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Peace Hyde: Entrepreneur, broadcaster, actress

9 March 2016 Comments (0) Africa, Featured, Leaders

peace hyde

The British-born personality promotes education, entrepreneurship in Ghana and Nigeria.

As a child growing up in the United Kingdom, Peace Hyde had two dreams: One day moving to Africa, home of her Ghanaian forbearers, and launching a career in television.

Today, Hyde is living that dream in high style as an award-winning broadcaster, internationally recognized entrepreneur, West Africa correspondent for Forbes, and founder of a nonprofit that promotes education in Ghana and Nigeria.

Two years after leaving a teaching career in England to move to Ghana, Hyde, 30, was recently named African Broadcaster of the year at the Nigerian Broadcasters Merit Awards 2016.

Awards for leadership, influence

Hyde also was one of five people in media and entertainment named to a prestigious list of 50 most influential young Ghanaians in 2015 and was recognized as a Young Chief Executive Officer leader by the young CEO Business Forum in London for her work with Aim Higher Africa, a nonprofit she founded to promote education in Ghana and Nigeria.

She is also currently nominated for International Business Woman of the Year at the Women 4 Africa awards in London in May.

As a teacher in England for seven years before relocating to Africa, Hyde learned two important lessons: the importance of education to motivate and empower young people and the ability to multi-task, which has served her well in her many roles.

Education is a critical tool in the fight to empower communities and lift them out of poverty, she said.

Encounters with young people who carried goods back and forth at the markets of Accra convinced her that education was their way out. Seeing young girls who had no future but laboring at the marketplace, she said she “felt a deep sense of injustice. Something needed to be done for these girls.”

Without funding initially, she began to teach the children at the marketplace. Later, she found support to start Aim Higher Africa, a nonprofit that focuses on education and entrepreneurship.

Project creates digital classrooms

Initially, working in Ghana, Aim Higher Africa focused on improving standards at rural schools, including providing teachers with guidelines on discipline, testing, evaluating and grading.

As the program has grown and expanded to also work in Nigeria, where Hyde is currently based, she said it has become more strategically focused on bringing digital education to rural classrooms.

Currently, the organization is working with 30 schools in Ghana and Nigeria, Hyde said.

Promoting African entrepreneurship

She wants to help build a generation of young African entrepreneurs to help improve employment opportunities on the continent.

She said discussions traditionally have focused on job creation. But her philosophy with Aim Higher Africa is that empowering the next generation entrepreneurs and leaders who can create new industries “the only way you can create sustainable and scalable opportunities.”

Aim Higher Africa organizes Ignite events where entrepreneurs share their expertise and encouragement with young people.

She also hopes to tell success stories in her role as a television host and Forbes West Africa correspondent. As more stories of successful entrepreneurs are told, the environment and opportunities for the next wave of entrepreneurship will improve.

She sees “a new Africa where we are proudly exporting our heritage to the world,” she said. “I believe it is time to highlight the move towards digital platforms and technological advances that were not present (in Africa) a couple of years ago.”

Started with a teaching career

Born to Ghanaian parents in the United Kingdom, she was raised in England and received a degree in psychology from Middlesex University. She went on to receive a master’s degree in journalism and communications as well as a teaching qualification.

Once she completed her studies, she taught in middle and high school for seven years.

She said her experience as a teacher gave her a lot of practice in multitasking, which has paid off as she juggles roles that include broadcasting, running a nonprofit and even some acting.

Her current broadcast projects include hosting a popular celebrity talk show, The EFGH Show (Entertainers from Ghana) and hosting Friday Night Live, a lifestyles show. She has occasional roles in television programs, including a role as a Yoruba mother on the MTV program “Shuga.”

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British bank Barclays will leave Africa

8 March 2016 Comments (0) Africa, Business, Featured

barclays africa

South African economic problems and corruption risks on the continent prompt decision to sell majority stake in Barclays Africa.

South Africa’s economic slow down and plummeting currency were key factors in Barclays decision to exit banking on the continent, ending a presence dating back nearly 100 years.

Barclays, one of Britain’s largest banks, announced it would sell its stake of 62.3 percent in Barclays Africa as part of a larger strategy of refocusing on operations in the United Kingdom and the United States.

Barclays has also cut back operations in Asia, Brazil, Europe and Russia.

Banks in 14 countries

Barclays Africa Group, Limited, one of the largest banks on the continent, is worth about $4.9 billion. It has 45,000 employees and 1,267 branches.

It operates in 14 countries: Botswana, Egypt, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, Tanzania, Uganda, Zambia and Zimbabwe, as well as South Africa, where the company owns and operates the bank network, Absa.

The African bank has been profitable, but the steep fall of the rand last year cut return on equity to 9 percent, below a target of 11 percent.

Barclays believes Africa is a growth area, according to those familiar with the bank’s review of its options. However, the South African issues along with higher risk of corruption prompted its decision to sell its stake.

Leadership seeks to refocus

Barclays CEO Jes Staley

Barclays CEO Jes Staley

The move comes under the leadership of Barclays CEO Jes Staley, who took over in October 2015, the latest in a succession of chief executives who have sought to improve the bank’s outlook following the financial crisis.

The decision is a major turnaround from just a year ago, when Barclays Africa CEO Maria Ramos promised that the bank would rank among the top three in revenue in its five largest markets – South Africa, Botswana, Kenya, Ghana and Zambia by 2016. Barclays Africa at that time was in the top three in only two of its markets – South Africa and Botswana.

Ramos also said the bank was on target to produce a return on equity of 18-20 percent.

Bank could be a tough sell

It was not immediately clear who potential buyers might be although it is unlikely Barclays would put its shares on the market if it didn’t expect suitors.

Despite the relative financial health of the bank, it may be a tough sell, according to analysts.

Garth Mackenzie of Trader’s Corner, said while Barclays Africa was a well-governed asset with a good dividend yield, concerns about risk “seem to overshadow that.”

South African turmoil undermines rand

The rand hit an all-time low in late 2015 after African President Jacob Zuma sparked protests with the ouster of a respected finance minister with an unknown who was then quickly replaced amid political and financial turmoil.

The value of the South African currency fell 40 percent in 2015. The rand has begun to recover but is still down by about 25 percent. Meanwhile, South Africa reported economic growth of only 0.06 percent in the final quarter of 2015.

Dividends cut

Barclays also announced it would cut shareholder dividends in half for the next two years, as the bank continues to struggle to recover from the financial crisis. The announcement prompted a reduction of eight percent in the value of its shares.

Staley, the CEO, said that the bank restructuring was coming to an end. “We are acutely aware of shareholders being tired” that it has taken so long to restructure the company.

Barclays has assured investors that their funds are safe; only share certificates will change hands in any sale. However, Barclays decision to leave Africa raises the question of whether other companies will also shift their focus to markets they perceive to be safer in America and Europe.

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What do reformist gains in Iran elections mean for business?

4 March 2016 Comments (0) Featured, Middle East, Politics

iran elections

Surprise Iranian election result endorses President Hassan Rouhani’s economic reforms.

On February 26th, Iranians headed to the polls and handed moderates and reformists a surprise victory. The result also signaled the endorsement of President Hassan Rouhani and his more moderate agenda and economic reforms, such as his recently negotiated nuclear deal and his moves to engage with the West.

Iranians were voting to decide who sits in the powerful 88-seat constitutional council, the Assembly of Experts, and the 290-seat Iranian Parliament. The Interior Ministry reported that the final count in the parliamentary elections gave reformists 85 seats and moderate conservatives 73, meaning the two blocks, who put their differences aside to run on the same platform, now hold a 54% majority over hard-liners. Iran’s moderates also won a majority in the Assembly, receiving 52 seats, or a 59% majority, bringing to an end more than a decade of conservative domination. In a vote of confidence, President Hassan Rouhani and one of his leading allies, former President Ali Akbar Hashemi Rafsanjani, also retained their seats, while two prominent hardliners lost theirs.

The main role of the clerical Assembly of Experts is to choose the Supreme Leader, the head of state who sits above the president. Current Supreme Leader, 76-year-old hardliner Ali Khamenei, is reportedly ill, meaning it is likely the Assembly voted in by this election will pick the next Supreme Leader. If a reformer or moderate is elected, Iran could see significant change.

However, although this election gave moderates their most dramatic gains in a decade, there have been arguments that the victory is not as reformist as some claim. The running lists were both heavily pruned by the Guardian Council before the vote, with all but 166 rejected of the 801 individuals who put themselves forward as candidates for the Assembly, and 5,200 of the 12,000 individuals registered to run for the Parliament rejected. Nonetheless, with a 62% turnout, this election will be seen as a blow to hardliners and as evidence of a desire for change.

The economy at the heart of the elections

The economy seems to be at the heart of these election results. Iran has been suffering double-digit unemployment and inflation for much of the past decade. Sanctions have cost the country between 15-20% of GDP. And many of its brightest minds have deserted the economy, as 300,000 Iranians moved abroad between 2009 and 2013. A reformist victory suggests that Iranians have had enough of economic pain and are ready to endorse Rouhani’s economic reforms.

Rouhani intends to strengthen the private sector by tackling corruption, welcoming foreign investors, and developing trade with the West. Indeed, since taking office in 2013, more than 120 foreign business delegations have visited Iran in search of business opportunities. And just last month, February 2016, Chinese President Xi Jinping made a poignant visit to the country to discuss increasing trade and signing several agreements. Rouhani has also travelled to Europe to drum up foreign investment, meeting Matteo Renzi in Rome and Francois Hollande in Paris, where he left with $30 billion in deals. Rouhani has also previously said that he hopes to develop tourism into a $30 billion-a-year industry by 2025.

Several deals have also been negotiated recently. Boeing has been given special clearance to sell to Iran, and General Electric is hoping to be offered the same benefit soon. In January, Iran signed an agreement to buy 118 Airbus jets worth $27 billion. And Iran’s Khodro and France’s Peugeot have signed an agreement to build cars.

His negotiation of the nuclear deal in January which lifted sanctions allowing Iran to once again export oil, was also a very clear message of intent. The country now plans to export an additional 1 million barrels a day this year, low prices or not, which will offer a boost to Iran’s economy. And it is also highly likely that foreign firms will start bidding on Iran’s oil fields, bringing the country more modern techniques.

Rouhani

Rouhani

Comparatively fewer restrictions on economic reforms

Moving forwards, analysts believe that these election results will offer Rouhani comparatively fewer restrictions on economic reforms and in making the country more attractive to foreign firms looking for a piece of the relatively untapped market of 77 million consumers. Analysts expect that Rouhani will find it easier to push through legislative reforms and address issues crucial to the business sector such as the commercial code, labor laws, and stock market regulation. They cite the expectation that hardliners will now focus their diminishing political power on social and cultural conservatism.

Analysts have also commented that the positive public opinion will also be significant. These election results offer a symbol to the rest of the world that Iranians themselves are more favorable towards trade and commerce with the West and America, and that in turn could encourage foreign businesses to make longer-term investments.

Of course, the elections do not leave Rouhani without restrictions. Supreme Leader Ayatollah Ali Khamenei, who is strongly against the expansion of civil liberties and freedoms, will still have the final say on matters of state, and the similarly conservative unelected clerical body, the Guardian Council, will continue to have the power to vet all laws. But it does seem that the winds of change may have begun to blow.

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Morocco prepares to host global climate change conference

4 March 2016 Comments (0) Africa, Featured, Politics

marrakech

More than 30,000 people are expected to attend the COP22 gathering in Marrakesh in November.

Morocco has begun preparations for COP22, the 2015 global climate conference, where African nations hope to see further action to help mitigate damage from climate change.

The event, expected to attract 30,000 attendees, will be held November 7 – 18 in Marrakech. Morocco recently appointed a committee, headed by Foreign Minister Salaheddine Mezouar, to guide logistical preparations.

The conference follows COP21 last November in Paris, where 195 participating countries produced a landmark agreement to reduce carbon emissions.

Repairing damage will be key issue

The upcoming conference is expected to focus on an issue of great importance to many African nations: Mitigation of damage already done by climate change and help adapting to a new environment.

Speaking at a recent “From COP21 to COP22” conference in Geneva, Helen Clark, administrator of the United Nations Development Program, said the next conference must drive mitigation efforts.

Following the Paris agreement, Clark said, agencies and governments must “scale up” initiatives to repair or reduce damage and help countries adapt to changing environmental conditions.

Clark said her agency would facilitate access to financial and technical resources along with other major global actors.

From decision to action

She said COP 22 in Morocco marks a transition from the consensus building and decision-making of Paris to a “COP of Action.”

Clark said that in addition to supporting development to reduce emissions, her agency will work with more than 100 countries to finance mitigation measures as well as strengthening disaster management work and linking it to climate change damage.

While Africa is the least polluting continent on the planet, it has suffered some of climate change’s most severe effects.

At the climate conference in Paris, African leaders emphasized the need for financial help to address losses in their countries.

Drought, flooding, erosion hit Africa

Southern Africa, including Mozambique, Botswana, Zimbabwe and South Africa has been hard hit by drought as have Ethiopia, Eritrea and Somalia in the Horn of Africa.

Drought has nearly emptied the Kariba Dam reservoir on the Zimbabwe-Zambia border, forcing power shortages and energy rationing.

At the same time, heavy rains, landslides and flooding have hit Burundi, Nigeria and Malawi.

In tiny Zanzibar, the rise of sea levels is salinizing the soil, making farming impossible. Zanzibaris have also seen rising temperatures, floods and increased sea waves.

Coastal erosion is emerging as a major threat in West Africa, where large shares of gross domestic products are associated with the sea, including fishing and tourism.

Financial help to mitigate damages and help countries adapt to a new and changing environment are expected to take center state at the Marrakech conference.

Morocco has ambitious plans to reduce emissions

Morocco hopes hosting the conference will also shine an international spotlight on its ambitious efforts to reduce its own reliance on greenhouse gas emissions with its pledge to reduce them by one third percent by 2030.

Morocco plans to increase the share of renewable energy to 42 percent by 2020 and to 52 percent by 2030. The country recently opened what is believed to be the world’s largest solar power plant near the city of Ouarzazate, about 120 miles southeast of Marrakech

As preparations get under way, organizers have begun holding workshops to educate tour and hotel operators and discuss logistics in the city of about 1 million population is Morocco’s most popular tourist destination, known for its colorful markets. Marrakech hosted COP7 in 2001.

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Data shows decline in governance in 21 African nations

3 March 2016 Comments (0) Africa, Featured, Politics

Ghana

10 countries see improvement in their political systems and Mauritius, Cabo Verde and Botswana are the top rated.

Africa has seen scant improvement in national governance in recent years and more than a third of its 21 nations saw declines in the quality of their civic systems, according to a comprehensive index established by a Sudanese philanthropist.

The overall average for the continent increased by only 0.2 points to 50.1 out of a total of 100 possible points between 2011 and 2014, according to the Ibrahim Index of African Governance. The index also showed a decline of more than two points in the area of economic opportunity.

Twenty-one countries, including five of the top ten nations, have experienced deterioration of government performance since 2011 while only 10 countries registered improvement.

The index revealed significant gaps. Mauritius was the top-rated nation with a score of 79.9; war-torn Somalia had the lowest with a score of only 8.5. Regionally, Southern Africa had the highest rating for governance at 58.9. Central Africa had the lowest, 40.9.

Index assesses safety, business climate

The annual index is produced by the foundation of Sudanese telecom billionaire Mohamed Ibrahim, who is known for fighting corruption. Launched in 2006, it evaluates governance in each of 54 African countries based on 93 indicators that fall into four broad categories: safety and rule of law, human development, participation and human rights, and sustainable economic opportunity.

The top 10 countries, with their ratings in parentheses, are: Mauritius (79.9), Cabo Verde (74.5) Botswana (74.2), South Africa (73), Namibia (70.4), Seychelles (70.3), Ghana (67.3), Tunisia (66.9), Senegal (62.4), and Lesotho (61.1).

Mauritius, Cabo Verde, Botswana, Seychelles and Ghana, saw ratings declines while the other five countries improved.

Other countries that showed improvement were: Ivory Coast (48.3), Morocco (57.6), Rwanda (60.7), Senegal (62.4), and Zimbabwe (40.4).

Ivory Coast shows most improvement

Ivory Coast was most improved with an increase of 8.4 points. The West African nation is emerging from years of civil war that was triggered by a disputed election in 2010 and left an estimated 3,000 people dead. Ivory Coast held successful democratic elections for president in 2015.

War-torn South Sudan, Mali and the Central African Republic posted the steepest drops in the ratings. South Sudan’s rating declined by 9.6 points to 19.9 out of 100. The Central African Republic’s rating decreased by 8.4 points to 24.9. Mali was down 8 points to a rating of 48.7.

Thousands have been killed or displaced in South Sudan as the government battled rebel forces since 2013. The United Nations has warned that nearly 25 percent of the population of South Sudan is in urgent need of food.

After years of civil unrest, Mali has been plagued by jihadist attacks targeting tourist locations. Islamist militants killed 20 hostages in November at a hotel in the capital of Bamako.

In the Central African Republic, hundreds have been killed and an estimated 35,000 people displaced since 2013, when a mostly Muslim group overthrew the government. Widespread accusations of human rights abuses by that group prompted formation of mostly Christian militias that have retaliated against Muslims.

Tanzania, Uganda among those with declines

These countries had also ratings declines of one point or more: Tanzania (56.7), Uganda (54.6), Mozambique (52.3), Gambia (50.5), Cameroon (45.9), Guinea-Bissau (35.7), and Libya (35.5).

Other countries whose ratings declined slightly (less than one point) were Benin (58.8), Malawi (56.7), Niger (48.4), Guinea (43.7), Equatorial Guinea (35.5), Eritrea (29.9).

Along with the Guinea-Bissau, Equatorial Guinea, Libya, Eritrea, Central African Republic, South Sudan, the bottom 10 included: the Democratic Republic of the Congo (33.9), Chad (32.8), Sudan (28.3), and last-place Somalia (8.5).

The index also revealed striking differences across regions of the continent, from an average low of 40.9 points in Central Africa to a high of 58.9 points in Southern Africa. East Africa scored 44.3, North Africa 51.2 and West Africa 52.4 In addition to being the lowest rated, Central Africa was the only region where governance deteriorated, according to the index.

Business environment declines

In its four categories, the index showed that the sustainable economic opportunity indicators had the lowest average score for the continent, 43.2 points, a decline of 0.7 points from 2011. In particular, the index showed a decline of 2.5 points in “business environment,” which included a drop of 11 points in the sub-category of soundness of banks.

Four countries bucked the trend, showing gains of 5 points or more on economic opportunity ratings: Morocco, Togo, Kenya and Democratic Republic of Congo.

Ibrahim said that while the continent has made significant progress in the past 15 years, the latest results are cause for concern.

The 2015 index “shows that recent progress in other key areas on the continent has either stalled or reversed, and that some key countries seem to be faltering,” he said. “This is a warning sign for all of us. Only shared and sustained improvements across all areas of governance will deliver the future that Africans deserve and demand.”

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Janine Diagou rises to number 2 in family company

2 March 2016 Comments (0) Africa, Featured, Leaders

janine diagou

As head of banking of NSIA Group, Janine Diagou prepares to introduce company shares on the regional stock exchange.

When Janine Bénédicte Diagou joined the family insurance and banking business in 1999, it wasn’t guaranteed that she would be running it one day.

But 17 years later, she is group managing director and head of the banking division at NSIA Group, a leading insurer in French-speaking Africa based in the Ivory Coast, and the number two to her father, Jean Kacou Diagou, who founded NSIA Group in 1995 and serves as its president.

These are busy times for the Diagous as their company, which has pursued an aggressive growth strategy, prepares to take their bank public and introduce shares on the regional stock exchange for eight West African countries, including Ivory Coast.

For Janine Diagou, that has meant months of travel to meet with boards of subsidiaries in the region to smooth the way for the initial public offering, which will enable the bank to raise capital.

Diagou studied business in England, France

Janine Diagou studied business and finance in Paris and in London, obtaining a Bachelor’s Degree in business administration in France and a Master of Science degree in finance in England.

After she finished her studies in 1995, she joined Citibank in Abidjan, and then moved to Mobil Group ACOE as an internal auditor.

She said she took what was essentially a demotion to join her father’s company at his request in 1999, trading an executive role at Mobil Group for the more modest role of auditor at NSIA.

Her father was forming a new auditing group and asked her to join as a simple auditor.

“He asked me to cut my salary in half. I was not very excited at first, especially since I did not know the insurance industry. So we had to work hard to prove that I deserved my place,” she said.

Skepticism, then success

She said she faced skepticism and took pains to avoid being perceived as having the job because she was the daughter of the boss, including addressing him as “mister president.”

She rose to become financial director of the group and then took charge of strategic development. She assumed her current position in 2011.

She said she and her father never had a game plan for her advancement.

“He never promised me anything and, believe me, he did not ease the task either. I think in my job, I won his trust,” she said.

Progress for women in business

She believes her success is a victory for women in business.

“Convincing men in industry of your competence is not simple in Africa,” she said. “The main challenge was to prove again and again that I was capable of doing the job at least at the same level as men — and even better.”

She said she and her father have not reached a stage of discussing succession. Instead she is focused in gaining investor confidence that the company is sustainable.

Family, private investors having holdings

NSIA currently owns nearly 80 percent of the bank, with the family holding 60 percent and the remaining 20 percent in the hands of private investors. National Bank of Canada bought a 20.9 percent share in the bank for approximately $94 million in 2015.

NSIA Bank, formerly known as BIAO-CI is part of the financial group NSIA, which is a leading insurance provider in 12 countries across West and Central Africa. NSIA also owns a bank in Guinea. The company reported revenue of $3.3 million in 2014 and Jean Diagou forecast revenue would increase by 10 percent in 2015.

Few details of the initial public offering have been made public and no date for the stock sale has been announced.

Ivorian law requires companies to offer at least 10 percent of their shares to be listed on the exchange.

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Gulf Economies Can Survive Plummeting Oil Prices, says IMF

28 February 2016 Comments (0) Business, Featured, Middle East

Lagarde-Christine

The IMF is confident that GCC economies can survive continued low oil prices by reducing state spending and increasing government revenues.

The International Monetary Fund (IMF) is confident that GCC economies can make the adjustments needed to cope with continuing low oil prices, but only by reducing state spending and increasing government revenues, said IMF Managing Director Christine Lagarde last week.

Speaking to a conference of Arab economic officials, Lagarde, recently given a new five-year term as IMF chief, said: “Oil prices have fallen by two-thirds from their most recent peak but supply and demand-side factors suggest they are likely to stay low for an extended period. The size and likely persistence of this external shock means that all oil exporters will have to adjust by reducing spending and increasing revenue.” However, she was cautiously optimistic, arguing that most of the GCC countries have the scope to pace their adjustment over several years and limit the impact on growth.

Oil prices have plummeted from their summer 2014 highs of $115 a barrel to the low $30s. Lagarde argues that the oil-reliant Gulf States’ ability to survive the drop will rely on greater taxation and fiscal reforms. She called for the introduction of value-added tax, “ideally a harmonized regional VAT”, commenting that “even at a low single-digit rate, such a tax could raise up to 2% of GDP”. She also called for a greater weight on corporate and personal income and property and excise taxes to increase revenues, as well as bringing energy subsidies to an end. She also called for the diversification of the economy away from oil, for example by adding incentives for entrepreneurship and boosting private sector employment.

IMF cuts economic growth forecasts

Lagarde’s comments follow the IMF’s Regional Economic Outlook report of the MENA economies, which was a brutal assessment of the slowing growth and effect of low oil prices on the region. The IMF has also cut economic growth forecasts for the oil-exporting Gulf States to 3.4% this year, as it reports that last year MENA oil exporters as a whole lost more than $340 billion of revenues (equivalent to 20% of their combined gross domestic product).

While Kuwait, Qatar, and the United Arab Emirates have strong enough fiscal buffers to last for twenty years, Oman, Algeria, Saudi Arabia, Bahrain, Libya, and Yemen are in a worrying situation, with only five years of fiscal buffers left. Masood Ahmed, the IMF’s regional director, comments: “GCC countries have sizeable buffers — most of them can finance substantial deficits for four to five years. But will they want to use buffers … to continue running large deficits?”

But it is not all bad news. The share of GDP of the non-oil sector is rising, up by 12% to 70% between 2000 and 2013 in the GCC countries as the UAE, Kuwait, Qatar, Bahrain, Saudi Arabia, and Oman all put in place strategies to promote non-oil trade, attract more foreign direct investment, and begin to lift subsidies.

Diversified economy in the UAE

Dubai

Dubai

The UAE has one of the most diversified economies in the region. Non-hydrocarbon revenues account for 75% of GDP and 80% of total export revenues. Retail and real estate sectors are showing strong growth driven by wealthy ex-pat domestic demand. And tourism, encouraged by the country’s position as a safe haven, is expected to grow further with Dubai Expo 2020.

The food and beverage sector is also looking strong. The UAE has invested $1.4 billion in the food processing industry since 1994, and it continues to expand the halal food segment which is projected to grow to $1.6 trillion by 2018.

Bahrain and Kuwait implement painful reforms under the cover of the IMF

IMF recommendations are also making it easier for some governments to implement painful reforms and cuts which could lower their citizens’ living standards. Bahrain has planned a series of austerity cuts under the cover of IMF recommendations, introducing VAT, cutting spending on social transfers, removing domestic subsidies for meat and cutting them for gasoline, and freezing public-sector wages. The country is also trying to boost revenues from tourism, light manufacturing, and services industries.

Finance Minister Sheikh Ahmed bin Mohammed al-Khalifa said: “Bahrain’s Government Action Plan, currently underway, includes wide-ranging measures that will ensure the sustainability of Bahrain’s financial resources and development, benefiting the entire country”.

The IMF is also playing an increasingly important role in Kuwait, where it has helped the government design a broad-based tax system, and introduce VAT and a business profit tax.

Oman aims to be a logistics hub for the region

Oman is traditionally dependent on oil to fund its national budget, currently accounting for 77%. But in 2015, sales fell 35%. And while Oman’s leaders have been discussing the diversification of the economy since the 1990s, it has always been put off for a later date, and today the country has almost no manufacturing or agricultural production.

However, the country does now have plans to develop manufacturing, transportation, and tourism sectors. And the government is building a huge port at Duqm, on Oman’s central coast, in an attempt to become a logistics hub for the region. This would provide an alternative shipping route for oil exports from Iran or Iraq as well as for manufactured goods. Good plans, but now we need to see some action.

Saudi Arabia searching for diversification

Saudi Arabia is similarly reliant on the oil sector, currently accounting for 85% of its budget revenues. And although finances are buffered by huge reserves of foreign currency, they can only last so long if the government continues to sell them at speed to finance spending and its fight with US oil producers. Benefitting from a surplus of 6.5% of GDP in 2013, by 2014 that figure was a deficit of 2.3%. And the struggle looks set to grow in importance over the coming years as the number of working-age Saudis is predicted to hit 4.5 million by 2030.

As part of its diversification program, the government plans to invest in transport infrastructure, energy, utilities, and housing. The Kingdom’s Unified Investment Plan also seeks to boost investment and further investment in education to improve the Kingdom’s competitiveness. A McKinsey study has also highlighted eight sectors with potential — mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance, and construction. It believes that investment in these areas will enable Saudi Arabia to double its GDP and create as many as six million new jobs by 2030.

Qatar sees impressive economic expansion

In Qatar, economic diversification of the non-hydrocarbon sector, particularly focused on manufacturing, chemicals, and services, is estimated to have grown 11.3% in 2014. As Lagarde commented last November: “A non-oil GDP growth of more than 10% is impressive.” Qatar has also announced plans to scale up petrochemical production, and private sector credit growth is being driven by growing construction and real estate.

Driven by higher investment spending — $182 billion was earmarked for new project implementation over five years from 2014 — and population growth, the Qatar National Bank expects the country’s economic growth to reach a significant 7.8% in 2016, up from 6.8% in 2015. Non-hydrocarbons contributed 62% of the country’s GDP in 2014. And Qatar’s policy to diversify its oil economy received praise from the IMF, with Lagarde commenting: “as far as Qatar, there have been solid and strong policy measures to diversify the economy.”

Let’s hope that the other GCC countries can successfully emulate Qatar’s economic success.

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Kenya, Senegal join effort to fight tax evasion

28 February 2016 Comments (0) Africa, Business, Featured

Kenya signs the Convention on Mutual Administrative Assistance in Tax Matters

Twelve African countries sign multilateral agreement to counter tax abuse, which costs the continent an estimated $50 billion annually.

Kenya and Senegal have joined 10 other African countries in signing an international agreement designed to reduce tax evasion.

The multilateral convention enables cooperation among nations, including exchange of information about tax evaders and assistance in collecting taxes from them.

African nations lose an estimated $50 billion per year to illegal financial transfers, including tax avoidance, according to a 2015 report by the African Union and UN Economic Commission for Africa. In comparison, Africa received about $29 billion in foreign aid in 2013.

The tax evasion problem is particularly acute for poorer countries that do not have tools to fight sophisticated schemes by large multinational companies. The report and aid groups have noted that these billions of dollars might otherwise be used to develop services and infrastructure on the continent.

Multinational companies blamed

“Africa is hemorrhaging billions of dollars because multinational companies are cheating African governments out of vital revenues by not paying their fair share in taxes. If this tax revenue were invested in education and health care, societies and economies would further flourish,” said Winnie Byanyima, executive director of Oxfam International.

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is one tool to fight large-scale tax evasions. It was developed by the Council of Europe and the Organization for Economic Cooperation and Development in 1988 and updated in 2010.

Parties to the agreement cooperate by providing financial information to other party countries on request, performing tax examinations and assisting with recovery of tax dollars.

Twelve African nations sign agreement

Kenya and Senegal signed the agreement in February. Other African parties to the convention are Morocco, Gabon, Cameroon, Mauritius, Uganda, Ghana, Nigeria, South Africa, Tunisia and Seychelles. Globally, a total of 94 countries have signed the convention.

Kenya also recently passed a law that prevents companies from using a common tax-avoidance practice called “transfer pricing” or “trade mispricing.”

Using this practice, companies allocate their costs to subsidiaries in high-tax jurisdictions in order to pay most of their taxes at the lower rate while moving their profits to jurisdictions where they pay little or no tax.

For example, the African Union study described a South African case in which a multinational corporation claimed that a large part of its business was located in the United Kingdom and Switzerland, with relatively low tax rates.

On investigation, South African officials found the European branches had only a few staff while the company conducted most of its business in South Africa. The scheme had enabled the company to avoid $2 billion in taxes, which the South African government reclaimed.

Invoices misstate value

Other practices are “under-invoicing” or declaring a low value on exports to minimize profits on paper and “over-invoicing” by declaring a high cost on imports.

For example, Mozambique records showed an export of 260,385 cubic meters of timber was exported to China in 2012 while records in China show 450,000 cubic meters were imported from Mozambique that year, according to the report.

Another study, by Global Financial Integrity (GFI), found high rates of over and under-invoicing in Kenya, Ghana, Mozambique, Tanzania and Uganda in the decade leading up to 2011.

Kenya, Tanzania see high losses

GFI said Kenya had an estimated $10 billion and Uganda $813 million in under-invoicing. At the same time, Tanzania had $10 billion to over-invoicing. Ghana had more than $14 million for the decade in misstated invoices and Mozambique more than $5 million.

The African Union report said illicit financial outflows from Africa have more than doubled since 2001, from $20 billion to the current $50 billion. The report said African nations lost about $850 billion to illegal transfers between 1970 and 2008, including $218 billion from Nigeria, $105 billion from Egypt and $82 billion from South Africa.

The report said mispricing occurs in a number of sectors, including mineral production in the Democratic Republic of the Congo and South Africa, crude oil exports from Nigeria, and timber sales from Mozambique and Liberia.

Corporations, organized crime cited

Thabo Mbeki, the former president of South Africa who chaired that panel that produced the report said large corporations were the main tax abusers aided by corrupt officials and weak governance.

“The information available to us has convinced our panel that large commercial corporations are the biggest culprits of illicit outflows, followed by organized crime,” Mbeki said.

African and non-African governments as well as oil, mining, banking, legal and accounting firms were involved in tax avoidance schemes, according to the study.

It found that 38 percent of the outflows from the continent originated in West African and 28 percent in North Africa. Southern, Central and East Africa each accounted for about 10 percent.

While significant to the continent, Africa’s losses are a small share of the illicit outflows globally, about six percent of an estimated $1 trillion between 2007 and 2009.

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Tunisia seeks to improve appeal to foreign investors

27 February 2016 Comments (0) Business, Featured, Middle East

tunis

A proposed investment code offers incentives to investment as the country aims to double investment to $2.5 billion by 2020.

Tunisian government officials hope to speed up implementation of a code that the North African nation hopes will make it more attractive to desperately needed foreign investment.

As its economy struggles in the aftermath of the 2011 revolution, Tunisia hopes to double foreign investment to $2.5 billion by 2020.

The Tunisian cabinet recommended hastening adoption of an investment code in February following protests a month earlier over high unemployment that included clashes with police in several towns and the capital of Tunis.

The protests were a grim reminder to the government that poor economic conditions, including high unemployment, prompted demonstrations that ended the 23-year presidency of Zine El Abidine Ben Ali during the 2011 revolution in Tunisia.

Incentives, smooth path for investment

The proposed investment code, which must be approved by the Tunisian parliament, is designed to clear administrative obstacles by creating an agency to smooth the way for companies to invest within the country, according to Yassine Brahim, Tunisian minister of development, investment and international cooperation.

The code will include financial incentives for investors, especially companies that intend to export from Tunisia and those that invest in poorer interior sections of the country.

It also will give international investors more flexibility to transfer funds out of the country, Brahim said.

Tax exemptions offered

Yassine Brahim

Yassine Brahim, Tunisian minister of development, investment and international cooperation.

Tunisia already offers significant incentives to potential investors, including a 10-year tax exemption, and, in some locations, state subsidies. The government also created industrial zones and promised significant investments in improving roads and other infrastructure.

The investment is sorely needed as the country struggles with an overall unemployment rate of 15 percent and a rate of 32 percent among college graduates. The country’s economy in 2015 grew by less than 0.3 percent.

Tunisia is generally seen as the one success story from Arab Spring, which also saw violent revolts in nearby Egypt and Libya.

However, Tunisia has struggled to form a government and improve its economy.

Civil unrest returns amid high unemployment

In January, economic conditions and regional inequalities prompted the worst civil unrest in the country since the 2011 revolution.

Protest that began in Kasserine in the central part of the country spread to several other towns and to Tunis, where shops were looted and burned. Frustrations ran highest in marginalized rural areas and in poor urban districts of the capital.

Tunisia also lost about a third of its tourism revenues in 2015 after two Islamic State attacks killed 59 foreign tourists.

Government proposes bond issue

In February, the government announced that it was preparing a bond issue of up to one billion euros to cover a budget deficit stemming from losses from January’s unrest.

Violence and unrest has kept investors away. An estimated 300 investors have left the country since 2011.

For example, one Bahraini official recently told Tunisian President Béji Caied Essebsi that Bahraini business leaders are interested in investing in the country and a delegation would visit from Bahrain.

However, Khaled Abderrahmen Al Moyed, president of the Bahraini Chamber of Industry and Commerce, also said the business leaders would require “sufficient guarantees” of success to launch projects in Tunisia.

Location, workforce are positives

The primary investment sectors in Tunisia are textiles, energy, computer science, corporate services and energy. The largest sources of investment are France, Austria, Canada and the United Kingdom.

An analysis by Santander Bank cited positives about investing in Tunisia, including its strategic location on the Mediterranean, proximity to major European capitals, a well developed social system, qualified workforce, competitive salary levels, and the increasing diversification of it economy. The main negative, Santander said, is a cumbersome Tunisian bureaucracy.

Brahim, the investment minister said Tunisia hopes to attract $1.4 billion in investment this year, an increase of 12 percent from $1.25 billion invested in 2015, with a goal of $2.5 billion by 2020.

That compares with investment of $2.2 billion in 2010, the year before the revolution.

Joblessness sparks unrest, support for IS

Despite Tunisia’s difficulties, foreign investment has been increasing in recent years.

In 2015, investment increased by 21 percent compared to 2014, which saw a 19 percent increase over 2014.

That growth hasn’t translated into enough jobs.

The economic conditions are believed to be driving many Tunisians into the ranks of Islamic State and other militant groups. An estimated 3,000 Tunisians are fighting in militant Islamic groups in Iraq, Syria and Libya.

Aymen Abderrahman, 28, a Tunis-based activist, said that “frustration and total despair” drove the January protests.

The unemployed who are living in the same conditions as before 2011 “are seeing a spark to bring back to life the revolutionary past,” he said.

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6 African, Middle East startups in global competition

26 February 2016 Comments (0) Africa, Business, Featured, Middle East

New ventures from South Africa, Morocco, Sudan, Saudi Arabia and Egypt will compete in the Get in the Ring final in March.

Six startups from Africa and the Middle East will compete in the world finals of Get in the Ring, a global competition that helps raise the visibility of new ventures and connects them with potential investors.

The six startups representing South Africa, Morocco, Sudan, Saudi Arabia and Egypt include delivery services, mobile applications and energy developers. They will compete in the Get in the Ring world final in Medellin, Columbia in March.

Get in the Ring is one of the world’s largest competitions for startups.

Contestants face off in a boxing ring to deliver 30-second pitches for their product or service and they are judged by investors and other experts. They are scored based on their business model and potential market, their team, their achievements and their financials.

Two South African startups win regional

Winners for the sub-Saharan region are two South African startups, Newtech Rail and iMORPH3D.

Newtech Rail has developed technology for railway overhead infrastructure. Jan Jooste, a South African industrial engineer and director of innovation at Vaal University of Technology, launched the startup in 2015.

iMORPH3D is a mobile application that enables users to create anamorphic 3D illusions. Android and Apple versions are available for download. It is a product of Adfire Creative M3dia.

Morocco, Sudan among winners

In the North African regional competition, held in Casablanca, Moroccan startup LIK and a Sudanese startup SmartDelivery emerged as the winners.

LIK from Morocco is a mobile application that gives users free phone credits in exchange for agreeing to display advertising on their smart phones when they receive calls. The ads are location-based and contextual based on age, gender, and language. Launched late last year, the app already has more than 100,000 users.

LIK at Level Up Competition

LIK at Level Up Competition

LIK found that its users were seeing advertising everywhere but were not realizing any benefit from viewing the ads. “With LIK, they can finally benefit,” Ismail Bargach said. He co-founded LIK with Omar Kadiri, and Yassine Faddani. The startup also won the Level Up Morocco competition last year in Casablanca.

The Sudanese startup SmartDelivery lets customers order fresh vegetables, fruit and meat via an app and it provides free delivery. It is able to charge lower prices because it buys directly from farmers and eliminates the middlemen. According to the company, the app enables efficient communication on customer orders.

Middle East winners

Vanoman from Saudi Arabia and SolarizEgypt won the Middle East regional competition.

Vanoman is a platform to connect truck drivers in Saudi Arabia with customers who want furniture transported. Fadi Almaghrabi, its CEO, represented the company.

SolarizEgypt designs and installs grid-connected PV solar power plants as a supplement for conventional types of power for industrial, commercial and residential customers. The company was launched by a group of graduates of the American University in Cairo.

Participants pitch their ventures

Get in the Ring brings entrepreneurs together to compete in local, national and regional competitions that winnow the field for the world finals, where they compete for funding of up to one million euros and investment dollars.

Along the way, participants received expert advice, coaching on their pitches and the opportunity to meet investors and develop a fan base.

“This event is not just about pitching for funding. It is also about pitching for attention’’ according to Brian Walsh, founder and chief executive officer of The REAL Success Network, one of the partners for the event. Walsh said the multiple rounds of competition expose them to thousands of potential funders and supporters.

Steven Cohen, head of event co-sponsor Sage One International, said Get in the Ring “is helping to encourage excellence and innovation among local businesses, and to provide role models and inspiration for the entrepreneurs of the future.”

In 2014, the South African startup GoMetro was a runner-up in the global finals.

Get in the Ring began in 2012 in the Netherlands and has grown rapidly into a major global event. Get in the Ring competitions are now held in more than 60 countries. Between 2012 and 2014, more than 3,000 startups participated.

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