Africa Analysis
April 13, 2015
Mugabe not the empowerment hero back home that South Africans believe he is
Dianna Games
Mugabe's many excuses for a feeble economy have worn thin in Zimbabwe, where many people still await an "indepence dividend" as the country markets 35 years of independence, writes DIANNA GAMES Published in Business Day SA, 13 April 2015 ZIMBABWE President Robert Mugabe raised some laughs with offbeat remarks and jokes during his state visit to SA last week. Back home, though, there was little to smile about as the country headed for its 35th anniversary of independence this weekend. After decades in power, Mugabe presides over an economy that the African Development Bank has described as "fragile". The bank…
As the oil tide goes out, African oil producers find themselves in difficult times but importers have an unexpected economic boost, writes DIANNA GAMES Published in Good Governance Africa, 31 March 2015 The massive drop in petroleum prices may be a blessing in disguise for many African countries As oil prices dipped below $50 a barrel in January, Nigeria’s finance minister put a brave face on her country’s revenue crisis. Nigerians, she said, should start thinking of Africa’s largest oil producer as a “non-oil country”. Ngozi Okonjo-Iweala’s call was an appeal to prioritise other, less volatile sectors to drive…
March 30, 2015
Investors starting looking north for growth as SA squanders its advantages
Dianna Games
South Africa may be more sophisticated than other important markets in Africa, but political complacency and stagnating economic growth are getting foreign - and local - investors to look at high growth and good returns north of the border, writes DIANNA GAMES Published in Business Day SA, 30 March 2015 AFRICANS from other countries often ask me why SA is squandering its obvious advantages. Many of them come from countries that have hit economic rock bottom and know what a long, hard road it is to recovery. Although it is still easier to operate in than most other African…
Dysfunction is fuelled both by powerful vested interests which benefit from the status quo and by millions of people who earn incomes from 'parallel' economic acvities, writes DIANNA GAMES Published in Business Day SA, March 16 2015 ONE of the biggest complaints about Nigeria from foreign companies is how unnecessarily difficult it is to do business there. The government is not short of grand plans to diversify its economy and politically expedient quick wins but it is less exercised with dealing with the underlying factors that undermine economic development and diversification. Many of its policies have focused on stimulating local…
The nature of the current crisis is not new for Nigeria. It has been caught out before by crashing oil prices, writes DIANNA GAMES Published in Finweek, 12 March 2015 Nigeria’s finance minister Ngozi Okonjo-Iweala has tried to put a brave face on the multiple challenges that Africa’s biggest economy now faces in the wake of a plunge in the price of crude oil – the source of 80% of the nation’s revenues. Late last year, when the damage became apparent, she told the nation not to panic. “Panic is not a strategy. We are managing the situation to keep…
Business Day (South Africa), 27 October 2014 DO SOUTH Africans truly believe theirs is just another African country? Twenty years after the advent of democracy, this question is still being asked and many critics believe the country does not fully understand — or embrace — its "Africanness". South Africans often say they are "going to Africa", which highlights how many of them regard SA as being separate from the rest of the continent. Often used for convenience, this phrase nevertheless conveys a sense of the continent as being "over there". It is not something you hear used elsewhere in Africa.
With low oil prices, it is time to either be brave or crazy in Africa. But if oil drops much further, marginal exploration and infrastructure projects in Africa's oil and gas states are likely to be shelved while companies ride out the cycle, writes Dianna Games (Published Business Day, South Africa, 11 November 2014)
February 16, 2015
SA has learned nothing from the destruction of value in other African economies
Dianna Games
A degraded new normal happens over time, incident by incident, until you forget what you have lost, writes DIANNA GAMES Published in Business Day Sa, 16 February 2015 THE destruction of value in a country is seldom a single event. It is a slow erosion, an incremental shift in perceptions and expectations, year by year, incident by incident, until one day what has been destroyed is largely forgotten and there is a new normal. People no longer complain or protest about what they have lost because they have found a way to adapt to a degraded situation. An example of…
Political expediency is what drives the government of Zimbabwe, not the economy, not the interests of investors and certainly not the interests of its citizens, writes DIANNA GAMES Published in Business Day SA, 5 January 2015 AS 2000 dawned I was at an event where the subject of Zimbabwe came up. Many people in the discussion were adamant that President Robert Mugabe would be out of power within a few years. Then, they said, Zimbabwe would re-emerge as an economic power — Mugabe’s removal was seen as a necessary condition for economic revival. At the time the economy was in…
ON ARRIVAL at my hotel in Abuja last week, I had to make my way past an armoured car, a bomb disposal truck, a mobile hospital, police cars and a dozen or so heavily armed soldiers. After a couple of days, this started to seem quite normal. The same scene was replicated at several other hotels across the city. It also became normal to drive through empty streets as Nigerians stayed at home in accordance with a government directive for schools, businesses and government offices to shut down for three days to ensure no traffic jams and a smoother execution…
April 14, 2014
Nigeria’s progress looks better than cynics give it credit for
Dianna Games for Business Day
AFTER the announcement of Nigeria’s statistical triumph, I expected a chest-thumping, jubilant response in the country. Instead, news that Nigeria had become the biggest economy in Africa, with gross domestic product of an astonishing $510bn, was greeted with a sober, even dismissive, response by the media, professionals and ordinary people. "It’s too soon to exhale," a banking professional last week. "We have too much to do. Our macroeconomic fundamentals are not in place. Things are just not where we need them to be. There is no reason for celebration." Another said the statistics had, if anything, highlighted the lost opportunity.…
March 31, 2014
Corruption allegations a tactic in tussle to succeed Mugabe
Dianna Games for Business Day
THE struggle in Zimbabwe’s ruling Zanu (PF) to inherit the mantle of power from President Robert Mugabe has spread from the political battleground to the state-owned media. Publications such as The Herald and Sunday Mail once filled their pages with vitriol directed at the opposition Movement for Democratic Change (MDC. They attacked critics of the president, covering the government’s own shortcomings with thundering editorials about the threat of neocolonialism and other distractions. The ruling party was out of bounds for journalists employed by the state. Now it is open season. There are different theories about why the ruling party is…
ARNOLD Ekpe, former CEO of West African banking group Ecobank, once said African-owned companies had an advantage in African markets, particularly the difficult and high-risk ones, because they came from risky markets and understood the challenges and knew how to meet them. In an interview with me some years back, discussing the rise of African multinationals north of the Limpopo, he maintained these companies were also less daunted by the challenges than companies from outside Africa. Certainly, the rapid expansion of Ecobank across Africa — in 35 countries to date — signals a large appetite for risk. By 2008, when…
March 3, 2014
Nigeria’s activist central banker cut down by reaching into politics
Dianna Games for Business Day
INVESTOR confidence in Nigeria, soon to be Africa’s biggest economy, has taken a hit with the suspension of the country’s outspoken central bank governor. Investors are looking warily at a country where the president can, without resort to due process, get rid of the head of a supposedly independent agency. The naira dipped to a 15-year low in the wake of the scandal and there have been fears about the future of macroeconomic policy and the independence of the bank. But the action did not come as a complete surprise given the controversial and combative behaviour of Lamido Sanusi over…
February 17, 2014
Ghana risks regressing to 1970s with new forex controls
Dianna Games for Business Day
HAS the bubble burst for Ghana, a long-time darling of emerging-market investors with its political stability, high growth rates and apparent prudent economic management? It’s a question companies are starting to ask themselves as the country lurches into a situation reminiscent of the 1970s. The introduction of strict foreign exchange controls last week is a very controversial move. It has sparked concern among local and foreign investors, who anticipate a tougher operating environment. The new controls immediately spawned a currency black market. Within days, the local currency, the cedi, was selling on the streets at three times the official rate.…
January 20, 2014
Consumer preferences in Africa a stew of nuance and complexity
Dianna Games for Business Day
ON A bridge linking two islands that are home to some of Nigeria’s richest people, a giant billboard advertises Moët & Chandon, the champagne that has become a favourite tipple of the country’s wealthy elite. Last week, a UK newspaper reported that Shoprite’s seven stores in Lagos sold more of the high-end drink in 2013 than the chain’s 600 South African stores did. While this highlights Nigerians’ desire for luxury products, it also indicates their preference for foreign goods, something much less prevalent in another large market, Kenya. I travelled to Lagos and Nairobi over the past fortnight to find…
I DINED with a Nigerian elder last week, who told the story of how Nelson Mandela had lived in his Lagos home for several weeks in 1962 during a seven-month journey around Africa to raise support for the African National Congress’s (ANC) armed struggle. Mbazulike Amaechi, an official in Nigeria’s first post-independence government, said he was asked by the leader at the time, Nnamdi Azikiwe, to host Mandela during his visit to Nigeria in May 1962. When Mandela visited Nigeria again in 1990 to acknowledge Nigeria’s support in ending apartheid, he personally sought out Amaechi and Azikiwe to thank them.…
December 2, 2013
Nigeria’s car industry tune-up not enough to kick-start industrialisation
Dianna Games for Business Day
THE traffic jams in Lagos are legendary. In the hours spent on the city’s roads, there is plenty of time to view the array of cars of every imaginable make and age that clutter the roads. Nigeria is crammed with imported cars from every region of the world. The government has estimated the import bill to be more than R30bn a year. Unlike in South Africa, nationals are allowed to import used cars that are up to 15 years old, contributing to the congestion that is a hallmark of Nigerian cities, not just Lagos. But despite the huge market and…
November 18, 2013
East African tensions show economic union is hard to achieve
Dianna Games for Business Day
IS THE much-heralded East African Community (EAC) heading for troubled waters? Reports of Tanzania’s isolation from regional summits suggest something is afoot in this bloc that has been so praised for its success in breaking down trade and investment barriers. The ascent of Uhuru Kenyatta as the president of the bloc’s most powerful member appears to have changed the dynamics of the region. Under scrutiny because of his tussle with the International Criminal Court, Kenyatta seems determined to get things done in a hurry. Part of this is the fast-tracking of EAC commitments on a range of issues from infrastructure…
THE day Woolworths announced it was pulling out of Nigeria, I met a Nigerian colleague at a coffee shop in Sandton City, within sight of the chain’s shop there. A former resident of South Africa, he knows the brand well and planned to shop there after our meeting to buy clothes for his children back in Lagos. He said he had never visited either of the two Woolworths outlets in his home town, despite the fact one was not far from his house. A banking executive, he represents the middle class in the rest of Africa that South African retailers…
November 4, 2013
Protecting their patch more important than improving lives
Dianna Games for Business Day
IN MY early days of trawling Africa for information many years ago, I spoke to a wise old hand — an international bureaucrat who had travelled Africa while working for the World Bank — about why it was proving to be so difficult to improve the business environment. It took only political will, not money, I argued, to change regulations to make it much easier to do business. He laughed at my naivety and said political will was a much bigger problem than money would ever be. Any change to business regulations, or the removal of other impediments to business,…
October 28, 2013
History a reason for SAA to be cautious about its Africa strategy
Dianna Games for Business Day
ANY move to improve air connections in Africa is to be welcomed. But it might be wise for South African Airways (SAA) to revisit the history books before it makes a decision about a proposed West African hub and engagement with the Nigerian government to build capacity for a yet-to-be-launched national carrier. In the case of Nigeria, our national carrier has entered into one joint venture, which ended badly, and nearly entered a second partnership that was scuppered at the last minute. In 2001, a one-year code-share arrangement was concluded between SAA and Nigeria Airways to operate the ailing Nigerian…
October 7, 2013
Can Africa boast about its achievements as people try to flee?
Dianna Games for Business Day
THE deaths of more than 300 Africans in a boat packed with illegal immigrants heading for Italy last week must surely signal that all is not well on this continent. Despite pockets of significant improvement in people’s fortunes in parts of the continent, the fact that illegal migration from Africa to Europe continues apace is a stark reminder that the aspirations of people on this continent are a long way from being realised. The journey of illegal immigrants might end near the tantalising shores of Italy but it usually begins in poverty-stricken villages and towns in Africa, mostly across West…
August 26, 2013
‘China price’ may rise as African states grow more assertive
Dianna Games for Business Day
AN EXECUTIVE of a South African construction company told me recently that the company no longer bothered to put in bids for projects in African countries if it was competing with Chinese companies, because it could not beat the “China price”. It was, the executive said, a waste of time and money putting together a bid where the winner would be selected on the basis of the lowest cost rather than on quality of work and delivery. The Chinese invariably got the business, as their bids were always significantly lower than those of their competitors from other regions. We’ve heard…
August 12, 2013
High African growth rates distort the real development image
Dianna Games for Business Day
HOW many times have you heard that many of the fastest-growing economies in the world at the moment are in Africa? At almost every African conference these days, this is trotted out as a way of highlighting the fact that Africa is the “go-to” place for investment. A new list of the fastest-growing economies in Africa — and by extension, the world — put out last week by the African Development Bank in its Africa Economic Outlook 2013 includes some of the poorest countries in Africa, some of which are developing off an extremely low base. At the top are…
YOU might say there are three players in this week’s Zimbabwean election: the leaders of the two main political parties pontificating about how they will improve lives; and the online rabble-rouser, Baba Jukwa. It is to the website of the locally based Scarlet Pimpernel that Zimbabweans turn for information on the poll. He tells his fans he not only sits in Harare, but opposite State House. He claims to be a Zanu (PF) mole, and, frankly, no conspiracy is too bizarre in Zimbabwe. But it is more likely he and his network are Movement for Democratic Change (MDC) members. His…
July 15, 2013
Declining intra-African trade gives the lie to development story
Dianna Games for Business Day
THE reality check on all the good news about Africa’s new development trajectory is surely the report released last week by the United Nations showing that trade among African countries is declining as a share of the continent’s total trade. From 2007 to 2011, the average share of intra-African exports in total merchandise exports was 11%, less than half of the 1997 peak of 22.4% and not even close to the 50% in Asia and 70% in Europe. Just a few weeks ago, Kenyan President Uhuru Kenyatta said at a conference on Africa’s need to industrialise that Africa was still…
July 1, 2013
African groups make great strides where others fear to tread
Dianna Games for Business Day
THREE of the best-performing companies on the Zimbabwe Stock Exchange have, between them, invested more than R10bn to expand and revitalise their businesses since the end of hyperinflation in 2008. The best performer, SABMiller subsidiary Delta Corporation, whose share price has risen by 130%, is now capitalised at $1.8bn. By the end of last year, it was operating at 88% of capacity utilisation — higher than most companies in Zimbabwe. Cellphone company Econet has seen strong growth, driven in large part by its move into mobile money transfers, while conglomerate Innscor has invested in strategic acquisitions and expansion, taking advantage…
June 18, 2013
Will crucial Zimbabwe poll end up being more of the same?
Dianna Games for Business Day
AND so it begins. The build-up to the election in Zimbabwe has many worrying hallmarks of previous flawed elections. President Robert Mugabe is still ruling by decree when it suits him, as the unilateral declaration of the July 31 election date shows; Zanu (PF) is still using its state-owned propaganda machine to distort information and undermine its partners in the unity government; it is still using the courts to support favoured outcomes; election registration is encountering delays in urban areas, traditionally a stronghold for the opposition parties; and non-African countries offering observer missions are being told to “go to hell”.…
June 3, 2013
Rapid growth of African companies is shaking up the market
Dianna Games for Business Day
AT THE airport the other day, I bumped into a banker employed by one of the world’s best-known financial institutions who told me he had been asked by a rapidly growing African company to join it and was on his way to sign the deal. The conglomerate needed someone with international credentials to help it “corporatise” its operations, he said. The growth of African companies and multinationals north of the Limpopo is one of the most notable features of Africa’s changing fortunes. These new players are starting to shake things up with their successful exploitation of their home markets and…