News Archive April 2014

Africa needs investment not aid, says Equity boss

Equity Bank Group Managing Director James Mwangi has advised developed nations and partners to consider partnering with African states on investment projects in place of development aid.

Speaking in London, at the weekend, when he addressed delegates during the 13th London Business School Africa Business Summit, Mwangi stressed that sub Saharan Africa is now ripe for investment based partnerships which are more sustainable than aid based credit facilities and grants.

The Equity Bank boss who was one of the keynote speakers addressing the summit theme: ‘Beyond the Hype: The Not-for-Tourists Guide to Investing in Africa’, presented the case for financial education to boost financial literacy as one of the key development agendas.

“In Africa, we do not need aid; let us develop Africa as we have developed other economies through sustainable and innovative investment programmes not aid.”

He expressed regret that despite pumping billions of dollars in aid for sub Saharan countries, the average human development index for the region is still “worrisomely” low with poor education enrolment and achievement.

Though recognized as a contemporary development enabler, banking services and financial inclusion in sub Saharan Africa, Mwangi said is still a challenge with less than 12pc penetration rates.

“Education distributes opportunities more equitably and I am glad that with free compulsory primary education, Kenya, is leading the way. Alongside education, we need to enhance the capacity of most Africans to be financially literate,” he said.

Adding that: “You cannot introduce finance to a population that has never been part of a commercial world.”

To address the banking challenge, Mwangi reiterated that financial inclusion in the region requires innovative solutions beyond the traditional brick and mortar model.

Presenting the Equity Bank example, Mwangi explained that the bank had managed to roll out a robust agency-banking model, which now counts more than 10,000 agents countrywide providing banking services in kiosks, hardware stores, supermarkets and other unconventional outlets.

“To address the issue of banking services provision in the conventional banking halls, Equity Bank has been rolling out an agency and mobile based banking system to enable us reach the population cost effectively and conveniently,” Mwangi affirmed.

Now in its 13th year, the Africa Business Summit is firmly established as a leading forum in Europe for engaged discussion on doing business in Africa. The Summit brings together 300 delegates with an active interest in Africa, providing an excellent opportunity to network with like-minded professionals, including alumni and students of London Business School.

The 2014 Summit, last weekend was staged against a backdrop of hot-button issues, from the rebasing of the Nigerian economy (now Africa’s largest) to the infrastructure crisis, the acute demand for power to support growth, ensuring that growth is more inclusive, facilitating access to capital for entrepreneurs, an accelerating pace of innovation in technology and telecoms, a burgeoning middle class, a call for accountable leadership, regional integration, and achieving better health and education outcomes.

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Africa needs investment not aid, says Equity boss

30 Apr 2014
Equity Bank Group Managing Director James Mwangi has advised developed nations and partners to consider partnering with African states on investment projects in place of development aid. Speaking in London, at the weekend, when...
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Europe considers dropping ban on South African orange juice

The European Commission has proposed dropping a ban on South African citrus imports to keep orange juice on Europe’s breakfast tables this summer but said it could be re-imposed if shipments contain a fungal disease.

The European Union, which buys 1 billion euros ($1.4 billion) of South African citrus exports every year, banned mainly oranges, lemons, and tangerines from South Africa late last year because of a fungal disease found in shipments.

But in a document obtained by Reuters, the Commission, which coordinates trade policy for the 28-member bloc, says a ban is not necessary. It recommends considering blocking the fruit only if the black spot disease is found in five different shipments from South Africa during the 2014 season.

The document said proper checks and tracking of fruit origin were enough to allow citrus into the EU. “The specified fruits shall be visually inspected by the responsible official body at the point of entry,” it said.

EU governments will vote on Wednesday whether to extend the ban, which would block 600,000 tonnes of citrus fruit for the May-October season, potentially inflating the price of orange juice in Europe this summer and forcing South Africa to sell at lower prices elsewhere.

South Africa supplies about a third of the European Union’s total citrus imports and is the main source of oranges for the juice drunk by consumers in Britain, Germany and France during Europe’s summer.

Last year’s ban followed the interception of 35 citrus shipments from South Africa that were contaminated with the fungal black spot disease, which growers in southern Europe fear could take hold in their citrus groves.

While harmless to humans, citrus black spot causes unsightly lesions on the fruit and leaves, reducing both harvest quality and quantity. There is no known cure, but fungicides can be used to control the spread of the disease.

‘END OF AN INDUSTRY’

The dispute comes at a sensitive time because the European Union is offering to improve the terms of its free-trade deal with South Africa in return for Pretoria’s support for the trade deals that Europe is seeking with sub-Saharan Africa.

EU trade chief Karel De Gucht told South African officials during a visit to Johannesburg in November that the contaminated shipments were “serious and problematic”.

South African growers say banning their citrus produce from all the European Union’s countries is unfair because there are no citrus groves in northern Europe due to the colder climate, meaning there was no risk from the black spot fungal disease in places such as Britain and Germany.

“It’s what we’d term an industry-ending event should we be banned out of Europe,” Justin Chadwick, head of the Citrus Grower’s Association of Southern Africa, told South African media earlier this year.

The EU’s ban last year was largely symbolic because it came at the end of South Africa’s season. But the European Union’s food safety watchdog said in February there was a risk of the fungal disease taking hold in Europe’s estimated 500,000 hectares of citrus groves.

EU farm union Copa-Cogeca wrote to EU Health Commissioner Tonio Borg this month to call for an immediate ban from any South African farms found to be contaminated with the black spot disease. Citrus-producing Spain, Italy and Greece support such a measure but face resistance from northern European nations.

“We want measures for 2014,” the group’s head Pekka Pesonen said. “We faced a very high risk of contamination last season and we cannot repeat it this year.”

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Gas exports to make Dar es Salaam logistic centre

Tanzania will become a leading exporter of liquefied natural gas (exploration ship pictured below) by 2025, supplying markets as diverse as Pakistan, China, Spain and Chile.

PricewaterhouseCoopers (PwC) report states infrastructure in Tanzania is undergoing impressive investment in recent years and there is more to come.

Transport and utilities infrastructure projects worth $19 billion are in the pipeline. Last year, Tanzania signed aframework deal with China Merchants Holdings (International) to construct a new port at Bagamoyo, 75 kilometres north of Dar es Salaam in a project expected to involve more than $10 billion.

The construction of the port will also involve building infrastructure for a special economic zone (EPZ) and railway network. The new port will be able to handle 20 times more cargo than the Dar es Salaam port and is expected to relieve pressure on the Dar port once it begins operating in 2017. Construction of the ambitious project is expected to begin in earnest later this year.

Tanzania also has ambitious plans for investment in rail infrastructure to serve the neighbouring landlocked countries of Uganda, Burundi, Rwanda, DR Congo, Zambia and Malawi.

The report says rail projects with an estimated value of more than $14 billion are currently in various stages of development. These include a $2. 7 billion project to develop a new railway line from Tanga to Musoma on Lake Victoria. The Chinese Government has signed a $42 million agreement with the Tanzania- Zambia Railway Authority (Tazara) enabling Chinese companies to rehabilitate the railway.

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Gas exports to make Dar es Salaam logistic centre

30 Apr 2014
Tanzania will become a leading exporter of liquefied natural gas (exploration ship pictured below) by 2025, supplying markets as diverse as Pakistan, China, Spain and Chile. A PricewaterhouseCoopers (PwC) report states...
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AU pushes for AGOA extension

The African Union has urged member countries to push for the extension of the Africa Growth and Opportunity Act (AGOA) for the next 15 years to enable them maximize benefits through trade relations with the world economy. Local media reports Monday quoted the AU’s commissioner for Trade and Industry, Mrs. Fatima Haram as saying that there should be renewed efforts to strengthen Africa’s link with AGOA, a trade mechanism by the US government to offer tangible incentives to African countries to continue their efforts to open their economies and build free markets.

Haram said it was also crucial to maintain the momentum towards the establishment of the Continental Free Trade Area (CFTA) as soon as possible due to the uncertainties in the various bilateral and multilateral trade negotiations with developed economies.

Haram who was speaking during the ongoing Extra Ordinary Conference of AU Ministers of Trade in Addis Ababa which opened on Sunday added: “It has become even more critical for Africa to create and maintain momentum towards the establishment of CFTA that is ambitious for the shortest possible time as possible.”

She stressed the need to prioritize Africa’s economic integration agenda over other bilateral and multilateral agreements because “it is this agenda that is key to Africa’s economic transformation and development.”

The conference was convened in response to the directive from the AU Summit of January as recommended by the High Level Africa trade Committee (HATC).

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AU pushes for AGOA extension

29 Apr 2014
The African Union has urged member countries to push for the extension of the Africa Growth and Opportunity Act (AGOA) for the next 15 years to enable them maximize benefits through trade relations with the world economy. Local...
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