Investment

 

PROSPECTS FOR INVESTMENT IN AFRICA (SINO-AFRICAN TRADE AND INVESTMENT INCENTIVES)

The African continent has shown tremendous economic growth in the last decade based on the GDP per capita estimates with increasing investment in infrastructure, agriculture and trade. This has been largely influenced by the high level of political will and initiatives in these sectors and the increasing use of digital technology platforms in facilitating service delivery. Key challenges remain in sub-Saharan African countries however as regards scaling and sustaining this success.

Today, Sub Saharan Africa accounts for 950 million people, roughly 12 percent of the world’s population.  This is expected to rise to 31 percent by 2050 and to 34 percent by the end of this century as the region’s population is projected to quadruple. This means that by 2100, Africa and Asia will be home to 4.4 and 4.9 billion individuals respectively, and will together account for 83% of the world’s population. The sheer population size of Africa will increasingly affect other areas of the world—economically, politically, demographically, and culturally. This makes trade and investment collaboration between Africa and China a most formidable partnership. 

UN Regional Population Projections (Billions, 2015 - 2100)

The rapidly growing young population, rapid urbanisation and diversification of economies by many African governments has opened doors and continue to create opportunities for investment across the continent. Some of the most viable sectors for investment in Africa are Agriculture, automobile, financing, infrastructure, manufacturing, public-private partnerships, science and technology, solid minerals among others.

 

 

AGRICULTURE

Trade of agricultural products has continued to expand, driven by high demand, particularly in emerging economies. The value of global agricultural exports nearly tripled between 2000 and 2012, while agricultural exports increased by about 60 percent in volume terms over the same period. With global demand for agricultural products expected to remain firm in future decades, global trade in agricultural products is expected to continue to increase significantly over the coming decades. As a consequence, trade will play an increasingly important role in influencing the extent and nature of food security across all regions of the globe. The challenge has therefore become one of ensuring the expansion of agricultural trade. Africa plays a major role in this regard just as Agriculture plays a major role in the development of the African continent. Africa has over 600 million hectares of uncultivated arable land with agriculture providing employment to over 52% of the workforce. Much of Africa has enjoyed sustained agricultural productivity growth since 2005 owing to several factors such as inclusion of technology as well as renewed political will by many African governments to develop the sector in their various countries. The expansion and opportunities that exists in the Agriculture sector owes to increased attention to production, utilization and export of some of the major agriculture based commodities such as rice, cocoa, cofee, cassava and many more. The most viable investment destination for agriculture includes the following;

Nigeria:

Nigeria has huge opportunities for trade and investment in agriculture. With a population of over 180 million, and arable land (% of land area) reported at 38.4 % in 2014, according to the World Bank collection of development indicators, compiled from officially recognized sources.

Source: https://tradingeconomics.com/nigeria/agricultural-raw-materials-exports-percent-of-merchandise-exports-wb-data.html

With agriculture being a source of employment to about 70% of the Nigerian population, it holds huge potentials for high ROI owing to the diverse nature of agricultural practice in Nigeria and its huge contribution to the nation’s annual Gross Domestic Product (GDP).

Potential areas for investment in the Nigerian agricultural sector includes crop production, animal production, fish production, fertilizer production, farm equipment manufacturing. The wide array of crops which the nation has potentials for producing in exportable quantities remains under produced. Besides exportation of some of these agricultural produce, there is a huge gap that exists in the value chain utilization of many of these farm produce due to poor investment in the agro-processing industry. For example Nigeria produces over 60% of tomatoes in West Africa, yet it is the largest importer of tomato paste. The Federal government of Nigeria is coming up with favorable policies and focusing the policy instruments for enterprise development across successive stages of the commodity value chains for the development of crop, livestock and fisheries sub-sectors, namely input supply, production, storage, processing/utilization, marketing and consumption. Investing in various segments in the value chain is sure to rake in high return for any investor.

Some of the most viable crops with huge investment potentials (this includes the entire value chain for each commodity) include cassava, cashew nuts, cocoa, rice, sesame seed, ginger, palm kernel, tomatoes, groundnut/peanut, sorghum, millet among others.

 

Cote de Voire

Côte d’Ivoire has a large agriculture potential as 75 percent of the national territory constitutes arable agricultural land.  Agriculture accounts for 25 percent of GDP and 60 percent of export receipts.  The sector employs two-thirds of the population. Côte d’Ivoire is net food-exporter of major of cash crops grown by small farmers including: cocoa, coffee, rubber, cotton, palm oil, cashew nuts and bananas.  However, the country imports rice, wheat, corn meat and dairy products.

The main agricultural products are exported raw or unprocessed.  Currently, opportunities exist for foreign investments in processing cashew nuts, palm oil (bio-fuels), and other value-added products.  Côte d’Ivoire is one of the world’s top exporters of cashews and also the leading African producer.  Production of cashews has grown from 560,000 tons in 2014 to more than 635,000 tons in 2015. Only 10% of the production is processed. 

Côte d'Ivoire has achieved remarkable results in agricultural development. For many of its productions (including export), it is ranked at enviable global and African ranks.

Cocoa and coffee crops occupy more than 75% of land devoted to cash crops with a predominance of cocoa (56%). Côte d'Ivoire respectively held the first in the world and the 3rd African rank.

Cotton, oil palm, cashew and rubber occupy 23% of the areas.

Other cash crops (coconut, banana, etc.) occupy only 2% of the areas.

  • Coffee 

This area offers the following opportunities:

In 2002, coffee production was 300,000 tons with about 440,000 farmers’ operator 1,300,000 hectares. It has continued to experience a sharp drop in recent years, reaching its lowest level in 2008. But from 2009 coffee revives its usual level due to good weather conditions and maintenance of orchards. Production in 2009 reached 144,716 tons against 67,610 tons in 2008. Thanks to good climatic conditions and the maintenance of orchards. Production in 2009 reached 144,716 tonnes compared to 67,610 tonnes in 2008.

  • Cocoa

The annual cocoa production increased by 14.7% and amounted to 1,304,494 tons in 2009 after falling back to 12.8% in 2008. This production comes from about 600,000 farmers operator 2,500,000 hectares with an average yield of about 500 to 600 kg / ha. Cocoa cultivation system most widely used in the forest area is the extensive and small family farm with farm sizes varying between 1 and 1.5 ha.

  • Palm oil

Two types of operations:

- Industrial operations, benefiting from technical and financial resources. They belong to large agro-industrial groups. The average yield is 10 t / ha.

- The village farms, benefiting from fewer resources, account for 75% of the total area (200,000 hectares) of the Ivorian palm grove. The yield is of the order of 5 to 7t / ha.

In 2004 the production was 1,378,826 tons and 292,278 tons regimes of crude palm oil. In 2009, she was 394431.6 tons of oil representing a growth rate of 9.8%.

  • Hevea

In rubber production, there are industrial plantations owned by large private and village plantations. Average yields of dry rubber obtained on all plantations are around 1.2 t / ha village plantations and 1.7 t / ha for industrial plantations against 2 to 2.5 t / ha obtained by station research.

The total area is currently around 110,000 ha of which 53% of industrial plantations and 4.7% of village plantations. Rubber production increased by 4.1% and appears to 202,094 tons in 2009 due to the expansion of cultivated areas due to the good prices in recent years.

The trends for these two products are attributable to investments, maintenance of cultivated areas and improved cultural practices.

  • Cotton

Cotton, mainly rainfed, is grown on about 300,000 hectares mainly in the Savannah area, occupying 150,000 farmers every year.

Fiber production reached a record level of 177,000 tonnes in 1999/2000 with an average ginning of the order of 43.50% among the best ginning rate in the world.

Today, production revives the good performance by a grant from the state to producers and amounts to 140,611 tons.

  • Sugar cane

The Ivorian production of sugarcane is primarily industrial. Farms are conducted in pure culture with irrigation. 2009 production experienced a 8.8% increase and appears to 168,414 tons.

This production is the result of two agro-industrial companies.

  • Cashew

Cashew is grown in the northern half of Côte d'Ivoire. Areas sown are small usually between 0.5-4 ha. Approximately 250,000 farmers cultivate this speculation on a set of 750,000 ha. 2009 production recorded a 9% increase, amounting to 340 318T. However yields between 240 and 600 kg / ha, are still far from the performance recorded in countries such as Guinea Bissau where it reaches 1200 kg / ha. Against this outperformance is due to the non widespread use of selected high-performance materials.

  • Pineapple

The cultivation of pineapple is grown by small farmers and large agro-industrial groups. Small farmers have very little money and settled on small farms (0.5 to 1 ha).

Production in 2009 fall of 21.3% to 77 They produce 60% of exported pineapples. The average yields are 25 to 30 t / ha. Large agro-industrial groups, with substantial material and financial resources, operate generally above 50 ha area. Their high technical level allows them to reach 50 t / ha close to the current varietal potential (60 t / ha).

776 T.

  • Banana

Current production is mainly provided by large agro-industrial groups representing banana multinationals. These groups practice intensive culture with important ways: Irrigation system installation, supply of inputs (fertilizers and pesticides) and can come into compliance with the new regulations on international trade.

Production has almost doubled over the period from 1997 to 2004 from 116,000 tons / year to 229,000 tons / year on increasingly smaller areas (100.00 ha in 1977-6000 ha since 1999). In 2009, she recorded a 2.8% shrinkage and stands at 285,602 T.

Both speculations face the lack of investment, but especially to the strong competition from Latin American countries.

  • Ornamental horticultural products

The current Ivorian ornamental horticulture respect to green plants (1,200 tonnes), cut flowers (2,000 tonnes) and foliage. The sector has developed through private initiatives. There are two categories of traders: large farmers to the number of 17 720 hectares in the open and 20 hectares in shade houses and small producers in number 43, grouped together in a cooperative called FLORACI operating about 140 hectares. The annual export is estimated at 1,300 tons. Ornamental horticulture is practiced in the southern half especially in the vicinity of Abidjan.

 

The ongoing work of the master plan for industrial development (SDI program being supported by UNIDO and ADB) highlight a huge agricultural potential insufficiently exploited by the processing industry. Rate of transformation of the higher raw materials are estimated at about 20% in the cocoa sector and 8% for coffee against less than 5% in other sectors. The intensification and diversification of productive activities in this field but also in intermediate sectors (packaging, building materials, spare parts, etc.), can be a potential for development of private investments.

 

 Cameroun

In Cameroon, agriculture represents more than half of the country’s non-oil export revenues and employs almost 60 percent of the working population. Ninety percent of rural households are, in one way or another, employed in agriculture, and approximately one-third of them earn their living from export crops. This presents vast investment opportunities for investment in the agricultural sector.

The most important cash crops are cocoacoffeecottonbananasrubberpalm oil and kernels, and peanuts. The main food crops are plantainscassavacornmillet, and sugarcane. Palm oil production has shown signs of strength, but the product is not marketed internationally. Cameroon bananas are sold internationally, and the sector was reorganized and privatized in 1987. Similarly, rubber output has grown in spite of Asian competition. Cameroon is among the world's largest cocoa producers; 130,000 tons of cocoa beans were produced in 2004.

The agricultural potentials in Cameroun is diverse as it is rewarding. The following data gives a general overview of the investment opportunities that exists in the Cameroonian agricultural sector.

Ethiopia:

Agriculture is the backbone of the Ethiopian economy. The sector contributes about 43% of the GDP and 86% of exports. The export of Ethiopia is dominated by coffee and oil seeds, which together accounted to 50.6% in 2008/09. Other principal export commodities are ‘chat’, flowers, pulses, and live animals. 

Ethiopia with 18 major agro-ecological zones and various agro-ecological sub-zones has a suitable climate for growing over 146 types of crops.

Ethiopia has suitable climate and types of soil required for the production of a variety of food crops. The major food crops grown are cereals, pulses and oil seeds. A broad range of fruits and vegetables and cut flowers are among fast-growing export agro-products. Organic coffee, cotton, tobacco, sugar cane, tea and spices are the main commercial cash crops grown in Ethiopia.

Livestock


Interestingly enough Ethiopia has the largest live stocks population in Africa. The CSA data shows in 2013 survey that Ethiopia has 53.99 million cattle, 25.5 million shops, 24.06 goats, 0.92 million camels, 50.38 million poultry, 9.01 equines and  10 million bee  colonies.
To empower the Ethiopian Meat and Dairy Industry Development Institute (EMDIDI) was established to support the Ethiopian Commercial Live Stock Sector through capacity building, through training, and consultancy, market promotion, and expansion as well as investment facilitation.


All these factors make Ethiopia one of the most promising countries to invest and expand business.
With the largest number of milking cows in Africa, Ethiopians potential for diary development is considerable. However, productivity and consumption remain low. Ethiopians currently consume 19 liters of milk per year. This is just 10 percent of Sudan’s consumption and 20% that of Kenya.

 Coffee Farming

According to The Africa Report of December 2, 2015 edition, just in July to this year Ethiopia exported 54, 000 tons of coffee worth 231.9 million compared with the $172.5 million it earned 51,000 tones over the same period last year.
By the end of 2014/15 the export will be risen to 235,000 tones generally $862 million in revenue. It is a recent memory that Ethiopia exported 190, 000 tons in 2013/14 earning $841 million.

Ethiopia produce hit a high plateau by producing and still remain 5th of the top 10 countries in the world. In 2014 alone, according to World Atlas, Ethiopia produced close to 400,000 tons or 397,500,000 kilograms and employed close to 15 million people in coffee production.

 Ethiopia is Africa’s leading producers of Coffee Arabica. The world “coffee” is said to come from Kaffa, a region where coffee has long been a wild crop. The country produces some of the best Arabica coffee in the world.

 In Ethiopia, coffee grows in almost all regional states. The suitable climatic condition varies from the semi-savanna climate of the Gambella plain (500 m.a.s.l) to the continuously wet highland forest zone of the south west (2200 m.a.s.l). Coffee grows in the Ethiopian highlands ranging from 1500 to 2100 meters above sea level. The ideal soil for the crop is slightly acidic with a PH of 4.5-6.5. It requires annual rainfall ranging from 1500-2500 mm with balanced distribution.

            Tea Farming

            Ethiopian tea is some of the best quality tea in the world. In fact, tea from Ethiopia has won acclaim for its taste and aroma. The total area covered by teal plantation in Ethiopia is 2700 ha. Ethiopia produces only black tea type. But it has a potential to grow for all types of tea. Currently, it has a capacity to produce 7,000 tons of black tea per annum. The annual tea consumption of the country is about 5,000 tones.

            The quality of tea mainly depends on climatic conditions, the type of soil upon which the plant grows and the method of processing. In Ethiopia, tea is mostly grown in the highland dense forest regions.

            Sugar cane Plantation

            In Ethiopia, sugar cane plantation started in 1954/55. Sugar has become one of the essential food consumption items in the country especially in urban areas. Though per capita sugar consumption in Ethiopia is one of the lowest in the world, the volume of consumption has been growing steadily since the establishment of the first sugar cane plantations-cum-sugar mills in the early 1950s. As a sweetening food item, sugar is used in preparing all types of drinks (coffee, tea, soft drinks, juices, etc) and foods (pastries, bread of special types, etc). White sugar is mainly exported to the neighboring countries such as Djibouti, Kenya and Yemen in quantities ranging between 30,000 to 50,000 tons per annum.

            The gap between demand and supply required the importation of substantial amount of sugar from abroad. In view of the increasing demand, the government has plans to increase its annual sugar production. Thus, new sugar projects are under construction.

            Oil Seeds Farming

            A variety of oil seeds are grown in Ethiopia. The oil seeds produced are supplied both for the local and international markets. Rapeseed, linseed, groundnut, sunflower and cotton seed serve as raw materials for the domestic edible oil industry. Some oil seeds, including peanuts and sesame, are important export crops. Favorable agro-ecological conditions exist for the production and processing of oil seeds in Humera, Metema, Jawi, Chewaqa and Mankush.

            Horticulture Farming


One of the most profitable investment sectors is horticulture. Even though the country began the flower industry in the late 90’s, Ethiopia became a formidable competitor to Kenya in the flower industry in Africa. Ethiopia, according to Ethiopian Flower Export Agency is targeting to export up to $500 million dollars by the end of 2016 calendar year. Ethiopia is the second largest flower exporter next to Kenya.   

 Commercial floriculture is still a relatively new industry in Ethiopia but it has emerged as a major non-traditional export sector. The rose industry has undergone successful development over the period 1998-2009.

 With diverse agro-climatic zones, the long growing season and the availability of water for irrigation, most fruits and vegetables can be grown well in Ethiopia. Among the major fruits, mango, banana, papaya, avocado, citrus, grape, and pineapple are the most common tropical and sub-tropical types cultivated. While pear and plum are emerging temperate fruits in the country.

 Ethiopia is now the second largest flower exporting country in Africa and the fourth in the world. It is also an ideal location for highland and low land world class flowers. The flower industry is one of the fastest growing sub sectors in the country.

 Currently, Ethiopia exports its cut flower to the Netherlands, France, Germany, Italy, Canada, Norway, Sweden, UK, Middle East, and other EU countries.

            Spices Farming

            The major spices cultivated in Ethiopia are ginger, hot pepper, fenugreek, turmeric, coriander, Cummins, cardamoms, corianders and black pepper. Currently, there are nearly 122,270 ha under spice farming. Spice production reached 244,000 tones per year. The potential areas for the cultivation of spice are Amhara and Oromiya, SNNPR and Gambella regions. The total potential for low land spice farming is estimated to be 200,000 ha.

            Cotton Farming

            Cotton is an important crop in Ethiopia. There is a huge potential for cotton cultivation in the country especially in Awash valley where large-scale cultivation under irrigation is found. Other potential areas for cotton cultivation are found in South Omo (Omorate), north western part of the country (Humera, Metema, Quara, and Belles Valley), Gambella, Tekezze valley, Dabus Valley and Wabeshebelle watershed area. Cotton production is well integrated into the rest of the economy with a large number of textile and garment factories relying on domestically produced cotton. Opportunities for the production and processing of cotton in Ethiopia are thus significant.

            Pulses Farming

            Cultivation of pulses like beans, peas, chickpeas, lentils, soybeans, etc. is also common in Ethiopia. Cultivation is carried out in both the highland and lowland areas of the country mainly by peasant farmers. Currently, the country exports a large quantity of pulses to the international market. There are also a number of factories that process pulses in the country.

            Rubber and Palm Tree Plantation

            Ethiopia has the potential for the production of rubber and palm oil.

            Rubber is grown under large scale commercial production in hot tropical and sub tropical humid climatic zones. Moderate acidic or acidic soil is suitable to grow rubber. Therefore, in south-western part of Ethiopia these agro-climatic conditions exist for the production of rubber at commercial scale.

            Palm tree is a perennial tree. It gives a higher yield of oil per unit area than any other oil seed crops. The plant can be grown in tropical and sub-tropical hot and humid climatic conditions. It can also grow in a wide range of tropical soils.

            Cultivation of palm tree can either be carried out under irrigation or using natural rainfall. Many areas in the south-western part of Ethiopia have both the required soil and climatic conditions to grow palm oil in large scale.

            Other Agricultural Products

            A huge opportunity exists for the production of jatropha, castor bean and similar agricultural products for the domestic as well as the export market.

            The estimated potential areas for the cultivation of various agricultural products in all regional states of the country are presented in the following table:

 

Type of Farming

Area (ha)

Region

1

Rice

280,000

SNNPR, Oromiya, Amhara, Benshangul Gumuz, and Somali

2

Maize

1,400,000

SNNPR, Oromiya, Amhara, Benshangul Gumuz, Gambella and Somali

3

Horticulture

763,300

SNNPR, Oromiya, Amhara and Dire Dawa

4

Coffee

426,000

SNNPR, Oromiya, Amhara and Gambella

5

Tea

150,000

SNNPR, Ooromiya, Amhara and Gambella

6

Cotton

3,000,810

Tigray, SNNPR, Oromiya, Amhara, Benshangul Gumuz, Gambella, Afar and Somali

7

Oil Crops

1,601,323

Tigray, SNNPR, Oromiya, Amhara, Benshangul Gumuz, Gambella, Afar and Somali

8

Pulse

3,274,469

Tigray, SNNPR, Oromiya, Amhara, and Benshangul Gumuz

9

Rubber

200,000

SNNPR and Gambella

10

Palm Oil

450,000

SNNPR, Oromiya and Gambella

Total

11,545,902

 

Data Source: Ministry of Agriculture

Maize 

Maize is an important crop in Ethiopia. It is grown in the mid highland areas of the country. There are huge tracts of land in all regions suitable for maize farming. Maize is mainly produced in SNNPR and Oromia regions where there are about 1.77 million hectares under cultivation. 

Wheat and Barley Farming 

Wheat and barley are mostly grown in the highlands and mid highland areas of the country mainly in Oromia (Bale and Arsi Zones) and some parts of Amhara (North Gondar and North Shewa Regions). 

Wheat and barley are the main cereal crops in the country with about 1,095,436 and 1,398,215 hectares under cultivation, respectively. The potential for the private sector in agro-processing and out growers’ scheme of development is significant. It offers excellent opportunities for production of wheat under irrigation in the Afar, Gambella, SNNPR and Somali Regions. 

Oil seeds and pulses 

A variety of oil seeds (e.g. sesame, rapeseed, linseed, groundnut, sunflower, Niger seed, cotton seed, etc.) are grown in Ethiopia. The demand for sesame has been increasing in the global market making sesame an increasingly important export commodity in Ethiopia. In 2008/09, Ethiopia exported 287,000 tons of sesame valued at 356.1 million USD, accounting for 24.6% of the total export earnings. Rapeseed, linseed, groundnut, sunflower, Niger seed and cotton seed also serve as raw materials for the domestic edible oil industry. 

Cultivation of pulses like beans, peas, chickpeas, lentils, soybeans, etc. is also common in Ethiopia. Cultivation is carried out in both the highland and lowland areas of the country mainly by peasant farmers. Currently, the country exports a large quantity of pulses to the international market. There are also a number of factories that process pulses in the country. 

Rice Farming 

Rice could suitably grow in many parts of the country. The predominant potential areas are:

  • West central highlands of Amhara Region (Fogera, Gondar Zuria, Demdia, Takusa and Achefer)

  • North West lowland areas of Amhara and Benshangul Regions (Jawi, Pawi, Metema and Dagur

  • Gambella regional state (Abodo and Etang Woredas)

  • South and South West Lowlands of SNNPRS (Beralee, Weyito, Omorate, Gura, Ferda, Menit)

  • Somali Region (Gode)

  • South Western Highlands of Oromia Region (Illubarbor, East and West Wellega, and Jimma Zones.

Spices

The major spices cultivated in Ethiopia are ginger, hot pepper, fenugreek, turmeric, cummins, cardamoms, corianders, and black pepper.  Currently, there are nearly 122,700ha under spice farming. Spice production reached 244,000 tons per year.  The potential areas for cultivation of spice are Amhara, Oromia, SNNPRS, and Gambella regions.  The potential for low land spice farming is estimated to be 2000,000ha

Livestock farming, fishery and apiculture

            Considerable opportunities exist for investments in rearing and breeding of livestock as well as in fresh water fishery development and the production of honey and beeswax.

            The livestock population of Ethiopia is first in Africa and tenth in the world. The sub-sector has large resources, which include 50.88 million cattle, 25.98 million sheep, 21.80 goats and 42.05 million poultry. Opportunities are also available in ostrich, civet cat and crocodile farming.

            Ethiopia’s potential for fishery development is limited to its freshwaters of most of the lakes that are located close to urban areas. The total fish catch potential from these waters is estimated at 40,000 tones per year. However, there is also an opportunity for investment in the construction of aquaculture to produce fresh water fish for local and international markets.

            The current annual production of honey and beeswax of the country is estimated at 43.7 thousand tones and 3,600 tones, respectively. This provides a high investment opportunity in all aspects of the development of this untapped sub-sector in the production, collection, processing and marketing of honey and beeswax. In relation to this, the demand for the bee queen is growing rapidly providing an additional opportunity for investment.

Forestry and Related Activities

            Potential activities for private investors in commercial forestry include the production and marketing of gum and incense, large-scale plantations for timber, the establishment of integrated forest-based industries such as pulp, and paper and chipboard.

Floriculture

Ethiopia is now the second largest flower exporter in Africa. It produces large budded and long stemmed

roses with vibrant colors. Many varieties are available and the main production season is from October to May. Flowers are produced in modern farms around Addis Ababa and in the Rift Valley and are exported via Bole International Airport in Addis Ababa. Temperatures are conducive to floriculture and there are long hours of sunshine – usually for more than eleven hours a day.

Water for irrigation is available in ample quantity and the well-drained soils in Ethiopia are suitable for growing horticultural products. Furthermore, a new environmental law was introduced to assess and regulate environmental impact before horticulural projects start and environmental auditing is conducted regularly to avoid pollution. Investors keen to fulfill their corporate responsibility will therefore be assured that Ethiopia promotes environmentally sustainable flower production. Roses are the most widely produced variety of flowers.

Other types of flowers currently in production include gypsophilia, hypericum, limonium, chrysanthemum, carnations, static and pot plants. The Ethiopian Highlands provide near ideal growing conditions for roses.

Vegetables, fruits, and herbs

Production of fresh vegetables, fruits, and herbs is a priority. Ethiopia produces and exports green beans, snow peas, broccoli, courgettes, okra, asparagus, cherry tomatoes, green chillis, fresh chives, parsley, rosemary, dill, basil, roccola, strawberries and table grapes. Seasons of production are compatible with many neighbouring countries and much of the land is suitable for organic certification.

The export performance of the sector had been limited to a very small volume to neighbouring countries and the European market. However, the export status is changing as more modern farms and processing enterprises are expanding. A huge effort is being carried out by the Ethiopian Horticulture Producers and Exporters Association (EHPEA) to link smallholders with the export market through an out-growers’ scheme. A project to facilitate diversification of production and smallholder farmer participation in exports is also being implemented. Farms who are already involved in export to Europe are certified for Good Agricultural Practice (GLOBALG.A.P) and their produce is handled in pack houses that meet the BRC standard.

Table 1. Agricultural Investment Land transfer facilitation service and requirements from Investors

No

Services

Required conditions and formalities from the investor

1

Provision of information about agricultural investment land potential and other relevant issues

  • investment license

  • supporting letter from the office represented and ID card/passport

2

Facilitation of filling the land request format, endorsement of   the request and provision of   feasibility study format

  • ID card/passport of the investor

  • Power of attorney( If it is from foreign country it has to authenticated by ministry of foreign affairs)

  • Memorandum of Association and Memorandum of Articles if the company is share company or plc

  • Investment license

  • Company Profile/track record/

  • Supporting letter from respective Ethiopian Embassy for foreigners and the Diaspora

  • Letter of interest to pay one year down payment.

  • Bank statement at least a         year showing a balance of 30% of the investment and audit report done by external auditor

  • letter of interest to conduct and submit Environmental Impact assessment study report

  • TIN (Tax payers Identification Number)

  • Clearance for paying the current year income tax

  • Resident and Work permit (For foreigners)

  • confirmation/application letter for the suitability of the land proposed

3

Evaluation and Approval of the business plan

  • Submit business plan prepared as per our standard format

4

Facilitation of Land transfer

 

  • Approved business plan document

  • Comment on the draft lease agreement

  • Final confirmation letter about the suitability of the land up on visiting the area as per the coordinates given on the provisional site plan

  • signed lease agreement

  • receipt of         down payment (with in 20 days after signing the agreement)

5

Provision of ownership certificates/site map

  • Signing         minute of land handing over

 

Table 2. Agricultural Investment land expansion facilitation and requirements from Investors

 

services

Required conditions and formalities from the investor

1

Additional expansion land inquiry

 

  • The investor who request extra land for the expansion , must submit written documents about the existing investment project performance: namely-

       The existing land lease agreement.

       Land lease certificate

       Business plan of the existing project.

       Development work done

       Site plan of the project

  • Site plan should include :

       over view of the cultivated land

       Quarters and lounge for the farm workers

       Storage for Agricultural inputs

       Storage for   seeds

       Incineration place for west

       The distance of the project area from water bodies

       Other essential work done on the project.

  • The investor who request extra land for expansion, must submit ,

       Any loan taken for the project from banks or   any financial institutions.

        Documents of paid loan.

       Receipt for paid land rent.

       Receipt of   Governmental payments

       Audit and   book keeping

       Lists of duty free imported machineries needed for the project and

  • About expansion land

       Business plan for the expansion project.

       The size of the requested land

 

Table 3. Agricultural Investment support services and requirements from Investors

 

services

Required conditions and formalities from the investor

1

Professional advices and information

  • Official letter of support

  • Identification card/passport for foreign nationalities;

  • Power of Attorney ( in case of agents) ;

  • Supporting letter from relevant institutes;

2

Facilitation of bank loan, tax free import of machineries and equipments; infrastructure and other agriculture investment support services

  • Official letter of request for a support;

  • Investment license and registration document;

  • Renewed trade license;

  • Land rent agreement document;

  • Letter of support from relevant regional investment office;

  • TIN; tax payment confirmation letter and audit report from relevant institute;

  • If it is a Share Company, need   Memorandum of Association;

  • Power of Attorney ( in case of agents) ;

  • Business plan document; if not to submit a letter of pledge to provide the document in 30 days’ time;

  • Copy of Identification card/passport ;

  • Resident Permit /Foreign Investors;.

  • Work Permit /Foreign Investors;

Data Source: Ethiopian Investment Guide 2014 and Ethiopia Trade and Investment and Ministry of Agriculture

 

Morocco:

Agriculture accounts for around 16.6% of national GDP and employs  approximately 40% of the country’s workforce. Fishing, and forestry sector employs about 4 percent of the total workforce giving the entire sector a 44% employment share. Driven in large part by the national agricultural policy, the Green Morocco Plan (Plan Maroc Vert, PMV), the sector’s GDP contribution increased by 57% between 2008 and 2015 to reach Dh115bn (€10.5bn). The agriculture sector largely determines the growth level of the whole economy. The 2015 budget earmarked for agriculture and fisheries was €950 million, or 4.1 percent of the national budget.

Morocco’s agriculture can be divided into three major sectors: 1) modern, private, irrigated, highly capitalized, and export oriented farms producing mostly fruit and vegetables; 2) agriculture within reorganized large scale dam-irrigated perimeters producing mostly dairy, sugar crops, seeds, fruits, and vegetables mostly for the local market; 3) rain-fed agriculture with more favorable land in the northwest (growing mostly grains, olives, pulses, red meat, and dairy) and less favorable land in the south and east (growing mostly grains and non-intensive sheep production). Grains account for over 60 percent of agricultural production, and area planted to wheat has expanded dramatically over the last 20 years with increased government support. In April 2008, the Moroccan government announced its new strategy for agricultural development that aims at encouraging domestic and foreign investment in agriculture as a means to generate employment, transfer new technologies and achieve a better integration with the world economy.  Major areas for investment have been olives, citrus, grapes, dairy, exotic fruits, etc.  The new strategy also aims at providing leverage for small farmers to consolidate outputs and increase value-added production.

Many of the export oriented farms, especially fruits and vegetables, have made a great deal of investment in modern irrigation equipment, new production and marketing technologies that help them meet international standards. Morocco’s agricultural exports consist mostly of fresh citrus, fruits and vegetables mostly targeted at nearby European markets. In 2015, Morocco’s exports of agricultural products were estimated at about USD 2.4 billion.

 

Kenya

The agricultural sector is the mainstay of the Kenya’s economy. The sector directly contributes 24% of the Gross Domestic Product (GDP) and 27% of GDP indirectly through linkages with manufacturing, distribution and other service related sectors. Approximately 45% of Government revenue is derived from agriculture and the sector contributes over 75% of industrial raw materials and more than 50% of the export earnings. The sector is the largest employer in the economy, accounting for 60 per cent of the total employment. Over 80% of the population, especially living in rural areas, derive their livelihoods mainly from agricultural related activities. Due to these reasons the Government of Kenya (GoK) has continued to give agriculture a high priority as an important tool for promoting national development because of its recognition of contribution of the sector to the overall GDP of the country as shown;

The Kenyan Government recently launched a critical phase of its ambitious agriculture development strategy called the National Agriculture Investment Plan (NAIP) which is the core blueprint for revitalizing crop, livestock and fisheries production in Kenya. Agriculture employs 75 percent of Kenyans but has yet to reach its potential to boost food security, nutrition and incomes; this plan is meant to bridge that gap. The strong commitment of the Kenyan government to this policy makes agriculture an attractive investment sector within the Kenyan economy.

The major agricultural products are Sugar cane, maize, plantains and beans, as well as meat and dairy products. Other crops for export include Tea as the main earner, vegetables, coffee, fruit, cotton and flowers are also major export crops.

Production of major crops in Kenya.

The table shows the yield trends of the five most valuable crops in Kenya. Bananas, mangoes, and potatoes show a clear trend toward increasing yields over the past 15 years.

Crops in Kenya by value of production.

Yield trends for major crops in Kenya.

Available data as well as policy direction of the Kenyan government shows strong commitment to boosting the nation’s agricultural sector. This provides vast and low risk investment opportunities for the savviest investors both local and foreign and guarantees high ROI in this sector.

 

AUTOMOBILE

The automotive manufacturing industry is a key component of modern manufacturing in an economy. However, it is not located in all economies and is not often associated with African economies – that is fast changing.

Automotive production does and has taken place in Africa. The industry is nearly 100 years old in South Africa. In the 1980s and 1990s, Nigeria achieved significant production and production occurs in Egypt and more recently Morocco. Smaller production activities take place in Kenya and some decades ago in Zimbabwe. 

The rapid growth of the middle class in many African countries has pushed demand for automobiles to an all-time high. The opportunities that exists for automobile industry is vast and until now, remain untapped. The entire value chain for the automobile industry presents opportunities for investment. Being a relatively untapped industry, it is expected to grow in a step-by-step model. A possible scenario will be for Original Equipment Manufacturers (OEMs) to strike partnership deals with local manufacturers for assembly. This will be a smart move giving to the fact that most African countries are deliberately taking policy steps to develop the industry in their respective countries; 

Nigeria is on course to becoming the hub of Africa’s automotive industry. With over 182 million people and a fast growing middle class, Nigeria is definitely the right choice for investors in the automotive sector.

The Nigerian auto industry has for years been largely import driven, however, in the early 80’s, the Federal Government set up state-owned plants across the country via agreements with European Original Equipment Manufacturers (OEM): Peugeot Nigeria Limited (PAN), Styer Nigeria Limited and National Truck Manufacturers (NTM) in Northern Nigeria; Volkswagen of Nigeria Limited (VON) and Leyland Nigeria Limited in the South, Anambra Motor Manufacturing Company (ANAMMCO) in the East.

In order to harness the potential of the automotive sector, the Nigerian government in 2013 announced a new national automotive policy, the National Automotive Industry Development Plan (NAIDP), which seeks to dissuade vehicle importation and inspire local production. The National Automotive Design and Development Council (NADDC) seek to ensure the timely implementation of the provisions of the policy as part of its mandate to revitalize the auto industry.

Nigeria imports about 400,000 vehicles (100,000 new and 300,000 used) annually, valued at about US$3.45 billion. The automotive industry currently generates around 2,600 jobs but has the potential to create about 70,000 direct jobs and 210,000 indirect jobs.

INVESTMENT OPPORTUNITIES

The auto industry presents a U$3.45 billion opportunity in import substitution. With over 182 million people of whom over 40 million are in the growing middle class, Nigeria represents a major potential opportunity for investments in the auto sector.

Nigeria’s potential new annual new-car market could be circa one million. However, it currently sits at about 56,000 in a market dominated by used cars. The current administration is making strong efforts to discourage importation and has revived 14 assembly plants for local production.

Investment Incentives

  • Pioneer Status (tax holiday) granted for 3 years and renewed for the next two years

  • 100 percent repatriation of profit net of taxes

  • Capital allowance not restricted. Granted in full -100%

  • Investment Promotion and Protection Agreement: The IPPA helps to guarantee the safety of investment of the contracting parties in the event of war, revolution, expropriation or nationalization.

Ghana’s automobile industry has been a driver of growth of the country as it is one of the most visible sectors to receive foreign investment. Some of the popular car brands in use are Toyota, Mercedes Benz, Mitsubishi, KIA, Nissan, Hyundai Volkswagen, and Renault among others. Ghana is a multicultural and ethnically diverse West African nation and is the 9th largest African economy. Its demand for automobiles and automobile spare parts is mostly driven by a sharp increase in its middle class as is the case with most African countries.

Local automobile manufacturers are springing up in Ghana with many still needing better deals with automobile OEMS. 

40 years after it closed its original plant in the country, Volkswagen’s new vehicle production facility in Kenya began production February 2017.

The new factory receives part assembled Polos and Vivos from Volkswagen South Africa’s (VWSA) Uitenhage assembly plant in the Eastern Cape for final assembly. It will handle 1,000 cars this year, increasing over time to 5,000 units.

Ethiopia already produces about 8,000 vehicles a year using imported kits in very small plants.

BMW, Ford and Toyota have all increased their operations in South Africa over the past few years. South Africa exported 173,000 vehicles to Europe in 2016, up from 116,000 in the previous year, and forecasts show that production will rise by 48% to 900,000 units a year by 2020.

Other companies, such as Toyota, Nissan and Mitsubishi already have similar facilities in Kenya, mainly producing buses and trucks rather than cars. Total production stands at about 10,000 units a year, according to the Kenya Vehicle Manufacturers Association (KVMA).

Volkswagen also plans to launch a ride-hailing service, along the same lines as Uber, in Rwanda, possibly using an electric version of the Golf.

Morocco has followed a similar pattern to South Africa, offering incentives for foreign companies and developing Tanger Med as an export port for the sector. As a result, output increased from 100,000 vehicles in 2012 to 348,000 in 2016.

With an increased demand and production of automobiles naturally comes increased demands for auto parts:

AUTO PARTS INDUSTRY

The African auto parts market for passenger vehicles is emerging as one of the most important re-export markets, growing more than 11 per cent year-on-year, and estimated to be worth US$7.68 billion in 2013 and based on the double-digit growth of demand in key Sub-Saharan countries, the value of the Africa’s auto parts market is likely to double by 2020.

Countries such as Nigeria, Kenya, Uganda, Ghana, have witnessed double digit growth in demand of parts in the past five years. Focusing on the tremendous opportunities of doing business in the fast-emerging African market, there are currently more than 21.6 million cars on the continent’s roads which make up for nearly 70 per cent of spare parts consumption. This provides viable investment opportunities for OEMs to take advantage of the emerging African markets.

 

INFRASTRUCTURE/FINANCING

Infrastructure has played a significant role in Africa’s recent economic turnaround, and will need to play an even greater role if the continent’s development targets are to be reached.

Simulations suggest that if all African countries were to catch up with Mauritius in infrastructure, per capita economic growth in the region could increase by 2.2 percentage points. Catching up with Korea’s level would increase economic growth per capita by up to 2.6 percent per year. In a number of countries—including Cote d’Ivoire, Democratic Republic of Congo (DRC), and Senegal—the impact would be even larger.

In most African countries, particularly the lower-income countries, infrastructure is a major constraint on doing business, and is found to depress firm productivity by around 40 percent. For most countries, the negative impact of deficient infrastructure is at least as large as that associated with corruption, crime, financial market and red tape constraints.

For an important subset of countries, power emerges as the most limiting factor, being cited by more than half of firms in more than half of African countries as a major business obstacle.

Deficiencies in broader transport infrastructure and infrastructure for information and communication technologies (ICT) are less prevalent, but nonetheless substantial in some case.

Private Investment in Infrastructure in Sub-Saharan Africa, 1990–2015

Africa’s largest infrastructure deficit is to be found in the power sector. Whether measured in terms of generation capacity, electricity consumption, or security of supply. Africa’s power infrastructure delivers only a fraction of the service found elsewhere in the developing world. The 48 countries of Sub-Saharan Africa (with a combined population of 800 million) generate roughly the same amount of power as Spain (with a population of 45 million).

Power consumption, at 124 kilowatt hours per capita per year and falling, is only a tenth of that found elsewhere in the developing world, barely enough to power one 100-watt light bulb per person for three hours a day.

With regard to ICT, Africa is staying closer to developments elsewhere in the world. The percentage of Africa’s population living within range of a GSM signal rose dramatically from five percent in 1999 to 57 percent in 2006. Over the same period, more than 100 million Africans became mobile telephone subscribers. Indeed, in some countries, household access to mobile telephone services now exceeds that of piped water. Internet penetration, however, lags considerably behind, with little more than two million subscribers and a further 12 million estimated to be making use of public access facilities.

Africa’s road density is sparse when viewed against the vastness of the continent. As a result, only one-third of Africans living in rural areas are within two kilometers of an all-season road, compared with two-thirds of the population in other developing regions.

Africa’s water resources are abundant, but owing to an absence of water storage and irrigation infrastructure, they are grossly underutilized. The continent experiences a particularly high level of hydrological variability, with huge swings in precipitation across areas, across seasons, and over time. This variability will only be exacerbated by climate change. As a result, achieving water security—defined as reliable water supplies and acceptable risks from floods and other unpredictable events, including those from climate change—will require a significant expansion of water storage capacity from current levels of 200 cubic meters per capita to levels of at least 750 cubic meters per capita, a level currently found only in South Africa.

In addition to water storage, there is further need to distribute water for agricultural use. At present, only six million hectares, concentrated in a handful of countries, are equipped for irrigation. Though less than five percent of Africa’s cultivated area, the irrigation-equipped area represents 20 percent of the value of agricultural production.

The cost of redressing Africa’s infrastructure deficit is estimated at US$38 billion of investment per year, and a further US$37 billion per year in operations and maintenance; an overall price tag of US$75 billion. The total required spending translates into some 12 percent of Africa’s GDP. There is currently a funding gap of US$35 billion per year.

Africa’s governments recognize the infrastructure problem, but they have neither the financial resources nor the technical ability needed to close the gap by themselves. Private capital and expertise must be mobilized.

International private capital—especially foreign direct investment—has much to gain by broadening its investment in African infrastructure. Successful projects are likely to generate a higher return on investment than similar projects in other regions, but to succeed in Africa, investors must adapt to an environment that presents a number of challenges related to government and financial markets: Private-sector investors in African infrastructure projects need four key attributes:

• A mindset and expectations that reflect the distinctive realities of the African investing environment—in particular, persistence and resilience, a long-term view of project success, and appropriate risk tolerance.

• Deep local knowledge of each target market and each local environment, as well as of local dynamics.

• An entrepreneur/engineer outlook rather than a more hands-off financier-type viewpoint with an integrated end-to-end view of the project and a willingness to acquire in-house capabilities for its different stages.

• Awareness of community engagement as a core priority, not an add-on.

RANGE OF WAYS PRIVATE SECTOR CAN INVEST IN AFRICAN INFRASTRUCTURE

 

Source: BCG Analysis.

Africa presents a huge market opportunity. It has 52 cities with population of one million or more and has an extremely low current level of intraregional trade. Its urban population is expected to increase by 50% by 2030. The purchasing power of Africa’s middle class is growing. In a decade, the continent will have the largest workforce in the world, along with 60% of the world’s uncultivated arable land and abundant energy resources ranging from hydrocarbons to renewable. The continent is home to four of the world’s ten fastest-growing economies.

 

 

MANUFACTURING

Africa is fast emerging as the most reliable and bankable avenue for greater returns in investment and trade. Manufacturing is still a nascent industry in Africa, Africa had set up an enabling environment for manufacturing since the 60s and 70s, those policies ebbed away for lack of political stability or political will to sustain favourable initiatives set up by successive governments; however, manufacturing is now a resurgent movement in Africa as most countries have come to embrace manufacturing which holds major potential for employment opportunities. Big economies in Africa from Nigeria, South Africa, Kenya, Rwanda, Angola, Morocco, Algeria, etc. are enacting policies to boost local manufacturing, backed up with lucrative incentives of zero tax for a number of years, import waivers for machineries, state provision of land, access road, insurances covering supply of raw materials and so on.

FACTORS FOR SUCCESS IN MANUFACTURING INVESTMENT

Aim Regional – Success in the manufacturing sector in Africa is dependent on a multinational’s willingness to capture regions as against dominating one country, however, capturing regions must first of all start with locating the must-win countries of each region – Morocco (North Africa), Nigeria (West Africa), Kenya (East Africa), South Africa (Southern Africa) and Angola (Central Africa) but that is not toignore other strong alternatives as Senegal, Cote d’Ivoire, Ethiopia and Algeria. Investors will start off on sound cost effective measures and scalable operational efficiencies by planning regionally.

Informal Market – The informal economy is a key feature of life in Africa — estimated to account for between 42% - 50% of GDP (Ernst and Young report). The highest figures areâ in Zimbabwe (59.4%), Tanzania (58.3%) and Nigeria (57.9%). South Africa has the least informal market size — only 28.4% of GDP. Small “mom and pop” stores have enormous market share — possibly as high as 85% of volumes. The combination of lack of formal retail, underdeveloped infrastructure and a fragmented local logistics sector means that foreign consumer products companies often need to consider strategic improvisation to create their own solutions for cracking the informal market and reaching consumers effectively and in a cost-efficient manner. Although not apparent, informal markets have structures, rules and a flow which businesses can tune into if they are prepared to invest sufficient time and effort.

Other factors to consider are use of local talent which greatly depends on availability of high quality skills, you may have to study the prevailing educational level of the locals and the vibrancy and diversity of their labour market. Investors must foster deep relationships with the government across all the tiers (local, state and federal) and your indigenous partner (if any); this will be instrumental to stay relevant to your consumer base. Finally, investors going into manufacturing must embed a strong and consistent culture of corporate social responsibility, a number of manufacturers have executed this to the extent that they are unknowingly considered indigenous companies to many local consumers – P&G runs a robust free childcare educational program to mothers hand in hand with the governments of some African countries, Unilever distributes a million free samples of products to mothers in maternity clinics, Coca Cola offers branding support to local stores including free signage, glass-front refrigerators and Coke branded menu to boost customer experience in each of those stores.

Why should an investor look into manufacturing in Africa?

Consider Africa today:

  • Local demand for fast moving goods is spiking up exponentially, consumer spending is growing at 16% compound per annum

  • GDP per household has doubled in the past 15 years, meaning families have more disposable income to spend on household goods

  • Over 90 million households earn more than $5000 per year; this is the income level at which package goods become affordable.

  • With a literacy rate of 70% and a corresponding 45% people living on $1 a day, means there is a robust labour market ready for any would-be manufacturer.

Consider Africa tomorrow:

  • African population will balloon to 1.5 billion by 2025 and on to 2.1 billion by 2050 (World population datasheet)

  • Consumer spending will be $1.4 trillion by 2020 (according to study by Financial Mail)

  • The collective GDP of Africa will be $2.1 trillion by 2020

  • 50% of Africans will be living in cities by 2030 (Mckinsey report)

  • There is a growing list of Manufacturers in Africa – Coca Cola, Unilever, Guinness, Cadbury, Procter and Gamble, BMW, Cadbury, Dangote Group, SABMiller, etc.

 

PUBLIC PRIVATE PARTNERSHIP

Africa is widely acknowledged as being the ‘preeminent emerging markets investment destination’ attracting global investors across all sectors. Investors seeking relatively higher risk-adjusted returns are appraising opportunities across services and infrastructure enabled by public-private partnerships (PPP).

Governments (especially in Africa) are looking to public-private partnerships (PPPs) to radically improve infrastructure networks in their countries and enhance service delivery to their people. They are hoping that this development finance model — where the state shares risk, reward and responsibility with private firms — will improve services to the masses, while avoiding some of the pitfalls of privatisation: unemployment, higher prices and corruption.

PPPs potentially bring the efficiency of business to public service delivery.

PPPs allow governments to retain ownership while contracting the private sector to perform a specific function such as building, maintaining and operating infrastructure like roads and ports, or providing basic services like water and electricity. Both sides stand to immensely benefit from the contractual agreement. Government earns revenue by leasing state-owned assets or alternatively pays the private sector for improved infrastructure and better service delivery. Often the private companies can do the job more efficiently, which can lower prices and improve rollout. The private operator gets reimbursed either by government or consumers for doing its work, at a sizable profit.

States often start with small PPPs projects, such as building and maintaining government offices, as Botswana is doing, to learn and develop the ability to work more effectively with larger PPPs projects.

FACTS BACKING AFRICA AS A VIBRANT DESTINATION FOR PPP INVESTMENT

  • $95 billion is what Africa needs yearly for infrastructure capital projects, so far only $45 billion is being mobilized by governments in Africa leaving a funding gap of between $40 to $50 billion which the private sector can fill up with favourable returns on investment. (World Bank report)

  • Nearly 600 million people lack access to electricity in Africa

  • 300 million have no access to safe potable water in Africa

  • Less than 1.5 doctors to 1000 population, less than 1.5 hospital beds per 1000 people

  • 350 public-private partnerships in South Africa alone at national, provincial and municipal level since 1994. South Africa has the greatest cumulative experience of PPP in Africa.

  • 300 years is what would take Nigeria (Africa’s largest economy) to reach developed countries’ level of access to doctors without PPP at current rate of government spending.

 

 

 

Examples of successful PPP initiatives in Africa

S/N

PPP PROJECT

PRIVATE PARTNERS

COUNTRY BENEFECIARY

1

Toll Road from South Africa to Mozambique

A 30- year concession for a private consortium, to build and operate the toll road from Witbank, South Africa to Maputo, Mozambique

Trans African Concessions (TRAC), SA Infrastructure Fund; Rand Merchant Bank Asset Management, ABSA, Nedcor, Standard Bank and First National Bank

South Africa and Mozambique

$700 million

2

Multi-Utility Provision in Gabon

A 20-year concession contract with the government of Gabon for the provision of both water and electricity services.

Societe d’Energie et d’Eau du Gabon (SEEG)

Gabon

$280 million

3

 

Urban Water Expansion, Dakar

French company SDE; the National Water Company of Senegal (SONES); the Ministry of Water and the World Bank

Senegal

$300 million

4

Malaria Control, Mali

Country wide distribution of Insecticide-treated net (ITN)

Mali Ministry of Health, USAID, UNICEF and NetMark which is a consortium of private high tech mosquito net manufacturing companies from Denmark, Netherlands and Germany

Mali

$50 million

5

Solar Power in Prefectures, Morocco

Office National de l’électricité (ONE) State-run electricity operator, Renewable Energy Service Company (RESCO) comprised of a French oil company, a French electricity company and one of their joint subsidiaries

Morocco

$35.5 million

6

Community Life Centres

A cost-effective primary healthcare delivery project including telemedicine solutions, family planning activities and training.

Safaricom, Huawei, Philips, GSK and Merck, Sharp & Dohme (MSD)

Kenya

Over $1.5 million

 

Generally, for a country to establish an enabling environment for PPP, the World Bank states that at the macro level these factors should be in place:

  • Political stability;

  • A continuous pipeline of bankable projects;

  • Transparent and efficient procurement;

  • Enforceability of contracts;

  • Equitable sharing of risks with the public sector; and

  • Certainty of the envisaged future cash flows.

  • Real demand for the service

  • The right prescription of local content into the projects

  • Hedging against local currency fluctuations

 

INFORMATION AND COMMUNICATION TECHNOLOGY

Africa is advancing by leaps and bounds in adoption and use of information and communication technologies (ICTs) in the private and public sectors. This is unique sector in that it influences the advancement of all other sectors and factors of production in the economy. ICT innovations are dramatically changing the way African governments and businesses operate, ultimately driving entrepreneurship and economic growth.

ICT in Africa has its own set of unique opportunities and challenges. The African Development Bank (AfDB), estimates that the continent’s mobile industry contributes US$56 billion to the regional economy, around 3.5% of total continental GDP. While the continent’s mobile penetration was around 65% in 2011, internet penetration was at about 11.5% and remains considerably underdeveloped in comparison.

While public sector investment in ICT in Africa has improved considerably, the private sector continues to be the key driver for investment and has invested close to $50 billion over the last decade.

AfDB suggests that a significant potential opportunity exists for low and middle-income African countries in the IT-enabled services (ITES) sector, which will exploit available broadband infrastructure. According to the report, the ITES sector – which is ICT-based services such as call centres – represents a “$500 billion addressable market, of which only about 20% has been realised”.

ICT IN AFRICA FACTS AND FIGURES

20-fold increase in access to bandwidth internet in just four years

7% growth contributed by ICT to Africa’s total GDP

$56 billion invested by the private sector in telecom

$170 billion projected ICT market in 2017

77% annual growth rate in mobile data demand (CISCO, EMEA report)

20-fold increase in data traffic up to 2020 (Ericsson)

930 million mobile phone subscribers, larger than Europe and USA combined

EXAMPLES OF SUCCESSFUL INVESTMENTS IN ICT

  • Agriculture: In Kenya, the Kilimo Salama scheme is providing crop insurance for farmers, using the M-PESA payment gateway, helping them to better manage natural hazards such as drought or excessive rainfall.

  • Climate change adaptation: In Malawi, a deforestation project is training local communities to map their villages using GPS devices and empowering them to develop localized adaptation strategies by engaging communities.

  • Financial services: In Senegal, SONATEL is one of the latest operators on the continent to launch a money transfer service that is enabling 200,000 subscribers to send and receive money using mobile phones.

  • Health: In Mali, telemedicine is helping overcome the lack of trained healthcare workers and specialists in rural areas, specifically the IKON Tele-radiology program.

  • Taxes: The possibility of electronic filing of taxes in South Africa.

  • Agriculture: The use of sensor-based irrigation systems in Egypt is revolutionizing traditional practices.

  • Security: Chinese telecoms firm Huawei and Safaricom recently collaborated on Kenya’s “Safe City” solution to deal with terrorism in Nairobi and Mombasa, 1,800 surveillance cameras were installed in the two main cities.

 

 

FINANCIAL SECTOR

The rise of Africa’s financial services sector in recent years has been remarkable. From a relatively underexplored and underinvested sector a mere decade ago, today, this sector is considered to be one of the continent’s brightest prospects. This is due to the fact that financial sector development has been on the agenda of African policymakers for some time now as (aside from profitable opportunities for investors) continued development of this sector has the potential to transform the lives of millions of people across the continent. For instance, access to credit by the SME/the more informal businesses has the ability to provide jobs, create safety networks and, ultimately play a role in reducing poverty.

The financial sector is undoubtedly the cornerstone of any economy evident in the fact that this is an enabler of all other sectors. Governments know that having a sound fiscal and monetary policy sets up the right environment for a booming season of investments. (To be Continued…)

 

Source: WEF, OECD, NEPAD, KPMG, Ernst and Young, The Africa Report, African Business, World Bank, African Development Bank

 

 

 

 

CLOSING SUMARY

 

 

 

 

sources:

http://www.foodsecurityportal.org/kenya/food-security-report-prepared-kenya-agricultural-research-institute

http://africasciencenews.org/renewed-push-to-boost-agriculture-investments-in-kenya

http://www.momagri.org/UK/agriculture-s-key-figures/With-close-to-40-%25-of-the-global-workforce-agriculture-is-the-world-s-largest-provider-of-jobs-_1066.html

 https://blogs.worldbank.org/opendata/future-world-s-population-4-charts

http://nigeria.opendataforafrica.org/iacdzsd/crop-production-in-nigeria

Africa Agriculture Status Report 2016.

http://africapolicyreview.com/analysis/building-an-automotive-industry-in-africa/

The State of Agricultural Commodity Markets 2015–16 (FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS)

https://www.export.gov/article?id=Morocco-Agricultural-Sector

http://www.cepici.gouv.ci

http://www.worldbank.org

http://www.investinethiopia.net/index.php/investment-opportunity-ethiopia/agriculture

https://www.oxfordbusinessgroup.com/morocco-2016/agriculture-fisheries

http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:21951811~pagePK:146736~piPK:146830~theSitePK:258644,00.html

http://www.momagri.org/UK/a-look-at-the-news/2016-IASM-Focus-on-Moroccan-agriculture_1751.html

http://www.autopartswestafrica.com/ghanas-automobile-industry/

http://www.invest-nigeria.com/automotive-sector/

http://www.smallstarter.com/curated-content/cars-made-in-africa-how-africas-automobile-industry-is-growing-again/

http://www.autopartswestafrica.com/ghanas-automobile-industry/

BCG Report-Africa-May-2017


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