African Economic Growth Impacts Franchising on the
Recent research has revealed that African nations
make up seven of the world’s ten fastest-growing economies. The
industries seeing the largest growth on the continent are wholesale
and retail commerce, transportation, telecommunications, and
manufacturing. According to this research, much of Africa will have
attained "lower-middle" to middle-class majorities by the year 2030
and consumer spending will expand from US$680 billion in 2008 to
US$2.2 trillion. Today, Africa has more middle class consumers than
India despite the fact that India has a larger population.
This economic growth parallels developments in the
franchise sector. According to the U.S. Commercial Service, the
trade promotion agency for the U.S. Department of Commerce, more
than 200 international franchises currently operate in Africa. The
market for food franchises alone exceeds US$300 million. Major U.S.
brands, covering a broad range of services and products, have
debuted on the African continent this year and others have indicated
plans for further development throughout the continent. This growth
is likely to continue so long as legislative and economic reforms
continue to take hold on the African continent and Western
franchisors and others look to new markets to expand after years of
declining growth in their own domestic markets. African governments
have even taken their own initiatives to promote franchising as a
tool to promote the growth and stability of home-grown business
The increasing popularity of franchising is due, in
part, to legislative reforms in countries that had previously
hindered the repatriation of royalties and franchise fees. In
addition, some countries have also enacted franchise-specific
legislation. For example, South Africa enacted franchise legislation
in 2008. Tunisia drafted a legislative framework for franchising
that took effect in 2010, and Angola has had franchise laws in place
since 2003. Other countries on the continent are likely to follow
Franchising in Africa is not without its challenges,
however. A basic understanding of any franchise arrangement is that
the intellectual property of the franchisor is licensed to
franchisees for a limited time and under certain terms and
conditions. The "rule of law" is critical to maintaining and
protecting the franchisor’s intellectual property. Concerns over the
relatively weak protection of intellectual property have been
expressed by several brands.
Access to capital is another concern. Franchisors
generally request franchisees commit over 50% of the total
investment, but African banks are cautious lenders to small and
medium enterprises and start-ups. However, reforms in the African
banking industry are changing the lending landscaping. Local banks
in certain countries now have franchise departments and are starting
to view franchising not as a business start-up, but as a support
system for business enterprises that may merit a closer inspection.
Despite these challenges, the developments in the
franchising sector in Africa may merit consideration for companies
expanding their presence worldwide.
By Kendal Tyre and Diana Vilmenay-Hammond, editors
of Franchising in Africa: Legal and Business Considerations, a
publication of LexNoir Foundation
Lower insurance premiums for African farmers on the
In 2009, EARS Earth Environment Monitoring, a remote
sensing company in the Netherlands, started FESA Micro-insurance
with the aim to develop low cost, satellite based micro-insurance,
reaching every farmer in Africa.
Increased food production requires African farmers
to invest in better seeds, fertilizer and pesticides. In this way
production and income may grow two or threefold. But most farmers
don’t have the cash and need a loan for this purpose. Microfinance
institutions (MFI’s) are reluctant to provide such loans, as crop
failure due to drought or excessive precipitation would make
redemption impossible. Micro-insurance is recognized as the key to
this problem. It would enable African farmer to climb out of their
poverty trap and start an upward spiral of increased income, savings
and further investments.
As the cost of traditional insurance is high,
weather index insurance has been advocated as a solution. However,
the number of weather stations in Africa is too low. Adding stations
entails high costs and would not provide the historical time series
needed for proper risk analysis.
In 2009, EARS Earth Environment Monitoring, a remote
sensing company in the Netherlands, started FESA Micro-insurance
with the aim to develop low cost, satellite based micro-insurance,
reaching every farmer in Africa. To this end 30 years of Meteosat
hourly images were processed to 10 daily Relative Evapotranspiration
(RE) and Cold Cloud Duration (CCD) data fields. These data serve as
insurance index of agricultural drought and excessive precipitation,
respectively. They cover the entire African continent at a
resolution of 3 km.
Since 2011 EARS is supporting insurance projects of
PlaNet Guarantee, MicroEnsure, Syngenta Foundation and Cardano.
Insurances have been developed for maize, wheat, rice, beans and
cotton in Mali, Burkina Faso, Benin, Kenya, Tanzania and Rwanda.
EARS is providing for the data collection, risk analysis, technical
insurance development, index monitoring and pay-out reporting. These
services are readily implemented by the insurer.
Today this new approach to crop insurance has
reached considerable scale. This is important so for keeping
overhead costs low - which will potentially help hundreds of
thousands of farmers to access affordable insurance. This in turn
should assist farmers to invest in better seed and fertilizer, and
in this way realise higher crop production and income.
The project with partner PlaNet Guarantee in West
Africa, involves more than 800 locations. Each location may cover a
farming community. In this way several hundred thousands of farmers
can be insured. Yearly costs of data collection, index development
and index monitoring would remain below 0.5 euro/farmer, a very
small part of the insurance premium. Therefore, FESA micro-insurance
represents a major breakthrough towards affordable crop insurance.
Everywhere in Africa!
Tourism in Africa is slowly coming of age
Africa has been one of the fastest-growing tourism
regions of the last decade. The right infrastructure, safety and
security, and effective communication of the continent’s attractions
will help the continent to reach its full tourism potential.
Jet-lagged, 500 delegates from around the world
arrived in Victoria Falls, Zimbabwe, in May to deliberate on the
path to Africa’s tourism future. To unwind, Zimbabwe’s Tourism
Authority, host of the congress of the Africa Travel Association
(ATA), had organized a fun-filled welcome. The delegates toured
Victoria Falls — one of the world’s seven natural wonders — where
they participated in bungee jumping, gorge swinging and zip-lining
over the Zambezi River. They then went on safari, encountering lions
and elephants. Later they savoured local cuisine and danced
enthusiastically to traditional music.
The host’s intention was clear: see, feel and
believe. Zimbabwe’s showcasing spoke louder than routine speeches.
It spurred tourism ministers from Ghana, Namibia, Uganda and other
African countries to become bullish about the continent’s potential.
Said US Ambassador Charles A. Ray, "Zimbabwe, even with its
political uncertainty, is a potentially huge market."
Tourism watchers are upbeat. In 2004, the New
Partnership for Africa’s Development (NEPAD) approved an action plan
to make Africa the "21st century destination." Taleb Rifai,
secretary-general of the UN World Tourism Organization (UNWTO),
recently stated that "Africa has been one of the fastest-growing
tourism regions of the last decade." The sector already employs
about 7.7 million people in Africa. Mr. Rifai cited data showing
steady increases in Africa’s tourist arrivals, from 37 million in
2003 to 58 million in 2009.
Tourism revenues are the lifeline of many economies.
About 50 per cent of Seychelles’ gross domestic product (GDP) comes
from tourism. The rates are 30 per cent in Cape Verde, 25 per cent
in Mauritius and 16 per cent in Gambia. The World Bank reports that
tourism accounts for 8.9 per cent of East Africa’s GDP, 7.2 per cent
of North Africa’s, 5.6 of West Africa’s and 3.9 per cent of Southern
Africa’s. In Central Africa, tourism contributes just 1 per cent.
Despite the chest-thumping, Africa’s share of global
tourist arrivals is relatively small. There were 980 million
international tourist arrivals in 2011, of which only 50 million
traveled to Africa. North Africa suffered a 12 per cent loss in 2011
from the previous year due to that region’s political unrest,
denting the continent’s share of international arrivals. But that
loss was partially offset by a 7 per cent uptick in sub- Saharan
Africa, which gained 2 million arrivals. Overall, the 2011 data
shows that Africa performed better than the Middle East, which lost
5 million arrivals. Generally, the continent’s top earners are
Egypt, South Africa, Morocco, Tunisia and Mauritius, according to
The East African Community (EAC), a regional bloc,
hopes to attract tourists from other parts of the world — not just
the West — to go to different parts of East Africa — not just Kenya
and Tanzania. The EAC strategy, developed in 2006, includes using
DVDs, brochures and other materials to promote the region as a bloc.
At international tourism conferences, East Africa now speaks with
What draws tourists to a country, region or
continent? "I wanted to see something different from Europe and I
decided to visit Kenya and Tanzania. It is a different feel I got,
and I like that," Sven Brun, from Norway, tells Africa Renewal. The
McKinsey Global Institute, a think tank, maintains that tourists are
attracted to countries with good infrastructure, safety and
security, and sanitation. Janet Kiwia, the managing director of
World Jet Travel and Tours in Tanzania, adds that bad roads, poorly
maintained airports, power outages and other shortcomings keep
There are concerns over the safety of Africa’s
aircraft and airspace. In just two days in June, two planes crashed
in Nigeria and Ghana, killing more than 160 people. In 2009 the
World Bank found that 60 per cent of runways in North Africa were in
excellent condition, but only 17 per cent in sub-Saharan Africa
were. In addition, many sub-Saharan airports are small and have
trouble dealing with huge arrivals. Most depend on a single airline
and some have no connections to major carriers.
A report by New York University, the World Bank and
the ATA calls on industry operators to apply innovative approaches
to managing the different types of African tourism, which it
categorizes as "safari," "nature" and "culture." The report
recommends "going beyond traditional safari to include new
adventures" by tapping tour operators’ creativity.
Nature tourism, including gorilla tracking, presents
opportunities. More than 700 mountain gorillas live in the Virunga
Mountains that span Uganda, Rwanda and the Democratic Republic of
the Congo (DRC). Faced with political instability, the DRC is trying
to attract tourists by charging lower rates than Rwanda and Uganda.
In 2011 the three countries raked in a total of $225 million from
gorilla tourism. Through the website www.friendagorilla.org,
tourists pay to track gorillas using webcams. It is also possible to
"friend" a gorilla on the social network Facebook. Raising awareness
of gorilla tourism through social media may attract more tourists
from different parts of the world. More tourists mean more money
spent on hotels, restaurants, tour guides and souvenirs.
Culture tourism requires aggressive promotion. Like
food festivals in Mexico and music and cultural festivals in Jamaica
and Trinidad, African festivals can draw visitors. Film festivals in
Zanzibar and Burkina Faso attract culture tourists. Africa needs to
"develop flagship tourist attractions and communicate brand
effectively," advises a McKinsey report.
Africa’s domestic tourism (by resident visitors) has
been flagging. Not more than half of Kenyan chief executives have
seen an elephant, notes Victoria Safari, a Kenyan tourism company.
"Africans should know Africa better than the white person from
outside," it adds, recommending cheaper transportation rates and
ease of travel to encourage African tourists. Currently it costs
about $1,500 to travel 1,800 miles from Luanda, Angola, to Dar es
Salaam, Tanzania, but only $1,100 to go from London to Dar es
Salaam, a distance of 4,600 miles.
Some countries are moving in the right direction.
Frommer’s, a US travel guide series, named Ethiopia one of the
world’s top 12 destinations in 2007. The 2010 World Cup in South
Africa attracted more than 300,000 foreign visitors. Only recently,
renowned international singer Youssou N’Dour became Senegal’s
minister of culture and tourism, which may help boost tourism in his
It may take some time before Africa catches up with
Europe, which received 480 million tourists last year. But as
international arrivals hit the milestone of 1 billion worldwide in
2012, Africa should aim for a bigger slice of the pie. The right
infrastructure, safety and security, and effective communication of
the continent’s attractions can be starting points.
Source: Africa Renewal www.un.org/africarenewal
Bikes Hit the Pavement in Ghana
In Ghana, a country burgeoning with traffic
congestion, increasing economic growth, and a stark urban-rural
divide, making frames of bicycles out of bamboo could be the key to
promoting sustainable development. It also makes stronger,
This is according to Bernice Dapaah, the executive
director of Bamboo Bikes Initiative, which trains young Ghanaians to
build, fix, and market bamboo-framed bicycles.
"We are into women, children, and youth’s
empowerment. And the project reduces carbon emissions and
contributes to traffic decongestion, so using it is also a form of
reducing climate change," she said in an interview with IPS.
Bamboo Bikes works in partnership with Ibrahim Djan
Nyampong, the owner of Africa Items Co Ltd in Accra, and the frames
are sold abroad for 350 dollars each. They cost nearly 200 dollars
to build, and Nyampong — also Bamboo Bikes’ technical advisor — pays
the young apprentices an additional 30 dollars per frame for their
Nyampong described some of the technical advantages
that bamboo frames hold over their carbon fibre or metal
"It lasts longer than the metal frame," he said.
"You know a bamboo bike doesn’t break – it’s very durable."
He said a control test run in Germany proved bamboo
frames to be 10 times lighter than metal frames, and noted their
heavy load-bearing capacity. Indeed bamboo’s tensile strength —
meaning the maximum stress it can withstand while being stretched —
is much higher than that of steel.
Bamboo is fibrous, and therefore shock-absorbent. It
naturally dampens vibrations, so the frames do not require steel or
"The bamboo has also been treated against splitting
and termites, so it’s very strong," Nyampong explained.
He said the bamboo is treated for three to six
months before being used for production. It is then coated in a
clear lacquer to protect it against rain and other damage.
These elements have enhanced the frames’
international marketability, and BambooRide, an Austrian company,
has begun importing them for sale in Europe.
"At first, we were developing the frames together
with (Nyampong), because they were good, but they had to fit a
certain European standard," said Matthias Schmidt, BambooRide’s
"So it was like a partnership, a knowledge transfer
in both directions," he told IPS.
The Austrian importers also provided Nyampong’s team
with new equipment, including their first jig, to improve precision
and reduce the margin of error.
Now, the Austrian company imports up to 10 frames
per month, and Schmidt said he looks forward to the initiative’s
capacity is limited… and in the case that we need more frames… we’ll
need other sources. So we’re supporting Dapaah’s efforts to improve
the equipment and technology," he said.
Using bamboo rather than metal to build bicycle
frames also holds several advantages for producers – and for the
According to Dapaah, bamboo’s availability as a
local material not only enables producers to avoid expensive import
costs, but also eliminates the carbon emissions that would arise
from the transport of imported materials into the country.
Bamboo is also organic and recyclable, and, unlike
metal materials, does not require high levels of energy during
extraction and manufacturing.
"The bamboo bicycle is environmentally friendly…
because we are also fighting against climate change," explained
She said the initiative also commits to ecological
sustainability by working with bamboo farmers in rural communities
to harvest new bamboo crops, and conserve already existent ones.
"If we cut one bamboo, we make sure to plant at
least three or five more," she said.
In addition, bamboo bicycle frames promote
sustainable transportation as an alternative to motor vehicles and
According to Isaac Osei, the regional director for
Ghana’s Environmental Protection Agency, this is important.
"The traffic situation in the country in general is
increasing, and when traffic increases it has its associated
environmental issues," he told IPS.
There are 30 motor vehicles for every 1,000 people
in Ghana, and the Driver and Vehicle Licensing Authority registers
hundreds more each day. Data suggests that vehicle ownership will
continue to rise, as the country hits record levels of GDP growth
per capita. Ghana has the largest GDP per capita in West Africa at
402.3 dollars in 2011.
Osei noted some of the harmful impacts of increased
vehicle use, including carbon dioxide emissions and pollution from
dust particles on dirt roads.
"To actually educate people to use bicycles rather
than vehicles, I think it is good for the country and the world as a
whole," he said.
By employing and providing young people with
technical skills, the initiative is designed to reduce unemployment
and, consequently, rural poverty.
"So far I’ve trained about 10 boys," Nyampong said.
"They can build the bikes, but it’s not up to the quality control
level, so we are still training them."
In addition, Bamboo Bikes will help graduated
trainees establish their own workshops, and begin to train more
In 2009, Bamboo Bikes won the Clinton Global
Initiative Award, and in 2010, the United Nations Environment
Programme Seed Initiative award. It also garnered international
attention in June when it received a World Business and Development
Award at the 2012 Earth Summit in Rio de Janeiro.
By Portia Crowe
Source: IPS News