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Gabon: Depressed in Economic Crisis, Government Fuels Investor Mistrust by Expropriating Veolia-SEEG

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The headquarter's of Gabon's energy and water company SEEG

The collapse of oil prices has plunged this small—and potentially wealthy—Central African state into a prolonged financial crisis and Bongo’s regime has been unable to resolve it. Gabon’s government had juste illegally seized French environmental services group Veolia’s SEEG unit and intends to terminate its contract to distribute water and electricity in the country: the latest in a larger, overarching economic and political crisis.

Gabon’s Economy: A Downward Spiral

Gabonese President Ali Bongo has known of Gabon’s suffering from a prolonged economic crisis since 2014, when a steep drop in oil prices hit the oil industry worldwide. At the time, he told French journalists: “The shock of falling oil prices is tough for Gabon”, speaking of the OPEC member state; a major oil-producing country in the Gulf of Guinea.

Production in Gabon is in decline. The recovery is slow and may not come at all. In the past five years, the oil sector accounted for 80 percent of exports, 45 percent of gross domestic product, and 60 percent of budget revenue, on average according to World Bank data.

With revenues declining and the population feeling the squeeze, Ali Bongo faces the strongest opposition in years, plus some social upheaval, including a spate of strikes in the private sector and public services. Teachers, magistrates and customs officials all demand an improvement of their working conditions and the payment of several months of wage arrears.

The budget was cut by over 5 percent in 2017 because of declining oil production and prices. Income per capita rocketed from $3,090 in 2000 to $10,410 in 2014 as oil prices shot higher. But as oil prices slid, it fell in 2015, for the first time in 15 years.

“Depleting oil revenues are pushing Gabon’s economy towards the cliff edge” said Maja Bovcon, senior Africa analyst at global risk firm Verisk Maplecroft.

SEEG Gabon Veolia

Scene of daily life along a main street of Libreville, the capital and largest city of Gabon.

As a result, and for the first time in Gabonese history, on June 19, 2017, the International Monetary Fund (IMF) approved a three-year extended arrangement (from 2017 to 2020) under the Extended Fund Facility (EFF) for Gabon for $642 million.

“The collapse of fiscal revenues from oil and manganese, which account for half of the government’s revenues, has caused significant difficulties in the public treasury,” says Yves Picard, director of the French Development Agency (AFD) in Gabon. “There was nothing left in the public purse, and the strikes multiplied in public services. Investors do not come anymore. The African Development Bank (AfDB) has provided 200 million euros and is expected to contribute 300 million by the end of the year, but the agreement with the IMF was essential. This agreement gives it three years of breathing space to wait for a rise in oil prices and not to sharply reduce deficits.”

A bad business climate, on top of widespread political instability

Gabon is also still reeling from a disputed election in August/September 2016 that turned violent in the coastal capital Libreville, harnessing anger among poor people, who say oil revenues never trickle below the Gabonese elite. Since he was first controversially elected in 2009, Ali Bongo, whose family has ruled the country of nearly 2 million since 1967, has said he will diversify the economy beyond oil into industry, mining, forestry and agriculture. He aimed to rein in spending and increase social programs, though it is unclear how much progress has been made so far.

The last Gabonese presidential election was marred by numerous inconsistencies, arrests, human rights violations and post-election violence. Bongo was initially handed victory, after surprising results in the eastern Haut-Ogooue province, but opposition leader Jean Ping called the election a sham, declared himself president and demanded a recount. The Haut-Ogooue is the native province of the Bongo family where initial results showed Ali Bongo won 95 percent of the votes on a 99.9 percent turnout.The case went to the Constitutional Court (chaired by Marie-Madeleine Mborantsuo, a close relative of the presidential family) which ruled in Bongo’s favor.

Seeg gabon veolia

Protesters in Libreville against Gabonese President Ali Bongo, after the 2016 presidential election.

Today, the business climate in Gabon is in particularly bad shape: endemic corruption, numerous strike actions by employees of both the Government and the private sector, unpaid wages in all sectors, an increasing number of overdue invoices, and so on.

“Gabon does not have a good reputation for doing business, but with the oil crisis, the situation has worsened: the Gabonese State shows the highest share of long overdue receivables, pushing companies like Sodexo or Veolia to engage in a power struggle, or leave the country” confides a senior executive working for a major bank in Central Africa.

Due to this atmosphere, the list of foreign firms leaving Gabon is getting longer: BNP Paribas, Bouygues, Sodexo, Shell, Panalpina, Sinopec…

The French credit insurance company Euler Hermes is worried about the consequences of “the current political turmoil in Gabon (…) Political uncertainty is not appreciated by investors, and negatively affects their confidence. Without these investors, it will be difficult for Gabon to finance the diversification of the national economy. Moreover, Foreign Direct Investment (FDI) has already decreased by 38% in 2015”.

The illegal expropriation of the French environmental services group Veolia’s SEEG unit sends a very bad message to international investors

The conflict unleashed by the Bongo’s regime against Veolia’s SEEG unit is the most recent episode of the economic uncertainty in Gabon.

“The liquidity crisis forces the Gabonese Central Bank to put in place capital controls without saying so; businesses have a hard time getting paid by the state and getting foreign currency” emphasises Stéphane Colliac, senior economist Africa at Euler Hermes.

The Gabonese State has debts due or payable to Veolia-SEEG: 62 million euros, according to the information supplied by Helman le Pas de Sécheval, secretary general of Veolia, to the Agence France Presse (AFP). At the end of 2016, Veolia-SEEG already claimed 100 million euros in arrears.

Ali Bongo SEEG Gabon Veolia

Ali Bongo inaugurates new hydraulic facilities built by Veolia-SEEG in Libreville, in 2016.

Veolia, which provides drinking water to 100 million people across the world, has been operating in Gabon since 1997 via the Société d’eau et d’électricité du Gabon (SEEG) which is a co-ownership (Veolia owns 51 percent, the Gabonese State, and others, own 49 percent).

On Friday 16th, February, Gabon’s government intended to terminate this cooperation through the Water and Energy Minister, Patrick Eyogo Edzang: “In the interest of preserving continuity and quality in the public provision of drinking water and electric energy, the Gabonese state has proceeded exceptionally to the temporary requisition of the company”.

Veolia-SEEG said it “regrets the sudden decision taken… to break the concession’s convention and the brutal use of Gabonese forces who requisitioned the enterprise”.

Several specialists in Gabon’s economy are worried about by the Government’s decision: “The concerns are legitimate. The state took a significant risk by cancelling Veolia’s contract without a new partner. In addition, the brutal method employed may seem like a foil to some investors who might have been interested. Such decisions impact the business environment and challenge the ability of the Gabonese government to meet its contractual commitments” said Mays Mouissi, a well-recognized economist from Gabon.

The brutal breach of contract with Veolia is “a very bad signal sent to potential foreign investors,” regrets Mr. Ntoutoume Ayi, an economist close to Jean Ping, the main opponent of President Ali Bongo.

Helman le Pas de Sécheval, secretary general of Veolia, shares this view: “Veolia is taking all necessary measures to enforce the law (…) This illegal expropriation and inconsistency of the Gabonese government will hurt not only Gabon but also Africa as a whole. The water and energy sectors demand vision, long-term investments and stability. This is what international investors expect”.

Gabon needs to pay attention to its international reputation and business climate. In an extreme case, foreign firms could refrain from investing, while domestic ones could flee the country for a more peaceful environment.

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Activist Lina Ben Mhenni Continues to Fight for Tunisian Democracy

Comments (0) Africa

Activist and avid blogger, Lina Ben Mhenni is no stranger to both accolades and threats. Through her blog A Tunisian Girl, which is written in Arabic, French and English, Ben Mhenni has reported on the overthrow of the Tunisian government, behind the scenes of the Tunisian revolution and the continued threat of corruption in her country.

As one of the only sources of uncensored information during Tunisia’s Jasmine Revolution, Ben Mhenni has been awarded the Deutsche Wells International Blog Award, the El Mundo’s International Journalism Prize and received a nomination for the Nobel Peace Prize in 2011.

The Jasmine Revolution

Born in 1983, Ben Mhenni was exposed to political activism from an early age. Her father, Sadok Ben Mhenni was a left-wing militant, who opposed the regime of former President Bourguiba, and was detained and tortured in prison. Her brother helped establish the Tunisian office of Amnesty International and she grew up hearing her family discussing politics, reading books and watching the news. She started writing a blog in 2007 and later launched A Tunisian Girl to cover issues surrounding freedom of expression, human rights and social problems facing women and students in Tunisia.

From 2008 to 2009 she studied in the United States and taught Arabic at Tufts University in Massachusetts. Upon her return she took a position as a teaching assistant in Linguistics at the University of Tunisia. In May 2010, Ben Mhenni and her friends organized a protest against the government’s censorship of the media via the internet, and by the time the protests against Ben Ali started in December, her blog had become an important source of information for both Tunisians and the international media.

International Fame

For many years Ben Ali had lead an oppressive regime in Tunisia, prohibiting any opposition and abusing human rights. Opponents to his regime were tortured and killed and journalists intimidated and silenced. During the protests, Ben Mhenni visited Sidi Bouzid and Kasserine and was one of the first to report on the atrocities committed there by Ben Ali’s security forces. She published video footage and photographs of police injuring and killing protestors and revealed the victim’s identities online. She also visited victims in hospitals and interviewed their families, publishing everything to her now infamous blog. Never hiding her name, Ben Mhenni put herself at risk to show the world the determination of the Tunisian people to overthrow Ben Ali.

Following the revolution, Ben Mhenni was involved in the interim government’s reforms to media and information laws, but resigned shortly after. However, she continued to track the progress of press freedom and human rights in Tunisia, and attempted to boycott the Constituent Assembly elections due to the fear the leading party, Al-Nahda would buy votes and not be moderate. In 2011 she published a book ‘Get Connected’ and won the Duetsche Welles Best Blog award and was nominated for the Nobel Prize.

The Reach for Democracy VS Clicktivism

Ben Mhenni continues to observe and critique the development of human rights in Tunisia, but says the country still has a long way to go. A new constitution has been written and organized elections have been transparent and democratic, but the regressions are still alarming says Ben Mhenni. Children are still being forced to drop out of school to work, women are dying during child birth due to lack of equipment in hospitals, and people still do not have enough electricity of running water in Tunisia. Ben Mhenni says Tunisia still lacks honest politicians and people who see being a citizen implies rights, but also duties.  

Although Ben Mhenni maintains she has never been an activist, she says people today think they can change the world by clicking the ‘Like’ button. “It is not enough to publish a status, or a video, or share a Hashtag,” she told Huffington Post. “You have to work in the field, meet people, and be present during the demonstrations.” Ben Mhenni continues to act on her words, she and her father have started an initiative to create libraries in prisons to promote culture and thwart terrorism, and she aims to teach the importance of organ donation after receiving a kidney transplant from her mother.

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2017 Top African Finance Ministers

Comments (0) Africa, Economy, Politics

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Economic and finance ministries from West and East African have set the standard for 2017’s API. Ten countries from the region have mastered macroeconomic balance with growth rates above 5% that outpace their demographic growth. Burkina Faso topped the list with 53%, followed by Senegal with 52%, Tanzania with 48%, Ethiopia with 47%, Kenya with 46%, Rwanda with 45%, Niger and Guinea with 43%, Cote d’Ivoire with a 42% growth rate, and Togo with 41%.

The API was extended in 2017 to include all African countries, instead of only those in the CFA zone, or the central and west regions, as was the case in previous editions. API 2017 also saw the inclusion of a new category for evaluation: the digital financial infrastructure worth 40% of a country’s mark, along with endogenous factors 30%, and institutional and fiscal frames, worth 30%. Although growth was substantial last year, financial website Financial Afrik warns that unless African countries can maintain growth of over 10% for over a decade there will not be any major development in the country.

Leading the pack

Topping the list of Africa’s best finance ministers is Burkina Faso’s Minister of Economy, Finance and Development Rosine Sori-Coulibaly. In office since January 2016, Sori-Coulibaly has been working to reduce the weight of current expenditure in the state budget, and has also allowed the public greater access to small business loans. She is joined by Senegal’s Amadou Ba, who brought about an increased cycle of growth garnered by the country since 2014. Third on the list is Philip Mpango, the appointed minister of finance in Tanzania since 2015. Mpango continues to create structural reforms in the country to finance free education and complete the nationalization of precious stones.

Other ministers of note include Ethiopia’s Abraham Tekeste, who is in charge of the implementation of a five-year-plan in the country to display a GDP growth of 11% per year. Over this period, industrial growth is set at 24% per year. Minister of Finance in Kenya Henry K. Rotich is at the root of several in-depth reforms in the East African country. Advocating for diversification, Rotich faces the challenge of financing Kenya’s public external debt. Rwanda’s Minister of Finance and Economic Planning Claver Gatete has distinguished himself in the rationalization of current expenditures, the implementation of innovative policies and the facilitation of procedures for economic operators.

Implementing policies

Rounding out the top ten is Niger’s Hassoumi Masaoudou, who has been minister of finance since 2016 and has the challenge of financing the Economic and Social Development Plan for Niger from 2017 to 2021. In a tense security environment Financial Afrik reports the first year of the plan has been quite successful. Guinea’s Malado Kaba has inherited several major infrastructure projects and is the first Guinean appointed minister of finance to obtain satisfactory results in regard to funding. Former head of the Ivorian Treasury, Cote d’Ivoire’s Adama Kone has reconciled the imperative of controlling the budget with the need for growth. The current cocoa crisis has not broken this balance and Ivorian fundamentals remain strong. Minister of Economy and Finance in Togo since 2015, Sani Yaya’s great challenge remains to restructure the country’s debt and to mobilize funds for development programs. In the two years as finance minister, Yaya’s results have awarded him respect.

Digital Financial Infrastructure

The API identifies four determinants that favor the construction of digital financial infrastructure in African countries. Innovation centers, the organization of public dialogues on financial and regulatory technologies, a national tool for digital verification of identity and the creation of a digital environment secure enough to experiment with the offer of innovative financial services. Both Kenya and Senegal scored highly in this area with both countries developing incubators of technological innovation, such as, spaces for co-creation between entrepreneurs and accelerators of enterprise. Also standing out in this area are Cote d’Ivoire, Senegal, Tanzania and Togo, thanks to the organization of public dialogues on the future of finance, financial regulation and inclusion.

According to Financial Afrik, Africa is improving in terms of economic and political governance, however in terms of transparency and institutional communication efforts must be made. Ministries of Economy and Finance are responsible for strengthening competitiveness between domestic and foreign companies, but at the same time, they need to ensure consumers are protected.    

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TV5Monde Afrique Launches Digital Offer for 25th Anniversary

Comments (0) Africa

tv5monde afrique

As part of the network’s 25th anniversary, TV5Monde Afrique has launched a free digital offer on online and mobile programs, specifically for African users. With 1.2 billion inhabitants, 362 million internet users, 150 million social network users and 220 million Africans aged between 15 to 24, the region is becoming a hot spot for telecom investors and TV5Monde is keen to take advantage.

TV5Monde’s digital director Helene Zemmour said the growing mobile market in the African continent meant the network had to find a way to move with user habits and rethink their offer for mobile. Consisting of a new website, mobile app and offline content, TV5Monde will broadcast programs based on the centralised theme of Africa, such as, the daily Africa Journal, as well as, movies, series, game shows, sport, documentaries, and magazines. Officially launched in Kigali, Rwanda in October, it will launch from Abidjan in Cote d’Ivoire on November 27th, Dakar in Senegal on December 5th, and Paris, France on December 11th. TV5Monde’s move to mobile, aims to confirm the network’s position on the continent and stay in touch with Africa’s increasing mobile consumption.

Mobile Consumption in Africa

According to the London research and consulting firm Ovum, over a billion Africans will be connected online by 2020, and this is due to the growth and influx of affordable smartphones. According to Ovum’s statistics, there are currently 419 million people online in the region, which is set to more than double over the coming five years to 1.07 billion people, by 2022. Ovum’s research shows Africa to be the fastest growing mobile market in the world and mobile data will be the main driver of growth. Researchers suggest this increase in data connectivity will also bring rising data revenue for operators, and create new platforms for digital services.

According to Bloomberg’s Matthew A. Winkler, from the Atlantic to the Indian Ocean, hand-held phones are driving economic growth in Sub-Saharan Africa as much as the railroad did in the United States of America in the 19th century. Mobile phones are letting people be their own ATMs, Winkler said, increasing economic activity by enabling payments for food, travel, school and business. This transformation is reflected in the more than 1,300 publicly traded companies that make up corporate Africa. According to data collected by Bloomberg, communications firms have increased in the last five years by 25% of the total market capitalization of African companies, up from 16%. Materials and energy, the natural resources the region is known for, diminished to a combined 18%, from 27%, for the same period. With a mere 43% mobile penetration, compared to 65% for the world, it will not be surprising if Sub-Saharan Africa will be most highly favoured region for telecom investors.    

SES-5 Satellite

Taking advantage of the high digital growth forecasts for the region, TV5Monde has also signed a long-term distribution contact with SES to broadcast three channels to French speaking viewers in Sub-Saharan Africa. The SES-5 satellite, which covers Sub-Saharan Africa, North Africa, Europe, the Middle East and the Atlantic Ocean, will distribute TV5Monde Afrique, the youth channel, TiVi5Monde, as well as, the lifestyle channel, TV5Monde Style HD.

The move to join SES, is also a move to strengthen the use of the French language across Africa. TVMonde’s CEO, Yves Bigot said the agreement would broaden the reach of the French language, which was becoming all the more decisive in a digital world where language is increasingly important, and the CEO of SES Video said the company would be delighted to contribute to the spread of the French language. SES-5 currently distributes over 500 local and international channels to Sub-Saharan Africa, 65 of which, are in French.

Dedicated to the audiences of the African continent and to the diaspora and fans of Africa, TV5Monde’s digital offer hopes to tap into the expanding internet audience, as well as, maintain and possibly grow the French language in the region.

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11 Arab Companies Make Forbes Global 2000 Top Growth Champions List

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The world’s biggest and most powerful companies are ranked yearly by sales, profits, assets, and market value and ranked in the Forbes Global 2000. This year, Forbes worked with database company Statista to look at the compound annual growth rate of revenues, from 2013 to 2016, for all 2000 companies and converted figures into US dollars. The growth rates were then ranked, and the top 250 companies were listed as the Forbes Global 2000 Top Growth Champions.

While no Arab company made it into the top 250 companies that made the Best Employers, Top Regarded Companies, or Top Multinational Performers list, 11 Arab companies did leave their mark on the 250 Top Growth Champions list. Of the 11 companies, five are from Saudi Arabia, four are from the United Arab Emirates, two companies are from Qatar, and one is situated in Lebanon.

UAE Leads the Way

Heading the Top Growth Champions list is the UAE’s residential and commercial development company, Damac Properties. Situated in Dubai, the luxury real estate company delivers upscale properties across the Middle East and the United Kingdom. As of May 2017, Demac Properties had a market capitalization of $4.7 billion. It had total assets of $6.92 billion, and a gross debt of $1.36 billion. With 55 million square feet of property development in planning or progress, including more than 13,000 hotel rooms and more than 19,000 employees, Demac earned $1.63 billion at the end of Q3 2017, 13% higher than in 2016.

With Expo 2020 set to increase demand for real estate in the region, Demac’s performance was attributed to continued demand for its projects. Demac recently reported more than 80% of its hotel apartment projects in New Dubai and Dubai South have sold out. It runs the only Trump brand golf club in the Middle East, and the company has also been chosen by the Oman Government to develop its $1 billion Port Sultan Qaboos waterfront project. Although revenues fell slightly in 2016, the real estate market in the region has stabilized according to Demac’s CFO Adil Taqi, and sales for the first six months of 2017 are up 4% over the same period in 2016.

Top Growth Middle Eastern Companies

The other Middle Eastern companies that made the list included Saudi owned real estate firm Jabal Omar Development, which ranked number 7. Alinma Bank, also from Saudi Arabia ranked 167th, Alawwal Bank ranked 169th, Saudi Investment Bank ranked 210th, and Saudi Arabian Mining Company came in at 222nd. Other companies from the UAE included real estate and construction firm Emaar Properties, which ranked 208th, and Dubai Islamic Bank, which ranked 249th. Qatar National Bank ranked 96th and Qatari real estate and construction company Ezdan Holding Group ranked 157th. Bank Audi from Lebanon came in at number 155.  

Top Five Global Companies

Ranked second on the list is China’s largest auto distributor China Grand Automotive Services. The Shanghai based company sells more than 50 different brands of cars, including Chrysler and Mercedes-Benz. In 2016, the firm posted revenues of $20.6 billion, 45% higher than the previous year. Also from China is real estate development company, Greenland Holdings, which ranked 3rd, and Hong Kong gaming and real estate firm Melco International, which ranked 4th. Ranking 5th was Chinese delivery service company, S.F Holdings.

The top delivering US companies on the list were e-commerce company XPO Logistics, which was ranked 8th and New Residential Investment (13th), Cheniere Energy (21st), Vereit (34th) and Liberty Expeida Holdings, which ranked 34th.    

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Bringing tourism back to the Middle East

Comments (0) Middle East

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Long heralded as the must-see tourist destinations of the Middle East, Egypt, Tunisia, Morocco and Turkey are feeling the blow to their once prosperous tourism sector, as holidaymaker’s head to safer shores. Terrorist attacks, kidnapping and political unrest has seen a decline in tourism in the region, however, some countries are finding ways to bring the people back.

Saudi Arabian Islands Make-over

The recently announced Red Sea Project will see Virgin airlines founder and entrepreneur Richard Branson invest in turning 50 Saudi Arabian islands into luxury tourist destinations. This comes as Saudi Arabia announced its plans to turn 13,127 square miles of coastline into luxury resorts in early August. “This is an incredibly exciting time in the country’s history,” Branson said in a statement released by the Information Ministry. As one of the world’s most conservative countries, where alcohol is prohibited and women have only just been given permission to drive, Saudi Arabia is determined to change its image in the international community.

According to Arabian Business, since the appointment of Prince Mohammed bin Salman as successor to his father’s empire in June, the country has launched a media offensive aimed at pulling the country out of its dependence on oil and diversifying its revenue. The Saudi Public Investment Fund, which is headed by Prince Mohammed, will provide the initial investment to the Red Sea Project, with plans to start construction in 2019. Branson is the first international investor to commit to the project in what the ministry called “a clear sign that Saudi Arabia is opening its doors to international tourism.”

Egypt Partners with CNN

Egypt is also set to launch a tourism media campaign with cable television channel CNN, after visitor numbers fell dramatically due to the Arab Spring uprising, which overthrew President Hosni Mubarak in 2011, and the Russian passenger jet which crashed in Sinai in 2015, killing all onboard. Russia, which was the number one source of tourists to Egypt, suspended flights to the country pending tighter security measures at Egyptian airports. In order to lessen the impact of these reports, Egypt will launch an advertisement to be aired on CNN’s weather forecasts in Europe, the Middle East, and Africa to attract tourists during the winter season. International advertising and marketing agency J. Walter Thompson, said the aim of the campaign was to attract tourists in winter to Egypt’s consistently warm weather.

According to Egyptian news site Ahram Online, Egypt was receiving as many as 14.7 million visitors back in 2010. Before the Arab Spring, tourism represented 13% of the country’s gross national product, bringing in some $20 billion a year in revenue, according to government figures. In contrast, the first seven months of 2017 have seen just 4.3 million tourists visit the country’s historic sites and arid landscape. Although tourism revenue has increased in Egypt, for the same period, by 170%, reaching $3.5 billion, it is still nowhere near the pre-2011 figures.

Future of Middle Eastern Tourism

While travel and tourism sectors of the regions usually popular destinations have suffered, not all the Middle East has been badly affected. Certain ‘safe haven’ destinations have actually profited in recent years. According to figures from the UN World Tourism Organization, visitors from the UK have increased in the UAE. Dubai saw a 5% increase in UK tourists in 2016, and Abu Dhabi was up 3%. Russian tourists have also flocked to the country after visa-on-arrival was implemented, which saw a rise of 14%. Oman has also seen a steady growth in numbers from Europe, with Britain and Germany among the top five tourism generating source markets, followed closely by India.

According to Trade Arabia, London’s World Travel Market event, to be held in November, will expect to see a strong contingent of exhibitors from the Middle East. WTM Senior Director Simon Press said according to figures from the World Travel and Tourism Council, in 2016 the total contribution to GDP from travel and tourism in the Middle East was $227.1 billion. This figure is forecast to rise by 5.2% in 2017, and 4.8% per annum to make $381.9 billion by the year 2027. “There are exciting times ahead for the Middle East,” Press said.    

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New Reforms in Nigeria to Attract Foreign Investment

Comments (0) Africa, Politics

Oluyemi Osinbajo Nigeria

Foreign investment dropped in Nigeria with the fall of oil prices three years ago, but they have started to return thanks to reforms made recently by the Nigerian government. Earlier this year, Nigerian Vice President Oluyemi Osinbajo, acting for President Muhammadu Buhari during his medical leave, signed several executive orders aimed at improving business processes under the acting authority of the Presidential Enabling Business Environment Council (PEBEC). As part of a government bid to bring back foreign investment, changes to port procedures, business registration, and certificates for importing capital, have been declared.

Port Procedures

According to the Oxford Business Group, a key factor of the reforms was a move to tighten operations at Nigeria’s ports by reducing the number of agencies needed to clear cargo, creating single checkpoints for goods in transit, and banning non-official workers from the area. In the past 14 agencies were required to clear cargo at the port, but this has been reduced to seven. Now these seven agencies must act as a single task force, at a central location, and payments must be made through the Corporate Affairs Commission website (CAC). Only on-duty personnel will now be allowed in secure areas at ports and airports. The government hopes these reforms will quicken processes at entry points, and curb bribery and corruption.

Business Registration

Another way in which the reforms hope to dissuade corruption in the country is by making processes more transparent. Business registration will now be automated through the CAC website, via an online payment transfer, and all state agencies are required to publish a list of fees and conditions for business registration and license applications online. These agencies must also publish a set time-line for applicants, and if a response is not given in time, the application will be approved by default. In the past, new applications had to be made by visiting the country. These changes to the system mean investors can now register their business without having to come to Nigeria, saving both time and money.  

Electronic Certificates

According to Reuters, the central bank of Nigeria recently announced plans to issue electronic certificates for capital imported into the country, which will also save investors a lot of hassle. The electronic certificate will replace the hard copy issued previously, which investors or companies were required to get in just 24 hours, according to a 1995 law. The certificate is a declaration that the company has invested foreign currency in Nigeria and is necessary for the company to repatriate returns on those investments. Investors have complained in the past, that they have struggled to meet the one-day deadline.   

World Bank Doing Business Ranking

With a population of 180 million, Nigeria is still an attractive place for investment, however implementation and operating costs are high, and security within the county remains an issue. The country ranked 169th out of 190, in the 2017 World Bank ‘Doing Business’ survey, an improvement of one place from 2016, but a drop of 50 places in the last eight years. For starting a business, the country ranked 138th, for getting a construction permit, 174th, and for registering property, 182nd. The World Bank listed eight areas for improvement: starting a business, construction permits, getting electricity, getting credit, registering property, trading across borders, paying taxes, and the entry and exit of people across borders.  

Approval for Reforms

The International Monetary Fund (IMF) which said much more needed to be done to raise Africa’s biggest economy out of recession in March, has praised the new reforms. According to the Oxford Business Group, the IMF lauded Nigeria’s commitment to improving business transactions and investment inflows, and noted that the central bank’s foreign exchange trading window was a boon for investors. Investors needing to settle trade-related requirements in US dollars could now do so by phone, and at rates set by the buyers and sellers themselves, rather than by the bank or the market. The IMF said the moves would curb the market premium and push foreign reserve levels above the $30 billion mark. As dollars have been in short supply in Nigeria since the oil price drop, the country has had to look at new ways to attract foreign investment.

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2020 World Expo Dubai: a first for the region

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world expo dubai

The World Expo will be held in Dubai in 2020, meaning that the MENA & SA (Middle East and North Africa & South Asia) region will host the event for the first time. The Expo began in London back in 1851, and once every 5 years a new location plays host to the global event. Hosting such a prestigious event comes as a huge boon for Dubai’s continually growing economy, and marks a breakthrough for the region as a whole. The event demands a lot of planning, not just for the initial hosting, but for the long term use for all the investments.

A long road to completion

The process of securing the right to host the 2020 World Expo began back in 2011, when 5 cities made the final shortlist. These cities were Sao Paulo in Brazil, Yekaterinburg in Russia, Izmir in Turkey, and Dubai of the UAE. Dubai’s bid was titled “Connecting Minds, Creating the Future”, and in 2013 it was announced that Dubai had won.

The Bureau International des Expositions (BIE) are the body responsible for selecting the winning bid, and after 164 member nations had voted, Dubai was the runaway victor with 116 votes.

Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said at the time “I am proud of our teams who earned this victory for Dubai with two years of hard work, dedication and commitment.”

The process to build the infrastructure for the Expo then began; as the 6 month event will see millions of visitors arrive, with the potential to generate an additional $40 billion of revenue for the economy, as 277,000 new jobs are created. The main site for the event is named Al Wasl, which means “The Connection” in Arabic, and the 4.38 sq km site will feature a 65 meter tall dome that includes a 360 degree screen to project images to the thousands of visitors.

Every nation that is appearing at the Expo will have its own pavilion, and there will also be 3 main pavilions for the central themes of the event, which are “sustainability”, “mobility” and “opportunity”. Contracts for the construction of these 3 key sites will be awarded later this year.

The UAE is only 45 years old as a nation, but the history of the people and the region is obviously far deeper. To try and illustrate this point, the 2020 Expo’s logo was based upon a ring that was discovered at a 4,000-year-old archaeological site in the Al Marmum area of Dubai.

Sheikh Mohammed said that the logo “represents our message to the world that our civilization has deep roots. We were and will always be a pot that gathers civilizations and a center for innovation.”

Building for the Future

Many major global events lead to their hosts finding that they are left with large debts rather than long term growth. The Olympic Games and soccer World Cup have often proved a cost, rather than an economic boost, to their host cities. However, Dubai’s planners are confident that they are building for sustained growth.

Aside from the new jobs created to prepare for the Expo, the organizers say that 80% of the buildings created for the event will continue to be used once it has ended. An additional 28,000 hotel rooms will have been built by 2018, and this should help continue Dubai’s growing tourism trade.

In addition, major expansion of the Al Maktoum International Airport is planned to carry on after the Expo, with the works to finish in 2025. The 2020 Dubai Expo is also aiming to be the first one in which more than 70% of the visitors are from overseas, which should again help sell Dubai as a tourist destination to many people new to the region.

A new city is being built in the Dubai South region, a city which will eventually host 1 million residents and 500,000 jobs. Long term contingency plans for the various developments used at the Expo are in place, and already Siemens has announced that, from 2021, it will use Expo site as its global logistics base.

The arrival of the 2020 World Expo should dovetail well with the government’s Vision 2021 plans, and Sheikh Mohammed bin Rashid has promised “to astonish the world in 2020.”

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StartUps Flourish Across the Middle East

Comments (0) Economy, Technology

middle-east-startup

The Middle East is overcoming cultural barriers, and political and financial challenges, to become a paradise for potential investors. Emerging local technology companies are flourishing and giants from the US, Europe and Asia are taking notice. From the arrival of business angels, to the sale of Souq.com to Amazon, the region is showing greater creditability for investment projects and successful business ventures.

Growing Markets

Although there are huge obstacles facing the business markets of some countries across the region, the six Gulf Cooperation Council countries (UAE, Qatar, Oman, Saudi Arabia, Bahrain and Kuwait) plus Egypt, Lebanon and Jordan are emerging as an economic hub. According to venture capital site Beco Capital, there are over 160 million people in the region, 85 million who are online, and 50 million who are adult digital consumers with disposable income. These countries have the highest value consumers, enterprises and entrepreneurs, as well as, the youngest populations and high smartphone and broadband usage. This largely untapped market, is becoming the breeding ground for local technology startups, and big players from abroad, who wish to tap into it.

So far, only 8% of businesses in the Middle East and North Africa (MENA) have digital presence (as opposed to 80% in the United States) and only 1.5% of the region’s retail sales are digitally transacted, meaning there is still plenty of growth to come. According to Beco Capital, each digital job is estimated to create two to three more jobs in the economy, meaning the digital market could add up to $95 billion in annual gross domestic product by 2020. The business landscape of the region therefore, shows a lot of promise to foreign investment.

Emerging Startups

According to research house MAGNiTT, there are now over 3,000 startups across the region, with $870 million spent in startup investment last year. The top 100 startups raised over $1.42 billion in funding and each startup has raised over $500,000 individually. Some 68% of startup founders come from the Middle East, although many hold dual citizenship, 12% of successful startup founders are female, and the UAE hosts 50% of the most funded startups in the region. These figures have attracted foreign investment from abroad.  

According to Bloomberg, Amazon’s recent acquisition of Dubai based, online market retailer Souq.com, shows that e-commerce in the Middle East is set to take off. Out-bidding Emaar Malls PJSC, which owns the world’s largest shopping center, at $800 million, Amazon is actively looking for new areas of growth, and seems to have found it in the Middle East. According to Bloomberg, Souq.com has 23 million online visits a month, employs over 3,000 people and sells more than 400,000 products, from electronic goods to household products and clothes.    

Business Angels

An angel investor is usually an affluent individual or professional investor who provides startup capital for a new venture in return for shares in the business. In a report drafted by Harvard Business School experts, angels increase creditability to projects and increase possibilities for success. The report found possibilities for success increased by 10 to 17% when initial investment was done outside the US. According to the National back in 2012, enthusiasm for angel investment was growing across the Middle East. High speed internet connections enable the regions businesses to reach a global audience, meaning companies can grow without need for crippling overheads previously associated with foreign investment.

Executive chairman of Oasis500, a Jordan based investment program, Usama Fayyad said the Middle East was a unique opportunity for investors to participate in companies who could easily grow in value two to ten times over in a matter of months. Business angels may also have valuable knowledge and experience to help struggling startups. Serial entrepreneurs, who have started their own business can mentor local companies to ensure successful management strategies.

Startup Ecosystem

Despite the war and poverty stories emanating from across the region on the nightly news, the Middle East is well on its way to becoming a global hub for investment. Even with numerous challenges, this has not stopped the region, as a whole, from overcoming the first phases of business development to build a promising startup ecosystem.  

Sources: (1), (2), (3), (4).

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Foloker Folarin-Coker wants to take her Nigerian label global

Comments (0) Africa

Foloker Folarin-Coker is not a name that is as famous as some within the world of fashion, but she has created an African fashion label that has not only proved hugely popular within the continent, but has begun to attract attention from further afield. Folarin-Coker has already achieved many firsts for an African fashion designer, and is determined to build her label into something even greater.

Self-taught Success

Foloker Folarin-Coker was born in Lagos, Nigeria in 1974, and at a young age she went to Switzerland and the UK in order to further her education. Folarin-Coker eventually graduated with a master’s degree in petroleum law, and returned to Nigeria in 1996. While her education seemed to be leading to a career in law, her real passion was in fashion, and despite having no background in the competitive industry, she created a small collection of her own designs upon her return home.

By 1998, Folarin-Coker had launched her label, Tiffany Amber, and the label has gone on to become one of Nigeria’s most popular fashion brands. The label’s domestic success led to 4 stand-alone stores in Lagos and Abuja, and Folarin-Coker became the first winner of the “Designer of the Year” award at African Fashion Week in 2009.

However, it is not just in the domestic market in which the Tiffany Amber line has proved popular, as Folarin-Coker was invited to showcase her designs at the New York Fashion Week in 2008. Her collection was met with such praise that she was invited back the following week, becoming the first ever African designer to present a range twice at the prestigious event.

Continued Expansion

Folarin-Coker continued to innovate after her breakthrough into international recognition, and in 2008 she launched two new ranges within her company. TAN by Tiffany Amber is a diffusion line that was launched alongside Folake Folarin, which is a couture line

In 2013, Forbes magazine listed Folake-Folarin as one of Africa’s 20 Young Power Women, and by 2014, the self-taught designer had staged more than 60 fashion shows at home and abroad.

Another line, Tiffany Amber Living, was added to her burgeoning portfolio, and Folarin-Coker says that her success was based on the principle of reinvention without changing the core of the brand. The designer explained, “Continuously reinvent yourself but don’t change the DNA of the brand’ –that’s what I believe, everyone knowing what the Tiffany Amber look is, is what has kept us.”

As the designs continue to prove popular and her range continues to grow, Folarin-Coker is determined to create a brand that remains iconic long after she is no longer around. She has said that her ethos is to work for the future as opposed to the present, and she has a firm belief in the talent within the Nigerian fashion industry.

As she continues to look forwards, Folarin-Coker says that her goal is to “have a presence all over Africa and ultimately every major city of the world.” Only time will tell whether these grand designs for the future are achieved, but thus far her goals have certainly been met with success.

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