of expenditure in the 2011-12 budget year alone.

Prudent monetary policies brought inflation down to 7.7% in 2013 from a high of 40% in mid-2011. The Bank underlines its commitment to continue partnership with Ethiopia, aligning its country strategy with the Growth and Transformation Plan.

It notes “the government of Ethiopia’s key development objective is to achieve inclusive, accelerated and sustained economic growth and to eradicate poverty” and expresses the Bank’s strong conviction of the prospects of Ethiopia’s development.

The Bank’s country strategy principles included alignment with the Growth and transformation Plan, prioritizing infrastructure, regional integration, governance and private sector development and supporting the East African Integration strategy. The Bank has therefore supported the Ethio-Djibouti Electric Power Interconnection Project, the Ethio-Kenya Electric Highway project, the Mombasa-Nairobi-Addis Ababa Road Corridor and the Rural Water Supply and Sanitation Program.

Since it joined the African Development Bank Group in 1964, Ethiopia has benefitted from loans and grants to the tune of US$3.75 billion, making it the sixth largest beneficiary in the continent.

Nigeria: Africa insurance market offers growth prospects

Despite the challenges in Africa, experts believe that Africa’s insurance and reinsurance markets offer potential for growth. According to a report by A.M Best Rating Company, insurance penetration in Africa is growing, but from a very low base, but in certain countries, given the economic development in the region.

The report stated that each country has different drivers for heightened insurance demand, ranging from economies dominated by the oil and gas and mining industries, to large populations. Accordingly, insurance market growth in recent years has also been characterised by an increase in the number of direct partnerships between businesses in Africa with others internationally.

South Africa: CoAL to invest $22.1m in Vele Colliery expansion

JSE-listed Coal of Africa (CoAL) said its board has agreed to a R220 million ($22.1m) extension of the Vele Colliery, located in the north of South Africa. The Vele Colliery spreads across ten farms with 8,663ha of land. Owned by Limpopo Coal Company, CoAL Africa has an 80 percent shareholding in Limpopo Coal’s shares. Eyesizwe Coal holds the outstanding 20 percent. The development aligns with the firm’s plan to focus on coking coal properties.

According to the company, the board’s approval came after the assessment and endorsement of Vele coal quality in August this year.

The firm has started raising money and this exercise will be completed by the end of March next year. After this, the firm will increase operations at the colliery in 2015, and the colliery will be in full swing at the close of that year.

South Sudan: Korean millionaires to invest

South Sudan will soon witness a number of investors from Korea coming willingly to invest in diverse natural resources in the country. The government through the Ministry of Foreign Affairs and International Cooperation has already embarked on serious discussions on how these millionaires will be handled when they arrive in the country.

The head of Korean mission in Uganda, Park Jong Dae confirmed that the millionaires will arrive as soon as the necessary arrangements are completed. He said South Sudan has a promising investment potential and the Korean millionaires are interested to invest there.

He also said he will be leaving shortly for Juba to see how the Korean peace keepers can introduce new programs to improve its developmental service to South Sudan. The envoy disclosed all this after a meeting with the minister for Foreign Affairs and International Relations, Dr. Barnaba Marial Benjamin, while in Kampala.

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SMEs AS AN ENGINE OF SOCIAL AND ECONOMIC DEVELOPMENT IN AFRICA

Reflex Eco Group – Africa news

by Charles Yeboah Frimpong (Ghanaian Financial Analyst)

This Blog is sponsored by http://www.reflexecogroup.com

SMEs (Small and Medium-sized Enterprises) are very important to the growth of any nation. It is no surprise that developed countries enjoying a growing and booming economy attribute most of their achievements to a flourishing SMEs sector.
Empirical studies have shown that SMEs contribute over 55 percent of gross domestic product (GDP) and over 65 percent of total employment in high-income countries.
In the developed economies, small businesses are recognized as the main engines for growth and development because of their significant contributions to economic growth and prosperity.
The potential of SMEs to promote domestic-led growth in new and existing industries and to strengthen the resilience of the economy in a competitive and challenging environment is inarguable. According to the Department of statistics of Malaysia, the economic growth in developed countries such as Korea, Japan, Taiwan and many others, was significantly generated by SME activities. The percentage contribution of SMEs to Gross Domestic Product (GDP)/total value added ranges from 60 percent in China, 57 percent in Germany, 55.3 percent in Japan and 50 percent in Korea, compared to 47.3 percent attained by Malaysia. The SME growth is assessed by SME contribution to the three (3) main sectors of the economy; manufacturing, services and agriculture.

This shows that small and medium enterprises (SMEs) have been the backbone of economic growth and driving industrial development. Due to their sheer numbers, size and nature of operations, the role of SMEs in promoting endogenous sources of growth and strengthening the infrastructure for accelerated economic expansion and development has been recognized.

Small and medium-sized enterprises (SMEs) are increasingly being recognized as productive drivers of economic growth and development for African countries. For example, it is estimated that SMEs account for 70 percent of Ghana’s gross domestic product (GDP) and 92 percent of its businesses. They also make up 91 percent of formalized businesses in South Africa and 70 percent of the manufacturing sector in Nigeria. SMEs not only contribute significantly to the economy but can also serve as an impetus for economic diversification through their development of new and unsaturated sectors of the economy. In addition, innovative and technology-based SMEs can provide an interesting platform for expanding outside of domestic borders, and entering intra-regional and international markets.

In many African countries SMEs account for about 50% of job creation. In Tanzania for example, it is estimated that more than a third of the GDP originates from the SME sector. In South Africa on the other hand, it is estimated that 91 percent of the formal business entitles are MSMEs, contributing between 52 and 57 percent to GDP and providing about 61 percent to employment.

A study conducted by the University of Ghana in the past estimates that small enterprises in Ghana provide about 85 percent of manufacturing employment and also further states that SMEs are believed to contribute about 70 percent to Ghana’s GDP and account for about 92 percent of businesses in Ghana.

Small businesses contribute to local economies by bringing growth and innovation to the community in which the businesses are established. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations. Small businesses also tend to attract talents who invent new products or implement new solutions for existing ideas.
Larger businesses also often benefit from small businesses within the same local community, as many large corporations depend on small businesses for the completion of various business functions through outsourcing.

Irrespective of the awareness of the remarkable contribution of SMEs to the development of African economies, it has to be admitted that the growth of SMEs in Africa faces a number of generic challenges. The first and common challenge is the lack of access to appropriate capital from both the banking sector and the capital markets. There is a general perception in the financial sector that lending or provision of capital to SMEs is risky business due to a number of reasons: high mortality rates of SME businesses, suspect management capabilities and skills, poorly prepared business proposals, obscure historical records of the operations of the SMEs and the lack of reliable collateral or collateral mismatch between type of assets held by SMEs and type of assets required by banks for collateral.
Contrary to the developed world where SMEs enjoy a great deal of protection and pampering, Africa’s SMEs are said to be living on the edge as borrowing institutions dedicate much of their loan portfolios to big business. Besides, SMEs in African countries lack the needed infrastructure and strong government policies to protect and support them put up their best to contribute to economic development.
It is said that the contribution of SMEs to the national GDP of Nigeria is poor for myriad reasons, including inadequate infrastructural/financial support to businesses operating within the various sectors, limited application of innovation to operations within the segment, unfavourable competition with foreign goods and services among others.

Lack of credit access indeed places a heavy burden on entrepreneurs to raise large amounts of capital for business development themselves and makes it hard for ideas to grow into enterprises. Improving access to credit is thus crucial if SMEs are to reach their potential and allow businesses to move from start-ups to established businesses with growth potential. Credit is also essential for creating an entrepreneurship spirit as it allows businesses to fail and rebound rather than just fail. Indeed, it is common for a number of start-ups and small businesses to fail, and a climate that allows failure allows an entrepreneur to learn from that failure and start afresh. It is in such an environment that innovation and success can most thrive.
Although small businesses may not generate as much income as large corporations do, they are a critical component of and major contributor to the strength and growth of local economies. Small businesses present new employment opportunities and serve as the building blocks of the largest corporations in developed countries.
Economies that have had the SME sector make better contribution to GDP have shown consistent commitment to the development of the sector by implementing access to finance and financial incentives, basic and technological infrastructure, adequate legal and regulatory framework, and a commitment to building domestic expertise and knowledge.
In this context, a policy thrust to grow successful SMEs must take pre-eminence if long term sustainable economic development and transformation of Africa is to be realized.

Charles Yeboah Frimpong

University of Ghana

Member, The Institute of Chartered Accountants (Ghana)

Tel: +233-246-542-642

Email: fycharles.7@gmail.com

 

 

 

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GHANA: MINERALS DEVELOPMENT FUND UNDERWAY

Reflex Eco Group – Ghana News

Antony Sedzro (Local journalist)

sedtony@yahoo.com

This Blog is sponsored by http://www.reflexecogroup.com

Ghana’s Lands and Natural Resources Minister, Inusah Fuseini, has announced that government is developing a bill to spell out the disbursement of revenues from the mining sector.

The bill will be similar to the existing Revenue Management Law which guides the usage of revenues from the country’s oil and gas sector.

Players in the mining sector have been calling for a fund which would help track revenues from the sector and enable Ghanaians appreciate its contribution to the economy.

Mr Fuseini announced this at the opening of the 6th Revenue Watch/GIZ Summer School for participants from 12 countries, in Accra.

He said “Ghana has also decided to put in place a Mineral Development Fund Bill which is going to be laid before Cabinet, to provide transparency in the management of ceded royalties to mining communities.”

When passed into law, the Fund is expected to track mining revenues and their disbursements. Currently, most mining royalties go to local assemblies and Chieftaincy stools and there are no clearly spelt out means of tracking the disbursements, especially by the local Assemblies.

Local mining communities will now identify projects for which the fund would be channeled into, the minister revealed. This, he believes, will bring transparency and accountability in the disbursement of mining inflows. He said this will also clear the perception that mining has contributed little to the development of the nation.

Speaking at the same event, the former CEO of the Ghana Chamber of Mines, Dr. Joyce Aryee challenged African leaders to stop failing their people in the midst of abundant natural resources.

Citing countries like China, Korea, and Singapore, Dr. Aryee said if these countries have become economically prosperous despite the global economic challenges, then Africans have no excuse to fail.

Ghana is a member of the Extractive Industries Transparency Initiative (EITI), an international body that sets a global standard for transparency in oil, gas and mining sectors. The EITI has 39 countries as members, and 23 have achieved “EITI compliant” status including Ghana.

In May this year, the EITI approved a revised standard of performance requiring its 39 implementing countries to release wide-ranging new information about their oil, gas and mining industries.

This move by Ghana to establish a Mineral’s Development Fund is therefore seen as part of the measures to comply with the EITI’s standards.

According to the Ghana’s EITI publication of February this year, the mining sector recorded $942,698 million and $897,710 million as government revenue and company payments respectively, with the oil and gas sectors pooling in $792 million and $652 million as government revenue and company payments for 2011, information from the Ghana News Agency revealed.

The EITI gave impetus to related laws including the Minerals and Mining Law, ACT 703 of 2006 and the Petroleum Revenue Management ACT, ACT 815 of 2011.

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