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Conference report-comesa-ria-2011-50

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Conference report-comesa-ria-2011-50 Conference report-comesa-ria-2011-50 Presentation Transcript

  • Conference Report 23 – 24 March 2011 Dubai, UAE
  • Under the patronage of H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.
  • 4 4th COMESA Investment Forum ContentsContents Preface 5 Executive Summary 6 Programme 11 Session Summaries Official Opening Remarks 16 Keynote Address 17 Plenary Session: COMESA – Dubai: The New Business Opportunity 18 Parallel Session: Trade – Dubai - Africa: Strengthening Trade Links 21 Parallel Session: Finance – New Models for Financial Growth 23 Parallel Session: Logistics – Identifying Opportunities in Logistics 27 Parallel Session: Agriculture/Agribusiness – Tapping into the Market: What are the Opportunities? 29 Parallel Session: Infrastructure – The Infrastructure Gap 32 Parallel Session: Finance – Private Equity 35 Bloomberg TV Debate 37 Plenary Session: Investing in COMESA: Reality versus Perception 39 Investor Success Story 42 Parallel Session: Trade – Increasing Intra-African Trade 44 Parallel Session: Logistics – Ports: Engine for Trade in the COMESA Region 46 Parallel Session: Infrastructure – The Importance of Connectivity for doing Business 49 Parallel Session: Finance – Strengthening COMESA’s Capital Markets 52 Dubai TV Debate 54 Parallel Session: Logistics – Rail: Key Drivers for Investment 57 Parallel Session: Agriculture – Moving up the Value Chain: Value-Added Processing 60 Parallel Session: Infrastructure – Energy: Powering COMESA 62 Plenary Session: Becoming Tomorrow’s Fast-Growing Emerging Market 64 Closing Remarks 67 About the Organisers 68
  • 5 4th COMESA Investment Forum PrefacePreface F ollowing the recent financial crisis and funda- mental shifts in global economic power, the Common Market for Eastern and Southern Africa (COMESA) finds itself in a stronger position as an attractive destination for investment, with its growing and diversifying economies. Investors are increasingly interested in the possibilities the region has to offer. This became evident on the 23–24 March 2011 when more than 1,500 participants from over 80 differ- ent countries flocked to Dubai to be part of the 4th COMESA Investment Forum. Also in attendance were 14 senior ministers and leading personalities representing some of the largest businesses in Africa and the world. In line with the theme of the 2011 Forum, “Unlocking the Markets of the Future”, the event uncovered investment opportunities in the new emerging markets that make up COMESA, the largest economic bloc on the African conti- nent. Participants gained a better understanding of what it means to do business within the COMESA Member States and forged new partnerships with policy makers and business leaders alike. Seasoned investors shared their success stories, emphasising that the returns on investment in the region are considerably greater than in more mature markets and even other emerging markets. Policy makers pointed to the great strides that have been made in terms of improving the investment climate, and implementing a regulatory and legal framework that is conducive to doing business. The Forum focused on five sectors: agriculture/agribusiness, trade, logistics, finance and infrastructure. The following pages provide an overview of the discussions and detailed summaries of the sessions that took place dur- ing the two-day Forum, examining the main issues impact- ing on the key sectors. Initiated by the COMESA Regional Investment Agency (RIA), the 2011 edition of the COMESA Investment Forum was organised in collaboration with Du- bai Chamber of Commerce & Industry, under the patronage of His Highness Sheikh Mohammed bin Rashid Al Mak- toum – Vice President and Prime Minister of the UAE and Ruler of Dubai. COMESA’s Member States include: Burundi, Comoros, DR Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
  • 6 4th COMESA Investment Forum COMESA – the Business Destination COMESA is Africa’s largest economic community, comprising 19 Member Countries stretching from the north to the south of the continent. Plentiful natural resources, a constantly growing population, an emerging middle class in need of new products, an increasingly aspirational youth and growing stability make it a vibrant economic community. The ideologies of the countries in COMESA are aligned: every state wants to move into capitalist market economies. This has helped the economic development of the region, which has seen a sharp increase in cross-border and foreign investments in the last decade, particularly from ‘newcomers’ such as Brazil, China and India. With a collective GDP of more than USD 70 billion, COMESA provides many opportunities for investment in various fields, particularly logistics, tourism, energy, infrastructure and mining. Investments in COMESA countries are not restricted to resources: value addition is equally on the rise. The region has become especially interesting for investors because of its high rate of return, which has stood at a staggering 29% since the 1990s, as opposed to the EU’s 10%. Until the financial crash in 2008, COMESA states’ GDP increased by 7% a year, as a result of stable macroeconomic environments, and liberalised capital accounts and markets. What is crucial is the unity of COMESA – only by strengthening the economic bloc can the region emerge as a strong entity. COMESA is also dedicated to cooperating with other regional economic communities, such as SADC and the EAC, in order to put Africa more prominently onto the global market. The Reality of Doing Business Investors see COMESA as a growing region where many reforms and developments are currently under way. Noteworthy is the commitment of both governments and policy makers, which are keen to engage with business leaders and support investors. Many reforms have been put in place, creating an environment that is conducive to doing business. Each COMESA state has an investment authority, as does the COMESA region as a whole. This ensures that all requisite licences are easily acquired in COMESA countries and all processes go smoothly. However, reforms still need to be unified and harmonised more effectively, particularly in terms of rules, policies, legislative powers, the labour environment, education and the movement of capital. Branding is of vital importance, particularly as Africa is often perceived as one big country. At the same time, every country in Africa is a case study on its own. There has been much general stereotyping due to ignorance, which has negatively impacted on investment prospects. The negative image of Africa in the media is still blocking investment. This needs to be changed in order to open doors and fuel investments. While there is increasing awareness around the world of what is happening in Sub-Saharan Africa, not enough information is available. Opportunities for business in the region need to be publicised, with information about them more widely distributed. For this purpose, investment authorities have been established in each COMESA country. However, investors who come into Africa ‘trip up’, not on the macro, but on the micro level, such as corruption. By partnering with local business people who know the markets, this can be avoided. Reliable local partners are key for international investors – they can assist with all matters related to the day-to-day issues of investing in the region. The biggest problem facing the growth of investment in Africa is talent. Finding good employees and managers can be difficult. However, this has been changing recently, because the financial crisis has led to many trained Africans returning home. The COMESA – Dubai Business Partnership The 4th COMESA Investment Forum was a further step in strengthening the partnership between COMESA and the UAE. Speakers from both the UAE and COMESA highlighted the importance of intensive collaboration between the two regions. Through this, they insisted, win-win situations will be created which will be beneficial for communities and businesses alike. Their geographical location and proximity make both regions Executive Summary H.E. Sindiso Ngwenya, Secretary General, COMESA (right) shaking hands with H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry
  • 7 4th COMESA Investment Forum natural strategic partners. Today’s trade relations between the UAE and the COMESA countries reflect a historic relationship, which commenced when the lands making up the modern UAE connected Africa to the Silk Road. The past trading relationships between the Gulf region and Africa have now evolved to include more sectors of the economy. Dubai’s success story is widely recognised and admired: it has exploited its geographic position and progressed with creativity and innovation. Hence COMESA, in many ways boasting similar preconditions to Dubai, should learn from the Dubai experience, particularly in terms of its effectiveness and speed, in order to improve its national and international competitiveness. But Dubai can serve as more than just a model for the region. Through its facilities (such as technology, infrastructure, free zones, zero trade barriers, and global market access), Dubai can also serve as a gateway which links Africa, and specifically COMESA, to the world. Dubai is a re-export centre for goods coming both in and out of Africa, thus making it an ideal entry point into the continent. At the same time, Dubai can take advantage of COMESA’s growing consumer markets, natural resources and vast tracts of land to ensure its food and water security. The boundless resources the COMESA countries have to offer (such as minerals, foodstuffs, etc) will continue to foster trade between the two regions and encourage dialogue on development and business facilitation. COMESA and Dubai must focus on business partnerships rather than governmental partnerships. This has already happened, and is evident through the various projects the UAE is involved in on the continent, such as the Port of Djibouti, or through the telecoms giant Etisalat. More business partnerships are arising. To continue this relationship between the two regions and to facilitate the exchange of information, it was decided that a COMESA Regional Investment Agency representative office will be established in Dubai. Trade A central topic was trade. The main issues discussed were how trade can be increased, not only within the COMESA region but also within Africa, and how the region can be positioned more prominently onto the global trade platform. Much has already happened to increase trade. The nineteen countries have agreed to harmonise laws and implement duty free agreements. The recently launched COMESA Customs Union will be operational in the next few months. At the same time, institutions such as the COMESA Clearing House and the African Trade Insurance Agency have been set up to help businesses mitigate risks. Various financial institutions also support businesses with trade finance tools. The region’s biggest weakness is infrastructure, which needs to be improved if COMESA is to compete more effectively. Intra-African Trade Although a large part of Africa’s population works in small and medium enterprises, the main issue is exporting to neighbouring countries, not to Europe. COMESA is already seeing substantial cross-border trade and investment, especially in the manufacturing and services sector, but this can only be increased through diversification of the economy. Infrastructure development is key to promoting intra- African trade: railways and road networks need to be developed rapidly, as well as storage facilities to allow farmers to store perishable goods before distribution. There are plans to set up a commodity exchange in COMESA, which will involve commodity-holding warehouses – this concept will make it easier for farmers to trade their produce. The Trade Relationship with the GCC Although there is considerable trade between COMESA and the Gulf, most exports from the COMESA region to the Gulf are low-value goods, while imports into the region from the Gulf are value-added goods, oil or oil products. COMESA makes up 52% of the UAE’s total trade with Africa. Trade has increased tenfold in a decade, and the volume of trade between the UAE and COMESA countries amounts now to USD 6.2 billion. A big component of trade from COMESA coming into the GCC is from Egypt. While COMESA is a commercial bloc, it is still important to look at trade and investments going to, and coming from, individual countries. Finance Opportunities in Finance The African financial sector offers many opportunities and has seen tremendous growth in the last 15 years. This is due to a rising bankable population; infrastructure development; regional organisations that are helping to increase efficiency and mobility; a general movement towards democratisation; the transformation of Africa’s main sectors; and a sustained 5% growth rate. The demand in Africa for financial services and products is growing and promises to be profitable. On top of this, the political developments in the Middle East and North Africa will open up many opportunities for the region’s economies and particularly the financial sectors. This is already visible in Tunisia, where many micro-finance institutions have emerged in the weeks following the revolution. Despite SMEs forming the backbone of the economy, it is still particularly difficult to find funding from large banking and financial institutions. Private capital is also hard to come by. This sector can be banked, but there is a need to develop
  • 8 4th COMESA Investment Forum special programmes – lending needs to be more inclusive of the bottom of the business pyramid. Technology is one of the biggest drivers of equity: mobile banking is making banking much easier, particularly within the SME sector. In light of this, technology promises to be the biggest driver of inclusion. Islamic banking offers an alternative opportunity for the financial sector in COMESA, as most commodities and the infrastructure are suitable. However, unless there are huge demands for Islamic banking, there are structural concerns that will hinder its development. While there are still many gaps in COMESA’s financial sector that will need to be addressed, it has been transformed rapidly in the last couple of years – a transformation that has taken the developed world over 200 years. Private Equity Private equity has changed, and continues to change, the business landscape in Africa. The number of PE companies has multiplied considerably in the last six years. This is due to fundamental improvements in the markets including liberalisation, reforms, macroeconomic management and positive progress in terms of the general geo-political environment. The most powerful driver is the increasing regionalisation of the African markets, which presents attractive economies of scale to investors. Capital Markets Interest in Africa is strong, and access to capital markets is in place. But there is a lack of products and the elements required for active capital markets – these being a stronger regulatory framework, better physical infrastructure (without which a market’s appeal disappears) and more favourable terms (repatriation of funds, foreign exchange controls, foreign participation and ownership of local companies). Governments can play a key role. They can initiate the process of connecting with international markets, develop a better understanding of African risk and opportunities, and help benchmark yields and risk, thus reducing the burden on companies or institutions coming to the market. This initiation is critical and can provide a model to emulate. Government willingness and engagement is primary. Following on from this, investment banks need to work together with lawyers, regulators and rating agencies to develop the products and frameworks. Investment banks will also have to work hard to develop funds and market them to international investors. Logistics Logistics is an essential element of trade. Despite trade having increased considerably, making Africa a commercial hub, there are still many logistical and infrastructural shortcomings, which make the transport of goods difficult. Warehouses, airports, rail, roads, airports and ports need to be improved, as well as the connectivity between them. In order to become commercially more competitive, Africa needs to upgrade its logistics capacity. Another factor is human resources – talent needs to be trained effectively in order to cater to human resources demands. While there are many logistics training institutes emerging in Africa, experience is still lacking and learning tends to be based more on a form of trial and error. Timing is another aspect of the challenge, as it can take a very long time to move goods from one country to another. Public-private partnership (PPP) projects can be very beneficial, as they bring experience and business opportunities to the private and public sectors. In many ways, Dubai can serve as an example in logistics development. Logistics have formed the base for facilitating the trade and growth of the city, and its logistics infrastructure has been the bedrock of its success. Ports Ports are crucial for the movement of goods from one country to another. What has become evident is that the more conveniently situated the port, the more impact it has on the country and the economy. While improvements have been taking place, such as the use of more international container depots and the new IT systems that have helped to decongest African ports, there are still challenges. The volume of trade is expected to grow exponentially in Africa: traffic is expected to quadruple by 2020. Ports need to be ready to deal with this increased volume, so more investment should go into the development of terminals. Existing port infrastructure needs to be improved and new ports need to be created. While some ports are equipped to meet international standards, the roads and railways have not caught up with this improvement. Capacity limitations also need to be addressed. To this end, PPPs are beneficial as they bring in expertise and funding, an example being the Port of Djibouti. Through a PPP, DP World collaborated with the government of Djibouti and local organisations to develop the port. The company brought capital, and the government made people and land available. The joint venture has been successful and has given a good financial return for all involved, thus creating a win-win situation for the investor and the country. For investments to work, there needs to be an environment in which the investor can make returns. Clarity of government policies and port development are equally important, because investors need a basic framework to work within. ExecutiveSummary
  • 9 4th COMESA Investment Forum Piracy is a major problem facing the port sector: it needs to be tackled speedily and on an international level. Rail According to the World Bank, railway deficiencies are holding back the continent’s financial growth by at least 1%. While more rail linkages need to be built, it is also of crucial importance to improve those that already exist. The cooperation between COMESA and other regional economic communities must leverage on their strengths and ensure the transfer of technology and knowledge building. While there are still many shortcomings, some rail networks are currently better than they have been in many years. Amongst them are the Tanzania Zambia Railways and the Kenya railway. Having gone through many years of non-investment and decline, they are now beginning to pick up. However, the challenge is that private sector investment into rail is difficult to mobilise, particularly for improving infrastructure that already exists. PPPs are the way forward for financing railways but contracts need to be better structured, with all parties involved feeling equally responsible and committed. Agriculture There is no business sector more important than agriculture. It accounts for one third of GDP, 80% of employment and 65% of foreign exchange earnings in the COMESA region. The potential for investment in agriculture is huge, particularly in land, as this has long been neglected. Africa has 25% of the word’s arable land, but less than 5% of that land is actually being used. Food shortages are found in some areas of Africa while surpluses are found in other areas. There is still a long way to go before these inequalities can be balanced and Africa can feed not only itself but also the world. Subsistence agriculture is still the mainstay for many farmers: however, access to markets and technology needs to be improved for smallholders to become a part of the agribusiness value chain. This would help producers become active stakeholders, which would encourage businesses to listen to them. At the same time, farmers themselves need to start thinking like businesses, rather than as individuals. Whilst small- scale farmers are seen by some as being an opportunity for investment, they are also seen as a hindrance, because land is fragmented. All agree that smallholders need to be dealt with through some form of collective – be this by merging land into large-scale farms or by working through associations. Smallholders need to take advantage of opportunities: to do this, it is most effective if they collaborate and work in cooperatives. Once farmers organise themselves into these structures, they can share knowledge and expertise; look at their productivity issues together; and examine how input procurement takes place (seeds, etc.) and how to reduce costs. Businesses need to see smallholders as an opportunity, as they are here to stay. At the same time, smallholders need to develop their expertise, learn better farming methods, form collectives and ensure the empowerment of women in farming. Opportunities in agriculture and agribusiness are manifold, but it is crucial that infrastructure and logistical challenges are overcome. Infrastructure Opportunities in Infrastructure Investment in infrastructure is one of the most important issues of economic growth in Africa. The amount of investment needed to improve infrastructure is USD 94 billion, of which USD 45 billion is still outstanding. PPPs offer many opportunities, but there are still challenges and regulations that impede proper implementation of projects. Investment from the private sector into infrastructure has been low in the past, particularly since multilateral and government- owned financing has given countries an excuse not to work with private companies. However, new opportunities are putting local companies on a steep learning curve. Companies operating in the region have begun to develop infrastructure as part of their investment strategy, such as providing power supply and building railways to mining sites. This has also helped to link different countries and regions. In order to make an impact on the region, companies must engage with the government, as well as with local companies who have the expertise.
  • 10 4th COMESA Investment Forum Energy Power is the source of all production. Africa has a lot of power resources and yet on average only 10% of its population has access to energy. Dependence on a single energy source needs to be reduced and electricity must be produced in sufficient quantity to make it available to the masses. Considering the impact of climate change on Africa – a subject that is becoming more and more important – renewable energy has to be the way forward. Development organisations in particular are interested in investing in that sector. The African Development Bank has a specific climate fund, which is financing big clean-energy projects in the Sahara region, with the aim of exporting solar power to Europe. There are also concessional funds for small clean renewable-energy projects. However, particularly for small-scale projects, it is difficult to motivate the private sector to invest. Projects need to be made commercially viable in order to attract investors. The Inga Dam project, being developed in the DRC, has the potential to power the region and also promises to provide good returns to investors. Inga will be able to produce 44,000 megawatts of power to meet the needs of the African continent, and then export the surplus. Development of Inga is due to be completed by 2015. Whilst the project already has funding of USD 2.4 billion, another USD 4 billion is needed. There are still opportunities for investors to come in on this particular project, as well as on many other power-generation projects in COMESA. ICT Technology has the potential to be the most effective enabler of Africa’s population and businesses. The fibre-optic cable which has brought the internet to the continent has increased connectivity and business velocity. Initially, it was laid to connect African businesses and individuals to Europe: now, its focus is connecting rural areas and integrating them into the economy. Regional connectivity is crucial because of the opportunities it offers: it can stem rural-urban migration, create employment across the country and allow for much more innovation. Overall, ICT enables development and economic growth. Evidence for this is the link between business development and telecoms: a 10% rise in telephone penetration raises GDP by 1%. This relationship is set to accelerate in the coming years. The reasons for this are the expansion of broadband internet (which is seeing many operators moving into the market) and the arrival of a low-cost smartphone for Africa. This phone promises to change how business is being conducted by offering many applications, and the same computing power and capacity as a laptop. At present, while 80% of the population has access to the telephone, only 20% have access to the internet: this smartphone will give everyone internet access. Innovative applications catering to specific demands can help Africa leapfrog many of the developments taking place in the First World. An example of this is an application that might allow owners of SMEs to run their businesses through their smartphone. Adopting foreign technologies is just as important as developing local technologies, so that African businesses do not ‘reinvent the wheel’. However, at the same time, the African business community needs to take advantage of local talent, and actively tap into the potential of the entrepreneurial youth in the region. ICT has also empowered governments. Business development in Africa has been slow because governments have not been able to collect taxes from the informal sector, which forms the biggest part of the economy. Now, through mobiles, the government can tax the informal sector, thus benefiting the economy. Becoming Tomorrow’s Fast-Growing Emerging Market The BRIC countries and other emerging markets can, in many ways, serve as examples for COMESA. What has made many emerging economies successful is a combination of several factors: prudent and easy-to-follow policies, which have had the potential to unlock the private sector; policy makers that have learnt from experience and allowed room for constant improvement; and a well-educated, capable and disciplined workforce, which has formed the backbone of a well-functioning economy. While it is important to understand that “politics is not business and business is not politics”, the quality of government and the honesty of people at the top of the government are equally crucial. Executive Summary H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai (right) and other dignitaries attending the 4th COMESA Investment Forum
  • 11 4th COMESA Investment Forum 09.00 – 10.30 Official Opening Remarks H.E. Abdulrahman Saif Al Ghurair, Chairman, Dubai Chamber of Commerce & Industry, UAE Heba Salama, Director, COMESA Regional Investment Agency, Egypt H.E. Sultan Al Mansoori, Minister of Economy, UAE H.E. Sindiso Ngwenya, Secretary General, COMESA Keynote Address: Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers 11.00 – 12.10 Plenary Session I COMESA–Dubai; The New Business Opportunity How can COMESA and its new partners collaborate effectively to encourage economic growth in the regions and enhance their positions within the global market? How to create win-win partnerships? How to map suitable opportunities? Moderator: Tom Ashby, Business Editor, The National Speakers: H.E. Sheikha Lubna bint Khalid Al Qassimi, Minister, Ministry of Foreign Trade, UAE Hon. Chirau Ali Mwakwere, Minister for Trade, Kenya Ahmad Bin Ali, Group Senior Vice President Corporate Communications, Etisalat Group, UAE Peter Kiguta, Director General (Customs and Trade), East African Community Charles Mbire, Chairman, MTN Uganda 12.30 – 13.45 Parallel Session I: Trade Dubai–Africa: Strengthening Trade Links Why is Dubai an attractive hub for doing business and trading with COMESA? How can African and international businesses take advantage of Dubai [when operating in and out of Africa]? Mechanisms & tools available to facilitate trade Moderator: Pat Lancaster, Editor, The Middle East Speakers: H.E. Hisham Al Shirawi, Chairman, Economic Zones World Alex Gitari, Director of Finance, PTA Bank Oti Ikomi, Senior Vice-President, Ecobank Transnational Inc Chris Kirubi, Chairman, Haco Industries Ltd Mahmood Sharif Mahmood, Foreign Trade Policy Director, Ministry of Foreign Trade, UAE 12.30 – 13.45 Parallel Session II: Finance New Models for Financial Growth Assessing the opportunities in banking and finance across Africa How can the financial sector fuel Africa’s economic growth? Islamic finance: a new opportunity for growth Financing SMEs: Challenges & Opportunities Moderator: Andreas Proksch, Director General (Africa Department), GIZ Speakers: Usman Ahmed, MD, Corporate Banking, Barclays Africa Kevin Flannery, General Manager, International Emirates NBD Dr. James Mwangi, CEO, Equity Bank Skander Oueslati, Senior Partner, AfricInvest Capital Partners Abdulla Qassem, Chairman, Network International UAE 12.30 – 13.45 Parallel Session III: Logistics Identifying Opportunities in Logistics Logistics in Africa: An Overview Projects: Opportunities ready to be harnessed The private sector as an engine for efficiency and modernisation Addressing connectivity Public-Private Partnerships Moderator: Anver Versi, Editor, African Business Speakers: Khaled Ahmed, Senior Vice President Strategy & Development, Economic Zones World, UAE Amadou Diallo, CEO, Africa & South Asia Pacific, DHL Global Forwarding, Africa Hussein Hachem, CEO, Middle East and Africa, Aramex Deanne De Vries, Vice President, Africa Agility Sanjeev S. Gadhia, CEO, Astral Aviation Ltd 15.15 – 16.30 Parallel Session I: Agriculture/Agribusiness Tapping into the Market: What are the Opportunities? Understanding the agriculture and agribusiness landscape in Africa Programme Day One – Wednesday 23 March 2011
  • 12 4th COMESA Investment Forum Discovering the smallholder as a producer and consumer Creating win-win situations Moderator: Edward Paice, Director, Africa Research Institute Speakers: H.E. Prof. Elias Nyamlell Wkoson, Minister of Foreign Trade, Sudan Dr. Evans Kidero, CEO, Mumias Sugar, Kenya Wanjohi Ndagu, Partner, Pearl Capital Partners Dr. Shachi Sharma, Head of Strategy and Planning, Africa & the Middle East, Syngenta Giulia Di Tommaso, Director of External Affairs for Africa, Middle East and Turkey, Unilever 15.15 – 16.30 Parallel Session II: Infrastructure The Infrastructure Gap Opportunities for the private sector to fill the infrastructure gap PPPs – creating a win-win solution Financing solutions for infrastructure projects Infrastructure – lessons learnt Moderator: Chalimba Phiri, Chairman, COMESA Regional Investment Agency Speakers: Lazarus A. Angbazo, President & CEO, GE East, Central & West Africa Marco Coutinho, Energy Coordinator, Vale, Brazil Farid Mohammed, Director, Pipal Mark Pearson, Director, TradeMark Southern Africa Programme 15.15 – 16.30 Parallel Session III: Finance Private Equity How Private Equity is changing the African business landscape: investment trends in COMESA Private and public capital as substitutes or complementary sources of funding Identifying the opportunities in fundraising How can COMESA attract more funds? Moderator: Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS), Eastern Africa, Ernst & Young Speakers: Ziyad Bundhun, MD, MCB Capital Partners Paul Kavuma, CEO, Catalyst Principal Partners Marie-Hélène Loison, Head of Private Equity, PROPARCO Skander Oueslati, Senior Partner, AfricInvest Capital Partners 16.40 – 17.40 Bloomberg TV Debate Positioning COMESA onto the global trade platform Assessing COMESA’s current role in global trade Benefiting from Free Trade Agreements Produce local, trade regional, sell global – how it can be done Moderator: Lara Setrakian, Bloomberg Presenter Speakers: H.E. Sindiso Ngwenya, Secretary General, COMESA H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry , UAE Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers Alykhan Lalani, Chairman and MD, Intouch Capital, UAE Karim Sadek, MD, Citadel Capital, Egypt Day One – continued Programme
  • 13 4th COMESA Investment Forum Programme Day Two – Thursday 24 March 2011 09.30 – 10.45 Plenary Session II: Investing in COMESA: Reality versus Perception What governments are doing to facilitate business: regulatory policy and institutional reform in COMESA What investors want from governments? Available instruments and securities: fund repatriation and arbitration Moderator: Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS), Eastern Africa, Ernst & Young Speakers: Hon. Aston P. Kajara, Minister of State for Investment, Uganda Olaf Meier, MD, African Development Corporation Shakir Merali, Partner – East Africa, Aureos Capital Vimal Shah, CEO, Bidco, Kenya Ashish Thakkar, CEO, Mara Group 10.45 – 11.15 Investor Success Story Hear first-hand about the experiences of an influential investor who has done business in the region. Speaker: Arnold Meyer, MD (Africa Real Estate), Renaissance Capital 11.45 – 13.00 Parallel Session I: Trade Increasing Intra-African Trade How to boost trade within Africa Benefiting from RECs and intra-regional partnerships Available tools and mechanisms Diversifying African economies to fuel intra-African trade Moderator: Prof. Dr. Maggie Kigozi, Executive Director, Uganda Investment Authority Speakers: Hon. Welshman Ncube, Minister of Industry and Commerce, Zimbabwe Kofi Adomakoh, Director, Project & Export Development Finance, Afreximbank Mahmood Mansoor, Chief Technical Advisor, COMESA Clearing House Dr. Kombo J. Moyana, Executive Secretary, COMESA Clearing House George O. Otieno, CEO, African Trade Insurance Agency 11.45 – 13.00 Parallel Session II: Logistics Ports – Engine for Trade in the COMESA Region Commercialising COMESA Ports Facilitating profitable alliances with key stakeholder Africa’s PPP growth and the investment opportunities Optimising port performance Moderator: Anver Versi, Editor, African Business Speakers: Hon. Amos Kimunya, Minister for Transport, Kenya Hon. Peter Sinon, Minister of Investment, Natural Resources & Industry, Seychelles Jerome Ntibarekerwa, Secretary General, Port Management Association of Eastern and Southern Africa (PMAESA) John Woollacott, Senior Vice President, Business Development, DP World 11.45 – 13.00 Parallel Session III: Infrastructure The Importance of Connectivity for doing Business: Increasing Competitiveness through ICT How is ICT changing the business landscape in Africa? Where and what are the opportunities and challenges for ICT in COMESA? Fuelling Africa’s wireless revolution Creating a regional fibre-optic network Moderator: Ken Kwaku, Founder, The Kwaku Group Speakers: Brian Herlihy, CEO, SEACOM Noel Herrity, Founder & CEO, One Tree Services Charles Mbire, Chairman, MTN Uganda Nicholas Nesbitt, Founder & CEO, Kencall 11.45 – 13.00 Parallel Session IV: Finance Strengthening COMESA’s Capital Markets How can capital markets cater to the region’s financial needs? How to tap into capital markets: local, regional and international opportunities What needs to be done to fuel Africa’s capital markets? Moderator: Christopher Hartland-Peel, Head of Africa Research, Exotix
  • 14 4th COMESA Investment Forum Programme Day Two – continued Speakers: Abdulla Mohammed Al Awar, CEO, DIFC Authority UAE Atiq S. Anjarwalla, Partner, Africa Legal Network Arnold Meyer, MD (Africa Real Estate), Renaissance Capital Karim Schoeib, Head of Capital Markets, SHUAA Capital 14.15 – 15.15 Dubai TV Debate: A Roadmap of Opportunities: Fostering Cooperation between the UAE and COMESA Moderator: Zeina Soufan, Presenter, Dubai TV Speakers: Sulaiman Hamed Al Mazroui, Chairman, Bankers Business Group Fahad Al Gergawi, CEO, Foreign Investment Office, Dept of Dubai Economic Development, UAE H.E. Hisham Al Shirawi, 2nd Vice Chairman, Dubai Chamber of Commerce & Industry, UAE Dr. Nasser H. Saidi, Chief Economist & Head of External Relations, DIFC (DIFC) Authority Karim Sadek, MD, Citadel Capital 15.15 – 16.30 Parallel Session I: Logistics Rail – Key Drivers for Investment Partnering with African rail operators – what to look for? PPPs – creating mutually beneficial relationships Financing concessions Key drivers for railway investment and profitable operations Moderator: James Martin, Rail Director, Mott MacDonald Group Speakers: Hon. Malusi Gigaba, Minister of Public Enterprises, South Africa AbdulMohsin Ibrahim Younes, CEO – Strategic Corporate Governance Sector, RTA, UAE Akashambatwa Mbikusita-Lewanika, MD, Tanzania Zambia Railways Authority (TAZARA) Nduva Muli, MD, Kenya Railways Corporation (KRC), Kenya Karim Sadek, MD, Citadel Capital, Egypt 15.15 – 16.30 Parallel Session II: Agriculture Moving up the Value Chain: Value-Added Processing Opportunities in Agriculture: From producer to manufacturer Integrating small-scale farmers into the agribusiness value-chain Improving access to markets Smallholder-friendly financial services Moderator: Anver Versi, Editor, African Business Speakers: Santosh Vasudevan, Principal Investment Officer, IFC, South Africa Joshua Varela, General Manager, National Smallholder Farmers’ Association of Malawi Sai Ramakrishna, CEO, Karuturi, India Kunal Chahl, MD, Diar Capital, UAE 15.15 – 16.30 Parallel Session III: Infrastructure Energy: Powering COMESA Solutions to increase capacity, efficiency and quantity How to expand access to electricity in urban, periurban and rural areas? Harnessing Africa’s renewable energy potential: how can COMESA become a major player in the sector? Opportunities in environmentally sustainable energy projects Moderator: Ken Kwaku, Founder, The Kwaku Group Speakers: Hon. Raymond Tshibanda N’Tungamulongo, Minister of International and Regional Cooperation of DR Congo Richard A. Claudet, Chief Investment Officer, Private Sector Infrastructure, African Development Bank Dirk Hoke, CEO, Cluster Africa, Siemens Farid Mohammed, Director, Pipal 16.50 – 17.50 Plenary Session III Becoming Tomorrow’s Fast-Growing Emerging Market What are the lessons learned from the BRIC countries and what can be replicated in the COMESA region? How to drive growth in the COMESA region to unlock the markets and develop the region into a major economic power? How to learn from international and African success stories and create an inherently African growth strategy?
  • 15 4th COMESA Investment Forum Moderator: Ken Kwaku, Founder, The Kwaku Group Speakers: Ranveer S. Chauhan, MD (Africa Region & Palm Division), Olam Stephen Karangizi, Assistant Secretary General, COMESA Charles Mbire, Chairman, MTN, Uganda Klaus Overbeck, Senior Vice President New Business, DEG 18.10 – 18.20 Vote of Thanks Speaker: Hon. Eunice Kazembe, Minister of Trade and Industry, Malawi and Vice Chairperson of the COMESA Council of Ministers 18.20–18.30 Concluding Remarks & Closing Ceremony Speakers: H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry, UAE H.E. Sindiso Ngwenya, Secretary General, COMESA
  • 16 4th COMESA Investment Forum Session Summaries Speakers: H.E. Abdulrahman Saif Al Ghurair, Chairman, Dubai Chamber of Commerce & Industry, UAE Heba Salama, Director, COMESA Regional Investment Agency H. E. Sultan Al Mansoori, Minister of Economy, UAE H. E. Sindiso Ngwenya, Secretary General, COMESA  T he opening session, which was attended by His Royal Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, set the tone for two interactive and fruitful days of discussions. The speakers from both the UAE and COMESA highlighted the importance of intense collaboration between the two regions. Through this, they insisted, win-win situations will be created which will be beneficial for communities and businesses alike. H.E. Abdulrahman Saif Al Ghurair, Chairman, Dubai Chamber of Commerce & Industry, UAE, officially opened the forum by looking back on the historic relationships between the Gulf region and Africa, stating that today’s trade relations between the UAE and the COMESA countries are reflective of that past historic relationship, but had evolved to include more sectors of the economy. The UAE’s strategic geopolitical location had allowed it to “become an active and economic partner of COMESA” and it was this strategic location that provided the UAE with competitive advantages of trade. Al Ghurair was confident that the boundless resources the COMESA countries had to offer (such as minerals, food, etc) will continue to foster trade between the two regions and encourage dialogue on development and business facilitation. Heba Salama, Director of the COMESA Regional Investment Agency (RIA), highlighted the successes and advances of projects in the COMESA region. Business and investments in the COMESA countries had increased fivefold in the last ten years, and this fourth annual conference should encourage businesses to take advantage of the many available opportunities. No doubt there were still challenges that COMESA must overcome, but Salama was hopeful that “by implementing mechanisms to promote a smooth business environment”, the resources of COMESA countries will become a key attraction to investors. She emphasised that investments in COMESA countries are not restricted to resources only, as the mining and manufacturing sectors are equally on the rise. COMESA also boasts some of the best tourist destinations today. The region has been improving its infrastructure, particularly along strategic routes (such as the commercial path leading from the Gulf down through Djibouti). Healthcare and ICT are other key sectors where improvements are taking place. A point Salama emphasised was the high rate of return on investments, which has stood at a staggering 29% since the 1990s, as opposed to the EU’s 10%. This reflected the potential that conducive investment climates can unlock and the opportunities capital markets in the region can take advantage of. She emphasised that a combination of a sound investment climate and strong capital markets is the engine for economic growth. Until the financial crash in 2008, COMESA states’ GDP increase was 7% per year due to the stable macroeconomic environments and liberalised capital accounts and markets. COMESA states are also signatories of the WTO and other prominent organisations. The large pool of human resources and competitive business transactions offers great potential for foreign investors. COMESA is comprised of 19 countries and is Africa’s largest economic community, making it particularly attractive for large-scale investments. H.E. Sultan Al Mansoori, the UAE’s Minister of Economy, also referred to the historical trade relationship between the Gulf and Africa, but with a focus on modern- day investments. Al Mansoori saw this conference as a strategic event to strengthen the trade relationship between Africa and the Gulf, and COMESA was one of the biggest groups the UAE has the opportunity and privilege to work with. COMESA’s collective GDP amounts to more than USD 70 billion and therefore provides many opportunities for investments in various fields. Future projections predicted that the number of consumers would increase to 500 million people in 2015. In this eventuality, Al Mansoori believed investors in COMESA to be the ultimate beneficiaries. He stressed that the UAE economy is ready to invest and merge with different economies. The banks in the UAE were “full of money”, the country had a solid infrastructure, and the laws and regulations worked together to empower the economy. He saw the UAE as a “gate” between the Gulf and Europe, and over the last few years the UAE had begun to focus more closely on Africa, because it was becoming pivotal to economic growth. The volume of trade between the UAE and COMESA countries amounted to USD 6.2 billion and a Official Opening Remarks Day One Thursday 23 March 2011
  • 17 4th COMESA Investment Forum larger flow of investments is expected in light of development projects, such as in ICT and communication. Dubai, according to Al Mansoori, was the main market for Africa and was central for trade. Similarly, Africais a promising partner for Dubai, and the government of the UAE in general was supportive of relations between the Gulf region and the COMESA states. This is evident through the various projects the region was involved in on the continent, such as the Port of Djibouti. More opportunities could become possible for both Dubai and COMESA. Al Mansoori concluded that empowering the investment climate was the role of decision makers and it was their responsibility to support business opportunities. H.E. Sindiso Ngwenya, Secretary General of COMESA, pointed out that Dubai had a congenial environment for growth and investment. The social and economic progress of the city was “the world’s envy”. Dubai is truly exploiting its geographic position and it had shown the world that a city or country can progress with creativeness and innovation. It was a good example of how a country can achieve prosperity without simply profiting from its natural resources. Dubai had diversified into finance, trade and many other areas apart from oil and gas. COMESA now had to take advantage of the opportunity to interact with counterparts in the UAE. COMESA needed to learn from its speed and effectiveness in order to improve its national and international competitiveness. Ngwenya concluded by encouraging business leaders to invest into the region’s infrastructure: USD 94 billion of investment is needed to improve the infrastructure in the COMESA region. He then urged those who had an interest in investing in the region to come and partner with COMESA, as the region had plenty of opportunities in Logistics, Tourism, Energy, Renewables, Infrastructure and Mining, to name but a few. Keynote Address Speaker: Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers  H on. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers, assured business leaders that governments were keen to engage and support investors: “COMESA is a forum, where we commit as governments to assure the business community that we will do everything required to help them partner with us.” COMESA had seen a leap in foreign and cross-border investments. Notably, more than 30% of investments from India and China had been in the manufacturing and services sectors. “In recent years many Western banks also opened their branches in the COMESA region,” she said. Cross- border investment into financial and retail services had also increased. COMESA was dedicated to cooperating with other regional economic communities such as SADC and the EAC, in order to put Africa more prominently onto the global market. The combined GDP of the three regional economic communities was expected to exceed USD 1 trillion by 2013. As to the trade relationship between COMESA and the GCC, Mashwama lamented that while there was considerable trade between the two regions, most exports from the COMESA region were commodities while the imports into the region from the UAE were value-added goods. She concluded by saying that she had a firm conviction that individually and collectively, unlocking COMESA markets will be done in the decades to come. It marked the relationship between the private sector and policy makers to promote economic growth. Right to left: H.E. Abdulrahman Saif Al Ghurair, Dubai Chamber of Commerce & Industry, UAE; Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers; H.E. Sultan Al Mansoori, Minister of Economy, UAE; H.E. Sindiso Ngwenya, Secretary General, COMESA; Heba Salama, Director, COMESA Regional Investment Agency Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers, delivering her keynote address
  • 18 4th COMESA Investment Forum Moderator: Tom Ashby, Business Editor, The National Speakers: H.E. Sheikha Lubna bint Khalid Al Qassimi, Minister of Foreign Trade, UAE Hon. Chirau Ali Mwakwere, Minister for Trade, Kenya Ahmed Bin Ali, Group Senior Vice President Corporate Communications, Etisalat Group, UAE Peter Kiguta, Director General (Customs and Trade), East African Community Charles Mbire, Chairman, MTN Uganda  T he aim of this session was to discuss how COMESA and its new partners can collaborate effectively to encourage economic growth. Moderator Tom Ashby, Business Editor, The National, opened the session by asking H.E. Sheikha Lubna bint Khalid Al Qassimi, Minister of Foreign Trade of the UAE, what Dubai was doing to increase trade with COMESA. Sheikha Lubna described the UAE’s long history of trade with Africa. Beginning in pre-colonial times, she explained how the lands making up the modern UAE connected Africa to the Silk Road. Moving into modern times, she described COMESA as a very strong economic bloc making up 52% of the UAE’s total trade with Africa. The region has heavy bilateral trade with the UAE. Trade has increased tenfold in a decade, and it reached USD 5.7 billion in 2009. Looking at the last ten months, that performance went up 6.3%. “What makes this particular tie important are Dubai’s characteristics as a hub, an area of connectivity and networking, and COMESA’s increasing liberalisation and support of the business community.” Dubai has always been a business centre, with most of its trade historically taking place between East Africa and India. What has changed today is the mode of operation: “We now have a hi-tech fleet, Jebel Ali and other great distribution centres, and great infrastructure. Dubai is an ideal re-export centre for goods coming both in and out of Africa.” Next, Ashby wanted to hear from East Africa. He asked Hon. Chirau Ali Mwakwere, Minister for Trade, Kenya, what COMESA was doing to increase trade specifically through Dubai. Mwakwere began by saying that COMESA put in place many regulations that made it easy to do trade with other countries and smooth the flow of goods and services. At the moment, COMESA has not created incentives specifically for Dubai – but Dubai has many advantages in dealing with COMESA. “Dubai has a window into Africa that is open to the world. It is up to Dubai to take advantage of that open window,” Mwakwere declared. With the COMESA region’s population of 450 million people, entering the region would give Dubai many opportunities. In COMESA, Dubai will find a population waiting for goods and services from the rest of the world. Additionally, the COMESA region has much uncultivated land – something which Dubai should take advantage of. Mwakwere then discussed the issue of labour. Looking at COMESA in general, Dubai has access to skilled, affordable labour. It is not cheap labour, he stressed, but skilled and affordable labour that can give value addition on the spot. Dubai could work with COMESA to serve the world with value-added materials that are produced from the raw materials found in Africa. Ashby then moved on to asking specifically how opportunities can be found in COMESA. With Etisalat serving 35 million people in the region, he addressed Ahmed Bin Ali, Group Senior Vice President Corporate Communications, Etisalat Group, UAE, to share his experience of doing business and driving profits in COMESA. “We started our operations in Tanzania in 1999. From that moment on, we noticed that there is huge potential in the region,” began Bin Ali. The low penetration of mobile networks in Africa had created countless opportunities for operators to come in and invest further. Etisalat focuses on Egypt and Sudan, both part of COMESA. Its investments there are worth USD 2.9 billion with a growth of 32%. Etisalat has 35 billion customers in Africa and employs 6,000 people full time, as well as an additional 200,000 on a part-time basis. The company has 135 million customers around the world, and 50% of its outlets are located in Africa. Etisalat, said Bin Ali, started the first video calls service in Egypt. The company laid down over 3,000 fibre-optic cables to connect COMESA countries. It also invested in submarine cables and a cable project connecting Kenya to other African countries. The company is constantly increasing its shares in the continent. “Telecom is a long-term investment. Operators have to provide customers with the various services they need. Most of our contracts are usually 15 years or more,” Bin Ali ended. Ashby wanted to hear from Peter Kiguta, Director COMESA–DUBAI The New Business Opportunity Plenary session
  • 19 4th COMESA Investment Forum “International investors need to partner with local businesses so they can inform them about the local terrain” General (Customs and Trade) of the East African Community (EAC), on what his region has been doing to increase fruitful international cooperation and partnerships. Kiguta stated that the East African Community promoted both regional trade and broader trade with the international community, for example, to eliminate tariff barriers between states. The EAC came together with South Africa to create business partnerships. This had increased trade in infrastructure development. As an increasingly attractive region for investment, the EAC is not only dealing with the markets of COMESA, SADC and the greater East Africa region, but with a variety of international markets as well. The most recent example was the EAC’s signing of a trade investment agreement with the United States. Charles Mbire, Chairman, MTN Uganda, explained how local companies can help international investors coming into Africa. International investors need to partner with local businesses so they can inform them about the local terrain. They can also help investors understand that business plans are not based on the income curve but the expenditure curve in Africa. Local businesses can help with local networking, uncover local potential, decipher the culture and reduce the layers that block international companies from doing business in Africa. Next, Mbire spoke about the partnership with Dubai: “We look for partners who don’t take us for granted and use our cultural and traditional handicaps to their advantage. We look for partners who want a one-on-one partnership and want to help us. Dubai is great because its mission is not just profiteering, and we feel very welcome. Dubai is great because it lets our own companies learn from international business practices because they are so close to us.” Returning to Sheikha Lubna, Ashby asked how to further strengthen the links between the UAE and COMESA. The Sheikha stated that the UAE had made many investments into the continent. In terms of telecoms, for example, companies here know that if they have a highly competitive company that can expand abroad, COMESA provides a great advantage in terms of audience and opportunity. Additionally, there are great resources in Africa and COMESA – particularly in terms of mining. This is a viable business proposition coming from Africa. The UAE is a great place to do this sort of business with because it offers top-of-the-line logistics and networking opportunities. The platform available in Dubai and the UAE is a strong incentive to bring African businesses to this region. Many companies have established areas of interest for themselves in the free zones. There are 36 free zones in Dubai, with many benefits, including 100% repatriation of income, zero trade barriers, and market access to Asia. African businesses can even explore regional opportunities through Dubai because so many African companies are in the Emirate. The Sheikha then moved on to discussing food and water security. The UAE is interested in working with COMESA to secure those commodities. In return, the UAE is interested in providing partnerships and cooperation on renewable energy, particularly through “the sustainability giant, Masdar”. It is also interested in potential infrastructure projects, such as railways. “There is great synergy between these economic blocs. If this relationship is fostered with more care, we can grow many times over, not just gradually.” Ashby then discussed the frequently mentioned point that Africa is looking for people who will add value to the continent’s raw materials. He asked Mwakwere to speak further about what African nations are looking for. Mwakwere described the huge swathes of land in COMESA that can be used to grow and process food that can go around the world. “If you decide to invest in food production in COMESA, I can assure you that the returns on investment will be higher than anywhere else,” he emphasised. Charles Mbire, Chairman, MTN Uganda, (left) and H.E. Sheikha Lubna Bint Khalid Al Qassimi, Minister of Foreign Trade, UAE
  • 20 4th COMESA Investment Forum “This conference is a door that allows the world more access to COMESA” The reason was that resources are plentiful. Additionally, there were corridors being developed to facilitate transport infrastructure. This created many opportunities that are awaiting investors. Investing in COMESA will not just be profitable to investors, but will also add knowledge to people in the region. Comments and Questions from the Floor: The first question from the audience was from a COMESA- based businessman to Sheikha Lubna, asking about special programmes that the UAE government – rather than just UAE businesses – has planned for the COMESA countries. The Sheikha explained that joint commitment from both sides continues helping businesses go forward. The UAE is promoting services in the COMESA region, such as Emirates Airlines. The UAE is a springboard for moving out into a greater international arena and can be used for re-exports. She gave an example of how creating access to a new area can increase business and connectivity: Emirates Airlines opened a route to Brazil, which really boosted business there from different parts of the world. The next comment came from Dr. Asfour, Vice Chair of the COMESA Business Council. She stressed that COMESA needed added value for its industries, and wanted to transform small and medium-size companies into larger companies. She also noted that capacity building is crucial to educate the workforce, and this is beneficial for both regions. Sheikha Lubna agreed and pointed out that through public-private partnerships, governments open doors, create ease in doing business, and remove trade barriers. At the end of the day, however, it is the business people who have to get together and lead most of the projects: “Governments open the doors, businesses walk through them.” In terms of building capacity, she agreed that it impacted both sides. “For example, the UAE has lots of well-educated Egyptians from COMESA who come here to work, so we benefit from COMESA’s capacity building as well.” A member of the audience from India voiced concern about the investments of venture capitalists. Like the UAE, India had also been taking on large-scale modern farming projects in COMESA. However, venture capitalists did not want to stay in the countries they are working in for more than five to ten years. Additionally, venture capitalists wanted to see their investments floated on local and regional stock exchanges. A UAE businessman complained about the lack of information available to investors looking to move into Africa. Ashby explained that Africa is getting increasingly connected to the internet, so that will change things. Mwakwere noted that this was an important observation, and it is a problem COMESA is addressing adequately because it knows that proper information must be in place to increase business. This conference, he explained, is a door that allows the world more access to COMESA. Introductions begin here at this conference, but there are increasing amounts of information on COMESA websites. He then offered some contacts for those who wanted more information on investment opportunities. “Dubai is a place the whole world comes to – we are all here. Let’s connect. I was being told that the banks here are full of money. Well, I can tell you, Africa is full of opportunities,” Mwakwere ended. Main Outcomes: Dubai and COMESA are working to further strengthen historically strong trade ties. COMESA can take advantage of Dubai’s experience and facilities (such as technology, infrastructure, free zones, zero trade barriers, and global market access) while Dubai can take advantage of COMESA’s growing consumer markets and natural resources to ensure its food and water security. Investors need adequate information about the opportunities and challenges in COMESA. (A COMESA Regional Investment Agency representative office will be established in Dubai as a result of this demand). Partnerships between local African businesses and international investors are key to successful business ventures in COMESA as they can help bridge the information gap, while being beneficial for all parties involved. Right to left: Ahmed Bin Ali, Group Senior Vice President Corporate Communications, Etisalat Group; Hon. Chirau Ali Mwakwere, Minister for Trade, Kenya; Tom Ashby, Business Editor, The National; H.E. Sheikha Lubna Bint Khalid Al Qassimi, Minister of Foreign Trade, UAE; Peter Kiguta, Director General (Customs and Trade), East African Community; Charles Mbire, Chairman, MTN Uganda Plenary session
  • 21 4th COMESA Investment Forum Parallel Session Moderator: Pat Lancaster, Editor, The Middle East Speakers: H.E. Hisham Al Shirawi, Chairman, Economic Zones World, UAE Alex Gitari, Finance Director, PTA Bank Oti Ikomi, Senior Vice-President, Ecobank Transnational Inc Chris Kirubi, Chairman, Haco Industries Ltd, Kenya Mahmood Sharif Mahmood, Foreign Trade Policy Director, Ministry of Foreign Trade, UAE  T his session, moderated by Pat Lancaster, Editor, The Middle East magazine, focused on Dubai as a strategic hub for doing business in and out of COMESA. The first panellist, Mahmood Sharif Mahmood, Foreign Trade Policy Director, Ministry of Foreign Trade, UAE, shared his views as to why Dubai is a good location for doing business and trading with COMESA. “For example, the important economic trade links between COMESA and China can be bridged by Dubai, as we provide logistics, infrastructure and transportation facilities in between the two regions” Mahmood stated. He further elaborated on Dubai’s many advantages: 1. Its strategic geographic location: Dubai is on the ideal crossroads in terms of trade – it is situated on the international trade route to India, Asia and Europe. 2. Its sound and transparent economic policies and laws: Dubai has a liberal foreign trade policy and low tariffs, no troublesome customs procedure but a sound technical structure, property services and extensive port facilities. Two airports and free zones allow foreign businesses easy operations and the possibility to expand effortlessly. 3. Its strong relationship with COMESA: Imports from COMESA into the UAE have increased from USD 200 million to USD 2 billion, while exports to COMESA have increased from USD 90 million to USD 700 million. 4. Its strong bilateral relation with China can also be beneficial in facilitating logistics and transport between COMESA and China. As a businessman himself, Chris Kirubi, Chairman, Haco Industries Ltd, elaborated on the implications of increased trade for African businesses. He advised the people of the GCC that COMESA is full of opportunities. He encouraged them to think out of the box and come up with alternative models which can benefit both regions: “You have sand, we have soil – we can develop a partnership where we grow in Africa and then come and play in the sand in the UAE … As for property, you have to go to the sea to build homes … we’ll give you land.” He invited business leaders to come and invest in various sectors such as the African airports. He added how tourism has an enormous potential, which needs to be unlocked. He further emphasised the importance of the COMESA conference and hoped that it would result in more meetings and partnerships. H.E. Hisham Al Shirawi, Chairman, Economic Zones World, explained that Dubai has Jebel Ali free zone, Techno Park and similar facilities, which are conducive to doing business. “Dubai has always been a trading hub since the 19th century, as oil did not create Dubai. Trade was at the core of the country’s growth, as IT, manufacturing, real estate … all is related to trade, and at the core of Dubai activity.” Shirawi emphasised that he is keen on working closely with COMESA: “With 19 states, it is a huge region, with a population of more than 500 million by 2015. A GDP of USD 442 billion, 11 million square kilometres of land – Dubai has to be a part of this growth story.” What Dubai can provide now to help COMESA develop its economy and increase its GDP are the facilities available in Dubai, such as available mechanisms for trade and transport: “To get goods from COMESA to another place; to store them and then send them on to the rest of the world – that’s where Dubai comes in. Dubai’s airports have a capacity of 60 million passengers per year and a capacity of 2.5 million tonnes per year. Dubai airport is the fourth-busiest airport in terms of passenger handling; 130 airlines are operating at the airport and Emirates reaches 200 cities. Jebel Ali Port, where 150 shipping lines operate, is one of the busiest ports in the world. Any product reaches South America in 25 days, the US in 21 days and China in 20 days: no other port can do that.” Lancaster then turned the conversation to finance and how financial institutions and banks can facilitate trade. Alex Gitari, Finance Director, PTA Bank, explained the role of his bank. As a development bank, PTA Bank’s focus on trade finance was twofold. First, the bank supported exports of raw materials. The second focus was project finance, which was long-term lending. “We are supported by our member countries which help us leverage short-term and long-term lines of credit from banks to support trade and investment,” Gitari stated. PTA’s membership structure made it an Trade Dubai–Africa: StrengtheningTradeLinks
  • 22 4th COMESA Investment Forum “GCC investors are invited to come and do business in COMESA – and that is very profitable” open institution, so it was the case that China has a 6.53% ownership. Thus they had access to market information and sat on the bank’s board, which enabled them to see where opportunities lie. Oti Ikomi, Senior Vice-President, Ecobank Transnational Inc, elaborated on Ecobank’s focus on trade and investment between COMESA and the UAE. Ecobank, being present in 30 countries, had an array of banking services for investors and exporters. Ikomi said, “We understand the critical need on how to share information and to promote business. We opened a representative office in Dubai at Emirates Towers. We have the local knowledge so we offer trade finance, account services and investment banking advice, as well as mergers and acquisitions.” The moderator then asked the panel “Why help COMESA?”. Shirawi explained that it is not help that they were giving, rather it was a partnership that they were seeking. The statistics showed that COMESA could become a big economic power. It had many untapped resources, which if utilised properly, could make the economy grow fourfold. Food security could be pivotal, as COMESA had soil, water and crops, and Dubai had the arrangements required to market them. “So it’s a win-win relationship for everyone.” Mahmood further added that COMESA has succeeded in putting the investment opportunity in the right context. “There’s great potential in agriculture and the growing middle class.” Kirubi said that in every economy, business ruled the game. Africa would like to see Dubai as a centre of excellence. “We see a lot of counterfeit products in our markets, be it medicines or other products and would like to have Dubai’s support on this.” He asked for measurements to be taken so that no counterfeit products would be coming through UAE ports into the continent. Lancaster then asked how trade could be increased between the regions. Gitari stated that PTA Bank could only support trade within its policy – geared towards bringing in goods and raw materials. The nature of the bank’s trade finance did not allow financing of the distribution of ready-made goods. Ikomi further added how the UAE and COMESA could enhance trade facilitation mechanisms or incentives, such as tax holidays on a bilateral basis. These kinds of mechanisms can help the two blocs and encourage trading. Kirubi then suggested that political leaders should come up with a trade agreement. Mahmood explained how signing a Free Trade Agreement was a long process but a good proposition that needed to be developed by ministers and joint committees of foreign affairs. Shirawi intervened, saying that rules and regulations worked from top to bottom while trade worked from bottom to top. Without each other’s participations in exhibitions, trade shows, etc., no agreement would be of any use. “First there here has to be an increase in the exchange of goods and services between the two regions,” he concluded. Comments and Questions from the Floor: Prof. Dr. Maggie Kigozi, from the Uganda Investment Authority, stressed that the GCC-COMESA connection was based on a partnership, not ‘help’, model. “GCC investors are invited to come and do business in COMESA – and that is very profitable.” Another member of the audience enquired about mechanisms put in place to control business risks. Shirawi pointed out that details regarding all the investment protection laws, repatriation laws and transparency still needed to be improved in order to create better confidence and trust for all parties involved. However, many securities had already been put in place, but risks cannot be completely eradicated, even with a strong legal framework. Another comment stressed the importance of protecting the region against an increased influx of counterfeit goods. COMESA has had an initiative on intellectual property rights and it had set up standards within the region – these kind of initiatives needed to be built upon in order to prevent harm to local businesses. Main Outcomes: Dubai provides a solid platform for COMESA’s trade through its airports, free zones and ports, etc. Both regions will benefit from this new business partnership and financing models are available to finance trade. It was suggested that a Free Trade Agreement should be signed between Dubai and COMESA – this needs to be further elaborated by policy makers. Pat Lancaster, Editor, The Middle East, moderating the session Dubai- Africa: Strengthening Trade Links Trade Parallel Session
  • 23 4th COMESA Investment Forum Moderator: Andreas Proksch, Director General, Africa Department, GIZ Speakers: Usman Ahmed, MD, Corporate Banking, Barclays Africa Kevin Flannery, General Manager, International Emirates NBD Dr. James Mwangi, CEO, Equity Bank Skander Oueslati, Senior Partner, AfricInvest Capital Partners Abdulla Qassem, Chairman, Network International UAE  C haired by Andreas Proksch, Director General, Africa Department, GIZ, the session looked at opportunities in banking and finance across Africa. The main issue discussed was how the financial sector can fuel Africa’s economic growth. First, Proksch addressed Usman Ahmed, MD, Corporate Banking, Barclays Africa, and asked him to share his experience of working in banking across the continent. Ahmad first described the commonalities across the countries in the COMESA region: the GDP had been growing at over 5% for the last decade and most countries will continue at the same pace. Traditionally, there had been a concentration on a few specific commodity sectors: gold, copper, diamonds and other minerals. Within those sectors were a few key players and the financial sector had long worked with these players, hence it understood the risks in the context of the African environment. Nowadays, there was much emphasis on trying to intermediate the FDI flows between China, India and others in relation to these commodity sectors, and on trying to develop the retail side. “There are many products and services being developed and these are attracting interest from the financial sector. What’s needed is technology and infrastructure,” Ahmed explained. Barclays had been in the continent for a long time and the company understood it very well. “Given growth rates in Western Europe, the US and developed Asia, it is clear that Africa is the upcoming market. This makes it quite easy for banks to follow each other into Africa. For us, Africa has always been a core market, even during the financial crisis,” he concluded. Proksch then wanted to hear from Kevin Flannery, General Manager, International Emirates NBD, about his experience of the financial sector moving forward in Africa. Flannery described how the financial crises in Asia 14 years ago and in Turkey 11 years ago created open and competitive environments that forced banks to get their acts together. In doing this, the banks brought what customers and investors wanted, and created more transparency. He believed this sort of event may need to happen to Africa to help the country’s financial sector leapfrog to the level of such rapidly developing economies. Next, he stated that developing countries needed to be aware of three things: 1. Basel III: Global standards ask countries to shrink their balance sheets when they should be doing the opposite. 2. Rating Agencies: Most of the COMESA countries are not rated, or rated very negatively, which blocks off huge amounts of business. How rating agencies rate countries should change. 3. International Accounting Standards: These are designed by Western economies that are at a certain level of development. African countries are not at that level of development, but they are forced to adhere to standards they are not ready for. That is unfair. However, Africa could overcome these issues. “There are lots of international companies which want to come in. With the level of penetration in Africa so low, there are lots of opportunities,” Flannery ended. Parallel Session New Models for Financial Growth Dr. James Mwangi, CEO, Equity Bank, sharing his views on the African finance sector Finance
  • 24 4th COMESA Investment Forum Proksch then turned to Dr. James Mwangi, CEO, Equity Bank. As it is one of Africa’s most talked-about success stories in banking, Proksch wanted to hear from Mwangi what had made his business one of the most successful in the African financial sector. Mwangi noted: “I think Africa provides a unique opportunity for the finance sector. It has seen huge growth for the last 15 years.” He broke down the drivers of growth into the following points: Low level of penetration: On average, only 25% of Africa has financial access. As incomes rise, the population is becoming bankable. Infrastructure development: This is rapid, specifically in the telecoms sector. Infrastructure is acting as facilitator to business and reducing the costs of doing business. Regional organisations: these are helping individual states work together, rather than working on their own. Among other things, this increases the efficiency of regulatory frameworks and mobility. Movement towards democratisation: Africa is getting new and stable political systems that are not only more democratic but also facilitating business more than ever before. The transformation of agriculture: This is a huge industry in Africa. Changes in this sector are creating shifts in cross-sector opportunities. Sustained 5% growth rate: This offers huge opportunities for the finance sector, which is growing faster than the economies themselves. Skander Oueslati, Senior Partner, AfricInvest Capital Partners, next spoke about investing across the financial sector, particularly into SMEs. Oueslati explained that his company focused on providing new products to SMEs to help them grow their businesses. As some products are not very well developed in some countries, the company had set up a fund that helps develop innovative products across Africa. Through funds like this, the company had invested in a group of leasing companies in West Africa that were not doing well due to a lack of commitment from the main shareholder. Oueslati’s company bought the businesses and turned them around. It brought in a new local CEO, a new IT system, and new products. Now it was a profitable business, even if one of the main countries concerned is Cote d’Ivoire. Oueslati confirmed that financial products such as leasing, insurance, housing finance and mortgages can be profitable and “there are still many more products like this that can be developed”. Oueslati then spoke about the difficulty of raising funds from the private sector. Despite a good track record going back to 1994, private capital was hard to find. Even when private investors commit, they commit much less than DFIs. When it came to North Africa, the GCC countries were interested, but Sub-Saharan countries were not as interesting to the GCC. Abdulla Qassem, Chairman, Network International UAE, then spoke about his experience in selling payment systems to different African countries. He began by describing his company’s development in the Middle East. Network International, a subsidiary of Emirates NBD group, specialised in the payment industry, and focused on all the ways used to make payments of money: credit cards, mobile payment services, etc. Created in 1995 with a limited vision, it did not even have an ATM-sharing platform. The company was a bank that was the result of three bank mergers, so it needed to take on a project that made all three banks happy. The concept of outsourcing was very new to the Middle East, but that was how Network International started its companies. There were three major advantages in doing so: Speed to the market (because the infrastructure was already laid down). Finance Parallel Session
  • 25 4th COMESA Investment Forum “Africa provides a unique opportunity for the finance sector” Companies already have teams passing on experience. Companies only have to pay for utilisation of infrastructure, they do not need to build one. In entering the African market, Qassem noted that “what we realised was that there is a demand for these services – to have debit or credit card products, ATMs, point of sales – but the region has a scarcity of skills and infrastructure.” One of the most important projects was acquiring an Egyptian company previously called NTC, which was now called Network Egypt. The company also had a presence in Ghana and Nigeria. It served 70 banks across Africa with all types of products: credit debit cards, payment gateways, etc. Qassem concluded with the firm conviction that “there is potential. We believe in Africa.” Leading the discussion that followed, the moderator, Proksch asked Ahmed about the potential of Islamic banking. Ahmed believed this could be extremely successful in COMESA. “Because there is so much commodity-based activity in the COMESA economy, it seems that Islamic banking would be a very natural fit,” he emphasised. “Most commodities, except gold, are approved Islamically to underpin transactions,” Ahmed explained. “If Islamic banks consider Africa important and are willing to partake in some of the risk taking that goes with financing imports and exports, there is huge potential for them. There is also huge potential in infrastructure as well, which is also very suitable for Islamic banking. What is needed is that these banks come and take risks. Relying just on DFIs and the World Bank does not add value from a commercial perspective. On the retail side, there is Islamic banking potential in Kenya, Nigeria and others. Some countries are more receptive to Islamic banking than others.” Flannery commented on the same subject, stating that issues with property entitlement and fiscal aspects had created blocks to Islamic banking. Unless there was a huge demand in the market, the structural concerns could be a big challenge. Next, Proksch moved the discussion into the context of the changing political landscape of the Middle East and North Africa, and how it could be affecting operations on the ground. Oueslati pointed out: “As a Tunisian, I think that the change that happened in Tunisia and Egypt will unlock a lot of opportunities in these two countries.” As an example, he explained that there used to be only one micro-finance institution in Tunisia, called Enda, because the former government did not want the lower sector of the economy to get more power. Now, doors are open for micro-finance in Tunisia, and this will address issues that caused price rises in the country. Lending to micro-enterprises will bring opportunities for the country and investors in many segments of the economy.” Oueslati also expressed his frustration at the fact that a country like Tunisia, which had almost 100% mobile phone penetration, did not have mobile payment systems because the former government felt threatened by it. These sorts of government blocks kept countries like Tunisia behind, and the financial service providers in those countries now had to do a lot to catch up to international standards. Qassem emphasised the importance of political stability for investors. “The revolutions in Tunisia and Egypt are opening many opportunities and markets there have a brighter future once they stabilise. Many services are now being unveiled because they are no longer restricted. Mobiles are a great example, but it also goes across all the sectors.” Mwangi asked if things could be put into perspective. He expressed amazement at how fast Africa was transforming. It had taken the developed world over 200 years to make this transformation. Africa must pay attention to the next generation emerging – it is very educated, sophisticated and connected. Investors must work through the transition by focusing on these young people rather than just the politics.
  • 26 4th COMESA Investment Forum Flannery described Emirates NBD’s analysis of Libya, which saw the banking system as not geared towards developing the markets and the economy. He expressed hope that this will now change. He remembered how in 1999, the company went to Syria to open up one of the first private banks. Since then, the country had changed dramatically. Comments and Questions from the Floor: Starting the question and answer session was Dr. Asfour, Vice Chair of the COMESA Business Council and President of the Egyptian Business Women Association, who discussed the need for social justice in Africa. The revolution in North Africa started because of unemployment, poverty and the gap between rich and poor. She wondered how investments can impact on the daily life of African people. A question was raised by a member of the audience regarding SMEs. Although there has been little talk about SMEs, they are the backbone of the economy. He recognised that it is difficult to finance SMEs because of transparency issues and wondered how these SMEs are being financed. Oueslati explained that his company focused on SMEs, and knew that they are the backbone of most African economies. Investing in them is not easy at all. Proximity is a must, which is why they had six offices in Africa. His company’s role is to clean up the books and enhance corporate governance. They are straightforward with their clients, saying these are the rules of the game. In several instances, they had to drop potential companies because they would not comply with strict requirements. There are some banks that are supportive of SMEs, but they are limited and local. Equity Bank is one of the banks that look at the bottom of the pyramid in Kenya. But to help SMEs move to the next level, we needed the help of government and local banks, he said. Mwangi stated that this was the official growth sector in Africa. The micro and SME sectors were what was pushing the economies. This sector can be banked, but we needed to develop special programmes and focus more on cash-flow lending rather than collateral-based lending, he said. Finance lending needed to be more inclusive of the bottom of the pyramid. Technology is one of the biggest drivers of equity: mobile banking is making banking much easier, as there is no need for bricks and mortar. Technology will be the biggest driver of inclusion in Africa. Main Outcomes: The African financial sector offers many opportunities and has seen tremendous growth in the last 15 years. This is due to a rising bankable population, infrastructure development, regional organisations that are helping to increase efficiency and mobility, a general movement towards democratisation, the transformation of Africa’s main sectors (such as agriculture) and a sustained 5% growth rate. Despite SMEs forming the backbone of the economy, it is still particularly difficult to find funding from large banking and financial institutions. Private capital is also hard to come by to facilitate investments into SMEs. The demand in Africa for financial services and products is growing and promises to be profitable. Islamic banking offers an opportunity for the financial sector in COMESA, as most commodities and infrastructure are very suitable for Islamic banking. However, there are structural concerns that will hinder the development of Islamic banking unless there are huge demands for it. The political developments in the Middle East and North Africa will open up many opportunities for the economies and particularly the financial sectors. This is already visible in Tunisia, where many micro-finance institutions have emerged in the weeks following the revolution. Left to right: Andreas Proksch, Director General, Africa Department, GIZ; Skander Oueslati, Senior Partner, AfricInvest Capital Partners and Usman Ahmed, MD, Corporate Banking, Barclays Africa Finance Parallel Session
  • 27 4th COMESA Investment Forum “You cannot escape logistics: it is an essential element of trade” Moderator: Anver Versi, Editor, African Business Speakers: Khaled Ahmed, Senior Vice President Strategy and Development, Economic Zones World, UAE Amadou Diallo, CEO, Africa and South Asia Pacific, DHL Global Forwarding, Africa Hussein Hachem, CEO, Middle East and Africa, Aramex Deanne De Vries, VP, Africa Agility Sanjeev S. Gadhia, CEO, Astral Aviation Ltd. Kenya  C haired by Anver Versi, Editor, African Business magazine, this session aimed at looking at where the opportunities within the logistics sector in the COMESA region are to be found. Versi introduced the discussion by giving an overview of logistics. He stated that “a history of trade is a history of logistics” and therefore it is a key part of the business of moving goods and people from point to point. He addressed Sanjeev Gadhia, CEO, Astral Aviation Ltd. Kenya, asking him to share his experiences of running a cargo airline. Gadhia explained that logistics had many challenges and, at the same time, wonderful opportunities. The challenges now for the COMESA region were several: primarily, the ports needed to be expanded; transit corridors were stretched beyond capacity and needed to be expanded too; railways in East Africa were in need of rehabilitation; new talent needed to be found and trained; and airport infrastructure needed to be upgraded to make the airports more efficient. “But these challenges can be opportunities for trade,” he concluded. Versi added that timing was also a part of the challenge: there is a problem with moving goods from the port of Mombasa because it takes time to get goods from the warehouses to rail and roads. The goods eventually reach their destination a long time later. “Simply moving goods from point A to point B needs better customs and synchronised systems.” Next, Khaled Ahmed, Senior Vice President Strategy and Development, Economic Zones World, UAE, gave his input on the role of logistics in the UAE. Ahmed said that Dubai had been a merchant society from the beginning, from pearl diving and fish, then to oil, tourism and real estate, etc. Across the timeline, logistics had been the base for facilitating this trade and growth. The logistics infrastructure had always been the bedrock of trade. Currently the free zones in the UAE house 6,000 companies, most of which were featured in the Fortune 500, and these economic zones allowed companies to set up businesses and trade internally – all of which required a whole set of instruments and tools. “You cannot escape logistics: it is an essential element of trade.” Hussein Hachem, CEO, Middle East and Africa, Aramex, noted Africa’s major role in trade: in terms of resources, Africa was the richest continent and is heavily involved in trade with the Middle East. Commodities travel from Kenya, down to Djuba, and finally Zambia. Africa and COMESA are considered the most important in bringing the products closer to the market. Deanne De Vries, VP, Africa Agility, described her company’s activities and stressed that Agility wants to facilitate trade by following the path of least resistance, and the UAE had many good policies to make trade easier. African countries were quickly gaining pace, and Rwanda is a great example, as it was rated the world’s top reformer in the World Bank’s Doing Business report, partly due to its trade- friendly policies. Amadou Diallo, CEO, Africa and South Asia Pacific, DHL Global Forwarding, explained that DHL had a lot of trade to Asia and the Middle East, and that volume of trade is constantly shifting. He believed that it was important to let the African consumer have the opportunity of choice, and businesses should try to set up a platform to sell goods anywhere in the world. Unfortunately, it is not well known that Africa is such a commercial hub because infrastructure had not been part of the focus. Versi then asked for examples of what investors needed to know. Gadhia noted that Africa has an abundance of labour and natural resources but was not exploiting them properly yet. Nairobi, Johannesburg, Lagos and Cairo were all working from and/or within hubs into almost everywhere, including the DRC, so trade within Africa is possible as long as there were customers. What Africa needed right now is expertise with PPP and sustainable business. Ahmed described a success story of PPP by using Dubai World’s experience in Djibouti as an example. The experience Identifying Opportunities in Logistics Parallel Session Logistics
  • 28 4th COMESA Investment Forum was successful as a lot of learning came from it and the port brought out hundreds of companies. Ahmed believed that as governments plan for these things, they should think of the returns they will receive in the end. In essence, the economy had to be as open to free trade as it can, or else the economy would be closed in. So they should create export free zones and invest: the model for business was changing and investors must keep up. Diallo added to Ahmed’s point by encouraging businesses to mobilise and inform investors. Business had been growing 27% across Africa every year, and 50% is the rate of growth in Indian and Chinese markets. Obviously African countries needed to make their markets grow as fast. De Vries pointed out that it was important to remember that “Africa is not a country. It is over 50 countries”, and that means there must be offices in every country, and logistics should work with locals to get insider knowledge. “The key is to show respect, even if you understand logistics,” she said. “Ultimately, there is a viable solution to moving goods.” Comments and Questions from the Floor: The first question was about geographical considerations: “Considering that all the elements of opening an operation are met, what is the role of the geographic environment? Does it affect decisions significantly?” Hachem responded that it depended on the capacity of the trade movement. If establishing a hub made commercial sense, then it would happen. Gadhia answered that in terms of airline services, it depended on that country’s regulations in terms of moving in between landlocked countries. He stressed that the Nigerian government is an excellent example, as it has taken steps to help logistics significantly. De Vries said that with regard to Agility, their location is often decided by their customers. The next comment and question came from Dr. Kwaku, Founder, The Kwaku Group: “The importance of logistics is the choice that it gives the consumer. But we have not emphasised enough the chances of competitiveness that it gives the seller. If you want to play with the big boys in the global market, you need to take logistics seriously. The issue of supply-chain management is linked to government supplies (in former British colonies), which are still based on the curriculum of the 1960s. What is the HR capacity that is supporting the sector in the last 10 years? Are we getting the right skills? I see a lot of logistics institutes popping up, but how useful are they? Right now the situation is very opportunistic. What do you think we need to drive this sector successfully?” Diallo answered that it was a form of trial and error: people were appointed from Africa, they made mistakes and then they were trained in places like Dubai to improve. In some ways things were getting better, and projects such as the MDGs were beneficial to development. The final question came from the moderator himself, who asked at large: “What is the scope of investment?” Hachem concluded the session by replying that “the scope is as big as the investment”. If Tanzania wanted to compete with Kenya, it needed better capacity and damage-control infrastructure. He noted that if you had a strategy for your economy, you needed to enable a proper infrastructure. We lived in a competitive world and the clients moved with it, so one cannot rely on loyalty, he said. In order for Africa to become more competitive, it needed to upgrade its logistics capacity. Main outcomes: Logistics is an essential element for trade. Despite trade having increased considerably, making Africa a commercial hub, there are still many logistical and infrastructural shortcomings, which make the transport of goods difficult. Warehouses, airports, rail, roads and ports need to be improved, as well as their connectivity. PPP projects can be very beneficial, as they bring along experience and business opportunities for the private and public sectors. Capacity building is key, and talent needs to be trained effectively. While there are many logistical institutes cropping up in Africa, experience is still lacking. In order to become commercially more competitive, Africa needs to upgrade its logistics capacity. Left to right: Deanne De Vries, VP, Africa Agility; Hussein Hachem, CEO, Middle East and Africa, Aramex and Sanjeev S. Gadhia, CEO, Astral Aviation Logistics Parallel Session
  • 29 4th COMESA Investment Forum “There is no other business sector more important than agriculture. It accounts for one third of COMESA’s GDP” Parallel Session Moderator: Edward Paice, Director of the Africa Research Institute Speakers: H.E. Prof. Elias Nyamlell Wkoson, Minister of Foreign Trade, Sudan Dr. Evans Kidero, CEO, Mumias Sugar, Kenya Wanjohi Ndagu, Partner, Pearl Capital Partners Dr. Shachi Sharma, Head of Strategy and Planning, Africa & the Middle East, Syngenta Giulia Di Tommaso, Director of External Affairs for Africa, Middle East and Turkey, Unilever  M oderating the session, Edward Paice, Director of the Africa Research Institute, introduced the discussion by stating: “There is no other business sector more important than agriculture. It accounts for one third of GDP, 80% of employment, and 65% of foreign exchange earnings in the COMESA region.” With the tone set on the agricultural potential of Africa, Paice asked H.E. Prof. Elias Nyamlell Wkoson, Minister of Foreign Trade, Sudan, to provide background on Sudan in terms of contract agriculture. “Sudan has vast resources that are important for agriculture,” said the Minister, “but how far will subsistence agriculture take us? What we call ‘traditional’ agriculture is still the mainstay of Sudan. Most of the producers are working in the domain of traditional husbandry (small families owning sheep, etc.). We have to take people out of subsistence and into more productive parts of agriculture, not only for survival but for export. Sudan has large amounts of livestock but unfortunately a lot of it is not exported. Exporting meat is not that easy because it must live up to certain international standards of health but Sudan does not have the capacity for that, so we need investors to come in.” The Minister then added that the separation of north and south Sudan would also introduce more complications with regards to investments, but if the separation is treated as “an amicable divorce”, then perhaps investments can continue to flow in. He admitted that although the south is still emerging from war, the potential for agriculture is still huge. Tracts of land had not been developed and the potential for tea, coffee, timber and other resources is great. The main topic as regards agriculture to both future Sudans is land lease. Currently the issue is being raised in the constitutional review, but the old constitution claimed that “land is communally owned”, making it difficult for the government to exploit or use land for the public benefit. Investors complained that they do not have access to land and the government cannot help because it is communally owned. The Minister recounted the example of a case in northern Sudan, where a farmer grew corn maize and was doing well. Despite that, the land next to the farm is unused. When the Minister asked the farmer to expand, the farmer said that he was prevented from using it by the owners of the land, who claimed that the land was communal. Paice next invited Dr. Evans Kidero, CEO of Mumias Sugar, Kenya, to speak. Kidero touched on the fragility of resources in some parts of Africa and the market roles they play. He said that in the 18th century, the sugar industry had an inexhaustible market, but two centuries later people thought it would die out – and then the demand for sugar in the EU went up. Kidero is thankful that Kenya has expanded its production capacities and diversified into power, water and other sectors. Paice asked Wanjohi Ndagu, Partner at Pearl Capital Partners, to speak about some of the investments the company has made in the sector. Wanjohi explained that some of their investments aim at improving businesses, and that “as far as [investment] potential goes, it goes far.” The COMESA region has a rapidly growing-income middle class and the growth they are experiencing is exponential. However, some setbacks still existed but the company is trying to tackle them. Currently, Pearl Capital has launched a guide for farmers to enable them to begin thinking as businesses rather than remain trapped in the “one-man syndrome”. There has also been a lack of working capital and balance, but in the last couple of years, this has been bouncing back. Ndagu claimed that “the working criterion in investment is the quality of the entrepreneur. We need a partner who is focused and driven.” Paice then turned to Giulia Di Tommaso of Unilever and asked how important it was for her company to link large numbers of farmers to higher-value markets? Di Tommaso addressed the obstacles and opportunities of investing in Africa. She noted that two thirds of value came from agriculture and that only 10% of agriculture is sustainable in Africa: when it comes to the question of ‘Why small farmers?’, her response was ‘Why not?’. She argued that the approach companies should have is not ‘business as usual’ any more. Tapping into the Market: What are the Opportunities? Agriculture/Agribusiness
  • 30 4th COMESA Investment Forum She urged that investors needed to shift the paradigm and look at the same investment areas in different ways. The moderator then turned to Dr. Shachi Sharma of Syngenta and asked him how Syngenta operated in the region. Sharma began with a quick recap of what Syngenta is: it is a fairly large agribusiness, and situated in almost all African countries, with 30% of their investments in the COMESA region. He explained that Syngenta had multiple ways to operate, with multiple business models to consult that particularly emphasise training. Syngenta tended to look at agriculture from “high to low”, and this can mean that on the one hand there is a huge area of land but no technology, or conversely there is little land with high technology. Syngenta’s main aim is to work with sustainable agriculture, and this is evident through their launch of a micro-insurance programme to protect farmers. “We believe that partnerships are crucial. We cannot gain market access on our own or come up with a financial matrix or financial capability on our own. We came up with interesting products in Africa that are hard to counterfeit.” Paice mentioned that one of the things that often come up during presentations is the scope and potential in the small farming sector. Large-scale agriculture is attracting a lot of attention, but it’s the small man who has the attention. He asked Dr. Kidero to say something about smallholders and how they are growing commercially. Kidero said that Kenya is home to five sugar companies and that one thing they have in common is that they are small (ranging from 0–25 acres). What his company did was to merge them so they ended up with large-scale farms. They were finally able to make a profit, although there is still a need for more management and money regulation. Currently they are going into ethanol, and revaluing products so that farmers can benefit from outputs to feed those on the land. Wkoson added that there are also cultural aspects that influence the way farmers do things. Some of them are stuck on the methods of their forefathers, and about 70% are engaged in subsistence farming. Wkoson thinks that women especially need to be empowered and there should be some funding for that. There are problems with both the way these issues are approached and the cultural aspects complicate this. Wkoson called for more training in better agricultural practices in a more scientific way. Paice asked Dr. Sharma to describe how local partnerships can be beneficial. Dr. Sharma said that it is a very big opportunity for all involved: “People have to find touch points to reach as many farmers as possible.” Syngenta was not directly developing businesses in those countries, the farmers were, and Syngenta was only advising them. Currently Syngenta is working on more business models to address the needs for better agricultural practices. Paice turned to Di Tommaso and asked her to explain the role of Corporate Social Responsibility (CSR), and she stated that it is important to incorporate CSR as early as possible. CSR in general is moving towards a more sophisticated approach, which becomes more interesting and challenging. What Unilever would typically do is to come in with direct investments, and then meet with the relevant NGOs, such as Oxfam, to get farmers together. Suppliers, processors and customers are looking towards a form of cooperative and responsible practices. The business community should be looking at long-term opportunities rather than thinking short term. Comments and Questions from the Floor: Paice finally opened the session to the floor, and the first comments and questions came from a Kenyan tea and coffee trader. His question was: “Why is the percentage of large- scale farming investment so low compared to the vast arable land of COMESA? Why have these opportunities not been exploited so far?”. He added that many investors are doubtful whether to invest in agriculture in Africa, when there should be no concerns. Africa is the home of the River Nile and the Great Lakes region. Angola and Mozambique are “floating on water”. He felt that plenty of water and land were lying idle. While food prices are going up, he thought that Africa is probably going to be the future key to bringing down prices and producing more food. The Kenyan government is importing food but the country could sustain itself on its food Left to right: Moderator Edward Paice, Director of the Africa Research Institute; Giulia Di Tommaso, Director of External Affairs for Africa, Middle East and Turkey, Unilever, and Dr. Shachi Sharma, Head of Strategy and Planning, Africa & the Middle East, Syngenta Agriculture/Agribusiness Parallel Session
  • 31 4th COMESA Investment Forum “Access to markets and technology solutions are essential when investing in smallholders” production. He concluded by asking the panellists, “Why do you think the people of Africa – with all these resources – are still importing food?” Paice agreed, stating that indeed investment had been neglected with regards to land. In fact, the World Bank recently admitted having “rediscovered” arable land, and that meant that investment opportunities were missed in the 1980s and 1990s, but in the 2000s the picture is much more encouraging. Dr. Sharma added that indeed arable land is plentiful in Africa. Available acreage is over half a billion. The main challenge is finding water, infrastructure and capital. “You need the right kind of capital structure to do large- scale farming. And there are so many variables to add to that mix of challenges.” Paice also pointed out that political sensibilities added to that mix, and while some investors are told how much land is vacant, it is not always the case. In Sudan, for example, there are certain times of the year that land is vacant but it does not mean that it is so permanently. Wkoson admitted that some of the reasons for lack of investment in Africa were true. Africa was still considered a high political-risk area. “Once an investor wants to invest, they make political risk assessments, and this is communicated to other international institutes and they guide investors – and therefore money does not come.” The more correct and balanced information that came out of Africa, the more investors will want to come. A representative from Oxfam directed a question to Wkoson: “As you said earlier, land was not owned but was for the common good, and that provided a huge opportunity for investment. How does your government ensure that those investments benefit the local community and do not jeopardise food security? And what conditions can you put on contracts?” Wkoson responded by saying that small farmers did not have access to the market and could not meet the world price. The benefit for those communities was integrating them into the world economy in the first place, and some farmers joined forces and formed cooperatives. So there was a way to improve the production of smallholders and guarantee food security. The concluding question from the audience challenged the panellists: “What if the future of COMESA does not lie in the hands of smallholders? What if the smallholders are actually blocking investment opportunities?” Kidero agreed, stating that future policy on land holding hinged on the idea that “everyone wants a piece. Land will be divided into more pieces than before. There is no future there, and businesses and governments need to find policies that are conducive to more large-scale farming.” Dr. Sharma, however, believed that smallholders would be around for the long term if one considers where African farming is today. Providing access to markets and technology solutions are essential when investing in smallholders. It is possible to integrate farmers into a large hub, and they can be dealt with as a large unit. There will be smallholder farmers for a long time, Dr. Sharma warned, if not forever, so what is crucial is to strike a balance and determine how we as investors provide that access to markets and technology. Concluding the session, Di Tommaso said that any situation began with a feasibility study, and the study will dictate which direction an investor would take. Unilever would look at the viability of a project, not the guarantees the government made, so that coming up with multiple methods was important. One model may work better in Asia, but not in the same way in Africa, and these differences were what made the whole process more difficult to go through, so it was not as simple as dismissing smallholders completely. Main Outcomes: The potential for investment in agriculture is huge, particularly in land, as this has long been neglected. Subsistence agriculture is still the mainstay for many farmers but farmers need to start thinking as businesses rather than individuals. Access to markets and technology needs to be improved for smallholders. While small-scale farmers are seen by some as being a potential for investment, they are also seen as a hindrance (land will be divided into too many pieces). All agree that smallholders need to be dealt with through some form of collective – be this by merging land into large-scale farms or by working through associations. Traditional and cultural aspects can be a hindrance to agricultural development. Land leasing is difficult to implement in Sudan as “land is communally owned”. Cultural aspects also influence how and what farmers grow. A more scientific way of farming needs to be taught and women need to be empowered.
  • 32 4th COMESA Investment Forum Parallel Session Moderator: Chalimba Phiri, Chairman, COMESA Regional Investment Agency Speakers: Lazarus A. Angbazo, President & CEO, GE East, Central & West Africa Marco Coutinho, Energy Coordinator, Vale, Brazil Farid Mohammed, Director, Pipal Mark Pearson, Director, TradeMark Southern Africa Programme  T his session looked at opportunities in the infrastructure sector in the COMESA region. The moderator, Chalimba Phiri, Chairman, COMESA RIA, first invited Lazarus A. Angbazo, President & CEO, GE East, Central & West Africa, to open the discussion by giving an overview of GE’s involvement in the infrastructure sector in COMESA and the opportunities he saw for the private sector. Angbazo stated that COMESA is a region with plenty of natural resources, but very little energy provided. Energy will have a very low cost there, however, so there are huge opportunities. From energy, Africa needed to move to transport and healthcare. Healthcare infrastructure is quite limited, and there is a huge gap in aviation infrastructure. Angbazo’s company had done an internal assessment and found that there are many investment opportunities. GE had the largest power installed base on the continent. In Kenya, it is co-developing energy projects. It had also started working in the rail sector, beginning by partnering with Transnet, the largest rail company in the region. To manufacture locomotives in a country meant that the infrastructure of neighbouring countries also needed to be improved, hence cross-border and cross-regional projects were being implemented. “To make an impact on the region, companies must engage with the government,” Angbazo stressed. Next, Marco Coutinho, Energy Coordinator, Vale, Brazil, spoke about his company’s experience with the infrastructure gap in Africa and how the company has gone about developing infrastructure as part of its investment strategy. Coutinho gave a background on Vale. Based in Brazil, it was the second-largest mining company in the world. The company operated its own logistics system, and so dealt intimately with the infrastructure gap when working in Africa. Globally, Vale had invested USD 46 billion in infrastructure in 2010, and USD 74 billion over the last five years. “Power and fuel must reach the mining site. It’s a critical element of the mining business. Many parts of Africa are full of mineral assets, and it is a great opportunity to mine them,” said Coutinho. In Mozambique, Vale dealt with two infrastructure bottlenecks: Logistics: The NACALA corridor and SENA corridor are limited, which impacts how much Vale can mine. Vale has been looking for alternative ways to reach optimal mining capacity. Energy supply: There is a world-class generation asset – the Cahora Bassa hydroplant. However, it is also used by other countries, as well as Mozambique. So Vale had to structure and build its own energy solution. Farid Mohammed, Director, Pipal, shared his experience of finding financing solutions for infrastructure projects in Africa and matchmaking between investors and projects. First, he explained that there are only two or three equity investors. On the debt side, things are more open. Five or 10 years ago, trying to get term financing was almost impossible. Most commercial banks were starting to look at longer-term financing. Foreign currency financing is also becoming available. He also spoke about development finance banks, saying, “Bear in mind that economies in East Africa are small economies. So if you are looking at ten-million-dollar projects, it is very noticeable.” Multilateral and government-owned financers are the other group. Mohammed described them as a two-edged sword. Because they work with governments only, that has given countries an excuse not to work with private companies. Governments have budgets they need to reach, so sometimes they spend that money in places where it is not very useful. In terms of opportunities, the infrastructure is crumbling and the population is growing, so there is a huge need for new infrastructure. Small economies, government control, and procurement rules made it difficult to maintain infrastructure. Kenya has a total power output of 12 megawatts – this is a real constraint on the economy. Three power companies were trying to open up power plants but not starting up because of gaps in contractual and management experience. Getting these projects in place is hard work. There is much political interference. Having said that, Mohammed stressed that there are still lots of opportunities. Today there is much more pressure on getting good-quality infrastructure in place. Water supplies, The Infrastructure Gap Infrastructure
  • 33 4th COMESA Investment Forum “Investment in infrastructure is one of the most important issues of economic growth in Africa” for example, were starting to become a big issue in East Africa. There are no water shortages when it rains – the problem is that the countries do not have storage capacity for water, so when no rain falls, there is a water shortage. Additionally, transport and port infrastructure must really improve in order to export oil. In terms of matchmaking, Mohammed said that business in East Africa is difficult and very competitive. There are well- connected, local companies. Investors must go to them first. They can be very insightful and helpful. Mark Pearson, Director, TradeMark Southern Africa Programme, spoke about transport infrastructure and public-private partnerships. He explained that transport infrastructure has major challenges and opportunities. The amount of investment needed to take Africa out of its current position is USD 94 billion, of which USD 45 billion is still outstanding. “Investment in infrastructure is one of the most important issues of economic growth in Africa. This continent has huge countries with scattered populations and small markets, so these countries need to export. And to export, they need to put in place regional supply chains,” Pearson declared. There is a big demand for commodities, he continued. This puts pressure on the people in the industry, and creates opportunities for others who want to come into the industry. In terms of infrastructure investment, COMESA must start with roads. Roads were traditionally seen as a public good, and so were heavily subsidised. The use of roads becomes cheaper and more economical than railways, and railways are looked at as cost-recovery systems. With less regulation as well, roads get the bulk of the traffic: 70% of transport goes through roads in COMESA, which is bad in terms of security and maintenance of the roads, which can be damaged by heavy machinery. Moving on to public-private partnerships, Pearson explained that there is much legislation in COMESA countries. A number of countries in COMESA implemented public-private partnership legislation in their ministries of finance. They have a lot of powers; for example, units can take unsolicited bids. There are some challenges still, in that some countries do not have well-staffed public-private partnership organisations and there is legislation in place that hinders them from taking advantage of a public-private partnership atmosphere. Interestingly, there is a move now to put roads into the public-private partnership sector. Governments tried to deal with railways through concessions. The problem is that concessions have been badly negotiated before. COMESA must look at other models to improve the service regarding railways. Comments and Questions from the Floor: Starting the question and answer Session, Dr Ken Kwaku, Founder, The Kwaku Group, saw four difficulties in improving infrastructure: 1. The use of new technologies in the renewable energy area. COMESA is not paying attention to ecological advancements. 2. Weaknesses in technical skills contributed to bad concession deals – infrastructure cannot be fixed without these skills. 3. COMESA is not mining opportunities enough, particularly in using resources from its pension funds. There are African countries with huge pension funds that are just starting to get used for investment and infrastructure building. 4. National promotion agencies need to help with matchmaking. But he would recommend representatives coming in to speak directly to private companies on the ground. That way they “can intimately know the good apples from the bad apples, and make sure they’re working with a genuine company.” Angbazo answered by explaining how his organisation was facilitating the development of new technologies in the COMESA region. He spoke about two sectors in particular: wind and geothermal. Some projects in Kenya and South Africa have gone beyond being technology vendors. GE worked with local investors and has been putting equity money in these projects, especially in wind. In geothermal, GE is doing the same thing. Kenya, for example, has 7,000 megawatts of power in just that sector. GE is helping develop that market. Angbazo also spoke about the need to bring in partners who have the capabilities they themselves do not have. Lazarus A. Angbazo, President & CEO, GE East, Central & West Africa (left) and Farid Mohammed, Director, Pipal, discussing COMESA’s infrastructure needs
  • 34 4th COMESA Investment Forum “If you don’t have a capable team, these projects won’t move out of our heads into the real world, and will not get done,” he ended. Pearson commented on the same question by addressing the “how and when” of change. He said that there has been a change in mindset. Before, the mindset was “It’s better to build something new than maintain what you have”. Now, that has changed, and the focus is on looking after what already exists and making it better. The skills gap, he continued, is a serious problem. As Africans are taking in new skills, the public-private partnership acts provide ample opportunity for more technical knowledge to get involved in concrete projects. Additionally, Pearson discussed a skills gap in preparing projects – a gap between concept and making a bankable project. That is why the COMESA community is putting in place a project preparation and implementation unit to help out SMEs. It is a big challenge, but first steps have been taken. On pension funds, Pearson agreed. Before, they were not allowed to invest other than locally. Now, pension funds had much more ability to move and invest outside the local area. If these regulations are not fixed, they will turn pension funds into a wasted resource. Mohammed pointed out that there is very little private sector experience in infrastructure and manufacturing. “But now opportunities are opening up, and local companies are on quite a learning curve.” On the pension fund side, he explained that Kenya has a more open capital-market system. The restriction is on where they can invest their money. But money still does flow, and there is a big turnover of money, especially in listed companies. A member of the audience then asked what governments can do to help improve transport infrastructure. Answering him, Coutinho described that, to some extent, his company has been interacting with the government. In terms of logistics, things are far more complicated because they are dealing with two corridors that are hard to go through. His company’s and the government’s willingness to coordinate and come up with a common understanding and interpretation of information on the ground were extremely helpful. Coordinating interpretation of existing information makes a huge difference at the end of the day. Main Outcomes: Investment in infrastructure is one of the most important issues of economic growth in Africa. The amount of investment needed to improve infrastructure is USD 94 billion, of which USD 45 billion is still outstanding PPPs offer many opportunities but there are still challenges and regulations which impede proper implementation of projects. Investments from the private sector into infrastructure have been low in the past, particularly since multilateral and government-owned financing has given countries an excuse not to work with private companies. However, new opportunities are putting local companies on quite a learning curve. Companies that are operating in the region have gone about developing infrastructure as part of their investment strategy, such as providing power supply and railways to mining sites. This has also helped to interlink different countries and regions. In order to make an impact on the region, companies must engage with the government as well as with local companies who have the expertise. H.E. Hisham Al Shirawi, Chairman, Economic Zones World, addressing the panellists with a question Parallel Session Infrastructure
  • 35 4th COMESA Investment Forum “Africa’s average return on investment is 29% as compared to the EU’s 10%” Moderator: Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS), Eastern Africa, Ernst & Young Speakers: Ziyad Bundhun, MD, MCB Capital Partners Paul Kavuma, CEO, Catalyst Principal Partners Marie-Hélène Loison, Head of Private Equity, PROPARCO Skander Oueslati, Senior Partner, AfricInvest Capital Partners  M oderating the session, Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS), Eastern Africa, Ernst & Young, introduced the theme by saying, “In the last couple of months, as we are coming out of the recession, we have seen globally an increase in cash flows into emerging markets. In 2010, USD 1.5 billion of private equity was raised for Africa, 56% up from 2009.” There were positive sentiments towards Africa as many economies were doing well. The average return on investment was 29% in Africa as compared to the EU, where it was 10%. Negatu directed his first question to Paul Kavuma, CEO, Catalyst Principal Partners, and asked him how private equity has changed, and continues to change, the business landscape in Africa. Kavuma explained that six years ago there were two PE companies: the number today has increased to almost two dozen companies. This is due to fundamental improvements of the markets, including liberalisation and reforms, macroeconomic management and positive progress in terms of the general geo-political environment. He emphasised that the “most powerful driver for attracting more private equity firms is the increasing regionalisation of the African markets, presenting to investors attractive economies of scale.” Ten years ago, The Economist magazine featured Africa on its cover as the ‘Dark Continent’, but now investors have discovered that there is a growing middle class and number of consumers, as well as aspirational markets which are accessible and affordable. “PE in Africa is coming of age and Africa is in a growth phase that puts us in a sweet spot.” Kavuma also highlighted that in the middle of the global economic crisis, his company set out to raise a fund focused on East Africa. The companies that the fund invested in were companies which have a growth business, good track record and the willingness to drive organic growth. The fund has the capability of building regional champions of scale. The next panellist, Ziyad Bundhun, MD, MCB Capital Partners, Mauritius, was asked what his company’s investment parameters were and where his company derived earnings from. Bundhun outlined four guidelines concerning the principal areas of interest: 1. Strategic regional significance. 2. The value potential of the project, the space and import assessment. 3. High-calibre management: Do the companies have people on board who can take strategic plans forward? 4. Clear exit routes – exits can take a long time as market conditions may vary. Exit routes can take different forms – ready buyers or other PE funds, as well as IPOs. Bundhun stressed: “We try and work with promoters; we make agreements at the outset to ensure the exit strategy is smooth and the exit opportunities are right. The markets are risky and the liquidity is a risky issue.” Marie-Hélène Loison, Head of Private Equity, PROPARCO, was asked to give a brief overview of her institution’s activities within the continent. Loison pointed out that for her institution, Africa is a strong focus, as PROPARCO provides a whole range of financial products. In total, they have six offices in Africa, of those two are in COMESA. The French government owns 60% of the institution, and 40% is owned by private investors. Asked if she thought that PE is a substitute for or a complement to private investment, Loison emphasised that it is complementary to private capital: “Obviously, for large projects, particularly in infrastructure, you need both private and public funding.” She explained that a development institution like PROPARCO is a patient investor and the exit only comes after a couple of years: they can even hold on long term on projects. Negatu then cited research that stated Africa requires on average USD 94 billion every year for infrastructure development. What can COMESA companies do to attract PE?, he asked. Loison replied, “Eighty per cent of our investments are in Africa, 25% in COMESA – the region has a sizeable share and we see a lot of potential. To address the key bottlenecks, financial services are very important. There is a need to have banks with regional networks. There needs to be a focus on specialised funds – that is the key element where the region should invest.” Private Equity Parallel Session Finance
  • 36 4th COMESA Investment Forum Skander Oueslati, Senior Partner, AfricInvest Capital Partners, a company which originated in North Africa, was asked what drove it to invest in East Africa. Oueslati explained that there were several reasons: Kenya, Uganda and Tanzania have a population of 110 million people, which is substantial and makes a very attractive market. On top of this, there is regional integration among these countries, which provides good opportunities. It was a diversification strategy that drove the company to move from North and West Africa. ”There were eight disbursed investments and three of those are in East Africa. The region has great potential and there are good opportunities available.” Negatu pointed to a new forecast by The Economist magazine for 2011–2015. Out of the top 10 economies, seven are African countries and five are COMESA Member States. He draw attention to a report which claimed that USD 24.5 billion in PE is trying to be raised to put into Africa. He asked the panellists if they believed this to be a possibility. Loison intervened by saying that the important element was the capacity to raise funds and that is relatively limited. The private sector could invest, but it is a slow process and a big obstacle to reach that number. Mid-size fund managers are diversifying, going into pioneering sectors and riskier countries. Kavuma pointed out that it was not easy to raise that kind of money as there is substantially less capital around. It is a supply-versus- demand game and there is very little supply. Negatu then highlighted how some funds have had an internal rate of return of about 40%. With these returns, why was it so difficult to raise the capital, was the question. Bundhun said the figures of 40% were true; an average return of 15% to 20% was also true. 2007 was the peak of raising funds, but currently the kind of targets are USD 10 billion from 35 fund managers, which had increased the demand for larger funds. Oueslati explained how two families of funds for North Africa and Africa have had limited success in raising capital in the GCC. Private investors commit funds which amount to one tenth of what DFIs put on the table: it is difficult to support DFIs for PE in Africa, and there is increased competition. The focus for them is on SMEs and growth capital. Pressures on managers are there in terms of fees and value creation, so timing is critical. Comments and Questions from the Floor: The first question came from Christopher Hartland-Peel from Exotix, London. He asked about the prospects for local pension funds. Kavuma answered by saying that there are regulatory issues which make it difficult to raise funds or have pension funds. These funds are not allowed to invest offshore, permissions are required. It is not a conducive environment, and there are various technical, legal and educational issues that need to be taken into consideration. Another question from the audience related to the difficulties in accessing reliable African funds and why the funds don’t target the diaspora population? Kavuma said that there were various restrictions which make that difficult. The regulatory environment in which funds are set up allows only for sophisticated funds and not retail investors. “We are talking with asset managers in Kenya to create a vehicle that will allow for consolidation of retail investors in the private equity space,” he said. Bundhun added that one had to bear in mind that retail investments have to be monitored closely because of risks. One had to be careful who one approaches for fund raising. Another member of the audience asked if there are investments into logistical projects which will allow farmers get their goods to the final market and if PE investors are interested in these sectors? Loison replied that these sectors required a long-term view, and not simply an approach of ”making three times your money in five years”, but rather making profit after a number of years. She noted that PROPARCO is looking at transportation projects, which also included storage facilities. Kavuma pointed out that the market scope is shifting. The real end market is local and regional. He gave an example of an investment their fund made a couple of months ago into a company in Tanzania, which markets consumer products such as tooth paste and skin care lotion. This company has a 70% market share in Tanzania. “What we saw is that the real market is in East Africa, the regional consumer is the final market. If we concentrate on local markets, then we’ll overperform.” Main Outcomes: The average return on investment is 29% in Africa as compared to the EU, where it is 10%. Private equity has changed, and continues to change, the business landscape in Africa. The number of PE companies has multiplied considerably in the last six years. This is due to fundamental improvements of the markets, including liberalisation, reforms, macroeconomic management and positive progress in terms of the general geo-political environment. The most powerful driver is the increasing regionalisation of the African markets, which presents attractive economies of scale to investors. The potential lies in the local market and the local consumer. With this in mind, funds are set to overperform. Parallel Session Finance
  • 37 4th COMESA Investment Forum Moderator: Lara Setrakian, Bloomberg Presenter Speakers: H.E. Sindiso Ngwenya, Secretary General, COMESA H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry, UAE Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers Alykhan Lalani, Chairman and MD, Intouch Capital, UAE Karim Sadek, MD, Citadel Capital, Egypt  M oderating the debate Lara Setrakian, Bloomberg Presenter, asked H.E. Sindiso Ngwenya, Secretary General, COMESA, where the region is currently standing in terms of facilitating business with international partners. Ngwenya outlined three points: 1. Nineteen countries agreed to harmonise the laws and implement duty free agreements. The recently launched COMESA Customs Union will be operational in the next few months – these developments have given an important signal to the private sector about the environment provided for conducting business. 2. COMESA has set up institutions which help mitigate risks and facilitate doing business, and it also works with multilateral organisations. There is COMESA’s PTA Bank, as well as a Clearing House which does real-time cross settlement. The World Bank and insurance agencies also operate in the region. 3. The issue of liberalisation of trade is increasingly important. There is substantial cross-border investment in COMESA, especially in the manufacturing and services sector. For the first time there is the beginning of structural diversification of the economy. Ngwenya further highlighted that COMESA had signed MOUs with the GCC and India, and has a good working relationship with China. “Our best friends are those whose interests coincide with us. We are doing business and we ensure that our interest is taken care of.” H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry, UAE, was asked what investors from the GCC wanted to see when they look at Africa. Buamim said investors saw COMESA as a growing region with a vast consumer base, where many reforms and developments are currently under way. Dubai’s proximity with the COMESA countries, as well as its infrastructure and logistical advantages, gives it the important role of linking the COMESA region to other parts of the world. Many investments have already been made in COMESA from the GCC and the UAE. Examples of this are Etisalat and Dubai Ports. He emphasised that communication is key: “We need to find platforms of exchange, try to communicate more and see how we work more closely with Africa. We need to be more aware of the opportunities for business in the region. One of the ways going forward is to position the UAE as a gateway to COMESA.” Karim Sadek, MD, Citadel Capital, Egypt, responded to Setrakian’s query, “Where is the Arab investor in Africa?”. He started by saying that a big component of the USD 19 billion exports from the GCC to COMESA is oil or oil products. A big component of the USD 5 billion from COMESA coming into the GCC is from Egypt. COMESA is a commercial bloc, but it is still important to look at investments going to and coming from particular countries: “There are challenges in Africa which differ from country to country. The major challenges are finance and infrastructure related.” Hon. Jabulile Mashwama, Minister of Commerce, Industry and Trade, Swaziland and Chairperson, COMESA Council of Ministers, intervened by pointing out that the key thing was to balance individual country interest with the entire bloc. There cannot be an “apple-to-apple industry”. “COMESA is a unit – as individual countries, our strengths are limited. Together we can emerge as a strong entity.” She admitted that the region’s biggest weakness is infrastructure: “In order to put COMESA more effectively onto the global trade platform, we need to improve our infrastructure. The plan is to harmonise amongst the individual COMESA countries, so we can trade amongst ourselves. As to a lack of information, the COMESA investment agency was launched and it helps to bring information together.” When asked what is holding back COMESA’s progress, Alykhan Lalani, Chairman and MD, Intouch Capital, UAE, said that he felt that COMESA is a great concept. According to him, to make it a success, it had to be unified more effectively, particularly in terms of reforms and policies, as some are conflicting. He cited Kenya as an example, where Positioning COMESA onto the global trade platform Bloomberg TV Debate
  • 38 4th COMESA Investment Forum liberalisation of the economy had forced out a multinational corporation like Colgate Palmolive (a manufacturing unit had been in the country since 1958). They moved to Egypt in order to get cheaper power, at almost one third of the cost. “COMESA legislative powers need to implement the unification of policies and rules, the labour environment, education policies, the movement of capital, etc ... Once this is done, the bloc then gains credibility.” Ngwenya emphasised that these developments are already taking place and that no convincing is required as the member countries are aware of these issues and ready to deal with technical aspects and modalities. There are a lot of partners who are keen on working with COMESA. In terms of infrastructure, in 2010, USD 110 billion was disbursed by China in infrastructure projects (such as 10,000km of paved roads commissioned every week). Brazil has come into various sectors within Africa. Ngwenya stated: “We are upbeat about new partners and we should maximise our interest.” Branding is something that can be learned from Dubai, Baumim commented. “Dubai didn’t have much and at one point in time we stood where Africa is standing now. Africa can learn from the success model.” Mashwama further added that Africa is many countries in one. It is perceived as one big country. Economic groupings will help unify dealings with issues. “Our interest to grow together is good, but then trying to brand products by countries can help creating awareness as long as that country aligns with COMESA.” Sadek commented that in Africa and COMESA, China and India are very much present in resources or resource- related infrastructure. There are very few GCC-owned entities in COMESA because “the biggest challenge is that people don’t like to invest in places they don’t know”. Comments and Questions from the Floor: The first comment came from a UAE businessman who had been doing business for 25 years in the UAE and, for the past year, has been doing business in Rwanda: “There are lots of opportunities in Africa and I found it easy to set up my business.” Another investor, who had done business in Kenya, Sudan and Ethiopia, complained that African market opportunities, as well as the laws, are not very clear. However, the stock markets are doing better than in other countries. He asked governments to be business oriented. He then paid the compliment that Kenya is a good place to do business, with the chamber of commerce being very active in holding meetings with the private sector to find out what their needs and requirements are. The panellists were asked how COMESA could get more investment. Baumin pointed out that Africa should focus first on getting hard infrastructure, then soft infrastructure can follow. Referring to the issue of communication, Lalani stressed that COMESA can learn from Dubai by communicating opportunities to the rest of the world. Ngwenya agreed that COMESA needed to highlight the changes already taking place so that investors know, for example, that China is investing in a hi-tech park. “You only get investment because you have created an environment conducive to international and local investors. Egypt and Libya are the biggest investors in the region.” Main Outcomes: COMESA is active in creating a climate conducive to doing business. This includes the harmonisation of policies and reforms, the liberalisation of trade, as well as the implementation and collaboration with institutions that mitigate risks. This explains why investors’ interest in the region has increased dramatically. Dubai’s proximity to the COMESA countries, as well as its infrastructure and logistical advantages, gives it the important role of linking the COMESA region to other parts of the world. There needs be more information about the opportunities for business in the region. While Africa has many countries, it is perceived by the outside world as one big country. Branding needs to highlight countries provided that country aligns with COMESA. Panellists during the Bloomberg TV Debate Bloomberg TV Debate
  • 39 4th COMESA Investment Forum “The total GDP of Africa is USD 2.2 trillion, big enough for it to qualify for the G7” Plenary Session Moderator: Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS), Eastern Africa, Ernst & Young Speakers: Hon. Aston P. Kajara, Minister of State for Investment, Uganda Olaf Meier, MD, African Development Corporation Shakir Merali, Partner – East Africa, Aureos Capital Vimal Shah, CEO, Bidco Ashish Thakkar, CEO, Mara Group  M oderator Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS), Eastern Africa, Ernst & Young, introduced the session by saying that it was really appropriate that this conference was being held in Dubai. “We have a saying these days that goes ‘If you want to be a serious investor, you have to be in Shanghai, Mumbai, Dubai – or goodbye’,” he joked. He expressed his admiration for Dubai, saying it has created something out of nothing in the last 15 years. It was very appropriate that COMESA came here to be inspired. He stated that Africa’s international reputation is less than positive. However, total GDP is USD 2.2 trillion, big enough for Africa to qualify for the G7. Considering this figure, Africa cannot be referred to as a poor country. Additionally, the average return rate is 29%. One of the biggest private equity firms in Africa has an over 40% rate of return on over half of their investments. This was not to gloss over the problems, but to highlight the advantages. Negatu then turned to Hon. Aston P. Kajara, Minister of State for Investment, Uganda, to ask what his government had done to attract investors. “We are aware of Africa’s potential and the fact that investors will not come to African countries until they have attractive investment opportunities,” Kajara began. He spoke about the measures his government was taking to put in place the best infrastructure – power, utilities, transportation and IT. In terms of Uganda’s advantages for investment, he cited much uncultivated land as well as political stability. Uganda also boasts good economic stability and a sound macroeconomic regime. The country had also established a transparency system, ensured there is good governance, and put in place board regulation for financial institutions. The country had also improved its investment laws to make them equitable and profitable. Additionally, each COMESA state had an investment authority and the COMESA region as a whole had that as well. This ensured that all licences are easily acquired in the countries and all processes go smoothly. Uganda and the COMESA states, he explained, were doing all this to make sure they benefit investment. Next, Olaf Meier, MD, African Development Corporation, spoke about his experience of doing business in COMESA. His company had been exploring frontier markets in Sub-Saharan Africa. One project they took on was providing ATMs for Rwanda. It was a very difficult project because of the lack of infrastructure, but they had made progress over the years. They also took over a bank in Equatorial Guinea (130% IRR), supported the people there with knowledge, and increased capital. Meier believed that the perception of the markets in Sub- Saharan Africa is not as good as it should be. His company’s experience on the ground with the local and political environment had been good, and gave them the confidence to move to Zimbabwe. “After coming back from successful investment trips, we spoke to journalists and media in our home country. I remember a journalist was fascinated by the business on the ground and wanted to take that story to the media. But he said he had a big problem publishing these stories because the media only published negative news on Africa,” Meier said. Obviously, however, the facts on the ground told a different story. There is increasing awareness around the world on what is happening in Sub-Saharan Africa. If investors went to the right people, they would get the right type of information. Negatu then asked Shakir Merali, Partner – East Africa, Aureos Capital, how he made decisions about investments in Africa. Merali said that on a macro-level picture, investment in Africa is absolutely enticing. There is a rising middle class, an increasingly aspirational youth, and growing stability. But that should not fool investors, who often come into Africa and “trip up”, not on the macro, but on the micro. For example, in going to the procurement agency, they find they cannot procure – they find the procurement agent saying, “What’s in it for me?”. “We’ve had a lot of people coming into Africa with eyes wide shut and getting burned. That is not good, because it leads to flight of capital,” he explained. The biggest problem facing the growth of investment in Africa is talent. Finding good managers in banking can be difficult. Recently, that had been changing, because the Investing in COMESA: Reality versus Perception Day Two Thursday 24 March 2011
  • 40 4th COMESA Investment Forum financial crisis was sending many trained African bankers back home to settle down. Merali then spoke about his personal experience. His company had invested in a Tanzanian pharmaceutical manufacturer and helped them take over a Kenyan manufacturer, “which was a big deal if you keep African politics in mind.” There, they faced the classic problems of operating in Africa – everything took longer than planned, the projects needed more money than expected, etc. After much hard work, however, they were able to get one of the biggest names in pharmaceuticals to take over the majority of the business, and were able to exit completely on a very good deal. “Now, of course, the company is doing very well, and we’re wondering if we got out too early. But what can you do? That’s a typical example of our work in Africa,” he concluded. Vimal Shah, CEO, Bidco, claimed that investors who are making large investments want to keep the opportunities in Africa a secret. They do not want too much competition coming in. He believed that the story of COMESA is very clear – 19 countries that are growing rapidly. Africa is a net exporter of basic commodities and the continent’s per capita consumption is very low and can only go higher. The main issue to understand is that the ideology of the COMESA region is aligned: everyone wants to move into capitalist market economies. That is a huge help. There is relative competitiveness in producing products in Africa: tariff-free trade in COMESA, a 25% barrier, and 25% of the world’s arable land just at your fingertips – 10% of that land is utilised, while 15% is an opportunity in waiting. “It is not easy, but it is worth it.” Information dissemination is very poor. However, there are investment authorities that have clear ideas of opportunities and what should be done. “There are exit routes too – but people don’t usually take those routes, because once they get in, they see how high their returns are and reinvest. They stay,” he added. Africa is part of the emerging markets, while the West is part of the “submerging markets”. Investment in Africa is the way to go, Shah stressed. The negative myths about Africa must be taken away to open up those doors. Finally, Ashish Thakkar, CEO, Mara Group, spoke about his family’s 120 years of experience in the continent. They have a diverse group, focusing on everything from real estate to hospitality to ICT, and are investing in 11 COMESA countries. “Every country in the region is an independent case study on its own. We have been generalised in a negative sense very frequently,” he said. In speaking about a US road show to promote investing in Africa, he gave a specific example of ignorance about Africa. In mentioning Sub- Saharan Africa to his audience, he found them referring to Tunisia. That was a major issue he believed needed to be fixed. Looking at Sub-Saharan Africa, there are 75 terrawatts of power and a population of 80 million people. There is much opportunity there to invest in, he stated. Negatu now addressed the big elephant in the room: China’s role in Africa. The Chinese involvement in Africa had changed the nature of investment in the continent. Shah agreed, saying China had been great for Africa. It was a competitive investor that had come in with lots of money and fast decision-making – cutting through bureaucracy. According to him, this has been one of best things that have happened to Africa. Now, China is going beyond infrastructure and construction – it is going into companies. Africa must think of producing for China – it doesn’t produce everything it consumes. China represented a huge potential market. Africa must also learn from China: Chinese businessmen were backed by their government, showing real public-private partnership. Africa needed to follow this model, he said. The service sectors in Africa had been held back by governments because people always want a cut. China is helping boost service sectors such as airlines and railways through buying them and developing them itself. Kajara spoke about China’s entry into the continent as the beginning of another scramble for Africa. China and the rest of the world have found out that there are many of Clockwise from top left: Seasoned investors Vimal Shah, CEO, Bidco, and Olaf Meier, MD, African Development Corporation; Hon. Aston P. Kajara, Minister of State for Investment, Uganda, and session moderator Zemedeneh Negatu, Managing Partner, Ethiopia and Head Transaction Advisory Services (TAS),Eastern Africa, Ernst & Young Plenary Session
  • 41 4th COMESA Investment Forum “The Chinese involvement in Africa has changed the nature of investment in the continent” opportunities that exist in these countries. Before, deals with the West were not on an equal basis. China came into the market and kindled a competition. He recalled a Western minister saying to him, “We must create a fresh start,” realising that the West’s earlier relationship with Africa was not good. This, Kajara believed, was healthy competition. Merali then spoke about the relatively untapped financial resources in the Middle East. “If there’s one area where we can say more can happen, it’s the Middle East,” he began. There are some people who have invested, but COMESA has generally not been very successful in raising capital in the region. There are companies that started in the Middle East that have grown and, now that their rate of growth is slowing, are looking to Africa. There is a lot of movement from South Africa, China, and India into COMESA. But that same movement has not come from the Middle East. Fast-moving consumer goods and other similar opportunities, however, would be perfectly suited to Middle Eastern investment. Meier added that he found the Middle East to be opening as well. His talks with investors in Middle East had given him insight into investors’ increasing focus on Sub-Saharan Africa and willingness to take greater risks. Thakkar commented that the beauty of COMESA is that investors from everywhere are welcome. His concern was whether investors, no matter where they are from, can actually add value to COMESA countries. As long as that added value and the countries’ priorities are taken into consideration, outside investment is great. Comments and Questions from the Floor: The first question was from a COMESA businessman, who was concerned about an overload of international investment. He wanted to get the perspective of government leaders on overselling and sustainability. “We talked about the elephant in the room – but I’m wondering if that elephant is destroying the grass.” Kajara answered by emphasising African governments’ focus on protecting their environment. In accessing land, they made investors aware that some land was owned by local people. Foreign investors got leases, and many did not have open-ended ownership of the land. Governments were looking at concessioning certain projects so that investments could come back to locals. Governments also looked at the mobilisation of local investors so they had the same access to the financial and physical incentives that international investors had. Another question related to how companies insure themselves against political risk and how they manage to train talent locally to make sure the business grows. Meier described some organisations that provided political risk insurance, such as MIGA, part of the World Bank. These organisations paid to make up for the company’s losses if civil war broke out, for example. However, he believed that political risk was not the biggest risk in Sub-Saharan Africa. Operational risk, he believed, is what really matters. Companies find the real political risk is politics getting involved in operational business. Once that is separated, companies immediately see improvements. Main Outcomes: To boost investment and provide information, each COMESA state has an investment authority. The COMESA region as a whole has a regional investment agency as well. This is ensures that all licences are easily acquired in the countries and all processes go smoothly. The ideology of the COMESA region is aligned: every country wants to move into capitalist market economies. Reliable local partners are key for international investors – they can assist with all matters related to the day-to-day issues of investing in the region. Every country in Africa is a case study on its own. There has been much general stereotyping based on ignorance, which has negatively impacted investment prospects on the continent. The negative image of Africa in the media is still blocking off investments. Talent has to be attracted to Africa; the economic crisis has brought back some bankers but there is need for more. Information dissemination is very poor; this needs to be altered to attract more investors. China’s investment into the continent has been beneficial for Africa, spurring international competition and rewriting the terms and conditions of deals with the West. China can also serve as an example, particularly as to how it deals with public-private partnerships and the services sector – the models should be replicated in COMESA. COMESA should focus on attracting investors from the Middle East as their interest for the region is awakening. Investors should be carefully chosen, only allowing those to operate in COMESA who can actually add value to the countries and the region.
  • 42 4th COMESA Investment Forum “The elephant in the room is not China but Africa’s population” Speaker: Arnold Meyer, MD (Africa Real Estate), Renaissance Capital  A rnold Meyer was invited to present Tatu City – the first privately developed city, and the first large- development real estate in a planned and managed execution. It is being built in Kenya. He began his speech by giving a background on Renaissance Capital and why they have seen Africa as “the Opportunity”. Renaissance Capital is a Russian investment bank that was founded in 1985 with a special focus on Africa. Some said that “Africa is the second-biggest opportunity in the world”, but Meyer believed it is even bigger. Eighty per cent of success in the last eight years in Africa is because of its unique partnership with China. While the Western world is off to do business with China in sectors such as retail and telecoms, Africa has played catch-up, with its incredible population boom that most of the world is ignoring. China is attracting Western investors because it is believed to have a huge market. While China is certainly a big market worth investing in, Meyer pointed out that it is equally important to focus on the growth of a market. In 1980, the total population in Africa was 400 million, and in 2010 it reached 1 billion. China’s population was 1.3 billion in 2010. Over the years, China’s population growth will not increase significantly due to the government’s one-child policy, but by 2015 the total population of Africa would have doubled to 2 billion, so in real terms, investments in Africa would go further if one focuses on growth. In 1990, China’s and Africa’s GDP were somewhat aligned, but China’s economy pulled away from the trend and advanced. Most governments in Africa are copying China’s economic policies and soon enough their economies will follow, but the bonus of Africa is its population growth. Until recently, Meyer said, Africa had suffered from bad luck: its growth had been negatively affected by the wrong policies and health had been hindered by the spread of infections. What is good is that recently a sense of stability has been returning to Africa, but this is widely ignored by the rest of the world. The turnaround is due to many factors, such as debt forgiveness coming into play, governments embracing reform, and overall economic growth. External debt, in particular, has declined sharply. Hosts of statistics supported the fact that Africa is becoming a better place to invest in, he said. Eleven countries in Africa are among the top 25 fastest- growing economies in the world. The IMF expected the number to increase to 12 in 2011. In terms of city development investment, 40% of the population is under the age of 20: 40% of that 40% will live in the city. In nine years, many cities in Africa are expected to support populations exceeding one million people. According to UN Habitat: “…60% of Africans are under the age of 25, and many of them will live in cities that have not been conceived yet.” In the next 15 years, an additional 14 million people will be added to the continent’s population, and it is obvious that not enough is done to accommodate that addition. The elephant in the room is not China, Meyer said, but Africa’s population. Current approaches were compounding the problem (such as water, traffic, infrastructure, etc). Nigeria had just opened new highways, but the volume of human beings is so dense that Meyer said the chaos had simply been transformed into “orderly chaos”. Ultimately, Meyer believed that the solution was to decentralise major cities to further stimulate population growth and create development corridors, in an overall effort to take pressure off bigger cities. “A lot can happen in 15 years with government vision and for an equity investor,” Meyer prophesied. Satellite cities are sprouting around larger cities, and an example of that would be outside Durban, where a sugar-cane field has transformed into its own city. Development corridors connecting them together would be great investments. In the case of Tatu City, many things need to be considered, such as what needs to be done and why Renaissance Capital decided to invest in an African city development (as opposed to one in China or East Asia). It was decided that Tatu City would be situated outside the Nairobi area (which is estimated to have an overwhelming population in nine years’ time). The land outside Nairobi chosen to become Tatu City is approximately 24,000 acres, just short of the size of the Palm Islands of Dubai; it can be reached by the Thika highway. A road network created for ease of movement is integral to the planning of the city. A study of Kenya has revealed that 80% of people use public transport, but the roads in most areas are simply not designed to support that. The Tatu project has designed a main artery for public transport to solve the issue. Another study revealed that the average Kenyan doesn’t mind walking 600 metres to and from public transport stops, so the developers are attempting to make that walk a visually appealing, green, modern and urban-friendly Investor Success Story Plenary Session
  • 43 4th COMESA Investment Forum economic environment. Part of that aim will be realised in Tatu Boulevard in downtown Tatu City. A lot of planning and design is centred on the heart of the city. Underground parking will be built to protect the cityscape from parked cars and pollution. A technology park is included in the design: currently, intense negotiations were taking place with a Korean company for this part of the design, which includes 90km of roads. The aspect of social integration is also being considered very carefully. Meyer claimed that usually the foundation block of the city is elitist and aimed at higher-income groups, but unless one wanted to develop an “apartheid-style” city, developers should put in the effort to socially integrate the poor as well. The analogy Meyer used was fruits: different income groups can be different groups of fruits, such as apples and oranges. In the fruit box analogy, the fruits are completely separated from each other – by space and sight. This would be like gated or walled communities, so this design was not considered in the city planning. Other analogies included the fruit bowl (where fruits are together but not necessarily mixed), the fruit jam (where the fruits are mashed together and everyone hopes for the best) and the fruit salad. The designers chose the “fruit salad” model, as the fruits mix together but still retain their distinctive flavours. They can either move together or move past each other. This approach will put pressure on the high-density areas. In conjunction with the Nairobi Building Council, social institutions such as schools and churches will help “glue” these different social groups in an acceptable manner. With regards to PPP, the Kenyan government had been very supportive. Meyer claimed that with the Kenyan government’s Vision 2050, they had looked at the needs of Nairobi and attempted to predict what it would look like by then. This macro-framework of infrastructure and support is Renaissance Capital’s door to knock on. For Renaissance Capital, it is convenient to have this interaction with the government. Concerning infrastructure, a lot has been done, according to Meyer. Tatu City is expected to consume 10% of Kenya’s total output of power as well as large quantities of other resources such as water, so the provision of these services should be available in the future. These factors are particularly important when it comes to working with a government body. Consequently, Tatu City will be a privately run with a private council, and it will be handed over to middlemen who will, in turn, hand it over to individual owners. Policy manuals have been written to handle paperwork processes like that. All other aspects such as security, landscaping, public advertising and the taxes will go back into the city. Meyer described the experience as incredible, and that its continuing success is due to ease of access to regulatory bodies. He hoped that the city would become a centre of commerce and activity. Arnold Meyer, MD (Africa Real Estate), Renaissance Capital, delivering his keynote address The panel on ‘Investing in COMESA: Reality versus Perception’
  • 44 4th COMESA Investment Forum Parallel Session Moderator: Professor Dr. Maggie Kigozi, Executive Director, Uganda Investment Authority Speakers: Hon. Welshman Ncube, Minister of Industry and Commerce, Zimbabwe Kofi Adomakoh, Director, Project & Export Development Finance, Afreximbank Mahmood Mansoor, Chief Technical Advisor, COMESA Clearing House Dr Kombo J. Moyana, Executive Secretary, COMESA Clearing House George O. Otieno, CEO, African Trade Insurance Agency  M oderating the session, Prof. Dr. Maggie Kigozi, Executive Director, Uganda Investment Authority, set the tone of the session by speaking about the importance of intra-African trade: “Eighty per cent of the population in Africa is working in small and medium enterprises, they are not worried about exporting to Europe but to the country next door.“ Of crucial importance is the issue of value addition. GCC-COMESA trade had more than doubled, but mostly low-value products from Africa are being exported, while high-value products are coming into the continent. There needed to be a diversification of goods in order to increase trade internationally and within the continent. “You have heard how incredibly resource rich Africa is. With so many resources, how can we be poor?” she asked. “African youth is getting educated and earning well enough to buy products. They have become entrepreneurial and are making money by investing in Africa and exporting to other regions. So trade is there, the question is how do we benefit from trade, how do we increase intra-African trade?” The first panellist, Hon. Welshman Ncube, Minister of Industry and Commerce, Zimbabwe, agreed with Kigozi but emphasised that the very existence of COMESA and the creation of common markets, free trade areas and custom unions in Africa, showed that the challenges hindering intra- African trade were being addressed and great strides had been made. “It remains true, that even though progress is being made, we still lag behind compared to most of the world in terms of trade volume.” Infrastructure development is key to promoting intra- African trade: railways and road networks need to be developed rapidly: “The North-South corridor (Zambia- Zimbabwe) will help overcome some of the challenges.” But apart from these infrastructure developments, and the importance of harmonising policies, value addition on African soil is crucial so that trade in value-added goods within Africa and other parts of the world can be done. “We need investments in the value-addition chain,” he concluded. Kofi Adomakoh, Director, Project & Export Development Finance, Afreximbank, shared his views on the challenges of accessing finance. He began by giving an overview of the bank’s activities in Africa. The bank’s focus was on trade and project finance; it also offered advisory services for both these financing options. Following the financial crisis, many European and American banks had cut the lines for trade financing in Africa, which was problematic. However, Afreximbank created a liquidity pool and identified a value chain: “We lent to banks and the customers of these banks and also directly to corporates.” With structured trade finance, Afreximbank structured the transaction and the performance. The matter is more complicated with project finance. The concern is that African countries do not only need to produce, but produce what other African countries want. This meant diversification, and also a risk which needs to be analysed. However, Afreximbank was willing to take project risks; the company is working with similar Indian and Chinese banks in order to learn from their experiences. The bank is particularly supportive of projects which span several countries and are thus beneficial for several countries. The next panellist, Dr. Kombo J. Moyana, Executive Secretary, COMESA Clearing House, spoke about the implementation of the Clearing House system, which is spanning 20 central banks in COMESA, and was set to be fully operational in May. It will be targeting USD 15 billion of intra- COMESA trade and COMESA’s international trade. “Once the importer and exporter agree on the trade, exporting banks can credit the bank account on the same day and in an acceptable currency (USD or euros).” He emphasised that because of the Clearing House, there will be no delay “as it will be credited the same day”. This was made possible through adequate securities including the Central Banks and COMESA, as well as various insurances ensuring that all parties involved “behave properly”. Apart from intra-COMESA or intra-African trade, also China and India have approached the Clearing House for clearing and payment systems. It was also now looking at the UAE and Gulf region to link up and facilitate trade into COMESA. Increasing Intra-African Trade Trade
  • 45 4th COMESA Investment Forum “Infrastructure development is key to promoting intra-African trade” Mahmood Mansoor, Chief Technical Advisor, COMESA Clearing House, elaborated on the cross- border payment system that the Clearing House uses. Traditionally, if the payment is in USD then it transits through New York and the exporter bank does not necessarily know the importer bank, therefore there is no comfort level in the transaction. He explained, “Our system is driven by our central banks, through this, all commercial banks can know each other. Once the two central banks are in the system then the two commercial banks can directly do the transaction without going out of Africa. It reduces the currency risk as the settlement currency is either USD or euros.” George O. Otieno, CEO, African Trade Insurance Agency, talked about risks pertinent to trade and how they can assist in providing insurances such as sabotage covers on trade credit and issuing guarantees to traders. He explained that his agency is able to stand the risk better as they are on the ground in Africa. Challenges were there for regional trade but things were improving gradually. Otieno said, “We have currently a capital of USD 120 million and aim to go up to USD 1 billion. There is cooperation with an Islamic insurance institution based in Jeddah, Saudi Arabia, and we can cooperate to share the risk to facilitate trade within Africa. We do two billion worth of trade applications currently and together we can hopefully do five billion worth of trade applications.” He concluded by encouraging the UAE to become a member of his agency. Comments and Questions from the Floor: The first comment was directed to the COMESA Clearing House representatives. A member of the audience voiced concern that it had implemented a system similar to that in the West, which evidently had failed: “By trading in USD and euros, you are linking yourselves to the USD and euro. This way you are in the grip of the IMF and the World Bank – so you need to change your system!” Kigozi intervened by pointing out that long gone are the days when Africans were puppets. “We are bright people and we are not following anyone’s best practices, we do things as we see them and we do say no when we have to.” Mansoor added that 99% of the trade transactions were in USD. The next question was again directed to the Clearing House, as to why it is operating on a full payments basis? Moyana explained that the full payment comes down to same-day clearing. He noted that in earlier days the Clearing House had partial payments, where reconciliation took place after the 60th day, and then it would take another two weeks or 75 days to settle the payments. But now, customers approached COMESA banks and suggested doing transactions via the internet to get to an exporter and get the payment within a short time so as not to lose the material (for instance, to some other country). This demand was put to central bank governors, and that is the reason why the Clearing House had come up with this new system so that the payment is within the same day and on a full payment basis. Another question related to strategic partnership in the tourism sector and if there were insurances. Otieno gave examples of tourism insurance in Uganda: the agency is also looking at other countries. A Nigerian businesswoman complained that there was a lack of basic facilities. She gave the example of fruits that were rotting and wasted because they cannot be stored. She wanted to know what solutions could be implemented to make these fruits available in neighbouring countries. Ncube responded by lamenting that this is indeed the case in many African countries. Many products are perishable and cannot be stored. No value is added to these products. He asked for a paradigm shift in government policies, for mechanisms to be put in place which would help market products quickly. Moyana added that there were developments to set up a commodity exchange and this would involve commodity- holding warehouses. “The idea behind it is that a producer of bananas, for example, takes his bananas into such a warehouse – from there, he will be contacted when a potential buyer is interested in getting hold of his bananas at a certain price. This will ensure a global exchange.” Main outcomes: Challenges of infrastructure, access to finance and administration need to be addressed to increase intra-Africa trade. Value addition on African soil is crucial so that trade in value-added goods could be done within Africa and the world. The implementation of a COMESA-wide clearing house system is set to be fully operational in May. It will be targeting USD 15 billion of intra-COMESA trade and COMESA’s international trade. Because of the clearing house, there will be no delay in transactions. There are institutions offering insurances to mitigate risk pertinent to trade. There are developments to set up a commodity exchange in COMESA, which will involve commodity-holding warehouses – this concept will make it easier for farmers to trade their produce.
  • 46 4th COMESA Investment Forum Moderator: Anver Versi, Editor of African Business Speakers: Hon. Amos Kimunya, Minister for Transport, Kenya Hon. Peter Sinon, Minister of Investment, Natural Resources & Industry of Seychelles Jerome Ntibarekewa, Secretary-General, Port Management Association of Eastern & Southern Africa (PMAESA) John Woollacott, Senior VP, Business Development, DP World  M oderator Anver Versi, Editor, African Business magazine, opened the session with a thought: “Ports are something we’ve taken for granted, they go far back in history. What has become evident is that the more conveniently situated the port, the more it had an impact on the country. Going back to colonial times, all roads and rails would go down to the ports. They would connect Africa to England, France, or Portugal – and suddenly the whole world wanted to come. Now the volume of commercialism is even higher than pre- colonial times, but the ports have not kept up. The volume of trade is expected to grow exponentially in Africa, and this means greater trade. Are our ports ready to cater to the growth of trade? What needs to be done?” Versi turned to Jerome Ntibarekewa, Secretary-General, Port Management Association of Eastern & Southern Africa (PMAESA), for his thoughts. Ntibarekewa stated that the eastern region of Africa held a strong position in port development: 356 million tonnes of cargo pass through; many roads in the region had been expanded to encourage the flow of traffic to these ports. Furthermore, improvement and concession programmes had been implemented in the port areas; Djibouti and Tanzania had improved management and shipping links with Asia; the ship size of transshipment had increased; terminal activity had also grown; and there was a 5–10% growth of traffic in the COMESA region. In terms of productivity, things are good, but Ntibarekewa admitted that some challenges and changes were beyond the port’s control. While some ports were equipped to meet international standards, the roads and railways had not caught up with this development. The use of more International container depots and new IT systems had helped to decongest the ports. Improving safety is another challenge, especially because of pirates. Ntibarekewa foresaw that traffic, infrastructure and capacity would become problems in the future. Traffic growth is expected to quadruple by 2020, so more investment should go into terminal developments. Capacity limitations are something else port authorities need to address. Governments must find ways to meet international standards. Versi then shared a story from his experience in Uganda: “I met a businessman and I told him I was going to the COMESA Investment Forum. He said, ‘Don’t mess with our port in Mombasa because Uganda relies entirely on that port’.” What this conversation revealed is that Kenya is the gateway for many landlocked African countries. Hon. Amos Kimunya, Minister for Transport, Kenya, reassured Versi that “nobody is going to mess with that port in Mombasa”. That port served the entire hinterland – Uganda, Burundi, northern Tanzania, Ethiopia, South Sudan, eastern DRC – so that was at least six or seven countries that were reliant on the imports that came in through the port of Mombasa: 30% of cargo was transit cargo destined for other places. Versi asked Kimunya if it was true that it now only takes a week to clear the port when it used to take 30 days. Kimunya replied that it is “a combination of the ports’ responsibility to unload cargo, and the private businesses’ responsibility to clear it. But if they don’t go through customs or the proper clearance procedures, the cargo must be held. You might see the port full of cargo and blame the port authority, but it’s the private businessmen. So, if they comply with the regulations, the port can be cleared in a week.” Kimunya then described how the port was currently undergoing some dredging to increase the depth to 50m. Beyond Mombasa, a second port for Kenya and the hinterland, Lamu (a natural bay), was being planned. It should connect the region with South Sudan and Ethiopia. “It’s a whole network. The good thing is that we have taken the challenge of the new development and that we want to collaborate with the private sector.” Inviting more businesses from the private sector to take an active part in the port’s development is crucial. In a nutshell: “We do believe that we’re not just doing it for Kenya but for the region.” Versi then turned to the Hon. Peter Sinon, the Minister of Investment, Natural Resources & Industry of Seychelles, to talk about his country. Versi asked him to describe the situation of the ports and the outlook of Seychelles in particular. Ports – Engine for Trade in the COMESA Region Parallel Session Logistics
  • 47 4th COMESA Investment Forum “The volume of trade is expected to grow exponentially in Africa” Sinon offered a brief and candid overview of Seychelles: “I come from an island with an exclusive economic zone of more sea than land. Our tourism logo is ‘We are unique by a 1,000 miles’, which shows how isolated we are, and therefore the port is our lifeline. It’s where all the goods that provide for the tourists and our own people come from, and it’s where we export the fish. Chullah fish in the Indian Ocean is our most popular product. I used to joke that in the economy of Seychelles are the two Ts: tourism and tuna. We have built two main ports: commercial and industrial fisheries ports. We’ve been trying to position ourselves with the opening up of South Africa, China, India and Africa – also as a gateway between Asia and Africa. We have the deepest natural port in the area. We have reclaimed land as in Dubai and we want to use that to build our tuna fishery and commercial port. The Seychelles Port Authority is fully run by Seychelles nationals and we take pride in the people who specialise in ports because we don’t have many specialised people. It’s important for us to keep abreast with technology and best practices and retain the people working there. “Seychelles has been a member of COMESA and SADC. We’ve developed a list of double taxation agreements, whereby if you are in Seychelles, you don’t have to pay tax twice. We have the ability to be dynamic and we have our natural ports. And unlike Mauritius, we don’t have cyclones so we operate all days of the year and week. We are a very safe and secure port and that’s why we want to capitalise on fish. Mauritius is into adding value to raw fish, and we have fish – just no tins yet. “All ports are reclaimed land, and smaller ports serve the other islands (of the 140 islands, we live on four). Where we do live, we also run smaller ports to carry goods to the other islands.” Versi then turned to John Woollacott, Senior VP Business Development, Dubai Port World, to talk about the possibility of investments and involving Dubai in projects for land reclamation or transshipment. Woollacott gave an extensive explanation of what DP World is and does: ports are a long-term business, and concession links are usually set for 40 years. DP World plays a role in facilitating growth in Africa and it hopes to do so. The key element of how the company works is through collaboration with governments in PPP structures and with local organisations to help try to develop the economy. Djibouti is an example of the DP World model. It is the company’s first investment outside the Middle East through a PPP with the “visionary government” of Djibouti. DP World brings capital, and the government brings people and land. The joint venture had been successful and given a good financial return. This was a significant and important investment because of the geography – being near Ethiopia and handling DP World’s transshipment. DP World is also in Egypt and it has just extended its agreement for another 30 years. The business focus for the future was to continue investing in Africa along these business lines. When asked about privatisation and business processes, Woollacott said, “What we do varies by location. We need to be involved in the operations. Sometimes governments tender it out, and in other places we go in early with the designs and funding. You can work with different models of development.” When asked about the role of Japanese and Chinese investors in Kenya, Kimunya provided a bigger picture: the Lamu development is a greenfield port and the government had put in money to make feasibility studies. It had nothing to do with the Japanese government or people, they were just consultants. The Kenyan government is fully paying for it. The Japanese port consultants could be anyone else. In terms of development, Kimunya was aware that they were going to use massive resources, and governments across the region did not have that kind of money, so they were looking for potential investors. It was a crucial question because this project required a huge amount of money, approximately USD 3 billion. From one investor that is a lot, so there was a Moderator Anver Versi, Editor, African Business
  • 48 4th COMESA Investment Forum need to work with a lot of people and countries like China, Kenya, the GCC, the UK – they all need to come together and identify where each is strongest. “As a government, we should do development and the private sector can be responsible as to how cargo is handled and we’ll just do oversight. I should be looking at how many ports we develop, not how many ships are coming in. Again, we’re moving into developing more facilities to get cargo onto rail or on the lake to Rwanda, etc. The scope for investment is huge.” Versi asked Woollacott what DP World would suggest to African governments. For investments to work, according to Woollacott, there needed to be an environment for the investor to make returns. Clarity of government policy and port development were both important, because investors needed a basic framework to work with. “It’s not your job to clear the ports, but it’s about creating the right framework around that. This would be something like the landlord model.” Ntibarekewa added that in Tanzania, the port side had already been privatised. Currently, some important upcoming projects were under way for more ports, and PPP was very important in port development. Cooperation and dialogue were under way, but the only real problem in the port world, according to Sinon, was the issue of pirates. Piracy is what keeps the port authorities up at night, wondering if their men and cargo will travel safely, Sinon said. Piracy is a huge international threat to effective trade and Seychelles has taken a leadership role to bring awareness of this issue to the international security level. Comments and Questions from the Floor: Versi opened the session now to Q&A and the first questions came from Mark Pearson, Programme Director, TradeMark Southern Africa. The first was directed to Minister Sinon: “The EU fishing agreement prefers to transship to Europe, is that detrimental to the process? And isn’t the cost of fuel and services very high in Seychelles?” Sinon answered that the costs are higher now because of economies of scale. The volumes that Seychelles was handling years ago have expanded, therefore the costs have, too. But the expansion of Seychelles’ capacity has allowed the ports to review the costs and remain competitive. As for the EU agreement, there are no issues. The EU is Seychelles’ main market, and the EU has recently given approval for Seychelles to process its own fish. Investors are investing, and more are showing interest. Pearson’s second question was directed to Kimuya on Lamu: “In regards to oil or general cargo, what are the connections going to be?” Kimunya answered that the connections will mostly be pipelines from Sudan, as Sudan wants to export its oil. Some will be crude, some will be refined. These pipelines in the long run were planned to connect the key cities in eastern Africa, eventually creating a whole network of interconnected hubs. Main Outcomes: The eastern region of Africa has a strong position, with many ports servicing Asia and the Middle East. Traffic, infrastructure and capacity will become problems for ports in the future. Traffic growth is expected to quadruple by 2020, so more investment should go into terminal developments. Beyond Mombasa, a second port for Kenya and the hinterland is being constructed: Lamu. It is a large project offering many opportunities to investors. Governments should be working with private companies and through PPPs to create profitable ports, as has been the case with the port of Djibouti. For investments to work, there needs to be an environment for the investor to make returns. Clarity of government policies and port development are equally important because investors need a basic framework to work with. Piracy is a major problem facing the port sector and it needs to be tackled speedily. The session panellists on ‘Ports – Engine for Trade in the COMESA Region’ Parallel Session Logistics
  • 49 4th COMESA Investment Forum Parallel Session Moderator: Ken Kwaku, Founder, The Kwaku Group Speakers: Brian Herlihy, CEO, SEACOM Noel Herrity, Founder & CEO, One Tree Services Nicholas Nesbitt, Founder & CEO, Kencall Charles Mbire, Chairman, MTN Uganda  M oderator Ken Kwaku, Founder, The Kwaku Group, opened the session by speaking about the role ICT has been playing in African businesses recently. He wanted to hear how it could help businesses function more efficiently, effectively and profitably. Nicholas Nesbitt, Founder & CEO, Kencall, described his company as a BPO that wanted to change the way the West did business with Africa. In 2004–5, Nesbitt started his IT- enabled business empire. People initially laughed at his goal, he recalled. His focus was on UK and American companies. There were many challenges based on culture and language, but the company persevered. Fast forward a few years, and the fibre-optic cable which brought broadband internet to the continent reduced costs. “We tried to do outsourcing the Indian way, but we learned that we needed to adopt a different model to do our business. We had to do it the Kenyan way, the COMESA way,” he explained. Through this experience, Kencall learned how to take a business model in one country and apply it to another. This was such a valuable experience that it is now being taught to entrepreneurs at Harvard. Kencall created many innovations based on the African market, such as call centres linked to employees on motorbikes so the employees could physically go out to the caller to help fix his or her problems. Since the beginning of setting this service up, the level of questions had risen: “They have gone from why the cow is not milking properly to what the market for milk looks like.” Everyone thinks fibre optic is about connecting to the ocean, but now it is about connecting the country. This can stem rural-urban migration and create employment country- wide. It can create a lot more innovation. “One of great things about being a pioneer in Africa is being given a clean sheet of paper every morning. Some people see nothing on that paper, but as an entrepreneur, you see that you can write anything on it,” he summed up. Next, Brian Herlihy, CEO, SEACOM, focused on technological advancement boosting innovation and reliability. He stated that these were the two lenses his company always used in looking at Africa. In the 1990s, the question was always where capital would come from. What is amazing is that Africa always answered its own questions: African companies such as MTN rose to fill that void. Now, the focus is on market efficiency – whether or not projects are bankable. ICT is the key here, because access to information is power, and can directly improve market efficiency. “The last 10 years were really about governments embracing capital markets in Africa. What the next 10 years will be about is that ICT will affect worker productivity,” he emphasised. The first thing that the laying of the SEACOM fibre-optic cable did was expose other bottlenecks. Unless SEACOM could add value to worker productivity, it was just a fibre- optic provider. SEACOM has been thought of as a way to connect local African businesses and individuals to Europe. But that was not what the company is aiming for. SEACOM believed that the best information was localised, diverse information. That is what the company was aiming to provide. Africa, he continued, is a safe prototype space – if a project fails or works on the continent, it does not have a huge impact on global revenue. When revenue is going down in one area, Uganda or South Africa becomes the next revenue base. SEACOM needed to have the right partnerships to do that the right way. Next, Noel Herrity, Founder & CEO, One Tree Services, spoke about why ICT was so important for development. He began by saying that the link between business development and telecoms is strong: a 10% rise in telephone penetration raises the GDP by 1%. This link is set to accelerate in Africa in the coming years. There were two reasons for this: 1. Roll-out of broadband: The development of regional broadband, not just undersea cables. There are many operators moving in very quickly to fill this void. 2. The arrival of the “clever” phone: This is the cheaper cousin of the smartphone. It is Android based, and should cost around USD 100. This phone will change Africa. It will have a multiplicity of applications, and the same computing power and capacity as we have on our laptops today. However, Africa does not have to wait for those developments, Herrity emphasised. It can take advantage of the benefits of the technology before such developments arrive. Having spent The Importance of Connectivity for doing Business: IncreasingCompetitiveness through ICT Infrastructure
  • 50 4th COMESA Investment Forum “Africa should not be reinventing the wheel, but making technology work in an African context” 35 years in telecoms and the last 10 years running a telecoms company in Botswana, Herrity could see the power of such delivery services. The innovations in the field take advantage of the challenges Africa faces. Mobile banking came from Europe, but it was championed by Africans for Africa, and so became a huge success. Herrity described a very clever child-minder application on a smartphone. The application lets parents know without significant investment where their child is and what is going on at school. This, he noted, is a very niche application in the African market. Logistics, transport, and business processes are key areas to be addressed by this sort of application. He imagined a basic Nokia phone that could apply this sort of technology to SMEs. SMEs could use it to know where the sales staff, trucks, and products are. Business owners in Africa tended to be multiple business owners, who needed to keep track of these things. Unfortunately, while 80% of the population has access to the telephone, only 20% have access to internet. Such a phone could give everyone internet access. People may doubt the importance of this, Herrity admitted. But look back five years, he said, and imagine Mark Zuckerberg trying to explain Facebook – his critics say it is just like multimedia messaging, and do not see the use for it. Here we had the same situation, he said. What is different is how the process is done. There is a move from paper to internet here for SMEs. “What’s important about deploying these types of innovative applications is that they will help Africa leapfrog many of the developments taking place in the First World. Services available to Africans are often not available to the First World. Because Africa is a green field, it will be possible to develop and use applications there not available in the First World. That way Africa can catch up,” he concluded. Next, Charles Mbire, Chairman, MTN Uganda, spoke about ICT successes and opportunities in Uganda. He said that telecoms in Africa, and in COMESA in particular, had revolutionised business. The main area it had addressed was “business velocity”. People had always been very shy of doing business in Africa because business velocity was very low. Mbire summarised what telecoms had done in Uganda by citing a short story. In 2004, MTN was expanding its network to Mityana. A friend of Mbire in America, who had not talked to his mother for 10 years, had heard a rumour that a phone line was being laid down there and asked Mbire to connect them. Mbire took the phone to the mother in the town, and found her bedridden and unable to talk. Listening to her son’s voice on the phone, at first she could not recognise him. After 10 minutes, tears rolled down her cheeks. She had recognised her son. After finishing her call, she got up, revitalised. The son started calling her regularly, and paid her medical bills through the phone. Two weeks later, Mbire went back to check up on her. The phone was now with her nephew, who took it to the city centre, where he was charging people to use it. Suddenly, he was making lots of money. That’s Africa. “Business development in Africa has witnessed a lack of infrastructure because the government has not been able to collect taxes. This is because the informal sector is the biggest part of economy. Now, through mobiles, the government can tax the informal sector,” Mbire explained. This has provided instant access to Uganda’s 15 million taxable people. Even morals are influenced: 90% of the people caught cheating are caught through mobiles. Comments and Questions from the Floor: A member of the audience wanted to share a story and give some recommendations. There was a young man curious about technology who, at the age of 13, created his own mobile network on the back of the local telecom system. The telecom people asked how he did that in their network, he replied that it was not their network, it was his God-given network too. This young man made about 55 different inventions, including a car alarm system, using mobile communication. While the car alarm system may not be very usable in Uganda because of the low level of car penetration, it could be used in Dubai. He wanted to know how such inventions can be moved from Africa to the wider world and how COMESA can encourage investors like this young man. The next question was regarding banks’ unwelcoming attitude to the advent of wireless, which was pushing into a domain traditionally reserved for them. Mbire answered by saying that one of the things hindering Africa from development is not understanding what is called “convergence”. If businesses cannot accept that change is coming, they are as good as dead. If they remain static, they have a problem. Mobile banking is coming. Critics of this are missing the bigger picture – we are banking the unbanked. For 40 years, traditional banks failed to increase bank penetration – through mobile banking, we managed to do it in one year, he said. In many cases, banks have been taking the cream – mobile banking brings down the cost of banking and increases revenue to government. Herrity emphasised the importance of adopting foreign technologies in Africa. While he did accept that there are very Parallel Session Infrastructure
  • 51 4th COMESA Investment Forum good local developments, like those created by the Ushahidi people, and which were used in Haiti to track people after the disaster, he believed COMESA should not shy from taking the best of both worlds. He then mentioned that raising USD 200,000 is harder than raising USD 2 million – because the 200,000 stage is where you start moving beyond friends and families into banks and investors. It is important to find these early-stage companies when they need 200,000 and connect them to businesses like MTN, to people who understand. Creating that connection is very important so these start-ups can survive, he concluded. Herlihy explained that entrepreneurship was about the implementation of the idea, not the creation of the idea. Africa was in danger of not investing in its youth’s ideas. He mentioned a girl in Kigali who spent three days travelling by bus to speak at a conference that she was not even invited to. She was allowed to speak, and she was very bright, but it should not have been that hard for her to share her ideas. Silicon Valley is set up for the youth. There is nothing like that in Africa. “We all need to remember that none of us have the ICT gene that people under 25 have – they can do anything in ICT without instructions,” he said. He continued by stressing Herrity’s point on adopting foreign technology. Applications took off when the iPhone was created because of Amazon’s earlier one-click-payment development. Amazon also created the e-commerce platform. African businesses should exploit the existing infrastructure for African uses. They can get to success faster by exploiting the ecosystem. We still have to perfect underlying infrastructure, but the next few years will be about how we can exploit that underlying infrastructure more efficiently, he said. Africa needs to make business developments less capital-heavy so younger people can work: they can create applications based on an existing infrastructure. Africa should not be reinventing the wheel, but making technology work in an African context. Nesbitt described a conference in London that emphasised youth and jobs. Africa needed to figure out how to create jobs more efficiently. Building the right platforms is critical to doing that. Areas we never thought could have changed have done so through Twitter and Facebook. Political and business leaders in this room must address this challenge in creating space for entrepreneurship, he said. Everyone in London was a B&B – a Best and Brightest – everyone was raising a fund that was supporting African businesses. But we did not see anyone who was going to turn this into actual wealth. We need well-equipped people and companies who have seen the world to come back to Africa and create jobs there, he concluded. Main Outcomes: The fibre-optic cable has increased connectivity and hence ‘business velocity’ in Africa. Now, it is about connecting the rural areas. Regional connectivity is crucial because of the opportunities is offers Africa: it can stem rural-urban migration, create employment across the country, and allow for much more innovation. ICT will be central to enhancing worker productivity in the next ten years. The African business community must actively tap into the potential of entrepreneurial youth in the region. Adopting foreign technologies is just as important as developing local technologies, so that African businesses do not have to reinvent the wheel and can leapfrog developments. Clockwise from top left: Nicholas Nesbitt, Founder & CEO, Kencall; Charles Mbire, Chairman, MTN Uganda; Noel Herrity, Founder & CEO, One Tree Services; Brian Herlihy, CEO, SEACOM
  • 52 4th COMESA Investment Forum Moderator: Christopher Hartland-Peel, Head of Africa Research, Exotix Speakers: Abdulla Mohammed Al Awar, CEO, DIFC Authority, UAE Atiq S. Anjarwalla, Partner, Africa Legal Network Arnold Meyer, MD (Africa Real Estate), Renaissance Capital Karim Schoeib, Head of Capital Markets, SHUAA Capital  M oderator Christopher Hartland-Peel, Head of Africa Research, Exotix, after introducing the panellists, spoke of how the capital markets can cater to the region’s financial needs, how these markets can be developed and how institutions can make use of and tap into these. He pointed out that within COMESA you have ‘investable countries’ (i.e. countries with active exchanges open to foreign investment) and ‘uninvestable’ ones (such as DRC, which is large and attractive but with no functioning exchange). Al Awar, CEO of the DIFC, highlighted the building blocks that are necessary for a country’s economy to flourish, and likewise its capital markets. The first and foremost element was that of infrastructure. To attract capital and develop capital markets, it was necessary to have state-of-the- art infrastructure, airports, roads, transport and connectivity. Dubai had invested in these essential factors to then be able to offer key selling points to investors wanting to access the region. Business people would be happy to base their activities out of Dubai, which, in turn, makes it an attractive destination with effective capital markets. The second fundamental was to ensure a business-friendly environment through a solid regulatory infrastructure and legal environment. The DIFC followed international standards, which mirrored those of other international financial centres such as London, Hong Kong and Singapore. That inevitably made it instantly appealing to international institutions, as they are dealing with a jurisdiction with which they are already familiar, whilst getting access to new markets. So with regards to COMESA Member States, the emphasis needed to be on the physical and regulatory infrastructure in order to fuel the development of the capital markets. Karim Schoeib, SHUAA Capital, spoke about the role governments can play in helping institutions access financial markets. Using the example of sovereign debt, a government which issues debt on international financial markets will make it much easier for corporates to follow suit, as a benchmark will have been set. This had been the case with many UAE quasi-government institutions being able to tap international capital following the successful issuance of sovereign debt. It was all a process; once countries tap into international markets, the interaction starts and a relationship develops, with international investors getting a better understanding of the risks at play. The markets, as much as anyone, needed to learn. The process (going and setting a benchmark) would also allow for the market to understand the fundamentals of the assets being placed and for subsequent tightening of the pricing of this debt. And it was critical to have liquid and active capital markets, because successful companies in the region could not solely rely on the banking system to fund their rapid growth. Karim also mentioned that there were two types of investors – those who will invest only in certain assets of a certain investment grade (hence the importance of a credit benchmark) and those who are looking to invest on a ‘backdrop’, an opportunity within a region which would offer fast growth and higher returns (at a greater risk, of course). Following on from this, Atiq Anjarwalla, Partner at the Africa Legal Network, mentioned that there was no ‘one rule fits all’, and each country needed to be treated individually. This was especially so in terms of the regulatory and legal frameworks, which, in many cases, had been inherited from the colonial days. There were certain key policies that could be implemented and which made a difference, such as getting rid of exchange policy controls, allowing a free banking sector (in terms of foreign ownership), which, as demonstrated by Kenya, will help strengthen capital markets. An economy that is vibrant will also help, and ensuring preferential tax laws and favourable rates of withholding taxes on repatriation of interest and dividends. This is what contributed to an active market in Kenya and we were seeing the same being replicated in Tanzania and Uganda. This was also being demonstrated as we saw an increasing number of clients looking at IPOs in the next two to five years, he said. The lending constraint of banks made capital markets the logical alternative, hence their importance. Taking the theme of benchmarking, Arnold Meyer of Renaissance Capital mentioned that the government bond market could also help banks price mortgages. Kenya Strengthening COMESA’s Capital Markets Parallel Session Finance
  • 53 4th COMESA Investment Forum “The diaspora is definitely ‘an investor’ that needs to be targeted” Housing Finance managed to raise USD 150m on the bond market, which was going to be devoted to mortgages. In some cases, the problem was actually disbursing this money. For example, Kenya has 18,000 mortgages in a country of close to 50 million people. Many of the population qualify for mortgages, but in many cases there was a lack of products. And the same goes for foreign capital. The Canadian Ontario Teachers’ Pension Plan, would love to deploy money into real estate in Africa but there is no pan-African fund, so again there was another opportunity for a well-capitalised pan- African fund that can spread its interest base over five or six countries. Schoeib added that this would be possible but “you need to get the bankers, regulators, law firms, investors all working closely together to put it place.” Dubai had successfully done that and these two engines for growth (banks and real estate companies) made up a large part of the capital markets. Al Awar added that there were other prerequisites for such dreams to become reality, such as physical infrastructure. International conglomerates were basing themselves out of Dubai to access Africa because of better connectivity and a regulatory framework they can work with. These were the two areas countries need to look at resolving. Enforcement of contract for one is key, and the Dubai International Financial Centre is there to ensure this, again adding to the attraction of listing or dealing within DIFC: a sound judicial and regulatory system. “Government is critical because as we have experienced in Dubai, unless the government is willing and proactive, we would not be able to advance to where we are today,” he added. “And also we had to see through a constitutional change to create the financial free zone that the DIFC is today. Following on from that, you will also need a strong base in terms of the professional services firms (lawyers, accountants, auditing, etc). And once you have the adequate infrastructures and platforms, investments will follow suit.” Meyer agreed with Al Awar, using Rwanda as an example of a country which had had to put in place all the regulations and platforms because of a lack of natural resources (thus forcing them to be effective), but whilst DRC was rich in natural resources, it had a poor regulatory framework. However, now that there is active investment in place within DRC, frameworks were being put in place to control the movement of capital, which over time, will lead to the development of capital markets. Comments and Questions from the Floor: A member of the audience asked the panellists about their thoughts on Diaspora Bonds as a source of raising finance, as had been successfully implemented by Israel and India? Hartland-Peel emphasised that the diaspora is definitely ‘an investor’ that needed to be, and is being, targeted. Developers were now building and promoting developments for that particular clientele, who for sentimental reasons needed to have a place ‘back home’. Schoeib noted that investment banks needed to be more proactive in marketing countries and regions. At SHUAA Capital, they have established funds and going with their equity research teams, they have had to market these to international fund managers: “It is a long-term process but with big returns, because when local institutions are looking to embark on larger projects, they will come to us first.” A question was raised in terms of the UAE’s involvement and, more specifically, the DIFC’s involvement in COMESA. Al Awar mentioned that it had incorporated a strategy to make it appealing to African companies looking at international investors and vice versa, but more interesting was the mention of double-tax treaties between different countries. Mauritius had signed a number of double-tax treaties, and much investment is now being channelled through that country. And this was a tool which other ‘centres’ and ‘hubs’ could use to drive capital flows. Main Outcomes: Interest in Africa is strong, and access to capital markets is there. But is are a lack of products and of the elements required for active capital markets, these being a stronger regulatory framework, better physical infrastructure (without which a market’s appeal disappears) and more favourable terms (repatriation of funds, foreign exchange controls, foreign participation and ownership of local companies). Governments can play a key role. They can initiate the process of connecting with international markets, develop a better understanding of African risk and opportunities, and can help benchmark yields and risk, thus reducing the burden for other companies or institutions coming to market. This initiation is critical and provides a yardstick to emulate. Government willingness and engagement is primary. Following on from this, investment banks with lawyers, regulators and rating agencies need to work together to develop products and the frameworks. Investment banks will also have to work hard to develop funds and market these to international investors. First-mover advantage pays dividends in the long term.
  • 54 4th COMESA Investment Forum Dubai TV Debate Moderator: Zeina Soufan, Presenter, Dubai TV Speakers: Sulaiman Hamed Al Mazroui, Chairman, Bankers Business Group Fahad Al Gergawi, CEO, Foreign Investment Office, Dept of Dubai Economic Development, UAE H.E. Hisham Al Shirawi, 2nd Vice Chairman, Dubai Chamber of Commerce & Industry, UAE Dr. Nasser H. Saidi, Chief Economist & Head of External Relations, DIFC (DIFC) Authority Karim Sadek, MD, Citadel Capital  T his session, chaired by Zeina Soufan, Presenter, Dubai TV, looked at how greater cooperation between the UAE and COMESA can be achieved. H.E. Hisham Al Shirawi, 2nd Vice Chairman, Dubai Chamber of Commerce & Industry, opened the session by stating that agreements between the two regions should be beneficial for both sides. Trade for these countries did not rest on having a specific agreement between them. Commercial activities go bottom up, not top down. COMESA is very rich in natural resources and capabilities not fully exploited because there is not enough development in these countries. There had been a noticeable increase in UAE investments in the region, and it is necessary to have conferences like these to share knowledge and experience. Next, Dr. Nasser H. Saidi, Chief Economist & Head of External Relations, DIFC (DIFC) Authority, spoke about the types of initiatives that would encourage trade between Dubai and COMESA. First, he emphasised the need for infrastructure. Dubai had a great role in this because they had ports and airlines that will connect COMESA to the rest of the world. Agreements will facilitate this building of infrastructure, as well as investment. This will entice businessmen. The Gulf had a major role to play, with Dubai’s port in Djibouti acting as a door into COMESA. The distances are not big – COMESA is just a two-hour flight from Dubai: “We can encourage commerce, trade, and tourism and connect COMESA to world.” Sulaiman Hamed Al Mazroui, Chairman, Bankers Business Group, spoke about partnerships between financial institutions in Dubai and COMESA. He thanked the Dubai Chamber for organising this conference, bringing together businesses and financial institutions from 19 African countries and many Arab countries. The conference offered a chance for the financial institutions in these countries to partner with one another. He spurred them to take advantage of this opportunity. Fahad Al Gergawi, CEO, Foreign Investment Office, Dept of Dubai Economic Development, then talked about other opportunities for cooperation. He described Dubai as a strategic location – COMESA countries could use it as a platform to export their services and goods and promote themselves to the world. In terms of an investment relationship, Gergawi said that each country should be viewed as a separate entity, as each country had its own incentives. While there were great opportunities to invest in and develop COMESA, the regional organisation must work to provide more information to investors. Karim Sadek, MD, Citadel Capital, discussed the impact of the recent political developments in the Middle East on the business environment in the region. He admitted that politics no doubt affected his company’s position. But the company knew that in the long term, its investments were not changing. There were huge markets in these societies, as well as lots of young people. His company was not interested in investing in real estate for the elite, but rather it was interested in serving the real, popular demands in these markets. Sadek described his company’s current investments, which were concentrated on Egypt, Uganda, and Kenya. Most of those investments led to services in agriculture and foodstuff. The company also had a number of investments in energy. Gergawi then spoke about why finding a long-term partner in COMESA is difficult. He said that this was mostly COMESA’s responsibility. It needed to give investors more information. The more accurate information received, the better investments can be coordinated. Shirawi focused on food security, saying that food security was important because the UAE imports most of its food resources. He found it strange that Africa with such vast resources can have famines. That led him to strongly believe in a partnership that can bring together Africa’s land and manpower and the UAE’s expertise in building infrastructure that could minimise famines in COMESA. In order to ensure such a partnership goes smoothly, the land and fees should be defined ahead of time and not changed every now and then. If the UAE and COMESA chose five strategic agricultural A Roadmap of Opportunities: Fostering Cooperation between the UAE and COMESA
  • 55 4th COMESA Investment Forum “A partnership that brings together Africa’s land and manpower, and the UAE’s expertise in building infrastructure could minimise famines” products and formed a community that sets up production from A to Z, this could provide a major benefit to people on both sides of the agreement. Saidi approved this approach. He said there were three major things to consider in agriculture: it is a fundamental part of the economy, it created opportunities, but it had a lack of infrastructure. There was no proper application of modern machinery, for example. The marketing of COMESA was important – Dubai can help play a role in this, just as it created a huge flower market in the airport. There is a time difference with European consumption markets – we can bring flowers and fruits and transfer them to the world, he said. COMESA and the UAE can focus on not just food security, but also on developing partnerships in other areas. Mazroui then discussed the UAE’s financing of such projects. Financing is short, he admitted, because of the current economic environment. Bankers were wary. But it was necessary to review the possibility of financing trade between COMESA and the world. He believed that UAE banks were capable, qualified and experienced to support this trade and the industrial sector. In discussing a starting point for financing projects in COMESA, Mazroui said that COMESA should create an environment in which UAE banks are comfortable to invest. Without rules and the proper environment, investors would not come. Focusing on representation from both the UAE and COMESA in partnerships, Gergawi suggested having COMESA offices in the UAE that can facilitate the presence of banks by providing information and market research, and by promoting countries and companies. It was important to have such offices in Dubai because that will support the economy of the COMESA countries by introducing their products to the world. Dubai is connected to the world through aviation and ports. It is an international centre for conferences, forums and exhibitions. It offers an ideal chance for COMESA companies to explore these opportunities, as well as a very rich platform for investors and companies looking to step out of Africa into the international arena. Saidi added that the Dubai International Financial Centre attracted more than 300 international banks and institutes, from Barclays to Indian and Chinese banks. They are all physically here. These banks can identify commercial opportunities for investors. Dubai can also find out about any forums or symposiums and decide to host them with these companies. Many countries have huge geographical range, and it is hard for GCC investors to know all the opportunities, so gathering information in these forums really makes it easier. Sadek spoke next about the ease of finding opportunities in COMESA. There are 500 million people on the African continent – there are many opportunities there. The major problem, he believed, was the lack of finance. Finance was really hindering investment, unless the company could walk in with its own finance, or had relationships with financial institutions. Cost of transport in the EU was one US cent per net tonne, and between Mombasa and Kambala, it was 12 cents. Speaking about Africa’s often-quoted 29% return rate, Sadek said he could not comment on this number because it is a collective average and he had a problem with a collective statistic. These countries are different, he explained. Their sizes are different. Investment in all of COMESA is not compared with that of other countries. So it is not easy to use this number. Shirawi addressed the issue of manufacturing in COMESA. The good returns quoted depended on the products. The 19 countries had different resources, and investment should take place if they needed more people to work on a product. If a business’s investment was capital intensive, manufacturing should be in free zones here in Dubai. If a business’s investment was labour intensive, manufacturing should be in COMESA. Where a company H.E. Sindiso Ngwenya, Secretary General, COMESA, (left) with H.E. Sultan Bin Saeed Al Mansoori, Minister of Economy, UAE
  • 56 4th COMESA Investment Forum should manufacture depended on the type and stage of manufacture. In discussing a starting point for infrastructure in COMESA, Saidi mentioned three major areas: energy, transport, and basic infrastructure. There must be a focus on logistics, which COMESA lacks. Dubai can offer investment funds to invest in infrastructure, but it needed new laws that help Dubai’s businesses provide services in infrastructure in COMESA. The laws in the Dubai International Financial Centre are based on English common law, as are the laws in most of COMESA. This facilitated finance and investing for companies here in Dubai to go to COMESA. In addition, the tourism sector is very important, as well as the sectors of raw materials and natural resources. Dubai’s companies needed to find opportunities for work and to create jobs. In the past, Dubai used to invest without creating jobs. Now it wanted to create jobs. It is ready to help with that – that distinguishes Dubai investors. Saidi also touched on the logistics corridor established between Dubai and COMESA a week before the conference. He believed this logistics corridor was unique because any product that came from COMESA into Al Maktoum Airport could be quickly shipped on the sea, or could be stored and used in factories. Shirawi explained that over 12,000 ships were received in Dubai in 2009. From Jebel Ali Port, goods can get to South America in 25 days, North America in 21 days, China in 20 days, and anywhere in the GCC in one day. This is a unique service, he said. Going through too many obstacles and hindrances and overchecking of documents will lead to delays. The swift movement of shipments made it easier for businessmen to increase cash flows. In speaking about what sectors COMESA can attract foreign investment into, Gergawi advised looking into the sectors found in Dubai. Investment companies and numerous financial institutions from around the world were in Dubai. COMESA was one of the opportunities for Dubai. Mining and foodstuffs were mentioned, but there is also tourism that has not been exploited. The COMESA region had an impressive heritage, a long history and natural beauty. However, the infrastructure surrounding that needs a lot of work and development. In addressing the fact that COMESA needs USD 94 billion to make development work, Sadek said that the private sector does not have very much opportunity to fill the infrastructure gap. Infrastructure is normally financed by countries, institutions or companies that are trying to get natural resources such as oil. The problem of finance is a major one for the private sector – particularly in terms of commercial financing that is not connected to governments that have particular interests. Saidi believed that a partnership between Dubai and COMESA could positively impact on the international economy. COMESA, he said, is an important human and geographical region. It had historical connections to Dubai, and it is developing quickly. If openness and partnerships become real, there will be great opportunities in COMESA. Chinese, Indian and African partnerships are going through Dubai. People are saying that there is a new Silk Road – that Silk Road will surely go through Dubai, he said. The companies are all here. Main Outcomes: The geographical location and proximity makes both regions strategically compelling partners. COMESA and Dubai must focus on business partnerships rather than governmental partnerships between the two regions. Partnerships should also specifically include banks and financial institutions. While the UAE can provide facilities, such as ports and airports, free zones, etc., COMESA can assist the UAE in issues pertinent to the region’s food security. A partnership could target Africa’s land and manpower and the UAE’s expertise in building infrastructure that could not only minimise famines in COMESA but also benefit the UAE. This partnership can also be translated into other areas and consumer markets. While the UAE can assist COMESA in expertise regarding its infrastructure development, the private sector does not have the ability to fill the infrastructure gap in COMESA. Doing so is the work of governments or major financial institutions. Investors require more information, hence a COMESA office should be set up in Dubai. Dubai TV Debate
  • 57 4th COMESA Investment Forum “Clearly we need more rail linkages, but we should not forget to revamp those that we have” Moderator: James Martin, Rail Director, Mott MacDonald Group Speakers: Hon. Malusi Gigaba, Minister of Public Enterprises, South Africa AbdulMohsin Ibrahim Younes, CEO – Strategic Corporate Governance Sector, RTA, UAE Akashambatwa Mbikusita-Lewanika, MD, Tanzania Zambia Railways Authority (TAZARA) Nduva Muli, MD, Kenya Railways Corporation (KRC), Kenya Karim Sadek, MD, Citadel Capital, Egypt James Martin, Rail Director, Mott MacDonald, moderated this session on rail and described railways as a “critical part of all development throughout the COMESA region”. He turned to Hon. Malusi Gigaba, Minister of Public Enterprises in South Africa, asking him to explain the railways in his country. Gigaba wanted to address the following issues: The state of the drivers and partners of the railway. The potential of localising manufacturing. Some successful projects and opportunities for investors. Gigaba believed that the state was one social agent in ensuring the security of supply. The revival of the rail sector was fundamental for development and sustainability. If one looked at the rail network in Africa, the bulk of it was in South Africa, where the port infrastructure and services were relatively more developed than in other parts of Africa. Eight ports in South Africa feed into the 20,000km rail system, which is the largest on the continent, he said. According to the World Bank, the deficiencies are holding back the continent by at least 1% of financial growth. Gigaba warned that individually, each economy is too small to ensure the growth potential of African countries, but by combining 700 million people and several economies together, sustainable programmes and finance are possible and will attract investment at the level that African countries require. Gigaba described a few rail projects currently taking place in South Africa: there were 100 locomotives from General Electric (GE). Only 10 would be manufactured in the US, which means that the remaining 90 must be developed in South Africa. The cooperation between COMESA and the EAC must leverage on the strengths of the countries that belong to those communities to ensure the transfer of technology and knowledge building. Gigaba made the appeal that “if we brought our ideas together and begin to stretch our thinking, we stand a better chance of localising development.” Next, Akashambatwa Mbikusita-Lewanika, MD, Tanzania Zambia Railways Authority (TAZARA), was asked to describe his organisation’s rail system. He stated that the Tanzania Zambia Railways Authority was a prophetic initiative, and it was one of the most serious railways that had been built since the 1960s. He felt that the age of their railways indicated that many countries had neglected them. The railways are well situated, but “now we must revamp our rail and improve it.” What Mbikusita-Lewanika hoped to see was that the spirit is revamped, and for PPP to take from the past and build on it. “Clearly we need more rail linkages, but we should not forget to revamp those that we have (or consolidate what we have) in addition to building on them.” Now, he claimed: “Tazara and other rails are at a stage that is the best I have seen in a while. The questions we should be asking now are ‘What are the weaknesses, and how do we remove them?’.” The moderator then turned to Nduva Muli, MD, Kenya Railways Corporation (KRC), and asked him how investment in rail could be made attractive to investors. Muli Rail – Key Drivers for Investment Delegates at the 4th COMESA Investment Forum Parallel Session Logistics
  • 58 4th COMESA Investment Forum provided a background on the railway in Kenya: it had gone though many years of non-investment and decline. It was beginning to pick up, and KRC were trying to get the private sector involved. KRC was trying to develop projects such as railway concessions, but it had had its problems. Muli advised that parties should be rational when they enter into PPPs, as projects should balance the risks and rights between public and private sectors. Muli added that above all: “We must ensure that there is macroeconomic stability in which what investors can have is kept in balance with what consumers can have … we must look at the bigger picture and it is critical that we keep those concessions and PPPs tight. We will be judged as countries when we deal with transport.” AbdulMohsin Ibrahim Younes, CEO – Strategic Corporate Governance Sector, RTA, offered his insight at this point on the rail and freight systems in the UAE. He said that the main issues were how to connect important routes, especially by sea. What the RTA is trying to do is to shift people from individually owned cars into taking the metro, thereby reducing the country’s carbon footprint. The RTA was attempting to monetise the potential components of the rail, but in terms of encouraging the private sector, they had found it very challenging. The floor was given to Karim Sadek, Managing Director of Citadel Capital, Egypt, which is a partner of KRC. He said that what made a railway attractive for investment is when each party involved in the PPP contributes something. But with the World Bank’s involvement, governments felt as if they are not involved any more, and this was serious. It was important to change the perception from within, especially with concessions. Martin noted that investors are saying that they won’t touch the fixed infrastructure, and Sadek agreed. Given the economic activity, investors are not likely to bother with fixed infrastructure. Rail must reach a level that validates the kind of investment going into it. Gigaba highlighted how Sadek’s point was a damning one because it showed Africa’s problem. “Had we sustained investments at 10% of the GDP up to today, we would not have missed the commodity boom or lost USD 1.5 trillion in rent, and maybe our infrastructure would have been of higher quality too. Investment in economic infrastructure has declined and we only began rebuilding in 1994. I think the issue Karim Sadek raises speaks to the arrangement between COMESA and others. If we can cooperate to create the volume and sustainability of the project, then we can make a case. South Africa’s population of 49 million is small, so to have impact we depend on relationships with other African countries. Unless we can increase the volume for business and involvement in the private sector, there are countries that are not going to make it. These are legacy issues. We need to strive for greater economic cooperative development – we need to attract investors and argue the case out for localisation and manufacturing those infrastructure promises.” When asked whether there really was money available to upgrade the rail, Mbikusita-Lewanika responded with an “absolute yes. Following Africa’s constant economic growth, from an investor point of view, there is no better time than now.” The moderator changed the topic to rolling-stock component, and said that the Japanese are prepared to invest because it is portable and the equipment can be removed, unlike infrastructure. Younes contributed his thoughts on rolling stock, that the challenges were the same as the RTA AbdulMohsin Ibrahim Younes, CEO – Strategic Corporate Governance Sector, RTA, UAE Parallel Session Logistics
  • 59 4th COMESA Investment Forum “Build achievable projects first, before undertaking projects that will take years” Delegates addressing the panellists had in Dubai when it developed their system. There were many different factors to consider, such as the fact that rolling stock can become part of the bankable production. Sadek made some key points: “We need to put aside any rail investments when we’re talking about general cargo. Build achievable projects first, before undertaking projects that will take years.” Comments and Questions from the Floor: The first question came from Mark Pearson, Programme Director, TradeMark Southern Africa: “Sadek is saying that concessions are one size fits all, and that is the case for all concessions. Did you think there is a possibility to renegotiate the structure of the concessions? What about the issue of taking advantage of the tripartite? Use your comparative advantage. Spoornet is the technology advisor to the concession, for BBR, etc. Do you see the potential for Spoornet to be more involved, and can you give your expertise to the region? Rail is more fuel-effective than road, and fuel prices go up.” Gigaba chose to answer Pearson’s question: “We’ve asked Spoornet to develop plans to engage more in Africa. There’s a lot of work taking place at the moment to try to support the AU initiatives. Organisations like Spoornet or SA have a great role to play in the continent to assist in the development of the supplier capabilities in other parts of the continent. With great cooperation between countries, the problem arises when we think individually or think in isolation. At the end of the day we share markets. We need to think anew on how to find and create infrastructure, given that our governments do not have the capital on their own to invest on their own. There is more investment to be made and I’m talking about companies that can support these investments. It is a valid point to ask which PPP model can support these programmes. We will sink into savagery if we don’t work together and think holistically. There are ways that have been thought about within the AU. We can’t sit back and say we will let ourselves be at the whims of investors.” The final comment came from a USAID representative: “What I’ve noticed is that nobody is mentioning the enormous railway project that is currently under way in Ethiopia. The Ethiopian government is about to embark on a 2,000km rail project to connect with Juba. There is a light rail project supplier-finance with the Chinese Export-Import Bank. Why aren’t we talking about new rail projects in Africa alongside talks on rehabilitating old rails?” Main Outcomes: While more rail linkages need to be built, it is crucial to improve those that already exist. According to the World Bank, the deficiencies in rail are holding back the continent by at least 1% of financial growth. In an attempt to localise production, South Africa is aiming at building 90 locomotives in the country. The cooperation between COMESA and the EAC must leverage on the strengths of the countries and ensure the transfer of technology and knowledge building. Private sector investments into rail are difficult to mobilise, particularly into improving infrastructure that already exists. PPPs are the way forward for financing railways but contracts need to be better structured, with all parties involved feeling equally responsible and committed.
  • 60 4th COMESA Investment Forum Moderator: Anver Versi, Editor, African Business Speakers: Santosh Vasudevan, Principal Investment Officer, IFC, South Africa Joshua Varela, General Manager, National Smallholder Farmers’ Association of Malawi Sai Ramakrishna, CEO, Karuturi, India Kunal Chahl, MD, Diar Capital  M oderator Anver Versi, Editor, African Business magazine, introduced the session by explaining that agriculture still forms a substantial part of Africa’s GDP. Africa has 25% of the word’s arable land, but less than 5% of that land is actually being used. Food shortages are found in some areas of Africa while surpluses are found in other areas. There was still a long way to go before these inequalities can be balanced. Santosh Vasudevan, Principal Investment Officer, IFC, South Africa, explained that the IFC is trying to capitalise on 60 years of experience of involvement in the local agribusiness sector, with USD 2.5 million invested. The primary focus of the IFC in Africa is the food business, including livestock, vegetables, processed food, etc. However, the IFC had faced significant challenges in the sector due to an increased perception of risk. That came down to the fact that agricultural production is largely at subsistence level; it is smallholders’ land. “As a large institution, we are able to succeed in agribusiness through partnership with financial institutions,” he explained. In the long term, Vasudevan convinced clients that financing vendors is important. IFC increasingly focused on advisory services, helping achieve global and sustainable standards, and providing access to other markets globally. Joshua Varela, General Manager, National Smallholder Farmers’ Association of Malawi, emphasised that smallholder farmers had no chance of taking advantage of opportunities unless they collaborated. This all starts in villages, where farmers organise themselves into a district association, “so 10 tonnes become 1,000 tonnes.” Once farmers organise into these structures, they look at their productivity issues together. They examine how input procurement takes place (seeds, etc.) and how to drop costs. They share knowledge and expertise (e.g. how to grow flowers, etc.). He pointed out that in Africa, farmers have to finance most of their production, whereas in the US, such production is financed by banks. “How do we create appropriate financial services for African farmers?” Varela asked. The most important service was providing access to markets. Farmers complain about fruits and vegetables rotting before getting anywhere. Becoming part of the agribusiness value chain would help producers: “If they are stakeholders the business will listen to them.” Varela argued: “We should not get commodities straight from the ground and export them, because that is like exporting jobs. In such a system, smallholder farmers cannot survive.” Verala concluded that it was very important for the future development of agriculture that farmers work with officials who know conservation agriculture techniques, particularly in relation to climate change. Considering massive global population growth, African farmers have to feed themselves and the whole world. Kunal Chahl, MD, Diar Capital, a company based in Dubai, Kuala Lumpur and Singapore, explained that his firm had uncovered a great interest in Southeast Asia in expanding to other parts of the world to find more agricultural production and agricultural investment opportunities. His company brings investors from Southeast Asia to East Africa. “Why would Southeast Asian companies want to travel across the world to look at agricultural investment opportunities?” he asked. His view was that food scarcity and security needs propelled investors to think outside of their home countries. He pointed out that a lot of excellent agricultural land in Southeast Asia was not up for sale because of the hype around food security. Chahl continued by explaining that since Africa is new to Southeast Asians, they are very cautious. “They wanted to jump in, but did not want to overexpose themselves.” Investors needed to be more educated on what the opportunities were. They began with joint ventures with local companies in target industries. Starting small was important to investors, especially seeing how there has been a backlash against land grabbing and neocolonialism. They wanted to be seen as helping the economy, not grabbing land. They also want to give back to the community, with a social agenda to make improvements. Moving up the Value Chain: Value-Added Processing Parallel Session Agriculture
  • 61 4th COMESA Investment Forum “We should not get commodities straight from the ground and export them — that is like exporting jobs” Sai Ramakrishna, CEO, Karuturi, India, had been investing in agriculture in East Africa for nearly seven years. With over 300 hectares of cultivation, Karuturi employs over 5,000 people. Speaking about the opportunities he saw in the agriculture sector in Africa, Ramakrishna agreed that they are manifold, but it is crucial that the difficulties of transportation are overcome. His company was building a water transport system to solve the logistical challenge. “Sugar sells for USD 1,000 per tonne, and rice just under around USD 900 per ton. Prices are much cheaper outside, creating price arbitrages that are astounding. The difference can be as much as USD 100 per pound, all due to logistics.” “If there is one thing Africa does not have a shortage of, it is land. What Africa needs is value addition,” he said. Ethiopia has three million hectares of arable land. Mozambique exports unprocessed cashew nuts to India, where they are processed for a large margin. He argued that we must begin to produce goods in Africa, for Africa. This will bring down costs in the region, make business profitable and be socially responsible. Versi asked about other companies that are operating along Karuturi’s lines, and how political change and influence impacts on his company. Karuturi replied that in terms of investment, many companies had followed Karuturi’s model in the last five years. Many Indian companies had taken on large land- farming developments in Mozambique and Sierra Leone. Brazilian and North American companies are in Ethiopia and Kenya. As to the risk of political change, he added that there were several instruments that help companies reduce risk such as bilateral investment protection, insurance from the World Bank, and, in some instances, regional investment protection. “As long as you’re willing to pay the price, you can get protection.” Versi then turned to Chahl: “Would your investors be satisfied by the kind of security guarantees Karuturi talked about?” Chahl replied that in cases of large land and capital investments, there was a lot more publicity, and, of course, protection treaties played an important role. But smaller cases did not really warrant huge international cross-border protection. It became a question of good diversification. Singapore and Malaysia, as common law countries, were attracted to Kenya and others because they have the same legal heritage. According to Chahl, that was more than enough for the investors. Main outcomes: Africa has 25% of the word’s arable land, but less than 5% of that land is actually being used. Agriculture production is largely at subsistence level and smallholders need to get access to markets and become a part of the agribusiness value chain – through this they will get a voice and be listened to by businesses. Smallholders need to take advantage of opportunities: for this, it is most effective if they collaborate and work in cooperatives. Value addition to products is crucial for farmers and agribusiness alike. There is increasing interest from Southeast Asian investors in agricultural investment opportunities in the COMESA region. Opportunities in agriculture and agribusiness are manifold but it is crucial that infrastructure and logistical challenges are overcome. The panel from right to left: Sai Ramakrishna, CEO, Karuturi; Santosh Vasudevan, Principal Investment Officer, IFC; Anver Versi, Editor, African Business; Kunal Chahl, MD, Diar Capital; Joshua Varela, General Manager, National Smallholder Farmers’ Association of Malawi
  • 62 4th COMESA Investment Forum Moderator: Ken Kwaku, Founder, The Kwaku Group Speakers: Hon. Raymond Tshibanda N’Tungamulongo, Minister of International and Regional Cooperation of DR Congo Richard Claudet, Chief Investment Officer, Private Sector Infrastructure, African Development Bank Dirk Hoke, CEO, Cluster Africa, Siemens Farid Mohammed, Director, Pipal  M oderating the session, Ken Kwaku, Founder, The Kwaku Group, opened the session by pointing out that power is the source of all production. The economic value of power is in its use and not in its production. As we thought about the problem of power in COMESA, we needed to think about its impact in all economic activities. “We know that behind all economic activity is energy and we know that Africa has a lot of power resources. Africa has resources in coal, solar and wind, and yet on an average only 10% of the African population has access to energy. This session is about how we can cater to the energy demand and supply in the region.” He then asked the first panellist, Hon. Raymond Tshibanda N’Tungamulongo, Minister of International and Regional Cooperation of DR Congo, how the DRC, considering its vast energy resources, could play a role in empowering the region. What were the opportunities for investors? N’Tungalulongo highlighted the point that in order to solve the deficit of energy in Africa, the issue of production needed to be solved: “We need to reduce our dependency on a single source of energy and we need to improve access to it. It is not only a matter of producing electricity but producing it in sufficient quantity in order to make it available to the masses – it’s the population that needs to have access to electricity.” Another important issue was that of the environment – a subject which was becoming more and more important. N’Tungalulongo proceeded to explain the hydroelectric Inga Dam project – a development which promised to have the potential to cater to the region’s energy demands. He said, “Inga can produce 44,000 megawatts of power to cover the needs of the African continent and then export surplus.” Development of Inga is scheduled to take place by 2015, servicing up to 19%, an increase from 9% of power needs. N’Tungalulongo added that they had USD 2.4 billion but there still was a need for USD 4 billion. The construction of the power station in Kusanga cost USD 300 million. Another USD 200 million will be required to produce 3,500 to 4,800 megawatts of power. Feasibility studies had been conducted. The project is huge and costs USD 45 billion. For investors, there were still partnership opportunities on this particular project as well as on many other power generation projects in Africa and COMESA. “These will generate a good return on investment for investors from all over the world.” “The DR Congo has experience in the construction of power stations and the business climate is also being improved considerably. The country enjoys peace, stability, a legitimate leadership elected by the people; the inflation rate is one digit. Just before the financial crisis hit Africa, the DRC was at 9% growth – currently it is at 7%. The exchange rate is stable, debt burden is not there, the country is in its development stage, there are many incentives for investors.” The next panellist, Richard Claudet, Chief Investment Officer, Private Sector Infrastructure, African Development Bank, talked about infrastructure financing funds, especially the bank’s projects in the energy sector in COMESA. The bank lends money to private sponsors and independent power producers in the energy sector. The bank is financing up to USD 3 billion in projects and they do have the ability to go into small projects from solar to mini- hydro. The bank is also trying to find solutions to get into big projects like Inga with a combination of public and private investments. Power is the biggest sector in the bank’s portfolio: they finance traditional sources of power such coal power generation, but finance is also going into thermal power plants and a broad range of renewable clean energy, which is now an excitable area. There is the climate fund, which is financing big clean-energy products in the Sahara area, with the idea of exporting solar power to Europe. There are also concessional funds for small clean renewable-energy projects. Claudet added, “There are barriers and challenges for the sector and the only solution is to be patient and to be along term investor.” He concluded by pointing to various potential energy sources and their challenges: “In many countries geothermal could be cheaper and cleaner than hydro and cleaner. But there are issues with this type of energy generation, such as the risk of drilling. Apart from geothermal, wind also offers various opportunities but there Energy: Powering COMESA Parallel Session Infrastructure
  • 63 4th COMESA Investment Forum “Behind all economic activity is energy and we know that Africa has a lot of power resources” is a transmission problem. Solar is a huge resource as well, but it costs a lot of money.” Dirk Hoke, CEO, Cluster Africa, Siemens, highlighted the opportunities available in the region in the energy sector. Siemens had decided to move its focus to Africa, considering both an opportunistic approach and a strategic approach. The opportunities were much wider than the associated challenges. “There are 42 gigawatts generated for 500 million people in South Africa. There is enough to support Africa but then it is not sustainable.” The potential for Siemens was huge, so the company was looking into all areas within the sector, including renewables such as wind, mini-hydro, etc. Hoke said, “There’s a big chance for Africa to create a stronger approach towards renewables. Strong contribution from countries in renewables can already be seen. Governments can also look at potential investments in connecting the rural areas of Africa. Small and medium enterprises are now looking at investing in these areas as they are promising to be profitable.“ He cited the example of Morocco, where 97% of the population has electricity and the rural areas are connected to each other. He concluded that power generation from coal to renewables had to be developed by multinationals like Siemens, which played an important role in this. The next panellist, Farid Mohammed, Director, Pipal, talked about the challenges and risks associated with renewables, which need to be dealt with to attract more investors. Mohammed had spent much time trying to convince financiers that they will get their money back from investing in these kinds of projects – which “was not an easy task”. He elaborated on the various opportunities renewable projects offered.”If one looks at a biomass project – it is divided in to two: biofuels and plantation waste projects. Now, the plantation waste projects have a lot of wet waste and this can be utilised to generate energy, whereas dry waste is more complex. First it needs to be collected from the field and then to be processed, it needs to be put in a boiler to generate something. Generally, these kinds of projects have the ability to generate much more than is needed. However, these kinds of projects, which are usually below 5 megawatts, are expensive.” When financing this type of project, the main issues that arise are: 1. The plantation companies are not ready to spend the money needed to set up the design of the project. So there is a need for a project developer to come in and take this role. 2. The initial capital investment required could range from 20% to 40 % of the cost and most plantation companies have other businesses and want to put their money in that core business. There is a problem in finding operators for these projects: “They are very difficult to find and that is why most of the power projects are run by governments.” Mohammed emphasised that the projects need to be made commercially viable on their own but quite often, “you are looking at hybrid solutions”. Comments and Questions from the Floor: A member of the audience asked about the development of the Inga Dam, considering its many challenges. N’Tungalulongo responded that Inga was a dream, which was now being translated into reality. The feasibility studies were being conducted, the finance model had been developed in detail. “We know it is doable, we don’t want to get stuck as it’s a huge project and we can do it. We are meeting people who are interested and now we have got some money, but it’s not enough yet.” The next question came from a representative from Singaporean firm Olam. He wanted to know more about the power projects that were currently taking place in the continent. Hoke responded that there were major investments in many countries: “We see strong projects in Kenya and Tanzania, and overall in COMESA, we, as Siemens, are heavily investing and contributing.” There were huge investments in oil- and gas-driven countries. Particularly in the MENA region, there was a strong growth in renewables, such as wind and solar. Main Outcomes: Dependence on a single source of energy needs to be reduced; electricity needs to be produced in sufficient quantity to make it available to the masses. Renewable energy projects offer potential for investments, and development organisations particularly are interested in these kinds of projects, but for small-scale projects it is difficult to motivate the private sector to invest. The Inga Dam project, being developed in the DRC, has the potential to power the region. It also promises to provide good returns to investors.
  • 64 4th COMESA Investment Forum Plenary Session Moderator: Ken Kwaku, Founder, The Kwaku Group Speakers: Ranveer S. Chauhan, MD (Africa Region & Palm Division), Olam Stephen Karangizi, Assistant Secretary General, COMESA Charles Mbire, Chairman, MTN, Uganda Klaus Overbeck, Senior Vice President New Business, DEG M oderating the session, Ken Kwaku, Founder, The Kwaku Group, set the tone by saying that COMESA can learn from the success stories of some of the BRIC countries. Other emerging markets can serve as inspiration to COMESA. However, it was important to point out that COMESA is an economic region, not one country. “Some might say we are comparing apples and oranges, that’s not the point. If you want to be like someone, see where he or she puts their feet and you put yours when they remove theirs.” The first panellist, Ranveer S. Chauhan, MD (Africa and Palm Division) from Olam, a Singaporean firm, was asked to share his experiences and thoughts on what COMESA can learn from successful emerging markets, such as Singapore. Chauhan gave an overview of the Olam story. The company had started in Nigeria and was now present in 65 countries globally. Olam considered itself an emerging market expert. Past decades had shown that private sector companies were the core of development. “What makes you grow is when you can recruit capable people, who are disciplined. You need policies which are easy for you to follow as well as support from policy makers to make a business run smoothly.” He stressed the importance of forums where business leaders can talk to policy makers and other business people. The next panellist, Stephen Karangizi, Assistant Secretary General, COMESA, was asked to shed light on the lack of confidence that Africans have, and the need to change the mindset of people in Africa. Karangizi believed that there had already been a change in the mindset and this was visible at this COMESA forum. In many COMESA and African countries, reforms had taken place, the governments believed in these reforms and also in the fact that the private sector was very important in playing a role in the development of the economy. The more information about the success stories got out, the easier it was to change the mindset. The educational system needed to be reformed and there needed to be a focus on creating an entrepreneurial spirit, he said. “It is important to have competent and efficient people to create the confidence that Africa is capable to do a lot more. With COMESA, the fundamentals are there with this economic bloc, the region is ready to do things and on the correct path to change the mindset and create a larger market.” Charles Mbire, Chairman, MTN, Uganda, stated that the most important or fundamental thing for policy makers to understand was that “politics is not business and business is not politics.” He further stated that “the biggest coward in the world is called capital and that it runs away from the slightest little problem.” Speaking from his own experience, he elaborated that there was a need for multinationals to be in Africa as they bring about a culture of continuity, whereas most of the Becoming Tomorrow’s Fast-Growing Emerging Market From left to right: Klaus Overbeck, Senior Vice-President New Business, DEG; Ken Kwaku, Founder, The Kwaku Group; Ranveer S. Chauhan, MD (Africa and Palm Division) Olam
  • 65 4th COMESA Investment Forum businesses in Africa had not existed longer than a decade. “The potential in the COMESA region is very high and it needs people to come, grow businesses, and plant but not transplant from Africa.” The next panellist, Klaus Overbeck, Senior Vice President New Business, DEG, was asked to highlight the lessons COMESA can learn from some of the BRIC countries. Overbeck elaborated on Brazil’s key to success. The country had a prudent policy and regulation framework. This had unlocked the private sector, which had contributed to its immense growth. China has had an experimental way of functioning which could be of interest to COMESA. “It started by having an open-door policy in four of its cities. It learnt from the experience and then opened 15 more economic zones – learnt from that experience, changed and then opened up even more. It is an intelligent way to make an experiment – learn from it, change and adapt; there is constant improvement.” India had inherited the burdensome British bureaucracy but implementing changes in government had also helped to unlock the private sector, which had been the key driver in its success story. “COMESA can learn nothing and everything from these nations. The quality of government, honesty of people at the top of the government, the enabling environment for the private sector are some of the lessons that can be taken. The infrastructure needs to be built up. Today China has 30 airports more modern than the most modern airport in Europe, in Zurich. Apart from this, the Asian tradition of parents sending their children to schools to have a better future than they had, is what Africa should imitate.” Comments and Questions from the Floor: The first comment was about investments in education and capacity building. The challenge for Africa was about investing in human capital. The next comments referred to the importance of SME development – which was crucial for Africa’s economic growth. The panellists agreed and pointed out that women form an important part of the SME economy and hence they needed to be empowered. Another member of the audience further stated that it was the youth who needed to be included in the debates and more of them needed to be at this forum. He suggested COMESA companies should sponsor young talent to come along to the next event. The next question was regarding tourism and how more tourists could be attracted to COMESA. Kwaku referred to the UAE and the wider Middle East as an example of how to do it. The COMESA region has some of the greatest tourist assets in Africa, from mountains to beach to animals. In line with this, a representative from a Kenyan advertising company pointed to the importance of branding: “If we want to be seen by the world differently, then we need to work on our branding. We need to have a Brand Africa.” Main Outcomes: COMESA can learn the following from the success stories of some of the BRIC countries: Policies which have the potential to unlock the private sector need to be prudent and easy to follow. It is vital that policy makers learn from experiences and allow room for constant improvement. A well-educated, capable and disciplined workforce should “COMESA can learn nothing and everything from these nations. The quality of government, honesty of people and the enabling environment are some of the lessons that can be taken”
  • 66 4th COMESA Investment Forum be the backbone of a well-functioning economy. While it is important to understand that “politics is not business and business is not politics”, the quality of government and the honesty of people at the top of the government are crucial. Burdensome bureaucracies should be reduced. Infrastructure development is vital. Plenary Session Top to bottom: H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry; H.E. Sindiso Ngwenya, Secretary General, COMESA; the speakers delivering their closing remarks
  • 67 4th COMESA Investment Forum “If you do business with Dubai, you do business with the world” Closing Remarks Speakers: Hon. Eunice Kazembe, Minister of Industry and Trade, Malawi and Vice Chairperson of the COMESA Council H. E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry H.E. Sindiso Ngwenya, Secretary General, COMESA  H on. Eunice Kazembe, Minister of Industry and Trade, Malawi and Vice Chairperson of the COMESA Council, began the closing remarks with extensive gratitude to the rulers of Dubai and the UAE for their warm welcome and planning of the 4th COMESA Investment Forum. “We have had a very fruitful two days of intensive business discussions and networking. Our expectations as participants have been exceeded by the conference and I believe that the objectives of the forum have been achieved.” She went on to say that various business linkages have been established between the business community of COMESA, the UAE and Dubai in particular and that these linkages should enhance trade and investment within COMESA. COMESA countries had experienced economic growth over the last 10 years and the business environment within COMESA was conducive to business. Kazembe explained that COMESA countries had the capacity and the necessary ingredients for business and were more than able to supply the world with a wide range of products, but their only major limitation was investment capital. She urged African business captains to seize the moment and make things happen in Africa and COMESA in particular. “It is the business captains who have the liberty to contact the relevant people after this conference,” she said. Finally, she expressed her heartfelt thanks to Sheikh Al Maktoum for having agreed to host the 4th COMESA Forum in Dubai and saluted the Ruler of Dubai for his visionary leadership. She stated that Dubai was one of the world’s most beautiful cities and a hub of global business, and thanked the Ruler again for such brilliant hospitality and warmth. “Such excellence in organisation is part of the popularity of Dubai.” H.E. Hamad Buamim, Director General, Dubai Chamber of Commerce & Industry, covered some of the main points of the forum over the last two days. He pointed out that over the talks, people tended to speak about Africa as though it was a country, but it is not. However, if it were a country, then it would have the second-largest area with many resources, withthe third-largest population (which translated to a big consumer market), and its economy would qualify it as a G7 country. “But Africa is not a country,” he stated, saying that it was a continent with 54 countries, nine of which were in the World Bank’s top 20 fastest-growing economies. He claimed that doing business in Africa had some challenges. One of them was that business in Africa often had a negative perception attached to it, and that the media was not helping at all: bad stories were communicated and good ones not at all. Another challenge of COMESA countries was the infrastructure (both hard and soft): while COMESA countries went through major reforms to protect investors and had created laws, sometimes they were not fully enforced. Financing and the cost of funding was another challenge, and Buamim noted that one speaker had called for a pan- African fund. “Dubai and Africa can be two-way traffic. If you do business with Dubai, you do business with the world. To do business in Africa, you should be in Africa. But people are already doing business from offices in Dubai.” Buamim closed by saying that he hoped the Middle East would continue to build successful dialogue with COMESA beyond these last two days. He noted that two significant signs of success of the forum could be seen in the high attendance (over 1,300 people from 75 countries) and the more than 400 one-to-one investor meetings that had taken place. On behalf of the Dubai Chamber of Commerce & Industry, he thanked the ministers and businesses for coming. H.E. Sindiso Ngwenya, Secretary General, COMESA, started with a quote he thought was illustrative of collaborative business, and followed up with advice: “If you want to go far, go alone. If you want to go furthest, go together. This is where the challenge is going to be. Let me urge all of you to not look at this forum as an event but as a beginning. We have to put more energy in realising practical outcomes. On that basis, the following should happen: we shall distribute the report of this forum because we need it to remind us of the things we’ve agreed to do. Secondly, we should follow up with each other. Do not let those meetings and exchanges go in vain. Our ministers and governments are keen to cooperate.” He urged the media and others to raise awareness of Africa, and COMESA countries in particular, by spreading accurate knowledge and information to combat the negative connotations that existed regarding Africa. He said that the task was made easier by the fact that the three main languages of Africa were English, French and Arabic, which also reflected the continent’s rich multicultural and multiethnic composition. In conclusion, he wished everyone a pleasant and safe journey back to their respective homes and added that it would be his honour and distinct privilege if the successful forum should result in more success and increase trade investment. He warned the audience not to forget that “we have all spoken about doing business together and we all know one another, so let us continue interacting.”
  • 68 4th COMESA Investment Forum The 4th COMESA Investment Forum was spearheaded by COMESA Regional Investment Agency (RIA) in partnership with Dubai Chamber of Commerce & Industry, under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum – Vice President and Prime Minister of the UAE and Ruler of Dubai. The agenda of the 4th COMESA Investment Forum was developed by IC Events – conference organisers for Af- rica and the Middle East – in cooperation with COME- SA RIA and Dubai Chamber of Commerce & Industry. COMESA’s member states include: Burundi, Comoros, DR Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sey- chelles, Sudan, Swaziland, Uganda, Zambia and Zimba- bwe. COMESA The Common Market for Eastern and Southern Africa (COMESA) was established in 1994 to replace the Pref- erential Trade Area for Eastern and Southern Africa (PTA). Its vision is to drive the attainment of a fully integrated and competitive regional economic commu- nity, through a strategy based on cooperation in trade, investment promotion and development. COMESA is the largest African economic bloc, comprising a total of 19 countries, a population of over 430 million, and a combined GDP of over USD 447 billion. Hav- ing successfully launched its Customs Union in 2009, COMESA continues on the road of regional integration by supporting the continuous creation of better invest- ment conditions, making it an increasingly internation- ally competitive economic community. Contact: Tel: +260 211 229 725 Fax: +260 211 225 725 E-mail: comesa@comesa.int Web: www.comesa.int COMESARegional InvestmentAgency COMESA Regional Investment Agency (RIA), one of eight COMESA institutions, constitutes its investment promo- tion arm. It was established in 2006 with the objective of promoting the COMESA region as a viable, attractive and favourable investment destination for regional and inter- national investors. Its mission is to transform COMESA into an internationally competitive investment area, which allows free movement of capital, labour, goods and services across borders of COMESA Member States, and thereby facilitate sustainable growth of private domestic and foreign investment. COMESA RIA’s key role is to be the strategic driver for capacity building among COMESA Member States’ Invest- ment Promotion Agencies (IPAs), promoting best practices and facilitating each Member State to generate a positive business environment for potential investors, thus creating a strong region within Africa for investment. In order to fulfil this role, COMESA RIA works closely with the 19 national Investment Promotion Agencies to improve national investment climates, as well as to identify their needs within their organisations, and provide the appropriate training and development support. Since its launch, COMESA RIA – headed by Heba Salama – has been engaged in building the capacities of the various IPAs, organising international investment conferences as well as investment road shows, and in acting as an information hub for investors seeking information about the region. In doing so, COMESA RIA is active in promoting the COMESA region as a Common Investment Area, and in building a positive image of the region for a worldwide audience. Contact: Anne-Marie Iskandar Marketing Officer E-mail: aiskandar@comesaria.org Mohamed Aref Research Analyst E-mail: maref@comesaria.org Tel: +202 2405 5428 Fax: +202 2405 5421 About the Organisers
  • 69 4th COMESA Investment Forum Dubai Chamber of Commerce & Industry Since it was founded in 1965, Dubai Chamber of Com- merce & Industry has been a pioneer in representing, supporting and protecting the interests of the business community in Dubai. Dubai Chamber plays a signifi- cant role in supporting business activities, enhanc- ing competitiveness, creating a favourable business environment, promoting Dubai as an international business hub, and voicing and influencing policies of interest to its members and to local, regional and inter- national authorities. To keep pace with Dubai’s continued economic growth and rapidly developing business environment, the Chamber has been keeping the channels of commu- nications open with the various business groups and councils in its efforts to strengthen the cooperation between the private and public sectors. Serving its over 118,000 members, the Chamber has set up 25 business groups and 39 business councils. As a business facilita- tor, the Chamber provides several value-added services such as issuing certificates of origin, business research- es and advocacy, mediation and arbitration, receiving trade missions and organising entrepreneurial training and seminars. The Chamber’s initiatives include credit rating, the Mohammed bin Rashid Al Maktoum Business Award, the Centre for Responsible Business (CRB), Dubai In- ternational Arbitration Centre (DIAC), the University of Dubai and Dubai Business Women Council. Keep- ing pace with changing technologies, many of these services are increasingly available online on Dubai Chamber’s website – www.dubaichamber.com – which is an indispensable source of information for Dubai’s business community. Contact: Tel: +971 (4) 228 0000 Fax: +971 (4) 202 8888 E-mail: comesa2011@dubaichamber.com www.dubaichamber.com IC Events IC Publications has over 50 years experience in pub- lishing magazines, newsletters, country supplements, industry reports and market intelligence on Africa and the Middle East. IC Events was developed to comple- ment IC Publications’ publishing arm. Together with its dedicated team of specialists and extensive network of contacts, IC Events tailors innovative forums, round- tables and workshops responding to the most pressing issues in Africa and the Middle East. IC Events activi- ties are 100% results driven, bringing together the main stakeholders and partners involved in the topics tackled to achieve concrete action plans. IC Events represents a platform to inform, engage, explore and develop. For more information visit www.ic-events.net Contact: Ogo Okafor Marketing and Communications Executive Tel: + 44 (0) 207 841 3210 o.okafor@africasia.com Contributors This publication is the report of the 4th COMESA Investment Forum which took place on 23–24 March 2011 in Dubai, UAE. We thank the summarisers Nour Merza, Khalisah Stevens and Veathika Jain for their contributions. This report was edited and produced by Anna Rosenberg with Alexa Dalby. The information within this report remains the property of IC Events. No part of this document may be reproduced or trans- mitted without the consent of the owner.
  • 70 4th COMESA Investment Forum Notes