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BMW looks to capitalize on the emerging African market

30 July 2016 Comments (0) Africa, Business, Featured

BMW Rosslyn plant, South Africa

How BMW is planning to become the leading luxury car brand in sub-Saharan Africa.

BMW has recently announced big plans for a major expansion into the African market. The German automotive powerhouse has long been considering a major push across the continent, and hopes its new strategy will see it become a household name in years to come.

South Africa is the stage from which BMW hopes to address its new audience of African consumers. The company has actually operated inside South Africa longer than it has in any other country outside of Germany. BMW acquired its historic Rosslyn plant from South African manufacturer Praetor Monteerders back in 1975. Since then, BMW has firmly established its prestigious brand inside South Africa, but seen little success across the rest of the continent, largely due to economic factors. For the most part, the Rosslyn plant has been used to service export-markets in Asia and the United States.

Rosslyn revived thanks to a major face-lift

The Rosslyn plant, famed for its outstanding quality, even by BMW standards, is about to receive a major face-lift. Production rates at Rosslyn have for a number of years been limited by one curious factor: room. Space has been at a premium for some time, thanks to the increasing technological demands of making modern cars. The firm has been cramming new technology into the same old space for over four decades, forcing it to compromise while restraining productivity. However, the shackles are about to be ripped off.

In late 2015 BMW finally acquired a long sought after plot of land adjacent from the factory. They simultaneously announced a 6 billion rand investment in the company’s South Africa division. A large part of this investment will be used to build a state of the art body-shop for producing the new BMW X3, which is critical to BMW’s forward strategy. The new body-shop will be one and a half times the size of the existing facility. This should make the Rosslyn facility twice as productive, providing BMW with the resources with which to wage its Africa expansion.

Strategic moves for BMW

BMW has realized it needs a “boots on the ground” approach to lead the charge across the continent. As a result, the company has granted full autonomy to its South Africa division, while using the rest of the 6 billion rand investment to train new staff and improve supplier support services. South Africa CEO Tim Abbott explained why BMW is so invested in the expansion: “The real growth for us in the future will come from Africa.”

While BMW is an international powerhouse in developed countries, those markets are saturated. Not just in the automotive sector, but in industries worldwide, shrewd organizations are realizing that Africa is the final frontier, the last chance to grow their brand in rapidly emerging markets. BMW does not intend to be left behind. The firm intends to start its courtship of Africa by targeting markets in Nigeria, Kenya, Ivory Coast, Togo, Ghana, Angola and Senegal.

BMW busy paving the way for a successful launch

BMW X3

BMW X3

Pivotal to their strategy is the upcoming BMW X3. The X3 is a sturdy and powerful four wheel drive SUV, which also boasts the style and finish synonymous with BMW. The German giant believes that these qualities will make the car highly attractive in the African market. Tim Abbott said that “with the X3, we believe we have a vehicle that resonates with these countries.”

Whilst the X3 isn’t going to be hitting African streets until 2019, Tim Abbott explained that BMW is busy paving the way for a successful launch: “Our plan over the next three or four years must be to create a structured sub-Saharan environment for BMW vehicles so that when the X3 is ready, so are the markets.”

Abbott explained that the firm intends to do this by working with African banks to create new vehicle financing options in target countries. Additionally a scheme is underway to re-sell used BMW’s from South Africa and elsewhere in the new African markets, while working with African dealerships to enhance sales and services to Western standards.

Ultimately, BMW is looking to secure its place in Africa’s conscious as the premier luxury car brand. Armed with major investment and an airtight strategy, it would seem unwise to bet against them.

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The Ivory Coast looks to double its hydrocarbon production by 2020

29 July 2016 Comments (1) Africa, Business, Featured

ivory coast offshore oil

The Ivory Coast, plans to double its production of hydrocarbons by 2020.

The Ivory Coast boasts one of the region’s most reliable power grids, which allows the nation to export energy to its neighbors. However, a recent economic boom in the already thriving Ivorian markets has seen the demand for energy rocket. The ever-growing demand for more energy has meant that the Ivory Coast has set itself the ambitious goal of doubling its hydrocarbon production by 2020.

The numbers behind the headline

While doubling production could be quite achievable for a nation only just embarking upon the mining of newly discovered resources, the Ivory Coast has a well-established hydrocarbon industry, in which 70% of its resources are already used up by electricity production.

The obvious questions are whether doubled production is realistic, and just what needs to be achieved if the aim is to be met. In simple terms, it means an increase from around 100,000 BOE (barrels of oil equivalent) per year, to roughly 200,000 of annual production by 2020.

Despite this seeming a large undertaking, the Ivory Coast has every reason to be confident. The recent history of its hydrocarbon industries shows hugely impressive growth, and there are plans in place to help realize its goal. From 2012 to 2013, the Ivory Coast doubled its natural gas output, reaching 220 million cubic feet per day. By 2014, this was 250 million cubic feet per day – mainly produced by the Ivorian company, Foxtrot International.

The state oil company Petroci is also working with Foxtrot and GDF Suez to ensure that natural gas contributes even further to the Ivory Coast’s energy needs. Foxtrot committed almost $1 billion over a 5 year period, in 2013, to increase gas production annually.

Petroci itself has also made marked inroads in expanding oil production, increasing its production from around 30,000 barrels per day (bpd) in 2014 to a 2015 high of 53,000 bpd. Such increases, in both gas and oil, indicate that the nation is well on target to meet its grand scheme of doubling total production across the field.

Confidence in development

Foxtrot International worker

Foxtrot International worker

While the aforementioned figures are impressive, the government’s supervisor of hydrocarbon exploration and production, Ousmane Doukouré, reported that the first half of 2016 has seen oil extraction at around 45,000 bpd. While this is still a marked improvement on 2014 figures, it is down from last year’s figure. However, investment, foreign assistance, and as yet untapped resources all provide confidence.

Petroci’s Managing Director, Ibrahima Diaby, spoke at an energy conference in the country’s capital, Yamoussoukro, and indicated the scope for development. Diaby spoke on off-shore gas reserves in the country, saying, “Today we have around 60 blocks. We’ve awarded about 20.”

Companies such as Exxon Mobil and Total are working on exploration within the Ivory Coast, and in addition to outside support, the Ivorian government has pledged $3.3 billion to boost oil production over the next 5 years.

For many years, the Ivorian government focused its development efforts on the agricultural industry, and as such energy was somewhat ignored. With a concerted effort from both the government and private companies, the resource rich nation is likely to grow its output exponentially. Diaby said the outcome of the nations increased gas and oil production would boost electricity by 80% over the next 6 years.

Foxtrot International began digging 7 new gas wells in 2014, and installed a new platform at its Marlin gas field in 2015. With major international oil and gas companies invested in developing the nation’s energy infrastructure, Diaby was confident in saying, “With the current exploration, our ambition is to reach 200,000 BOE (barrels of oil equivalent) in 2020.”

Wisely, there are additional angles to meeting the Ivory Coast’s growing energy needs. Aside from the ramped up production of domestic hydrocarbon resources, Diaby also told journalists that the country would begin importing liquefied natural gas (LNG), to help supplement the gas needs of some its power plants. These imports are scheduled to begin in 2018, and the Texas based company, Endeavor Energy, confirmed that it was aiming to secure a $900 million gas-driven power project within the Ivory Coast.

If such developments continue, West Africa’s largest economy may soon become as known for its power production as its famous cocoa exporting.

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Catherine Mahugu: Inspiring Women in Kenyan Tech

25 July 2016 Comments (0) Africa, Featured, Leaders

Catherine Mahugu

Catherine Mahugu is a tech innovator from Kenya who has built an empire on socially beneficial projects and connectivity.

Catherine Mahugu is leading the way in the Kenyan tech industry. Currently working from San Francisco for her e-commerce accessories business which connects consumers and local African manufacturers, she has made waves across the tech, IT and retail worlds. She credits her early interest in science and technology to her engineer father and at just 27, she has achieved a great deal in these industries.

Early life

Mahugu graduated from the University of Nairobi with a bachelor’s degree in Computer Science. From an early age she broke the mold, favoring entrepreneurial projects over “corporate” roles that she considered to be the “safe option.” Her first projects were collaborations with her student colleagues at university, such as a mobile application that helps rural water vendors connect with customers by advertising their location and prices.

Combining her degree, enterprising spirit and intimate knowledge of the regional issues affecting her native Kenya, Mahugu has been at the forefront of creating many projects that benefit local people. Her first official foray into the tech world was with KamataKab, a mobile solution that uses GPS to locate taxis in the area, an option to contact and then a rating system to rate the taxi’s service for other users to utilize. Although this was the overall winner at the Garage4Kenya awards in 2011, Mahugu knows that this app was a little too ahead of its time; it didn’t meet the recent successes of Uber and Easy Taxi today. This hasn’t fazed Mahugu however, and she feels that the experience showed her that innovation was a viable career route and that her ideas had traction in the tech world.

Innovation, Innovation, Innovation

The building blocks to her latest enterprise can be seen in her next project, SasaAfrica. This provided the foundations for Soko, launching an app that allowed merchants to connect with customers using only their mobile phones. The idea for the projects came from a chance meeting with the two other founders while in Nairobi. They all believed in a future for mobile phone technology to help African enterprises. With the percentage of mobile phone usage up to 90% in some parts of Africa, they realized that is was an obvious global solution to connectivity issues between consumers and vendors. After seeing many predominantly female artisans at local markets struggling to sell their ware to a limited customer base, they decided to launch a global marketplace that these vendors could access, in which they could accept orders and then organize distribution.

soko artisans

Profiles of the artisans on the ShopSoko.com website

Now based in California, the company helps over 1,000 artisans sell their products to a global community. After joining the Soko network, users see their yearly income increasing by a massive 400% on average. They now operate in over 40 countries and plan to expand to reach vendors in Mexico and India. Mahugu is committed to overcoming the challenges that many Africans face. They were confronted with supply issues from vendors, caused by problems such as inconsistency of electricity, so they are adapting their business model to include trusted, shared spaces where artisans can create and collaborate.

Mahugu knows the struggle many women face coming from traditional backgrounds, having less access to education, and to the outside world. She is committed to rebalancing gender inequalities and believes that “when one woman helps another, amazing things can happen.” She is a role model to young women, particularly in the tech-world. When she was expanding her business, and receiving no applications from women for the technology roles, she realized something had to be done to appeal to women like herself. She explained that the gender imbalance in the tech industry was “a harsh reality that dawned on me, and that we still need more women in technology and collaboratively need to promote this awareness.” Social enterprise and IT seem to be a winning combination for Mahugu, and her commitment to social justice and interest in empowering other women in the tech-world make her a person worth keeping an eye on.

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From Tragedy to Tech Triumph: Mubarak Muyika

16 July 2016 Comments (0) Africa, Featured, Leaders

Mubarak Muyika

The remarkable story of Mubarak Muyika and his burgeoning tech empire.

The tech scene is exploding across Africa as ambitious young entrepreneurs are changing the face of the continent. Kenyans have been at the vanguard of the action in recent years. One individual currently making big waves is Mubarak Muyika, a dynamic 22 year old with a colorful past.

Muyika was born in Western Province, Kenya. His father was a prominent civil servant and his mother was a high school teacher. Unfortunately, his young life was marked by tragedy: his father passed away when he was two years old. Then, when he was ten, his mother died and the young orphan was taken in by his mother’s sister and her husband.

Great Beginnings

It has long been observed that tragedy seemingly makes, or breaks an individual. In Muyika’s case, it was most certainly the former. He was known as a sharp and gifted student and it was in the early days of high school that his tech-entrepreneurial promise first blossomed.

Aged 16, Muyika developed the “enhanced petrol tracker.” The tracking database was designed to mitigate government mismanagement of oil resources by more efficiently cataloguing oil tanker movements, oil flow and demand. The project was incredibly well received. He was recognized as the best student in the computer exhibit category at the annual Kenya Students Congress on Science and Technology.

His adoptive parents were the owners of a book publishing and distribution company, Acrodile Publishers. Mubarak realized that the web presence provided by their current website manager was substandard and expensive, bottlenecking the company’s productivity. He taught himself PhP, Java and HTML and built a highly functional website for the business.

Business Blossoms

On the back of his newly earned skills, Mubarak launched his first business, Hype Century Technologies and Investments LTD. The company offered website designation, management, domain reselling and hosting services. He enlisted the help of two friends and the business quickly began to take off.

In a 2012 interview, Mubarak spoke about Hype Century’s remarkable success in the startup period: “By May after our first financial year we had about 1,800 domains which represented clients in Kenya, Uganda, Tanzania, South Sudan and some in the RC (Republic of the Congo). That was something that I can say is the biggest achievement, in terms of where the company is today.”

It was during this early period that Kenyan multi-millionaire Chris Kirudi realized Mubarak’s great potential. Through his contacts he recommended Mubarak for a scholarship to one of the world’s most prestigious universities, Harvard. Incredibly, Mubarak turned down the scholarship in order to focus on his business ventures, demonstrating extreme belief in his own talents and entrepreneurial ability. He is a man who knows his own mind. He gave insight into his tenacious business philosophy, saying, “If you are in a society with intelligent people who have a plan and a strategy, you need a plan, a strategy, speed and aggression. That is the only way to succeed in Africa.”

Soon, Mubarak’s business attracted heavyweight attention. International tech investor Jignesh Patel teamed up with the rising star, buying a 25% stake in the company. This proved to be a shrewd move, as Patel’s connections and experience propelled the firm to even higher heights.

A Bright Future

Zagace platform

Zagace platform

However, Mubarak soon felt the itch to challenge himself further; he clarified his decision to move on from Hype Century saying, “I had the feeling that I was not maximizing my potential. I opted to sell my shares and develop a new venture.”

In 2013, he settled a deal netting himself a cool six figure settlement for his 60% stake. Astonishingly, Mubarak was still only 19 years old.

His newest venture, ZAGACE is both ambitious and innovative. His firm offers a unique service providing a completely integrated, online business management toolkit for small and medium sized companies. ZAGACE allows users to manage human resources, inventory, accounting and communications all through a series of well designed, instanced apps. The concept has been lauded as ingenious and effective.

Eager to feed his business with the best talent available, Mubarak has recently moved his operations to Silicon Valley, USA. The young Kenyan means serious business, and the world has noticed. In 2015, he was named one of Africa’s most promising entrepreneurs in Forbes 30 under 30, while Yahoo named him one of nine “Mark Zuckerbergs” of other countries. With his talent, resilience and determination, Mubarak Muyika is setting the tech scene ablaze. We will no doubt be hearing more about him, very soon.

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Keeping House: Cleaning Up Nigeria’s Oil Industry

12 July 2016 Comments (0) Africa, Business, Featured

Nigerian Oil Industry

After the rollout of a $1 billion cleanup plan for Ogoniland, Nigeria–a region that has been severely damaged by the oil extraction industry–Nigeria’s state-owned petroleum corporation has voiced its support for environmental reform within the sector.

Nigeria is Africa’s largest producer and exporter of crude oil, and is estimated to have one of the world’s largest oil reserves. Unfortunately, Nigerians have yet to reap the benefits of such a potentially lucrative industry due to historically lax regulations. Nigeria has not been a competitive operator in the oil industry due to its historically bad practices, such as lack of oversight in production, virtually non-existent environmental regulations and not infrequent oil spills.

In early June 2016, Nigerian Vice-President Yemi Osinbajo set a $1 billion project to clean up Ogoniland, a part of the Niger Delta that has been intensely contaminated by the oil extraction industry. Following the example of the federal government, The Nigerian National Petroleum Corporation (NNPC) has decided to voice its concern for Nigeria’s environment as well. Following the federal roll-out of the massive internationally-funded cleanup plan, the NNPC announced their intention to reform the oil sector, although did not provide any details on how this would be done. The NNPC did, however, encourage members of the corporation to support conservation centres and parks.

Why Now?

Following an expansive 2011 study by the UNEP on the impact of oil extraction in the Niger Delta, Nigeria has been in the spotlight as one of the industry’s worst environmental offenders. The report found severe and widespread contamination of groundwater and soil across Ogoniland. In a number of areas, public health was compromised through contaminated drinking water and the presence of unnatural levels of certain carcinogens associated with oil extraction. Ecosystems unique to the delta region, such as mangroves, have been decimated by the virtually unregulated operations of the petroleum industry. All of the report’s findings pointed to a lack of institutional control within the oil industry and within the regulatory systems of the government. The report recommended that an initial investment of $1 billion would be needed to begin the restoration process.

It has taken more than five years to establish the infrastructure and amass the funding necessary to begin what is considered the “world’s most wide-ranging and long-term oil cleanup exercise ever undertaken,” but the project is finally underway. Experts estimate that it may take up to 25 years to restore the Ogoniland ecosystem to its pre-contamination status, but that such a long-term commitment is the only way to reverse the damage caused to the region.

Healthy on the Inside, Healthy on the Outside

A cleanup is a good place to start, but in order for the $1 billion investment to really contribute to positive change, a complete overhaul of Nigeria’s oil industry is vital.  Recognizing its role in the project, the NNPC announced its “20 Fixes” plan, aimed at reforming the chronically mismanaged oil industry. Among these “20 Fixes” were goals such as reducing and auditing costs, restructuring corporate centres and staffing, renegotiating existing contracts, unbundling the Nigerian Gas Company and improving information technology, among others. Reducing environmental impact was, surprisingly, not among these 20 top-concerns. Following the announcement of Ogoniland project, however, the NNPC voiced its support for the project, encouraging its workers to support environmental conservation, and committed to improving its environmental protection policies. A concrete plan to turn verbal commitments into action has yet to materialize.

Kachikwu pointed to the Lekki Conservation Centre, established in 1990, as an example of its commitment to conservation efforts. The NNPC claims that, with the support of Chevron Nigeria and others, it has contributed to the creation of the 78-hectare conservation centre, although no evidence for that is available.

This is not to say that the NNPC is not making a positive change, because it is. Recently appointed Managing Director Dr. Ibe Kachikwu has been hard at work to bring transparency to one of the world’s murkiest oil production lines. The World Bank, which committed more than $1 billion to a variety of projects in Nigeria for 2016, applauded the efforts of Dr. Kachikwu for the initiatives outlined in the aforementioned “20 Fixes.” Dr. Kachikwu urged the World Bank to offer additional support for an institutional framework “and training for the ministry and NNPC, [because] the training would provide the necessary skill sets that are required to grow Nigeria’s oil and gas industry.” With such financial support, the NNPC may be able to make the reforms necessary to clean up its act.

Time for Change

After decades of mismanagement, Nigeria’s oil industry may finally be at a turning point. Under the new direction of Dr. Kachikwu, the NNPC may be able to institute real, positive change that will make the cleanup efforts long-lasting. It is only with the moral and financial investment of the oil industry that the environment can be protected. Ogoniland will not be restored overnight, and it is of the utmost importance that the oil industry do its part to ensure it does not simply move the problem elsewhere.

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WeFarm combines cutting edge ideas with simple technology

6 July 2016 Comments (0) Africa, Business, Featured

wefarm

WeFarm aims to help farmers around the world support each other through simple SMS connections.

WeFarm was launched in 2014, as a means of giving farmers – in very different areas – access to advice and information from other people in the trade. The idea was to connect people who had no internet access, in order to give them the opportunity to learn from each other, and help share vital information. The company’s slogan is: “The internet for people without the internet”.

Connecting the unconnected

With 500 million small-scale farmers across the world, offering a wealth of experiences and methods to draw on, peer-to-peer networking for this essential group of workers could be huge. CEO and founder Kenny Ewan spent 7 years working with many remote agricultural workers in Peru before he devised the idea.

Ewan explained what inspired his idea: “I was always very impressed with the unique and low-cost solutions farmers would come up with as solutions to their problems, (but) farmers living less than 20 miles away wouldn’t have any way to hear about these local innovations because very few people in rural Latin America and Africa have internet access.”

From here the WeFarm idea was born. Ewan approached his co-worker, Claire Rhodes, and the two quickly drafted out their plans. After winning grants from the Nominet Trust and the Knight Foundation, WeFarm began to pilot its service in Kenya and Peru.

WeFarm CEO and founder Kenny Ewan

Strength in diversity

While it might initially seem unusual to try and connect such different markets as Kenya and Peru, Ewan explains that a wide range of experiences is a strength for the system. Citing a recent example of a Kenyan farmer who wanted information on keeping rabbits, Ewan says, “He was able to ask questions and get information from someone who’d been keeping rabbits for 20 or 30 years on their farm. He was a farmer in Kenya. His question got answered in Peru.”

Once a farmer has signed up to the service, they simply text a question to the local WeFarm number, and WeFarm’s online system scans the question for keywords, before forwarding it to farmer profiles that seem relevant. A body of translators ensures that questions can be asked and answered in English, French, Spanish, and Swahili.

WeFarm had 33,000 Kenyan farmers signed up inside 10 months of launching, and within its first month in Uganda there were 5,000 Ugandan members.

Ewan hopes that by sending questions to both local and remote members, all those using the service can benefit greatly. “Farmers,” he noted, “can obtain both instant, relevant local knowledge as well as new ideas and insights from further afield.”

Growth for all

With over 5.2 million messages having already been sent, and with an average of 65% of all users contributing their own knowledge to the service, WeFarm is growing quickly.

The service is on the verge of launching in Tanzania and The Ivory Coast, but it also has plans far beyond these impending introductions.

There are planned moves into the markets of Rwanda, Ethiopia, India, and Brazil, with Ewan and his team currently raising $2.9 million in funding to drive this expansion.

As the database of information increases, so does the opportunity for the company to expand its positive influence. The beneficial information, that farmers can find ranges from more in-depth reports on market prices and products, to shared tips about adapting practices to climate change.

As the company grows, so does the proportion of farmers in the developing world who can grow their own business. Moreover, as everything at the user level requires no more than a basic cell phone, the penetration of the project far outstrips internet access.

Ewan says that some people were skeptical about farmers helping each other for no fee, but on the contrary their users embrace the chance to share their views. Ewan said, “It’s not just about the exchange of information; it’s also about empowering people to have their voice heard.”

As WeFarm continues to grow, a lot more of the farming world’s voices should soon be heard.

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Is there hope for Eritrea?

5 July 2016 Comments (0) Africa, Featured, Politics

Eritrean refugees

Can Eritrea shake its reputation and get a handle on its migration problem?

Is Africa’s youngest country also its most repressive state? The labels it has carried for the past decade have become the lens through which the international community views it, but how fair is the reputation it has developed? Eritrea gained independence in 1993, nearly 30 years after Emperor Haile Selassie seized the land for Ethiopia in 1962. It has never held elections, has no free press and has a mandatory and indefinite national service. However, this oppressive picture seems to be at odds with the experiences of recent visitors, journalists and diplomats who have reported the country to be clean, relaxed and relatively advanced. People can be seen enjoying bars, restaurants and cinemas while going about their day under no obvious restrictions. The issues contributing to its high levels of emigration are unique. Can the problems be reversed and stability returned to this troubled nation?

Eritrea’s Troubled Past

The UN has repeatedly criticized the government for its lack of democracy and suspected human rights abuses. For over a decade, journalists have been barred from entering the country and in 2001, the government shut all down all free press houses. International sanctions placed over its alleged support of Al Shaabab Islamists in Somalia have further damaged Eritrea’s economy and deepened its isolation on the world stage.

Modern Eritrea has faced a number of crises in its young life. After just a few years of independence, a two-year war broke out in 1998-2000 that left tens of thousands dead. After 15 years of tentative peace, there has been a recent resurgence of violence. Details have been vague, with 200 Ethiopian troops reportedly killed, and both sides accusing the other of re-starting the hostilities.

Europe Watches On

Eritrea’s problems have been compounded by severe droughts and the nation’s heavy reliance on agriculture. A revival of the conflict with Ethiopia would be nothing short of catastrophic, inevitably forcing more people to flee the nation, adding to an already alarming exodus from the troubled country.

Migration from Eritrea hit new highs in 2015, with Eritreans being the largest contingent of Africans to arrive in Europe. This migration, although detrimental, is forcing the international community to take notice of the problems faced in Eritrea, driving change.

Mass Migration 

Eritrean refugee camp

Eritrean refugee camp

Due to this influx of migrants reaching Europe’s shores, the EU has recently announced a $227m “development fund” for Eritrea and has opened access to a number of emergency finance mechanisms. There is a growing perception that sanctions and further isolation are far less effective than engagement with these problematic countries; an increased amount of communication, research and aid has proven to be a more valuable strategy. It has been suggested that international isolation and hostilities with Ethiopia would only force it closer to its Somali and Sudanese neighbors, something unlikely to elicit the reforms that the UN has demanded.

The development fund, which is due to run from 2016-2020, as well as collaboration with the government to improve democratic and human rights, is expected to reduce the number of Eritreans leaving the country. The effectiveness of this campaign will depend on the government following through with reform. They claim the restrictive state has been a necessity due to a “no war, no peace” policy towards Ethiopia, and a need to be vigilant and prepared for further confrontation.

Looking Forwards

Alongside fresh UN aid, additional money is finding its way into the country through private investment in industry, particularly in the mining sector as Eritrea boasts strong mineral resources. The conflict in Yemen has also led to a fortuitous collaboration with the United Arab Emirates, with Eritrea providing “logistical facilities” from its southern port of Assab. Commentators feel that this foreign capital and cooperation is critical in paving the way to improved conditions and stability within the nation.

Despite its troubles, Eritrea has made some meaningful progress on its own. Since its independence from Ethiopia and subsequent war in 1998-2000, the country has posted promising health statistics. Under-five mortality has decreased by two thirds, due in part to successful vaccination programs that have saved thousands of lives. AIDS has long been a scourge upon Africa, with the continental infection rate standing at 5% today. Defiantly, Eritrea has bucked the trend by bringing its infection rates down to a comparatively low 0.8%.

Eritrea’s mass-migration problem is unlike those of Syria, Iraq, Afghanistan and Somalia. It has relatively low rates of corruption, it is not currently at war, and is not a hotbed of religious extremism or persecution. The problems its citizens face are related to democracy and a lack of rights, decisions the government claims are to protect the country’s future. Can this government be persuaded to work with the international community and democratize the country? The issues it faces are unique, but with an international focus on decreasing migration, coupled with foreign investment, its future could be promising.

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Kenyan Geothermal power continues its expansion

30 June 2016 Comments (0) Africa, Business, Featured

Kenya Geothermal Energy Project

Kenya continues to attract interest with its extensive geothermal energy schemes.

In the space of only a few years, Kenya has shifted its entire focus on energy, and created unprecedented growth in geothermal production. While hydro-electricity has long been the nation’s main source of power, the Kenyan government now hopes that by 2030 only 4% of the country’s energy will be hydro-electric. The notoriously unreliable rains of East Africa make a shift to geothermal power a sensible choice, and Kenya’s Great Rift Valley is proving to be a giant source of energy.

Power from within

It was back in the 1950’s when the first exploratory wells were dug in the Rift Valley. The Olkaria region of the area was quickly ascertained to have serious potential for energy creation. Under the surface there is a seething mass of geothermal activity that blanketsthe area with hot springs and bubbling, sulfuric fissures. It is no surprise that the national park in which Olkaria is found is known as “Hell’s Gate.”

Within 10 years of the first drilling, the Kenyan government, working alongside the UN, began more in-depth assessments of the energy potential that bubbled beneath the ground. By 1981, the first geothermal power plant had opened in Olkaria, with an initial output of 45 MW.

Kenya geothermal energy

Kenya geothermal energy

Harnessing this natural energy became a large project, with over $1 billion of investment over the next 20 years. However, it was an investment worth making, as Kenya’s energy demands have rocketed as the nation develops. Considering that in 2008 only 25% of the population had access to electricity, this demand was only going to increase. As such, the government developed its Vision 2030 program.

A bolder vision

Vision 2030 was launched in 2008 to outline Kenya’s plans for energy expansion that would facilitate rapid economic growth. However, droughts highlighted the unreliable nature of Kenya’s hydro-electric dependency, and in 2013 the project was updated with Olkaria’s geothermal plants the priority.

Olkaria expanded rapidly in the 21st century, with Olkaria II opening in 2003 and expanding its production in 2013. Olkaria III hosts a 110 MW generator to add to the combined power of 290 MW coming from Olkaria sites I and II.

As recently as 2014, Olkaria opened up site IV that hosts a further 140 MW of power, as the company KenGen has worked closely with multinational companies to further its production.

KenGen is the company responsible for Kenya’s geothermal production, and as a majority government owned body it has made massive inroads into expanding the energy supplied by the Rift Valley’s activity. Alongside companies like Toyota and Toshiba, KenGen has created a huge increase in the energy produced from Olkaria.

The financiers supporting its growth include the World Bank and the European Investment Bank, which hope that affordable, green energy will have even more far reaching effects. Diarietou Gaye, the World Bank’s country director for Kenya, said, “That’s why we are investing in the energy sector… [it] is a key infrastructure investment in the fight against poverty.”

This is borne out by figures quoted from KenGen CEO, Albert Mugo, who stated that the increased production from Olkaria had seen a 30% drop in energy costs for consumers since 2014.

Continued Growth

The expansion of Kenya’s geothermal power base is far from complete. The development of Olkaria V is already underway, and there are plans for an Olkaria VI site. Moreover, the fact that Kenya is now the 8th largest producer of geothermal energy in the world has attracted interest from neighboring nations. Ethiopian president Hailemariam Desalegn recently visited Olkaria, and the two nations have agreed to work side by side in the development of renewable energy.

Geothermal energy looks set to be at the forefront of Kenya’s energy revolution, and will surely play a vital role in the country’s continuing development.

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Western-trained talent returns to Ethiopia

27 June 2016 Comments (0) Africa, Business, Featured

Talented Ethiopians who grew up abroad are returning to their homeland, sparking hope and driving change in the once stagnant nation.

For a long time, Ethiopia has struggled as one of the poorest countries in Africa. 1974 saw the end of the iconic Haile Selassie’s rule, as the brutal Derg communist dictatorship seized power. The following years were harsh, and so began a long-lasting trend, whereby many of Ethiopia’s most skilled citizens left the nation to seek better lives in the western world. The once great kingdom languished under corruption, war, famine and drought.

Prior to the Derg regime, mass migration from Ethiopia was non-existent; sadly that was due to change. George Mesfin, an American-Ethiopian who fled with his family at the age of 14, summed up the situation by saying, “During the Derg years, for a while, everyone who could get out, got out.”

After the despotic government fell in 1991, it took a long time for the country to start making progress. However, members of the Ethiopian diaspora have started returning to their homeland, attracted by a growing economy and a more stable political situation. Making a difference seems to be the motivation that drives some to give up their comfortable lives in the western world. Many of the diaspora recognize the opportunity to use their western skills for the betterment of Ethiopia. The chance to become leaders who drive the nation forward resonates deeply within the souls of the patriotic. Those who have chosen to go back are helping to change the country in dramatic ways.

Returning Home

One of Ethiopia’s more famous returnees is Tadiwos Belete. Belete moved back to Ethiopia after developing a successful luxury spa business in Boston. He has since used his skills to create a thriving Ethiopian spa empire which employs over 1,500 people and focuses on using a solely local supply chain. In a 2013 interview Belete said, “The profitability is here, you can see it, you can feel it, you can touch it. But as well, as a human being you can make a difference here.”

While official figures are not available, Ethiopian economist Bisrat Teshome estimated that Ethiopians returning from other countries have injected more than $1 billion into the economy while starting over 2,000 new businesses. The influx of foreign-earned capital that comes with the returning migrants is a welcome source of investment for the country, where access to foreign currency and corporate investment are still lacking.

Western Influences

In the nation’s capital Addis Abbaba, a profusion of cafes, restaurants, fashion boutiques and other western-inspired businesses have appeared. Less visible, but no less important, the returning diaspora is investing in property development, agriculture, technology and a host of other sectors.

Kaldi's Coffee located in Addis Ababa

Kaldi’s Coffee located in Addis Ababa

However, Tesholme feels that improvements can be made “if that money was pumped into the industry sector, then it creates more jobs.” He went on to say that the manufacturing sector is underdeveloped in Ethiopia, and that manufacturing has the scope to create significantly more jobs for similar start-up costs, while also benefiting from foreign trade.

Ethiopia is also growing culturally through the return of its lost children. Some have found that their presence has positively influenced cultural attitudes towards workplace productivity and business best practices. Others have commented that Ethiopia has started adopting western standards of health and hygiene. Perhaps even more significantly, Ethiopia may stand to gain from the homecoming in a political sense. Shanta Devarajan, head of the Africa region at the World Bank, feels that the returnees have a positive role to play in political reform: “The diaspora might bring strengthened governance to African societies. These are people who have been outside the system and are able to observe it from afar, and that might actually strengthen government, something that we need so badly.”

Looking to the Future

Ethiopia faces issues such as a bloated bureaucracy, which is criticized as being slow to act and is an obstacle to international business. Additionally, the government is criticized for being ineffectual at a local level. Ethiopians who have experienced a more sophisticated system are well positioned to drive for reform and facilitate positive change.

The success of the diaspora is encouraging ever more ethnic Ethiopians to consider returning. In the last six months 2,600 have already made the trip home, a fourfold increase on the same period last year. If the new arrivals continue in the same vein as those who came before them, then Ethiopia’s reemergence on the world scene looks exceedingly likely.

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Who is Hisham el Khazindar?

17 June 2016 Comments (0) Featured, Leaders, Middle East

Hisham el Khazindar

Hisham el Khazindar, Co-founder and Managing Director at Qalaa holdings shows what he, and Egypt, are made of.

Hisham el Khazindar has gone from being a graduate in Cairo to running one of the Middle East’s leading investment firms, picking up an MBA from Harvard and work experience at places like Goldman Sachs. But how did this graduate from the American University in Cairo end up running a billion-dollar organization? First, look to exactly what he achieved along the way.

The man with the M&A plan

After graduating from the American University in Cairo in 1996 with a BA in Economics, Khazindar aptly started his career with EFG Hermes, a leading investment bank in the Middle East and North Africa (MENA) region. He spent his first three years there advising on key cross-border Mergers & Acquisitions (M&As), as well as carrying out high-profile equity offerings. Much like someone not accustomed to letting a good opportunity go to waste, Khazindar seized the chance to take a temporary transfer at Goldman Sachs in London in 1999 that lasted two years, continuing his work on M&As.

Khazindar returned to EFG Hermes as an Executive Director, advising on M&As and Initial Public Offerings (IPOs) – however, he was yearning for more. In 2001, Khazindar decided that the best way for him to progress would be to complete an MBA at Harvard Business School and, after graduating, Khazindar did not spend much time doing nothing. In 2004 he co-founded Citadel Capital (now known as Qalaa Holdings) and is now Managing Director of a $9bn private equity firm that controls investments in industries as varied as mining, oil and gas, cement, agri-food, transportation and logistics.

Perhaps due to his phenomenal progress, Khazindar sits on several boards in the region, from electrical and wind energy companies to eyewear providers. The list goes on: in total, Khazindar serves as director to six other companies and sits on the board of eight more. As if this wasn’t enough, he’s also earnt accolades including Young Global Leader in 2013 and being listed in the top 100 Young African Leaders.

Not an Inexperienced Public Orator

Khazindar is not unaccustomed to speaking in front of large audiences, having spoken at an Egypt: The Future conference and even given a TEDx talk, a local version of TED talks, about Egypt’s next 20 years. When he spoke at the TEDx in his native Egyptian Arabic, he occasionally brought in his perfect command of English to explain his ideas and largely did so with the eloquent ability of any other TED talk. He spoke of the importance of maintaining a reputation in business and of having to explain away any negative stereotypes that people can have of businessmen or entrepreneurs. This is something, he joked, that doctors and engineers have no problem with (jobs considered very prestigious in parts of the Arab world). Continuing to talk of the importance of the changes in Egypt and the necessity of grasping opportunities, Khazindar is certainly thinking of the impacts of his choices today in 10 or 20 years’ time.

In an interview with the Oxford Business Group, Khazindar kept away from delving into politics as much as possible, but he was unambiguous when it came to economic policies that the government would need to implement in order for economic recovery and growth to occur. These were, in no particular order, signs of lasting stability, appointment of ministers with proven economic ability, a workable constitution and articulation of clear economic objectives. As the interview moved onto financing tools and energy subsidies, Khazindar goes on to talk about the importance of SMEs and direct cash programs.

The future’s bright, the future’s…

Evidently, Khazindar knows what he’s talking about, he isn’t afraid to say what he thinks and he won’t let one success distract him from the next. His thinking is long term, for the progress of not just the Egyptian nation, its people and government, but of the entire region too. Something that Khazindar is quick to highlight is Egypt’s economically advantageous geographical location in Africa, in the middle of the Arab world and across the Mediterranean Sea from Europe; markets, he adds, with 1bn, 400m and 700m people, respectively. With such a large workforce to drive the economic growth (almost one in four Arabs in the Arab world is an Egyptian), it’s hard to see a future that isn’t better for Egypt.

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