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Will Djibouti become the Singapore of Africa?

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

Ismail Omar Guelleh

The tiny country on the Horn of Africa hopes to use its strategic location to boost trade and diversify its economy.

The tiny nation of Djibouti has set its sights on becoming the Singapore of Africa, a trade hub that takes advantage of its location on one of the world’s busiest shipping routes.

China’s recently announced plans to build a naval base in the Horn of Africa country gave a boost to Djibouti’s ambitions. Other plans, with a price tag of $12.4 billion, include expansion of port facilities, two new airports, as well as a $4 billion rail link with Ethiopia, Djibouti’s land-locked neighbor.

“We want to follow the path of Singapore,” Dijbouti president Ismail Omar Guelleh said.

China provides significant assistance

China is playing a significant role in Djibouti’s development as the Asian nation seeks to expand its influence in the region and secure trade routes with its “One Belt, One Road” initiative. Chian is financing most of the $12.4 billion in improvements as well as the $4 billion rail link with Ethiopia.

Work is expected to start soon on the Chinese naval base, which will be located at the new multi-purpose port of Doraleh.

The two countries have agreed to a 10-year lease for the base with China paying rent of $100 million per year. The base will house about 10,000 Chinese troops and is expected to boost local employment and businesses.

The United States and France already maintain naval bases in Djibouti.

Djibouti’s plans call for development of a second port, also at Doraleh, designed to handle container shipments.

Two new airports will be built

China is also providing support for two new airports Djibouti is building at a cost of nearly $600 million. With these projects, Djibouti hopes to increase both cargo shipping and tourism, which makes up a small part of its economy.

One airport at Ali-Sabieh, south of the capital will be capable of serving 1.5 million passengers and moving 100,000 tons of air cargo annually. It is expected to begin operating in 2018.

A second, smaller airport will be built in northern Djibouti. Designed to handle more than 750,000 passengers a year, it is expecting to start operating in 2016.

Rail line to link Djibouti, Ethiopia

China also is building a $4 billion railway line that will link Djibouti with Ethiopia, one of the fastest growing economies globally, which gets about 90 percent of its imports through Djibouti. The rail line will give land-locked Ethiopia a link to the sea while Djibouti will gain access to a market of 95 million people.

Djibouti, one of the poorest countries on the continent, envisions becoming a middle-class country in two decades in its “Djibouti Vision 2035” blueprint drafted with the help of the World Bank.

Ports and trade are already at the center of Djibouti’s economy but the nation hopes to diversify.

More than two thirds of Djibouti’s gross domestic product comes from the services, primarily port and trade-related operations. The remainder is from manufacturing and agriculture. Poverty is prevalent and unemployment is 60 percent in urban areas. The literacy rate is 70 percent.

Seeking economic diversification

Djibouti seeks to further diversify its economy by becoming a regional financial hub for foreign investment, including Islamic banks. China and Djibouti also signed deals for banking and free trade zones.

“Nowadays we are shifting to a much more integrated development plan. We’re trying to diversify our economy,” Djibouti finance minister Ilyas Dawaleh said.

Dawaleh noted that his country has enjoyed strong economic growth in recent years – 6.5 percent of gross domestic product in 2015 and 5.7 percent in 2014.

He predicted Djibouti will achieve double-digit annual growth in the next three years. “This is our target with our diversification strategy we are undertaking now,” he said.

Dijbouti is one of four countries that make up the Horn of Africa and the only one that has been largely peaceful for the past two decades while its neighbors across the Gulf of Aden – Somalia, Eritrea, and Yemen, have endured conflicts. This has enabled Djibouti to emerge as the main military and maritime hub in the troubled region even though the country is largely undeveloped.

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Morocco’s first solar power plant opened by King Mohammed VI

21 February 2016 Comments (1) Business, Featured, Middle East

Ouarzazate solar

King Mohammed VI switches on Morocco’s first solar power plant that is set to provide over a million homes with power.

The edge of the Sahara desert, just 12 miles outside of the city Ouarzazate is now home to a glittering spectacle that is set to be the world’s largest solar power plant.

After beginning construction on May 10th, 2013 the project has succeeded in completing stage one of its epic operations. Covering a spans the size of 35 football fields, the 800 rows of 500,000 crescent-shaped solar mirrors make up Noor I. This is the first of a complex of four linked solar power plants that once completed in 2018, will finally occupy a site larger than the country’s capital, Rabat, which is home to 1.4 million people.

Instead of utilizing the more familiar photovoltaic panels that are now a common sight on rooftops around the world, ‘the door of the desert’ site uses mirror technology which despite being less common and more expensive, has the advantage of continuously producing power even after the sun has gone down.

As NASA’s Kathryn Hansen explained, “The system at Ouarzazate uses 12 meter-tall (39 foot-tall) parabolic mirrors to focus energy onto a fluid-filled pipeline. The pipeline’s hot fluid is the heat source used to warm the water and make steam. The plant doesn’t stop delivering energy at night time or when clouds obscure the sun; heat from the fluid can be stored in a tank of molten salts.”

Royal inauguration

ouarzazateOn Thursday 4th February, 2016 the plant welcomed royal guest King Mohammed VI to inaugurate the countries first ever solar power plant. The ceremony was attended by the head of government, members of the government and foreign officials, including French Environment Minister Ségolène Royal who said it inspired, “great hope to all countries with a lot of sun and desert” to produce solar energy.

As the opening took place construction works commenced on the plants Noor II and Noor III sites, while for Noor IV, a call for tenders was opened. Once completed the full complex is expected to provide 1.1 million homes with power.

The king is said to be confident in the immense capacity his country has to offer renewable energies, from the Atlantic wind to the Saharan sun.

Solar superpower

It is hoped that for a country who has no claim to fossil fuel, this will be its opportunity to become self-sufficient. Additionally it plans to enter onto an international platform, providing fuel for countries worldwide. No small fry for a country that has been the biggest importer of fuel in North Africa, the venture will bring both economic and geopolitical value.

As Morocco’s Minister of the Environment Hakima el-Haite recently highlighted, “We are not an oil producing country. We import 94% of our energy, which has serious consequences for our state budget. We also have the weight of fossil fuel subsidies, so when we heard about the potential of solar power, we thought, why not?”

The country has pledged that 42% of its electricity will come from renewable energy by 2020. By 2030 they vow to have decreased their CO2 emissions by 32%, a commitment made as part of the climate conference in Paris (COP 21) that Morocco is determined to honor.

Raising the bar

As the official hosts of this year’s COP 22, Morocco is setting a precedent with the huge investment into renewable energy. However, they are by no means new to the fight against climate change. In fact since the 1960’s Morocco has shown a firm dedication to protecting the planet with a dams, agriculture and water strategy, followed more recently in 2008 by the energy strategy.

By investing in what it has, Morocco is investing in the future of its people and more far reaching, in the future of the planet. The added bonus being that by extricating itself from major financial outgoings it allows money to remain within the country and the possibility of exporting becomes very real, as more and more countries look for alternatives to fossil fuels. Could Morocco become one of the world’s biggest suppliers? Only time will tell but one thing is for certain, as Thierry Lepercq, CEO of the Paris-based Solaire Direct, acknowledged, “Solar is a true revolution,” and Morocco is at the forefront of that revolution.

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Growth in African wealth brings more philanthropy

20 February 2016 Comments (0) Africa, Featured, Leaders

Mo Ibhrahim Foundation

As the number of millionaires and billionaires on the continent grow, many give back to programs promoting health, education and entrepreneurship.

As the wealth of the continent increases, African philanthropy is on the rise.

For example, Aliko Dangote of Nigeria, the richest person in Africa recently joined with the Bill and Melinda Gates Foundation to pledge $100 million to fight malnutrition in Nigeria.

Dangote has supported programs in education, youth empowerment and health as well as a program that offers micro grants to rural women and young people to help them start businesses.

Now he will help in the battle against malnutrition in his home country, where one in five children are malnourished and one in three suffers from stunted growth – the highest number in Africa.

With a fortune of $17 billion built in cement and sugar manufacturing, Dangote is considered the richest person in Africa.

Philanthropy increasing across Africa

Dangote is not alone in using some of his considerable wealth to help others.

A recent report by UBS and Trust Africa said philanthropy on the continent is on the increase, building on longstanding African traditions of giving back to family and community.

“Over the past ten to fifteen years, there has been phenomenal growth in philanthropic institutions across Africa,” according to the study, “Africa’s Wealthy Give Back” (pdf). “We have begun to see the emergence of more strategic philanthropy,” along with more formal infrastructure for giving, the report said.

The USB-Trust Africa study cited projections by McKinsey Global Institute that gross domestic product in sub-Saharan Africa will grow to $2.6 trillion by 2020. With that will come corresponding increases in the number of wealthy individuals.

Dangote with Bill Clinton

Dangote with Bill Clinton

Growing wealth fuels giving

It said there were nearly 150,000 wealthy people in African in 2013, and the number had increased 3.7 percent over the previous year. At the same time, the total wealth of this group increased by 7.3% to $1.3 trillion.

There are about 25 major foundations on the continent.

Patrice Motsepe, a South African mining tycoon, in 2010 was the first African to sign the Giving Pledge that was started by Bill Gates and Warren Buffet. In 2013, Motsepe donated half his fortune to his own foundation to help those in need. His net worth is estimated at $1.4 billion.

Sudanese billionaire Mohamed Ibrahim’s foundation produces an index of African governance and Ibrahim is known for fighting government corruption on the continent. His Mo Ibrahim foundation also offers scholarship aid to young African leaders. A pioneer of telecoms in Africa with Celtel International, his fortune is estimated at $1.1 billion.

Tony Elumelu, a Nigerian banker, whose foundation is funding 10,000 African startups at a cost of $100 million. The program provides entrepreneurs with $10,000 each, half for training and half to start the business. Elumelu’s goal is to create one million jobs and add up to $10 billion to Africa’s gross domestic product. Elumelu’s net worth is estimated at $700 million

Jim Ovia, the founder of Zenith Bank, one of the largest banks in Nigeria, and of the telecom Visafone, which has three million subscribers, supports technology startups. His wealth is estimated at $550 million.

With a fortune estimated at $450 million, Cyril Ramaphosa, vice president of South Africa, supports South African entrepreneurs through his Shanduka Foundation. His Adopt-a-School Foundation has already built 454 schools.

Philanthropy builds on African tradition

Halima Mahomed, a philanthropy advisor to Trust Africa, said the wealthy Africans are following deeply ingrained traditions of African culture. “Rich or poor, everyone gives in Africa” and the newly wealthy are following that trend, Mahomed said.

Gregorie Muhr, a philanthropy analyst at UBS, said the approach is changing, as the new philanthropists take a more business-like approach to their giving, having seen that millions of dollars previously donated in Africa have not always reached the intended objectives.

The advent of billionaire philanthropists is not unique to Africa. “The trend is global’’ in developing markets where a new class of super rich emerges, according to Jenny Hodgson, executive director of the Global Fund for Community Foundations.

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Egypt will launch the Middle East’s first commodities exchange

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

egypt exchange

As the nation seeks to become a global trade center for grain, it will open an exchange focused on agricultural products this year.

Egypt plans to launch a commodities exchange focused on agricultural products, the first of its kind in the Middle East as part of the nation’s goal of developing a major trade and processing hub for grain on the Mediterranean coast.

According to Egyptian Minister of Supply Khaled Hanafy, the government plans to begin operating the commodities exchange by the end of this year.

Meanwhile, Hanafy has also been courting international investors for a $2 billion initiative to turn Egypt into a global grain-trading hub.

The Egyptian government wants to make the country a major center for processing and re-exporting wheat, maize, soy, and other commodities. Grain is a significant crop in Egypt but it is also the world’s largest wheat importer.

Development of Damietta as major port

The government is proposing a mega-development in the port of Damietta on the Mediterranean coast, including new piers that could receive giant tankers and ships.

The plan was approved by President Fattah al-Sisi in October and the project is to be finished in two years.

Hanafy cited Egypt’s strategic location with access to markets in Europe, Africa and the Middle East, with 1.6 billion consumers as well as its access to the Suez Canal, as key advantages of the initiative.

Currently, major trade routes for grain are across the Pacific and Atlantic oceans and the western Mediterranean. Major exporters, including Russia and the United States, have direct access to markets in Asia, Latin America and Europe.

Egypt’s proposed hub could also find competition in plans to develop nearby Suez Canal ports such as Djibouti into global trade hubs.

Damietta

Damietta

Egypt seeks investors

Hanafy has met with officials and investors from Russia, the United States of America, the United Arab Emirates, Sudan and Slovenia.

He said the Egyptian government is working in cooperation with the Egyptian Exchange market and the Egyptian Financial Supervisory Authority, the government regulating agency, to launch the commodities exchange.

The commodity exchange will include commodity producers, a spot market for buying and selling securities, and storage and grading hubs.

Farmers can use mobile application

Egyptian farmers will be offered a mobile application that will enable the market to track their output, electronically linking their crops to the exchange, according to Iman al Mutlaq, chief executive of Sigma Investments, which is working on the project.

Mutlaq said it would begin with six agricultural commodities plus oil and gold. She said a small number of commodities would help promote high volumes.

The government is working on guidelines for pricing and products, which will need to be in place before the exchange opens. It also will begin issuing certificates of origin.

Agricultural production needs to increase

The government believes the commodities exchange will boost development of Egypt’s highly fragmented agricultural lands, Hanafy said.

Egypt wants to reduce grain imports while improving domestic production that is approaching $100 million to supply a rapidly growing population.

Egypt increased agricultural production by 20 percent between 2004 and 2014. Sisi recently called for  increased production by 2030 through modernization and support for small farmers.

Lack of silos results in waste

The nation has struggled to make agricultural operations efficient. Lack of modern storage facilities is part of the problem. The country stores much of its wheat in open lots, causing an estimated loss of 30 percent. The United Arab Emirates recently agreed to provide funding to Egypt for two dozen silos.

Limited land available for agriculture is another challenge. Only about three percent of the land in the country is suitable for agriculture.

Agriculture experts say in the future, production in the Euphrates and Tigris river basins could increase enough to support a regional grain market in the Middle East. For now, however, war in Iraq and Syria has disrupted grain production.

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With new leadership, Ecobank Nigeria expands services

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

Charles Kie

One of the country’s largest banks targets support to grow small and medium-sized business sector.

One of Nigeria’s largest banks is expanding services for small and medium-sized business enterprises as it welcomes a new top executive. The Ivorian Charles Kie is the new managing director of Ecobank Nigeria, replacing Jibril Aku, whose five-year term ended December 31. Ecobank Nigeria, based in Lagos, has more than $9 billion in assets and operates more than 600 branches, making it one of the largest banks in the country.

New services for small, medium-sized businesses

The bank recently launched a number of initiatives designed to support the small and medium enterprise (SME) sector of the economy.

Calling small and medium-sized businesses the engine of economic growth for the nation, Sunkanmi Olowo, head of SME and Value Chain Banking at Ecobank Nigeria said the bank would increase funding and support to the sector.

Olowo said Ecobank Nigeria was launching SME Club, which will provide preferred business support and tailored products to small and medium-sized businesses.

SME Club will provide capacity development, technical assistance and business, accounting, tax and legal services building to small and medium-sized enterprises as well as information mining, networking and capacity, he said.

The bank is also launched MyMall, an online e-commerce platform on which businesses can market and sell their services and goods.

Olowo said Ecobank will also offer training and funding through a New Venture Initiative, he said.

New managing director named

Charles Kie, the Ecobank Nigeria’s new managing director, joined Ecobank Transnational in 2011 and served as chief operating officer of Ecobank Capital and then became head of Ecobank group’s corporate banking division.

Previously he was chief executive officer of Groupe Banque Atlantique, based in Togo and Ivory Coast with operations in nine West and Central African countries. He also worked for Citibank, serving as CEO of Citigroup West Africa.

A graduate of the Ecole supérieure de commerce d’Abidjan in Ivory Coast, Kie has Master’s degree in Business Administration from the London School of Economics and a Master of Science degree from the University Of Clermont-Ferrand (France). He also attended Harvard Business School’s Advanced Management Program.

Parent organization emerges from scandal

Ecobank Nigeria is a subsidiary of Ecobank Transnational, a pan-African banking group based in Togo with more than 1,250 branches and offices in 36 countries in sub-Saharan Africa. It has $24 billion in assets and 11 million customers.

The parent organization got new leadership last year after two years of scandals that saw the bank accused of poor governance and fraud.

The Nigerian Ade Ayeyemi was named group chief executive in September as the bank was poised to expand its footprint on the continent.

“This organization went through a near-death experience two years ago. And now we’ve recovered, we need to power through,” Ayeyemi said.

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As the UNMDGs expire, Togo measures its poverty

17 February 2016 Comments (0) Africa, Featured, Politics

togo

The National Institute of Statistics and Economic and Demographic Studies (INSEED), Togo’s national poverty statistics tracking organization, recently released their findings for poverty levels in the country for 2015.

Between 25 August and 30 September of 2015, INSEED surveyed 2,400 households to measure the living conditions of the Togolese. The conclusion of the 2015 survey is significant for a variety of reasons, but none more important than the expiration of the United Nation’s Millennium Development Goals (UNMDGs). The UNMDGs were the world’s first data-driven goals meant to end global poverty by 2015 or 2020, depending upon the goal. Drawing upon the eight vastly general UNMDGs, INSEED used broad poverty indicators to measure the status of their citizens: access to basic social services; food safety; education and literacy; subjective poverty and monetary poverty. INSEED’s Technical Director Akoly Gentry said that survey results indicated that economic growth had occurred in Togo, although more than half of the Togolese continue to live in poverty and are subjected to the health, education and employment challenges that stem from continued poverty. The overall conclusion was that, between 2011 and 2015, economic development had reached the poorest of the poor in some way.

Conducting the Survey: Why Now?

With the expiration of the majority of the UNMDGs came the birth of the UN’s latest broad development goals, called the Sustainable Development Goals (SDGs). Where there were once 8 MDGs, there are now 17 SDGs, and in order to give a strong baseline for Togo’s SDG targets, the survey was necessary.

59% of the Togolese are 25 years old or under: continued economic development is imperative for a generation that never knew the harsh reign of colonialism and have grown up in a world where they are well aware of the wealth of the outside world. In surveying the levels of poverty of a diverse set of households around the country, INSEED was able to gather a comprehensive set of data with which to inform their development plans.

Access to Basic Social Services

Many households in the developing world do not have access to what are considered basic necessities in the western world, including electricity and improved drinking water. The proportion of households now using electricity as their main mode of lighting is 48.3%, up 9.1 percentage points since 2011. As the use of electricity has increased, the use of other/traditional modes of lighting has decreased. The use of oil lamps, the cause of many house fires and childhood burns, declined from 23.5% in 2011 to 3.1% in 2015. This alone is a massive achievement for Togo.

In countries where tap water is not fit for consumption or available at all, citizens must rely upon bottled or bagged water. In 2011, 55.9% of Togolese were utilizing drinking water, a figure that has improved to 61.8% in 2015. The availability of improved drinking water is a major component of development: clean water promotes good health and hygiene, prevents waterborne illnesses such as cholera and giardia, and prevents unnecessary deaths.

Food Safety

In the developed world, bananas and oranges are available 365 days a year, regardless of the growing season. For the billions of people living in the developed world, access to calories is not guaranteed due to famines. Famines are, of course, not a natural disaster: they occur when food management, transportation and storage systems fail. In 2011, nearly half of the population had difficulty finding food. The survey revealed that now, in 2015, one-third (33.1%) of the population has difficulty accessing adequate nutrition. These are institutional failures endemic in impoverished countries. Whether it is the physical unavailability of food or the inability of an individual to find enough capital to obtain food, one third of Togo’s population is not considered food secure. In an era where obesity threatens to overshadow cardiac disease as a leading cause of death in the western world, this is unacceptable.

Health Indicators

Health is closely linked to food and clean water access. Be it illness from contaminated water, uncooked or unclean meat or pesticide covered vegetables, these two are inextricably linked. 23.9%, or nearly one quarter, of Togolese surveyed reporting being ill within the past four weeks, up from 20.6% at the last survey. Illness was not clearly defined, and thus is an entirely subjective indicator. According to the CIA World Factbook, Togo’s risk of disease is “very high”: malaria, dengue and yellow fever are a threat particularly during rainy seasons when mosquitoes thrive; typhoid and hepatitis A as well as meningococcal meningitis are also listed as high risk diseases. The physician density is 0.05 physicians per 1,000 people–since the average size of a Togolese household is not listed, this statistic cannot be extrapolated to the survey group. It is safe to say that, at best, there may have been one doctor available to the entire group.

Education and Literacy

66.2% of the population over the age of 15 is literate according to INSEED’s survey results–according to the CIA World Factbook, 78.3% of males over 15 and just 55% of women over 15 are literate, showing gross education discrepancies between genders. Overall enrollment rates in primary and secondary schools (which does not measure attendance) improved from 81.8% to 84.8% and 41.0% to 49.2%, respectively.

Employment, Subjective Poverty and Monetary Poverty

The reported unemployment rate declined from 6.5% to 3.4% while the underemployment rate, or the percentage of people who are employed (usually through the selling of their crops at market) but who consider their employment situation insufficient for any number of reasons, rose from 22.8% to 24.9%.

The percentage of households who consider themselves to be poor in comparison to those around them fell from 81.4% to 61.7%. This does not necessarily mean that nearly 20% of the population became less poor, but that they perceive themselves as more equal to their peers.

The incidence of poverty as measured by international organizations such as the World Bank, International Monetary Fund and UN, fell from 58.7% to 55.1% in 2015. The GINI inequality co-efficient, meaning the proportion of people who own wealth in the country, was reported as 38 (although this is not recorded by the World Bank)–a score of 0 means a country has perfect equality, and a score of 100 means the country has perfect inequality (one person would own all of the wealth). By comparison, the United States has a GINI co-efficient of 41.1. Thus, the lower a score, the more equal the society.

The incidence of poverty increased from 28.5% to 34.8% in the Greater Lome region, as well as in some rural areas.

To Go Forward

Poverty is difficult to measure. Standards were created by the very countries that are partially to blame for the stunted development of enormous swaths of the world. The existing modes of development, where a country is given a loan full of conditionality (that often cut social programs), accompanied with crippling loan repayment rates, clearly does not work.

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Maha Al-Ghunaim, CEO, Global Investment House

16 February 2016 Comments (0) Featured, Leaders, Middle East

maha al ghunaim

Maha Al-Ghunaim, founder and CEO of Global Investment House, is a pioneer in the world of Arab finance

In the world of Arab banking and finance, Maha Al-Ghunaim is something of a pioneer as the founder and CEO of one of the Middle East’s largest investment companies, Global Investment House. As a women in a male-dominated industry, both in the Middle East and beyond, working in a country where only 15% of women are in the workforce, she is also something of a rarity.

Building Global Investment House

Al-Ghunaim trained in mathematics, graduating from the San Francisco State University in 1982, and has worked in asset management and investment banking for the over 30 years since. Straight out of university she joined the large government-owned investment company, the Kuwait Investment Authority. And she comments: “At that time they really took care of young Kuwaitis who were entering the workforce… I started from the bottom and learned how things are done and gradually moved my way up the ladder.”

She would work there for many years, before taking positions at the now dissolved Kuwait Foreign Trading Contracting & Investment Co. and the Kuwait Investment Company.

In 1998, Al-Ghunaim launched Global Investments House with four colleagues, having spotted a gap in the Middle Eastern market for integrated solutions in brokerage, asset management, and investment banking. She says: “We understood that the capital markets in Kuwait lacked certain products and services and we capitalized on that.” Focused specifically on opportunities in the Gulf Cooperation Council (GCC) and Middle East, the company chose to offer funds and investment products which were wholly new to the region, including bonds, index funds, fixed income funds, and private equity. The company also pushed research and development. “We widened the capital markets rather than everybody competing for the same slice – make the pie larger. We started to create very new funds and products,” comments Al-Ghunaim.

Global is now an investment bank with $3.7 billion under management, 210 employees, and offices in Kuwait, Bahrain, Egypt, Jordan, Saudi Arabia, Turkey, and the UAE. In 2008 the company became the first Kuwaiti firm to list on the London Stock Exchange, and was also listed on the Kuwait, Dubai and Bahrain bourses. “We started Global with a capital of $50 million in 1998 and, by mid-2008, we were trading at a $5 billion market cap,” comments Al-Ghunaim.

Regularly included in Forbes’ Top 100 Most Powerful Women, Al-Ghunaim is also a leading Arab businesswomen who chairs or sits on the boards of numerous companies and bodies including Kuwait’s National Industries Group, Kuwait University, Bank Muscat International, Bahrain, Baring Private Equity, Hong Kong, and Jehangir Siddiqui Capital Markets, Pakistan.

Steering Global through the financial crash

But the journey has not been easy. Having launched Global during the phenomenal Middle Eastern boom when oil prices were soaring, the company found itself significantly over-leveraged when the financial crisis hit in 2008. The company’s accumulated losses exceeded 75% of its capital in 2011, breaching Kuwaiti market rules, and the group’s shares were suspended from trading. One year later, it was forced to delist from the country’s stock exchange. “We found ourselves in the middle of liquidation disasters to pay off our debts and simultaneously organize Global International, regionally or locally. The financial crisis hit everyone around the globe… but also [there were] some mistakes that we encouraged in the way we do business,” she comments.

Al-Ghunaim successfully steered Global through this trying time, but needed to completely restructure the way the company did business. “We chose to be completely transparent with our clients, shareholders, and regulators throughout it all. This approach was unique in a culture that generally conceals problems, but we stuck to our commitment to being honest… Our earnings will be completely different from what we had before; it’s no longer about how much you make but about the quality of your earnings which provides sustainability and better valuation.” Now a risk-averse company, she reports that Global is well capitalized, debt-free, and profitable, and business is growing.

Committed to opportunities in the Middle East

Going forwards, her focus continues to lie in the Middle East, as committed as ever to the opportunities for Global in the region. “We create a strong bridge connecting buyers and sellers across the region. This is where we can really add value. Many investment houses offer similar expertise and experience in financial engineering and technical sides of the business, but our regional footprint, insight and placement power gives us an edge.”

Global is also continuing to pioneer in the region, adding new products to its range of billion dollar private equity funds. Two new products due to launch include a fund to invest in secondary private equity funds in the region, and a healthcare platform “which will allow investors to take advantage of the healthcare domain at the GCC-MENA-Turkey level”.

Al-Ghunaim also sees significant opportunities developing in education, consumer goods, and retail, “considering the demographics on the consumer-side, the strong inflow of expats, and the growing entrepreneurial spirit among SMEs”. And a spreading of bets across these sectors seems a particularly valuable strategy for Global considering the continued low oil prices in the region.

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Rail projects for Middle East, North Africa total $350 billion

15 February 2016 Comments (1) Africa, Business, Featured, Middle East

high speed rail saudi arabia

The region is experiencing a boom in development of railways to drive economic growth and benefit the environment. 

High-speed rail travel is on a fast track in the Middle East and Northern Africa. More than $350 billion in rail projects are under way in the region.

The estimate represents major rail projects in 16 countries, according to Terrapinn Middle East, which is organizing the 10th annual Middle East Rail conference in Dubai March 8 and 9.

Rail travel has become increasingly appealing in the region as a greener alternative to auto or air travel.

While the United Arab Emirates recently delayed work on a high-speed rail project, other governments that are facing budget deficits because of the oil glut prioritize rail projects as a way to improve trade and increase tourism to boost their economies.

Saudi Arabia builds high-speed line

One of these countries, Saudi Arabia accounts for about one third of the total spending with projects totaling $118.9 billion.

A major Saudi project is the $55 million Haramain high-speed rail project, which will connect the holy cities of Mecca and Medina with Jeddah, the country’s commercial capital and second largest city. Following delays, it is expected to begin operations in early 2017.

Kingdom wants to boost religious tourism

The Saudis see rail development as key to the nation’s ambitions to attract more tourists, especially to the holy sites.

The Saudi kingdom drew 16 million tourists in 2014 and wants to double that number by 2030, according Fadh Al Rasheed, group CEO of King Abdullah Economic City.

The Saudis also are building a $12 billion four-line commuter rail network in Jeddah as well as a $22 billion six-line network in the capital of Riyadh.

UAE project sees delays, staff reductions

While most projects are moving forward in spite of financial problems brought on by sharp reductions in oil prices, the United Arab Emirates in January suspended the bidding process for the second stage of its $11 billion Etihad Rail project and cut a third of its workforce. A project spokesman said the aim was to streamline operations before moving forward with bids.

Terrapinn said United Arab Emirates planned on spending $27 billion for metro rail, a tram and long-distance freight and passenger rail.

ethiad rail

Gulf States plan integrated network

Saudi Arabia and the UAE have agreed with four fellow states in the Gulf Cooperative Council to build an integrated high-speed rail network linking their countries by 2018 at a total estimated cost of $200 billion. The other partner nations are Bahrain, Kuwait, Oman and Qatar.

The goal is to create an efficient regional network of freight and passenger rail lines.

The railway network will yield environmental benefits for the region and create new jobs while reducing dependence on more expensive air or auto travel, according to Feras Shadid, a rail asset management consultant.

According to Terrapinn Bahrain has allocated $12.9 billion for rail; Kuwait, $17 billion, Oman, $16 billion, and Qatar, $46.7 billion.

China will help Iran build a high-speed line

With the lifting of sanctions, Iran is planning to develop a high-speed rail line linking the cities of Tehran, Qom and Isfahan. Terrapinn said Iran plans to spend $24.6 billion on rail projects.

China last month agreed to give Iran financial help with its high-speed rail line as part of an agreement to significantly increase trade to $600 billion in the next 10 years. China also wants to build a high-speed line linking the two countries.

Algeria, Egypt and Morocco plan rail development

Algeria, with a Terrapinn estimate of $34.4 billion, is developing light rail systems in Algiers, Oran and Constantine. While the projects have been delayed because of lost oil revenues, they are currently expected to be fully operational by 2020.

Egypt, with an estimate of $30.9 billion in spending, has projects including $1.5 billion to build a rail line linking 6th of October City to Cairo.

Morocco has an estimated $10 billion in projects, including a high-speed rail line that will connect Tangiers to Casablanca.

Farther south, Nigeria has $75 billion in rail projects, according to Terrapinn. High-speed rail service between Abuja and Kaduna is scheduled to begin operations in March. The line has nine stations.

Terrapinn also listed the following countries and their rail spending: Djibouti and Ethiopia ($4 billion shared), Iraq ($14 billion), Jordan ($3.8 billion), Lebanon ($500 million).

Major rail convention planned in March

Terrapinn released the estimates in advance of Middle East Rail 2016, the largest conference and expo devoted to rail projects in the region.

About 9,000 rail operators, government officials and contractors are expected to attend the March 8-9 event at the Dubai International Exhibition & Convention Centre. The expo will feature 300 exhibitors.

High-speed rails, or “bullet trains,” travel at significantly faster speeds than traditional trains. They can reach speeds of up to 350 kilometers per hour. They have been developed in Europe and East Asia.

Meanwhile, the boom in rail construction in the Middle East has caused worker shortages in other parts of the world.

For example, officials in Chennai, India said they have trained rail workers only to see them leave for higher paying jobs in the Middle East during the last two years, causing interruptions and delays.

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Economic Freedom in Africa

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

Lagos (1)

According to US think tank The Heritage Foundation and the Wall Street Journal, Mauritius, Botswana and Cape Verde are the most “economically free” countries on the African continent

At the beginning of each year, the Wall Street Journal and The Heritage Foundation release their economic freedom index, ranking countries from the most economically free to least economically free. Economic freedom is defined as the fundamental right of every human to control her or his labor or property. In an economically free society, citizens are free to work, produce, consume and invest in whatever way they see fit, and labor, capital and goods are able to move freely without undue restrictions. The index is based upon a total of 10 indicators divided into four broad groups: rule of law (property rights and freedom from corruption); limited governance (government spending and fiscal freedom); regulatory efficiency (business freedom, labor freedom and monetary freedom); and open markets (trade freedom, investment freedom and financial freedom).

Africa and the Economic Freedom Index for 2016

There are no African economies ranked as “free”, but two fall into the “mostly free” category. Mauritius was ranked 15th out of 178 with a score of 74.7 out of 100. Mauritius also has the distinction of being Africa’s only full democracy, although the newly-elected government (2014) has been accused of using anti-corruption policies to unfairly target members of the former government. Property rights are respected, meaning that the government does not unfairly seize land from citizens or other property owners. The budget deficit is under control, and public debt accounts for approximately 50% of the GDP (a level comparable to Switzerland in 2011). Notable successes are open markets and regulatory efficiency while concerns are property rights and labor freedom.

Botswana ranked second in Sub Saharan Africa with a score of 71.1 and global ranking of 30. Thanks to foreign investment, Botswana’s economy has diversified and is predicted to continue to do so. Botswana is also home to a large amount of natural resources and is a prime example responsible natural resource management because it does not rely upon a single industry to support its economy. Furthermore, Botswana has the most transparent government and lowest rates of corruption in Africa, which is notable given their natural resources (compared to Nigeria, which has a huge amount of oil, but most of the potential positive externalities are absorbed through endemic corruption). Notable successes are open markets and fiscal freedom while concerns are corruption, management of public finances and regulatory efficiency.

Moderately Free

Cape Verde

Cape Verde

Coming in third for Africa is the small island nation of Cape Verde, with a ranking of 66.5, which puts it in the “moderately free” category, and global ranking of 57. With a relatively strong rule of law, Cape Verde has been able to transition to a more open and diverse economy. Property rights are highly respected and the nation has done a good job of reigning in corruption and enhancing the quality of the regulatory system. Rule of law and open markets are marked successes for Cape Verde, while management of public spending and labor freedom are areas of concern.

There are 7 other “moderately free” countries in Sub Saharan Africa: Rwanda (63.1); Ghana (63); Seychelles (62.2); South Africa (61.9); Namibia (61.9); Madagascar (61.1); and Cote d’Ivoire (60).

The most oft cited areas of success are in the expansion of trade freedom and the increase in the efficiency of regulatory systems; areas of concern are in the freedom (or lack thereof) from corruption and property rights.

“Mostly Unfree”

Fourteen of Sub-Saharan Africa’s countries are ranked as “mostly unfree”.

Swaziland is the freest of the mostly unfree with a ranking of 59.7. This tiny landlocked country rests within South Africa’s borders and is a relatively impoverished monarchy. Political parties are banned, and the most recent elections (2013) were declared not credible by international watchdogs. Economic opportunities are few, and the economy relies heavily upon the tourism sector. Reasons for this low ranking are the stagnation of the economy, ongoing civil unrest that frequently becomes violent, high levels of corruption, mismanagement of public finance and an inefficient regulatory system. Swaziland’s successes were cited as monetary freedom and trade freedom, while concerns were listed as rule of law, management of public finances and financial freedom.

Coming in behind Swaziland are Benin (59.3); Uganda (59.3); Burkina Faso (59.1); Gabon (59); Zambia (58.8); Tanzania (58.5); Senegal (58.1); Kenya (57.5); Nigeria (57.5); The Gambia (57.1); Sao Tome and Principe (56.7); Mali (56.5); Djibouti (56) and Mauritania (54.8); Niger Cameroon Burundi (53.9); Togo (53.6); Guinea (53.3); Mozambique (53.2); Comoros (52.4); Sierra Leone (52.3); Liberia (52.2); Guinea-Bissau (51.8); Malawi (51.8); Ethiopia (51.5); Lesotho (50.6);

The main concerns in these areas are rule of law, corruption, management of public finance and regulatory efficiency. These countries are moderately to severely impoverished, and economic opportunity is low for much of their populations. Pervasive corruption makes institutional change challenging, and low levels of confidence in the government and economic sector are not encouraging.

The Bottom Eight: Repressed

Sub Saharan Africa has 8 of the world’s 24 most repressed economies: Angola (48.9); Democratic Republic of the Congo (46.4); Chad (46.3); Central African Republic (45.2); Equatorial Guinea (43.7) Republic of Congo (42.8); Eritrea (42.7) and Zimbabwe (38.2)

Angola is ranked 155th out of the world’s 178 ranked states, while Zimbabwe is a dismal 175th. These repressed countries have myriad problems that prevent development: on-going civil war, deeply embedded corruption, abuse of natural resources, mismanagement of development aid and massive rates of unemployment all prohibit economic development in these countries. While there have been a few areas of notable success (monetary freedom in the Central African Republic and Equatorial Guinea, for instance) several of these countries do not have a single notable success.

Economic Freedom: Winners and Losers

As with most global indicators, some nations simply cannot be ranked: this year, much of the Middle East that is currently mired in the ISIS conflict was considered unrankable, as were Sudan and Somalia (Africa’s notoriously failed states). It is, as always, the citizens of these countries that suffer from lack of economic development. Millions of individuals are at the whim of their too-often unfairly elected leaders, and buying into systems of corruption is the only visible way out of the swamp of poverty. For citizens of Zimbabwe, economic repression has continued for generations, and hope for change dwindles with each fraudulent election. The international community has few suggestions for these nations, as existing modes of economic development are clearly ineffective. Hopefully, as time moves slowly forward, these nations will develop their own way into the world of economic interconnectedness.

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The woman leading UAE’s drive to become an entertainment hub

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

noura al kaabi

Noura Al Kaabi has brought filming of movies including “Star Wars” and “Fast and Furious 7” to Abu Dhabi as head of the free zone twofour54.

Goodbye, Hollywood. Hello Abu Dhabi. Noura Al Kaabi is leading the United Arab Emirates’ ambitious effort to become a global media and entertainment hub.

As chief executive officer of the government-owned free zone twofour54, Al Kaabi brought the high-speed car chases of the action movie “Fast and Furious 7” to Abu Dhabi and transported the “Star Wars’’ storm troopers onto the nation’s vast desert.

Other productions in the country include “Sesame Street,” the well-known children’s television show; Top Gear, a highly popular motoring show in the United Kingdom; and “Bang Bang,” a Bollywood action movie.

Zone provides infrastructure and support

It’s all part of an effort Al Kaabi is spearheading at twofour54, which aims to provide the infrastructure and support to attract foreign productions and also to grow entrepreneurship in media and entertainment within the country.

The “Star Wars” movie and other high visibility projects have put twofour54 on the map with international film companies. The project offers incentives and logistical support to attract new projects.

Bollywood has been especially interested because Abu Dhabi is only a few hours away from India.

Tax-free environment attracts foreign investment

Duraï featured in Fast & Furious 7

CNN, Sky News Arabia, and the Cartoon Network also have set up projects in the twofour54 zone.

The twofour54 zone is one of a about three dozen free zones the United Arab Emirates government has established to promote economic development and attract foreign investment. The zones provide a tax-free environment and allow foreign ownership of companies operating within it.

The twofour54 zone also offers business support services, production facilities, funding for entrepreneurs and media training.

While development of international films and programming has grabbed headlines, fostering internal talent development in media and entertainment is a key goal.

“We are enabling young skilled media professionals to learn from the world’s best producers, directors, developers and other experts in the industry,” Al Kaabi said, emphasizing the importance of bringing “fresh faces” into the industry as a way of encouraging innovation.

UAE seeks to diversify revenue base

She noted that Abu Dhabi’s emergence as an entertainment hub is contributing to the United Arab Emirates effort to diversify its revenue sources and reduce its reliance on oil revenue.

The UAE has set a goal of reducing the proportion of gross domestic product from energy products from 30 percent to 20 percent in the next 10-15 years. Other important sectors include financial services, manufacturing and tourism.

Visibility in international films can boost tourism as well, she said. “Fast and Furious,” for example, featured a scene in which the characters drove a stolen car through the Etihad Towers. That is likely to attract people who want to visit and see the structure close up, she said.

A LinkedIn Global Influencer

Al Kaabi regularly appears on power lists in the region.

She was the first woman from the region to be chosen for LinkedIn’s Global Influencer Program, which designates leaders to share perspectives on the professional network. LinkedIn has selected about 500 influencers, including U.S. president Barak Obama and Dubai vice president Sheikh Mohammed bin Rashid, since the program began in 2013.

Al Kaabi sits on several boards including United Arab Emirates University, the National Media Council, Abu Dhabi Media, and Image. She chairs in the Emirates Media Measurement Company.

She was one of Forbes Middle East’s 30 Most Influential Women in Government in 2014 and was awarded Business Woman of the Year at the Gulf Business Industry Awards.

Technology, metrics pose challenges

In spite of the progress of twofour54, she sees challenges ahead, particularly on the technology and metrics fronts.

She said the entertainment and media industry in the region needs a technology update. Another important next step is to figure out how to measure reach of the content the project produces.

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