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Archive for the ‘trends’ Category

M-Pesa lands in South Africa

03 Sep

South Africa’s largest mobile phone operator Vodacom has teamed up with Nedbank to unveil an M-Pesa mobile-based cash transfer service, similar to the successful on operating in Kenya.

The service was developed by Britain’s Vodafone, the majority shareholder in Vodacom, and part owner of Kenya’s Safaricom.

The product – available in Tanzania and Afghanistan – allows users to transfer money from person to person using a mobile phone.

It will initially allow users without access to bank accounts to transfer money using handsets and eventually pay bills and buy goods.

Vodacom plans to replicate M-Pesa’s success in Kenya to the continent’s richest country in a move targeting about 13 million unbanked South Africans.

In Kenya, M-Pesa as a value added service has helped Safaricom to increase its market share from about 60 per cent three years ago to over 80 per cent.

Mr Mark Taylor, the newly appointed MD of Vodacom Payment Services, the company that houses M-Pesa offering hopes to emulate those market share gains in SA.

“There are other cellphone banking products and money transfer services out there, but there quite simply is nothing like M-PESA.

‘‘The beauty of this service is the ease and speed with which people can send money to each other anywhere in the country,” said Mr Pieter Uys, Vodacom Group CEO in a statement.

Vodacom’s commercial director Romeo Kumalo says the telecom’s target is to sign up 10 million customers within three years.

“If we get to 10 million users, that gives us more than 50 per cent of our subscriber base,” says Mr Taylor. “Then we will start to build enough traction that people will churn to us.”

In Kenya and Tanzania M-Pesa has been extended to allow customers to pay for school fees, insurance premiums and to put money into savings accounts.

“In South Africa, cell phone penetration is extremely high, and yet it is estimated that more than 13 million economically active South Africans do not have a bank account,” said Mr Mike Brown, Nedbanks’ chief executive.

Customers there can also receive payments such as salaries and dividends.

In July alone, about 1.7 million new M-Pesa subscriptions in Kenya were recorded.

According to the latest figures from Safaricom, the number of clients on M-Pesa has grown by 61 per cent from 7.38 million as of July 2010 to 11.89 million the same period last year.

Up to the end of last month, the service had transferred Sh525.84 billion since its inception in 2007 and the monthly average of money moved through the system has increased by 30 per cent.

Importing innovations

The service facilitated the transfer of Sh33 billion last month, compared to Sh20 billion in July last year. There were 19,500 agents as at the month of July.

While in the country recently, the US Under Secretary of State for Public Diplomacy and Public Affairs Judith McHale said that her country will leverage its technology by importing innovations from Africa as part of the Obama Administration’s bid to strengthen relations with the continent.

Citing the M-Pesa evolution, Ms McHale said her country’s economy could benefit by importing the revolutionary mobile money transfer system from Kenya.

Source:
Daily Nation

 
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Posted in innovation, technology, trends

 

Nigeria embarks on vast free trade zone with China

03 Sep

Nigeria is building a multi-billion dollar free trade zone with Chinese investors on the edge of its commercial capital Lagos to try to develop a local manufacturing base and help reduce its import dependence.

People stand outside the administrative building after a commissioning ceremony of the Lekki free trade zone in Nigeria's commercial capital Lagos August 19, 2010.REUTERS/Akintunde Akinleye (NIGERIA - Tags: BUSINESS)

The newly commissioned Lekki free trade zone in Nigeria’s commercial capital Lagos

The $5 billion first phase of the Lekki Free Zone, a 3,000 hectare site on the eastern fringe of the city, is 60 percent held by Chinese investors and 40 percent by the Lagos state government, the deputy head of the project told Reuters.

The consortium will provide basic infrastructure including roads, power plants and water plants before manufacturing firms are invited to set up business, Lekki Free Zone Development Co (LFZDC) deputy managing director Adeyemo Thompson said.

“We have a number of Chinese companies which are coming in the manufacturing area,” Thompson said in an interview.

“They are coming to produce furniture, electronics, pharmaceuticals and heavy machinery. We are having a fair in November, that is when we kick off operations.”

The Chinese shareholders in the project include China Railway Construction Corp., the China-Africa Development Fund Ltd and the China Civil Engineering Construction Corporation Ltd.

A total of 16,500 hectares of land bordered by the Atlantic Ocean and the Lagos and Lekki lagoons has been earmarked for the whole free zone, which will include a deepwater sea port and a new international airport in close proximity.

The aim of the free zone is to make it easier for foreign investors, particularly manufacturers, to build a foothold in sub-Saharan Africa’s most populous nation and second-biggest economy while still owning 100 percent of their firms.

It is modelled on free zones around China which have helped the Asian giant to develop its manufacturing base and economy over the past three decades.

“We have a one-stop shop … No investor has to deal with any government agency directly. We license the enterprises. You can register your enterprise within a week, get permits and everything you need to run your business,” Thompson said.

“The free zone allows you to attract foreign direct investment into the country and investors are given some incentives … It helps boost production, manufacturing, create employment and is a basis for sustainable infrastructure.”

The manufacturing and agricultural sectors have been neglected since the 1970s oil boom, when Nigeria began making easy money from crude oil sales. Oil accounts for more than 80 percent of revenues and more than 60 percent of exports.

Nigeria imports everything from toothpicks to cement, with a growing proportion of the goods coming from China. The Lekki Free Zone will enable Chinese and other manufacturers to test their products on Africa’s largest potential consumer market.

“There is a huge market in waiting,” Lagos State Governor Babatunde Fashola said at an opening ceremony this month.

“When you look at how much our people spend importing goods from abroad, how much they pay in excess baggage at major airports, bringing this here is like bringing home prosperity.”

The vast majority of Nigeria’s 140 million people live on less than $2 a day but economists say a growing middle class means a consumer market is developing that could help its economy surpass South Africa’s in the coming years.

The West African head of private equity firm Actis estimated earlier this year that some 10 million people had moved from low income towards the middle income bracket in Nigeria in the past five years alone.

Thompson said China was encouraging manufacturers whose Western export markets had suffered in the global downturn to explore frontier destinations such as those in Africa.

The administrative complex housing Thompson’s office, customs and company registration officials, and a few warehouses are so far the only buildings to have been completed.

The architect’s models show glistening glass and steel warehouses around a central lagoon, and the ultimate aim is to build a mini-city which will house more than 180,000 people.

Sceptics point to the lacklustre interest in some other free zones around Nigeria, particularly the $300 million Tinapa resort in the southeastern state of Cross Rivers, envisaged as a tourist resort and duty-free shopping paradise.

Its launch two years ago was marred by armed customs officers trying to impound products bought by its customers.

But Lekki’s investors say the two are incomparable.

The new zone is adjacent to Nigeria’s most populous city, Chinese investors own a majority stake, no commercial loans are involved, and manufacturing – not tourism – is at its heart.

“The choice of China as partner is because in recent times they have had experience of transforming an unrated nation into a world class nation,” Thompson said.

Reuters

 
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Don’t shoot that foreign correspondent, he’s dying

30 Aug

If there is one group of people quite a few Kenyans would like to shoot right now if they could, it is foreign journalists.

It all has to do with their coverage of the August 4 constitution referendum vote.

It was an African referendum, and in Kenya where, after the December 2007 election dispute, the country plunged into murderous violence.

The charge is that the foreign press waited for the machetes to come out, and when they didn’t, they didn’t treat the “historic” vote with the respect it deserved.

It is true that the majority of international observers and foreign journalists who were in Kenya congregated in the Rift Valley, where some could have expected, as one European newspaper put it in 2008, “Kalenjin natives of the area [to] murder the local Kikuyu tribesmen.”

In the event, the real story was happening in Nairobi at the tallying centre of the Interim Independent Electoral Commission.

Kenya’s IIEC easily pulled off one of the most efficient voting operations in the world.

Thanks to smart deployment of new technologies, the first result, according to a good source, was received in Nairobi exactly minutes after polling closed at 5pm.

By 8pm, exactly three hours after polls closed, the IIEC had received a record 87 per cent of the results.

Then it faced a pleasantly strange problem; it had been too efficient, and now it had more data than it could process!

We stayed up through to 7am, and I had dozens of “international” news sites open on my computer. It was amazing.

Even a British outlet with a strong African presence went nearly 10 hours after the polls closed before it did an update — it was waiting for the bloodletting that never came.

I am a big fan of the foreign press. In the bad days, they were the only source of information on the nasty things happening in Africa.

They reported the carnage of wars, ravages of famines, and the brutalities of military and one-party African regimes when there were hardly any independent newspapers and broadcasters to tell these stories.

However the spread of democracy, free markets, the Internet, mobile phones and other vehicles of globalisation have changed the game.

Those who want “negative” images of Africa – the alleged cannibalism, African porn, witchcraft, corruption, mob lynchings, squalor, and tribal rage gone amok — no longer have to look for it in the Western media.

The African media do it better than anyone else. If you want the good stuff, there’s is no shortage of African sources for that too.

Every nation needs an external eye to draw its attention to flaws that it cannot see.

Africa can collectively use a lot of that right now, because the continent is changing and throwing up a lot of complexities.

This requires financial resources and the type of clever correspondents most struggling Western media can no longer afford.

However, part of it doesn’t require money.

Just a shrewd editor to wake up, smell the coffee, and realise that while most votes in Africa are stolen, occasionally some get away clean.

However, even with more sophisticated coverage, my sense is that traditional-style Western foreign correspondent is mostly irrelevant today, and will soon be dead altogether.

Source:
East African

 
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12 Reasons to Invest in Africa

28 Aug

Over the past decade, South Africa outperformed the MSCI Emerging Markets Index

Forget the BRIC countries of Brazil, Russia, India, and China. Larry Seruma, chief investment officer of Nile Capital Management, says many retail investors are missing a tremendous opportunity for growth in Africa. Seruma manages the Nile Pan Africa fund, the first actively managed, U.S.-based mutual fund to focus exclusively on Africa. He recently released a report, which can be seen here, that explains his investment firm’s reasons for investing in the continent.

Click here to find out more!

Seruma says more investors will begin to look outside of developed markets like the United States for growth, because those markets aren’t expected to grow as fast as they have in the past. “It’s only much more recently you’re beginning to see these huge disparities coalesce,” he says. “The U.S. is going to have very low investment opportunities going forward.”

[See U.S. News's Mutual Fund Score to find the best investments for you.]

Investing in Africa involves plenty of risks. The biggest, Seruma says, is liquidity. “Liquidity is really the ability to trade frequently,” he says. “When you want to get out of a position, it’s not easy to get out of a position.” Executing trades can be difficult because some African stock markets aren’t as transparent and not as much trading takes place compared with, say, the S&P 500. There are other concerns, including the threat of government and corporate corruption. Many African countries have become functioning democracies, however, according to Seruma.

There are a number of other funds that give investors access to Africa and other “frontier” markets, which are also sometimes called pre-emerging markets. Templeton Frontier Markets and iShares MSCI South Africa Index ETF are two examples. Out of the 53 countries in Africa, Seruma’s fund currently invests in 14, which together account for about 90 percent of Africa’s overall market capitalization. Here are Seruma’s reasons for investing in Africa.

‘Ground-floor opportunity.’ Seruma says many investors have already missed what he calls a “ground-floor opportunity” in Africa. For the decade ending Dec. 31, 2009, an African composite index made up of eight countries, including South Africa, Nigeria, and Egypt, returned about 14 percent annualized. South Africa alone returned an average of 13 percent per year over that period. Compare that with the MSCI Emerging Markets Index, which returned about 7 percent annualized, or the S&P 500, which lost about 3 percent over the same time period. He compares the risk versus return ratio in Africa today with emerging markets like China, India, and Brazil in the late 1900s—meaning that investors who enter a new high-growth market first reap the highest returns over time because they’re willing to take on more risk.

[See The Opportunity in Africa.]

Low correlation. Correlation is a measure of how investments perform in relation to each other. A low correlation, for example, means that two securities will frequently move in opposite directions. According to Seruma’s research, from January 2002 through June 2009, an African composite index of eight countries had a correlation of 0.59 with the S&P 500, 0.66 with the MSCI EAFE Index (which measures developed markets outside of North America), and 0.60 with the MSCI Emerging Markets Index. That means that 59 percent of the time, the returns of the African index differed from those of the S&P 500. Investors can use correlation statistics to find out how to better diversify their portfolios. “The African markets have a very low correlation with domestic or other emerging markets, so [you have a] good opportunity to actually reduce risk in the overall portfolio,” he says. Diversifying your portfolio among uncorrelated assets can help offset big losses.

[See Why Emerging Markets Belong in Your Portfolio.]

Strong growth expected. According to projections from the World Bank, nine of the 15 countries in the world with the highest rate of five-year economic growth are in Africa. Seruma estimates that Africa is likely to grow by 4.7 percent over the next five years. Economists expect much slower growth in places like the United States and U.K. over the next few years. “It’s a pretty huge growth differential,” he says.

Profitable companies. There are a number of well-known companies that are based in Africa, including South African Breweries (a subsidiary of SABMiller) and telecom company MTN. Africa’s total stock market capitalization now exceeds $1 trillion. A recent study by two economists, Paul Collier and Jean-Louis Warnholz, found that from 2002 to 2007, the average annual return on capital of African companies was 65 percent to 70 percent higher than that of comparable companies in China, India, Indonesia, and Vietnam. That means the African companies were more profitable.

[See 7 Great Dividend Funds.]

Demand for commodities. “It’s mainly driven by [the] BRICs,” Seruma says. “As they industrialize, they’re going to be demanding more and more of these commodities.” For instance, 10 percent of the world’s oil reserves and 40 percent of the world’s proven gold reserves are found in Africa, according to Seruma.

Increasingly less violent. According to Freedom House, 63 percent of Africa’s population now lives in countries designated “free or partially free.” Compare that with Asia, which has a score of 66 percent. Seruma says most African countries now have functioning democracies. “It’s a very different picture from what it was 20 years ago, and that has increased investment,” he says.

China’s involvement in the region. Seruma singles out China because many Chinese companies—some of which are backed by the government—have made significant investments in Africa. “They are really taking a long-term view about investing in Africa,” he says. The governments of countries like China have realized that they’re going to need resources from the African continent to fund their growth and consumption in the future, Seruma says.

[See 3 Ways to Invest in China's Powerhouse Economy.]

Infrastructure spending. Countries are no longer coming to Africa solely to extract resources. They’re beginning to stay and help make important infrastructure improvements in the country, Seruma says. “The old story of investment in Africa was ‘let us get the natural resources out of the ground and immediately ship it out,’” Seruma says. “Now it’s changing. Not only do they go to Africa and make an investment in Africa, but they’re also making the additional development projects.” For instance, diamond giant De Beers recently signed a deal to mine diamonds in Botswana, including a commitment to build a diamond sorting facility.

Low debt. Concerns about sovereign debt—the debt that governments owe—has made headlines in Europe. Countries like Greece, Portugal, and most recently, Ireland have seen their debt downgraded by ratings agencies like Standard & Poor’s. The United States also faces a huge budget deficit. Seruma says he believes that the United States will see five or six more years of low interest rates, which will lead many investors to look to different regions of the world for higher yield. “The capital being pushed out of the developed markets is going to benefit Africa,” he says. “We believe this time around, there is some sustainability in terms of capital flows.” Many African countries don’t have the same worries. Seruma cites Nigeria, which has a debt-to-GDP ratio of only 18 percent, compared with countries like Greece and Japan whose debt-to-GDP ratio is more than 100 percent.

[See 10 Ways the European Debt Crisis Affects Your Investments.]

Growing investment from abroad. Seruma also cites a United Nations Conference on Trade and Development report, which shows that capital flows to Africa are higher than three of the four BRIC countries. Africa is ahead of Brazil, India, and Russia. It’s second only to China.

Attractive valuations. Seruma believes that many African countries are currently trading at attractive valuations. He says the average price-to-earnings ratio for African companies is about 8 to 9 percent compared with the S&P 500, which has an average P/E ratio of about 15 or 16 percent. “There’s a huge valuation differential that is not explained by the risk,” he says.

Young demographics. Compared with other regions of the world, Africa has a much younger median age, which means African governments aren’t as burdened by elderly populations and pension plans. It also means that Africa has a young, vibrant workforce, Seruma says. Africa’s most populous nation is Nigeria, which Seruma accounts for about a quarter of Africa’s total population. Nigeria’s median age is 19 years old. Compare that with 37 in the United States, 40 in the U.K., and 45 in Japan.

Source
US News Money

12 Reasons to Invest in Africa

 
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New port at Uganda expected to ease delays in regional trade

26 Aug

Goods from Mombasa are handled at the an inland container depot in Nakawa, Kampala. A new port is planned for Tororo

The establishment of a dry port at Tororo, Uganda is expected to ease the transportation of goods to the landlocked country and the Great Lakes region.

The inland port is envisaged to ease delays experienced in clearance of cargo at a key port in Kenya for goods bound into the region.

“The Inland Dry Port will significantly improve efficiency in cargo handling from (Kenya’s) Mombasa Port thereby reducing freight costs and demurrage occasioned by long delays at the point of entry,” said Mr Mohamed Jaffer chairman of the Great Lakes Ports firm.

With increased economic activity in the region, Mombasa is creaking under the weight of handling imports and exports.

The dry port to be established by Great Lakes Ports Tororo will be located at the Tororo-Malaba border point. The company is a subsidiary of Great Lakes Port Kenya.

The inland port whose construction will start towards the end of the year will cost $120 million and take two years to be completed.

For along time importers from Uganda and the Great Lake Region have complained of the long delays in clearance of goods. In a recent economic update report on Kenya, World Bank notes that the inefficiencies at the Mombasa Port remains the biggest obstacle to enhancing regional trade.

Need for investment

“There is a need to undertake a range of investments and policy initiatives to improve efficiency and expand the capacity of the Mombasa Port the gateway for Kenya’s and the region imports and exports,” says the bank.

For instance, it is estimated that Mombasa Port has high berth occupancy of 87 per cent compared to industry recommendations of 70 per cent. This inordinate delay leads to increase charges by shippers which are then passed on to the final consumers.

According to the World Bank, planned reforms would allow the private sector invest and operate port facilities at a time the volume of trade has increased tremendously both for Kenya and the region.

The institution acknowledges that despite the recent upgrading of the Mombasa Port immense challenges such as vessel clearance delay, port congestion and high cost of charges such as demurrage continues to affect the port

According to data from the Central Bank of Kenya the main destination of Kenya exports in the region is to Uganda which accounts for 11.4 per cent of it’s total trade.

The share of exports to the East African Community (EAC) region is estimated at 22.7 per cent, while those to Common Market for Eastern and Southern Africa (Comesa) region is 29.2 per cent.

Source:
Africa Review

 
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Africa prospects lure investors, but is it ready?

26 Aug

Africa offers among the world’s best investment prospects as emerging markets grow ever more important, although its economies risk being destabilized by the slew of capital they stand to attract in coming years.

Energy-producing continental giant Nigeria was identified as a top pick by some of the most influential figures in emerging markets finance who spoke to the Reuters Emerging Markets Summit in Sao Paulo last week.

Africa withstood the financial crisis better than many predicted, and the region’s economic growth is forecast at 4.75 percent in 2010. Next year, half of the world’s 10 fastest growing economies are expected to be in Africa, and it is now attracting more than just the most intrepid investors.

“The latent interest in Africa is enormous,” said Stephen Jennings, chief executive of Russian investment bank Renaissance Capital, speaking to the Reuters meeting by video link from Moscow.

“Before the crisis there were probably 40 people or groups establishing Africa funds. In 3-4 years you’ll have 100 Africa funds and the biggest one won’t be $2 billion, it’ll be $20 billion.”

Fund tracker EPFR reports 43 consecutive weeks of net inflows to Africa equities funds, reaching $484 million in the first half of 2010 — nearly double those to India over the same period.

Africa’s advocates say the inflows stand to accelerate rapidly as a dearth of attractive returns in the developed world pulls investors in while a more stable political and economic environment indicates diminishing risks.

MSCI’s index of Africa countries outside South Africa .dMI8600000P, though well off its year highs, is still up nearly 8 percent in 2010. The S&P 500 .SPX is more than 8 percent down.

BRIC LINKS

A shift of global economic power to emerging giants such as Brazil, Russia, India and China — known collectively as the BRICs — benefits Africa as surging economies seek its resources and push up commodity prices and investment.

Brazil, Russia and India still trail China, which last year became Africa’s biggest trade partner, but they have been rapidly expanding trade and putting more money into Africa.

“What’s absolutely striking is how much change there’s been between the BRIC countries and Africa,” said Jacko Maree, chief executive of South Africa’s Standard Bank, which is Africa’s biggest. “We like to think that the whole story has only just begun.”

Brazilian firms with a large African presence may soon issue bonds in South African rand to seize on growing interest, said Standard Bank’s chief executive in the Americas, Eduardo Centola.

NIGERIA TOP PICK

Nigeria’s market of about 140 million people — nearly three times bigger than South Africa’s — as well as its energy resources and bigger, more liquid markets, makes it the top choice for many eyeing Africa.

On the Goldman Sachs’ growth-environment index, which measures a mixture of economic and social development indicators, Nigeria’s score has nearly doubled over the past decade.

“If it were to show the same increase in its growth-environment score over the next decade, many investors will look back and say why the hell didn’t I invest in Nigeria,” said Goldman Sachs’ global head of economic research Jim O’Neill, who coined the term BRICs.

Ethiopia and Rwanda are among the smaller African economies seen as promising. They show how previously ignored countries scarred by war are emerging as possible investment magnets alongside those such as Ghana, a relatively stable democracy which is soon to become an oil producer.

There are risks, though, with concerns over political stability even in bigger economies such as Nigeria and Kenya.

Africa experts underline the fact that new mineral riches have rarely been shared widely, and suggest reliance on such income for national coffers could discourage establishing tax bases that would put states on a sounder footing.

“Where I think the real caution has to come in is the quality of the growth,” said Patrick Smith of the Africa Confidential newsletter. “It would be pretty silly to say success is certain.”

A big influx of investment funds could in itself pose a problem for African countries less prepared to cope than those in other rapidly growing regions that have felt the pain of such flows in the past.

“Africa has no experience of huge capital inflows,” said Renaissance’s Jennings. “Under the scenario I’m painting, the capital inflows will be way above and beyond the ability of those countries to absorb them.”

Most African countries have small, illiquid markets and little financial infrastructure, raising the chances of economic distortions and asset bubbles that could lead to currency crises and long-term damage.

“People look at how certain African economies have been getting their act together and there is a risk you will get significant capital inflows,” said Mohamed El-Erian, chief executive of PIMCO, the world’s largest bond investor.

“That will provide quite a challenge to policy makers.”

Source:
Reuters

 
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Kigali transits from sleepy town to Africa’s Singapore

25 Aug
Kigali is trying to develop on the high-tech front. Photo/MORGAN MBABAZI

Kigali is trying to develop on the high-tech front.

Rwanda’s capital is changing from a sleepy backwater where most things closed at 9pm to a future Singapore with gleaming office blocks and all-night shopping.

Ten years ago, ordering a coffee got you an imported tin of the worst kind of Nescafe accompanied by a pot of powdered milk.

Now you can choose from expresso, macchiato or mocha from home-grown beans and the milk comes frothing out of a steamer.

Rwanda’s ambitious “Vision 2020” plan seeks to transform the central African state into a middle-income country and acknowledges: “this will not be achieved unless we transform from a subsistence agriculture economy to a knowledge-based society”.

The country has already successfully promoted top-end eco-tourism around the endangered mountain gorillas that live on the mist-clad slopes of the Virunga volcanoes.

It has also positioned its coffee output at the speciality end of the market.

“Kigali is one of the fastest-growing cities in Africa and we are committed to ensuring future growth is based on very good planning,” city Mayor Aisa Kirabo Kacyira told AFP.

The Colorado-based OZ Architecture firm has developed a 50-year master plan for Kigali, incorporating a new international airport, and with entire districts of town given over respectively to shopping, offices, technology and medical facilities.

“They are trying to make Rwanda the most sustainable, high-tech, wired country in Africa, a little bit like what Singapore became,” to Southeast Asia, OZ senior architect Carl Worthington told Metropolis magazine. “They are trying to re-invent the whole country.”

“Before 1994 Kigali wasn’t a planned city,” explained Vivian Kayitesi, who manages the division of the Rwanda Development Board (RDB) charged notably with investment promotion.
Kirabo Kacyira wants the future city to be “as beautiful and as sustainable” as the current one, even if its population of one million is poised to double.

Giant yellow cranes are busy on the construction of a convention centre that will include 300 top-end hotel rooms and conference facilities for more than 2,000 delegates, with conference tourism something that the RDB is pushing.

An additional 200 top-end rooms are under construction at a hotel in town, also Chinese-built.

“The target is to go from 700 to 4,800 rooms by the end of 2010,” Kayitesi said, referring to the small highland country as a whole.

To reduce sprawl, the authorities are encouraging investors to go in for 10-plus storey buildings.

Patrick Sebatigita, the managing director of Ujenge, an engineering company, started up two years ago in a room in his house “with a PC and a pickup” and has expanded quickly.

A lot of progress

“We’ve made a lot of progress,” he said, referring to Rwanda’s economy. “If we keep this trend we might not reach Singapore in the next 10 years but in the sub-region definitely we’ll improve,” he told AFP while overseeing work on a residential construction site.

“Rwanda is still at a disadvantage in terms of human capacity and education,” and small companies still find it hard to access credit, he said.

The country has registered 7.1 percent average GDP growth since 2004 and was chosen “fastest global reformer of business regulations” by the World Bank Doing Business Survey.

Administrative changes and four major commercial laws in 2009 have made it easier to start a business, employ workers, register property and access credit, the RDB says.

Modern housing is in short supply, so the time to obtain a construction permit has been sharply reduced.

Skyline aside, Kigali is trying to develop on the high-tech front.

For Leon Orsmond, who runs Osmosis, a viral marketing company with offices in Dubai, Lagos and …Kigali, Rwanda’s recent history, rather than being a handicap, has proved almost a catalyst.

“Because of 1994 they’ve had to play fast catch up. They’ve had to leapfrog. They’ve had to accept that from an agrarian economy they’ve got to move to a knowledge-based one,” he said.

Sixteen years ago Kigali was yet to emerge from the trauma of the genocide of the Tutsi, in which an estimated 800,000 people were killed in three months.

Among the rare physical reminders today are the memorial museum, and the bullet-pocked walls of the parliament building, kept that way on purpose.

Kigali is already famous for having banned plastic bags and the environment remains a major redevelopment consideration.

The current industrial zone, Gikondo, will be returned to wetlands and a new industrial park on the outskirts is scheduled for completion by year end.

Officials say those on modest wages will not be forgotten.

Source:
BD Africa

 
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African Monetary Policies

19 Aug

Until fairly recently, most African monetary policies focused on targeting monetary aggregates along with holding real effective exchange rates reasonably constant. As the shortcomings of the system have become more apparent, many of the more reformist African central banks have started a journey towards formal inflation targeting frameworks following the example of South Africa. we speak to Ridle Markus Africa Strategist from ABSA Capital.

Source:
CNBC Africa

 
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GM’s Plans for East Africa

19 Aug

Source:
CNBC Africa

 
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Chinese economy eclipses Japan’s

16 Aug

The Chinese economy eclipsed the Japanese economy in size in the second quarter after Japan posted poor economic growth figures for the period, increasing the chances that China will officially overtake Japan as the world’s second-largest economy for the year.

The Japanese economy grew at an annualised, seasonally-adjusted pace of 0.4 per cent in the three months ended June. That was much lower than the revised 4.4 per cent growth rate recorded for the first quarter, and well below the 2.3 per cent expected by economists.

“The symbolism of this moment is far greater than its actual significance,” according to Eswar Prasad, a professor at Cornell University and former head of the IMF’s China division. “In terms of both influence and dynamism, China outstripped Japan a long time ago.”

The nominal size of the Japanese economy in the second quarter was $1,288bn, compared with $1,337bn for China, according to a Japanese government official. But the official cautioned that the comparison was inappropriate because China, unlike Japan, does not produce seasonally adjusted data.

China’s quarterly output actually overtook Japan’s in nominal terms in the fourth quarter of last year and since then China has continued to grow rapidly while Japan’s recovery has stalled. Over the first half of 2010, however, Japan maintained its position as the world’s number two economy.

The head of China’s foreign exchange reserve administration last month said China had already overtaken Japan as the world’s second-largest economy. Economists in China point out that while Japan reports detailed and generally accurate economic data, China potentially under-reports its economy by as much as a fifth.

In terms of purchasing power, a more meaningful measure of economic strength, China overtook Japan as the world’s second-largest economy nearly a decade ago. If the European Union is counted as a single economy, then China remains at number three and will stay at that position for some time.

“Using measures such as PPP [purchasing power parity], Japan’s economy is already smaller than China’s,” said Chiwoong Lee, an economist at Goldman Sachs. “Given its potential growth rate going forward it would be just a matter of time before it overtakes Japan anyway.”

While China has made great strides towards replacing Japan as the second biggest economy, on a per capita basis it lags far behind other large economies because of its huge population and is still regarded as a relatively poor country. Japan’s per capita gross domestic product is still more than ten times larger than China’s $3,600.

Meagre Japanese growth in the second quarter also raises questions about the strength of its economic recovery. By comparison, the US economy expanded at an annualised rate of 2.4 per cent in the second quarter, while Germany grew at 9.1 per cent, its fastest pace since reunification.

The Japanese economy grew more slowly in the second quarter on the back of stalling consumer spending, falling public investment and slower exports. Net export growth slowed but remained solid and was the main contributor to growth for the period.

“Japan is an export driven country and [these figures show that] without fiscal stimulus, there’s no real domestic demand,” said Goldman Sach’s Mr Lee. “Strong exports for Germany is not helpful for Japan, as it suggests that global demand is OK.”

Slower export growth is a challenge for Japanese companies at a time when the yen is trading close to a 15-year high against the dollar as risk averse investors pile into the currency. Although authorities have stepped up verbal intervention, analysts are sceptical that direct intervention from the finance ministry is likely.

Monday’s economic growth figures could add to pressure on policymakers to find other ways to deal with slowing growth and the impact of the stronger yen on the recovery. Last week, the central bank kept its economic assessment unchanged and did not announce any further easing measures.

Investors were spooked by the GDP numbers and the Nikkei index fell 0.6 per cent to 9,197, closing in on the psychologically important 9,000 level.

Source:
FT

 
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