Prosperous brand new african car market 

Comments (0) Africa, Featured, Transport

Second-hand cars have been winding their way to African markets for many years. A road trip from Europe West Africa to sell your used vehicle has long been synonimous with both adventure and profits. It has remained uite easyt to find major export-import enterprises that will whisk your used car away to Africa.

Motorization ripe to take off across Africa

In addition to European car makers both North America and the Far East send second-hand vehicles to the continent en masse. The market is thoroughly established today: according to the consulting cabinet Deloitte an overwhlming majority of the 42.5 million vehicles on use on African roads today come from second-hand exports. This trend is likely to increase. Africa is the least motorized region on the planet with only 44 registered vehicles per 1000 inhabitants. The global average on world scale stands at 180 vehicles per 1000 which paves the way for tremendous growth of African market in the future. Demand for used cars is soaring due to an emerging African middle class and an improving economic climate.

Nigeria takes the lead

Nigeria is the biggest car market in Africa, and is also one of the most affluent in the Sub-Saharan region. The country boasts a population of over 140 million with approximately 40 million currently belonging to the rapidly emerging middle class. While new car sales are slowly picking up across the country, used sales still best those of new vehicles by a ratio of 4:1. In Nigeria, car ownership is seen as aspirational, whereas in the western world only new, high end cars represent a genuine status symbol. However for the burgeoning Nigerian middle class, car ownership itself is a highly coveted distinction. While the highly affluent will choose to buy new cars, Nigeria’s used car market is expected to grow for the foreseeable future.

Grey market evolves in Benin to meet Nigerian demand

Benin has dramatically benefited from the of Nigeria car market when Nigeria places high tariffs on the importation of used vehicles far above that of Benin. However this loophole is soon likely to close given that both Benin and Nigeria are working on a single import tariff for the block. Similar to Nigeria, Kenya has a large population and an emerging middle class. Citizens have been readily buying used cars, aided by the country’s strong banking sector that offers attractive lines of credit. In 2015 used cars outsold new cars by a ratio of 5:1, and according to forecasts this ratio is expected to be maintained for many years.

Kenya, Uganda and Tanzania look towards Japan for quality used vehicles

Japan has a strong record of car export, driven by tight environmental regulations and high service costs that incentivise any citizens to sell their car merely after few years. Japanese models such as Toyota and Nissan are fanatically popular across Africa due to reliability, strong 4×4 models, fuel economy and comparatively cheap repairs.

Many of Kenya’s neighbors such as Uganda and Tanzania are also seeing a surge in the second-hand car market. Given that Kenya has the largest port in East Africa it is likely to become the main import hub for Japanese second-hand cars, creating jobs and businesses throughout the region. Ultimately, apart from South Africa and the North African countries the rest of the continent is going to fce with a major increase in demand for second-hand cars over the coming years as economic conditions keep improving. Some estimates suggest that by 2030 car ownership will more than double to reach a healthy number of 90 million registered vehicles.

Read more

Zimbabwe’s optimistic growth forecasts as economy stumbles

Comments (0) Africa, Agriculture, Economy, Featured

Despite an unstable economic context , the embattled government of Zimbabwe is putting on display ambitious growth targets for the next two years. The government recently projected an annual growth rate of 6.5 percent between 2016 and 2018.

That forecast contrasts with small economic growth rates in recent years jeopardising  President Robert Mugabe’s legitimacy. Mugabe, the world’s oldest state representative aged 92, has been in office for 36 years now. Finance minister Patrick Chinamasa had originally forecast an economic expansion of 2.7 percent in 2016. But Chinamasa was forced to cut the target by nearly half, to 1.4 percent, in the face of the negative impact of the drought and falling commodity prices worldwide.

Cash shortages plague nation

Zimbabwe’s economic challenges include cash shortages, its worst drought in decades, heavy reliance on imports, crippled agricultural and manufacturing sectors, a drop in tourism, and worker strikes that have paralyzed key sectors. “What you have are highly incendiary conditions in Zimbabwe,” said Charles Laurie of the political risk firm Verisk Maplecroft. The nation is “ripe for a power grab.” Mugabe has cracked down on opponents and the government in August increased its surveillance of social media and cellphone channels while the military went on high alert in the face of what it said were potential cyber-terrorist attempts to destabilize the government. But the government cash shortage is evident prompting a government decision to start issuing bond notes that some see as a shadow currency. For the past two months‚ the government has been late in paying the military‚ police and other public workers. Zimbabwean banks have restricted the amount of cash that can be withdrawn, sometimes allowing only $20 per day.

Financial crisis recalled

Some experts say the country may be headed into its worst financial crisis since 2008-2009, when Zimbabwe dropped its national currency in the face of hyperinflation that reached 500 billion percent. The United States dollar, South African Rand and recently the Chinese Yuan, have been introducedd by the government as acceptable currencies in Zimbabwe. However, the government plans to introduce bond notes has sparked fears that large government issues of the notes will effectivelynamount to printing more money – a move that could drive inflation.

Weak signs of recovery

Zimbabwe was on the road to recovery in 2010-12 after a disastrous land reform initiative, and annual economic growth topped 10 percent in 2012. However, since then, growth has trended downward – 4.5 percent in 2013, 3.1 percent in 2015 and only 1.5 percent in 2015. The government said agriculture, fishing, manufacturing, and construction, would help drive growth in the next two years. At the same time, the government forecast targeted annual inflation of less than 1 percent and a budget deficit of 1.2 percent of gross domestic product in 2017 and 2018. But a number of key Zimbabwean economic sectors are highly challenged. Agriculture, the backbone of Zimbabwe’s economy, lacks funding and farmers are straddled with strict loan requirements driven by banks’ concerns about security for 99-year leases of many farms. The government is counting on receiving $5 billion from China to revive the agricultural sector. The nation hopes that China will provide funds for farmers to grow tobacco, flowers, cotton, and soya beans and to breed beef cattle.

Food imports increase

In the aftermath of dramatic drought the government was forced to import more than 700,000 tons of maize adding to the country’s trade imbalance, which hit $3.3 billion in 2015. The manufacturing sector is currently hampered by obsolete equipment and power shortages as well as intensifying competition from cheaper imports. Currently, the sector has reduced production and is operating at about one-third of its capacity. A requirement that foreign investors sell controlling equity stakes in their companies to local residents has further dampened enthusiasm for investment. Direct foreign investment dropped by nearly a quarter in 2015 to $421 million. The decline was attributed to assessments showing high levels of corruption as well as bureaucratic red tape.

Tax costs tourism dollars

Tourism has also declined because of a ban on ivory imports and a 15 percent tax on accommodations and tourist services. A report by the Zimbabwe Council for Tourism report said the nation lost more than $100 million in tourism revenue last year because of the tax. Experts dispute the nation’s ability to meet the new economic growth targets. John Robertson, an independent Zimbabwean economist, said it was unlikely that funding from abroad would revive the economy. Oswell Binha, an economist and chairman of Buy Zimbabwe chairman said the economy, which is at risk of recession, simply does not have the capacity to grow at a rate of more than 6 percent. “Zimbabwe under its current circumstances will never achieve any growth beyond 4 percent,” Binha said, as a result of the country’s inability to maximize key drivers of its economy.

Read more

West African seed exchange to increase agricultural production

Comments (0) Africa, Agriculture, Featured

Officials are touting the launch of an electronic seed exchange in West Africa as an important step in improving productivity and food security. The online platform will serve seven West African countries – Benin, Burkina Faso, Niger, Ghana, Mali, Senegal and Nigeria. The platform is based in Abuja, the capital of Nigeria, the leading producer of seeds in the region. Officials hope the new platform will contribute to agricultural productivity. They want to double high-yield seeds from 12 percent in 2012 to 25 percent by 2017. The electronic platform aims to provide an online point of connection for seed producers, traders, distributors, farmers, researchers and other industry stakeholders. In the long run, the platform could help improve the practice of seed quality analysis and the official catalog of seed varieties.

Exchange to boost trade

The platform will help promote the seed trade in the region while fostering healthy competition in the marketplace, said Philip Olusegun Ojo, director general of the Nigerian Agricultural Seeds Council. Ojo noted that about 70 percent of the seeds used by farmers in West Africa are produced in Nigeria. Regulatory changes have boosted the country’s seed industry, Ojo said, and today more than 155 seed companies operate in Nigeria. The electronic platform will provide farmers with information on the origin of seeds and their country of availability. The West and Central African Council for Agricultural Research and Development has developed the program in cooperation with the West African Agricultural Productivity Program.

Seeds key to improving a country’s agricultural production

Abdou Tenkouano, executive director of the council, said Nigeria has the capacity to supply nearly two-thirds of the farmers in West Africa need. Tenkouano said that the platform was designed to become a hub that will be a precursor to regional research and development initiatives in agriculture. Heineken Lokpobiri, minister of Agriculture and Rural Development, said seeds are key to food security in Nigeria, which spends more than $6 billion annually on food imports. “The objective of achieving food security can only be realized through the availability of quality seeds,” Lokpobiri said, noting that more companies should be encouraged to enter the seed market as the nation attempts to diversify its agriculture. According to Lokpobiri, the quality of Nigerian seed has improved while production has increased from about 5,000 metric tons in 2007 to 173,000 metric tons in 2015, mostly maize and rice seed. Revenue increased to more than $70 million. “We were able to achieve this success through enhanced collaboration with research institutes, liberalization of foundation seed production, strengthening of the national seed certification, as well as total withdrawal of government agencies from certified seed production and marketing,” he said.

Agriculture major occupation

Agriculture is a major sector of the Nigerian economy, engaging more than two thirds of the workforce and accounting for about a third of the nation’s gross domestic product. Major food crops include beans, sesame, cashew nuts, cassava, cocoa, maize (corn), millet, rice, soybeans and yams. Small farms that are generally widely scattered produce about 80 percent of the food. More than 75 million acres, about a third of Nigeria’s land area, are under cultivation. The new seed exchange platform may help improve constraints highlighted in a report last year that said Nigeria’s seed industry was underperforming. The study said the industry was hampered by weak technical capacity, inefficient enforcement of seed laws, information disconnects and lack of capital investment. The report said Nigeria must assure that farmers have access to new varieties of seeds of high quality and at affordable prices. “Unfortunately, the Nigerian seed industry has not fully developed the capacity to perform this role very well.”

Read more

Algerian billionaire bets on investments abroad

Comments (0) Africa, Business

Sugar refining fueled the fortune of Algeria’s richest man, Issad Rebrab.

Originally trained to be an accountant Rebrab launched Cevital, Algeria’s largest private company and owner of one of the largest sugar refineries in the world as well as a string of companies in the country and abroad.

The son of revolutionaries who fought for Algeria’s independence from France, Rebrab became the country’s first billionaire in 2013. Forbes estimates his net worth at $3.4 billion, making him the ninth wealthiest person on the African continent.

Now 72, Rebrab came from modest beginnings. He completed accounting studies at a vocational school and started his career teaching accounting and business law. He went on to start his own accounting firm in 1968.

Invests in metallurgic industry

He followed a client’s advice to invest in the metallurgical construction business, and in 1971, he acquired a 20 percent stake in Sotecom, a metallurgic manufacturing company.

Rebrab later said it was a risky move, but “at worst, I knew I could always go back to teaching.”

His fortunes took a nose dive in 1995 when terrorist attacks destroyed his factories costing him more than $1 billion. He was then forced into exile to France.

Three years later he returned to Algeria to establish Cevital.

Refinery produces sugar, oil and margarine

The company headquartered in Béjaïa is one of Algeria’s largest exporters in addition to providing products for domestic consumption, including sugar, vegetable oil and margarine. The sugar refinery produces 1.5 million tons annually. In 2012, Cevital produced 450,000 tons of oil for domestic consumption as well as quantities of liquid sugar for the country’s sodas industry. Cevital products are exported around the world, including to West Africa, the Middle East and Europe.

His other industrial interests include petro chemistry, steel, and naval and automobile construction. Rebrab is the sole Algerian enacting agent for Samsun Electronics in his country thanks to his subsidiary company named Samha .Cevicar another subsidiary is the sole agent of the car rental agency Europcar.

All five of his children now work in his businesses, which employ a total of more than 13,000 in Algeria.

Rebrab is betting that his country can compete with China for cheap labor. “We have huge potential; we can make up for lost time very quickly,” he said.

A string of investments in Europe, Sudan

He is also one of only a few Algerian businessmen that have expanded activities outside the country.

Rebrab has diversified his holdings by acquiring distressed companies in Europe.

In 2014, he acquired Groupe Brandt, a large maker of appliances based in France that had filed for bankruptcy protection. Cevital invested more than $200 million to build a Brandt plant in Algeria, which will employ 7,500 people.

Since 2013 the company has also purchased the Spanish aluminum smelter Alas Aluminum, the French assets of the Spanish household appliance manufacturer Fagor, and the Italian steelmaker Lucchini.

Cevital has also ventured south, with a 2014 agreement to invest $3 billion to develop production of sugar cane in Sudan.

Court cancels sale of Media Company

Earlier this year, Rebrab agreed to buy the media group El-Khabar for $35 million. The newspapers is published in Arab-language publication with a circulation of more than 500,000.

The Algerian Ministry of Communication challenged the acquisition, citing a law that prohibits a company from owning more than one general news company Rebrab already owning the French-language newspaper Liberté.

In July, an administrative court of Algiers gave reason to the government and cancelled the sale of El-Khabar.


Read more

U.S. and Africa: From aid to trade

Comments (0) Africa, Economy

U.S companies are just “scratching the surface” of business opportunity in Africa, effectively leaving an expanding market wide open for China, according to advocates for boosting trade, including President Barack Obama.

Dismissing the economic slowdown of some African nations as temporary, experts at the second U.S.-Africa Business Forum highlighted the potential offered by an expanding middle class, untapped mineral wealth and expanses of uncultivated farmable land on the continent.

President Obama spoke at the forum on September 21 to urging American businesses to increase trade between the United States and the African continent. “We are making progress but we are just scratching the surface,” Obama said. “There is still so much untapped potential.”

Trade exchanges rates remain low

Sub-Saharan Africa accounted for only one percent of all U.S. trade in 2015. While 5.6 percent of Africa’s trade was with the United States, that amount is much smaller than the more than 19 percent of the continent’s trade with China, which has stepped up economic ties with Africa in recent years.

According to the Obama administration, American and African countries have made deals worth $15 billion since the first U.S.-Africa Business Forum two years ago. Another $9 billion in deals were announced at the forum.

U.S. investments increased

American investments in Africa grew by 70 percent with major companies including Google and FedEx increasing their presence on the continent. African nations, meanwhile, have encouraged increased trade and business development by cutting red tape and promoting political stability.

Besides the extension of trade accords with Africa and its Power Africa program to boost electricity supplies, the U.S. increased support from the U.S. Export-Import Bank, the U.S. Trade and Development Agency, the Overseas Private Investment Corp. and the Millennium Challenge Corp.

Political instability slow growth

Africa is working hard to ease barriers to trade and investment through development of regional free-trade accords and political stability, according to Nkosazana Dlamini-Zuma, chairwoman of the African Union Commission.

Still, there is more to be done as Africa seeks to recover from an economic slowdown prompted by falling oil and commodity prices as well as a drop in demand from China, which has its own economic struggles.

The International Monetary fund recently forecast that sub-Saharan Africa’s economy would expand by only 1.6 percent this year, about half the growth rate of 3.3 percent in 2015 and well below the annual average of 5.7 percent in the 10 years before that.

Besdies, foreign direct investment in Africa dropped as the commodities boom ended. Foreign direct investment fell to about $71 billion last year, down nearly 20 percent from more than $88 billion in 2014, according to accounting firm EY.

Some African economies thrive

While South Africa and Nigeria, the two largest economies in the sub-Sahara, are struggling, other countries including Kenya, Rwanda, Tanzania, Ivory Coast and Senegal, are expected to display economic growth well over 5 percent this year.

Household consumption in Africa is expected to grow 3.8 percent annually until 2025 when it will reach $2.1 trillion, according to McKinsey & Co. It projected that the continent will have a bigger workforce than India or China by 2034.

Amadou Sy, director of the Brookings Institution’s Africa Growth Initiative, said U.S. companies have been slow to shift from seeing the continent as an aid recipient to seeing it as a potential business partner.

While aid has long been the primary focus of dealings with Africa, that is changing Sy said.

‘’The other side of the coin is that we have fast-growing economies. We have business opportunities,” he said. “The first accomplishment is getting U.S. businesses and U.S. stakeholders to look at Africa as a business partner.”

Read more

China’s gifts to Africa: Governmental buildings and stadiums

Comments (0) Africa, Economy

While much of the aid China provides to Africa comes in the form of investment and loans in infrastructure and economic development, Beijing has also given the continent dozens of government structures and sports stadiums. China promised in last August to the government of Zimbabwe a $46 million gift to build a new Parliament. The building will be located in Mount Hampden, about 10 miles to Harare, the capital. Zimbabwe’s Senate and House have grown to host a total of 300 representatives exceeding  the current Parliament’s building capacities.
The agreement between China and Zimbabwe was made official after the Forum on China-Africa Cooperation in Johannesburg in last December. The Chinese government also agreed to wipe out Zimbabwe’s debt to the country accounting for $40 million. Meanwhile, China has promessed to invest more than $1 billion in development of a thermal power plant in Zimbabwe. In return, Zimbabwe agreed to make the Chinese Yuan legal tender. Zimbabwe also abandoned its own dollar currency seven years ago after a period of hyperinflation and currently uses multiple currencies, including the United States dollar and the South African Rand.

China’s economic support has focused on governments’ facilities

Financial support to public services and government infrastructures have emerged as strategy from China to strengthen its ties to the continent by becoming Africa’s major investor and supplier in infrastructure projects. In 2012, China funded the Africa Union’s $200 million headquarters in Addis Ababa a strategic shift displayed as “China’s Gift to Africa.” The building, 100 meters tall, now dominates the skyline of the Ethiopian city. Most of the materials and furnishings were imported from China and more than 1,000 construction workers both Chinese and Ethiopian have worked on the project.

China also built an opulent presidential office complex for Mozambique’s government decorated with crystal chandeliers and with marble interiors. The structure that was opened in 2014 today overlooks Maputo Bay. However China’s financial input has never been disclosed. China has also donated $25 million for a new building to house the offices of the president and vice president in Uganda and provided furnishings from China. The building standing next to Uganda’s Parliament building was opened in 2011. In Sierra Leone, China has built a new foreign ministry, offices for its Parliament and a 100-bed friendship hospital outside the capital Freetown. China has also renovated government’s offices in Zambia.

The benefits of a “stadium diplomacy”

China has been devising a “stadium diplomacy” building more than a dozen sports venues on the african continent. Among them are the construction of Mozambique National Stadium which was built to Olympic standards at a cost of $80 million and offers seats to 42,000 spectators. I the same vein China evenly contributed to Tanzania and Malawi’s National Stadium. China also provided an estimated $600 million financial support to Angola to enable the construction of four stadiums to host the 2010 African Cup of Nations competition. For the 2012 African Cup, Equatorial Guinea built two stadiums with Chinese assistance while 2012 co-host Gabon enjoyed a gift from China of a $60 million stadium.

China invests its trade increases

China has become by far Africa’s biggest trading partner, and more than one million Chinese laborers and traders have moved to the continent in the last decade. Trade value between Africa and China was estimated to $220 billion in 2014 and was expected to increase to $300 billion in 2015.  In 2014, trade exchanges with China accounted for 15 percent of total imports to Africa and 6.5 percent of its exports. As a matter of comparison that same year imports from the United States represented 5.5 percent and exports nearly 5 percent when India’s imports accounted for 6 percent and exports for  more than 8 percent.

Read more

In Madagascar, medical drones to the rescue

Comments (0) Africa, Health, Technology

While drones are thought of mostly as weapons of war, the robotic, unmanned aircraft may play a life-saving role in remote regions that do not have access to health care. In Madagascar, the American medical drone manufacturer Vayu, Inc., and New York’s Stony Brook University, are testing use of drones to deliver medicine and equipment to remote areas. According to Dr. Peter Small, founding director of the university’s Global Health Institute, 70 percent of the population of the island that lies off east Africa live in very rural settings, including a significant number who dwell in remote settings that can only be reached by foot. “These are places that are only accessible on foot; you can’t even get a bicycle there. By using drones we can not only fly out to villages, but collect diagnostic specimens and deliver care,” Small told Digital Trends. “It is really revolutionary.”

University, country in longstanding partnership

Stony Brook University has a longstanding relationship with Madagascar, which has one of the most important and diverse ecosystems in the world. For three decades, scientists and students at Stony Brook’s ValBio Center, a 15,000-square- foot research station, have worked the island residents to bolster conservation efforts while improving residents’ quality of life. The center is located on the edge of Madagascar’s Ronamafana National Park. The university’s Global Health Institute, which has a $10 million endowment, is teaming up with Vayu, Inc., a Michigan aviation company that was launched in 2014. With more than $1.1 million in investment, the start up is focused on building affordable drone technology to provide medical aid and supplies across rugged terrain and during times of disaster. The drone can take off and land like a helicopter and is able to fly long distances.

Long-range mission accomplished

With the backing of Madagascar’s government and the U.S. Agency for International Development, the project recently achieved the world’s first long-range, autonomous drone flight. The drone collected blood and stool samples from rural villages and flew them to the ValBio center for testing. Small said the potential of drone technology to improve health care in remote areas is enormous. For example, he said a health worker who cannot diagnose a cough in a patient might be able to use a beacon to call a drone. The drone could then collect a sputum sample and fly it to lab for diagnosis then fly medications back to the patient’s location. The entire operation might take as little as a couple of days, he noted. “Drones will find innumerable uses, such as accelerating diagnosis of tuberculosis and ensuring delivery of vaccines,” Small said. Tuberculosis and many other diseases that plague developing countries, require diagnosis in a lab and stool and blood samples must be transported quickly. That is why it is critical in places like Madagascar to find an alternative to cumbersome travel by road or pathway.

Global impact likely

The organizers believe their partnership will produce significant progress in delivering quick diagnosis and medications for remote communities that lack health care professionals or facilities. Vayu in particular was founded with the purpose of developing drones for medical transport in hard-to- reach areas. “Vayu’s accomplishment is significant for public health in developing countries, where limited access hinders healthcare and it is for the future of autonomous unmanned vehicles,” said Vayu’s CEO, Daniel Pepper, a former international journalist and medical student-turned- founder of Vayu. The project could have global impact. Stony Brook University President Samuel L. Stanley Jr., MD, a nationally renowned expert in emerging infectious diseases, believes that the benefits of this partnership will likely expand well beyond Madagascar. “Global health is an immediate problem for everyone,” he said, noting that commonplace air travel has shattered natural isolation. “Advances in health delivery and implementation (in other parts of the world) can have positive impacts in the U.S. as well. The benefits of promoting health worldwide are immense.” A similar effort is already under way in Rwanda, were a Silicon Valley start up is using drones to deliver medicine and blood to patients. Zipline International said the unpiloted aircraft will transport supplies to hospitals and medical centers around the country, forming the world’s first national drone delivery system. Zipline International said it plans to expand the service to other countries later this year.

Read more

Tech start-up MAGNiTT and its founder Philip Bahoshy

Comments (0) Africa, Business, Leaders, Middle East, Technology

Philip Bahoshy and his groundbreaking company MAGNiTT are revolutionizing the start-up industry. What’s interesting is that MAGNiTT is itself a start-up firm. So how is Bahoshy simultaneously helping new companies, while nurturing his own venture through its infancy period? Bahoshy, 31, was raised in the U.K and has Iraqi roots. He obtained a BSc in Economics from the prestigious London School of Economics which he completed in 2006. In 2007, Bahoshy made a move to Dubai to work for the highly regarded management consultancy firm Oliver Wyman, where he immersed himself in the corporate world. He then made a move to Barclays Wealth in 2010 to work as the chief of staff for the CEO of the Middle East and North Africa (MENA) region.

A start-up for start-ups

His high-flying corporate career bestowed him with an acute understanding of the business and investment landscape in the MENA space. Upon completion of his Master’s degree in 2013, Bahoshy was looking to go solo and start his own firm. Armed with a slew of business ideas, he was keen to get the ball rolling; however, he struggled to find investment, guidance and concept validation. After speaking with other start-ups, Bahoshy came to realize that although Dubai was a vibrant and energetic hub for all kinds of business people, new firms weren’t always making the right connections. He described this as “start-ups struggling in isolation.” This realization gave birth to MAGNiTT, which Bahoshy founded late in 2014. He envisaged building an online ecosystem that would make life easier for start-ups to find the various supports they need, while enabling external parties to identify fledgling firms that they are interested in. Initially, MAGNiTT solely focused on linking start-ups with investment. He explained: “We identified that the real pain point in the region is access to angel funding – basically $100,000 to $250,000.” He elaborated, explaining that start-ups often struggle making the transition from setting up the firm with their own capital, to developing a viable business that is ready for substantial investment from venture capitalists. Linking start-ups with angel investors is often critical if firms are to bridge this gap.

An online pitching platform and more

Bahoshy already had other ideas about how MAGNiTT could develop and provide further services. Firstly, he realized that it can be bewildering for investors and other parties when trying to identify start-ups, and that his product needed to work seamlessly. He focused on making MAGNiTT a streamlined online portal where start-ups have to outline the core concepts of their product. They have to succinctly present their business idea and the problem it solves, their elevator pitch, their target market, the competition, and finally, monetization. External parties can filter and search profiles for concepts they are interested in, analyze the product outline, access further information and ultimately connect with firms that they want to start a dialogue with. Bahoshy was already aware that start-ups need more than just funding to get off the ground. He focused on bringing mentors, accelerator programs, service providers and co-founders to the ecosystem. For start-ups, they can request what kind of support they are looking for. According to MAGNiTT’s data, 58% of start-ups on the site have listed that they are looking for mentorship, 56% are interested in showcasing supports, while 26% are looking for legal support or backing.

Major interest, new features and the future 

In January, Bahoshy had a respectable 200 start-ups signed up to MAGNiTT. Since then the site has exploded and today there are over 1400 start-ups and thousands of users registered on the platform.The site is already helping to forge valuable connections that are taking start-ups to the next level. Bahoshy has said that he wants to bring resources such as video conferencing, legal, marketing and HR services to the site. Additionally, MAGNiTT has recently launched a blog alongside a raft of materials relevant for start-up firms. He is also looking to bring Venture Capitalists into the platform to assist start-ups later down the line. MAGNiTT is itself listed as a start-up on MAGNiTT. Uniquely, its own success is being defined by how well it creates opportunities for all of its parties. For Bahoshy it’s so far so good and he is currently in negotiations with interested investors. It looks as though MAGNiTT is set to take off while bringing other great business ideas along for the ride.

Read more

The Workers Strike Back: Unions Take Action in South Africa

Comments (0) Latest Updates from Reuters, Politics

Image: Striking miners dance and cheer after they were informed of a 22 percent wage increase offer outside Lonmin's Marikana mine

In mid-August, an estimated 15,000 workers for the South African power company went on an illegal strike after weeks of wage increase negotiations. Employed by Eskom, South Africa’s largest electricity company, nearly one third of the work force protested the wage ceiling and inadequate housing allowances. Eskom had pre-emptively obtained a court interdict banning employees from striking after negotiations with major unions turned sour. The unions that represent Eskom employees had demanded their wages be increased by 12-13%, but Eskom refused to budge above 7-9%, and claimed wage discrimination as a hangover from apartheid. Workers felt that their grievances warranted more than negotiations, and thus went on strike.

Unpopular Policies

Eskom was established in 1923 and generates approximately 95% of the country’s electricity. Over the past seventy-odd years, Eskom has been the center of a variety of dramatic incidents, but perhaps the most pertinent is their policy of “load shedding.” Beginning in response to inadequate power supplies starting in 2007, Eskom began the practice of load shedding, or regular, scheduled blackouts to reduce the stress upon the electricity grid, turbines and power sources. In order to meet the demand of South Africans with an inadequate supply, different regions are purposely deprived of electricity so that it can be directed elsewhere on a complex schedule. The vast majority of South Africa’s energy comes from aging coal-fired power stations. In what can only be a planned irony, the strike came on the one-year anniversary of “no shedding,” or an entire year without planned power cuts. Eskom had been looking forward to publicizing their success but were instead faced with the possibility of a black-out due to a shortage of workers.

Workers Unite

As South Africa’s largest producer of energy, Eskom is considered a vital service company. In South Africa, workers in vital service industries can be prevented from striking despite their constitutional right to do so. After weeks of negotiations with workers and their unions (primarily the NUM and Numsa, or National Union of Metalworkers of South Africa), Eskom realized workers were likely to strike regardless of the preventative law. They then applied for and were granted an interdict, opening up any workers who did strike for legal action by the company. Eskom’s national spokesman, Khulu Phasiwe, said that workers who did not show up to work because they were striking would have to account managers the reasons for to their absence without leave. 15,000 workers, or about one third of Eskom’s total employee base, considered the strike worth the risk. Workers demonstrated outside power stations in the eastern provinces, while others went on strike across the country.

Eskom workers demanded that their wages be increased incrementally, starting with a “10% increase of the lowest salaries, 8.5% of the highest income and housing allowance of 3,000 rand,” approximately $222 USD. Prior to the strike, the company refused to budge above a 9% increase. According to the country’s largest union, National Union of Mineworkers (NUM), the lowest paid Eskom worker earns about 9,000 rand, or $666 per month. While cost of living in South Africa is lower than in, say, the United States, $666 is not enough to live on, particularly if one is supporting a family.

NUM released a bold statement saying that “the NUM members are very angry at the attitude of Eskom refuses to end the wage system of apartheid.” In various interviews, several workers claimed racial discrimination, and some women claimed gender bias as well. Under apartheid, white South Africans were paid a higher wage for the same job than black South Africans. This legalised and codified racism ended in name with the collapse of apartheid in 1994, but continues in practice to this day in every sector of South African life. All of NUM’s members at Eskom went on strike. It is not just the racially-based wage discrimination that drove workers to strike, but also the unlivable wages they receive for their labor.

The Enemy of My Enemy…

Prior to the strikes, the NUM and Numsa had been bitterly divided over their ideologies and desires. This strike, however, has brought them together: a spokesperson from NUM said “whatever differences we may have with Numsa, we have a common enemy now, which is Eskom.” Eskom ensured the public that negotiations are underway to bring an end to the civil action, but it seems unlikely the issue will be put to rest any time soon.


Read more

Election spells more economic trouble for South Africa

Comments (0) Africa, Economy, Politics


South Africa has reclaimed its spot as Africa’s largest economy, but fallout from recent elections threatens to exacerbate the country’s economic difficulties.

Frustration with the nation’s struggling economy prompted many voters in Aug. 3 municipal elections to turn away from the African National Congress (ANC), the storied party of Nelson Mandela which has led the country since the end of apartheid more than two decades go.

In the face of high unemployment and slow growth, voters in several major cities, including Pretoria and Johannesburg, turned to the Economic Freedom Fighters party on the left or the Democratic Alliance on the right.

Those parties, far apart on economic and other policies, have nevertheless  informally agreed to band together in order to shut out the ANC. EFF leader Julius Malema rebuffed ANC overtures to form a coalition in Johannesburg, calling the party “corrupt to the core.”

ANC loses support in cities

In elections that are widely seen as a vote on the performance of the national government, the ANC received 54 percent of the vote, compared to 62 percent just two years earlier.

However, the party saw steeper declines in the nation’s urban areas, where middle class voters rejected ANC appeals based on the historic role of the party. For example, in Johannesburg, South Africa’s largest city, the ANC received only 44 percent of the vote, while only 41 percent of voters in the capital of Pretoria favored the ANC. Even in Nelson Mandela Bay metro area, which is mostly black, voters elected a white commercial farmer, Athol Trollip, as mayor.

The party went into the election with considerable baggage, including a sluggish economy and a spate of corruption scandals in the administration of President Jacob Zuma.

Last spring, a South African  court rebuked Zuma, saying that he violated the constitution when he used millions in government funds for improvements at his home in rural , They included a swimming pool, visitor center, and an amphitheater, which he said were necessary for his security. The court ordered Zuma to pay more than $16 million back to the state.

Economy reels under Zuma

Zuma sent South Africa’s economy into a tailspin last December after he abruptly fired a respected finance minister and then was forced to sack an inexperienced replacement only four days later amid protests.

The value of the rand plummeted but a measure of order returned with the appointment of a third finance minister, Pravin Gordhan.

At the same time, the nation’s economy has not rebounded from the 2007-08 financial crisis, and experts predict little growth in the coming years.

The South African Reserve Bank has forecast that the country will record no  growth this year and less than 2 percent annually in 2017, 2018 and 2019.

The nation’s unemployment rate tops 25 percent and it is more than double that among young people.

Major reforms needed

Experts suggest major economic reforms will be required to fuel the growth the country needs and to avoid cuts in government spending and a credit downgrade.

“South Africa’s public purse has come under pressure. At the same time the country faces the danger of a credit risk downgrade by international credit rating agencies,” said Jannie Rossouw, head of the School of Economic & Business Sciences at the University of Witwatersrand.

Rossouw said the government might have to give away some state-owned enterprises, such as South African Airways, that are unprofitable and a drain on tax coffers.  South African should also cut bureaucratic red tape to stimulate economic activity.

However, Rossouw said he did not see a way forward for reform in the near term unless the anti-Zuma faction within the ANC can take control from the president’s faction.

At the same time, he said, planning and implementation of reforms could be slowed by the fact that a growing number of municipalities have coalition governments, some of which are unfriendly to the ANC.

Currency values drive economic rankings

Meanwhile, South Africa’s hold on the title of Africa’s largest economy may be tenuous.

The country reclaimed the top spot this summer after trailing Nigeria and Egypt.

However, the ranking is based primarily on the gross national product as measured by the value of a nation’s currency against the U.S. dollar. The increase in the dollar value of the South African rand outpaced that of the two other countries even though the nation’s GDP decreased to $312.8 billion in 2015, according to World Bank data.

Read more