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Displaying items by tag: Other

May 21, 2013

Nigerian state visit a chance to tackle problems with SA

THE arrival of Nigeria’s president in South Africa on Monday for the first Nigerian state visit since 2009 is an important symbolic development in the relationship between two of Africa’s most important countries. The intention behind this visit, and that of our president to Abuja recently, is clear. The states need to leverage their collective strength for the good of the continent and themselves, and tackle the issues that divide them. The relationship is complicated.

It is often described as being simultaneously co-operative and competitive. Unspoken rivalry about continental leadership bedevils relations. South Africa’s role of being Africa’s voice in international blocs has served only to rile Nigeria and South Africa’s attempt to leverage its Brics (Brazil, Russia, India, China, and South Africa) membership to gain favour in Africa has not impressed the Nigerians.

Commentators are quick to seize on issues that raise areas of competitiveness. One relates to the size of the economies. The rebasing of Nigeria’s gross domestic product (GDP) from 1990 to 2008 brings it much closer to South Africa’s GDP. At growth rates of about 7% a year, analysts predict Nigeria will soon overtake South Africa. The prospect of being a bigger economy than South Africa is a source of great delight to Nigeria, going by commentary on the issue.

Ironically, high levels of diversified South African investment into and trade with Nigeria have contributed to its higher GDP. South Africa’s trade with Nigeria has risen from R709m in 2000 to R6.1bn last year and there have been some sizeable investments by companies such as Tiger Brands and SABMiller, as well as reinvestment into existing operations by MTN and others. The commercial interest in Nigeria by South Africa’s companies has grown over the past few years as wary executives have accepted that no African strategy is complete if it excludes Africa’s biggest market.

Strong political ties are important for the success of South Africa’s business in Nigeria. Most companies do not rely on the government to expand their business interests into other countries, but issues at an official level can affect the kind of welcome they can expect. So it is good for business that the leaders of the two countries are increasing official contact. It is also important that state-run processes such as the South Africa-Nigeria Binational Commission have become re-energised since last year’s spat over alleged yellow fever certificate infractions by Nigerians that led to deportations.

But problems remain at lower levels of interaction. Negative views about each others’ countrymen at a bureaucratic level and among ordinary citizens present a problem for companies, as they are the main nonpolitical interface with Nigeria.

The difficulty Nigerians have in getting visas to visit South Africa has been a key source of tension. The media, too, have played a negative role by perpetuating negative stereotypes. South Africa’s media have tended to focus on drug dealers and frauds, while Nigerian newspapers often characterise South Africans as arrogant and exploitative. Newspapers carry damning reports about visa problems and the treatment of some of their nationals in South Africa.

Nigerians report that they continue to be unduly harassed by our airport officials and our police. The perception that South Africa does not allow Nigerian businesses to invest here is incorrect but it persists, fuelled by uninformed debate.

This week’s state visit is, symbolically, an important event that is setting the tone for a new era in South Africa-Nigeria relations. It is important that our leaders are talking and that they are seen to be doing so. But we can only hope they will not be sidetracked by talks about grand plans for Africa.

The real problems dogging the bilateral relationship are at a micro level, and if they are not tackled, strategic co-operation at the macro level could be compromised.

• Games is CE of Africa @ Work and honorary CEO of the South Africa-Nigeria Chamber of Commerce.

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January 28, 2013

Volcano looms large over political intrigue and hardship in Goma

THE thing that struck me on my first visit to Goma, in eastern Democratic Republic of Congo, a few years ago was its beautiful location on the edge of Lake Kivu. Opulent resorts, restaurants and homes with verdant green lawns and banks of tropical plants line the lakeshore. But just a few streets inland, the sprawling town bears the scars of a turbulent past characterised by conflict and poverty.

The presence of United Nations (UN) peacekeepers are a stark reminder of the insecurity of life there.

Even nature has not been kind to Goma, the main city in eastern Congo. Its citizens live in the shadow of the Nyiragongo volcano, which in 2002 poured molten lava into the town, killing 150 people, destroying 14,000 homes, burying buildings and forcing 300,000 people to run for their lives.

The rutted lava roads are reminders of this event. The experts believe this was just a taste of what the volcano is capable of and warn that Goma is one of the most dangerous places in the world.

Lake Kivu’s beauty masks the potential danger that lurks in its waters. The deep reaches of the lake have high levels of carbon dioxide and methane gas that occur as a result of unusual geological and biological processes.

Scientists say that when the build-up reaches a critical mass, the lake could explode or produce a toxic gas cloud above the water, affecting the health of everyone around it.

Rwanda, which shares the lake, is extracting the methane for energy. That also presents risks — changes in the water’s chemical composition could affect fish stocks that people rely on for food.

The beautiful mountains and jungles that form the backdrop to Goma not only contain vast mineral wealth but are also breeding grounds for rebel insurgency groups, illegal miners and petty warlords.

Eastern Congo has been relatively peaceful since Rwanda captured rebel leader Laurent Nkunda in 2009 as part of a ceasefire agreement between the Congo and Rwanda.

The Tutsi fighter led a five-year rebellion in the area, ostensibly to counter the persecution of ethnic Rwandan Tutsis in the region by Hutus working with the Congolese army.

The Tutsi-dominated M23, which recently took over Goma after chasing out the army, was formed earlier this year by breakaway soldiers. It is named after the March 23 2009 ceasefire agreement between Nkunda’s forces and the government, which the M23 says has not been honoured. Ethnic tension spilling over from Rwanda is at the heart of recent conflict in the region. Persistent reports that the Tutsi-led government in Kigali was backing first Nkunda and now the M23 have been strenuously denied by Rwanda.

The politics of the region are highly complex and the geographical and political isolation of a huge swathe of the Congo has allowed regional actors into the vacuum. The high-stakes resources game in this part of the world means there is no shortage of groups willing to fight for economic and political control of the frontier region.

President Joseph Kabila seldom visits people in the eastern Congo and only to inspect troops or campaign for votes.

In 2006, he won 96% of the vote in Goma. Last year, the voter response was less enthusiastic. Locals have become used to a life dominated by rebel militias and local warlords who terrorise the population and extort commissions from people carrying anything from illegally mined coltan to tin. The $1.5bn annual budget for the large UN peacekeeping force could have been better spent on building infrastructure and opening up the area, something Kabila has promised, but failed, to do. As a Congolese academic in Goma told me: “The president hardly visits us and most people here have never been to Kinshasa. We are so isolated that we have had to invent the state here.”

The combination of intricate regional politics, poor leadership and entrenched dysfunction suggest that an ever-changing array of rebel groups will continue to harass the people of Goma for years to come.

• Games is CE of Africa At Work, an African business consultancy.

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November 4, 2012

Business in Africa: Corporate Insights – Extract

Nigeria, Zambia, Ghana, Ethiopia, Tanzania, Uganda and Mozambique, once among Africa’s poorest and most politically challenged states, are now among the best performers on the continent, with some of the highest growth rates and measures of gross domestic product (GDP) in the world.

This sea change in Africa’s fortunes has seen growing interest in the continent’s bounty from resource-hungry emerging markets – China and India key among them – for more than a decade. Standard Bank predicts that China’s investment could rise by 70 per cent from its 2009 figure to $50  billion by 2015 and that the volume of bilateral trade between China and Africa might rise to $300 billion by 2015.

China has been a key driver of the global commodities ‘super cycle’ that has been turning since the dawn of the new century. The heightened demand for Africa’s oil and minerals, due in part to China’s resource-intensive growth over the past decade, has been a trigger not just for growth, but for large investments in infrastructure as part of offset agreements for acquisition of those resources. New emerging market interest in Africa has also provided a catalyst for global investors to pay attention to what Africa has to offer. Executives who have been sitting on the fence are taking a closer look at the investment opportunities.

Since 2008, emerging market performance has stood in sharp relief to the relative decline of developed world economies following the global financial crisis that pushed investors to look for frontier markets with better potential. Africa, which has experienced average growth of more than four per cent for a decade, seems to fit the bill.

One clear signal of the way the world has changed is reflected in the appeal in 2011 by a former colonial master, Portugal, to its former colony, Angola, for investment to boost the eurozone country’s ailing economy. Angola has been one of the fastest growing economies in the world, with double-digit growth between 2004 and 2008, touching nearly 20 per cent in 2005. Angolan companies have already made significant investments into Portugal in the banking sector, telecommunications and energy and this appears set to rise as Portugal faces further GDP contraction.

Africa’s high population growth, of major concern to development experts a decade ago, is now regarded by some as a key driver of growth and new investment. It is seen as a ‘demographic dividend’ on the back of sustained economic growth across the continent – rather than as a crisis waiting to happen. The African Development Bank in 2011 stated that the size of Africa’s middle class, which it measures as being people of higher than the average income among Africans, but with a lower average than elsewhere, has tripled over the last 30 years to 313 million people, or about 30 per cent of the continent’s population.

Standard Bank of South Africa estimates that more than half of Africa’s population will be living in urban areas by 2030 and 60 per cent by 2050 when the population is expected to be two billion. This trend will have particular significance in already heavily populated countries such as Nigeria, where the cities are likely to have 140 million more people living in them by 2050, and South Africa and Angola, which could see up to 80 per cent of their people living in cities.

Urbanisation, too, was viewed as a major threat to Africa’s progress a decade ago but is now seen as an inevitable part of growth, providing opportunities in a range of sectors because of economies of scale and easy access to infrastructure – which are now considered to be tools in the advancement of socio-economic well-being. Urban poverty rates in Africa are about 35 per cent, compared to 52 per cent for rural areas.

Underpinning this new economic order is greater relative political stability. Peaceful governing transitions through elections have become the norm in many countries. Although Africa experienced two coups d’etat in 2012, in Mali and Guinea Bissau, the continent has generally become more adept at taking action against blatantly undemocratic actions – even though it has failed to act effectively on the subversion of democracy through rigged elections and human rights abuses in countries such as Zimbabwe. Nonetheless, several ‘liberation era’ leaders, many with dubious political records, are moving on and the door is opening to younger leaders more in tune with the growing numbers of young people that make up Africa’s population of one billion.

New technology has played a positive role. The impact of mobile phones has been significant, driving economic growth by enabling business activity at a new level. By 2012 there were more than 700 million mobile phone users in Africa and it is predicted that by 2015 the continent will have the highest mobile subscription rate in the world. This phenomenon has unleashed a range of new opportunities for Africa’s inhabitants in trade, banking, information flows, consumer messaging and other areas. New sea cables connecting Africa to the world have pushed up the availability of bandwidth by more than 60 per cent since 2010, albeit off a low base. The highest increase was in sub-Saharan Africa – 82 per cent to reach 368 Gbps – and in North Africa, which increased by 45 per cent to reach 433 Gbps.

Global brands are jostling for centre stage in an increasingly crowded marketplace as the African consumer becomes a target for international companies, particularly from developed countries, but also from emerging markets and Africa itself. Marketing executives say the message to African consumers needs to expand outwards from traditional media to social networks and mobile phones as people on the continent become increasingly sophisticated.

Multinationals from developed countries are positioning themselves for increased competition from emerging markets. Standard Chartered Bank, brewer Diageo and manufacturers Unilever and Nestlé are among the firms that are ramping up their investments. Nestlé has invested $446 million in Nigeria alone since 2003 and planned another investment of more than $80 million in 2012, with a view to doubling the size of its Nigerian business by 2015. Standard Chartered, which makes ten per cent of its profit from African operations, planned to double its number of branches in Nigeria in 2012 and is looking at expansion elsewhere on the continent, while Diageo has been on the acquisition trail to boost African sales, which already account for 14 per cent of total group sales and have shown annual growth of 15 per cent since 2007.

African companies, too, are growing and expanding. Corporate entities from South Africa, which has been a serious investor on the continent for almost two decades, retain a strong foothold in most sectors and a new wave of top executives from Africa’s biggest economy is rolling across the continent. In other large markets, the number of multinationals is growing as companies in Nigeria, Kenya and other places increasingly take a regional view and are setting up shop, both in their immediate hinterland and further afield.

These companies are mostly in a few sectors – financial services, agriculture and consumer goods. But there is also growth in oil and gas where, out of about 800 companies operating in the sector, more than 100 are African players – in addition to several dozen African state-owned oil companies.

Increasing amounts of private equity are chasing acquisitions and funds are seeing new interest from emerging markets as they exit thriving African companies. The growth of the African private sector has been one of the key changes over the past decade, with West and East African firms in banking, retail and manufacturing increasingly focusing on regional expansion.

Many governments have improved the operating environment for private investors. The World Bank’s Doing Business Index shows that African countries are among the fastest reformers in recent times, with 36 out of 46 countries measured between June 2010 and May 2011 having implemented reforms in at least one of the areas measured by this report. In the six years up to 2011, 43 sub-Saharan countries had made the regulatory environment more business friendly while steps had been taken to harmonise regional business regulation, for example with the 16 Francophone countries that are members of the Organisation for the Harmonisation of Business Law in Africa (OHADA).

African entrepreneurs have a new-found confidence, not least due to the ‘leap frog’ new technologies and media that have given them effective new business tools. Skilled Africans are returning to the continent to take up opportunities with both international and African companies, opportunities that are proliferating in an era of increasing pressure for local hire.

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October 8, 2012

Experts may be selling investors short by talking up Africa

A COLLEAGUE recently attended an international investment conference in Morocco and reported that some of the statistics about Africa were way off the mark. Nigeria, one expert said, had 200-million urbanised people. Actually, the country’s total population is about 160-million, about half of whom are urbanised.

Another expert claimed that intra-African trade had risen from 5% of total African trade in 2000 to 25% this year. This is more than double the generally accepted figure of about 12%. This raises questions about how many incorrect statistics — and opinions — are making their way into companies’ business plans. With Africa increasingly on the global investor map, there are many new “experts” talking up the opportunities. Analysts who, just a few years ago, could not tell you how many Congos or Guineas there were or name one African-owned company outside South Africa, now charge hefty fees to advise clients on their Africa strategies.

There is no doubt that growth trends are positive. For example, a recent World Bank report says 38 sub-Saharan countries could be middle-income states by 2025.

But many of the statistics that excite investors are coming off a low base, with definitions massaged to push the growth story. There are also still many challenges that may yet dent ambitious growth prognoses. Countries such as Nigeria, Mali and Kenya face rising levels of terrorism, while Zimbabwe is struggling to make ends meet after a decade of abuse by its leaders. Although capital is being earmarked for Africa as other opportunities contract, there are not many countries that have the capacity to absorb sizeable inflows, nor to leverage them for broad-based growth.

While urbanisation presents opportunities, the reality is also that many of Africa’s large cities are sprawling entities with large areas of squalor that are barely touched by municipal services.

High growth in consumer-facing industries is being touted as a big drawcard for investment. In Nigeria, the experts predict 1,000% growth in retail sales per person by 2016. But reliable statistical information about incomes, personal expenditure and other related issues are hard to find, raising questions about whether the growth of Nigeria’s middle class is, in fact, overstated.

While risk levels have reduced, new and often more complex and insidious risks have emerged as companies try to keep up with changing government priorities and an increasing array of corporate governance principles.

Some of the high growth rates used to highlight Africa’s performance are in undiversified, resource-rich economies. Despite the opportunity that resources offer for sustainable growth, few African governments have got this right. The World Bank says poverty has increased in countries such as Angola and Gabon.

There is no doubt there are many positive trends in Africa and these should be celebrated. But it’s risky to ignore the realities. On the one hand, investors may find conditions on the ground a far cry from what the business plan crafted in an air-conditioned office in a far-off city offered. The growth statistics hide high poverty levels, poor infrastructure, overzealous bureaucracy, shallow markets and small populations with little spending power, for example.

The blame for failure is usually apportioned to difficult conditions in the host country rather than the investment strategy.

On the other hand, danger lurks in African governments starting to believe the hype. This may have the unintended consequence of diverting policy makers from reforming the dysfunctional operating environments that continue to add to the cost and difficulty of investing in Africa.

• Games is CEO of Africa At Work, an African business consultancy. Her new book, Business in Africa: Corporate Insights, will be launched in South Africa on Tuesday.

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October 1, 2012

Battle of the brands about to begin in Africa

Howwemadeitinafrica – excerpt from Business in Africa: Corporate Insights

The battle of the brands is about to begin in Africa, predicts Rick de Kock, Director of Africa Operations for advertising company TBWA\Africa. As the word spreads about the consumer opportunity in a continent of a billion people with rising incomes and high economic growth levels, global brands from all over the world are rushing in.

With 54 diverse countries on the continent, even rigorous business plans can run aground on the unique and complex set of circumstances found in each country. Dianna Games, the CEO of Africa @ Work and a columnist for Business Day, has recently compiled a book, Business in Africa: Corporate Insights, that addresses these issues concerning doing business on the continent. Below is an extract reproduced in online newsletter Howwemadeitinafrica.

  The battle of the brands is about to begin in Africa, predicts Rick de Kock, Director of Africa Operations for advertising company TBWA\Africa. As the word spreads about the consumer opportunity in a continent of a billion people with rising incomes and high economic growth levels, global brands from all over the world are rushing in.

“The competition for consumer spend is keen and growing,” he says. “Some of the world’s fastest-growing economies are here and international brands want a piece of the action.”

The original driver for TBWA’s African expansion was the movement of South African multinationals into the rest of Africa. “But we started to find that more and more of our global clients wanted to go into the continent and wanted us to work for them in African markets.”

Interest in the consumer markets of Africa is coming from all over the world, he says. “We are seeing more brands from India coming down the east coast of Africa and there are a lot of new brands coming from Europe and America such as Walmart and Yum Brands, which is opening KFC outlets across the continent. There are very few coming from China at this stage but that may change in time. And there are also the African brands. Many of the big African brands have traditionally come out of South Africa but that is also changing as African companies spread their wings out of their traditional local markets.”

Talking to customers

“Consumers are starting to understand that everybody wants to talk to them. With the explosion of new technology, African consumers are more connected to the world than ever before so they have more choice and they know what is good and what isn’t. If you try to sell them rubbish, they’ll know.”

This rapid penetration of technology into Africa has implications for the way business operates. The landing of numerous submarine cables on African shores since 2009 has given the continent vastly increased access to international fibre bandwidth and the numbers of internet users is rising as the technology becomes more affordable. The number of internet users rose from 4.5 million in 2000 to nearly 140 million by 2012 – with 45 million in Nigeria alone. But internet penetration still has not reached beyond seven per cent of the population, so the potential for growth is huge.

The GSM Association, a body that represents the interests of mobile operators worldwide, predicted that the number of mobile phone users in Africa would reach 735 million by the end of 2012.

“We are dealing with a mostly young, dynamic target market that is becoming globally connected through the internet and mobile phones and they are understanding brands a lot more,” says De Kock. “The way we communicate with this market will have to change dramatically. Everyone will have to up their game.”

“With the massive competition for audiences and consumer spend, advertising messages are starting to fade into each other; they are becoming wallpaper. So advertising has to move from being literal to more conceptual in order to stand out.”

“Traditional media such as radio, television and billboard are still key delivery platforms in Africa and they will be for a while. But millions of Africans are now getting their messages from a variety of places. We can’t just run a television advert anymore. We have to ask how we can also start tapping into consumers’ social networks. The model being used in Africa is changing rapidly.”

De Kock says the biggest spenders in African advertising are, by far, the mobile companies, followed by financial services providers and the producers of alcohol products and fast-moving consumer goods (FMCG). The fastest growing spend is in the alcohol and FMCG industries.

As more and more multinationals arrive in Africa they will challenge local brands, De Kock predicts. “The challenge for African marketers is to build local brands to the point where they become pan-African and even global brands. There are very few pan-African brands currently that don’t come from South Africa.”

The advertising industry in South Africa is far more advanced than it is elsewhere in Africa. “We have a long tradition of advertising here and this country worked hard to box above its weight in the rest of the world.” He cites the example of Hunt Lascaris, which, from small beginnings, became not only a top agency in South Africa but internationally.

But, he says, the advertising environment in other African countries is changing. “Over the past few years, advertising in Africa has gathered momentum, the messaging is getting sharper and the production quality is getting a whole lot better. I have seen real strides being made in the industry. Some countries are much more sophisticated than others, for example Kenya where there has been a long tradition of advertising; whereas West Africa is now playing catch up. But it can be difficult to draw skilled people into the industry because it is quite intangible. It’s not like becoming a lawyer or a doctor,” notes De Kock.

Thinking locally

“You are not dealing with homogenous societies within regions, or even within countries. Foreigners have tended to regard Africa as one country rather than acknowledging the many differences in nationalities, cultures, religion and languages. The worst thing you can do when you are trying to sell something to people is to offend them by being culturally insensitive.”

The advertising industry reflects, in part, the society in which it operates. “This means you can’t adopt a one-size-fits-all approach,” says De Kock. “If you want to be relevant, you have to spend money making adverts that are particular to a market and that means you cannot re-use material that has been made for other markets. You have to invest in understanding your consumers to know what drives them and what visual language would appeal to them.”

“You need to pay attention to the cultural differences between North, East, West and Southern Africa. There are also local differences that need to be taken into account, even within countries, when developing advertising campaigns. Nigeria, for example, has more than 250 ethnic groups while in East Africa, where Swahili is widely spoken, there are variations of the language between countries such as Kenya and Tanzania.”

“You can speak to people in official languages such as English but if you really want to resonate with markets you should try to build in the local languages and regional peculiarities. Humour is something that needs to be handled carefully – what is funny in one market may not be funny in another.”

“Religious sensitivities also have to be taken into account. In many countries we would think nothing of showing men and women in bathing costumes on a beach together. But this would be a real problem in countries in North Africa for example. And even within countries you need to consider these issues because of religious diversity.”

De Kock says such factors make it crucial that multinationals operating in Africa truly understand the markets they are trying to reach. In the past, market information has been difficult to find. However, recently market research firms have proliferated, servicing companies that are competing for advantage in a crowded marketplace. “But, at the end of the day, it really helps to have a presence on the ground. No one knows a market better than someone who lives in it.”

Although he believes South African companies have a big role to play on the continent, “people from the rest of Africa have a lot to teach us about entrepreneurship. If you drive through African cities late at night, you will see many entrepreneurs hard at work, with their workplaces lit only by candles or torchlight. The sense of energy across the continent is massive, particularly in East and West Africa. Nobody stands still. They are always finding ways to make money.”

“There is no doubt things are moving and, with the developed world in trouble, investors no longer regard Africa as being so risky. There is almost a sense that if you can lose your shirt on Wall Street, Africa seems quite tame. In fact, if you’re not doing business in Africa already, you’ve possibly missed the boat.”

This article is an extract from Dianna Games’s book, Business in Africa: Corporate Insights (published by Penguin Books, September 2012).

 

Available at all leading book stores – R260 (US$31.60).

Dianna Games is the CEO of Africa @ Work, a South African-based company that aims to facilitate and improve business in Africa through the provision of research, information and networking opportunities. She is also a columnist for Business Day.

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August 17, 2012

NIGERIA BREAKFAST – JOHANNESBURG

BREAKFAST INVITATION

NIGERIA’S ECONOMIC PERFORMANCE AND TRENDS

The South Africa-Nigeria Chamber of Commerce and Standard Bank invite you to a breakfast / networking function on 6th September 2012

Nigeria, Africa’s biggest market, is looking at growth rates of 7% in 2012 despite some significant challenges. It is also viewed as one of the most attractive emerging markets globally and is a fast-growing destination for South African goods and services.

Join us to hear about the latest economic developments and trends in this exciting market.

A more detailed programme will be issued in due course

DATE: Thursday 6th September

VENUE: Ballroom, Hyatt Regency Hotel, Oxford Road, Rosebank, Johannesburg

TIME: 7.30am to 9.15am

COST: R200 for Chamber members; R450 for non-members

RSVP: Monde Nyambe at This email address is being protected from spambots. You need JavaScript enabled to view it.; Mobile 079 2489 910

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August 1, 2012

Zimbabwe’s military men will not return to their barracks soon

ZIMBABWEAN Finance Minister Tendai Biti was forced to hold a rally in a clearing in the bush earlier this month after being driven out of the chosen venue, a stadium near President Robert Mugabe’s home area, by busloads of Zanu (PF)-aligned youths and soldiers. About a dozen people from the Movement for Democratic Change (MDC) were beaten as the crowd drove MDC supporters into the bush, setting the grass on fire as they went.

This is just one of a number of attacks on political parties and their supporters by Zanu (PF) in a rising tide of violence in Zimbabwe. Election talk is in the air with the completion of the draft of a new constitution and a directive by the courts for by-elections to be held in 38 vacant parliamentary seats by the end of August — an election that might change the balance of power in the legislature.

Biti, a top MDC-T official, has never been Zanu (PF)’s favourite person. Not only does he control the purse strings in the unity government, but he has also been making a lot of noise about the diamond-mining companies’ failure to direct the required revenue to the national fiscus. In his recent midterm budget, Biti cut the budget by 15% and reduced projected economic growth from 9,4% to 5,6%.

Zanu (PF) moved quickly to establish itself in the diamond industry, seeing a new patronage opportunity.

The companies operating in the rich diamond fields of Chiadzwa have strong links to “securocrats” — serving and retired military officials who have worked their way into key political and business positions in Zimbabwe. The mining companies in the area are under scrutiny by the MDC and international nongovernmental organisations because of concern that Zanu (PF) is using profits to fund its own agenda. Anjin Investments, for example, is a consortium of Chinese and Zimbabwe military interests, while Mugabe’s wife, Grace, is said to be a shareholder in Mbada Diamonds. This is chaired by close Mugabe associate Robert Mhlanga, who made the headlines in South Africa a few weeks ago over his extensive property interests here.

State-owned Marange Resources is chaired by retired colonel Tshinga Dube, a top party official and former head of an arms firm controlled by the defence ministry.

The securocrats are also running parastatals and hold other key economic and political posts. They have been pivotal in keeping the party — and the president — in power.

Civil society organisations have claimed that thousands of youth militia, war veterans and army commanders have been recently deployed across the country to revive the party’s structures in anticipation of another, probably violent, election campaign. Top military officers have abandoned the pretence of being impartial and have openly declared their allegiance to Mugabe. Earlier this month, army chief Maj-Gen Martin Chedondo told soldiers that Zanu (PF) was the only party that had the country’s interests at heart.

The threat of a military backlash in the event of an MDC presidential victory is not idle. It was, after all, the wave of violence unleashed against the MDC after the president lost the first round of votes in 2008 that led Tsvangirai to pull out of the race, allowing Mugabe to win the poll unopposed.

Reform of the security sector is a key part of the roadmap to free and fair elections being facilitated by South Africa. The draft of the new constitution provides for the military to become more politically neutral. But it will be difficult to turn around the culture of impunity that has invaded a large part of the security forces over a decade. As one Zimbabwean analyst said recently, the army, air force, police and the intelligence agency have failed to provide security, have actively preyed upon the population and have become synonymous with human rights violations.

The MDC-T is confident a new political climate in Zimbabwe will see the security forces and their bosses back in barracks and under civilian control. But the securocrats are deeply entrenched in power and in feeding from the trough of patronage. They are unlikely to give up easily — they have nowhere to go.

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June 14, 2012

Africa’s hospitals crumble while leaders are treated elsewhere

THE death this month of Malawi’s p resident Bingu wa Mutharika in a private clinic in Johannesburg brings to mind other African leaders whose lives ended in hospitals far from the public health systems of their home countries. Malawi’s first post-independence president, Hastings Banda, died at a private clinic in SA in 1997. Africa’s longest-serving president, Omar Bongo of Gabon, died in a Spanish hospital, while Togo’s former leader, Gnassingbe Eyadema, died in an aircraft in 2005 while being evacuated for emergency treatment abroad. Nigeria’s Umaru Yar’Adua was admitted to hospitals in Germany and Saudi Arabia, while Tanzania’s Julius Nyerere died in a London hospital.

Most of the continent’s current leaders also prefer to be sick in foreign hospitals and private clinics. Angolan President Eduardo Dos Santos has been treated in Spain and Brazil and plenty of Angolans will bet he hasn’t seen the inside of a local health facility. The same applies to Zimbabwe’s Robert Mugabe, who frequents hospitals in Malaysia and Singapore.

Cost is not an issue for Africa’s political elite, who prefer to pour taxpayers’ money into overseas medical facilities rather than spending it on improving health systems at home.

Getting ill in most African countries is not for the faint-hearted. But as incomes improve, Africans return from abroad and expatriate numbers grow, healthcare is becoming a major investment opportunity — private healthcare, that is.

McKinsey research suggests that healthcare spending in sub-Saharan Africa will more than double its 2006 levels to reach about R245bn a year by 2016, 60% of which will go to private healthcare. To meet increased demand, it says, total investment of up to R200bn will be required.

 But most Africans cannot afford private healthcare facilities and most don’t have access to medical insurance. Even public healthcare is seldom entirely free for patients.

 Africans battle a range of communicable and parasitical diseases. The continent bears 66% of the world’s HIV/AIDS burden, which swallows up resources in public healthcare systems. Now the continent faces a dramatic increase in lifestyle-related diseases, such as diabetes, hypertension and cancer. The experts say that probably 85% of diabetes cases are undiagnosed and the incidence may be higher than HIV in 20 years’ time.

 Rising health costs in developed countries have resulted in a shift in focus to promoting health rather than treating sickness. In the UK, primary health interventions saved about 80000 people from dying of cardiovascular disease over a decade. H ealthcare experts will tell you how difficult it is to change people’s behaviour. In Africa, fighting the battle from a prevention perspective will be even harder. The basic tools of prevention, such as sanitation, clean water and nutrition, are generally not in place.

Countries have become dependent on donors to foot the bill for health spending but this assistance is declining with financial problems in donor countries. Governments have to now think about more strategic and sustainable interventions.

 In 2001, 53 African countries signed the Abuja Declaration pledging to dedicate 15% of national budgets to improving healthcare. The World Health Organisation reports that only SA and Rwanda have met the target in the decade since then. Seven states have cut spending. Poor management systems, a lack of maintenance and hygiene in facilities, poor municipal services, inadequate equipment and fraud in tendering and procurement processes also deter progress.

Healthcare issues are complex but two issues seem clear. Government funding is well below what is needed to sustain a basic healthcare system and what exists is not being used efficiently. The other is that if political leaders who influence policy and funding choices were forced to use public health systems, they would find a way to address many of the challenges they blame for the condition of systems that force them to flee to other countries when they feel a bit poorly.

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November 14, 2011

Young leaders’ vision for a brave new Africa faces old problem

WHEN the topic of youth leadership comes up in SA, what comes to mind are the antics of Julius Malema and his cohorts in the African National Congress Youth League. The subject has many people throwing their hands up in despair, not only at the reports of bad behaviour and self-serving tactics, but also at the lost opportunity. The youth should be changing things for the better, not reverting to the discredited and failed policies of the past.

So it was a pleasant surprise to attend a conference in Addis Ababa recently hosted by the African Leadership Network (ALN) and attended by several hundred mostly young Africans from 22 countries.

The network encourages membership of people under 45 with the aim of engaging “the collective influence of Africa’s new generation of leaders to drive prosperity across Africa”, according to its marketing material.

It suggests that unless Africans can raise their own resources, they will not be able to own the future.

The network, many of whose members belong to the biggest companies operating in Africa, provides a platform for the exchange of ideas as well as a place for business deals to be done — a sort of “Davos for Africa”. The event had a refreshing perspective focused on creating wealth, rather than simply dwelling on problems.

It is the brainchild of two West Africans — Cameroonian Acha Leke, a director of McKinsey, and Ghanaian social entrepreneur Fred Swaniker — both with roots in other global and local leadership initiatives.

The ambitions of the ALN have struck a chord with big business, which was reflected in the high-powered conference sponsors — MTN, TBWA, JP Morgan, McKinsey , Actis and Yellowwoods.

 The famous words of Nelson Mandela, captured on the programme, seemed to inspire the delegates: “Sometimes it falls upon a generation to be great. You can be that great generation.

Enthusiastic participants echoed the sentiment. “We are the ‘can do’ generation and we must use that energy to change Africa,” said one. “We are the generation that believes in transparency and accountability. We need to bring these qualities to the way things work on the continent,” said another.

African Development Bank (ADB) president Donald Kaberuka dropped in at the event. He entered the spirit of things, emphasising that the bank was looking to employ bright young minds to help Africa’s development from inside the system. Kaberuka was in town for another event across town, the annual African Economic Conference, hosted by the ADB and several United Nations (UN) agencies to discuss issues facing Africa.

As I went from one conference to the other, I couldn’t help feeling that the ADB-UN event reflected the “old” Africa. Despite worthy analysis of challenges facing the continent, it dodged some of the real issues that hold back the continent, including policy weakness, poor leadership and a lack of responsibility for failure. At the ALN’s Addis Ababa event, which symbolised the “new” Africa, these issues were tackled head-on as part of forging a new path for Africa.

The African Union (AU), which has made Addis Ababa its home, seems to represent neither the old nor the new Africa, but rather the failure of African leadership. The AU, where Malema clearly plans to strut his stuff one day, has as its current head one of the most venal leaders the continent has seen — the president of Equatorial Guinea.

One speaker at the ALN event challenged the well-heeled young people in the room to think not only about engaging politicians, but to consider becoming politicians. A show of hands indicated that most thought they could do a better job of running their countries than their governments.

The average age of national leaders in Africa is more than 70 years, despite the weight of the youth in African demographics, which is growing as more young voters come into the system every year.

That disconnect could be a space to exploit, the speaker said.

But the system of patronage in African politics is so well entrenched that changing the system will be the biggest challenge for the ALN and other young leaders if they really want to see a change in Africa. It won’t be easy.

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October 31, 2011

Will the green-economy train take Africa to the right destination?

I WAS afforded a glimpse into the world of climate change last week at the 2011 African Economic Conference in Addis Ababa and observed how the debate has taken on almost religious proportions.

The event, on the theme of Green Economy and Structural Transformation, and hosted by the African Development Bank (ADB), the United Nations (UN) Development Programme and the UN Economic Commission for Africa, looked at what African countries should be doing to get in step with the global green trend to counter climate change.

Africa faces particular challenges, given that it suffers from so many development challenges already, which some fear may be made worse by trying to keep pace with the global “green” drive.

The sheer weight of funding and initiatives are good reason to believe something positive may emerge from the hysteria about the world’s condition. The expectation is that Africa will benefit from new investment in technologies and infrastructure that will improve the quality and sustainability of growth.

Global action on climate change also offers an opportunity for a new engagement with African governments and policy makers on improving economic efficiency. This is all good but perhaps unrealistic given that a lack of political will to improve the economic environment has been a brake on development in the past.

The fact that all African countries are confronting challenges as a result of climate change is not a sufficient driver of change in Africa. Countries have always faced climate challenges. In a key affected sector — agriculture — issues of land tenure and associated lack of collateral and access to credit still hamper Africans’ ability to have food security .

Two of the most serious problems attributed to climate change, deforestation and land degradation, are caused largely by unchecked commercial exploitation, rural energy needs and poor farming practices.

In short, neglect and policy failure are perhaps the greatest obstacles to the development of African agriculture. The question is whether the weight brought to bear on governments to tackle climate change will get them to be more proactive about improving the way this and other sectors are managed.

We would all like to live in a greener world so there are many upsides to the focus on greener economies. African analyst and author Paul Collier told the gathering that solar power would be the next big thing in Africa, leapfrogging current energy sources in the way that mobile phones had done, as the cost of the technology came down.

But there are also many unknowns. For example, what will the effect be of climate-change initiatives on growth on a continent where the biggest new investment is in the areas that climate change proponents suggest is causing the problem — resources.

ADB chief economist Mthuli Ncube says there is no tension between a green economy and resources investment. The focus, he says, will not be on discouraging new investment but rather encouraging companies to be more aware of the environmental implications of their operations.

With all the hype about climate change, it is easy to forget the size and complexity of the challenges and the effect all of this may have on growth.

A continent already hobbled by capacity constraints now faces a future filled with more complex policy challenges as countries are pushed to restructure their economies to fall in line with this global trend.

There are also concerns about other consequences of creating green economies, such as trade barriers, deindustrialisation and rising costs of doing business. And there is a lack of consensus on what a green economy actually is, which will compromise policy formulation.

But Africa is already on this fast- moving train. African ministers recently signed an agreement recognising the benefits to the continent of green economies. But it will be interesting to see if the political will to make this work matches the enthusiasm expressed in public forums.

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