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Somalia resumes banana production, hopes to grow exports

27 December 2015 Comments (0) Africa, Business, Featured

somalia banana

The banana industry is making a comeback in Somalia after two decades of war devastated its leading export.

The East African country’s fledgling effort faces significant challenges, including lack of irrigation and storage infrastructure as well as a wait-and-see attitude of potential export partners abroad who are mindful of Somalia’s recent history of violence and instability.

While most of Somalia’s current crop goes to local markets, exports have begun to Middle Eastern countries including the United Arab Emirates.

About 40,000 tons annually

Currently, Somalia has about 4,000 acres in cultivation, producing about 40,000 tons annually, according to FruitSome, a company formed by about 100 growers to market Somali bananas abroad.

The current planting is less than 14 percent of the 30,000 acres that were in cultivated when the industry was at its peak. In 1990, before the war began, Somalia was the largest banana exporter in East Africa. Banana exports accounted for about $96 million and produced Somalia’s leading source of outside income.

“Prior to 1991, Somalia was renowned for its thriving banana industry. However, insecurity, lack of inputs, and poor infrastructure, has over the last two decades led to a devastating decline and eventual collapse of banana exports,” according to the Food and Agriculture Organization of the United Nations, which is providing assistance to the Somali banana industry.

Irrigation and production infrastructure destroyed during the war

The military government of Somalia was deposed by rebels in 1991, throwing the country into chaos, especially in the south, where bananas are farmed, and in the capital of Mogadishu. During the fighting, irrigation and production infrastructure was destroyed and banana growers lost access to export markets as pirates operated off the coast of Somalia. Drought and famine exacerbated the hardships in 2011.

An internationally backed central government was installed in 2012 and the nation has slowly become more stable, although insurgents of Al-Shabab, an Al-Qaeda ally, continue to operate in Somalia.

Growers, many of whom fled to refugee camps in neighboring countries, have begun to return to farms they were forced to abandon during the violence.

Lack of refrigerated storage: another challenge

“This place was a bush a year-and-half ago. We cleared the bush and now more than hundred people work here every day,” Omar Osman, a farm manager in Afgoye, said.

“Things are calm. Thank God. Us, Somalis, we have to make use of God’s blessings. This country has everything and now it is possible to make use of the land.”

In addition to clearing brush and replanting, growers must reconstruct irrigation systems destroyed by fighting factions. Lack of refrigerated storage is another challenge.

The UN Food and Agriculture Organization (FAO) has provided direct food aid to families in Somalia as well as assistance in restoring and increasing food production, including seed and land preparation services as well as farmer training.

Turkey to help Somalia

The FAO also developed several virus-free banana varieties, and Somali growers chose one, William, that is tolerant to virus attacks and drought. The FAO began making seedlings available to growers in 2012.

Turkey has also undertaken efforts to help Somalia rebuild its agricultural and fisheries sectors.

“If invested well, Somalia’s fisheries and agricultural sectors can feed the entire Africa,” said Galip Yilmac, the Somalia program coordinator with the Turkish Cooperation and Coordination Agency (TIKA).

Banana exports resumed in 2014 to Middle East markets including the United Arab Emirates. The FAO said Iran and Turkey also expressed interest in Somali banana imports.

But the Somali growers also face skepticism from some quarters. Dole, for example, invested in Somalia in the past. But a representative of the company said “right now it seems difficult to develop any agriculture program in Somalia because of the local situation.”

Somali’s bananas sold in local markets

For now, most of Somali’s bananas are sold in local markets, and livestock has replaced bananas as the country’s leading export. Other exports are fish, charcoal and scrap metal. Export partners are the United Arab Emirates, Yemen and Oman.

Somalia has a population of 10.8 million. Its 2013 GDP was $1.4 billion, according to the United Nations.

Italian colonists introduced bananas to the fertile Shabelle and Juba river valleys of southern Somalia in the 1920s. The industry grew steadily and it peaked in the 1960s. Somali bananas are known for their sweet taste and creamy texture.

Rebuilding Somalia’s banana industry

FruitSome, the company formed by banana growers in 2012, is looking to increase exports, primarily to Europe and the Persian Gulf.

“Close to a hundred farmers are still registered as members of the banana growers association. They have been hoping to be able to export again but drought, civil war, social unrest and a shortage of irrigation infrastructure has so far made it impossible to revive the industry until very recently when the country has begun to re-emerge socially and politically, supported by international partners,” FruitSome said.

Despite the challenges, the FAO was upbeat about prospects for rebuilding Somalia’s banana industry. “With peace slowly returning to southern Somalia, this makes investment in the banana industry a key priority for FAO and its national and international partners,” the UN agency said.

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Driving Up Tourism in Abu Dhabi

21 December 2015 Comments (0) Business, Featured, Middle East

abu dhabi cruise

With ambitions to become a top winter sun destination, Abu Dhabi has launched a new cruise ship terminal and is developing its tourism infrastructure.

With ambitions to become a top winter sun destination, last Sunday, Sheikh Hazza bin Zayed Al Nahyan, National Security Advisor and Deputy Chairman of the Abu Dhabi Executive Council, officially opened Abu Dhabi’s first purpose-built cruise ship terminal. With capacity for three ships carrying 5,000 passengers at a time, this new terminal, located in the Zayed Port, marks a major landmark for cruise tourism in Abu Dhabi. 205,000 cruise visitors in 112 vessels are already scheduled for this season, 2015-2016, which is a fivefold increase compared to the first cruise season of 2006-2007. Officials expect this figure to increase by at least 15,000 next season to 220,000 cruise passengers in 117 vessels (2016-2017). Longer term growth projections anticipate that figure to reach 300,000 passengers in 130 vessels by 2019-20. Swiss-based cruise line MSC Cruises will be the first cruise line to use the new terminal as its home port for the 2015-16 season. The following season, it will be joined by Celebrity Cruises.

Abu Dhabi’s Economic Vision 2030

Development of the cruise tourism industry is part of a plan to significantly boost tourism in the emirate traditionally seen as second to Dubai as a tourist destination. In 2006, Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, mandated the development of a long-term economic plan to increase the non-oil share of the emirate’s GDP. Known as the Economic Vision 2030, the year by which predictions suggest Abu Dhabi’s baseline growth assumptions could achieve economic diversification, the plan focuses on finding tangible solutions to boost tourism and leisure. Sultan Ahmed Al Jaber, Minister of State, said: “By working closely with our strategic partners and building the necessary infrastructure we hope to expand Abu Dhabi’s tourism sector and reinforce its position as a major global destination.”

As part of the Economic Vision 2030 plan, in 2006 Abu Dhabi also formed the Tourism Development and Investment Company (TDIC), a body intended to drive development of the tourism industry. Capitalizing on blue seas, sand dunes, and UNESCO world heritage sites, the TDIC is currently working on more than 55 projects across the emirate which are all set for completion by 2020. Building projects include multi-use complexes, business and leisure resorts, and desert resorts. One of its flagship developments is Saadiyat Island, where branches of the Louvre and the Guggenheim are currently being built, and expected to open towards the end of next year. Two championship golf courses, environmentally-friendly resorts, new hotel developments, and luxury residential developments to house 160,000 residents are also underway.

The Abu Dhabi International Airport is also undergoing expansion in order to increase its capacity to 45 million. The new, high-tech 700,000 square meter Midfield Terminal Building, set to open in 2017, has been designed to process 19,000 bags per hour on a 22 kilometer baggage handling system and to utilize a new check-in system that can automatically verify mobile and printed boarding passes, improve security, and lower waiting times.

These projects will join the Yas Island development, Abu Dhabi’s $40 billion man-made destination island, which is home to the Ferrari World theme park and the $1 billion Yas Marina circuit, the most expensive F1 track ever built, which hosted the first Abu Dhabi Grand Prix in 2009.

Tourism up in Abu Dhabi

The strategy is already seeing some success. Abu Dhabi’s most recent summer season saw a 21% rise in the number of visitors compared with the previous year. The most significant growth came from Indian visitors, up by 29.8% year-on-year, and Saudi Arabian visitors, up 28% year-on-year. Visitors from the US also grew a significant 24.4%. And visitors from Europe grew 18.1%, with the United Kingdom and Germany contributing to the bulk of the increase. The figures mean that this year Abu Dhabi will exceed 4 million visitors for the first time. Sultan Al Mutawa Al Dhaheri, acting executive director of the Abu Dhabi Tourism and Culture Authority (TCA), said: “We are hugely encouraged by number of visitors who came to the emirate, not only from across the GCC but from around the world”.

The TCA will continue to focus on attracting tourists from India, a drive which this year saw a promotion office opened in India’s capital Delhi to increase passengers of Cruise Arabia, a voyage touring Dubai, Abu Dhabi, Bahrain, and Muscat. The TCA is also focused on attracting tourists from China. This year, more than 20 Abu Dhabi hotels, shopping centers, and tourist destinations enrolled in the China National Tourism Administration’s “Welcome Chinese” program to learn about providing services for Chinese travelers such as Mandarin-speaking staff and payment services for China’s UnionPay bank cards. The TCA has also led a delegation of Abu Dhabi travel suppliers, including representatives of Hyatt Hotels and Resorts and The Ritz-Carlton Abu Dhabi, to Korea and Japan. And looking toward the African market, the TCA will open an office in South Africa this coming year.

The Middle East looks to tourism

Abu Dhabi’s tourism aspirations are part of a burgeoning trend in the region. Dependent on oil for around 50% of GDP and suffering from high unemployment of the young, Saudi Arabia has begun investing in a number of programs to develop heritage sites, museums, tourist accommodation, and tourism infrastructure. A report by the Saudi Commission for Tourism and National Heritage (SCTNH) confirms: “Tourism represents the second most important economic sector in the Kingdom. Despite its low contribution to the gross domestic product (GDP) of only 2.7 percent, development plans in tourism show its ability to raise its contribution to higher levels, and makes it more capable to develop targeted areas especially the rural and remote areas that need comprehensive economic development to create jobs and investment opportunities.” The global Travel and Tourism Competitiveness Report currently ranks Saudi Arabia as 64th in the world. This in fact puts it ahead of many of the more traditionally tourist-focused countries in the Middle East: Tunisia is 79th, Egypt is 83rd, and Lebanon is 94th.

Qatar is also looking to boost tourism to diversify its economy; 2013 tourism figures were up 8.3%, but it still lags behind most of its neighbours. The Qatar Tourism Authority (QTA) has set a goal of attracting 7.4 million visitors by 2030, and has pledged to spend billions in developing new tourist attractions and training more hospitality workers. And Dubai’s Department of Tourism and Commerce Marketing (DTCM) is also busy implementing Dubai Vision 2020, a program designed to double the number of tourists from 10 million in 2012 to 20 million by 2020, and boost tourism’s share of GDP to $81.7 billion.

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Tehran takes tough line with VAT tax

18 December 2015 Comments (0) Featured, Middle East, Politics

iran tax

Implementation of 2008 VAT  tax at a time of economic stagnancy is causing confusion and anger in Iran’s merchant class.

Across Iran there is a growing anger at VAT bills received by merchants, many of them covering the years since the tax was first implemented in 2008, and some of the bills reaching $100,000 or more.

As Iran faces economic stagnancy, businesses claim that these VAT bills could in many cases render their businesses unsustainable. Falling oil prices have greatly affected the Iranian economy over the last few years. And with the groundbreaking deal with the West on slowing development of nuclear weapon capability meaning that many sanctions will be lifted in mid-2016, many consumers have vastly reduced their spending in the hope that the deal will bring both lower prices and a greater range of available goods.

Relaxed Taxation

Historically Iran has had a laid back approach to taxation; authorities were often willing to negotiate and bargain, there was a high level of smuggled – and thus tax free – goods available on the market, and dual accounting was and is still common practice to avoid some taxes. But with the global oil market seeing reduced prices over the last decade, the Iranian government brought in a 3% VAT level in 2008 on all but everyday goods such as bread and some other food products.

But since President Hassan Rouhani took office in 2013, tax collection has been stepped up, a move that is now worrying business owners across Iran. With oil prices forecast to continue falling in the year ahead, the lifting of sanctions still several months away, and with a deficit that could reach 550 trillion Iranian rials next year (18.3 billion USD), the government is keen to maximize tax collection. Given that the vice-president of the Iran Chamber of Commerce, Pedram Soltani, estimates that 40% of all government income in the year ending March 2016 will come from taxation – with VAT constituting half that figure – it is understandable why the authorities in Tehran are keen to pursue this.

Power of the Merchants

But President Rouhani has to tread carefully on this issue. Despite there being a ban on free trade unions, the merchant class – or bazaaris to give them their traditional name in Iran – remains a powerful force with a past history of confronting the government on this same issue. They played a key part in the revolution of 1979, combining with the clergy to oppose the Shah’s oppressive policy and implementing strikes which crippled the economy. And, when they see it as necessary, they have again wielded that power to oppose policies by the new regime. A 2008 strike in response to the original implementation of VAT saw clashes with security forces as many businesses closed. This led to a temporary suspension of the tax and an announcement of annual rises with an agreement on figures of 6 to 15%.

iran tax 2Then in 2010 the government stated that VAT on many goods would rise by 70%. Once again the bazaaris went on strike and once again the government backed down, agreeing to reduce the VAT rise to 15% instead of 70%. The government also offered a concession that businesses who could show they operated at a loss in previous years could apply for an exemption from increases.

An interesting factor of both these strikes was that it was not confined to merchants who were affected by the higher rates but was instead supported by traders across a wide range of goods, illustrating that the bazaaris had strong solidarity across their “membership.”

A rock and a hard place

How this current dispute plays out will be interesting to observe and hard to predict. On one hand, there is a determined government led by Rouhani who is trying to steer the country through uncertain economic waters. Even with the lifting of sanctions due in mid-2016, it will take some time for that to have any positive effects. On the other hand there is a united and powerful merchant class who are adamant that many businesses cannot survive these new increases or backdated bills. Given the outcomes of the two previous strikes and the resulting government climb-downs, it may well be the case that Rouhani has to consider some form of compromise, as strike action of any length would further damage the economy and could also lead to more instances of public disorder.

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FACE Africa develops water sources and sanitation programs in Liberia

17 December 2015 Comments (0) Africa, Featured, Leaders

saran kaba jones

Liberian American Saran Kaba Jones believes assuring access to clean water is the essential first step to rebuilding the war-torn West African nation.

At times recovery from the devastation of war seems intractable, even hopeless. But a 33-year-old woman whose family fled the civil war in Liberia when she was a child is proving otherwise.

Saran Kaba Jones, a Liberian American woman, founded FACE Africa in 2009 to help Liberians gain access to clean drinking water in the wake of her native country’s 14-year civil war. By the time the conflict ended in 2003, Liberia was in ruins – roads, schools, factories destroyed and no electricity or running water.

Jones believes providing access to water is an essential first step in addressing other problems such as lack of education and employment and rebuilding the shattered nation.

Water unlocks opportunity

“We view water as a true catalyst for change and it doesn’t just solve the issue of health, but it’s a holistic sort of development issue,” said Jones, who is the nonprofit organization’s executive director.

In its nearly seven years of existence, FACT Africa has worked with local residents to build 50 well projects that serve 25,000 people in 35 communities in Liberia. The organization has also trained 300 local pump mechanics.

A more recent effort is WASH, a project to provide water, sanitation, and hygiene awareness to local schools in response to the West African country’s Ebola outbreak.

According to UNICEF, 55 percent of Liberia’s schools do not have access to water, 43 percent do not have functional latrines and 80 percent do not have hand-washing facilities.

Local community engagement boosts success

A key aspect of FACE Africa’s effort is that local residents are engaged from the outset and communities take ownership of the water projects once they are operational. All of the projects so far continue to be fully functional, according to FACE Africa.

“Our projects utilize local materials, local labor and ingenuity and ownership is transferred to the communities upon completion. More importantly, we focus on optimizing sustainability of our water projects by forming long-lasting, collaborative relationships with communities,” FACE said.

Jones said she realized the importance of access to clean water in 2008 when she returned to her native country for the first time since her family fled the war when she was 8 years old. The family lived in Cote D’Ivoire, Egypt, France and Cypress before she attended college and settled in the United States.

Priority was education

She was initially focused on education, having contributed small scholarship assistance to a family friend in Liberia. But the visit convinced her that access to clean drinking water had to be addressed before significant improvements could follow in other areas.

“My interest at the time was education, but when I got to Liberia, one of the things I started to see was that one of the major impediments to education was the lack of clean drinking water,” she said. “Kids were getting sick and not showing up to school for long periods of time because they were drinking contaminated water.”

Empowering women

Jones also saw a connection between water and the empowerment of women and girls, who may spend as much as 60 percent of their day walking to collect water, robbing them of opportunities to work or go to school.

“One of the biggest impediments to women’s growth and development is the lack of clean water. Women and girls are the ones responsible for walking long distances to fetch water. I came to the realization that the basic necessity of clean water had to be met before any other area of development can be tackled. That’s what led me to focus on water, rather than education.’’

The UN estimates that Sub-Saharan Africa alone loses 40 billion potential work hours per year collecting water. FACE Africa estimates its 50 projects have saved 1 million work hours to date.

Africa hard hit

Lack of access to water is a global problem and Africa is particularly hard hit. According to FACE Africa, 663 million people globally do not have access to safe water supplies and more than half of them are in Africa. Globally, two million people die each year from water-related diseases. According to the World Bank, water-related diseases kill more African children less than five years of age than HIV/AIDS, malaria, and measles combined.

FACE Africa, based in Cambridge, Mass., raises money through donations, grants from foundations and corporations, and fundraising events, raising about $150,000 annually. The money can accomplish a lot: It costs FACE Africa $7,500 to build a hand-dug well and install a hand pump, for example.

Jones has been recognized for her work, including being named a World Economic Forum Young Global Leader and one of The Guardian’s Africa’s 25 Top Women Leaders in 2013.

From depression to determination

Jones said the harsh realities she found in Liberia on her first visit left her “depressed and disheartened.” But she was determined to make a difference and she has.

“There’s nothing more pleasant or fulfilling than seeing the smiles on the faces of women and children who no longer have to travel miles every day to fetch contaminated water and can now drink water without worrying about getting sick from it,” she said.

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Stef Wertheimer: Manufacturing Peaceful Coexistence in Israel

12 December 2015 Comments (0) Business, Featured, Middle East, Politics

Stef Wertheimer

Israeli industrialist Stef Wertheimer, founder of Iscar and Blades Technology, is investing millions in industrial parks to diffuse Arab-Jewish conflict.

Born in Germany in 1926 a decade before his family was forced to flee the Nazis to what was then British-Mandate Palestine, Stef Wertheimer is an Israeli industrialist who believes that his country’s problems and solutions lie in economics. Over the last 30 years, the billionaire has invested millions of his own personal wealth in building industrial parks and training programs for Arabs across Israel, in the hope of using job creation and lowered economic disparity to foster peaceful coexistence between Arabs and Jews.

The International Metalworking Companies Group and Blades Technology

Now aged 89, Wertheimer’s early academic career was short lived. He was expelled from school aged 14, and instead started working in a camera-repair shop. Later, in the lead-up to Israel’s War of Independence in 1948, he made weapons for the Jewish underground. And after the war, in which he served as a pilot and a member of the Palmach strike force, he set up a small metal tool-cutting factory in a garage in his garden in Nahariya. The city, Israel’s northernmost, is in an underdeveloped, largely agricultural and Arab region, about which Wertheimer says: “There were no jobs, this area was agricultural, and I decided that I had to do something on my own”.

He named his small operation Iscar, and within five years, the company was exporting precision carbide cutting tools to Europe and the US. Today, it is one of the world’s top two companies in the field, and its automotive, aerospace, and electronics industry customers include General Motors and Ford. It is also now the largest of 15 companies that make up Wertheimer’s International Metalworking Companies (IMC), a Group valued at $10 billion, with 140 subsidiaries in 61 countries around the world, employing over 10,000 people.

Wertheimer further expanded his manufacturing holdings in 1968, when the Israeli government asked him to make blades for the Israeli Air Force following a French weapons embargo. In the years following, Iscar Blades (now Blades Technology Ltd.) has similarly become one of the world’s largest in its field. With a valuation of $1 billion, its customers include Rolls-Royce and General Electric.

Wertheimer solidified his position as one of Israel’s most respected businessmen in 2006, when Warren Buffett’s conglomerate holding company, Berkshire Hathaway, bought an 80% stake in IMC for $4 billion. It was Buffet’s first purchase outside of the US, and he went on to buy the remaining 20% of the company in 2013 for $2.05 billion. The Wertheimer family (Wertheimer’s son Eitan started running day-to-day operations at Iscar in 2004) also sold its 51% stake in Blades Technology in 2014. And the deals have made Wertheimer the head of the wealthiest family in Israel and the country’s third wealthiest man, with an estimated net worth of $5.6 billion.

Tefen Industrial Park

Tefen Industrial Park

The Tefen Industrial Park

In the late 1970s, Wertheimer also served a term in the Knesset, Israel’s parliament. It was during this time that he decided that there may be a different route to achieving peace and stability in Israel: one centered on industry and job creation. Acting on his idea, in 1982 he established a residential community near Nahariya, Kfar Vradim, and later the same year moved the Iscar plant to the nearby industrial zone, Tefen. In 1984, the Tefen Industrial Park was officially inaugurated, marking Wertheimer’s first park dedicated to helping Arab and Jewish Israeli entrepreneurs set up export-focused industrial initiatives. “I started looking for a way to influence the Arab population in Israel, Jordan and the Palestinian areas by developing industry,” says Wertheimer. “The idea of industrial parks in the Middle East and on the borders between Israel and its neighbors is that the parks will bring industry and provide jobs, which will keep people busy working, instead of engaging in terrorism”.

The Tefen Industrial Park now hosts 20 companies, and also offers a post service, a shared dining hall, landscaped gardens, a collection of vintage cars, a tennis court, and a school that educates students in industry and innovation. Wertheimer, whose own main office is on the site, has also created art and German-Jewish history museums.

Expanding Israel’s Industrial Export Output

His unique philosophy stems from the country’s problem of economic disparity. Israel’s 1.7 million Arab citizens make on average 58% of the income of their Jewish counterparts. Arab men make 69% of the income of Jewish men. And there are three times less Arab women in the labor force than Jewish women. The Arab population is also largely excluded from Israel’s current tech boom, which this year has seen $9 billion in tech mergers and acquisitions.

Based on the five principles of export, education, coexistence, community, and culture, Wertheimer has now established six further parks in typically Arab dominated regions – five in Israel (in Tel Hai, Omer, Dalton, Lavon, and Nazareth) and one in Turkey. The industrial parks, which Wertheimer calls “capitalistic kibbutz”, also run training programs before placing the workers in jobs, and recruit Arab and Jewish entrepreneurs for industrial entrepreneurship courses to create Arab-Jewish partnerships. Firms also receive benefits encouraging the employment of professionally educated Arabs. The parks have so far generated and supported 260 companies, which have seen an average yield of $200,000 in sales per employee, higher than Israel’s average. And Wertheimer also has plans to add another park aimed at the Bedouin, one of the region’s poorest communities.

Yitzhak Rabin, former Israeli prime minister and 1994 winner of the Nobel Peace Prize, said: “With 20 more industrial parks like these, it would be possible to double the industrial export output of Israel. This would completely change the economic, social and security situation.” Wertheimer has also been honored for his work. He was awarded Israel’s highest honor, the Israel Prize, in 1991. In 2010, he received the Oslo Business for Peace Award. And Germany has bestowed both the Federal Cross of Merit and the Buber-Rosenzweig medal for his work in advancing peace through entrepreneurship.

Not everyone agrees that an economic solution will solve Israel’s problems, but Wertheimer is fully committed to a future trying to do just that.

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African Nations See High Stakes, Opportunities in Paris Climate Talks

10 December 2015 Comments (0) Africa, Environment, Featured, Politics

Africa at Cop21

African nations brought a unified agenda to the Paris climate conference, making clear they are willing to take aggressive steps to fight global warming but need international support to make significant cuts in pollution.

Africa is highly motivated. Ironically, it is the least polluting of the world’s continents, but it has suffered some of the most severe effects so far – drought in some regions and severe flooding in others.

As the Paris conference drew to a close, key issues of vital interest to Africa were under debate, including the allocation of responsibility for reducing carbon emissions between rich and poor countries as well as how to finance clean-energy improvements and repair damage already done.

Aggressive emission cuts sought

“African countries have demonstrated greater ambition in cutting their emissions than the high-emitting nations,” Akinwumi Adesina, president of the African Development Bank, said. Forty-seven of 53 African countries had completed plans to cut emissions by an October deadline, he said.

Alassane Ouattara, President of Côte d’Ivoire, said his country has set a goal of reducing greenhouse emissions by 28 percent by 2030 by increasing renewable sources, reforestation and development of carbon neutral agriculture.

Morocco recently increased its goal to increase renewables from 42 percent in 2020 to 52 percent in 2030.

Seeking international support

At the same time, numerous African nations made clear that they would need international support to make good on their pledges.

Sudan, for example, pledged to “reach 20% renewable share in the power mix by 2030… Aims to raise forest area to 25% of Sudan by 2030… Pledge conditional on international support.”

Yemen pledged a 1 percent cut in emissions by 2030 without international support or by 14 percent cut if international support was forthcoming.

High cost of action

Adesina said Africa needs an international investment of $55 billion a year up to 2030 to create a more efficient energy sector that uses more renewable resources for power. He said the African Development Bank would contribute $5 billion in financing, which will represent 40 percent of its total investments.

The United Nations has estimated it will take more than $93 billion a year for the world’s 48 poorest, least developed countries, including 34 in Africa, to put their action plans into effect.

Of more than $60 billion that has been committed so far, less than a third goes to the poorest countries, according to a November 2015 report by the International Institute for Environment and Development.

Paying for climate damage

African leaders also stressed the need for financial help to confront losses climate change has already wrought in their countries.

The United Nation’s Adaptation Fund “must be reinforced to support the losses and damages suffered by developing countries,” Denis Sassou Nguesso, President of Congo, said, echoing comments of many African leaders.

Currently, the negative effects include drought in South African, Mozambique, Botswana and Zimbabwe as well as heavy rains, landslides and flooding in Burundi, Nigeria, and Somalia.

Great Green Wall

The Great Green Wall aims to cultivate more forested land in Africa to fight the effects of climate change.

Seeing opportunity in the challenge

Adesina and other African leaders also pointed to the opportunities – both economic and environmental – that significant climate change work could unleash.

For example, the continent has significant capacity to produce wind and solar power, as well as potential geothermal power.

African forests have the potential to absorb tons of carbon emissions and reforestation efforts are under way to grow forest stock.

Among the efforts unveiled at the Paris conference is the African Restoration Initiative, a coalition of African countries and donors who seek to restore 250 million acres of degraded or deforested land by 2030.

Economic opportunity

As their development accelerates, African nations also are poised to benefit from clean industrialization, tapping technologies that have emerged in the past decade rather than relying heavily on older, carbon-hungry machinery.

“Industrialized countries will have to retrofit older infrastructure to harness the sector’s vast potential. Africa, however, is not married to any technological platform and is ready to leapfrog to these new, efficient and more sophisticated technologies,” Carlos Lopes, executive secretary of the United Nations Economic Commission for Africa, said at the Paris conference.

Progress for Africa

As Africa looks ahead to the challenges and opportunities of climate change, Adesina of the African Development Bank contrasted its position today with that of the last climate conference.

“A decade ago, at COP 11 in Montreal in 2005, Africa had no common position and no common negotiators,” he said. “This year, at COP 21, it has a Conference of African Heads of State on Climate Change; it has an expert team of about 200 climate negotiators; it has a clearly outlined position on the negotiations; and it has a well-articulated collective work program to support low-carbon and climate-resilient development on the continent.”

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OPEC Rejects Oil Production Limits Despite Falling Prices

8 December 2015 Comments (0) Business, Featured, Middle East

OPEC Meeting

In spite of growing climate concerns and plummeting oil prices, the world’s largest oil cartel has rejected limits on pumping crude oil in the coming year.

The move by the Organization of Oil Producing Countries (OPEC) virtually guarantees a continuing glut of oil along with low prices at the gas pump. Low prices could further undercut U.S. production shale oil production in 2016.

Meeting December 4, 2015 in Vienna, Austria, representatives of OPEC’s 13 member countries debated whether to cut crude production, currently about 31.5 million barrels a day, in an attempt to prop up prices.

Growth in demand is cited

In a statement following the meeting, OPEC acknowledged the oversupply but emphasized potential growth in demand next year.
“ The Conference observed that global economic growth is currently at 3.1% in 2015 and is forecast to expand by 3.4% next year. In terms of supply and demand, it was noted that non-OPEC supply is expected to contract in 2016, while global demand is anticipated to expand again by 1.3 mb/d (million barrels per day),” the OPEC statement said.

OPEC ministers divided

The failure to impose limits followed a fractious discussion within OPEC. The Vienna meeting, scheduled to last four hours, was extended to seven as members debated whether to continue a year-old policy of oversupply.

The prevailing faction, led by Saudi Arabia, the cartel’s largest producer, wants to pump at current levels despite the risk of even more price reductions. Other members, such as Venezuela and Algeria, want to cut production in an attempt to bolster prices.

OPEC member countries produce about 40 percent of the world’s crude oil and their exports represent about 60 percent of the total oil traded internationally, which has enabled the cartel to influence oil prices, according to the U.S. Energy Information Administration.

That was evident as the U.S. benchmark rate for oil declined 2.7 percent to $39.99 a barrel on the day of the OPEC meeting.

Action could undermine U.S. producers

Saudi Arabia says it wants to protect its market share. But some analysts say Saudi Arabia wants to pump more oil in order to slow down shale oil production in the United States, leaving OPEC producers to fill the vacuum as demand grows. Shale oil is significantly more expensive to produce so these producers are even harder hit by lower prices.

A U.S. slowdown is already happening. According to Baker Hughes North American Rig Count for the week of December 4, 2015, there were 737 active rigs in the United States compared to 1,920 rigs a year earlier.

Oil production may increase

Meanwhile, OPEC production is likely to increase beyond the current 31.5 billion barrels a day.

In Vienna, Iran said it would double production to 4 million barrels a day, the amount it was producing before international sanctions were imposed. Iran’s production dropped sharply in 2012 as a result of the sanctions, which are being lifted as a result of the Iran nuclear deal. Iraqi oil production also has increased to about 4 million barrels a day.

A new reality for OPEC

The decision to keep pumping underscored the cartel’s weakened ability to collectively sway prices.

“Effectively, it’s ceilingless,” Iranian Oil Minister Bijan Namdar Zangaeh said. “Everyone does whatever they want.”

Iraqi Oil Minister Adel Abdul Mahdi noted that other producers do not operate with production limits. “Americans don’t have any ceiling. Russians don’t have any ceiling. Why should OPEC have a ceiling?”

Historically, OPEC has been able to bolster prices by squeezing production. But in November 2014, Saudi Arabia blocked calls from poorer OPEC members to cut production in hopes of halting the slide in prices. At that time, the price of oil was slightly more than $71 per barrel.

“It is a new world for OPEC because they simply cannot manage the market anymore. It is now the market’s turn to dictate prices and they will certainly go lower,” Dr. Gary Ross, chief executive of PIRA Energy Group, said at the time.

Indonesia rejoins OPEC

OPEC also welcomed the re-entry of Indonesia into the cartel after a six-year absence. The country is the fourth smallest producer of OPEC’s 13 members.

A net importer of oil that also exports, Indonesia rejoined OPEC hoping to gain greater access to crude oil supplies.

Climate change concerns

While declining to set limits on crude production, the OPEC ministers did discuss the United Nations Climate Change Conference that was ongoing in Paris at the same time.

The discussions “stressed that climate change, environmental protection and sustainable development are a major concern for all of us,” the OPEC statement said.

Efforts to reduce carbon emissions could place large oil producers in even more of a bind if governments in the climate talks move to reduce dependence on oil in favor of sustainable energy sources.

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COP21: Africa’s Solar Industry Poised to Take Off

4 December 2015 Comments (0) Africa, Business, Featured

solar power in africa

With some of the most abundant renewable energy sources but the world’s highest prices for power,  Africa has an enormous stake at the COP21.

Africa’s Power Deficit

This week, one of history’s largest-ever gatherings of world leaders is taking place in Paris, as the international community comes together to tackle climate change. Until  December 11th, the 21st United Nations Conference of the Parties on Climate Change (COP21) will host more than 30,000 diplomats and delegates, seeking to reach a global pact which commits nearly every country in the world to reducing their greenhouse gas emissions.

Africa has an enormous stake in its success. 621 million people, two thirds of the population, currently live without electricity, using candles, kerosene, or wood to light their homes and cook. Power shortages and service interruptions are the norm. At present rates of progress, 300 million people will still lack electricity in 2040.

And although the continent produces little of the greenhouse gas emissions that world leaders at the COP21 are seeking to reduce, it is Africa’s poor and rural population who pay the highest prices in the world for power. Measured on a per-unit cost, households in Africa pay up to 80 times more for energy than those in London. Indeed, in Kenya charging a mobile phone costs nearly 400 times more than in the US. The economic effects are huge. According to the World Bank, more than 50% of African businesses cite inadequate power supply as a major business constraint.

UN Secretary-General Ban Ki-moon adds: “Africa is particularly vulnerable to the effects of climate change. Much of its economy depends on a climate-sensitive natural resource base, including rain-fed subsistence agriculture. Disruptions in food or water supplies pose serious risks not only for the economy but also for political stability, particularly in fragile states.”

Solar-preneurs

M-Kopa Solar Kit

M-Kopa Solar Kit

But there is an environment primed for change. Africa has some of the most abundant renewable energy sources in the world, most notably solar, thanks to 320 days of sunshine per year. Over the past seven years, the price of solar panels has dropped by more than a quarter. Some East African countries have already declared solar products VAT exempt. And mobile penetration has brought people, even in remote communities, into a digital economy. In 2010, investment in renewable energy across Africa was just $3.6 billion, but estimates suggest that is set to hit $57.7 billion by 2020, as an affordable African solar industry is poised to take off.

First and foremost, we are seeing a rise of “solar-preneurs”. For example, Tanzanian startup Juabar designs, builds, and operates mobile solar charging kiosks which it leases to a network of entrepreneurs who can offer electricity to their communities. In Rwanda, the African Renewable Energy Distributor operates a similar franchise network around its own smart solar charging kiosks. There is also the hugely successful M-Kopa Solar – “kopa” is Swahili for “borrowed” – which has pioneered the idea of “Pay-as-you-go” renewable energy. Clients pay an upfront fee of $35 for a solar system (an eight watt solar panel, two LED lights, a USB phone charger, and a portable, solar-powered radio). Using a mobile payment system, clients then top-up $0.45 per day for a year after which the system is theirs. Since launching in 2012, the company has grown to provide power for more than 140,000 households in Kenya, Uganda, and Tanzania, and is adding over 4,000 homes each week. Two similar companies, Azuri and Angaza, are also seeing success.

Working to a slightly different model is Patrick Ngowi’s Tanzanian startup Helvetic Solar Contractors. Operating in Tanzania, Kenya, Uganda, Rwanda, and Burundi, and expanding to other parts of Africa, the company supplies durable and affordable solar products (including water heaters, solar kits, solar batteries, and solar street lights). The company also works in less privileged areas through its non-profit division, Light for Life Foundation, providing free solar solutions to rural African women, with a goal to help 100,000 by 2025. Valued at $8 million, it has been awarded the title of Fastest Growing Company and Brand in Tanzania by KPGM. On a similar theme German company Mobisol offers home solar systems via a mobile phone payment plan providing enough electricity to power a variety of household and consumer appliances. It also has larger systems on offer for small businesses.

Solar-orientated accelerators and financers are also emerging. For example, the San Francisco and Tanzania based SunFunder has already financed $2 million of solar projects. And Senegalese-American singer Akon’s Akon Lighting Africa initiative to bring solar electricity to rural Africa has announced the launch of a new Solar Academy to consolidate African expertise. The Academy will train African engineers and entrepreneurs in the skills needed to develop solar power, and to install and maintain solar-powered electricity systems and micro grids, with the support of European experts.

The International Commitment to Solar in Africa

The international community, too, is getting involved. The UK has launched an Energy Africa access campaign, chaired by former UN Secretary General Kofi Annan. This brings together Richard Branson (who has worked to develop solar power in Caribbean countries), Bob Geldof, and politicians from 14 African countries to work on solar power projects in Africa.

Branson is also part of the Breakthrough Energy Coalition alongside Bill Gates and Mark Zuckerberg. The coalition acts as an investment platform for early-stage clean energy projects which launched on the first day of COP21.

Again in the UK, the Africa Renewal Energy Alliance has seen Nigeria and Sierra Leone sign agreements to fast-track off-grid solar power. A further 12 countries, including Malawi, Senegal, and Tanzania, are expected to join.

2015 Paris Climate Conference COP21

This week’s COP21 is reaffirming the commitment to African renewables. On the first day of the conference, the host country’s President François Hollande announced plans for France to devote €6 billion to generate renewable energy (wind farms, solar power, and hydroelectric projects) in former West African colonies and across Africa between 2016 and 2020.

India’s Prime Minister Narendra Modi also launched an international solar alliance of 121 countries which will mobilize $1 trillion in investment by 2030 for a “massive deployment of affordable solar energy” in sun-rich but cash-poor countries around the world. Modi said: “Solar technology is evolving, costs are coming down and grid connectivity is improving,” he said. “The dream of universal access to clean energy is becoming more real. This will be the foundation of the new economy of the new century.” The Indian government is investing an initial $30 million and will host the alliance secretariat and fund its operations for five years.

So without the entrenched regime of oil and gas to negotiate, Africa now has the opportunity to jump from being the world’s energy-poorest continent to the leader of a new model of renewable energy.

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Profiles of 5 Promising Kenyan Startups

30 November 2015 Comments (0) Africa, Business, Featured

nairobi

Following up on our article about the blossoming startup scene in Nairobi, Kenya, we’ve compiled a list of 5 promising Kenyan startups with a quick description of what they do.

 

1. iCow

iCow is an Agricultural Information Service SMS mobile phone application designed to help enhance the productivity of small-scale dairy farmers in Kenya. Aiming to help rural communities and farmers by giving them knowledge to develop as both farmers and businessmen, each farmer enters personalized details about their cows – whether that may be five or 500 – before receiving text messages and voice prompts with tailored instructions about the breeding and production patterns of their livestock. It helps farmers manage their stock and tackle challenges by tracking the estrus stages of their cows, providing the cost per liter of milk produced by their animals, helping them find the nearest vet and AI providers, and by giving information on breeding, nutrition, milk production efficiency and gestation, fodder production, hygiene and animal diseases. Following the 365-day cow cycle, farmers are assisted year round in making informed decisions and reducing risk.

The app runs on even the most basic mobile phone, and each text message costs about 10 Kenyan shillings, or $0.10.

 

Zatiti

2. Zatiti 

Launched in 2013, Zatiti is a web platform which helps entrepreneurs create e-commerce websites (which are M-PESA compatible). 81% of sellers in Kenya are looking for a mobile e-commerce solution to reach the 98% of Kenyans who access the web through mobile devices, but coders and developers are hard to find. The Zatiti platform requires no technical expertise from customers, handling everything from set-up to the design of customized themes. And clients can easily update their platforms with the website builder’s simple content management system. Empowering entrepreneurs, users can also monitor revenue and sales orders, and receive messages through the service.

Zatiti charges a 2% transaction fee and a monthly subscription fee depending on type of plan, along with offering premium templates, increased storage space, and increased product variety.

soko

3. Soko

Soko is a mobile driven e-commerce platform that enables artisans to engage with the international marketplace, even if they lack access to the internet or a bank account. In a similar mold to Etsy, Soko works with artisans to create modern, ethical jewelry, handmade from sustainable materials, and then helps them to sell their products to a global audience of brands, retailers, and online customers around the world. Its niche: all that can be done via only SMS. An SMS entry form allows artisans to create online storefronts, profiles, and upload images. As they text the information is transcribed as metadata which is automatically uploaded to the Soko website. It uses a peer recruitment model whereby store owners recruit and mentor new sellers. Soko says: “With our tools, any talented artisan can participate in the global marketplace, becoming a driver of social and economic development in their community.”

Based in Nairobi, so far the company has 12 employees around the world, about 250 artisans currently featured on the site, and has raised close to $1 million in seed funding.

m-farm

4. M-Farm 

M-Farm is a SMS mobile phone application, compatible with even basic mobile phones, which aims to empower African farmers. M-Farm cuts out the middle man by connecting farmers directly with buyers. It provides them with real-time food pricing information, allowing them to sell their produce at much fairer prices. Making small farmers more visible, it offers a group selling tool where farmers can team up to bring their accumulated produce to drop off points and the SMS system then promotes what they have to sell. And it offers a group buying tool, allowing farmers to pool resources to get better prices for things like fertilizer. Kenyan CEO and founder Jamila Abass says she founded MFarm in 2010 after reading about how farmers have been “oppressed for decades and disconnected in terms of information”.

A SMS for a single crop is the cost of a text message. The company counts nearly 17,000 users in Kenya, and projects one million by the end of next year.

sokotext

5. SokoText

SokoText uses mobile phone text messages to aggregate demand for food in Kenyan slums and unlock wholesale prices for micro-entrepreneurs. The company says “Small-scale vegetable sellers and kiosk owners are the gatekeepers and key players of food accessibility in urban slums. Yet a lack of capital means that they cannot afford to buy in bulk and pay to travel long distances to markets every day to buy just enough stock that will help them get by. SokoText leverages the widespread and increasing use of mobile phones in slums to solve these problems. With SokoText, they can boost their business while becoming the key agents that empower people living in the slums to eat better and healthier.”

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Kenya’s Tech Renaissance: Nairobi Set to Become Africa’s Key Technology Hub

27 November 2015 Comments (2) Africa, Business, Featured

nairobi

Mobile and internet penetration, a mobile economy, developing tech ecosystems, and government support are set to make Nairobi Africa’s key technology hub.

Over the last half-decade, Kenya has rapidly developed into a country of digital innovation, and its capital Nairobi, dubbed Silicon Savannah, looks set to become Africa’s key technology hub. With a fast-growing urban economy and a young and digitally savvy population, it is already easier to pay for a taxi by mobile phone in Nairobi than it is in London or New York. Since 2002 Kenya’s technology services sector has grown to more than £300 million (2013) up from just £11 million. And VC funding for African startups, which hit more than $400 million in 2014, is projected to grow to at least $1 billion by 2018. Google, Intel, Nokia, Vodafone, and Microsoft have already opened sites in Nairobi. And IBM has chosen the city for its first African research lab (a $100 million Innovation Centre).

A mobile economy 

At root, this technology renaissance has been spurred by mobile phone penetration. Back in 1999, Kenya, as with most of the Africa region, had a rudimentary telecommunications infrastructure and counted only 300,000 landline telephones. Over the last decade, it has proved easier and cheaper for the country to bypass the analogue age entirely and instead move directly to installing mobile phone networks. Mobile phones are also easily accessible, cheap, and practical, especially when compared with a computer. And unsurprisingly in just a few years mobile phone penetration in Kenya has grown from less than 20% to 85% (it’s 89% in the US).

At the same time, Kenya lacks a traditional banking infrastructure. Until recently, for example, the high proportion of Kenya’s urban population working to support family members in the countryside relied on hand delivery or sending cash through bus drivers. And the combination of these two elements has created the perfect setting for a mobile payments-based economy.

In 2007, state-owned telecoms company Safaricom launched M-PESA, the SMS-based money-transfer system (pesa is Swahili for “money”). Converting even the most basic phones into roaming banking devices, M-PESA spread at speed. And by 2012, more than 17 million Kenyans (70% of the adult population) were using mobile payments, the highest percentage of any country in the world. Now more than $320 million dollars are transferred via Kenyan mobile phones each month as huge swathes of previously unbanked customers join the digital economy. Safaricom also sells solar-powered charging equipment to expand the market.

mpesaGovernment support

With a 40% unemployment rate to solve, the Kenyan government is also supporting the country’s technology renaissance, determined to leverage the opportunity to create jobs and drive sustainable economic growth for the next generation.

In 2009, the East African Marine system, backed by the Kenyan government, laid a 5,000 km fiber-optic undersea cable linking the coastal town of Mombasa with the UAE. And since this time, internet penetration has grown to just under 67% of the population. This is a significant growth from 2010 when internet penetration was around just 14%.

It has created a fertile marketplace for e-commerce and tech businesses, in which the government continues to invest. In 2013 the government formed an Information Communication Technology (ICT) Authority. It laid out a policy roadmap, Vision 2030, focusing on digital infrastructure (e.g. a new fiber-optic network). And it is currently building a multi-billion dollar “techno city” called Konza with aims to create 200,000 jobs by 2030. Located 60 km south of Nairobi, a 2,000-hectare plot will offer office parks for science and technology firms, a university, retail outlets, and residential facilities. Tax breaks are also being offered to companies willing to move to the new city.

A tech ecosystem

A tech ecosystem is also starting to emerge. Where traditional ecosystems may be lacking, Silicon Savannah is filling the gap with innovation hubs and accelerators. The trend has been led in part by Ushahidi co-founder Erik Hersman who considers the future of tech in Kenya reliant on hubs to bring together technology entrepreneurs, young programmers, creative professionals, and investors, along with their ideas and innovation. “Hubs in major cities with a focus on young entrepreneurs… Part open community workspace (co-working), part investor and VC hub and part idea incubator. The nexus point for technologists, investors, [and] tech companies,” says Hersman. Ushahidi established the iHub innovation Centre in 2010, and since then it has been part of creating 152 startups and counts 15,000 members. iHub has also partnered with the ICT Authority on several initiatives, has hosted speakers including Yahoo’s Marissa Mayer, and has driven an upsurge in different types of innovation hubs across the continent.

Accelerators are also part of the emerging ecosystem. A particularly successful example is Nailab, which launched in 2011 to work with early stage globally scalable startups. So far it has incubated 30 companies, and in 2013 it partnered with the government to launch a $1.6 million technology program providing entrepreneurs with access to capital, education, and contacts within the industry. Tech competitions are also emerging. For example, the IPO48 startup competition brings together over 100 Kenyan entrepreneurs, programmers, designers, and project managers at a time, to build a new mobile or web service over the course of two days.

In Kenya, the stars of mobile and internet penetration, a mobile economy, developing infrastructure, and government support have aligned, and there are great opportunities ahead. And as its global reputation for innovation continues to grow, the country has the chance to future-proof itself both as an economic driver and Africa’s key technology hub.

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