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Africa gets its first smartphone manufacturing facility in Nigeria

20 July 2017 Comments (0) Featured

While mobile phone penetration has been rapidly increasing throughout Africa for several years, until now, all the smartphones sold on the continent were imported from overseas. However, as AfriOne opens up its first smartphone production factory on the continent, the hope is that the flourishing technology can provide greater employment opportunities for the next generation.

The First in Africa

Mobile phones have become an integral part of life for many people, and the proliferation across Africa has increased rapidly in recent years. In Nigeria, the market penetration has surged and investments in the telecoms sector skyrocketed by 6400% in the past 4 years. With such growth, it is no surprise that Africa’s first smartphone production unit has found its home in Nigeria.

The company AfriOne has established the factory in Nigeria’s Lagos Free Zone with an initial investment of $10 million. The plant will begin producing 120,000 units per month; however the company is confident that the facility will eventually produce as many as 300,000 products per month.

The new range of smartphones will cost between $92 and $108 and are aimed at Nigeria’s middle income consumers. AfriOne’s parent company, Contec Global, intends to open up a second production unit as it continues its expansion.

The investment seeks to capitalize on the huge expansion in e-commerce within the region. E-commerce is predicted to account for 10% of all retail sales in Nigeria by 2025, and consultant group McKinsey estimates it could be producing $75 billion in annual revenue by this time.

The 20,000 square foot production facility includes a Research & Development (R&D) department and testing laboratories. Mr. Sahih Berry, AfriOne’s Founder and CEO, said that the company has a goal to “democratize technology, by offering affordable innovations through our product offerings and removing barriers deterring the large scale adoption of advanced technology in Nigeria.”

By Nigerians, For Nigerians

The unveiling of a facility such as AfriOne’s new smartphone production unit offers immediate job opportunities as well as the obvious increase in options for the Nigerian consumer. AfriOne’s Chief Operating Officer, Mr. Sandeep Natu, told the press that the factory will initially employ around 500 people. Both the company and government officials are hopeful that the long term benefits of the operation will be more far-reaching.

Contec Global’s Managing Director, Mr. Roheen Berry, said that the company is dedicated to increasing opportunities for young Nigerians through a policy of Corporate Social Responsibility.

Mr. Berry explained that the facility will have various training programs for young men and women working at AfriOne, and added, “We are tangibly investing in Nigeria’s future through AfriOne, while providing a valuable skill set to its workforce that will facilitate continued innovation in Nigeria’s emerging, dynamic and robust market.”

The Nigerian government believes that the venture will not only create immediate employment opportunities, but will help foster a culture of innovation and technology within Lagos that could lead to greater long term growth. Lagos State Governor, Akinwumi Ambode, announced the plant’s opening at a press conference in which he expressed hope that this would lead to the city of Lagos create a 24-hour economy.

Mr. Ambode also discussed AfriOne’s commitment to working with a local college, Lagos State Polytechnic, for the maintenance and repair of mobile devices. He said, “The collaboration with Afrione will be of immense benefits to these students and the State.”

The factory promises to offer these students practical experience within the field of telecommunications and mobile technology, thus spreading the potential impact on future job creation far beyond the direct employment within the plant.

Lagos State Government already had a youth training initiative in place, known as the Empowerment Trust Fund, and Mr. Ambode believes that, “AfriOne’s collaboration will complement efforts by the Lagos State government in ensuring that these youths are empowered.”

Nigeria currently has around 154 million mobile phone users, and e-commerce and mobile banking are both rapidly growing sectors within the West African nation. As these markets continue to grow and attract investment, a domestic center for the production of the medium needed to access these fields may seem long overdue. AfriOne assured press that the phones would use cutting edge technology and would come with popular African apps for banking and farming already installed.

AfriOne will be looking to expand its production base quickly, and the local government hopes that further development provides an ongoing boost to economic growth and employment.

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First Female Head of UN Economic Commission for Africa: Vera Songwe

15 July 2017 Comments (0) Featured, Leaders

Announced in April by UN Secretary General, Antonio Guterres, Dr. Vera Songwe has become the first woman ever to head the United Nations Economic Commission for Africa (UNECA). Headquartered in Addis Ababa, Ethiopia, UNECA is one of the UN’s five regional commissions, and was established in 1958 to encourage economic cooperation among the nations of the African continent. A prestigious position by itself, Songwe has also acquired the rank of Deputy Secretary General of the United Nations.  

Beating more than 70 candidates for the role, Songwe, aged 48, takes over the reins of the organization at a critical time, following the departure of Dr. Carlos Lopes of Guinea-Bissau, who stepped down from the organization in September, last year. Labelled as one of 25 African’s ‘to follow,’ by the Financial Times in 2015, the UN reported that her longstanding track record of policy advice and results orientated implementation in the region, as well as, her demonstrated strong and clear strategic vision for the continent, is what lead to the decision.

Track Record in Economics

Before her appointment, Songwe was serving as the International Finance Corporation’s Regional Director, covering West and Central Africa. Between 2012 and 2015 she was the World Bank’s Country Director for Senegal, Cape Verde, Gambia, Guinea-Bissau and Mauritania. Before that, she held the post of Advisor to the Managing Director of the World Bank for Africa, Europe and Central Asia, and South Asia. She is also currently a non-resident Senior Fellow at the Brookings Institution’s Global Development African Growth Initiative, since 2011.

Starting her professional journey as a Young Professional at the World Bank in 1998, Songwe worked in the Middle East and North Africa region covering Morocco and Tunisia in the Poverty Reduction and Economic Management unit (PREM). Later she joined the East Asia and Pacific region PREM unit where she held several roles, such as, Regional PRSP Coordinator, Country Sector Coordinator and Senior Economist for the Philippines. She has also worked in Mongolia and Cambodia for the World Bank.

Born in 1968, Songwe earned a PhD in Mathematical Economics at the Center for Operations Research and Econometrics, as well as a Master of Arts in Law and Economics, and a Diploma of Profound Studies in Economic Sciences and Politics, from the Catholic University of Louvain-la-Neuve, in Belgium. She also has a Bachelor of Arts in Economics and Political Science from the University of Michigan in the United States. Songwe has also published several papers on governance, fiscal policy, agriculture and commodity price volatility, and trade and new financial infrastructure.

In the Shadow of Lopes

With the departure of the charismatic, and sometimes combative, Carlos Lopes, Songwe arrives in an institution where her predecessor has left a large imprint. Joining the organization in 2012, Lopes has been credited with reshaping UNECA and raising it out of obscurity on the continent. According to The East African news outlet, Lopes championed the need for improved data and statistics for informed decision making. He was the first to call for debt cancellation for the Ebola-effected countries in Africa, and led a team to demonstrate the economic impact projections on Africa were highly exaggerated and part of a negative narrative. During his resignation, Lopes was also praised by colleagues for taking the relationship between the organization, its partners and member states, to a higher level, for beautifying the UNECA compound, leading UNECA to host big conferences impacting on Africa’s development and empowering employees and ensuring gender parity in the organization.

Songwe’s Vision

However, Songwe is not without her own talents and tenacity. With some 20 years at the World Bank, Songwe’s new duties of advising African governments on their development projects will be well within her grasp. Described by her colleagues as a hardworking and competent leader, she is on the selection committee for the Tony Elumelu Foundation, an annual program of training, funding and mentoring for the next generation of African entrepreneurs and the influential African Leadership Network. According to RFI, as the new Executive Secretary for UNECA, Songwe will give priority to innovative financing, agriculture, energy, and economic governance.

 

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Cameroon Tastes Success with its Penja Pepper Export

10 May 2017 Comments (0) Agriculture, Featured

Cameroon’s distinctive Penja pepper, hailing from the volcanic soil of the Penja valley, is the first African product to receive an internationally protected geographical indications label (PGI) by the African Intellectual Property Organization. Recognized by the European Union, the label awards the name of an area, a specific place, or in exceptional cases, the name of a country, as a description of an agricultural product or foodstuff. The product must be traditionally and at least partially manufactured within the region and thus acquire unique properties.

The Penja pepper, known for its bright, musky flavor, has become a prized spice used by Michelin-starred chefs around the world and fetches as much as USD$33 per 3.5 ounces. There is some confusion as to the origins of the pepper, some saying a farmer stumbled across it and gave it to his wife to plant, whilst others maintaining a French colonialist planted it on his banana plantation, but it is clear the white peppercorn rose to prominence through French entrepreneur Erwann de Kerros. Kerros came across a farm growing the pepper, in Cameroon, in 1992 and was astounded by its distinct flavor. He stayed in the region for four years before returning home to reveal the great qualities of the pepper. Today Kerros runs his spice company, Terre Exotique, with almost $10 million in revenue.

PGI Label Profits Farmers

The PGI label on Penja pepper has also helped the local community who farm it. The small town of Penja, and surrounding villages have been transformed by the localized Penja production. According to law professor Michael Blakeney, from the University of Western Australia, who has advised nations on intellectual property rights, there are huge economic benefits from the PGI label. You can charge between 8 – 10% more for a product that’s sold under the label and it protects rural economies: farmers stay where they are if their product is profitable, he said.

The label prohibits the products name from being used by producers outside of the region, just as champagne must be produced in the Champagne region of France and therefore means more work for the local people of Penja. Since the label was awarded in 2013, some 200 new farmers have taken up production, said pepper plantation owner Rene Claude Metomo. Many others have abandoned growing coffee and cocoa in favor of Penja pepper. Although there are some growers in Madagascar, Cameroon is the only country where it’s grown on a large enough scale to be reflected in export statistics.

Production on the Increase

Over the past five years, production of Penja pepper has increased more than fifteen-fold, according to Business Cameroon. In 2012, before the PGI label was awarded, production levels of Penja were at 18 tons per year, but in 2015 that figure had risen to 300 tons and continues rise. With around 60% of production consumed locally, the remainder is exported to the European market and chefs around the world are clamoring for more. New York City chef, Lior Lev Sercarz said he buys around 331 pounds of Penja pepper per year. It’s got herbaceous, grassy notes and doesn’t burn, he said.

Business Cameroon also reports that there are plans made by Swiss agro-food giant, Nestle, to use Penja pepper in their Maggi bouillon cubes. Maggi stock cubes, officially represents 90% of the production of the Nestle Cameroon factory, which supplies the whole CEMAC market – Cameroon, Congo, Chad, Central African Republic and Equatorial Guinea. The project would mean an increase in demand and production of Penja pepper, and a further boon to the local people of the area. Most of whom are farmers who would not be protected if it weren’t for the PGI label.

Penja pepper is one of three African products to be awarded the PGI label, along with Oku honey from Cameroon and Ziama Macenta coffee from Guinea. According to the general manager of the African Intellectual Property Organization Paulin Edou Edou, there may be six more African products with the PGI label in the near future. Only a few years ago the notion of intellectual property was unknown in the African continent, said Edou Edou. Now, countries are lining up to have products registered. With the success, Cameroon has seen with Penja pepper, it is easy to see why.

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Africa’s first online shopping mall looks to make its mark

25 April 2017 Comments (0) Business, Featured, Technology

Online shopping is big business across much of the world, but in Africa e-commerce has yet to make the sort of impact that other technologies, such as cell phones, have done. However, the online retailer, Odjala, is Africa’s first online shopping mall, and it hopes to capitalize on the ever increasing access the continent has to smartphones and the internet.

The spread of e-commerce

While most African consumers still visit bricks & mortar stores or markets to make a purchase, the market for online retail in Europe and North America is huge. The man behind Odjala, Afiss Bileoma, mentioned that 60% of people in Europe and North America use online shopping to make purchases. The company E-marketer, states that Africa only accounts for 2% of online purchases worldwide, but this is a situation that is already changing and likely to change even more as time goes on.

Internet penetration is around 20% in Africa now, and smartphones are rapidly spreading along the path that cellphones already trod.

This embracing of technology has already led to large online retailers such as Nigeria’s Jumia, which has sites in 23 different African countries. However, the Benin based Odjala will be the first to offer a virtual mall online, and it will be offering consumers the chance to buy a wide range of products.

Bileoma states, “We turn around 10,000 Internet users a day, 20% of which will go through with a purchase. They buy a lot of gifts, clothes, toys. We succeeded a big blow by signing a partnership with Naomi Dolls; dolls that were only available in Côte d’Ivoire or France.”

In addition to offering exclusive products such as Naomi Dolls, Odjala’s main role is in providing an online presence to Benin’s largest outdoor market. The market is called Dantokpa, and is situated in the Cotonou area of the nation. Dantokpa hosts numerous independent shops and stands, yet most of its stock is now available on Odjala’s online mall which allows Benin’s consumers to peruse the extensive range of goods from their own homes.

Outdoor meets online

It would initially seem that an outdoor market is the antithesis of online shopping, but Odjala has sought to connect the traditional way that most Beninese shop, with the growing demand for online services. Odjala means “Big Market” in the local language of Yoruba, and the Odjala app is free to download on both Android and Apple products. Bileoma set up Odjala in 2016, and secured agreements with the majority of Dantokpa’s stores, and additionally made deals with other retailers in the area.

A consumer can use either the app or visit the online mall directly on their computer; any order that is placed is then delivered to their door by a courier. Bileoma accepts that this relatively new concept will take time to grow, as many potential customers have to get used to shopping in such a different way. Bileoma has promoted the concept on social media sites, such as Facebook, but still encountered a lot of customers who he said would “call and who actually wish to see the stalls.”

Nevertheless, such problems can often be overcome by providing customers with a sense of security that lessens concerns they may have over a new service. Bileoma explained that, “If a customer is not satisfied by a product, he can return it.”

This policy is fairly standard for online retailers around the world, but one of Odjala’s other features is a lot less common. Around 90% of purchases made on Odjala are paid for by the customer upon delivery. This model would be highly unusual for most online retailers, and is more akin to the method used by auction sites like Ebay.

However, these types of reassurances could help ensure that people new to online retail, feel more confident about trying a new method of shopping. It is online shopping with an understanding of how the majority of consumers in Benin are used to spending their money, and Bileoma will be hoping that such things build confidence in his brand.

As online shopping saves customers’ time, and the money that would be spent on traveling to a store, Odjala looks set to make the most of the ongoing spread in Africa’s online presence.

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Israeli start-ups raise a record $4.8 billion in 2016

19 April 2017 Comments (0) Business, Featured, Technology

Overall, last year was a successful one for Israeli start-ups, raising a record breaking $4.8 billion in funding, according to a recent survey by the Israel Venture Capital (IVC) Research Center and law firm Zysman Aharoni, Gayer & Co. (ZAG). The increase is of 11% from the year before, when Israeli high-tech companies raised $4.3 billion. The report also stated that the average financing round, which has been steadily growing over the past five years, reached $7.2 million last year, 19% above the $5.1 million five year average. However, the last quarter of 2016 saw a drop of 8% compared to the last quarter of 2015.

IVC CEO, Koby Simana explained in a statement, that 2016 was a record breaking year for Israeli start-ups, but despite the higher total amount, it was characterized by a smaller number of financing rounds, with higher average capital raised each round. “This is a troubling trend for the Israeli VC funnel, since the majority of capital goes into later rounds.” Simana said. “If there are no companies lined up for later investments, there could be a more serious issue later on.”

Fewer financing rounds

While capital-raising reached new heights, the survey found the number of financing rounds were much fewer than expected. There were 659 deals closed in 2016, which is only marginally above the average of 657 deals closed per year. It was also 7% lower than 2015’s record high of 706 deals closed throughout the year.

The IVC – ZAG report also found an upsurge in large deals (above $20 million) in 2016. Both in terms of deal numbers and capital raised. There were 76 large deals during the year and $2.68 billion of capital raised. An increase of 22% from 2015 where 76 deals closed and $2.19 billion was raised. The increase in large deals is due to the enhanced activity of foreign investors, primarily corporate investors and venture capital funds, explained Simana.

Software companies raise most capital

 Software companies led the capital raising again last year, with $1.7 billion in funding, up from $1.4 billion in 2015, which also placed them first. Internet capital decreased, attracting a mere 16% of total capital, or $744 million, compared to 2015’s $1.12 billion, when it placed second with a 26% share. Life science capital raising also decreased in 2016, by 14%. However, the outlook for life science capital is still positive, according to Shmulik Zysman from ZAG. The industry still has potential in Israel, he explained, due to three reasons: the interest shown by Chinese investors, good chances of European and US investors returning to Israel and Donald Trump’s campaign to ease price control on medical services and drugs.

An optimistic outlook for 2017

 According to Forbes, Israel continues to attract the attention of top global funds looking for great deals outside of Silicon Valley, Boston and New York City. As well as large corporates interested in the innovation coming out of Israel, Chinese investors will continue to be a major influence. Forbes also put the decline of exits (initial public offerings and merger and acquisition deals) down to a growing maturity of the tech ecosystem in Israel. Regarding the findings in the report, Zysman remained cautious for the year ahead. “We expect the uptrend in capital raising activity to continue in 2017,” he said in a statement. “Though possibly at slower rates.”

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Tida Jallow: Giving Gambians a Reason to Stay Home

23 March 2017 Comments (0) Africa, Featured

Many of Gambia’s young people are leaving. Packing their things with what little they have, and making a perilous journey across the Sahara Desert to Libya and from there, across the Mediterranean Sea to Europe. Tida Jallow, a Gambian seamstress and fashion designer is part of an initiative to curb the mass exodus before Gambia loses all its young people.

Dreams of Europe

Nicknamed the ‘Back Way’ this popular route to Europe is tried by many Africans who have no chance of obtaining a visa and leaving through official means. According to the BBC, Gambia, with a population of less than two million, by percentage of population, accounts for more people heading to Europe than any other nation. With Europe, worried about over-migration, in Gambia it is the opposite that worries people. With so many young able bodied people leaving for greener pastures, there is no one to help out on the farms and bring in the harvests in the villages.

Where an average daily income is $1.25, it is not surprising that people dream of a better life. In a country where the cell phone network is better than any local infrastructure, almost everyone can surf the web via their phone. Social media photos of friends and relatives in Europe decked out in designer brands only add to the incentives to leave. Families whose relatives send back money, have corrugated roofs and satellite dishes on their new houses.

No to the ‘Back Way’

In an effort to give people a reason to stay in Gambia, Jallow trains villagers the art of tailoring in her boutique in western Gambia. Even so, four of her apprentices have already left for the ‘Back Way,’ including her half-brother. Even in Jallow’s tiny village, around 50 people have taken the ‘Back Way. People understand the risks, says Jallow. They have all heard stories about dying in the Sahara or drowning at sea, yet they continue to leave. There is also a risk of being kidnapped, trafficked raped and murdered. Jallow’s brother, who she trained as a salesman, died recently in Libya.

Chief Executive Officer of the Anti-Back Way Campaign, Mustapha Manneh trains youth people to gain agriculture and farming skills. “People always think life will be better in Europe,” he says. “Speaking personally though, I wouldn’t want to be an illegal migrant anywhere.” Mr Mannah points out that many youth people leaving the country dramatically lack skills. His organisation will pay a visit to schools in order to make them aware of the many dangers of taking the ‘Back Way’. Young people are vital to the development of Gambia, but more job opportunities are needed to keep them from leaving the country.

A New Leader

Ruled for more than two decades by President Yahyah Jammeh, a man accused of killing and jailing his critics, many Gambians claimed political asylum upon reaching Europe. Although it is understood that many genuinely left for economic reasons. With the arrival of a new president however, Gambia’s economy may take a turn for the better. Adama Barrow won the election in December 2016, by 50,000 votes. After some back-peddling by former President Jammeh, Barrow was sworn in and promises to revive the economy.

Barrow himself, left for Europe as a young man, and understands the pull for young people to leave Gambia. “You hear the name Europe, you think it’s heaven. It’s never like that,” he said. After working as a security guard for three years in London, Barrow returned to Gambia in 2006. He then set up a successful real-estate agency before being elected President of Gambia. A story that shows there may be some more hope for Gambians willing to stay after all.

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Military Base Expansion: an End to Japan Peace State

14 February 2017 Comments (0) Africa, Featured

A Japanese military base in Djibouti, on the East African coast, is being expanded as part of a new militarized movement happening in Japan and as three Japanese government sources have revealed, to counter Chinese influence on the continent.

Since 2011, a Japanese Self Defense Force contingent has occupied a 12 hectare site in Djibouti and operated a maritime patrol aircraft from the base. Originally described as a ‘facility’ rather than a military base, United Press International (UPI) reports the area houses air, land and sea-based forces as part of an active, ongoing anti-piracy mission in the Gulf of Aden. According to UPI this offers Japan increased cooperation with allied partners and further projects military power.

A Japanese Defense Ministry spokesman said that in addition to the land Japan had borrowed, it was considering leasing additional land to the east. Although Japan relies heavily on imports of oil and gas from the Middle East, the UPI article claims Japan’s expansion represents an agenda beyond solely protecting its economic security. According to Reuters, a Japanese government source told the agency that China’s increasing presence was the reason for Japan’s rising involvement.

Chinese Economic Presence in Africa

Chinese investment in African Nation’s development is increasing exponentially. In December of 2015, China pledged $60 billion as part of a loan and aid package to Africa to help with development projects, to improve agriculture and reduce poverty. According to the Wharton Africa Business Forum held in late 2015, Chinese economic presence on the continent has continued to skyrocket, from $7 billion in 2008 to $26 billion in 2013.

According to Reuters, China is seeking ties with Africa to gain access to natural resources and find new markets. However, Japan has also pledged to increase its support with $30 billion towards infrastructure, healthcare and education in Africa. China is putting money into new infrastructure and raising its presence in Djibouti, said the Reuters source. “It is necessary for Japan gain more influence.”

Expansion of Japan’s Djibouti Base

Strategically located by the Red Sea, and cornered by Ethiopia, Eritrea and Somalia, Djibouti also hosts US, and French Bases. China started construction on a military base in the country at the beginning of 2016. The base is the first overseas military facility and coastal logistics base that will provide supplies to naval vessels taking part in peacekeeping and humanitarian missions, reports Reauters.

Japan’s expansion of their base would include C-130 transport aircraft, Bushmaster armored vehicles and extra personnel, Reuters source claimed. The extra leased land would be smaller than the existing base and would cost roughly $1 million per year. The source claimed Tokyo would justify the expansion by pointing to the need to have an aircraft in the area to evacuate Japanese citizens from troubled areas. According to UPI, however they point to an increasing militarization of Japan.

Militarization of Japan

Long been described as a ‘peace state’ after a constitution imposed on the country by the United States after World War II, Japan may be leaning once again towards an era of military action.

As part of the WWII constitution, Japan’s constitution stated the country would forever ‘renounce… the threat or use of force to settle international disputes’ and that ‘land, sea, and air forces, as well as other war potential, will never be maintained’.

However, a controversial new legislation backed by Prime Minister Shinzo Abe’s government announced in March of last year, stated Japanese forces could engage in collective self-defense and come to the aid of an ally under attack. The legislation was passed against the wishes of the majority of polled Japanese citizens who opposed it and in direct violation of the constitution.

Stepping back from seven decades of state pacifism, Prime Minister Abe is seeking to give Japan’s SDF a greater role in regional and global affairs. Djibouti’s military base may be just the beginning of Japan’s military operations.

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South Africa Leading the way in Renewable Energy

2 February 2017 Comments (0) Environment, Featured

South Africa’s independent energy program is a leading example of a country utilizing its natural resources for energy. With long lasting days of sunshine, falling equipment costs, and a government confident in reducing its C02 emission, the African nation is leading the way in sustainable renewable energy on the continent.

At the ‘Africa Renewable Energy Forum’ held last year in November in Marrakech, Morocco, energy ministers from all African countries, investors, financers, and technology providers discussed renewable energy plans, climate change targets and the development, enhancement, and protection of the continent’s natural resources. At the same time, South Africa’s Department of Energy (DOE) and Independent Power Producer (IPP) discussed plans to export their successful independent renewable energy plan to 11 other countries in Africa.

South Africa’s REIPPPP

South Africa’s Renewable Energy Independent Power Producer’s Procurement Programme (REIPPPP) has been successful in demonstrating that renewable energy can be delivered at lower cost, in energy terms, than new build fossil fuel options, said Sandra Coetzee, Head of Strategy at the Department of Energy’s IPP Office.

Launched in 2011, the REIPPPP has attracted local and international investors with commitments of 194 billion rand (USD$14 billion) making South Africa 3rd and 4th most attractive renewable energy investment destination among emerging markets by the Climate Scope Index. By the end of 2015, 6376 MW of power was procured, of which 2 gigawatts (GW) was connected to the national grid. This is equivalent to half of the capacity of an additional coal powered station, delivered in only a third of the time, Coetzee said.

Supporting Renewable Energy

Solar and wind power account for just 2 percent of South Africa’s energy needs, but just two or three years ago, there was 0 percent of renewables in the country, said Tobias Bischof-Niemz, Head of Energy at the Council for Scientific and Industrial Research (CSIR). South Africa has the capacity to produce 45,000 MW of power, the largest on the continent, but greater demand has led to ongoing blackouts and an energy crisis in the emerging country. In response, the government has supported nearly 100 renewable energy projects and a plan to increase renewable energy to 21 percent of the national energy by 2030. The government also plans to reduce fossil fuel dependency from 86.5 percent to 57 percent.

Renewable energy cost is 40 percent cheaper than coal, Bischof-Niemz said, and South Africa can go for a 70% renewable energy share by 2040 at the lowest cost. The country has plans to increase electricity production and maximize renewable energy sources, such as wind, hydroelectric and solar power resources. The National Development Plan has stated that by 2030 at least 95 percent of South Africa’s population will have access to either off-grid or on-grid electricity.

654 million people in Africa have no access to power

Although South Africa is having temporary respite from load shedding, that is, power outages due to over demand, some countries in the region are experiencing 12 to 16 hours per day with no electricity, said Scott Brodsky, Partner and energy lawyer at international law firm Macfarlanes, who are advising clients across Sub-Saharan Africa on aspects of renewable and other energy projects. There are still some 654 million people on the continent who still have no access to power, said Coetzee. Meaning enormous potential for energy investment over the African continent.

According to a new report by Bloomberg New Energy Finance (BNEF), entitled ‘Today’s Potential, Tomorrow’s Energy’ unsubdsidized solar energy is beginning to outcompete coal and gas. New solar projects are beginning to cost less to build and in the developing world, solar is the most cost effective source of energy, the report shows. Although an overall shift to renewable energy can be more expensive in wealthier countries, where solar must compete with existing billion dollar coal and gas plants, emerging markets, where new electricity capacity is being added as quickly as possible, clean energy will beat any other technology in most of the world, said BNEF Chairman Michael Liebreich.

Although there is positive news for clean energy in developing nations and South Africa’s REIPPPP could spread across the African continent, it seems renewable energy alone will not solve South Africa’s energy crisis. The country still has plans to build two new coal plants and even a nuclear energy plant, reports CNN.

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Alabbar’s plan to conquer e-commerce

19 January 2017 Comments (0) Featured, Middle East

A new online shopping platform created in the United Arab Emirates is set to dominate the industry in the Middle East and possibly the world. Noon.com, which was announced early November, is an online retailer boasting over 20 million products and same-day delivery. Created by Emirati billionaire and businessman Mohamed Alabbar, the site will be launched worldwide in January, 2017.

Stocking millions of products ranging from fashion to electronics, food to cars, the site will be ten times bigger than the region’s current ecommerce site, Souq.com and will stock over 5 million more products than Dubai’s biggest malls. Starting with 20 million products, the plan is to get to 100 million, Alabbar explained in an interview with Arabian Business. Initially the site will sell popular consumer items, he explained, but will eventually expand to sell niche items too.

The region is ripe for an ecommerce revolution: Alabbar

With $1 billion in financial backing, half from Saudi Arabia’s Public Investment Fund and half from Alabbar himself and a group of Gulf Cooperation Council investors, the ecommerce site will operate from and focus on the UAE and Saudi Arabia before branching out. Noon’s head office will be located in Riyadh, Saudi Arabia

As a region with 50 percent of people under the age of 25, the UAE and Saudi Arabia have extremely high internet and smartphone usage as well as high per capita income Alabbar explained. However, ecommerce accounts for only 2 percent of total retail sales in the region, a total of $3 billion a year.

People in the Gulf nations are still buying online from Amazon US and Amazon UK even though they have to wait a long time for delivery, Alabbar said. Countries like the USA, China and the UK have an ecommerce penetration of 15 to 18 percent of retail, but it is negligible in the Middle East. “The region is all but ripe for an e-commerce revolution,” Alibbar said. “Local giants have emerged in ecommerce around the world, like Alibaba in China. Why should it be any different in the Middle East?”

Ecommerce market to be worth $70 billion by 2025

By 2025 the ecommerce market is expected to be worth a whopping $70 billion a year, and Alabbar aims to take a sizeable chunk of it. Noon is being built with an eventual goal of an initial public offering in five to seven years Alabbar said. Immediate goals, however, include growing online sales in the region from 2 percent to 15 percent. A financial goal from $3 billion to $70 billion within a decade, taking up much of the ecommerce market.

“Any vision to change the world necessarily has to be big. A quantum leap cannot be small,” Alabbar said. An obvious comparison to Noon is Alibaba. When Alibaba was launched, Amazon was already a large public company, Alabbar explained. But that didn’t stop CEO Jack Ma from dreaming big. Today they are the largest ecommerce company in the world, and Amazon is almost non-existent in China, Alabbar said.

End to End Ecommerce Retailer

Noon plans on being an all-encompassing retail experience. From its website to an app, to delivery system and pay platform, it is all the same company from start to finish. Noon’s CEO and former country manager for Souq, Fodhil Benturquia said Noon’s edge over competition lay in its technological advances. “Our customer experience will be driven by state-of-the-art technology that will power everything from product discovery to purchase and delivery,” Benturquia said.

As well as creating its very own paying platform, Noon Pay, the company is also currently building the world’s largest warehouse adjacent to Dubai’s Al Maktoum International airport to store its products. The warehouse, which will be the size of 60 football fields will be one of many similar centers across Saudi Arabia and later across the entire region. Large storage centers mean same-day delivery is possible and this will be achieved via an in-house system called Noon Transportation and part-owned delivery service, Aramex. Noon is going to change the online shopping landscape for the Middle East customer, Benturquia said.

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The collapse of oil prices is forcing the UAE to reconsider a long-standing taboo on taxation

4 January 2017 Comments (0) Featured, Middle East

The past seven months have seen global oil prices drop sharply leading to significant revenue shortfalls in many energy exporting nations in the Middle East. Desperate to diversify revenue, the Gulf states will introduce direct taxation on its citizens for the first time.

According to Younis Haji Al Khouri, the United Arab Emirates Finance Minister Undersecretary, taxation could generate billions of dollars in revenue for the oil-dependent nation. A draft law for corporate taxation was approved by the UAE cabinet at the start of the year and plans to introduce value-added tax (VAT) by 2018 are underway. VAT would include heavy fees on luxury items such as cigarettes and alcohol, Al Khouri explained, but certain sectors such as healthcare, education, social services and 94 different food items would be exempt.

“There was a study conducted in 2014 that showed that the [revenues] collected from the implementation of value-added tax for the UAE are between AED10 billion (USD$27 billion) to AED12 billion (USD$32 billion)” Al Khouri said.

Falling oil prices

Oil prices reached an all-time low at the start of the year with benchmark Brent crude oil prices as low as just $28 per barrel and up to only $45.4 per barrel half way through November. In comparison, Brent crude went for more than $115, per barrel in June of 2014, reported Gulf News.

Largely to blame for the decrease in oil prices are surging oil production in the United States, a higher US dollar, and weak economic growth in energy importing countries, reports the BBC. However, the war in Syria and Iraq has also had a part to play. Militant group ISIS has been capturing oil wells and purportedly undercutting market prices by selling oil on the black market at a significant discount. According to the BBC, ISIS is making around $3 million a day selling oil for around $30 – $60 per barrel.

This has left the UAE and other oil-producing countries to deal with lower prices for their output. While the UAE government has taken some steps to remedy the situation, such as cutting billions of dollars’ worth of petrol subsidies, according to Deutsche Bank and IMF, the nation would still need the price of oil barrels to rise to at least $81 per barrel to balance its budget.

Introducing Tax in the Gulf nations

Introducing tax may be the answer to the UAE’s revenue woes. Although taxation has long been a taboo subject in the Gulf states, the current price of oil has caused many countries in the Gulf Cooperation Council (GCC) to rethink their stance. Taxation could be an alternative source of income for countries hoping to move their economies away from a dependence on oil and gas.

A research and risk analyst at Moody’s Investor’s Service Mathias Angonin, said the UAE has a limited amount of ways to improve revenue. “The UAE introduced tough measures quickly, including the fuel subsidy reform and the reduction in capital expenditures,” Angonin said. “But the list of low-hanging fruits to raise revenue or reduce expenditures is getting shorter and shorter. The authorities are focusing on medium-term measures such as the VAT introduction in 2018 and 2019 and new forms of taxation.”

Moving Economies Away from a Dependence on Oil

Although it has long been a steady source of income, the UAE is not entirely dependent on oil and gas. The country has a thriving maritime port and is a global aviation hub. According to Gulf News, UAE is one of the most diversified economies in the region. Trade and logistics, services, retail, tourism and aviation are among the key drivers of non-oil growth, explains Shady Shaher Al Borno, Head of Macro Strategy Research, Global Markets and Treasury, Emirates NBD.

“We expect the UAE economy to grow by 3.4 per cent in 2017,” says Al Borno. “In the medium run, we expect Expo 2020 to have a positive impact on growth dynamics of the UAE as a whole as the non-oil sector will benefit from the flow of projects for the construction of facilities to host the 2020 event.”

Dubai’s staging of the next universal technological exposition, entitled ‘Connecting Minds, Creating the Future’ and based on themes such as sustainability, mobility and opportunity, is expected to add an estimated 4.5 percentage points to GDP growth in the UAE and an extra $10 billion of private sector cash injected into the GCC, according to a report by Qatar National Bank. The event will also create thousands of jobs in construction, planning and tourism.

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