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Africa gets younger while key leaders age

29 April 2016 Comments (0) Africa, Featured, Politics

mugabe

The average age of Africans is 19.5 but many of its leaders rank among the world’s oldest.

Africa has the youngest population on earth, but many of the continent’s leaders rank among the world’s oldest.

In Africa, 200 million people are between the ages of 15 and 24 and the population of young people is expected to double by 2045. The average age of Africans is only 19.5.

The youthful population contrasts with many long-standing government leaders who are in their 70s, 80s and 90s.

Zimbabwe president is 92

The oldest is Robert Mugabe of Zimbabwe, who at age 92 is the oldest leader in the world. Mugabe was elected to his seventh term as president in 2013. Second oldest is Beji Caid Essebsi, 89, who was elected president of Tunisia in 2014.

Cameroon’s president Paul Biya is 83. He has been in power as prime minister and then president for 40 years, making him the longest serving leader on the continent.

African leaders in their 70s include Abdelaziz Bouteflika, 79, president of Algeria since 1999; Alpha Condé, 78, president of Guinea since 2010; Manuel Pinto da Costa, 78, president of Sao Tome and Principe since 2011 (and previously from 1975 to 1991); Ellen Johnson Sirleaf, 77, who became president of Liberia in 2006; Peter Mutharika, 75, president of Malawi since 2014; Jacob Zuma, 74, president of South Africa since 2009; and Yoweri Museveni, 71, who has been president of Uganda since 1986.

Average age is 78.5

In 2015, the average age of the ten oldest African leaders was 78.5, compared to 52 years of age for the world’s 10 most developed countries. U.S. President Barack Obama is 54, Chinese president Xi Jinping is 62, German Chancellor Angela Merkel is 61, and Russian President Vladimir Putin is 63.

Many African nations enacted term limits to prevent leaders from staying too long in office, but leaders both younger and older have sidestepped those laws in recent years.

For example, in Rwanda, voters last year extended the potential term of popular president Paul Kagame, 58, until 2034, dispensing with term limits that would have prevented him from running for re-election to a third term in 2017.

In 2005, Ugandan lawmakers changed the constitution, allowing President Yoweri Museveni to seek re-election in 2006 and 2011. Now 71, Museveni was re-elected again this year.

Burundi election protests

In Burundi, the re-election to a third term of president Pierre Nkurunziza, 52, sparked protests by those who said it went against the country’s limit of two five-year terms.

Not all of Africa’s long-serving presidents are old. Joseph Kabila, now 44, has been president of the Democratic Republic of the Congo since 2001, when he took office after the president, his father, was assassinated. Kabila was elected in 2006 and re-elected in 2011.

An election is scheduled in November in the Democratic Republic of the Congo, and term limits could prevent Kabila from running for another term. However, the government has suggested the election may be delayed because of logistical problems, sparking protests as the opposition charges Kabila is maneuvering for another term.

Leadership may be out of touch

David E. Kiwuwa, an associate professor of international studies at Princeton University, said the aging leadership is out of touch as the youth population grows.

“With the burgeoning youthful demography at the bottom, the political top is a disturbingly graying lot,” Kiwuwa said.

He said while some African leaders survive by intimidation, others command the loyalty or even reverence of the public because they have been in office for so long and are seen as “fathers of a nation.”

He said the dominance of aging leaders has prevented younger, more creative leaders from emerging even as Africa’s population has grown younger.

“Why is Africa saddled with leaders who ought to be enjoying their retirement in peace and quiet?” Kiwuwa asked.

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Kenya’s Chase Bank reopening after liquidity scare

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

The mid-size financial institution works to emerge from receivership after questionable loans discovered and top executives dismissed.

Chase Bank Ltd. in Kenya is reopening its branch offices and resuming online and mobile banking services this week as the troubled financial institution seeks to emerge from receivership with new management and a new majority owner.

The bank was abruptly closed by Kenyan regulators in early April after its chairman and managing director resigned because an audit revealed that the bank had loaned $80 million to its own directors and had allowed its bad debts to rise to $100 million.

Kenya Commercial Bank Group Ltd., Kenya’s largest bank and a Chase rival, agreed to acquire a majority stake in Chase Bank on April 19 and began reopening its branch offices and restoring online services.

Chase is the country’s 11th largest bank with assets of $1.4 billion. Chase has more than 40 branches and 100,000 customers. It is a mid-sized bank and has a mix of low and middle-income customers. Chase also operates Islamic banking services for wealthy business customers who trade with companies in the Middle East.

Chase, the third Kenyan bank to falter in less than a year, had reported a profit of $23 million in 2014 but recorded a loss of $7 million last year.

Social media rumors cause panic

The bank was closed on April 7 after hundreds of panicked customers made a run on the bank based on rumors of problems on social media, according to the Central Bank of Kenya, which took control of the bank after financial discrepancies emerged.

The trouble began after Chase released two conflicting financial statements. An audit uncovered hidden loans to bank directors. Chase dismissed the two bank executives and police have ordered their arrest.

The Central Bank of Kenya said in a statement that Chase “experienced liquidity difficulties” and was not able to meet its financial obligations after panicked customers began making large withdrawals.

Two other banks fail

Chase is the third Kenyan bank to be placed in receivership because of liquidity problems and questions of mismanagement within the past year as regulators have stepped up scrutiny of the country’s financial institutions.

Central Bank Governor Patrick Ngugi Njoroge

Dubai Bank, a small institution, was taken over by regulators in August and Imperial Bank, a midsize financial institution, collapsed in October. Police in March also ordered the arrest of the chief executive officer and five other executives at a fourth bank, National Bank of Kenya, where an audit was scheduled.

Central Bank governor Patrick Ngugi Njoroge has tightened regulatory control on the nation’s banking industry since he took office in July. Earlier this year, Njoroge ordered a moratorium on new bank licenses until an investigation into the health of the country’s banks is complete.

Too many banks for population size

Bank consolidations are likely going forward as Kenya has an oversupply of financial institutions.

Kenya, with a population of 40 million and a $61 billion economy, has more than 40 banks. By comparison, Nigeria, with more than four times the population and an economy nine times as big, has 22 banks.

This large number of financial institutions creates a competitive environment in which banks may take unwarranted risks. At the same time, Kenya has traditionally allowed banks to maintain relatively low reserves, making smaller banks vulnerable to runs.

One banker said the central bank should force banks into “arranged marriages” to winnow and stabilize the banking sector. Banks that refuse should lose their licenses, according to John Gacora, managing director of Kenya’s NIC Bank.

Public confidence at stake

Hoping to calm pubic fears, Njoroge said the central bank would offer support to any bank that suffered liquidity problems through no fault of its own.

Njoroge said he hoped the Chase re-openings also would restore public confidence in the country’s banking system, which he said was stable in spite of problems at the four banks.

Kenyan regulators said they received offers from six local banks and two foreign banks for Chase.

The central bank cited KCB’s reputation as a strong bank with long experience in Kenya in favoring the larger bank’s acquisition of Chase.

Opening Chase under the management of KCB “will improve the profile of the troubled lender by capitalizing on the sound reputation of KCB,” said Eric Munywok, an executive at Sterling Capital. “If KCB wasn’t involved, a lot of depositors might have fled.”

New owner must retain customers

Financial experts said Chase customers would be well served by KCB Group, which would gain as well.

Maurice Oduor, an investment manager at Cytonn, said the main question is whether clients will stay with the bank following the scare in early April. “Clients may go away unless KCB ups its game in client service.”

The new management has a year to demonstrate it can emerge from receivership, In the meantime, the central bank has placed a moratorium on payments to Chase creditors of Chase Bank until the new team comes up with a plan for dealing with the bank’s debts.

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Sub-Saharan Africa rail projects promise to increase trade

26 April 2016 Comments (0) Africa, Business, Featured

uganda railway

Rail projects proposed or under way on the southern continent will cost an estimated $60 billion.

Railway projects totaling more than $60 billion are proposed or under way in sub-Saharan Africa.

That estimate comes from Terrapin, which is organizing a major rail conference June 28-29 in Johannesburg. According to Terrapinn, projects in Uganda, Namibia, Batswana, Mali, and Nigeria have the largest budgets, ranging from $8 billion up to nearly $14 billion each.

One massive project is a 3,000-kilometer rail line that will link Benin, Burkina Faso,

Niger, Ivory Coast, Nigeria, Togo and Ghana.

These nations and mining companies that operate within them are funding the project as the mining industry seeks to increase mineral exports from 109,000 tons a year to 3.4 million tons in 2020, a 30-fold increase.

Without rail network, transport expensive

The lack of a cross-border rail network has made transport expensive, especially in land-locked countries such as Niger, which derives 11 percent of its gross domestic product from mining, and Burkina Faso, which derives 13 percent of GDP from mining.

The rail network also is expected to boost trade among the linked nations and drive economic development in other sectors.

Nigeria also has ambitious plans for domestic rail lines, including one linking Lagos and Kano and another between Lagos and Calabar along the coast. Both were designed to ease commuter congestion and facilitate transport of goods.

However, plans were thrown into doubt in April when the Nigerian National Assembly removed $300 million in funding for the coastal project from the 2016 budget. Funding for a third line between Idu and Kaduna was severely reduced as well.

New line will transport coal

Meanwhile, Botswana and Namibia in southern Africa, are seeking private investment to build a 1,500-kilometer rail line that would transport coal from land-locked Botswana’s fields to Namibian ports on the Atlantic coast.

The project was estimated to cost $15 billion when first proposed in 2011. In 2015, the two countries staffed an office to begin looking into legal and cross-border issues that will have to be addressed.

In Mali, China has agreed to finance an overhaul of a rail line linking the capital of Bamako to Dakar in Senegal. Renovation of the 1,300-kilometer rail line will cost a total of $2.5 billion.

China will also train engineers and technicians and overhaul more than 20 train stations and domestic routes.

China will build Ugandan network

China will also play a role in development of a light-rail commuter network in the Ugandan capital of Kampala. The two countries in December signed an agreement for the China Civil Engineering Construction Corporation to build the first phase of the project at a cost of about $440 million.

Plans call for a 240-kilometer network with rail lines from the city center to Entebbe, Nsangi, Wakiso and other towns surrounding the capital. To ease traffic congestion, Uganda also launched an experimental commuter rail line in December between Kampala and Namanve.

Terrapinn listed the following countries with projected rail costs in its report: Uganda ($13.8 billion), Namibia-Botswana ($10 billion), Mali ($9.5 billion), Nigeria ($8.3 billion), Mozambique –Malawi ($4.4 billion), South Africa ($4.3 billion), Kenya ($4 billion), Angola ($3.3 billion), Cameroon ($2.9 billion), Zambia ($1 billion), Democratic Republic of the Congo ($630 million), Zimbabwe ($450 million), Ghana ($300 million), and Tanzania ($40 million).

Terrapinn earlier this year reported a boom in rail development in the Middle East and North Africa with proposals and projects estimated at more than $350 billion, with a number of high-speed rail lines under way.

Railways are vital to economic growth

According to the African Development Bank, railways have an important role to play in the economic development of the continent.

“Rail transport is inevitably critical to support economic development. Unless this mode of transport is developed, Africa may not realize its full potential in exploiting its abundant natural resources and wealth,” the bank said in a 2015 report.

However, the African Development Bank report said the poor condition of rail and rolling stock in many African countries is undermining the potential of rail systems to make a strong contribution to economic growth.

Unfortunately, the ability of African countries to attract investment for railway upgrades has been mixed, it said.

However, the report said support for investment in rail infrastructure will grow as African production of goods and minerals increase and as environmental concerns are heightened.

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We Cash Up aims to be the PayPal of Africa

20 April 2016 Comments (0) Africa, Business, Featured

Cedric Atangana

With e-commerce on the continent poised for growth, We Cash Up develops an innovative platform to enable online purchases on phones.

Hoping to ride a wave of innovative online technology and mobile adoption in Africa, the startup We Cash Up has set its sights on becoming the Pay Pal of the continent.

Cedric Atangana, co-founder and CEO of the Marseille-based company Infinity Space, said its We Cash Up network will aim to provide online purchasing power for Africans who do not have bank accounts.

Atangana said as many as 800 million Africans are excluded from internet commerce because they do not have bank accounts. At the same time, most of them have mobile phones.

His solution? A mobile network that enables users to make secure payments via their phones.

A network of businesses and buyers

Small businesses and stores that participate in the network are both a point of deposit and a point of withdrawal so We Cash Up does not have to develop an expensive new infrastructure to manage cash transactions.

We Cash Up says one key feature of We Cash Up is that its developers found a way to communicate across mobile money systems in 54 African countries that enables transactions across borders.

Infinity Space also developed an artificial intelligence that tracks the behavior of mobile users in order to identify risky or fraudulent transactions, the company said.

Infinity Spaces is also developing a We Shop Up platform for participating merchants.

The company operates as a virtual team. Atangana is based in Marseille while other team members work from Kenya or Cameroon.

African e-commerce faces challenges

Atangana sees vast potential both for merchants and buyers and internet use grows in Africa.

Experts agree that the potential to expand e-commerce in Africa exists but it faces key challenges. For example, e-commerce giants including Kalahari and Mocality have invested in Africa and then retrenched after failing to achieve profitability.

Wealthier Africans have not embraced online shopping, for example, because of concerns about fraud. At the same time, many African cultures value their vibrant and plentiful physical marketplaces over online shopping.

Cross-border differences inhibit scaling efficiencies and require duplication of services. The logistics of delivery are complicated.

E-commerce expected to increase

At the same time, the continent appears poised for growth in e-commerce as spending power increases along with internet access. One study predicts e-commerce, now a tiny fraction of the economy, will grow by 40 percent annually during the next decade.

Atangana believes We Cash Up can tap into that growth and change attitudes about online shopping.

Atangana, who holds a degree in engineering from Polytech Marseille, founded Infinity Space in Cameroon in 2010. The company operated in Nairobi, Kenya before Atangana moved its current headquarters to France.

He and Infinity Space chief marketing officer Marcelle Ballow Bekono were named to Forbes list of top 30 African entrepreneurs under 30.

We Cash Up has received several awards in startup competitions, including $20,000 at the 2014 Google Pitch Night.

Friends lacked bank accounts

He said he got the idea for We Cash Up after he had to help friends who did not have credit cards make online purchases.

On separate occasions, he said, friends in Cameroon and Kenya were unable to participate in developer competitions because they could not provide banking details.

“Indeed, one of the conditions for registration was to provide bank details or the majority had no credit card. And it has been very frustrating for me,” he said. “The idea of this project is born from our desire to help these people.”

Atangana said very few similar services are currently available and they seldom cross borders.

Account Nickel offers prepaid cards to people who do not have bank accounts but operates only in France. MPesa is a leading mobile payment platform in East Africa while telecom operators offer prepaid services in other countries.

But Atangana has a bigger vision of mobile e-commerce across international borders.

“This is the Airbnb financial system,” Atangana said.

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Palestinian banker charts path to economic growth

15 April 2016 Comments (0) Featured, Leaders, Middle East

Hashim Shawa

Hashim Shawa, who took over his family’s bank at age 31, has built the largest bank in the Palestinian territories with deposits of more than $2 billion.

Amidst occupation, war and financial uncertainty in the Palestinian territories, a young financier has built his family bank into the largest financial institution in the territories and its second largest employer.

Hashim Shawa took the reins of the Bank of Palestine in 2007, when he was only 31 years old, following the sudden death of his father.

Named by one of 100 most powerful Arabs under age 40 by Arabian Business, Shawa has made the bank one of the fastest growing in the region with more than $2 billion in deposits.

Bank started to aid citrus farmers

Shawa’s grandfather, Hashim Atta Shawa, founded the Bank of Palestine in Gaza in 1960, as an agricultural bank.

The Shawa family was in the citrus business, exporting oranges and grapefruit to Europe. The elder Shawa launched the bank to help Gaza farmers obtain loans for farm equipment and irrigation systems.

Israeli authorities closed the bank for more than a decade after the Six Day War in 1967. When Israel occupied Gaza, it ordered Hashim Atta Shawa to change the name of the bank from Bank of Palestine. The bank founder refused.

Following a favorable Israeli court ruling, the bank re-opened in 1981 and moved its headquarters to Ramallah on the West Bank. Hashim Shawa’s father, Hani Hashim Shawa, headed the bank until 2007, when he died of a heart attack.

Banking experience in Europe, Middle East

The younger Shawa’s transition to lead the bank at age 31 was sudden and unexpected. However, he had established his banking credentials in Europe and the Middle East.

Shawa worked as assistant vice president at Citigroup Private Bank in London from 1997 to 2002, after completing a degree in engineering at University College in London in 1997. He also served as vice president and senior private banker for Middle East region at Citigroup Private Bank in Geneva from 2002 to 2005. He was as associate director responsible for developing banking business in the Middle East & North Africa, at HSBC from 2005 to 2007.

Shawa said the family had always planned on him eventually taking the reins of the Bank of Palestine, first becoming his father’s deputy and then chief executive officer. “All of those plans had to be fast-forwarded in difficult circumstances,” he said.

Deposits more then double

In addition to being chairman and general manager of the bank, Shawa is vice chairman of the Palestine Institute for Financial and Banking Studies and a director of Investbank – Jordan, Abraj Real Estate Investment and Development Co., the Palestinian Investment Fund, and Palestine Power Generation Co.

Nine years after he took over, the Bank of Palestine has more than 50 branches and employs about 1,500 people. Deposits have doubled since 2009, from $1 billion to $2.1 billion.

Shawa said the bank has grown with demand for basic services such as small business loans and mortgages.

Challenges in Gaza

Progress has not come without its challenges, especially in the Gaza strip.

The bank faced street protests at some Gaza branches after it stopped transactions involving charities that might be in violation of international rules because they support Hamas.

Rival Arab Bank paid an undisclosed settlement after hundreds of terror victims sued on the grounds that the bank maintained accounts for Hamas operatives that made payments to the families of suicide bombers.

The Israeli-Gaza conflict in 2014 forced the bank to close more than a dozen Gaza branches for nearly two months except for occasional openings to allow customers to withdraw cash or make deposits.

Young population promises growth

Unlike other parts of the Middle East, nearly all of the businesses operating in the Palestinian economy are small or medium-sized. Growing interest in establishing businesses along with a population that is overwhelmingly young – three-quarters of the population is under age 35 – add up to opportunities for further growth for the bank.

“It’s a good foundation for any company that wants to set up a business and develop a growth strategy in any sector,’’ Shawa said. “We have a healthy target market of customers coming in every year, and they’re going to be looking at personal, home and business loans.”

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Oil-dependent Gabon seeks to diversify industry

14 April 2016 Comments (0) Africa, Business, Featured

gabon oil worker

The African nation looks for private investment as it creates infrastructure to grow timber and mining production.

Gabon is making progress with its ambitious strategy of industrializing its economy by 2025, but plunging oil prices may slow its advances.

Gabon’s goal of economic diversification took on new urgency in 2015, when the plunge in oil prices sent shock waves through the economy of the nation of 1.8 million people located on the Atlantic coast of equatorial Africa.

In 2010, Gabon adopted a sweeping Strategic Plan Emerging Gabon, designed to diversify its economy and make its industry more competitive. With 80 percent of its export revenues coming from oil, the country is attempting to increase timber production and mining.

The plan calls for major investments in infrastructure and services to establish the Gabon Special Economic Zone with as many as 10 economic areas around the country.

Timber processing is key

Gabon’s industrialization plan relies heavily on improving the timber industry.

Forests cover nearly 85 percent of the country and it is home to more than 400 tree species.

In 2010, the government decided to halt exports of raw logs as a way of encouraging domestic processing, which would in turn increase profits and create more jobs. By 2012, about one third of logs were being processed in Gabon.

France is the largest importer of processed wood projects from Gabon, accounting for 42 percent of sales while Asia accounts for 3 percent.

Timber revenues triple

Since the halt, timber revenues have tripled from $66 million in 2009 to $190 million in 2014.

Gabon also created a special economic zone, Nkok, in Libreville, to make it easier for foreign companies to do business in the country.

The Nkok zone attracted 62 investors in 2013, including 40 percent in the timber industry. The number of timber processing factories increased from 81 in 2009 to 114 in 2013 while the number of jobs nearly doubled to more than 7,000.

The boost in the timber sector also resulted in the startup of transportation companies to haul logs.

Timber awaiting processing in Owendo, Gabon

Timber awaiting processing in Owendo, Gabon

Growth in mining sector

Mining is another sector that Gabon is attempting to grow.

Following the creation of a metallurgical complex in Moanda, production of manganese increased to $305 million. At the same time, the country went from small-scale production of gold – about 30 kilograms in 2009 – to produce more than 1,200 kilograms in 2014.

The economy grew about 4.1 percent in 2015, and the African Economic Outlook projected similar growth in 2016.

Economic challenges persist

Nevertheless, Gabon’s economy “is facing mounting headwinds,” the International Monetary Fund (IMF) said in early 2016.

According to the IMF, falling oil prices have resulted in a slowdown in non-oil sectors including construction, transportation and services.

The slowdown has led to a government budget deficit of 2.3 percent of Gabon’s gross national product in 2015, after posting a surplus of 2.5 percent the year before. At the same time, the nation saw a trade deficit of 1.9 percent in 2015 compared to a surplus of 8.3 percent in 2014.

Slower growth forecast

The IMF predicted economic growth of only 3.2 percent in 2016, largely because of declining oil production. However, growth in the agricultural sector could help increase the growth rate to about 5 percent in 2017-18.

IMF directors noted that Gabon has made progress authorities in developing the country’s infrastructure since 2010.

They emphasized the need to continue to foster diversification so that Gabon will be less vulnerable to fluctuating oil prices.

As revenue to the government tightens, IMF directors recommended that Gabon officials focus on high-impact infrastructure projects and structural reforms that will increase productivity and improve the labor force.

Gabon improves regulatory climate

At the same time, Gabon officials have acknowledged that the regulatory environment could be better for business.

Gabon President Ali Bong Ondimba pledged to “radically improve” the business climate by streamlining the regulatory process for investment through a National Agency for Investment Promotion and with establishment of a National adjustment for Competitiveness Pact to facilitate and speed up establishment of business operations.

Ondimba said the country must encourage private investors to step up as public investment declines.

“We must ensure that everyone plays their part. The government facilitates the business environment and the private sector that invests and recruits. If everyone plays his role, we will (achieve) growth and the creation of 20,000 jobs per year,” he said.

One bright spot for investment in Gabon’s efforts came in April, when AFRICA Finance Corporation, based in Lagos, Nigeria, announced it was investing up to $140 million in the Gabon Special Economic Zone to help fund infrastructure projects including a new mineral terminal.

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Tourism in Morocco down amid regional unrest

11 April 2016 Comments (0) Business, Featured, Middle East

Casablanca Morocco tourism

While the North African nation is considered safe, instability in neighboring countries prompts decline in foreign visitors.

As regional unrest results in declines in tourist visits by Europeans, Morocco is attempting to attract more visitors from Russia, China and West Africa.

A visit by Moroccan King Mohammad VI to Moscow in March underscored the North African nation’s strategy of attracting tourists from outside European nations that have traditionally been major sources of visitors.

The Ministry of Tourism of Morocco is also in talks with airlines to open direct flights to that country from Russia and China.

Safety fears groundless

Tourism minister Lahcen Haddad said Morocco has lost tourists because of unwarranted fears about safety prompted by continuing unrest in Libya, Tunisia and Egypt as well as recent attacks by terrorists in Turkey.

“Morocco remains a very safe and secure country,” Haddad said. “But we need to do more to get that message across.”

A 2015 report by the Overseas Security Council also declared all areas of Morocco safe for tourists, citing mostly minor thefts as the main risk.

Tourist visits down 1 percent

The country’s tourism industry got a wakeup call in 2015, when total tourism revenues and tourist visits declined after a decade of growth.

According to the Treasury and External Finance agency, tourist revenue to hotels and restaurants declined by 1.3 percent during the first three quarters of 2015, following an increase of 3.3 percent a year earlier.

The agency said tourist arrivals at Moroccan border posts also declined by 1 percent in 2015 while these arrivals had increased by 2.4 percent to more than 10 million in 2014.

French visits drop by 7 percent

The largest decline has been among the French, who constitute Morocco’s largest source of tourism. French tourism to Morocco declined by 7 percent in 2015. The nation also saw declines in visitors from Spain, Italy and Belgium, while arrivals from the United Kingdom and the United States increased, according to the tourism ministry.

Tourism revenue in 2015 totaled about $6 billion, still a significant share of Morocco’s $100 billion economy. The sector employs about 400,000 people.

Like other countries in the region, Morocco experienced significant growth in its tourism industry between 2001 and 2011, according to Eurostat. The Arab Spring began in Tunisia in 2010 and spread to Egypt, Libya, Syria, Yemen, and Bahrain the following year, prompting varying degrees of unrest and instability that persists in some countries today.

Other countries see steep declines

Morocco has not fared as badly as some other countries in the region.

Egypt more than tripled the number of visitors to 14.7 million in 2010, only to see tourism drop by one third. Jordan, while stable, saw tourism fall by 17 percent in 2010 and 2011.

Turkey, hit by terrorist attacks, also experienced steep declines in tourism, which accounts for 15 percent of its gross domestic product.

As Europeans stay away, Morocco is pinning its hopes to expand the tourism sector on visitors from Russia, West Africa and China.

King Mohammad visits Moscow

King Mohammad visits Moscow

King visits Moscow

In March, a visit to Moscow by King Mohammad VI’s included talks about ways to encourage more Russians to visit Morocco as well as talks about providing direct flights to the North African country from St. Petersburg and Moscow.

In his first visit to Russia since 2002, the Moroccan king met with Russian President Vladimir Putin to discuss bilateral cooperation in tourism, agriculture and energy. The two countries signed 12 agreements related to tourism.

The king also inaugurated an exhibition “Morocco-Russia: A shared ancient history,” which includes bronze objects from ancient Roman sites as well as Roman statues at Moscow’s Pushkin Museum.

Goal is 200,000 Russian visitors each year

Haddad, the Moroccan tourism minister, said the nation hopes to increase the number of Russian tourists five-fold, from 40,000 annually in 2015 to 200,000 by 2019.

“Russia offers us a big opportunity,” he said.

Haddad said talks are under way with Royal Air Maroc and Russia’s Aeroflot about opening new routes between Marrakesh and Agadir in Morocco and Moscow and St. Petersburg.

A 2014 plan to add direct flights between Morocco and China has not been implemented.

Morocco is hub for West African travelers

Meanwhile, Haddad said Morocco is a top hub for West Africans traveling to Europe or other countries in Africa.

Haddad said Morocco could attract as many as 160,000 visitors from West Africa if it can entice transit travelers to stay a few nights in Casablanca and visit attractions such as the medina and Hassan II mosque.

Morocco’s tourism industry is expected to get a boost later this year with more than 30,000 attendees at COP22, the 2015 global climate conference November 7 – 18 in Marrakesh.

Morocco has also started talks with European carriers about offering low-cost flights to Moroccan tourist destinations such as Ouarzazate and Errachidia, Haddad said.

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Algeria seeks to boost its tiny stock market

7 April 2016 Comments (0) Business, Featured, Middle East

Challenges include lack of knowledge of stock investment in the domestic market, lack of liquidity in investments and competition from more traditional investments.

Algerian officials are looking for ways to boost investment in the country’s stock exchange, which is one of the world’s smallest.

The relatively young exchange, based in Algiers, lists only four companies and has a capitalization of less than $140 million.

Officials hope to increase the capitalization to $1 billion in 2016 by listing additional companies.

The stock exchange faces several challenges, including lack of knowledge of stock investment in the domestic market, lack of liquidity of investments and competition from more traditional investments.

Biopharm offering attracts little interest

A recent initial public offering by the Algerian pharmaceutical company Biopharm had a lackluster start, raising only $6 million in its first week, far less than the $5.5 billion, or 20 percent shares in the company, on offer.

According to experts, Biopharm has clear advantages as an investment. It operates in the health sector, which is expected to grow as the population ages. It has a solid record of financial results, including net revenue of $32 million in the first three quarters of 2015 and promises a return of 14 percent.

Stock market is seen as a novelty

Investing in the stock market is a relative novelty in Algeria, which only established the exchange in 1999. Instead consumers favor more traditional investments, such as real estate, which are seen as more stable and safe. Another popular investment is to convert Algerian dinars to Euros, which in recent years has yielded higher returns than the Algiers-based stock market.

Another problem is the lack of liquidity of stock investments. Given low consumer interest in the exchange, it can be difficult for those who want to sell to quickly find stock buyers.

The stagnant Algerian exchange contrasts with the largest stock exchange in the region, in Saudi Arabia, which is also the largest economy in the region.

Saudi market capitalization is $570 billion

The Saudi market capitalization is $570 billion, or about one percent of the world stock market and larger than the main market in Russia. The exchange is highly liquid, with a daily trading volume of $2.5 billion, making up 65 percent of the trading in the entire region.

Saudi stock exchange

Saudi stock exchange

The Saudi exchange, which has issued several initial public offerings, opened to foreign investment in 2015. The exchange is primarily geared to larger foreign investors in order to promote stability.

Other large exchanges in the region are in the United Arab Emirates, with a market capitalization of $245 billion, and in Qatar, where the stock market is capitalized at about $200 billion.

Algeria’s neighbors also have active stock exchanges. Morocco’s exchange is capitalized at approximately $48.8 billion with 77 companies listed. Tunisia’s exchange has a market capitalization of $9.2 billion with more than 70 listings.

Algerian government seeks to boost exchange

Some have said the Algerian government should be doing more to promote that nation’s stock exchange.

Algerian Finance Minister Abderrahmane Benkhelfa recently met with representatives of the stock exchange, bank managers and other key players to explore ways to “boost the stock market.”

Benkhelfa stressed “the need for synergy and dialogue among the organizations to give more credibility to the financial market.”

The minister said the stock exchange needed to be modernized with improvements in company transparency, including regular publication of their financial statements, and efforts to improve competitiveness. He appealed to Algerian companies to join the market to fuel their growth.

He said the upcoming listings of Biopharm in April and of Aïn Kbira of Sétif, a cement company, in May, would help boost the market’s value significantly.

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Keeping In Step: Competition for Anghami Music App in MENA

6 April 2016 Comments (0) Business, Featured, Middle East

anghami

Anghami, a recently launched Lebanese music listening platform, is facing fierce competition from the French company Deezer, which recently announced an expansion into some Middle Eastern and North African countries.

Mobile music listening platforms have rapidly become the norm, and with an ever-expanding variety of services, competition is fierce between geographically isolated competitors. Anghami, a newly launched Lebanese mobile music platform, gained more than half a million users in its first three months on the market, leaping to the top of iOS app lists in 12 MENA countries. A reported 30% of Anghami subscribers use the app daily, indicating strong staying power, and the app has already been shortlisted for a variety of MENA technology start-up awards.

While Anghami has burst into the scene as a regional leader, it is now being threatened by French music platform Deezer. Deezer, which boasts more than 7 million active users, announced that it would be putting $130 million towards an expansion into the MENA region. Deezer will soon be available in Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, UAE, and Yemen, encroaching very seriously on Anghami’s territory.

Not Missing A Beat

While Deezer may have more experience than Anghami, Anghami was specifically created for Arab users. Anghami’s founder, Elie Habib, was very conscious of his demographic’s needs: consumers in the MENA region prefer mobile music that can be easily shared with friends, and so Anghami is only available on smartphones. Anghami is widely available on most smartphone platforms to cater to its clients’ varied phone plans.

Unlike Anghami, Deezer is available both on smartphones and through the web, but is more limited in terms of platform compatibility because its current, mostly European users have a smaller variety of phones.

Anghami is also conscious of its users’ interest in learning about new music through the app. To meet this need, Anghami has a personal DJ function that enables users to discover new music. Deezer has no such function. While currently in English, Anghami is reportedly working on an Arabic version to drive home its local focus. Currently, 75% of Anghami’s users’ phones are set in English, and 25% are in Arabic. Creating an Arabic language version would create a better sense of inclusion for 25% of users and may increase appeal amongst Arabic speakers around the region. Anghami is very MENA focused, and is only available in 15 countries. Habib points to this as one of their strong points: they are focused on a very niche group, and can better tailor the app to meet their needs and changing demands, unlike Deezer, which is now expanding for a more global reach.

The Customer is Always Right

In keeping with its regional focus, Anghami not only provides its users with access to international music, but has specific sections for Arabic music as well. Users with premium access can download songs from Anghami to their phones and listen when there is limited or no internet available. This is especially important for a region that does not have 100% internet coverage. For users in, say, the Atlas Mountains of Morocco, being able to download music would be incredibly important.

Anghami’s premium service enables users to share downloaded music with friends on social networks, such as Facebook or Twitter, and is ad free.

While Anghami boasts many intriguing aspects, Deezer’s global reach and larger consumer network has made it much more globally attractive. Not only does Deezer provide a similar new-music service, but the app tracks listening trends and personalizes playlists. Users with the premium app can opt to see the lyrics of their favorite songs in real-time, thus preventing the age-old embarrassment of belting out nonsense. Since Deezer is available across language barriers, this may be a very interesting feature for people whose first (or second) language is not English. Anghami has not specifically addressed this feature, but it seems as though it would be a good opportunity to incorporate into their Arabic language platform.

Welcoming The Big Fish Into A Not-So-Small Pond

Co-founders Eddy Maroun and Elie Habib did their due diligence before launching Anghami, securing deals with key regional and international labels. Several Arab artists have released their albums only through Anghami, making the appeal of new music even greater. Deezer has similar contracts with one major exception: Anghami has an exclusive three-year contract with Rotana, one of MENA’s biggest labels, for streaming in Lebanon, the UAE and Saudi Arabia.

Not only is Anghami strategically linked with important labels, but it is also working on partnerships with telecom companies. For a platform solely available on mobile networks, this is the key.

The question is whether users will move from Anghami to Deezer once their playlists and preferences have been set. Deezer has a much larger catalog of music (more than 40 million titles), but, as Habib points out, “most people only listen to 100,000 songs. What you really care about is the core catalog…by May or June we’ll have 5 or 6 million songs.” As demonstrated by their soon-to-be dual language platform that caters specifically to smartphone users, Anghami is focused on regional appeal, rather than the number of songs available.

Entry Power VS Staying Power

Habib has a very positive outlook for the future of Anghami in MENA, even after the arrival of Deezer. “We’re pretty excited to have Deezer coming in. It validates that we are in the right place at the right time. We’re looking forward to having a healthy competition. At the end of the day, the user benefits from it,” says Habib.

Anghami is shiny, new, and specifically designed for an Arab clientele; Deezer is nearly a decade old and has millions of followers from most regions of the world. Anghami’s website features popular Arab artists as well as internationally known musicians, and has photos that are likely a more accurate representation of their users. Perhaps Deezer has plans to use some of its $130 million commitment to design an Arab-friendly website as it expands into MENA, but Anghami’s specific design will, hopefully, give it a boost.

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Algerian telecom Djezzy sees path forward

5 April 2016 Comments (0) Business, Featured, Middle East

Djezzy

A tax dispute behind it, Djezzy receives approval to expand its 3G network in the fast-growing mobile market.

Djezzy, a long-troubled Algerian telecom, says it is on a path to growth after receiving approval to upgrade its network to 3G nationwide.

The upgrade could put Djezzy on a par with rival companies Mobilis, which offers 3G coverage in all 48 of Algeria’s provinces, and Ooredoo, which offers 3G in 36 provinces.

Djezzy currently has more than 18 million subscribers, almost half the market, but it offers 3G coverage in only 30 provinces. The company, in which the Algerian government has a 51 percent stake, said it would extend service to the remaining provinces this year.

Tax dispute slows Djezzy growth

Algeria’s mobile market is booming. However, Djezzy’s growth has been slowed by a lengthy dispute over back taxes that culminated in the Algerian government’s purchase of a majority share in the company in 2014.

VimpelCom, owned by Telenor ASA of Norway and Russian billionaire Mikhail Fridman, retained the remaining 49 percent of the Djezzy, and continued to operate Djezzy through their Optimum Telecom Algeria.

VimpelCom recently reaffirmed its commitment to the Algerian market.

Company will expand 3G nationwide in 2016

Vincenzo Nesci, executive chairman of Optimum Telecom Algeria, said in March that the company had received government authorization to deploy 3G services in all provinces of the country and would implement the expansion during the during the ‘first months’ of 2016.

The expansion follows a long period of crisis for the company.

The Algerian government barred Djezzy from importing SIM cards and other equipment starting in 2010 and the Algerian central bank blocked overseas transfers of funds – including paying dividends to the parent company – in a dispute over taxes Algeria said the company owed.

The government said Djezzy, at the time the country’s largest operator with 14 million subscribers, owed $600 million in back taxes.

Government buys share of company

Algerian regulatory hurdles also derailed a proposed sale of Djezzy to MTN, a telecom based in South Africa, for $7.8 billion.

Instead, the Algerian government bought a majority stake in Djezzy in 2014, in a deal that provided the parent company with $4 billion in cash and dividends after paying a fine of $1.3 billion to settle the Algerian tax claims.

Djezzy faces competition from two other major mobile network operators, Mobilis and Ooredoo, seeking to serve Algeria, which has a population of about 40 million.

Djezzy leads market, lags in 3G

According to an August 2015 report by Algeria’s Post and Telecommunications Authority, Djezzy leads in the total number of subscribers with 18.6 million, nearly half of the market. Mobilis has 13 million subscribers and Ooredoo has 11.7 million.

However, Mobilis leads in 3G subscribers, with 3.8 million, followed by Ooredoo with 3.4 million. Djezzy brings up the rear in 3G with only 1.25 million subscribers.

The regulatory agency said the market grew by 22.7 percent in 2014, compared to 2013. The total market generated revenues of about $3 billion in 2014, 8 percent higher than in 2013.

One study found that Algeria was one of the fastest growing mobile markets in the region along with the United Arab Emirates and Saudi Arabia, while the market was stagnant in Egypt, Kuwait and Israel.

Mobile revenue in the Middle East and North Africa was expected to grow from a total of $50.4 billion in 2013 to $59.1 billion in 2018. As more people consume information on their mobile devices, the study said primarily spending on handset data would drive growth.

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