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An African leader for global health?

29 June 2016 Comments (16) Africa, Featured, Leaders

Tedros Adhanom Ghebreyesus

The African Union supports Ethiopian Tedros Adhanom Ghebreyesus to become the first head of the World Health Organization from the continent.

With Africa bearing much of the brunt of disease globally, who better to lead the United Nation’s World Health Organization than an expert from the continent?

That is the reasoning as the African Union throws its support behind the candidacy of Tedros Adhanom Ghebreyesus, Ethiopia’s foreign minister and former health minister. As Africa recovers from the recent Ebola epidemic, an official from the continent would bring the perspective of someone who has seen its health problems on the ground.

U.N. members will choose a new WHO leader in May 2017 and the campaigning is well under way. Tedros is one of three candidates for the top post. The others are Phillippe Douste-Blazy, a former foreign minister and health minister from France, and Sania Nishtar, a former minister of health and education from Pakistan.

The 8,000-person health agency was founded by the United Nations after World War II to set global health policy and tackle major health emergencies. It has the authority to spur urgent drug development and push governments to fund essential drugs, as well as to declare public health emergencies.

“Someone with fresh experience from Africa can bring you a fresh view,” Tedros said.

Ethiopian growth cited

Tedros points to Ethiopia’s economic growth, as well as achievements in improving health care. He cites his government’s quick reaction to the region’s current drought, which avoided famine.

He said his experience reforming Ethiopia’s health system and reorganizing finances of the Global Fund supported his qualifications for the World Health Organization job.

Tedros became minister of foreign affairs in Ethiopia in 2012 after serving as health minister since 2005. He has also served in leadership roles in federal and regional government.

Tedros as minister of foreign affairs in Ethiopia

Tedros as minister of foreign affairs in Ethiopia

He earned a Ph.D. in community health and a master’s degree in immunology. He began his career in health in 1986. In addition to being the first African leader of the agency if he is elected, Tedros would be the first who is not a medical doctor.

Renowned for malaria research

A globally recognized researcher on malaria, he published a study of the incidence of malaria among children living near dams in northern Ethiopia, a key contribution to the field in 1999, and was named ‘‘Young Investigator of the Year’’ by the American Society of Tropical Medicine and Hygiene. He was the first non-American to receive the “Jimmy and Rosalynn Carter Humanitarian Award” in 2011 for significant achievements in improving human health.

According to the Global Fund, Ethiopia’s health programs are well managed and report significant achievements, including a 50 percent drop in the incidence of HIV and an even greater drop in AIDs-related deaths.

Still, Tedros’ tenure as health minister was not without controversy. Several groups of Ethiopians living abroad are opposing his candidacy, citing his refusal to declare a cholera epidemic when he was health minister that led to thousands of deaths. Tedros responded that the deaths could have had many causes, but a report said laboratory checks confirmed cholera was the cause.

The ministry also had to return $6 million to the Global Fund amid accusations that funds to fight HIV were misspent on health clinics. Tedros denied the money was misspent. He said the funds were returned because they were spent after a deadline had passed.

African Union backs candidacy

The African Union endorsed his candidacy in January.

“He is Africa’s candidate,” said Abdelmalek Boudiaf, Algeria’s health minister.

Margaret Chan, the current WHO chief, said half the regions of the world had never had one of their own leading the health agency. Eight chiefs have come from Europe, the Americas or the Western Pacific, which includes China and Japan.

The French candidate, Douste-Blazy, dismisses the importance of geopolitics, saying strong leadership ability is the key.

Sania Nishtar, the Pakistani candidate, said the argument for an African leader could just as easily apply to South Asia.

Vote “a nail biter”

Geopolitics could give the African candidate an edge in the voting. This year, for the first time, each of the U.N.’s 194 members gets a vote rather than the executive board making the selection.  With 54 states, the continent will account for more than a quarter of the votes.

Still, in spite of the backing of the African Union, delegates from at least two West African nations that are former French colonies said they preferred the French candidate.

Nothing is certain. “It will be a nail biter,” said Suerie Moon, research director at Harvard Global Health Institute.

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Romain Girbal: Doing Mining Differently in Africa

28 June 2016 Comments (0) Africa, Featured, Leaders

Mining has often been a “dirty” industry, with a history of exploitative social practices and environmental degradation, particularly in Africa. Various treaties and organizations have made efforts to clean up mining practices over the years, but French entrepreneur Romain Girbal has decided to start at the source. He is the president and cofounder of the Responsible Mining Alliance (AMR), a new company that is working to develop responsible mining projects in Africa that respect both the community and the environment. The company has already started its first bauxite mine in Guinea and its passionate leader is looking to expand.

Romain Girbal: From the City to the mines of Africa

Romain Girbal looked set to pursue a career climbing the corporate ladder. He studied business law at the University of Paris X Nanterre and international trade in Madrid. After graduating from the prestigious HEC business school in Paris in 2007, he moved to London and worked in the City as a junior consultant in structured financing for mining behemoth Glencore, where he focused on West Africa and Latin America. Glencore is the world’s largest commodities trading company, with over $170 billion in revenue in 2015. Looking back on his experience there, Girbal notes that “working there allowed me to familiarize myself with the sector and to quickly learn its norms, challenges and growth opportunities.” These lessons helped him to later launch the Responsible Mining Alliance.

In 2008, however, Romain Girbal left Glencore to become the director of the legal department of Harvest Energy Limited (owned by State Oil), a British company working in fuel distribution in several European countries. In his new role, he managed the daily negotiation and drafting of contracts. Girbal soon felt the need for a change, stating, “I then realized that I had more of an entrepreneurial spirit, and I wanted to try out an African adventure.” He joined up with Thibault Launay, a friend he made in London, and the two decided to try to make it on their own.

In 2012, they created Adventure Capital Corporation, a venture capital and consulting firm specializing in mining, oil and gas investments, mostly in Africa. These first steps foreshadowed the creation of the Responsible Mining Alliance in July 2015. This time, Romain Girbal and Thibault Launay set out to develop mining projects in Africa that were responsible both socially and environmentally, an innovative and ambitious vision that would begin to take shape in Guinea.

The Responsible Mining Alliance (AMR) rethinks mining

logo-alliance-mimiere-responsable“With the Responsible Mining Alliance, we wanted to show that you can do mining differently,” declared Romain Girbal in February 2016 when asked about the philosophy of AMR on French business channel BFM. With this credo in mind, the two young French entrepreneurs set up shop in Guinea, persuaded of the enormous potential of mining in this emerging country. The Responsible Mining Alliance now holds a bauxite mining permit in Boké, in the northwest of the country.

Although Romain Girbal and Thibault Launay were eager to jump into the mining sector in Africa, they wanted to do so in a new and ambitious way. This is why the Responsible Mining Alliance goes further, with the goal of doing “socially responsible mining” as they told BFM Business. What does that mean?

“We’re trying to set new standards in the mining industry, first in Guinea where we are starting our operations. We’ve signed partnership agreements with the Boké School of Mining and the Boké Center for Professional Education so that our mining engineers and geologists can give free classes there,” explained Romain Girbal, sincerely motivated by the idea of changing things in an economic sector that has been stained by negative clichés. While the government of Guinea has standards for socially and responsible practices, his group is “working hard to set ever higher standards. Mining is about more than extracting raw materials. It can also be a way to get local communities involved in mining by starting win-win partnerships for everybody.”

The Responsible Mining Alliance’s vision could be summed up in a few key points: following high social standards, respecting the environment, favoring local employment as much as possible and training engineers and workers through partnerships. These aren’t just pretty words; as Romain Girbal likes to point out, “For us, we consider it a requirement. In terms of employment, for example, right now we are only a small team in Guinea, but 18 of our 21 employees are Guineans.”

romain-girbal-photo-conseil-administration-alliance-miniere-tesponsableThe high standards Girbal has set for his project have attracted outside attention as well: in January 2016, Xavier Niel, the famous French billionaire and boss of telecom operator Free, decided to invest in the Responsible Mining Alliance via his personal holding company NJJ Capital. This was a big publicity win for the young mining company, and other well-known investors and partners have since joined the adventure. These include Anne Lauvergeon, ex-CEO of Areva; Edouard Louis-Dreyfus, head of Louis Dreyfus Shipowners; Alain Mallart, head of Energipole; and Daniel Lebard, head of ISPG. Not to mention Arnaud Montebourg, the former French Minister of the Economy, who worked his network to support the young French entrepreneurs’ project. In addition, the well-known French business journal Les Echos recently wrote an effusive article on AMR about how this mining startup is taking the Paris elite by storm. It’s just the latest media success for a project that seems to be going quite well.

Bauxite, the mineral at the heart of the AMR

Beyond the historical ambitions of this project, the AMR represents a strategic business choice to invest in bauxite, a mineral necessary for the production of aluminum. Bauxite is sold to aluminium oxide refineries, who then sell it to aluminum smelters to make the final product. According to Girbal, “You need about 4 tons of bauxite to produce 1 ton of aluminum.” In the context of globalization, where emerging economies like China have profoundly shaken up the market, bauxite is one of the most important raw materials for several strategic economic activities, such as aviation, transportation and construction.

In 2010, worldwide production of bauxite reached 211 million tons. Australia is the largest producer, with a third of the market, followed by China, Brazil, India and Guinea, which holds an 8% share.

According to the French Geological and Mining Research Bureau (BRGM), Guinea alone holds 52% of the world’s bauxite reserves. Romain Girbal readily shares this number to show the potential of the Responsible Mining Alliance in this West African country undergoing rapid growth. “For the moment we’re only operating in the Boké prefecture, which is the real global center of bauxite and where the future of this strategic mineral lies because it’s where you find the world’s best bauxite,” Girbal notes. “Big mining companies are setting up here more and more.”

In Boke prefecture, in the northwest of the country, the Responsible Mining Alliance has obtained an exploration permit for 295 square kilometers (114 square miles). Prospecting has already begun and extraction should start soon. This deposit contains an estimated 650 million tons of very high quality bauxite.

“I think we came at the right time to Guinea, getting started with a very promising bauxite permit,” Girbal says. “That’s how we have been able to develop the Responsible Mining Alliance and get to where we are today.”

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In Madagascar, a small family company mushrooms

28 June 2016 Comments (0) Africa, Featured, Leaders

Ylias Akbaraly

Ylias Akbaraly heads Sipromad Group with 2,000 employees and revenue of $100 million a year.

Madagascar is among the world’s poorest countries, but that hasn’t stopped businessman Ylias Akbaraly from amassing a fortune estimated at $710 million.

Akbaraly, a Franco-Malagasy of Indian origin, has helped build a family business into a conglomerate with holdings in industry, tourism, real estate, aviation, banking, agribusiness, pharmaceuticals and security as well as technology and telecommunications.

Forbes ranked him as the fifth wealthiest person in francophone Africa and his company reported $100 million in revenue last year.

He has master’s degrees in management and marketing from the University of California, Berkeley, and from the School of Management Company of Paris. He also sits on the international council of the Belfer Center for Science and International Affairs at Harvard University.

Company employs 2,000

As chairman and CEO of the Sipromad Group for 20 years, he has helped transform his family’s business from a company of 20 employees to one with 2,000 people on staff and offices in Mauritius, Paris and Dubai in addition to Madagascar.

sipromad.com

sipromad.com

He received the Pravasi Bharatiya Samman Divas Award in 2009, the highest recognition from the Indian Government to a non-resident Indian, and Britain’s Non Resident Indian Businessman of the Year in 2006.

In 2008, he also co-founded with his Italian-born wife, Cinzia Catalfamo Akbaraly, the Akbaraly Foundation, a charitable organization that aims to reduce poverty through the development of projects in education, nutrition, health, child development and housing. The foundation currently is focused on the “4Awoman Project” to fight against women’s cancer in Madagascar and in Africa.

Akbaraly is also a director of Man and Wife, a family and social magazine published in India, Real Estate Observer, a magazine specializing in real estate and real estate development in India, and the Madagascar Foundation in United States.

Building tallest structure in region

The company is building the Orange Telecommunication Tower, a 33-story headquarter building in Atananarivo, Madagascar, that is expected be the tallest structure on the Indian Ocean.

The family and the business grew from humble origins.

His family came from India to Madagascar in 1918 when his great-grandfather sought better opportunities. He became a trader in the coastal town of Belo Sur Tsiribihina. The business passed through generations, and Akbaraly’s father moved the company to Antananarivo in 1972. Initially, Sipromad manufactured and sold wax in Madagascar, then diversified into soaps and candles.

After he returned from studies in the United States, Ylias Akbaraly began working in real estate and rose within the company.

Company sales total $100 million

With the expansion of capitalism in the country starting in the 1980s, more investment was possible and the company expanded its holdings significantly.

Today, the family group includes some twenty companies in different sectors as well as interests in other firms and has combined sales of $100 million.

Akbaraly, who aspires to make his home country a major trading hub on the Indian Ocean, said his hero in India is Mahatma Gandhi because he was able to elevate an entire nation and help it grow.

He said he also admires U.S. President Barack Obama as a symbol of global change.

He sees a bright future for his home country as a hub for trade between the Indian Ocean and Africa and a great place to invest, especially in tourism, agriculture, renewable energy and mining. As its political unrest comes to an end, the country, he said, is primed for growth.

“I dream that this beautiful island will become the dragon of the Indian Ocean and a hub for all Africa.’’

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Western-trained talent returns to Ethiopia

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

Talented Ethiopians who grew up abroad are returning to their homeland, sparking hope and driving change in the once stagnant nation.

For a long time, Ethiopia has struggled as one of the poorest countries in Africa. 1974 saw the end of the iconic Haile Selassie’s rule, as the brutal Derg communist dictatorship seized power. The following years were harsh, and so began a long-lasting trend, whereby many of Ethiopia’s most skilled citizens left the nation to seek better lives in the western world. The once great kingdom languished under corruption, war, famine and drought.

Prior to the Derg regime, mass migration from Ethiopia was non-existent; sadly that was due to change. George Mesfin, an American-Ethiopian who fled with his family at the age of 14, summed up the situation by saying, “During the Derg years, for a while, everyone who could get out, got out.”

After the despotic government fell in 1991, it took a long time for the country to start making progress. However, members of the Ethiopian diaspora have started returning to their homeland, attracted by a growing economy and a more stable political situation. Making a difference seems to be the motivation that drives some to give up their comfortable lives in the western world. Many of the diaspora recognize the opportunity to use their western skills for the betterment of Ethiopia. The chance to become leaders who drive the nation forward resonates deeply within the souls of the patriotic. Those who have chosen to go back are helping to change the country in dramatic ways.

Returning Home

One of Ethiopia’s more famous returnees is Tadiwos Belete. Belete moved back to Ethiopia after developing a successful luxury spa business in Boston. He has since used his skills to create a thriving Ethiopian spa empire which employs over 1,500 people and focuses on using a solely local supply chain. In a 2013 interview Belete said, “The profitability is here, you can see it, you can feel it, you can touch it. But as well, as a human being you can make a difference here.”

While official figures are not available, Ethiopian economist Bisrat Teshome estimated that Ethiopians returning from other countries have injected more than $1 billion into the economy while starting over 2,000 new businesses. The influx of foreign-earned capital that comes with the returning migrants is a welcome source of investment for the country, where access to foreign currency and corporate investment are still lacking.

Western Influences

In the nation’s capital Addis Abbaba, a profusion of cafes, restaurants, fashion boutiques and other western-inspired businesses have appeared. Less visible, but no less important, the returning diaspora is investing in property development, agriculture, technology and a host of other sectors.

Kaldi's Coffee located in Addis Ababa

Kaldi’s Coffee located in Addis Ababa

However, Tesholme feels that improvements can be made “if that money was pumped into the industry sector, then it creates more jobs.” He went on to say that the manufacturing sector is underdeveloped in Ethiopia, and that manufacturing has the scope to create significantly more jobs for similar start-up costs, while also benefiting from foreign trade.

Ethiopia is also growing culturally through the return of its lost children. Some have found that their presence has positively influenced cultural attitudes towards workplace productivity and business best practices. Others have commented that Ethiopia has started adopting western standards of health and hygiene. Perhaps even more significantly, Ethiopia may stand to gain from the homecoming in a political sense. Shanta Devarajan, head of the Africa region at the World Bank, feels that the returnees have a positive role to play in political reform: “The diaspora might bring strengthened governance to African societies. These are people who have been outside the system and are able to observe it from afar, and that might actually strengthen government, something that we need so badly.”

Looking to the Future

Ethiopia faces issues such as a bloated bureaucracy, which is criticized as being slow to act and is an obstacle to international business. Additionally, the government is criticized for being ineffectual at a local level. Ethiopians who have experienced a more sophisticated system are well positioned to drive for reform and facilitate positive change.

The success of the diaspora is encouraging ever more ethnic Ethiopians to consider returning. In the last six months 2,600 have already made the trip home, a fourfold increase on the same period last year. If the new arrivals continue in the same vein as those who came before them, then Ethiopia’s reemergence on the world scene looks exceedingly likely.

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The end of OPEC?

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

opec meeting

OPEC’s refusal to impose production limits and an evolving global marketplace signal diminished clout for the oil cartel.

When OPEC ministers once again failed to agree on production limits to bolster oil prices in early June, it was yet another signal that the days of the oil cartel’s dominance in the global marketplace are over.

Members of the Organization of Petroleum Exporting Countries may continue to be important players in world oil markets, but “the cartel has lost its privileged ability to control global oil prices,” according to Global Risk Insights, which assesses political and business risk around the world.

OPEC nations, led by Saudi Arabia, traditionally have been the world’s swing oil producers, with enough reserves and daily production to control the price of oil. But that has changed in recent years as the United States, Russia and other smaller non-OPEC countries increased production.

Non-OPEC production rises

Total OPEC production is nearly 37 million barrels a day compared to non-OPEC production of nearly 57 million barrels daily, according to Global Risk Insights.

Despite waning influence, OPEC’s refusal to set production limits has played a major role in creating an oil glut, precipitating a two-year crisis that has seen the price of oil drop to as low as $26 per barrel earlier this year before climbing to $52 this month. That compares to prices of about $110 per barrel in 2014, when the crisis began.

Some OPEC nations, led by Saudi Arabia, have been willing to absorb the financial shocks of plummeting oil prices in order to preserve market share, reasoning that the low prices would drive competitors, notably U.S. shale oil producers, out of business.

OPEC has rebuffed calls to limit production by members Algeria and Venezuela, which have been hard hit by the slump.

Saudis take a financial hit

Saudi Arabia itself has not been immune to the financial impact of low oil prices.

The Gulf nation has spent more than $150 billion of its reserves in less than two years and posted a deficit of $98 billion last year.

Earlier this year, the Saudis borrowed $10 billion from a consortium of international banks, its first foreign debt in 25 years. The government also was considering asking creditors to take IOUs because it cannot pay its bills.

Oil rig at Bakken Formation

Oil rig at Bakken Formation

The OPEC strategy to let oil prices fall in order to wound its competitors has had mixed results, especially in the United States.

While 59 shale oil companies in the U.S. have filed for bankruptcy, production has dropped only slightly because of more efficient production. While financially troubled, the U.S. shale production should be able to rebound quickly once oil prices start rising, perhaps as early as next year.

Deal with Russia falls through

OPEC also came under fire from a top Russian oil executive in the spring, after a proposed deal between OPEC and Russia to freeze output fell through.

Igor Sechin, an ally of President Vladimir Putin, said tensions between Saudi Arabia and fellow OPEC member Iran have undermined the oil cartel. Saudi Arabia and Iran are vying for political dominance in the Middle East, and Iran, freed from Western economic sanctions, has vowed to significantly increase its oil exports.

“At the moment a number of objective factors exclude the possibility for any cartels to dictate their will to the market,’’ Sechin said. “As for OPEC, it has practically stopped existing as a united organization.”

Saudis pledge economic reform

Meanwhile, the Saudis have pledged sweeping economic reforms that signal their intention to go their own way on oil prices.

The reforms aim to diversify the country’s oil-dependent economy by increasing non-oil revenue to $141 billion by 2020. However, Saudi Arabia said it would maintain its output of 12.5 million barrels per day until 2020.

Deputy Crown Prince Mohammed bin Salman said his hope was that in 20 years the country would no longer be oil-dependent. The Saudi kingdom relies on oil for 80% of its revenue.

Saudi Arabia has vast oil reserves and has modernized production at a time when other oil producers including Venezuela and Iran have let their industries deteriorate.

At the OPEC meeting in early June, the Saudi oil minister also alluded to the waning clout of the cartel, saying that the market would determine prices.

“I think managing in the traditional way that we tried in the past may never come again,” Khalid al-Falih. Oil producers should “let the market forces continue to seek and find that equilibrium price between supply and demand.”

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Ushahidi: An African technology with global reach

25 June 2016 Comments (0) Africa, Business, Featured

Ushahidi

The mobile crowdsourcing platform, launched by Kenyan entrepreneurs nearly a decade ago, has been used by an estimated 90,000 projects worldwide.

Ushahidi, the mobile crowdsourcing software used to alert people of danger during civil unrest and to help aid agencies provide relief in disaster zones, is taking the world one text at a time.

Used in 159 countries and 31 languages, the software was developed and first deployed during post-election violence in Kenya nearly a decade ago. Today, Ushahidi estimates 90,000 projects worldwide have used the software, which is available as a free download.

Ushahidi, which means “witness” in Swahili, has grown from an ad hoc team trying to save lives in a crisis into a sophisticated nonprofit software development organization that aims to help solve global problems.

Its widely used open source crowdsourcing tool enables people to share information and interactive maps on their phones using SMS text messaging.

Platform documented violence

Four Kenyan technologists developed the software in 2007. As protests over disputed elections spiraled into violence at the end of that year, an estimated 1,500 people were killed in two months. In Nairobi, unwittingly walking into a neighborhood where violence had erupted could mean injury or death.

Enter the Ushahidi crowdsourcing software, which enabled residents to report flare-ups. The software mapped these reports to show people what areas they should avoid in real time, potentially saving hundreds of lives.

The initial deployment drew 45,000 users in Kenya who documented hundreds of incidents of violence that might have otherwise not been reported.

It was developed in a few days by an ad hoc group of technologists and bloggers “trying to figure out a way to gather more and better information about the post-election violence,’’ according to co-founder Ory Okolloh, who said the group believed the government and police were underreporting the number of deaths.

Ushahidi map

Helped aid workers after Haiti earthquake

The platform gained international prominence in the aftermath of the 2010 earthquake in Haiti, when it was used to identify and map locations where rescue and aid were needed. Within days, a live Ushahidi map had 2,000 individual reports that were mapped using satellite imagery. The platform was credited by aid workers with saving hundreds of lives.

Use of the platform has grown exponentially and has adapted to different situations.

While it is impossible to know how many people are using the platform because it is a free download, Ushahidi estimates it has been deployed for 90,000 projects with 6.5 million posts that have potentially reached 20 million people.

Deployed in media crackdowns, war zones

In Nigeria, Mozambique, Zambia, Colombia and Albania, groups used the participatory platform to detect election fraud. It is being used in Sweden to collect reports of anti-gay discrimination. It was also used during media crackdowns in Egypt during and after the Arab Spring. Organizations including the United Nations Office of Humanitarian Affairs have used it to coordinate aid activities in Libya, Syria and Afghanistan.

In Nigeria’s election-monitoring, one report found that use of the Ushahidi software increased voter turnout by 8% in 2011.

In a 2015 election in Nigeria, social media was a force in keeping the polling process transparent but the Ushahidi data-collection platform offered more credible information, according to Liesl Louw-Vaudran, a consultant with the Institute for Security Studies.

“Lively activity on social media also has a downside, however, with rumors of violence, cheating and slandering of opponents being rife on Twitter,” Louw-Vaudran said. “This is almost impossible to control, but data-gathering software like Ushahidi, can serve to provide early warning of potential election violence.”

Global software developer

With philanthropic support, Ushahidi has grown into one of Africa’s major software developers. Headquartered in Nairobi, it has global operations. Backers include the Omidyar Network, the Ford Foundation, the Knight Foundation, the MacArthur Foundation, Humanity United, Google and Cisco.

While the crowdsourcing software is a free download, organizations pay Ushahidi for support and customization, as well as other software products it has developed including data collection, management, visualization tools and enterprise systems.

Another Ushahidi project includes partnership in the Resilient Network Initiative, which trains community organizations to use open-source tools to engage with their local governments.

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Morocco enters free trade pact with China

24 June 2016 Comments (0) Business, Featured, Middle East

morocco china trade

The north African nation seeks to diversify its trading partners through agreements with the Asian giant as well as India and Brazil.

Morocco has signed a free-trade agreement with China, the North African nation’s largest trading partner in Asia.

While the overall effect on the Moroccan economy is under debate, experts say the agreement will create more purchasing power for Moroccans, who will have access to Chinese goods that are typically less expensive than those produced in country or elsewhere.

The move underscores China’s growing role in the economy of the continent as well as Morocco’s determination to diversify its trading partners. Morocco has also entered trade agreements with Russia and India and an agreement with Brazil is under negotiation.

China is Morocco’s fourth largest trading partner after Spain, France, and the United States. Morocco is China’s seventh largest trading partner in Africa. While trade between Morocco and China has grown in recent years, it is still dwarfed by Chinese trade with neighboring Algeria. Trade between China and Algeria reached $8.6 billion in 2013 compared to $2.3 billion in trade with Morocco.

Experts debate impact

Analysts say the new agreements could have mixed results.

Moroccan textile factory

Moroccan textile factory

On the plus side, competition from Chinese goods could force Moroccan industries to better serve consumers in their country and Moroccan businesses will gain greater access to one of the largest markets in the world.

At the same time, they say, more than half of Moroccan exports are minerals, fertilizers and metals produced by large industries while small businesses struggle to compete.

Some argue that the opening of trade will cost jobs in Morocco, but others note that Moroccan and Chinese workers seldom compete for the same jobs. China’s economy is based on heavy and light industry, while agriculture, food processing and precision manufacturing dominate Morocco’s. The two countries do have some direct competition in textiles and leather.

The agreement will create more wealth in Morocco. With access to cheaper goods, even poor Moroccans will gain spending power.

Economic progress

With a gross domestic product of $252 billion and a population of about 33 million people, Morocco has made significant progress in integrating its economy into the global market through efforts including streamlined procedures for operating a business and launching a nascent aeronautics industry, according to the Heritage Foundation.

After a strong performance in 2015, with growth in the gross domestic product of 4.4%, the Moroccan economy has slowed this year, according to the World Bank. Drought has reduced cereal production, and GDP growth is expected to be less than 2% in 2016.

While Morocco has been a U.S. trading partner, as well as a key ally in the war on Islamist terrorism, the nation in recent years has sought to expand its trading partnerships, notably with members of the BRICS coalition of emerging economies that seeks to break Western domination of the global economy.

BRICS is made up of the emerging markets of Brazil, Russia, India, China and South Africa.

Agreements with India, Russia

In October, Morocco and India signed agreements designed to encourage more trade between the two nations. Morocco’s major exports to India are rock phosphates and phosphoric acid.

In November, Morocco announced a free trade agreement with Russia. Morocco is Russia’s main trade partner on the continent and its exports include citrus fruit, vegetables and frozen sardines.

In June, Moroccan representatives met with trade officials of Brazil to discuss a possible free trade agreement. Brazil is another importer of Moroccan phosphates and its derivatives.

Chinese influence grows

Meanwhile, China is a major trading partner with other African nations including South Africa ($20 billion), Nigeria ($15 billion) and Angola ($36 billion).

China in recent years has been developing relationships with many African countries through investment, aid and trade relationships, driven largely by China’s energy needs.

Morocco, a net oil importer with strong ties to the United States and Europe, has not been of great interest to China until recently. However, Morocco has sought allies in its territorial dispute with the separatist Polisario Front in the Western Sahara.

Given China’s strong trade ties to Algeria, it seems unlikely, however that the Asian nation would support Morocco in that dispute.

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Tunisia struggles to attract foreign investment

23 June 2016 Comments (0) Business, Featured, Middle East

tunisia oil

Tunisia reports slowed growth as international companies show concern about the difficulty of extracting oil and phosphates as well as high taxes.

Growth of foreign investment in Tunisia has slowed amid concerns about a lack of government incentives and the difficulty of extracting the North African nation’s oil and phosphates.

Direct foreign investment in Tunisian industry amounted to $81 million in the first four months of 2016, an increase of less than 5% over the same period in 2015. A year earlier, direct foreign investment had doubled as the country adopted its first constitution and formed a government in the aftermath of Arab Spring.     

Tunisia lacks appeal to investors for a number of reasons, according to experts.

“Insecurity, high taxation and the difficulty of extraction of potential reserves are the main obstacles that prevent Tunisia from being attractive to foreign investors,” said Radhi Meddeb, chief executive officer of the engineering company Comete.

Tax policy cited

Only 15% of oil company executives believe Tunisian tax policy encourages investment, according to Global Petroleum Survey 2015.

Under the nation’s tax policy, the state gets 80%of the revenue on the sale of oil while the operating companies receive only 20%, even though they bear all of the costs with no help from the government.

Tunisia also has more limited reserves than other sources of oil and phosphates. The Global Petroleum survey estimated the country’s oil reserves amount to the equivalent of about 850 million barrels, compared to nearly 24 billion in Texas. Reserves of phosphates amount to 100 million tons, 20 times less than in Algeria.

While relatively stable compared to other nations that were part of Arab Spring, Tunisia is not immune to political and economic upheaval. For example, Gafsa Phosphate posted nearly $10 million in losses in 2014 amid recurring strikes by transport workers.

Production drops sharply

While 50 foreign companies were operating in the extraction industry in 2010, when the Arab Spring began, fewer than half that many operate in Tunisia today.

Nationally, phosphate production has dropped by nearly 60%, from 8.5 million tons in 2010 to 3.5 million tons. Oil production has fallen by half, from about 90,000 barrels a day in 2009 to 45,000 this year, according to Trading Economics.

On the plus side, Tunisia has announced it will join the Initiative for Transparency in the Extractive Industries, a global standard that promotes accountability and fights corruption in the use of revenues from extracted resources.

Tunisia first applied to join the initiative in 2012, but political instability prevented its membership, according to Kais Mejri, head of governance at the Ministry of Industry.

Tunisia believes that the initiative will make the nation more attractive to foreign investors compared to rivals who are not part of the initiative. “We hope to return next year to the same (foreign investment) rates as before 2011,” said Ridha Bouzaouada, Tunisia’s Director General for Industry.

Part of larger, regional struggle

Tunisia is not alone in its economic challenges.

More than five years of turmoil across the region has created a negative economic outlook, according to Hamdi Tabbaa, president of the Arab Businessmen Association.

Tabbaa estimated regional economies have lost about $1.2 billion in the past five years as Syria, Iraq, Yemen, Libya, Egypt, Lebanon and Tunisia saw an average decrease of 35% in their gross domestic product.

Direct foreign investment in the region was also dropping. It declined from $48 billion in 2014 to $44 billion last year, well under half of the record high of $96 billion in 2008, according to the Arab Investment and Export Credit Guarantee Corporation.

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World Bank program puts Zambia on path to solar energy

22 June 2016 Comments (2) Africa, Business, Featured

solar farm zambia

The African nation will develop two solar farms that will produce more than 70 megawatts.

With an assist from the World Bank, Zambia will build two solar power projects that will provide the cheapest electricity on the continent.

First Solar Inc., the largest panel producer in the United States, along with the French company Neoen, together will build a 45-megawatt plant that will produce electricity that will sell for just over six cents per kilowatt-hour. Enel, an Italian company, will build a 28-megawatt plant that will sell power for just under eight cents per kilowatt-hour.

The two solar farms will be built near a substation that sends power to Zambia’s capital, Lusaka.

The companies are the first winners of an auction program the World Bank launched to encourage wider use of renewable energy in developing countries.

Program reduces costs, risk

The Scaling Solar program, World Bank, International Finance Corp. and Multilateral Investment Guarantee Agency pooled resources to offer financing, insurance and advice to potential solar developers. This reduces their risk and helps cut costs to build and launch projects, in hopes of attracting large developers capable of building large-scale solar farms to the continent.

The World Bank estimates that less than a quarter of the population of sub-Saharan Africa has access to electrical power. Some African countries, including Zambia, rely heavily on hydropower and have seen energy shortages and outages in recent droughts. Zambia expects to auction another 200 megawatts of solar within a year.

Solar energy development is an important piece of the continent’s plans to help fight global climate change, as approved at COP21 in Paris last year.

Senegal, Madagascar participate

Madagascar and Senegal are also participating in the Scaling Solar project and the World Bank expects to add a fourth African country later this year.

The goal is to encourage development of 850 megawatts of capacity in Zambia, Madagascar and Senegal, which would require an investment of about $1 billion.

The program could be adopted in Asia as well.

“It’s not designed for Africa” alone, said Jamie Fergusson, global lead for renewable energy at the IFC, told Bloomberg. “It’s designed for countries with limited independent power producing experience where the power buyer is a publicly-owned utility.”

Competitive auctions

Scaling Solar uses competitive auctions to award development rights and offers the endorsement of the World Bank. This can allay concerns of international banks about political risk. Using standard contracts, it also speeds development significantly.

More than 90% of Zambia’s generating capacity comes from hydropower.

Drought has brought record-low water levels at the Kariba Dam on the Zambia-Zimbabwe border, forcing significant power cutbacks and rationing.

The reservoir has been at 12%capacity this year and dam authorities cut hydropower production to 25% of capacity in January. A year earlier, the dam, which is fed by the Zambezi River, was at more than 50% capacity.

Africa turns to renewables

With renewable energy a priority on Africa’s climate change agenda, solar developments are becoming more common on the continent.

Morocco this year turned on the first phase of what will be a 580-megawatt farm that will be the world’s largest and serve more than one million people when it is completed in 2018.

Noor 1, the first section located near Ouarzazate, currently produces 160 megawatts of power.

Morocco, which imports more than 90% of its energy, wants to generate 40% of its energy from renewable sources by 2020, with a third of that total coming from solar, wind and hydropower each.

In South Africa, George Airport will use electricity from a 750-kilowatt solar project. Projects that will provide hundreds of megawatts are underway in the nation, where clean energy investment rose to $4.5 billion last year.

Entrepreneurs boost small efforts

Smaller efforts are also taking shape as “solarpreneurs” enter the market.

In Ghana, a local company named Volta builds small solar projects for hospitals, health clinics and schools and lets them pay over time. According to the company’s founder, Mahama Nyankmawu, a 45% reduction in energy costs puts repayment well within reach for his customers.

Another company, Off-Grid Electric, said it is installing more than 10,000 solar units a month in Rwanda and Tanzania. The company recently raised $70 million in investment to expand its operations.

As interest in solar grows on the continent, the World Bank’s Scaling Solar project should help quicken the pace of development.

Antonio Cammisecra, head of business development at Enel in Rome, said the World Bank program for Zambia “accelerated our entry by as much as a couple of years.”

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Africa’s crippling brain drain

21 June 2016 Comments (0) Africa, Business, Featured

africa brain drain

Millions of highly educated African professionals move to other countries in search of greater opportunities, undermining health care, science and development.

With thousands of well-educated Africans emigrating each year, brain drain is stunting the continent’s growth, especially in medicine and science.

African migrants totaled more than 30 million by 2010 – about 3 percent of the total population of the continent – more than doubling over the previous 20 years, according to a report by the World Bank. About half migrated to other countries within Africa, while others went abroad to the Middle East, Europe and the United States. Many are fleeing conflict in their home countries or seeking better economic opportunities in more advanced African economies. However, many of those fleeing are among Africa’s best educated, and they are seeking to work abroad.

“You cannot eat patriotism”


Gichure wa Kanyugo, a Kenyan-born psychiatrist who works in Boston, said domestic conditions such as poverty, conflict, unemployment and poor health care discourage Africans from returning to their homelands.

“We would like to return home, but domestic conditions don’t allow it. You cannot eat patriotism, can you?” Kanyugo said.

The Economic Commission for Africa estimated that 20,000 educated professionals have left Africa every year since 1990 and the United Nations declared that the outflow of African professionals is “one of the greatest obstacles to Africa’s development.”

The problem is especially acute in the fields of health and science.

In sub-Saharan Africa, 38 of 47 nations fall short of the minimum standard of 20 doctors per 100,000 people set by the World Health Organization.

Shortages of qualified medical personnel were evident during the recent Ebola crisis. In 2014, for example, Liberian officials reported that there were only 170 doctors in the country. Liberia had nearly eight doctors per 100,000 people in 1973 but the rate dropped to just 1.4 by 2008.

Limited opportunities

Meanwhile, experts say most engineers and scientists who train in Africa choose to work abroad because opportunities are limited in Africa, which provides only one percent of the world’s scientific research.

Thierry Zomahoun, chairman of the Next Einstein Forum, said Africa loses $4 billion a year because jobs in science, technology, engineering and math must be outsourced to foreign professionals.

Zomahoun, whose organization staged Africa’s first international science and technology conference in Dakar in 2016, said the solution is greater investment in science and research on the continent to make scientists who have remained on the continent more visible.

The International Development Research Center said brain drain also has financial and societal costs. This is because African countries lose significant amounts of their investment in higher education as graduates leave or decide not to return home when they finish studies abroad.

According to the World Bank, Egypt, Morocco, Burkina Faso, Algeria and Zimbabwe were the top five African emigration countries in 2010.

Emigration rates are among the highest in countries that have gone through armed conflicts, such as Eritrea and Liberia, and in countries with small populations such as Cape Verde and Lesotho.

The most common destinations are France, the United States, Ivory Coast, Saudi Arabia and South Africa.

In the United States, African immigrants account for 4 percent of the country’s foreign-born population. Nigerian, Ethiopian, Egyptian, and Ghanaian immigrants account for 4 in 10 of the African born population in the U.S.

A slowing drain?

Fortunately, there are signs the drain may be slowing. Adcorp, a South African human resources management company, found that more than 350,000 highly skilled South Africans returned from other countries in the six years following the 2008 financial crisis.

One expert said governments must put in place policies that encourage African expatriates to return.

But African businesses also must create more opportunities, said Menghis Bairu, CEO of Serenus Biotherapeutics, which develops medical therapies for sub-Saharan Africa.

Until Africa can more effectively retain professionals or persuade those who have left to return, “Virtual participation” may help ease the problem, engaging expatriate professionals to coach, mentor and help plan advancements, according to the International Development Research Center.

“Virtual participation … shows promise as a means to engage the African Diaspora in development efforts,” the center said.

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