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Good News April 2012

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Waking Up the World Up to Business in the New Africa

While Africa is on the move, most of the world slumbers. Why do I say this? In Charlotte, North Carolina, a "new" market for promoting business in Africa, I had the great opportunity to speak about the business potential in Africa on a local radio talk show with Vince Coakley. But I was shocked that the majority of people, who called in, were harsh in their perspectives on Africa, particularly South Africa. This woke me up to how much the world still needed to be awakened to business in the New Africa.

The callers saw no hope or light. They were mostly truthful about what they had to say about crime, corruption, and security in what they understood. They weren’t vicious, but you could tell they actually believed or felt what they were saying.

I reminded the audience that US history wasn’t so great for human rights and politics in the 1800s. We had one of the bloodiest civil wars in history almost a hundred years into our history. And even though we are supposed to be a beacon for human rights today, we have a lot of problems here in the US.

African democracies are at most 60 years old and places like DR Congo less than ten years. Countries in this stage of development will not have the institutional strength, or strong rule of law in general, as mature democracies yet they grow fast and provide opportunities unmatched elsewhere.

The final point I made was that every country has its problems, but also has opportunities. It’s important to find what works for you in business and be open to possibilities.

This experience re-affirms my opening statement. There is a New Africa, but most of the world is unaware and little is being done to wake them up to the full reality of the Africa of today and of the future.

You probably think that this article is about the callers and people like them, but it’s not. It’s about the millions of people who know something about the New Africa, but remain silent, passive, or accepting of what is said and propagated. Everyone should have a right to speak and to his or her opinion, but those opinions do not have to go unchallenged or probed.

We who know should be sharing about the things in Africa that do work and how it is progressing. While admitting that Africa has the highest rate of poverty and HIV/AIDs in the world, we should be pointing out that the rate of poverty has slowed and the number of new HIV/AIDS cases is slowing compared to the growth of the continent’s population.

In business, we should be sharing about the low debt levels in many of the countries compared to the West and how investment risk in the West is rising. Also, we should be sharing about the impact African innovation is having on the mobile sector around the world. While this is "old" news to many of us, it is "new" news to most of the world.

It is not about create platforms to change the perception of Africa, even though more are needed. It is about individuals and organizations embedding Africa into normal, everyday, mainstream conversation. If people are talking about interesting news, share a comparative or insightful perspective on what is happening in Africa.

If you are focusing on business and investment in Africa, here are a few tips I gave on "pitching" Africa when I spoke last year at the launch of one of our books at the World Bank:

  • Let Africa sell itself.

  • Watch the terms you use, e.g., wealth creation versus poverty reduction.

  • Be authentic – share realities, successes, and potential.

  • Place Africa in context of what is happening in other global regions.

  • Focus on Africa as an upcoming, emerging region, which already has close to 20 emerging economies.

  • Don’t sell Africa at the exclusion of other global regions, but as part of a global strategy – one of several regions a global business strategy should touch.

  • Explain how Africa can be used to expand markets and extend globally.

  • Show people who have a passion to make a difference in Africa how they can achieve this by supporting for-profit ventures, or market-based social enterprises, which are more sustainable.

  • We also need to broaden our engagement. We need to move beyond circles that are familiar with Africa and get into mainstream business and social groups and share about the continent. Go and plant seeds where conversation about Africa in terms of business and investment would be new.

    Finally, I do have some good news to share about the close of the recent radio interview. Several callers actually shared positive perspectives.

    One caller shared his experience about being in Cote d’Ivoire. He found the people to warm, welcoming, and hard-working. He said Cote d’Ivoirien pineapples were much better than Hawaiian, and if he had the money he would invest there.

    This caller represents to me an untapped, deep spring of people that I know exists. We just need to reach them.

    And concerning the rest of the world, it’s not up to the world to change its perception of Africa. It’s up to us to create a new perception of Africa.

    Authors: Africa Good News Editor

    Leveraging Zambia to Do Business in Africa

    Zambia is among the top African countries in which it is easier to do business, according to Greg Marchand, CEO of Gizmos Solutions, an IT consulting and engineering firm in Zambia. It is also expected to be one of the fastest growing countries in the world through 2015. For US firms, there is also the bonus of being able to trade in US dollars.

    Zambia is a land-locked country with around 13 million people. Being land-locked presents challenges for supply chains, as it can be difficult and costly to get freight into the country. Since supply chains are a critical aspect of doing business, Marchand suggests using supply chains that have been developed by others. "Zambia was a colony of England and there’s still a lot of government, as well as economic ties. South Africa is a huge trading partner; China is a big trading partner; India is a big trading partner," he says. "So, those supply chains have been more established. The more you shift between two locations, the more efficient you’re going to be. America doesn’t have a lot of trade with Africa right now and the majority of commerce between the United States and Africa is in the oil industry."

    The nature of Zambia’s geographic, but land-locked, location also presents a major opportunity, Marchand says, "We (Zambia) are actually surrounded by eight countries and we have a total of twelve borders to eight countries, which provides us with a unique opportunity to be a trade hub – for people to bring their products in and maybe add some value."

    Zambia is a member of the regional economic community – Southern Africa Development Community (SADC). Even though Zambia has 13 million people, it has access to a market size of over 250 million people in SADC.

    Besides being a geographically significant hub, Zambia is endowed with abundant minerals like copper, land, and water. China has taken advantage of this abundance to meet its demand for minerals due to growth in sectors like manufacturing. This is indicative of its investment in SADC countries – the largest investments in 2009 were in the resource-rich countries of Democratic Republic of Congo (~$228 million) and Zambia (~$112 million) according to the Ministry of Commerce in China.

    Marchand also notes that the capital city of Lusaka is considered prime real estate, "Lusaka has been recognized in a recent Citi report as being one of the best investment locations for land in the world. This report basically outlined where good investors are putting their money and Lusaka is number two on the list…"

    For US businesses, Marchand points out several opportunities specifically suited to American companies in Zambia and other parts of Africa, "If I look at the IT infrastructure sector, which is [what] I am in, we are in the fastest growing telecommunications market in the world. We have a +20% compound growth rate in cell phone subscribers. Other major G8 countries are building the IT backbone in Africa and that’s going to be something that’s going to be huge down the road…In the power sector, America has not been as much involved as they have been in the oil and gas extractive industry. Thirty percent of Africa has great power and the next 70 percent is going to be built by somebody," he says. "We’re kind of missing that boat of developing the next generation of people who are into power generation in Africa. There are some long play, uptake opportunities for American companies to do generation and distribution."

    Yet there are other sectors growing and attractive to American companies interested in entering Zambia. "There’s also a large opportunity in financial services – insurance as well as primary commercial banking," Marchand says. "I would say an American firm might not want to come in and do retail, but definitely commercial trade, all sorts of commercial support finance; there are some very lucrative businesses in Africa and it’s what fuels the growth in the economy and there are ways to mitigate your risk."

    Zambia may present great opportunities, but there are still challenges and risks. Marchand advises, "…the first thing you can do is do your homework, do your research, figure out some key contacts, me being one of them; the reason I founded an American Chamber of Commerce in Zambia is to facilitate trade and investment with Zambia and the United States…The commercial services part of the US Embassy is also a good place to start. I know our economics and political officer (in Zambia) is extremely proactive."

    Also, play up the networks in your local area, which may connect you to Africa. For example, a significant number of Africans work and go to school outside of the continent, so university alumni organizations can prove to be useful in exploring business in Africa shares Marchand. The key is to find the network and contacts that can help you navigate and execute successfully in Africa.

    Featured image is by Dr. Ferdinand Groeger.

    Download radio interview from here.

    New Home for Black Rhinos in Kenya

    The World Wide Fund for Nature (WWF), in partnership with the Kenya Wildlife Services, has completed the second, and final phase of its US$72 250 (R560 000) project to transport 21 black rhinos from the privately owned Solio Ranch and Mugie Rhino Sanctuary, both in the Rift Valley province, to Ruma National Park in the southwestern Nyanza province.

    Home to a wide variety of birds and animals, including roan antelope which are found nowhere else in Kenya, the 120-square-kilometer Ruma National Park is managed by the Kenyan Wildlife Services (KWS) and was declared a rhino sanctuary at the end of 2011.

    Another advantage is that it is free of tsetse fly, that large biting insect that transmits diseases such as sleeping sickness.

    While the move was underway, the country’s forestry and wildlife minister Noah Wekesa reaffirmed Kenya’s stance on poaching, saying: "I want to send a strong message to the poachers that they shall be dealt with severely according to the law."

    He then said that his ministry will review current penalties for those caught poaching, and if necessary would make them harsher.

    The move was also done to help encourage tourism in western Kenya. While it was once normal to see several rhino at once on a game drive, that is no longer the case, and the mighty animals were last seen in the area more than 50 years ago.

    Saving the black rhino

    Kenya’s black rhino (Diceros bicornis) population now numbers just 620, when a few decades ago it stood at over 20 000. The lowest numbers were seen in the mid-1980s, when just 300 individuals remained.

    The country, which once had one of the largest rhino populations on the continent, is working tirelessly to help save the remaining individuals, and has seen its efforts rewarded with the doubling of the population of black rhinos in recent years.

    The ever-present poaching situation is a serious threat to the goals of KWS to boost the numbers.

    However, Kenya has still escaped relatively lightly compared to the poaching toll in other countries. Of the almost 500 rhino killed in Africa over the past five years, 70 died in Kenya. In South Africa, 52 animals have been poached in 2012 alone – around one every day.

    Most poaching activity occurs in South Africa and Zimbabwe because of the bigger populations found there.

    The greatest demand for rhino horn comes from Asian countries, whose citizens mistakenly believe it has near-miraculous medicinal properties, and Middle Eastern nations such as Yemen, where the horn is carved into a highly prized dagger handle.

    The sophistication and the level of organisation of poachers and illegal traders has soared in recent years. Poachers are becoming almost military in the precision and speed of their operations and it has been noted that some former soldiers, with their combat training, have taken to poaching.

    Various groups such as the WWF, the International Rhino Foundation, the African Rhino Specialist Group of the International Union for the Conservation of Nature, and Saving Rhinos, to name a few, as well as national wildlife authorities, are fighting a constant battle to protect the sought-after beasts.

    Because of the poaching problem, KWS conducts a rhino census every year between July and October in the Tsaveo West Sanctuary. A few months after the census, which provides information on the number and distribution of black rhinos, the animals’ ears are notched to help with identification and tracking.

    During the 2010 exercise, transmitters were also inserted into the rhino horns. Under sedation, the animal received the device, which was placed into a hole drilled into the horn. The hole was sealed and the animal was marked, allowed to recover and then released.

    By Lyndon Jaftha

    Harnessing the Wealth of Minerals in Poor Nations

    Developing countries with potential mineral riches have often fallen prey to corruption and mismanagement. As a result, they’ve failed to benefit from their natural resources and remained in poverty. Now, new guidelines have been drawn up to help such countries harness their mineral wealth.

    The World Economic Forum and The Boston Consulting Group have identified six steps to help poor countries cash in on their mineral deposits. The recommendations are based on the advice of 400 experts from NGOs, governments and mining companies.

    Learning from the past

    "Historically, there have been so many cases where countries, who have lots of minerals, have systematically not developed those correctly. They haven’t done them in a socially or economically, what we call, responsible manner," said Alex Wong, World Economic Forum’s senior director.

    He said the "six steps" or "building blocks" can help prevent history from repeating itself.

    "What’s happening now with the commodity price cycle that we’re in and the emergence of several countries onto the global stage - such as Mongolia, Guinea, Peru – these are countries who are now, for the first time in a way, having the opportunity to develop their mineral resources and using it as a major way for their countries to grow economically. So, it’s actually an incredible moment where we don’t want to make the same mistakes that have been made in the past," he said.

    Poor, yet mineral rich, countries face a number of challenges in developing their extraction industries. These include not having the expertise, skills or resources at hand to develop the industries. Another issue may be a failure to get local communities and civil society involved in the process. And often the negotiating process has not been transparent.

    "So, people actually don’t understand what are the terms of the agreement. They have, therefore, mismatched expectations and lack of communication, which then obviously causes lots of tension and misunderstanding," said Wong.

    Doing what’s right

    Wong said the recommendations help create a climate of trust, which can lead to all the stakeholders benefiting from the mineral wealth.

    "First of all, promoting capacity building and knowledge sharing. And that includes making sure everybody understands how to do it. How to develop these mineral resources in a responsible manner. Making sure people understand the costs and benefits associated. The second category of actions is around collaborative processes, processes both at the national level and at the local level. So that you have mechanisms and processes for people to be included in the discussions and have a feeling that they’re part of the negotiations and the outcomes," he said.

    The final category of recommendations concerns transparency and dispute resolution.

    Wong cautioned there is not an immediate return on investment for mineral rich countries, as there may be for oil-rich nations.

    In for the long-term

    "In mineral development, in particular, it’s especially challenging because governments don’t actually often get their revenue that comes from the process of extracting their minerals until a good 10 to 15 years later in some cases. And whereas oil is probably a little more immediate because you get stuff under the ground, you ship it out and the government’s seeing revenues," he said.

    Wong said there’s been a good initial response to the Framework for Advancing Responsible Mineral Development. It highlights 22 successful projects in such countries as Mongolia, Liberia, Ghana and Chile. He says a second initiative promoting responsible mineral extraction is the World Bank-led Extractives for Development initiative, or E4D.

    By Joe DeCapua

    South Africa Develops Hi-Tech Solution to Fix Roads

    South Africa’s Council for Scientific and Industrial Research (CSIR) has successfully piloted new road technology, specifically designed to improve the lifespan of roads that carry heavy traffic. If the technology is implemented nationally, it could mean the end of potholes on local roads.

    Economic growth, higher traffic volumes and higher axle loads are some of the factors that have made it necessary to review how South Africa’s roads are built and maintained.

    South Africa has a well developed and extensive road network of about 754 000 kilometres, of which over 70 000km are paved or surfaced roads.

    HiMA technolog

    High-modulus asphalt (HiMA) technology, which can be used on main routes, high-volume urban roads and at airports, is now being considered for use in routine road design and construction in South Africa.

    HiMA could become a cost effective, innovative solution to help meet the increased demands placed on the country’s road infrastructure.

    HiMA is the South African name for an asphalt material type originally developed in France in the early 1990s. In France, the technology is now used extensively on main routes, airports and urban roads.

    It is a composite material consisting of graded mineral aggregate blended with a hard bituminous binder.

    It has improved resistance against permanent deformation and due to its high stiffness, provides better protection of underlying road layers. Its high binder content also makes it more durable.

    Sustainable road maintenance

    A research project was established to investigate the feasibility of HiMA technology as a solution to sustainable road maintenance in the country.

    It is a joint initiative of the CSIR and the Southern African Bitumen Association (Sabita).

    Sabita represents various organisations involved in the manufacture and supply of bituminous road building materials, construction, maintenance and design of roads.

    At the request of Sabita, the CSIR was asked to develop South African specifications for the design of HiMA mixes, using local components such as aggregate (crushed rock) and bitumen.

    Bitumen is a binder used for asphalt and is derived from crude oil at refineries, together with other products such as fuel.

    Testing the benefits

    The eThekwini municipality in Durban is the first road authority to implement the use of HiMA technology on a section of road at the entrance to the Durban harbour.

    This road was the ideal trial site for HiMA technology as it’s a major access route to the harbour, and always in need of frequent maintenance. Paving of the HiMA layers on the road was completed in September last year.

    The base layers were constructed using cost-effective road materials technology with improved performance to cater for the extreme volumes of heavy vehicles entering and leaving the harbour.

    One of the HiMA mix designs used at the Durban harbour contained 20% reclaimed asphalt and could carry much higher traffic loads than traditional mixes.

    The trial yielded positive results and eThekwini is looking to implement HiMA technology more widely within its municipal region.

    Krishna Naidoo, senior manager of eThekwini’s road rehabilitation branch, says that the municipality is impressed with the results.

    "We believe that HiMA offers a better solution, taking into account the challenges posed by the weather and high volumes of heavy, slow-moving traffic around the Durban harbour," Naidoo says. "Any interruption of traffic in that area affects the national economy."

    If the harbour road requires less frequent rehabilitation, pollution generated by traffic jams caused by road repairs can also be reduced.

    "The use of this technology in road construction leads to roads that last longer and need less maintenance, thus causing fewer delays for road users," explains the CSIR’s Dr Erik Denneman, who also heads up the longer-life roads project.

    HiMA also decreases the life-cycle costs of roads, increases sustainability and decreases the use of non-renewable materials such as aggregate and bitumen.

    Lifespan of roads

    Denneman says that HiMA is suitable for use in both new road construction projects and upgrading of existing roads.

    "Roads lose strength over time due to traffic loads and this is why they need to be rehabilitated periodically," he says.

    He adds that HiMA can also be used to build ‘perpetual roads’. This is an innovative concept where roads are constructed to have a very high carrying capacity, using thick layers of high quality material.

    Although this will cost more initially, in the long term the road would last longer and require less maintenance to the structural layer. Only the top layer would have to be replaced periodically.

    "Over the life of the road, this will reduce road user delays considerably and increase the sustainable use of resources," he says.

    The durability of roads also depends on other factors such as the weather.

    "As South Africa has a hot climate, it is important that the asphalt remains stable at high temperatures," he says. On a hot day, the surface temperature of roads in South Africa can reach 60°C.

    Asphalt is a visco-elastic material, which means that its stiffness decreases at higher temperatures.

    "One of the advantages of HiMA technology is that it has a stiffness at high temperatures that is significantly higher than that of conventional asphalt."

    Design guidelines for HiMA mixes

    The CSIR and Sabita have developed preliminary guidelines for the design of South African HiMA mixes and roads containing HiMA layers.

    The guidelines will be incorporated into the updated, comprehensive South African Road Design Method undertaken by the CSIR and other organisations for the South African National Roads Agency.

    By Wilma den Hartigh

     


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