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Liberia will turn schools over to private operator

21 May 2016 Comments (2) Africa, Business, Featured

bridge international academy school

Bridge International Academies, which runs schools in Kenya and Uganda, will pilot a program in Liberia’s troubled school system.

The government of Liberia plans to turn its troubled school system over to a private company, drawing objections from representatives of the United Nations and threats of a strike from the country’s teachers.

Education Minister George Werner said the country would launch a pilot project in September, when 50 of the nation’s 5,000 schools will be taken over by Bridge International Academies, a private company based in Kenya, which also operates schools in Kenya and Uganda.

Werner noted that the Liberian school system has been “in a state of decay for the last three decades.” He said he decided to turn to Bridge after realizing that incremental change by the government would not happen quickly enough for the system to benefit Liberia’s children.

Werner said education would still be free to Liberian students.

High rate of failure on exams

Disrupted by years of war and then the recent Ebola crisis, the school system was labeled “a mess” by Liberia’s president, Ellen Johnson Sirleaf in 2013 after 25,000 of country’s high school graduates failed their university entrance examination.

After Werner announced the pilot program, Liberian school teachers approved a resolution threatening to strike if the government goes ahead with the plan.

One Monrovia teacher said schools are underperforming in part because of the low teacher salaries the government pays, forcing teacher to take two jobs. Joseph Komoreah said Liberians should be in charge of their education, not an outside company.

Meanwhile, a United Nations official said the plan amounts to a “gross violation” of the Liberian government’s obligation to provide a right to education.

State should run schools, official says

Kinshore Singh, the U.N. special rapporteur on education, call the plan an “attack” on teachers and public schools.

Calling the scale of the plan “unprecedented,” Singh said a public education system is “a core function of the state and abandoning this to the commercial benefit of a private company constitutes a gross violation of the right to education.”

Singh argues Liberia would do better to invest in improving its own education system and could approach the United Nations for assistance.

A Bridge International Academy school

A Bridge International Academy school

Schools lack resources

About 1.5 million are enrolled in Liberia’s primary schools but only about 20 percent of them complete 12th grade. Classrooms are often overcrowded and under supplied, even lacking enough chairs for all the students.

Bridge operates more than 350 schools in Kenya and seven in Uganda, charging each student $6 per month. The World Bank invested $10 million in Bridge International in 2014 and social investors including Bill Gates and Mark Zuckerberg have also provided funding.

But the company has also been criticized for its teaching methods.

The company calls its approach the “Academy in a box.” Bridge develops teaching materials and delivers lessons to teachers on a tablet they can use in the classroom. Bridge also uses computers to monitor how the students are progressing so educators can intervene if there are issues.

More than 100 organizations object

After it received World Bank funding, more than 100 organizations supported a statement critical of Bridge and the privatization of education in Kenya and Uganda.

A Bridge International spokeswoman said the system enables teachers to give well prepared lessons and uses technology to streamline administrative processes.

She said Bridge pupils had a 22 percent higher pass rate on national exams in 2015 than other students.

In the pilot program, the Liberian government will continue to pay the teachers but Bridge International will vet and supervise them. The company said it is looking for outside funding for the pilot.

If the 2016-17 pilot goes well, Liberia may look for other private education providers to help run its schools.

Bridge International Academies said it is the world’s largest education innovation company with more than 100,000 students in more than 400 nursery and primary schools in Africa. The first Bridge school opened in Nairobi, Kenya in 2009. In addition to its African programs, Bridge is planning to expand into Asia.

Founded in 2007, the company hopes to operate more than 3,000 schools in Kenya, with more than two million students, by 2018. The company wants to reach 10 million students in a dozen countries by 2025 with its own schools or using its model in partner schools.

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Cyber threat looms over Africa

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

africa cyber crime

As more people transact banking and business online, experts raise questions about security from hackers targeting the continent.

Amid global alarm about cyber theft, authorities warn that banks and other businesses and institutions in Africa are increasingly vulnerable to online fraud and theft.

African and international cyber security experts, including representatives of government and the United Nations, will gather in Nairobi in June to discuss online threats and how to fight them.

As more Africans use the internet, businesses and governments are providing more transactions and services online. But experts are raising questions about whether those sites are secure from cyber criminals.

Many small and mid-sized businesses cannot afford expensive security measures such as firewalls and malware protection while governments also use templates to build their websites, which cost less but may also be more vulnerable to attack.

Kenya, Nigeria, South Africa see attacks

Kenya, Nigeria and South Africa are among African countries that have already suffered millions of dollars in losses to cyber crime.

Nigerian officials estimated the country’s institutions lost $630 million annually to cyber attacks, theft and software piracy, nearly one percent of the country’s gross domestic product while online bank fraud more than doubled.

“Global tracking of cyber-attacks indicate that Nigeria is among the countries with high numbers of software piracy, intellectual property theft, and malware attacks,” Babagana Monguno, Nigerian national security advisor, said at the recent inauguration of a 31-member Cybercrime Advisory Council.

Monguno called the threat “a serious challenge to our resolve to take advantage of the enormous opportunities the internet brings.”

Nigeria’s new Cybercrime Advisory Council, established through 2015 legislation, is charged with promoting information sharing and making recommendations designed to improve cyber security. The country’s National Cybersecurity Policy and Strategy outlines the legal, technical and institutional systems that will be required to fight cyber-attacks in Nigeria.

Kenya loss put at $150 million

In Kenya, authorities said online thieves took about $150 million in 2014, as cyber crime in that nation tripled over 2013.

A 2015 report noted that 25 percent of Kenya’s internet users are unsupervised teens that may be exposed to cyber crime.

One expert said many businesses in Kenya lack the resources and access to IT expertise they need to protect their online platforms.

Rutendo Hwindingwi, division director for Sage East and West Africa, said businesses need to implement firewalls and use anti-malware tools and have access to IT specialists who can quickly respond when applications or operating systems are attacked.

The Communication Authority of Kenya in April put out a call for tenders a study of e-commerce and cyber crime detection and prevention in the country as the government attempts to develop a strategy to fight cyber crime.

The authority said it had set up a team to monitory cyber attacks, especially those that target government systems.

South African bank customers warned

South Africa has seen cyber crime losses totaling about $65 million, according to one estimate.

The South African Bank Risk Information Center recently warned bank customers to pay more attention to security, especially on mobile phones.

The center’s chief executive, Kalayani Pillay said protecting electronic devices is critical to reducing the risk of being victimized by cyber crime.

Phillay said malware and phishing attacks were on the increase in South Africa, including efforts to target accounts of corporate executives to move large sums of money.

The country’s wealth and particularly its relatively high gross domestic product per capita made it attractive to cyber criminals, she said.

Risk grows with mobile usage

Banks continuously update cyber security measures, but criminals come up with new ways to steal from customers, she said. The risk will grow as more bank customers migrate online, especially banking on their smart phones.

The warnings come against a backdrop of global concern following two large heists this year at Asian banks.

In February, hackers sent more than 30 fund transfer orders totaling $950 million from Bangladesh Bank using Swift, a global money transfer system. The thieves successfully transferred $81 million to accounts in the Philippines.

In May, Swift revealed another heist had taken place prior to the Bangladesh theft but had only been revealed by the second bank, which one researcher said was in Vietnam. The amount of the theft was not released.

Hackers breach bank security

Swift, with 11,000 member banks, processes 25 million messages each day to process billions of dollars in transfers.

In each case, Swift said the cyber thieves bypassed security controls at the local banks to request the transfers.

As concern grows on the continent, the African Expert Convention on Cyber Security, June 22-23 in Nairobi, will bring together experts from government agencies, the United Nations, corporations and investors to discuss strategies for fighting cyber crime.

Organizers hope the event will enable participants to share expertise from different sectors and create partnership frameworks for enhancing cyber security. Participants will also learn the latest technical tools available to protect against cyber threats.

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African governments seek bailouts as commodity prices fall

19 May 2016 Comments (0) Africa, Featured, Politics

angola imf

Angola is the latest nation to seek an aid package from the International Monetary Fund as its oil-dominated economy falters.

As its economy buckles under the weight of falling oil prices, Angola is turning to the International Monetary Fund (IMF) for a bailout.

By one estimate, the West African nation faces a shortfall of $8 billion, or 9 percent of its gross domestic product, this year. Angola last borrowed from the IMF in 2009.

Angola is one of several cash-strapped African countries that are turning to the IMF for financial help as prices drop for commodities such as oil and minerals.

Ghana agreed to an aid package in 2015, it’s first from the IMF in six years. Zambia is also in talks for IMF aid, which would be its first since 2008. Zimbabwe has also asked the IMF for its first loan in nearly two decades.

Meanwhile, the IMF stopped a $55 million loan to Mozambique – part of a bailout approved last year – after discovering the country had failed to report $1 billion in unreported loans it owes.

South Africa and Nigeria may also be forced to turn to the IMF as their economies struggle.

Angola faces shortfall

Angola’s request was an about-face after the nation repeatedly said it would not turn to the IMF for help in the current crisis because the aid would come with too many conditions.

But the country’s reserves have fallen as oil prices stayed below $45 a barrel and the government is reluctant to cut services in advance of elections in 2017.

Oil accounts for 95 percent of Angola’s exports and about half of the government’s revenue. In addition to slumping oil revenues, the country has suffered a retrenchment by China, which has its own economic problems.

Monetary agency requires transparency

In exchange for IMF aid, the Angolan government is likely to be forced to be more transparent about its financial dealings as the international agency typically scrutinizes the finances of countries it assists.

One criticism of Angola’s economy is the extent to which it is controlled by President José Eduardo dos Santos, who has ruled the country for more than three decades. While nearly half of the country’s population subsists on just over $1 per day, dos Santos’ daughter, Isabel dos Santos, is the richest woman in Africa, raising questions about the source of her wealth. Isabel dos Santos has denied using state money to enrich herself.

“The IMF stands ready to help Angola address the economic challenges it is currently facing by supporting a comprehensive policy package to accelerate the diversification of the economy, while safeguarding macroeconomic and financial stability,” Min Zhu, IMF deputy managing director, said in a statement.

One expert urged caution. Ricardo Soares de Oliveira, an Angola expert at Oxford University, noted that a study in 2011 by IMF staff found that the government could not account for $32 billion between 2007 and 2010.

“The IMF should use the leverage it has to extract serious concessions and tangible reforms from the government,” de Oliveira said.

Ghana receives bailout

Angola is the not the only country turning the IMF.

Ghana, an oil and gold producer, received a three-year, $918 million bailout in 2015. The country saw the value of its crude exports cut in half between 2014 and 2015, falling to $1.5 million in the first three quarters of last year as both prices and demand fell. Gold exports fell by nearly one third to $2.4 million.

In December, the IMF also agreed to a $283 bailout loan package for Mozambique that required the southern African nation to disclose all of its borrowing. In April, the IMF said it stopped a disbursement of $55 million after learning the country had not reported millions in loans by Credit Suisse Group and the Russian VTB Group.

Mozambique, a natural gas producer, saw exports fall by 14 percent in 2015.

Zambia, Africa’s second largest copper producer, saw a shortfall of 8 percent of gross domestic product in 2015 and is also seeking IMF assistance in 2016. Zimbabwe also expects an IMF loan in the third quarter of this year.

In addition to the IMF aid, the World Bank said it expects to lend up to $25 billion this year to countries reeling from falling commodity prices.

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Starbucks arrives in South Africa

18 May 2016 Comments (0) Africa, Business, Featured

starbucks south africa

Hundreds in Johannesburg line up on opening day of the coffee giant’s first store in sub-Saharan Africa.

The U.S. coffee giant Starbucks opened its first cafe in sub-Saharan Africa – a store in an affluent Johannesburg suburb – and the company plans to open at least a dozen more stores South Africa in the next two years.

Many people waited overnight and hundreds of people lined up before the opening to get their first taste of Starbucks while #StarbucksSA trended on Twitter on opening day.

Previously, Starbuck’s only African locations were in Morocco and Egypt. The global corporation has about 23,000 stores in the Americas, Europe and Asia.

Starbucks founder Howard Schultz said the company might eventually open as many as 150 stores in South Africa.

Second store opens soon

A second location is set to open soon at another Johannesburg shopping mall, but there are no plans to expand to other countries in the region.

The new stores are being launched through a licensing partnership between Starbucks Coffee Company and Taste Holdings, a South African management group and leading licensor of international brands.

“We are proud to be bringing Starbucks to South Africa,” said Kris Engskov, president of Starbucks for Europe, Africa and the Middle East. “We’re going to deliver a great Starbucks experience. The coffee market here (in South Africa) is vibrant and growing fast – we want to be part of that growth.”

Taste Holdings operates stores

Under the agreement, Taste Holdings gains exclusive rights to open Starbucks outlets in South Africa. It will own and operate the stores.

Carl Gonzaga, chief executive officer of Taste Holdings, said the partnership is committed to development of local suppliers and Taste Holdings has a program to increase employment among unemployed South Africans, who will benefit from new opportunities at Starbucks.

Engskov said young people have been the key to Starbucks’ success. With most of its workers aged 17 to 25 years old, “talented youth has always been a priority,” he said.

Taste Holding’s also holds a licensing agreement for Domino’s Pizza in South Africa and the company owns and operates Zebro’s Chicken, the Fish & Chip Co., Maxi’s Restaurants and St. Elmo’s Woodfired Pizza.

Hundreds line up for coffee

A line at the new Starbucks location in Johannesburg

A line at the new Starbucks location in Johannesburg

At the April 21 Starbucks opening in Johannesburg’s Rosebank district, a long line of customers was waiting when the store opened at 7:30 a.m.

Mohamed Mala, a 19-year-old student, said he waited for 12 hours to be the first customer. ” We wanted to be the first customers at Starbucks, and we were,” he said.

“Starbucks has been one of the things missing from the South African scene,” said Norma Cooper, a bank employee.

Starbucks will compete with many established locally owned coffee brands and independent coffee shops.

Gonzaga said the menu was designed to reflect local customer tastes including local products such as Rooibos tea.

Some of the coffee beans are sourced from nine African countries, including Kenya and Burundi, he said.

South Africa attracts U.S. food chains

With the most developed economy on the continent, South Africa has seen recent openings of several U.S. food chains, including Krispy Kreme Doughnut and Burger King.

Starbucks’ Engskov noted that significant quantities of Starbucks coffee products from Africa, Ethiopia, Rwanda and Tanzania, where the company has established farmer support networks.

The support centers opened after Ethiopia and the company settled a dispute in which that nation and Oxfam accused Starbucks of trying to block Ethiopia from obtaining trademarks for two of the country’s best-known coffee beans – Harrar and Sidamo. A third coffee, Yirgacheffe, was trademarked in the U.S. in 2006.

Under the agreement, Starbucks was allowed to promote and sell the three brands in markets where they are trademarked as well as where they are not while recognizing the integrity of the Ethiopian coffee brands.

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A second-hand clothing ban in East Africa?

17 May 2016 Comments (5) Africa, Business, Featured

africa second hand clothes

Burundi, Kenya, Rwanda, Tanzania, and Uganda consider ending imports of used garments by 2019 in order to increase domestic production.

Five East African countries may ban sales of second-hand clothing from abroad – a staple of many residents’ wardrobes – in order to bolster domestic garment making.

Burundi, Kenya, Rwanda, Tanzania, and Uganda make up the East Africa Community (EAC), which directed its member countries to phase out textile and shoe imports by 2019. The heads of state of all five countries must agree before the limits could take effect.

The proposal comes as many African countries seek to increase manufacturing and other industries to fuel economic growth.

Charitable donations resold

Second-hand clothing, mostly from Europe and North America, are a mainstay of local clothing markets in Africa, according to Dr. Andrew Brooks, author of Clothing Poverty: The Hidden World of Fast Fashion and Second-hand Clothes.

In Uganda, for example, second-hand garments account for 81 percent of all clothing purchases, Brooks said.

East Africa imported more than $150 million worth of second-hand clothing in 2015. Brooks noted that the used clothing is less expensive than locally produced garments or even inexpensive new imports.

U.S., U.K. are largest exporters

Most of the second-hand clothing sold around the world comes from charitable donations by European and North American residents who are unaware the clothing will be sold, Brooks said.

The United States and the United Kingdom are by far the largest exporters of used clothing.

The United States exported used garments worth more than $685 million in 2013, according to United Nations data. Much of it went to Central and South America, Canada and Mexico but Tanzania and Angola also received major shares.

Uganda imports 1,500 tons of used clothing each year from the U.S. alone, according to the U.S. International Trade Commission.

The United Kingdom’s exports totaled more than $620 million with major shares going to Ghana, Benin, Kenya, and Togo.

Germany was the third largest exporter at more than $500 million, with large shares going to Cameroon and Angola.

Other major exporters are South Korea, The Netherlands, Belgium, Canada, Poland, Italy and Japan.

South Korea and Canada together exported $59 million worth of used clothes to Tanzania while the UK exported $42 million worth of used clothes to Kenya.

Regional industry declines

Garment manufacturing in Ghana

Garment manufacturing in Ghana

Brooks, a lecturer at King’s College in London, said local garment makers employed hundreds of thousands of people in East Africa before the debt crisis hit in the 1980s and 1990s when domestic producers struggled to compete and many factories closed.

In Kenya alone, a garment industry that employed 500,000 people was reduced to only about 20,000 garment workers today.

The East Africa Community pointed to the need to rebuild domestic production as it proposed the ban on second-hand imports.

“The region, like the other developing countries, is ready to transition into an industrial bloc with a higher level of production quality and manufacturing practices,” said Betty Maina, Kenya’s Principal Secretary at the EAC Ministry. “It will benefit industry and increase access to locally manufactured products in the region and create more employment opportunities.”

No ban on new clothing imports

Brooks noted that the ban does not include imports of new clothing, which could also undercut the domestic garment makers. While rebuilding the local garment industry may be beneficial in the long-term, higher prices could hurt local consumers.

In the near term, government would also suffer losses of tariffs collected from clothing importers. For example, Kenya collected $54 million in tariffs on 100,000 tons of imported used clothing in 2013.

Rwanda earlier this year nearly tripled its import duty on imported clothing from 35 percent to 100 percent in order to encourage purchases from the country’s lone textile mill. Two years ago, the factory was producing at 40 percent of capacity but that has dropped to 20 percent.

Comprehensive approach urged

To revive the garment industry, Brooks said, more comprehensive action than the ban must be taken.

These include improvements in transportation and power supplies to stabilize the distribution system as well as tax relief for factories and support for the sustainability of east Africa’s cotton sector.

“A revitalized local market would ultimately boost the (regional) economy by providing more jobs than the second-hand sector while retaining money that currently goes to Europe and the U.S. to pay for second-hand imports,” Brooks said.

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Why Tunisia Believes Exports May Ignite Recovery

16 May 2016 Comments (0) Business, Featured, Middle East

tunis

Due to political instability and terrorism, Tunisia has been struggling economically. Could exports be the solution?

Tunisia’s economy had been in a fragile condition for many years. Still reeling from the global financial crisis, the Arab Spring uprisings left Tunisia and many other North African economies stagnant as a result of the regional instability. The problem was further compounded by risk adverse foreign investors, who came to view countries in the region as unattractive prospects.

Then came the terrible terrorist incidents of 2015. The attacks were designed to undermine the Tunisian economy, and they were successful in doing so. The portents were dire for a country in which tourism accounted for 14.9% of GDP in 2014, whilst employing approximately 12% of the working population.

Exports as the answer

A full-on financial crisis was fortuitously averted by the slump in global oil prices, combined with a good year for Tunisian exports of olive oil. Olive oil production on the European continent was hampered by a historically poor harvest in 2015. Yet Tunisia enjoyed record harvests, which enabled the beleaguered nation to quadruple its export revenues of olive oil from US$ 250 million in 2014 to in excess of US$ 1 billion in 2015. These factors have helped Tunisia narrowly avoid the fiscal brink; additionally they have illuminated a potential escape route from the economic wilderness.

The boom of last year’s olive oil season has set events into motion, as Tunisia can ill afford to let such a success become a one-off. Fortunately the EU has realized this, and in an effort to assist Tunisia they doubled the country’s olive oil export quota back in September 2015. If high production can be maintained, Tunisia can become a perennial player in this area. However, in a microcosm that reflects the overall Tunisian economy, Tunisian olive oil products are exported in their most basic and least valuable form. Value and jobs can be added by exporting refined, branded bottles as opposed to the current situation: exporting raw olive oil that is refined and branded by Spanish or Italian firms.

Transitioning to the exportation of more diversified and sophisticated products is something that would benefit other sectors within Tunisia. As an example Tunisia currently exports crude oil. However efforts are being made to finance and build the necessary facilities that will allow for the exportation of refined oil products. As with olive oil, this will create jobs and generate more revenue from the countries resources.

What needs to be done

At a recent conference to discuss the promotion of Tunisian exports, the President of the Tunisian Confederation of Industry Trade and Handicrafts, Wided Bouchamaoui, highlighted the value that an increased focus on exportation would bring to the economy: “Tunisia could raise the value of its annual exports to 100 billion dinars in the next decade.”

However, if such targets are to be achieved, continued oversight will be needed. Due to government intervention, the Tunisian dinar has been overvalued for many years, subsequently hampering exportation as Tunisian goods have been comparatively expensive. In an attempt to remedy the situation the Tunisian Central Bank has allowed the Dinar to depreciate in a controlled fashion. Despite this, the currency is still overvalued by as much as 15% according to some analysts. Further controlled depreciation is an ugly necessity, should Tunisia want its goods priced properly on the international market. This would serve as the catalyst to stimulate Tunisian exports and help reduce the trade deficit (US$ 6.6 billion).

The painful fallout from this policy is that for ordinary citizens their savings have lost value and their buying power has been reduced. The government finds itself in a precarious, high stakes situation: risk social unrest by allowing the currency to slide further, or hamstring the export-led recovery by giving in to public pressure.

Additionally, Tunisia has a major problem with illegal cross border imports and exports, a legacy from the Zine El Abidine Ben Ali regime. These activities undermine the country’s legitimate export enterprises, discourage foreign investors and deprive the state of taxable revenues. Whilst the current government has taken some steps to eradicate these practices, more must be done to legitimize all cross border trade.

If managed correctly, the export industry can be used as a major weapon in the Tunisian economic recovery. The benefits are numerous: exports can generate much needed revenue for the nation, tackle high unemployment, rebalance the trade deficit, generate new industries and encourage long-absent foreign investment in the country.

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Mauritania, Senegal seek to become oil, gas exporters

16 May 2016 Comments (0) Africa, Business, Featured

senegal gas

The two West African countries bet on a long-term recovery as global fuel prices slump.

In spite of the slumping price of oil in the past year, two West African countries are betting on a long term recovery as they race to produce enough oil and gas to become exporters by 2020.

Mauritania and Senegal both report promising off shore oil discoveries and each nation plans to proceed with multi-billion dollar extraction projects.

However, David Thomson, an analyst with Wood Mackenzie cautioned that securing financing for the projects could be challenging and take time. “These projects are massive and they’re very capital intensive,” Thomson said.

Offshore wells promising

In Senegalese waters, Cairn Energy reported that it had drilled three wells that revealed significant amounts of oil off Africa’s western extremity. Drilling was planned at a fourth, according to the Scottish energy company’s chief executive, Simon Thomson.

The United States company Kosmos Energy said it had confirmed a large pool of natural gas that straddled the Mauritanian-Senegalese border at sea and it planned to drill in the area.

The projected yield is 20 trillion cubic feet of natural gas, an encouraging threshold for further drilling, Kosmos spokesman Thomas Golembeski said.

Other African nations wait

The Senegalese and Mauritanian plans contrast with other nations such as Tanzania and Kenya, which are delaying tapping similar resources until the economic climate improves.

Nadine Kone of Oxfam International questioned the wisdom of Senegal’s and Mauritania’s plans. “Why rush with oil given where prices are now?” Kone asked.

After increasing by 20 percent in April, global oil prices fell in early May to below $45 a barrel and experts predicted weakened demand.

Senegal oil

Producers see increase in demand

Golembeski said the Kosmos thinks demand will have increased by the time the gas site is ready to deliver. He cited the ease of shipping to Europe as an advantage for exports from the region.

“Demand for oil and gas will continue to increase over time as more and more people around the world move from rural areas into the cities and want the conveniences of modern life,” he said.

Both countries have enjoyed steady economic growth in the past five years.

With a population of 3.6 million and a gross domestic product of $15.5 billion, Mauritania has seen sustained economic growth, primarily as a result of growth of the mining industry. The country is Africa’s second leading exporter of iron ore and also exports gold and copper.

According to the Heritage Foundation, the nation’s gross domestic product saw a growth rate of more than 5 percent on average during the past five years.

Senegal’s economy has grown at an average annual rate of 3.5 percent in the past five years, the foundation said, but volatility of economic growth has undermined progress in social development and fighting poverty. The nation has a population of 14.5 million and a gross domestic product totaling $33.6 billion. Senegal is primarily rural and has historically had few natural resources, relying instead on agricultural exports.

In 2015, with a growth rate of 6.5 percent, Senegal was the continent’s second fastest growing economy. Services, chemical production and construction drove growth.

Questions about oil proceeds

Kone of Oxfam questioned whether the five-year window the energy companies are projecting from exploration to sale is enough time to create a legal framework to regulate the governments’ use of proceeds from their 10 percent shares in projects within their boundaries.

Despite economic growth, both countries suffer from youth unemployment and chronic poverty and many residents do not have access to housing, health services, education or even clean water.

Kone cited Ghana, which discovered oil in 2007, as a model in the region that Mauritania and Senegal might emulate. Ghana created a dedicated fund from the proceeds that it used to invest in priority areas such as education and agriculture.

A contrasting example is Nigeria, where the state-run oil agency withheld billions of dollars funds that were designated for government services. Nigeria derives about 70 percent of its revenue and is Africa’s top producer of crude oil.

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African Development Bank: Ease visa rules to promote trade, tourism

15 May 2016 Comments (0) Africa, Business, Featured

passport-kenya

Saying cumbersome visa requirements undermine business growth, the organization ranks visa openness of 55 nations.

Making access to visas easy or scrapping the requirement entirely is an important way governments can help promote tourism and trade among the nations of the continent, according to the African Development Bank (ADB).

The ADB has developed the Africa Visa Openness Index to assess which countries have the most open and efficient visa access. The bank says cumbersome visa procedures undermine doing business across borders on the continent.

On average, travel within the continent is often difficult because African nations are “more closed off to each other than open” the ADB said in its 2016 report (pdf) on visa access. “Free movement of people is not a reality across Africa.”

Most require visas in advance

The report said only 20 percent of the 55 countries in the index do not require visas and only 15 percent offer visas on arrival, meaning more than half require visitors to obtain visas in advance.

To make matters worse, the report said, many of Africa’s strategic hubs have restrictive visa policies while the continent’s small, landlocked and island states tend to be more open to promote trade links with neighboring countries.

The report said countries in West and East Africa tend to be more open than in other regions.

The top 10 nations for openness stand out, with an average score of 0.86 (out of 1) on the ADB index, more than double the overall average of 4.25.

Seychelles is first for openness

The top 10 countries are Seychelles, Mali, Uganda, Cape Verde, Togo, Guinea-Bissau Mauritania, Mozambique, Mauritius, and Rwanda.

At the bottom of the list are Eritrea, Ethiopia, Sudan, Angola, Gabon, Libya, Egypt, Equatorial Guinea, São Tomé and Príncipe, and Western Sahara.

South Africa was 35th on the list, Nigeria 25th and Kenya 16th.

The report said eight of the top 10 countries for openness have seen gains in travel and tourism as a portion of gross domestic product.

In Seychelles, which is visa free, tourism accounted for nearly 57 percent of the country’s gross domestic product in 2014 and was expected to increase by more than 5 percent in 2015.

Rwanda, Mauritius ease requirements

The report highlights benefits to Rwanda and Mauritius after they adopted open visa policies for visitors from other African countries in recent years.

Both countries have seen an increase in African business and leisure travelers, which has produced “an economic impact that is still growing,” the report said.

After Mauritius relaxed visa requirements for visitors from 48 African countries, more than one quarter of visitors to the nation in 2014 came from other African states, with revenue from tourism totaling $1.2 billion.

“Greater visa openness forms part of Mauritius’ Africa strategy, which aims to promote the country as a gateway for investment into the continent,” the report said.

New open visa policies are also helping Rwanda with gross domestic product growth of 7 percent in 2014 and tourism income up 4 percent to more than $300 million.

Rwanda adopted a visa-on-arrival policy and cut its fee by half, to $30, then saw visits by Africans increase by 22 percent annually.

“We are seeing more African travelers not just in tourism, but in business,’’ said Francis Gatare, chief executive officer of the Rwanda Development Bank.

ADB wants visa requirements eased

The report notes that the African Union’s Agenda 2063 calls for removal of visa requirements across the continent by 2018 and creating an African passport.

Other potential solutions include offering visas on arrival, as Mauritius and Rwanda have begun doing, creating visa-free regional blocs or visas for regional blocs, offering multi-year visas, or offering visa-free access to Africans as Seychelles does.

Other way to make travel more is to offer eVisas so the traveler can apply online rather than having to be present to obtain a visa, the report said. Currently, nine African countries offer e-Visas: Côte d’Ivoire, Gabon, Kenya, Nigeria, Rwanda, São Tomé and Príncipe, Sierra Leone, Zambia and Zimbabwe.

Questions about security

The report argues that more open visa policies will not undermine security.

“Having strong systems in place including biometric databases at border controls and joining IT systems with other countries and regions seems to be the answer. That allows information sharing and greater cooperation, which in turn minimizes risk and provides higher levels of security overall.”

The report emphasizes the importance of travel to the development of the continent in the coming years.

By 2034, air arrivals to destinations in Africa are projected to increase to 280 million from nearly 120 million in 2014.

That increase “needs to be matched by more visa-open policies on arrival on the ground,” the report said.

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Looking Back on Kenya’s First Startup Acquisition

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

Weza-Tele-Founders

Kenyan financial technology startup Weza Tele was acquired by AFB financial group for $1.7 million, the first and largest acquisition of a tech startup in Kenya.

The startup-acquisition cycle is every Silicon Valley entrepreneur’s dream: a tiny idea that results in a multi-million dollar payout when a corporation recognizes the genius of your small-but-wildly-successful company. WhatsApp, the seemingly simple messaging service used around the world, was bought by Facebook for $19 billion; Skype, the Star Trek-like video calling system millennials had been dreaming of since childhood, was bought by Microsoft for $8.5 billion; and Clementine, an app that allows users to make conference calls without being tied to a cell phone, was bought by Dropbox for $100 million after less than one year on the market. In tech-intensive countries, these stories are hardly noteworthy because as soon as a new startup emerges, rumors abound regarding which major company will buy it.

This is not the case for countries like Kenya, where the startup industry is truly only starting up. In fact, the first-ever acquisition of a startup by a major company occurred in mid-2015 when AFB, the consumer finance group based in Ghana, purchased the Kenyan startup Weza Tele for $1.7 million.

A True Start Up

Weza Tele is truly the byproduct of the 21st century competitive yet collective experience: Weza Tele was created at Nailab, a co-working space that provides 3-6 month internships for budding entrepreneurs, and launched at DEMO Africa, a conference that hand picks innovative products and services from around Africa, in 2014. Weza Tele was founded by Hilda Moraa, Sam Kitonyi and Newton Kitonga and is “a leading provider of innovative value added mobility solutions in commerce, supply chain and distribution, and mobile payment options” available not only in Kenya, but also across Nigeria, Tanzania and Zimbabwe.

Weza Tela has two major existing business solutions: MyOrder, which makes supply chains for small and medium distributors transparent and gives greater visibility to individual manufacturers, and Odoo, which is a website-building application that provides a suite of add-ons including SMS ordering. In addition, Weza Tela offers services to streamline businesses’ SMS-ordering processes and can be hired for consulting services. Frost & Sullivan, the entrepreneurial company who awarded Weza Tele with its 2014 Entrepreneurial Company of the Year, said that “Weza Tele has excelled in an untapped market by tailoring flexible solutions for small scale supply chain sector. It offers cost-effective solutions to address the challenges faced by SMEs in the supply chain industry and provides valuable tools to drive their sales and marketing.”

Weza Tele myOrder

Selling Out Encourages Others to Buy In

After its 2014 launch at DEMO Africa, Weza Tela was met with major success, and purchased by AFB just one year later. AFB “provides credit access to customers in Africa through a range of financial products, including mobile loans and retail credit cards.” Launched in Ghana in 2010, AFB now operates in Kenya as well as Tanzania and has more than 400 retail partners. By purchasing Weza Tela, AFB will be able to get its foot in the door of markets in Nigeria and Zimbabwe.

This landmark acquisition, says Jessica Colaco (director of partnerships and community at iHub), is “history in the making as it opens doors for growing startups in this ecosystem. The Weza Tela team are a lighthouse for others in the Kenyan startup ecosystem” and will encourage others to continue working towards their goal. AFB’s purchase shows Africans that major, multi-national companies have confidence in homegrown ideas.

A Vote of Confidence for Homegrown Ideas

Weza Tele has promised customers that the transition will be seamless and services will not be interrupted. Should this transition go as planned, big things may be looming on the startup horizons for Kenya and beyond.

By demonstrating their confidence in Weza Tele through a massive purchase, AFB is not only showing young entrepreneurs that their ideas have value and may result in a big payday, but demonstrating to Africans in general that they do not need to rely on outside ideas to move their countries forward. If large financial institutions are willing to take the risk on relatively young startups, then perhaps more ideas will come to fruition through co-working spaces and conferences meant to showcase and launch the best and brightest.

Encouraging young leaders to create their own solutions to local problems is of the utmost importance for any community, particularly one that has had been so directly and heavily influenced by outside forces for centuries. It is ideas like those behind Weza Tele that show a deep understanding of the needs of local businesses. Hopefully, Weza Tele’s success story is just the first chapter for Kenyan technological innovation.

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SoleRebels: An Ethiopian success story

13 May 2016 Comments (3) Africa, Business, Featured

SoleRebels

The eco-friendly shoe manufacturer, launched by a young woman entrepreneur, sees rapid growth and global demand.

A young Ethiopian entrepreneur has turned her concern for unemployed artisans from her home community into a global shoe brand with millions of dollars in revenue.

Bethlehem Tilahun Alemu’s SoleRebels produces eco-friendly shoes that are sold internationally by large retailers including Whole Foods and Amazon as well as in a growing number of the company’s own standalone stores.

SoleRebels also complies with fair trade standards set by the World Fair Trade Association, according to Alemu. The company pays employees three or four times the minimum wage in Ethiopia and provides medical insurance and transportation to and from work.

Helping jobless artisans

Alemu, 35, started the company in 2005, shortly after she finished college. She had seen that skilled artisans lived in squalor and chronic unemployment in her small, impoverished community of Zenebework in Addis Ababa.

“I wanted to find a way to share my love for the amazing artisanship of Ethiopia with the world while creating well-paid meaningful work for the people in my local community, while leveraging their immense creative skills,” she said.

At the start, the company was Alemu, her husband, her teenage brother and two artisans. It has grown to employ 300 people in Ethiopia and several hundred more in its international stores.

Shoes from local fibers, recycled tires

SoleRebels produces comfortable, hand-crafted sandals, slip-ons and laced shoes using recycled tires for the soles and local natural fibers, including hand-spun cotton, jute, and Koba, an indigenous plant cultivated in Ethiopia for thousands of years.

The design of the shoes draws on Ethiopia’s famous Selate and Barabasso shoes that soles that were worn by Ethiopian rebel fighters who opposed Italian forces attempting to colonize the country nearly a century ago. Those shoes used recycled tire material for the soles.

The name SoleRebels derives in part from that historic connection.

However, the name also reflects Alemu’s goal of countering a dominant narrative – a legacy of the famine years – that Ethiopians are destined to rely on international aid.

SoleRebels in Stores

Ethiopia’s economy booming

Alemu said the success of Sole Rebels is “living proof” that her country, one of Africa’s poorest, is ready to move from being dependent on foreign aid to taking charge of its economic future with home grown skills and resources.

Eugene Owusu, who represents Ethiopia with the United Nation’s Development Program said SoleRebels is “blazing a trail’’ for other companies as his country seeks to reduce its need for foreign aid.

Owusu said nation’s booming private sector would help the country continue to grow its economy and reduce poverty.

The economy of Ethiopia has grown at a rate of about 10 percent a year in the past decade with growth domestic product reaching an estimated $50 billion in 2014.

As one of the fastest growing non-oil economies in Africa, Ethiopia has become a destination for foreign investment. Ethiopia seeks to grow exports as a share of its economic output largely with the sale of minerals and manufactured goods.

International recognition

With her own exporting success, Alemu has been widely recognized for her achievements.

The World Economic Forum named her a Young Global Leader in 2011. She was featured on Forbes list of “100 Most Powerful Women” and listed by Business Insider as one of “Africa’s Top 5 Female Entrepreneurs” in 2012. The following year, Fast Company named her one of its “100 Most Creative People in Business 2013,” while The Guardian called her one of “Africa’s Top Women Achievers.”

SoleRebels shoes are sold in more than 30 countries through online sales and major retailers plus a growing number of the company’s own shops. In addition to its flagship store in Addis Ababa, SoleRebels has more than a dozen standalone retail outlets in the United States, Taiwan, Japan, Greece, Switzerland, Spain, Austria, and Singapore.

$10 million in revenue projected

One of the world’s fastest growing footwear brands, the company projects it will have 50 stores by 2018 and forecasts revenue of $10 million or more this year.

Alemu said her business model shows that eco-friendly production and community empowerment go hand in hand with financial success. But as much as her product helps her community, Alemu said quality is the key to her company’s success.

“We don’t want to make a pity product; we want people to buy our shoes because they look good.”

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