The eThekwini City Council in Durban and the Greater Port Harcourt City Development Authority in Nigeria invite you to an Investment Forum to showcase opportunities in the GPHCDA New City development in Port Harcourt, the capital of Nigeria’s oil producing industry.
The First Phase of the project is moving ahead in 2010 and the award of contracts is due to begin for Bulk Infrastructure, Interim Services and Real Estate Development for Phase 1A of the project.

A high-level team from Rivers State and the GPHCDA is in South Africa to speak to South African investors and suppliers of goods and services.

PLEASE RSVP to Dianna Games or call 082 331 4225

A one-day investment forum is being held in Durban on 10 September to discuss the investment opportunities with South African investors, contractors, developers and service providers. A high-level team from Rivers State and the GPHCDA will address the event.

The event is being hosted by the eThekwini Municipality. Mayor Obed Mlaba has signed an MoU with the City of Port Harcourt in a twinning arrangement to build the relationship between the two cities. In the first phase, Durban will be training Nigerian officials in South Africa.

Nigeria, Africa’s biggest market, is one of South Africa’s top trading partners on the continent. Trade between the two nations has risen from R11m in 1994 to more than R11bn in 2009. The number of South African firms doing business in Nigeria has jumped over the past decade and includes some of the country’s biggest listed companies.

The South Africa-Nigeria Binational Commission celebrated 10 years in 2009 and is the political underpinning of the bilateral relationship while the South Africa-Nigeria Chamber of Commerce represents business.

Port Harcourt, the capital of Rivers State and the de facto capital of the Niger Delta, is one of the fastest growing cities in Africa, with a population currently of about five million people. The international oil companies operating in Nigeria operate around the city, which is an Oil and Gas Free Trade Zone with two airports, including an international airport; two ports; and a rail terminus. It also the regional headquarters for most Nigerian banks.

The Master Plan for the New City covers a period of 50 years, with the development being undertaken in phases. The first phase is being launched this year and tenders for infrastructure, contracts and other services will be advertised before the year end.

Opportunities in the first phase include the following sectors: power; water supply and reticulation;  solid waste management; ICT; residential housing, a commercial office development; multi-sector industries; a golf course and club house development; and an urban transport system.

South African-based engineering company Arcus Gibb is a partner in the project and has been responsible for drawing up the Master Plan and designing engineering services for the development.

The Greater Port Harcourt Development Authority was legally inaugurated in 2009. It provides the legal and regulatory framework for the development, reducing the risk of any policy reversal by future administrations.

PRESIDENT Jacob Zuma ’s visit to China was, by some accounts, a big success. Much was made of the size of the business delegation — about 350 people — and the government team of 13 Cabinet ministers. It was a display of business-government engagement that SA rarely sees. It signalled the type of “SA Inc” image many believe the country should be putting forward in the way most of the countries the president visits are doing.

But behind all the warm and fuzzy statements, there is, sadly, no SA Inc. In China, our politicians were calling for the economic giant to invest in South African manufacturing while strikers were pounding the streets.

It is probably no coincidence that the African countries in which China has chosen to set up special economic zones to attract Chinese manufacturing do not include SA and are the countries not wracked by strike activity.

The weakness of SA Inc is more pronounced in SA’s own backyard — Africa. Take Angola. The state visit to one of SA’s biggest trading partners earlier this year also boasted a sizeable business delegation and was hyped as signalling SA’s seriousness in taking this bilateral relationship forward. Our government has taken the relationship so seriously that the post of ambassador in the South African mission in Luanda was vacant before his visit — and remains so.

Zuma plans to visit Nigeria later this year to mark that country’s 50 years of independence. But he is not assured of a rousing welcome given the resentment among Nigerians about our government’s failure to address the challenges of getting visas to visit SA, which is also hampering SA investors’ training plans for Nigerian employees. This has led to similar problems for South African business people getting visas to do business in Nigeria. Zuma must put pressure on the Department of Home Affairs to get its house in order if he plans to highlight the importance of this bilateral relationship on his visit.

Talk of economic diplomacy rolls smoothly off the tongues of our politicians but there is no real plan to leverage SA’s strong political ties for economic gain, despite growing competition in Africa from the foreign countries Zuma is so assiduously courting.

The symbolic importance of Zuma’s state visits will be lost if they are not underpinned by a strategy of engagement and diplomatic support that leverages longer-term benefits for the country as a whole. One lesson from the emerging markets Zuma has visited is the boost an export-led political strategy can have on domestic growth. For example, since it opened up its economy in 2000, Brazil has seen annual export growth of 13%, with a positive effect on its domestic economy.

The quality of many diplomats and the lack of a trade and investment component in most African missions means their presence has limited benefits for the growing number of South Africans doing business on the continent.

Many of the agreements negotiated in bilateral relations at a political level are not communicated to business and are often not signed or ratified, remaining little more than a gesture.

Back home, the politicians worry about the political repercussions of uneven trade flows (in SA’s favour) with other African states and voice concern about the perception of SA as a regional hegemon. They talk about codes of conduct for companies operating in Africa, rather supporting their expansion.

The government is clearly more concerned about making political friends in Africa than leveraging benefits for itself in the post-financial crisis era, where Africa is the new land of opportunity. There is almost no branding of SA in the region, nor do enough of our officials in other African countries court local businesses to invest in SA. They should be made to feel as welcome as potential investors from Europe, Latin America and Asia, if only to improve the climate for South African exporters and investors.

If SA does not wake up to the benefits of having a proper multi-stakeholder Africa strategy that leverages economic benefits for SA from the groundwork that has already been laid, it will be left out in the cold in the new scramble for Africa.

The corporate cleanup in the country, led by the financial sector, has taken quite a few important scalps over the past year. That of NSE chief Ndi Okereke-Onyuike, just months before her official retirement, was one more. As many of her counterparts in the financial sector were being swept away by the Central Bank of Nigeria, the questionable leadership of the country’s foremost financial institution lingered. For Nigerian business, the only surprise about the axing was that it took so long.

 Okereke-Onyuike brought the exchange’s reputation into disrepute through ill-considered ventures outside the financial market. The most controversial was her chairmanship of Transcorp, an investment vehicle established in 2005 by leading Nigerian business people to leverage opportunities in Nigeria. It was regarded as a patronage vehicle for former president Olusegun Obasanjo, who was a driving force behind its creation.

When Transcorp listed in 2006, the NSE chief, as its chairwoman, became both player and referee, raising questions about her moral fitness to lead the exchange. The listing itself was controversial. For example, the company failed to meet the regulatory requirement of a five-year track record and its valuation was done solely on the credentials of its board members, most of them bank CEOs.

Nevertheless, more than 300000 shareholders were signed up and the company made headlines with the size of its investments. These included bankrupt telecoms utility Nitel — which sane investors had studiously avoided. By 2010, Transcorp shares had lost more than 90% of their value.

Nigeria’s 2009 banking crisis was precipitated more by reckless bank lending for even more reckless speculation on the NSE, Africa’s second-biggest exchange after the JSE, than it was by the wider global crisis.

In the heady days preceding the global meltdown, Nigeria was awash with money. Recapitalised banks were soaking up money with unprecedented interest in their international rights offers. Concerns about regulation on the NSE were swept under the carpet as investors made obscene profits.

Following the global financial meltdown, money deserted the NSE. The all share index dropped nearly 46% in 2008 and a further 33% last year, with turnover down by over 70% last year.

The decline hit the financial sector, which has the biggest representation on the exchange, and the central bank moved in to rescue ailing banks with a $4bn bail-out last year.

The NSE’s president, food and cement mogul Aliko Dangote, was elected last year, despite allegations he had manipulated the shares of African Petroleum, a company belonging to his long-time foe, Nigerian oil industry billionaire Femi Atedola. Dangote’s election was nullified by the courts but he continued in the post awaiting an appeal. He recently claimed the NSE was bankrupt and that audits had been doctored to mask the crisis.

But Dangote (also on the Transcorp board), was given the boot by the regulator, along with Okereke-Onyuike and the NSE’s entire governing council.

 The new CEO of the Securities Exchange Commission (SEC) had vowed, on taking up the post in January, to restore investor confidence to the exchange. The SEC pounced when Accenture, conducting the hunt for Okereke-Onyuike’s replacement ahead of her retirement, suspended work, claiming it had not been paid. The regulator cited concerns about inadequate oversight, continuing litigation concerning the presidency, governance challenges and failure to implement a succession plan.

Given the importance of investor confidence in capital markets, the latest events at the NSE are an obvious blow to Nigeria, which is spending heavily to celebrate 50 years of independence in October — also, ironically, the 50th anniversary of the NSE.

But the developments have been greeted with relief by the business community, despite the potential short- term reputation and trust issues.

The cleanup of the financial sector has been compromised by the dubious leadership of its premier institution.

The NSE is pivotal to the Nigerian economy and its demise would be a major setback to the country’s ambitions to become a global player. The washing of its dirty linen in public was necessary for the start of a new era for the exchange.

Despite the still-strong likelihood of violence, support for an election next year is gaining ground because of frustration with the pace of reform and the political infighting holding back the country’s recovery. The unity government is not tackling the tough issues.

As rebel Zimbabwe cricketer Henry Olonga said recently, the rot in his country is much deeper than anything a unity government can deal with.As long as those leaders who have been perpetrators of all those human rights abuses are still around, it’s just a facelift. They’ve just tightened things to make it look a little more pretty,” he told Wisden Cricketer magazine.

Expectations of an economic dividend from the political compromise have not been met. Finance Minister Tendai Biti has revised downwards growth projections for key sectors — mining, tourism and manufacturing — forecasting gross domestic product growth of 5,4%, down from 7%.

Official diamond sales to fund revenue shortfalls have not been possible until now because of human rights abuses in diamond fields and official theft by old-guard politicians (Mining Minister Obert Mpofu is reported to have been on a property buying spree recently, acquiring 27 properties in Victoria Falls alone).

A new constitution is the MDC’s condition for taking part in an election. But the process of drawing it up has been delayed by nearly eight months because of political squabbles and funding shortages. Last month, Prime Minister Morgan Tsvangirai of the MDC and Mugabe jointly kick-started it again, with the launch of the constitutional outreach programme, which will let Zimbabweans make inputs. The leaders urged people to keep to the timetable, suggesting a new urgency to complete the constitution, possibly with an election in mind.

The public participation process is crucial to avoid a repeat of what happened in 2000, when the nation voted against a draft constitution drawn up by the government with minimal consultation and public input.

 But Mugabe has not been as eager to implement key reforms that are considered necessary to the holding of a free and fair election. These mostly involve reversing legislation he introduced in the heady days of unfettered power up to 2008.

 More than 23 bills before parliament — relating to, among others, human rights and security reforms, media freedom and access to information — have not yet been passed and the Public Order and Security Act, which curtails freedom of movement and association, remains on the statute books. Mugabe retains most of the powers he has abused in previous elections.

 These include presidential powers. He retains control of the army and police leadership, despite the shared home affairs portfolio with the MDC.

 State radio recently revived jingles hailing Mugabe’s leadership and airing other crude Zanu (PF) propaganda that had not been heard since the launch of the unity government.

 The party has also been accused of mobilising its forces, using the constitutional process to unleash its thugs in rural areas to intimidate people into resisting MDC proposals.

Would a Zanu (PF) poll win, with Mugabe at the helm, be taken seriously by the international community, which has resisted pumping aid and investment into Zimbabwe because of what he and his party represent?  There is likely to be a question mark over such a win anyway, given the history of violent and rigged elections.

A clean slate is what the country needs. Zanu (PF) in its current form does not represent this. An overhaul of structures may give the party a chance of winning an internationally monitored poll — not an overnight process. Its eagerness to hold an election suggests a resort to tactics of old. The uneasy truce may have tided Zimbabwe over a difficult period and broken Mugabe’s and Zanu (PF)’s stranglehold on power. But undue haste to bring about a new dispensation may be a bigger obstacle to progress than continuing with the compromise for a while longer, in order to put sturdier building blocks in place.

The landmark occasion has been celebrated with parades, parties, football games, dancing, public speeches and publications glorifying the achievements of governments.

Some governments have not stinted on spending. In Senegal, President Abdoulaye Wade, who describes himself as something of an art boffin, spent about $70m on an African renaissance statue to mark the occasion. Some may argue that this is a fitting tribute to the independence struggle and its fruits.

However, the statue was built by North Koreans, who, ironically, have created a thriving business building monuments to mark freedom and independence for African countries. Senegalese craftsmen, who are among the continent’s finest, had a minor role in the project.

And the statue did not come cheap. Yet Senegal remains a poor country 50 years after independence and the statue towers over extreme poverty in Dakar.

In Nigeria, which celebrates 50 years of independence in October, President Goodluck Jonathan has earmarked about $66m for projects to mark the occasion — a dramatic increase from the $400 000 suggested by his predecessor, the late Umaru Yar’Adua. The list of Nigerian anniversary projects seems uninspiring and designed more to line the pockets of suppliers than make a nation proud.

The extravagance is not lost on a population struggling with virtually no power supply, rampant poverty and a depressed economy. In Cameroon, President Paul Biya, in power for 28 years, spoke at length about democracy and good governance in the presence of presidential guests from other African countries, not one of whom was democratically elected.

In Madagascar, citizens raised flags on independence day but had little to celebrate with their economy struggling and their nation diplomatically isolated since its unelected president, Andry Rajoelina, swept to power last year in an uprising that removed his elected predecessor.

Other countries marking 50 years of independence include the failed state of Somalia; the resource-rich but governance-poor nations of Central African Republic, Democratic Republic of Congo, Chad and Mauritania; and others that have experienced limited democracy or development, such as Togo, Gabon, Benin, Niger, Cote d’Ivoire and Cameroon.

The desire to celebrate 50 years of independence is understandable, but the occasion does raise the issue of what these countries have achieved in that time. In Africa, the vision of 1960 remains, in most cases, a vision.

The success rate in building politically and economically sustainable entities has been patchy. And many of the problems African countries are experiencing today are of their own making. Leaders spend more time trying to find scapegoats for their problems than solving them.

Fifty years after independence, most Africans are dissatisfied with their lot. Poverty is rife, there is little decent infrastructure, public finances are regularly plundered and politics is about acquiring personal power and money rather than governance.

Planning for the future is almost nonexistent, reflected in the fact that countries have preferred to mark their anniversaries with one-off events and monuments rather than with projects to take them into the future.

Africans themselves, instead of benchmarking their performance against global successes, measure their progress against the relatively modest successes of the continent.

It is often said that Africa needs more time; that developed countries had centuries to get to where they are. The success of Asian countries undermines this argument. Trotting out examples of the different growth trajectories of Asian and African countries over the same time frame — Ghana versus Malaysia or Sudan versus South Korea — may have become a cliche but the comparisons remain instructive.

There is no doubt that 50 years of independence should be marked in some way, and even celebrated. But 2010 also needs to be a year of reflection and stocktaking. The future depends on it.

 Over the years, these figurines appeared in SA’s markets, with new models including golfers, jockeys and, yes, soccer players. So it was a surprise to read that the wooden souvenir soccer players licensed by Fifa for sale in SA’s shopping malls over the World Cup tournament had been made to order in Indonesia, with just their team outfits being painted on in SA.

A spokesman for the South African company that produced them was quoted as saying they battled to find artisans in Africa with the capacity to make the several thousand men.

This is strange, given the longstanding expertise in west Africa. But it is disappointing is that not one business in that region — where the majority of African teams at the cup hail from — thought to undertake such a project well in advance of the tournament. Unlike flags or soccer jerseys, wooden carvings are particularly African souvenirs and it is irksome that these official mementos had to be produced outside the continent.

Indeed, there are many other World Cup-specific African artefacts that could have been produced locally for the tournament. How about souvenir eagles from Nigeria, elephants from Côte d’Ivoire and lions from Cameroon — to reflect the teams’ nicknames?

For all the talk of this being an African tournament, most countries on the continent have done little to leverage benefits for themselves. Beyond the matches, it has been almost entirely a South African event. The continent’s biggest exposure in this tourist-fest has been through its non-tournament- specific arts and crafts, which foreigners have been snapping up.

 And even then, unless visitors ask about the items, they will not know their origin as there has been no attempt by African communities in SA or traders from other countries to brand their nations through their stalls or their merchandise.

 Unless I have missed something, Africa north of the Limpopo has missed the branding opportunity of the decade. By way of contrast, Portugal, a country that needs no introduction, is running a well-marketed month-long festival of shows and events in Johannesburg during the Cup.

Even if tourist numbers are lower than expected, there are still many thousands of foreigners in SA. For many, it is their first visit to Africa and they are open to new sights, experiences and information.

 Despite the warm and fuzzy view of an African union of states by Africans, countries still vie on a national basis for business, tourists and recognition. This nationalism is hardly on show outside the stadiums.

 Branding a country need not involve the tortuous process of getting Fifa accreditation. A Nigerian or Ivorian display of crafts, music, food, pictures and information at markets in SA’s cities, which have been packed with tourists over the past few weeks, would go a long way towards highlighting their countries.

Classy billboards in Sandton highlighting Nigeria as an investment opportunity or Ghana as a tourist destination would link these states to the success of the tournament and highlight their competitive edge. And this effort needs not be limited to participating states.

 Southern African countries have made some effort with a small exhibition of their attractions in Johannesburg, but this leaves a large number of countries, notably in west Africa, out of the loop. There have been some glimpses of the rest of Africa via art exhibitions and a few musicians performing in world cup concerts.

The notion of an African World Cup is not just about attracting a few tourists across the border between games — it is about an opportunity to brand countries in SA while the world is watching, an opportunity that has been missed by governments, business and communities across the continent.

As a result, it is likely that as African teams pack up and go home, they will be forgotten in the minds of the thousands of foreign fans still enjoying Brand SA.

While the large local and international banks were doing what banks generally prefer to do — courting wealthy elites and multinationals — Equity ditched its unsuccessful mortgage financing business and focused its efforts on the “missing middle” of the market.

Another big success story in Kenya also focuses on that missing middle — the mobile banking system M-Pesa, which is soon to be launched in SA. M- Pesa, in partnership with mobile operator Safaricom, allows people to move money without a bank account, using only mobile phones. The product struck a chord in the market — less than three years after its launch, it has almost 10-million customers.

 Banking low- to middle-income earners, particularly those outside the cities, has traditionally been shunned by large African and foreign banks because it was complex terrain that didn’t seem to have much profit upside.

 But, almost under the radar, there has been a steady shift into this market, with mobile telephony playing a crucial role in enabling new ways of doing financial transactions. Even poor people don’t keep their money under the mattress anymore, which presents a big business opportunity for banks.

As financial analyst Mark Napier points out, the fact that people are unbanked in Africa doesn’t mean they don’t want to be. Napier is the editor of an interesting book launched in SA last week, Real Money, New Frontiers — a collection of case studies and essays on financial innovation in Africa, which also looks at why some succeed and some don’t.

The case studies focus on the success stories across the continent, of which there are a surprising number. It also includes some of the more unusual innovations such as the relationship Barclays Bank in Ghana developed with susu collectors — informal money traders who collect daily the profits from small informal businesses and keep them safe for a fee.

Barclays lured the susu collectors to deposit the money with the bank and it cultivated them as middle men to lend money back into the community. Now, more than 700 susu collectors have grown their businesses, traders have more access to finance, and Barclays grew its new deposits in one year from $2m (2007) to $10,2m.

It has taken time for South African institutions to get into lower-income finance, mostly because of concerns about profitability and the complexity of addressing this segment. Unsuccessful government microfinance initiatives also dented confidence.

But this market is now growing rapidly, largely because of mobile phone tie-ups, and SA has a significant place in the book. Case studies include initiatives by the big banks in conjunction with cellphone operators and off- the-shelf insurance products.

 The commonly held view that poor people are bad debtors is quickly being debunked. Bad debt ratios of microfinance banks can be extremely low and, in some cases in Africa, loan repayments have been 100%.

 But many microfinance schemes fail. This is partly because of the difficulty of doing business on the continent. According to the World Bank, 27 of the 35 least business-friendly countries in the world are in Africa.

Not only are African governments not moving quickly enough to improve the business environment, they are diverted in their quest to address poverty by the tendency to focus on redistributing wealth, rather than creating it.

 There is also an inordinate focus on the resources and agriculture sectors as being wealth creators for Africa’s future. This does not recognise that consumer spending on goods and services has been a consistent and dependable driver of growth in Africa over the past decade. The cellphone revolution is one manifestation of that.

If there is one message that emerges from all of this, it is that the best way of creating sustainable growth is to do so from the ground up rather than from the top down.

Simply walking out of his office to speak directly to an official about an issue, rather than working through the chain of command, had thrown his ministry into panic mode, he said — so steeped were they in following procedure. In fact, protocol and procedure had, he found, become an end in themselves and adhering to them appeared to be more important than achieving an outcome. “Actually getting the job done doesn’t seem to be part of the deal.”

A recent survey conducted by the World Economic Forum among 300 of its Young Global Leaders across 70 countries, including many in Africa, found that most would like to join the public service to have the opportunity to make a difference and be part of decision making — and because of dissatisfaction with the current leadership. However, they were unwilling to do so because of their negative perceptions about public service, which included excessive bureaucracy, exposure to fraud and corruption and inadequate pay.

A further deterrent was the perception of public service being a second-rate employment option where values such as accountability, transparency, ethics and innovation were not in evidence. Many viewed the sector as a closed shop, with key appointments linked to political patronage rather than merit.

Another dinner speaker said people with ambitions to improve the performance of government often believed they could work within the system until they attained a leadership position that would allow them to effect change. But that is a pipe dream. More often than not, people get sucked into the system and become part of the status quo rather than a force for change. Or they leave. It is difficult for individuals to change the rules of the public service game and that is why mediocrity and process trump innovation and vision.

Young and talented leaders who may aspire to public service are taking their skills to the private sector rather than fighting for influence and change in government systems dominated by party political agendas and patronage.

Is this an unchangeable reality that we have to live with? Or could the slow but steady improvement of political leadership in Africa mean that, at some point, the bureaucratic system will begin to improve? African governments are facing a new world that is driven by technology and increasing access to information through the internet. Social media and blogging have become ways for citizens to examine and criticise inefficient and corrupt governments and to find information that will ultimately allow them to make more informed choices at the ballot box.

More than ever, Africa needs a new kind of leadership both to build on the gains of improving governance and to drag the spoilers, of whom there are so many, into a new era.  A reformed and vibrant public sector might even lure skilled Africans back to the continent. But they will not give up prosperous lives abroad to enter a system that stifles innovation and new ideas.

Talk of political change tends to focus on a change of president, minister or official. The whole system of government, including the public service, must be reviewed if Africa is to position itself for a more successful future.

 As bureaucracies deal with public money, some rigorous order and checks and balances are necessary. But some elements of private- sector models could be introduced to make the public service more dynamic and results-orientated. Already, new partnerships between business and states have allowed some fresh air to blow through the corridors of power. 

Changing entrenched mindsets and attitudes through the chain of governance is a long process but it needs to start somewhere. If Africans do not start now putting measures in place to foster a new generation of leaders in governance structures, leaders that have change and innovation rather than patronage and process as core drivers, in 50 years’ time Africa will be little changed from what it is today.

This politically sensitive issue, which has dogged SA-rest of Africa ties for nearly two decades, came to the fore again last week with the release of a report by the Open Society of Southern Africa on the behaviour of South African miners in the region. A survey of selected companies operating in southern Africa found the practices of South African mining companies to be “appalling”. These include lax environmental standards, a failure to keep promises development agreements, wage differentials between locals and expatriates in similar jobs and a lack of upliftment of communities.

The report, South African Mining Companies in Southern Africa: Corporate Governance and Social Responsibilities, also details many excellent programmes and activities of mining firms . But it is the dirt that sticks and the findings will, rightly or wrongly, tarnish the image of all companies.

 South African companies come under greater scrutiny in Africa than investors from elsewhere , partly because of the tendency among South Africans to occupy the moral high ground in dealing with other Africans, based on the size and relative sophistication of their economy. Locals criticise the way some South African firms “swagger” into their countries. The poverty, rundown infrastructure, often corrupt or unsophisticated governments and other aspects can encourage corporate behaviour unacceptable at home.

A lack of regulation and monitoring of environment standards, compounded by the sometimes poor behaviour of local companies, makes it easy for foreigners to drop their standards in countries such as the Congo and Angola. But company ethics should be the same wherever a company operates. Otherwise what is the point ?

Being the regional economic power imposes particular obligations on SA, particularly business, to engage positively with neighbours. The report reiterates the oft-stated call for the government to design guidelines for businesses operating across the border.

The nationalisation debate g aining ground in Africa has upped the ante for good corporate behaviour in the resources sector. No excuses are needed for more regulation and greater state intervention. While Zimbabwe’s indigenisation laws may be considered to be extreme, the concept of greater local empowerment is generally embraced in Africa. And the focus elsewhere, as in Zimbabwe, is on the resources sector.

Tanzania, often praised for being investor friendly, sent shock waves through the mining sector last week when it announced a new law that provided for the state to have a stake in all future mining projects. The government also said it would no longer issue gemstone licences to foreign firms.

The relevant minister said the law was not enacted to please investors but to safeguard Tanzanians’ interests . That is the new direction Africa seems to be taking, as governments tread the fine line between attracting foreign investment and satisfying growing demands for local ownership.

Resource companies need to raise standards, not lower them, and to build relationships with host governments to ensure their continued welcome. Corporate social responsibility programmes should be as inclusive as possible, no matter how excessive expectations of communities and governments on noncore development are.

But African governments also have a responsibility here. Mining companies complain about their hosts breaking entry agreements, policy unpredictability and onerous and multiple financial obligations.

Governments’ investor unfriendly actions tend to be defended on the basis that the state is the victim in any relationship with multinationals because officials do not have the expertise to negotiate big deals with company executives used to hard bargaining in well-resourced western states. But that view negates the obligations of the state to negotiate for its future. If a country does not have the capacity to do so, then it should make it a priority to build — or buy — it.

 South African firms face rising competition in Africa’s mining sector. They need to exploit their competitive edge as a fellow African state by ensuring exemplary corporate governance and a strong empowerment focus