Africa Analysis
A lack of proper enforcement and a culture of corruption at borders enables smugglers to sink Nigeria’s promising car hub dream, writes Dianna Games Nigeria’s car industry is a good illustration of the embedded dysfunction of the country’s economy. Policy interventions and incentives to date have not been sufficient for the sector to realise its potential. Despite some progress, the initiative has been undermined not only by the economic slump, but also by other problems that have dogged industrialisation for years, including smuggling across the country’s porous land borders. The automotive sector was targeted by former president Goodluck Jonathan to…
Zimbabweans are sceptical, fearing they will again be left with worthless paper in place of real money, writes Dianna Games. Resistance to Zimbabwe’s new "currency" has not disappeared nearly two months after bond notes were introduced amid widespread protests by citizens who feared the notes were a step back into the past. The Reserve Bank of Zimbabwe is feeding the quasi-currency into the system in tranches. In the first phase, the equivalent of just under $80m is being circulated. But a lack of trust persists. After all, the exercise is being presided over by the same government that took…
Tanzanian President John Magufuli’s tax overhaul may endanger investment, writes Dianna Games. The growing tax and compliance burden in Africa — the result of a new push for growth and a desperation to fill dwindling coffers — may come at the cost of long-term growth if not handled carefully. Last week, Reuters reported that a tough new tax regime put in place by Tanzania’s President John Magufuli had led a number of large investors to reconsider their investments in that country. Some, the report said, were looking at scaling back their operations or expansion plans, with at least…
Billions of dollars earmarked for African assets often fail to find a home, WRITES DIANNA GAMES. Among the many challenges Africa faces is hype. Global advisers, consultants, investment bankers, asset managers and others with a vested interest in getting international capital to Africa, one way or another, sold us the "Africa rising" story. The strategy succeeded. Billions of dollars flowed in, Africa-specific investment funds mushroomed and international private equity giants rushed to secure lucrative assets on the continent. Valuations of blue-chip local companies jumped as funds competed for their attention. But the hype did not always live up…
The Made in Nigeria campaign to push import substitution is the country’s response to the painful period of recession and foreign exchange shortages it is experiencing as a result of low oil prices and its failure to diversify its revenue stream away from oil, WRITES DIANNA GAMES. But it is nothing new. Previous administrations have touted this concept and there have been a few successes, but many failures. Governments have paid lip service to the concept, allowing Nigeria to become one of the most difficult and costly countries in which to do business in the world. They have failed…
ALIKO Dangote, Africa’s richest man, is fond of banging the visa drum. He uses many public platforms to urge leaders to make it easier for Africans to travel around their own continent. Last week was no exception. Dangote, in a television interview in Nigeria with CNBC, said he needed 38 visas to travel across Africa. And it was not always straightforward to get them, he said. "You go to a country that is looking for investment, that particular country will give you a runaround just to get a visa," he said. "You have to know somebody who is…
AS ZAMBIA elects its seventh president, Zimbabweans remain burdened by the one president the country has ever known, commentators on social media pointed out last week as Zambians went to the polls. Comparing the two countries is nothing new. Since the days when they were both part of a federation, there has been rivalry, from the state of their economies, which have swung from prosperity to poverty, to who has the best views of the Victoria Falls, on their joint border, WRITES DIANNA GAMES. Zimbabwe is experiencing its worst economic crisis in a decade, while Zambia has been in…
AFRICA is SA’s to lose when it comes to trade and investment, Africans in other parts of the continent often say, referring to the relative sophistication of the country’s business environment, the number of multinational companies based here and its range of manufactured and value-added exports, WRITES DIANNA GAMES. This is a profile that is enjoyed by no other African country — even though others are rapidly building competitive advantage. Although SA has, over the years, built an investment, trade and political profile in the rest of Africa, it has not gained the kind of traction it could have…
NEWS about the recent conviction of former Chadian dictator Hissène Habré for substantial human rights abuses had us stepping back in time for a moment into a different Africa, WRITES DIANNA GAMES. Recent conversations at events around the continent have been very much focused on issues such as the digital revolution and, inevitably, "leapfrogging" challenges with technology, entrepreneurship and economic self-sufficiency. Habré, the leader of Chad from 1982 until he was deposed in 1990, took one of Africa’s poorest countries and not only impoverished it further, but killed an estimated 40,000 people in a reign of terror. It is…
MISTRUST between the private sector and governments in Africa is one of the biggest impediments to the delivery of infrastructure, the CEO of a South African multinational company says, WRITES DIANNA GAMES. This issue has dogged African development for many years — suspicion and even animosity between the two "sides", whose strategic collaboration is critical to delivering better lives for Africans. At various pan-African events I have attended in the past few weeks, the private sector, when mentioned at all, has been characterised largely as "the enemy". Talk about development in organisations such as the African Union and…
THE recent "tuna fleet" scandal in Mozambique raises questions about whether another African success story might be heading for choppy waters, WRITES DIANNA GAMES. The country is facing censure over evidence that the government may be using a big chunk of $850m raised on international capital markets three years ago to buy arms and not the large fleet of fishing boats the money was earmarked for. Earlier this month, the International Monetary Fund (IMF) cancelled the second tranche of a $285m emergency loan it had granted at the end of last year and cancelled an IMF mission to the…
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THERE is no evidence to prove bilateral investment treaties signed by African countries have made them more attractive to foreign direct investment, despite it being the main reason to sign them, WRITES DIANNA GAMES. The private sector tends to be the main beneficiary of treaties, with governments weakened by a lack of negotiating capacity. These are among the findings of an Economic Commission for Africa report looking at issues about, and the consequences of, investment policies and bilateral investment treaties. The report was launched at the African Development Week in Addis Ababa. The decision to do the research was…
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PRESIDENT Jacob Zuma undertook a state visit to Nigeria last week – a country he knows very well. But the Nigeria that President Jacob Zuma encountered on his short state visit last week is a totally different country to the one that hosted him in the 1970s as an exiled African National Congress (ANC) operative, WRITES SAM MKOKELI A few incidents in recent years revealed a deepening gulf between SA and Africa’s largest economy, but Nigeria rolled out the red carpet for Zuma as Africa’s superpowers try to revive their diplomatic and economic ties. The tension would have been…
THE question doing the rounds in Zimbabwe is how President Robert Mugabe did not know his government had been robbed of billions of dollars in diamond revenues by mining companies even though it had a 50% stake in all of the six mining ventures, WRITES DIANNA GAMES. Questions are also being raised about how he did not know about the apparent looting of the country’s resources when his own military and highly placed officials were among those allegedly profiting from the diamonds being mined at the lucrative Chiadzwa diamond fields. Mugabe said this month that despite presumed revenues of…
THE tourist town of Sharm el-Sheikh in Egypt is battling to keep the doors of its hotels and restaurants open. The millions of tourists who normally patronise this picturesque town, which sits between the Red Sea and the Sinai Desert, have dwindled to a trickle after the crash of a Russian airliner with 224 people on board shortly after take-off from this popular holiday resort in October, WRITES DIANNA GAMES. Not only are jobs and businesses at stake, the plunge in tourist dollars has exacerbated a serious foreign currency crisis. Tourism contributes about 13% to Egypt’s gross domestic product,…
ONE of the most significant changes in the business landscape over the past decade has been the growth of African companies north of the Limpopo, WRITES DIANNA GAMES. Although the growth of South African companies and their activities in other African markets get a lot of attention, they are increasingly competing with home-grown companies in their chosen markets. These companies are developing regional and continental strategies in competition with South African, Asian and Western multinationals. The rapid growth of the private sector in key African economies is the cumulative result of an era of market-driven economies and business reform…
THE inaugural flight by South African Airways (SAA) last week from Johannesburg to Abuja, the capital of Nigeria, was a milestone in the relationship between the two powerhouses of Africa, WRITES DIANNA GAMES. The launch of the route is not just about moving people between two strategic cities; it is symbolic of a greater connectedness between Africa’s two biggest economies that is long overdue. The launch of the route between Johannesburg and Abuja came 19 years after SAA began flights to the commercial hub of Nigeria, Lagos, in 1998 — a route that became one of the fastest growing…
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A SOBERING snippet of information for Africa watchers appeared last week: the continent’s exports to China fell 38% to $67bn last year, and foreign direct investment into Africa fell 40% in the first six months. It was also reported that Africa’s imports from China rose 3.6% to $102bn — bad news for African producers, WRITES DIANNA GAMES. African leaders who clustered around President Xi Jinping and his team in Johannesburg at the China-Africa summit with outstretched hands late last year were not disappointed, with promises of $60bn in aid and loans. But this sizeable, although not altruistic, promise is not…
"EBOLA was like a war in our countries," Guinea’s President Alpha Condé told the World Bank last year as he outlined the havoc that had been wrought by the rapid spread of the virus in the West African country. At a meeting last April to seek funds for reconstruction, he was joined by the presidents of the other two worst-affected nations — Liberia and Sierra Leone. The leaders, who had been battling the spread of the virus for more than a year by then, outlined the devastating effect the health crisis had on their countries, WRITES DIANNA GAMES.…
Hold on to your hats – next year will be a rocky ride for Africa WRITES DIANNA GAMES CHINA’S promise last week to deepen partnerships with African countries and provide $60bn over three years to address constraints to development, was good news for a continent facing many headwinds as it rushes headlong into 2016. Ironically, China’s slowdown is one of those headwinds. But there are many other issues that will make next year a difficult one for sub-Saharan Africa. The continent’s petro-states have slashed budgets and put infrastructure projects on hold as budgets dry up, but they continue to…
THE continent’s stock exchanges are a hard sell to African companies. Of more than 1.5-million businesses registered in Africa, only 1,600 are listed on the stock exchanges of the 23 states that make up the African Securities Exchanges Association (Asea), WRITES DIANNA GAMES. At last week’s Asea conference in Johannesburg, delegates took a hard look at what Africa’s exchanges need to do differently to boost performance and relevance to attract investors and build assets. Asea president and head of the Nigerian Stock Exchange Oscar Onyema suggested that new ways of engaging business leaders were needed, not just to talk…
REFLECTIONS on the history of Africa’s two biggest economies dominated the SA-Nigeria Chamber of Commerce’s (SA-NCC) 10th-anniversary dinner in Johannesburg last week, BY DIANNA GAMES. George Nene, a former South African ambassador to Nigeria, told guests of how his six-year sojourn in exile during apartheid was transformed into an ambassadorship when he was asked by former president Nelson Mandela to open SA’s first embassy in Nigeria in 1994. Nene facilitated the long corporate trek to Lagos by companies such as South African Airways, MultiChoice and MTN. The early relationship was dynamic. In 1999, the SA-Nigeria Binational Commission was formed…
THE strains of former president Thabo Mbeki’s "I am an African" speech introduced the Brand Africa awards ceremony in Sandton last week, writes DIANNA GAMES. The event was a celebration of Africa’s own initiatives, culture and excellence, but the results of a cellphone survey of 6,000 African consumers across the continent released that very night showed that consumers still prefer foreign brands by a wide margin. Of the top 100 brands chosen by respondents as being either their most admired or most valued, just 23 were African. Admittedly, MTN did top the 2015 Top 100 list, toppling Coca-Cola…
A QUESTION Nigerians often raise in discussions about SA and its West African counterpart is why there are not more Nigerian companies investing here, writes DIANNA GAMES. Where are the Nigerian banks, the food franchises, the supermarkets and IT companies? they ask. The diplomats are particularly exercised by the trade and investment imbalance. This, they say, reflects badly on the bilateral relationship. It is true that there are few Nigerian investments here more than 20 years after SA opened its doors to the rest of the continent. Dangote Cement has acquired a cement operation, and oil and gas company…
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THE words "brave new world" have an optimistic, inspirational ring to them. But of course they are best known as the title of Aldous Huxley’s 1930s novel, which foretold a dystopian future. The phrase was first used by William Shakespeare in The Tempest, where it also carried heavy irony, writes DIANNA GAMES. So, Zimbabwean President Robert Mugabe’s description of the United Nations (UN) sustainable development goals (SDGs) as a path to a "brave new world" had literary-minded listeners sensing that this wasn’t the most auspicious send-off for a praiseworthy initiative. For Zimbabwe, under Mr Mugabe’s rule, has been…
SEA LEVELS are rising along the entire West African coast. UN-Habitat suggests that more than 25% of people living within 100km of this heavily populated coastline are at risk from rising seas, writes DIANNA GAMES, CEO of Africa@Work. Bar Beach in Lagos was once a meeting place for the people of this sprawling megacity. Informal bars stretched along the narrow belt of sand, church groups came to pray, children played in the water and touts, prostitutes and others plied their trade. But as the relentless encroachment of the Atlantic Ocean took its toll, and all manner of methods to…
COMMERCIAL property development seems to be surging ahead in many African markets, defying the commodity price slump and currency crises, writes DIANNA GAMES. Speakers at last week’s Africa Property Investment Summit in Johannesburg suggested that concerns about lower commodity prices, China’s slowdown and the currency turbulence in many of the continent’s key economies have not seriously dented long-term plans for large development projects in countries such as Mauritius, Mozambique, Zambia, Nigeria and others. The property market provides a barometer for the economic fortunes of a country. The growth of shopping malls and mixed-use developments, as well as…
AUGUST in Italy is the height of the tourist season. Visiting the country last week, I was struck by the sheer volume of people thronging the historical attractions, spending money on food, drink, services, hotels, clothes and trinkets, writes DIANNA GAMES. Airports and stations were at bursting point as visitors bustled from one popular tourist destination to another. These are volumes SA has probably come close to just once — during the 2010 Fifa World Cup — and yet Italy gets them every year, as do many other cities and attractions across the world that maximise their advantages. Tourism…
Toothpicks are on the list of more than 40 items for which the Central Bank of Nigeria has forbidden the sourcing of foreign currency through the formal banking system for spending on imports, writes DIANNA GAMES Published in Business Day SA, 3 August 2015 THERE has been a lot of talk about toothpicks in Nigeria of late. The humble implement for removing elusive morsels of dinner is a culprit in Nigeria’s foreign exchange crisis. It is included in a list of more than 40 items for which the Central Bank of Nigeria has forbidden the sourcing of foreign currency through…
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BURUNDI’s president goes to the polls this week to stand for president of his tiny nation for the third time, writes DIANNA GAMES. Pierre Nkurunziza has not been dissuaded by violent protests in which many have died or been displaced. Nor has he been daunted by the African Union’s (AU’s) calls for the vote to be postponed because of the violence, So, despite improvements in governance in some areas, it is business as usual for sub-Saharan Africa’s third-termers. There was a glimmer of hope late last year that change might be in the air when hundreds of protestors set fire…
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