African Capital Markets I

The 10^th IMN South African and African Capital Markets Conference attracted over 600 delegates from across the globe in on the 22nd of November 2012. Converging at the Westin Grand in Cape Town, were the brains and pockets behind chiseling into shape, Africa’s capital markets which for decades have remained generally untapped.

Still experiencing growing pains, African capital markets akin to the continent’s economy have drawn the world’s attention as fertile hunting ground for higher returns.

“There has been strong development of local currency debt capital markets  in many countries in Africa as well as unprecedented interest by offshore investors for African credit risk as they turn away from near zero interest rates environments in the developed world and search for yields elsewhere.” Megan McDonald, Head  - Debt Primary Markets, Standard Bank

 Around this period last year, the word on issuers, bankers and investors' lips what “Eurobond”. The IMN Conference coincidentally fell just about two months after the historic Zambian sovereign Eurobond.  A USD denominated 10 year bond which raised $750million and was oversubscribed resulting in an order book value of $12billion. Excitement at the prospect of more sovereign and corporate issuances in Namibia, South Africa, Angola and Nigeria was in the air.

Fast-forward, one year later, the IMN conference goes into its 11^th year. Taking a look back at the past 12 months, economic tremors of varying magnitudes have swept the globe but Africa continues to register growth. Critics would render Africa’s growth story nothing to write home about but with liquidity in the capital markets seeking crevices through which to match assets, Africa is on track to catch up with the rest of the world.

Marking the beginning of the 10^th IMN conference for emerging markets in Africa questions that lingered above the meeting revolved around:

• ·         Africa’s institutional capacity
• ·         Underdeveloped markets with relatively undeveloped yield curves
• ·         High interest rates – a deterrent of poverty eradication

In a week, a wider pool of delegates will converge in Cape Town to behold and review the progress made over the past twelve months and project into the future.

·         Are Africa’s capital markets developing too quick too soon?

·         Is Africa transformed institutionally to make current and future investments worthwhile for investors?

·         If Africa has seen inflows of funds in other forms and failed to realise tangible growth over the decades, will the story change now?

·         With many African countries healing from the debt burden lifted under the HIPC debt review initiative, is Africa ready to take on more debt?

·         Africa needs approximately $100billion worth of investment per annum to develop her infrastructure, are capital markets the only solution?  

These are questions I hope we can all explore as we take a close look at financing Africa’s development  at The 11th Annual South African & African Capital Markets Conference.

DuPont says that Sustainability can be the defining feature of Africa’s growth

Continent well positioned to address the sustainable growth challenge

16 July 2013, Johannesburg:  African companies now recognise the importance of sustainability as a strategic imperative, although many still battle with implementing a comprehensive solution. This is the view of Antoinette Du Randt, Regional Director, DuPont Sustainable Solutions, the operations management consulting firm of the science company.
Du Randt says “after grappling with sustainability for many years, starting with how to define sustainability, there is now raised awareness about the need to continually think about keeping a business sustainable for the long term”. Du Randt ranks sustainability as a key challenge for corporations in the 21^st century and she equates it to the modern assessment of business performance.
 “A key element of sustainability is the creation of social value,” says Du Randt, who points out that companies are under pressure to not only deliver profits for shareholders, particularly evident in mining companies, but also to deliver higher value to government through increased taxes and royalties, as well as communities where they operate, who are looking for employment opportunities and improved facilities.
Sustainability can also become the defining feature of Africa’s growth in the decades ahead, helping the continent overcome the “growth at all costs” trap that has afflicted other countries in the past, whose economic growth has sometimes been accompanied by high social and environmental costs.  
Africa has changed for the better, moving from economic stagnation to being home to seven of the ten fastest growing economies, according to The Economist. This growth has helped build a burgeoning middle class, which has spurred demand for goods and services.   
But for Africa to truly realise its potential it will need to diversify its economy, encourage movement to high value manufacturing and facilitate beneficiation of its vast minerals. Putting in place robust sustainable development strategies will help the continent achieve inclusive growth without damaging the environment or harming the long term use of fresh water resources and agricultural output.
Du Randt points out that DuPont sees sustainability as part of the evolution of the business model and is a goal that companies have to pursue in collaboration with government, labour and communities. Du Randt believes that sustainability is no longer a function of corporate responsibility or compliance, but rather a key growth opportunity that differentiates a company from its competition. “For companies to thrive, the communities they operate in must thrive,”  
Du Randt says as with any other business objective, sustainability needs to be driven from the top of the organisation with a clearly defined set of goals, a buy in from all employees and leadership from board and executive level.
Du Randt points out that companies need a change in mind set and view sustainability as “going beyond corporate social responsibility” to create sustainable shared value for all stakeholders as a strategic imperative.
Sustainability can deliver commercial benefits. Between 1990 and 2004, DuPont estimates that it reduced its greenhouse gas emissions by 72% and has generated $ 10 billion in revenue from products based on non depletable resources.
She also argues that stakeholders need to have realistic expectations from sustainability and that stakeholder education and inclusion is important.
Du Randt argues that the best way for companies to achieve sustainability is to invest in innovation that improves all aspects of business performance, whether its improvement in production while reducing water and energy consumption or by defining market facing goals which deliver product innovation that reduces the environmental footprint throughout the value chain while providing tangible consumer benefits
There is also emerging debate whether companies should be provided with incentives, including financial incentives, to pursue sustainable practices. Du Randt points out those financial incentives are likely to have a limited impact and the companies should pursue sustainability for their own long term interests.
Du Randt also argued that there are already incentives such as tax breaks in place and the ultimate incentive for any company is increased and sustained profitability, gained through an integrated strategy informed by shared value creation and capture.
Du Randt concludes by noting that as external pressures continue to mount, improved sustainability performance is no longer optional, shareholders and stakeholders expect companies to reduce their environmental foot print.

As companies search for opportunities on the African continent and exploit its resources, they should use innovation and a robust sustainable culture to drive improvement.

No small scale mining for foreign nationals in Ghana

Ghana, formerly known as the Gold Coast has been a major supplier of gold to world commodity markets.  After South Africa, Ghana is the largest supplier of gold out of Africa and political stability has made the country an attractive investment destination. The gold rush has not been without its fair share of irregularities. Recent weeks have seen Ghana’s gold industry overshadowed by the arrest of over 100 illegal Chinese gold miners among other nationalities.

According to Kofi Bentil, Vice President of local think tank, IMANI Ghana, the miners were rounded up for breaking the law not on the basis of their nationality.

“Firstly on breaking immigration laws, secondly for working in the country without relevant permits, thirdly for operating in an area specifically reserved for Ghanaians and fourthly they have done acts which have destroyed the environment in Ghana. Because of these acts they are either being processed for repatriation to China or for prosecution in Ghana”

The miners are currently out on bail and some are in the process of being repatriated to China.

Former illegal mining sites are often characterised by land that is beyond rehabilitation due to the extent of the damage. The abandoned open mine shafts have collected water and become breeding ground for parasites. The irresponsible mining operations also caused the contamination of drinking water sources in communities where access to safe water was already a challenge.

Though there has been outcry over the unfair treatment of the Chinese miners, Ghanaians who conduct mining without the necessary permits or cause environmental damage would be prosecuted in the same manner. Mr Bentil believes the small scale mining sector in Ghana will not grow in the foreseeable future if government is not at the forefront of empowering Ghanaians with the ability to defend what is rightfully theirs.

However, the Chinese miners in question acquired the land they were operating on from Ghanaians who either sold their mining concessions in full or in part. This is due to either the lack of interest in mining on the part of Ghanaians or  the need for quick returns.

 Mr Bentil says, “any individual, Ghanaian or foreign who operates outside the stipulated mining policy and breaks the law in any way, will be equally prosecuted.”

“The Ghanaian policy on small scale mining clearly states that no foreign national may conduct artisanal mining under any circumstances. Even if these Chinese regularize their stay in Ghana and gain work permits, they will not be allowed to own any small scale mining permit and licenses. The only way they can get involved in small scale mining is if they are employed by a Ghanaian small scale miner.” Mr Bentil reiterated.

“The capital intensive nature of mining is of no importance in small scale mining. All you need is a shovel and you can operate a small mine,” said Mr Bentil when asked what government and financial institutions were doing to avail capital to turn small scale mines into lucrative operations.

The impact of artisanal mining in Ghana is said to be quite significant. For every direct job in mining, about 10 others are created in side stream activities. Small scale mining contributed 9% of total gold production in 2000 and by 2010 the contribution had risen to 23%, with over a million Ghanaians directly dependent on ASM for their livelihoods.

Listen to interview here https://soundcloud.com/edeline7/kofi-intro

88mph opens applications in Nairobi

08.05.2013, Nairobi, Kenya

88mph, an early stage startup fund and 3 month accelerator program has opened applications for Nairobi. The program assists start-ups by giving them investment of up to a 100k, access to business networks and the know how to quickly grow their businesses. 88mph’s strategy in Africa is to fund strong teams and web-mobile ideas that have the ability to scale across English speaking Africa.

“There’s an immense opportunity to build mobile/web startups in Nairobi right now. African Mobile/web is hands down one of the fastest growing markets in the world and we want to reach out to entrepreneurs who build products and services for hundreds of million mobile/web users that are rapidly popping up on the continent,” says 88mph Program Director Nikolai Barnwell.

Barnwell continues,“Unfortunately, the natural course of a startup is to die before succeeding. But we provide the funding and the infrastructure to boost the odds of survival and we now want to look for the next batch of future successful entrepreneurs.”

That’s why, in addition to funding, the 88mph team in Nairobi has put together talent and resources, to add more value for the startups:

• A partnership with Google has enabled the right space and internet resources to build tech companies, as well as access to Google’s experienced web professionals who can mentor the startups.
• A host of highly experienced local Kenyans and global mentors have been added to the already top-notch 88mph mentor network.
• Furthermore, “Entrepreneurs-in-residence” – experienced entrepreneurs, specialized in sales, programming & web design - are being brought in from across the world to work side by side with the local startups during the 3-month acceleration.
• Finally, 88mph arranges a demo day, where the startups will get access to a group of investors and showcase what they’ve achieved so far.

Last year 88mph invested in 6 web-mobile startups in Nairobi. The 3-month program to accelerate the growth of the startups in Nairobi last year has reaped great rewards for the start-ups, with one startup with confirmed follow on funding and another two that are in final discussions. This will allow them to be able to scale their businesses across Africa successfully.

‘I've seen a wealth of talent infused in Nairobi within the past couple of years," says Carey Eaton, co-Founder, One Africa Media and CEO, Cheki Africa Media."88mph and the ecosystem brewing here are making a very significant contribution to building technology companies in the region to another level, building the next great wave of web and mobile businesses that solve African problems. I'm looking forward to following these startups closely throughout the program."

The speed at which the mobile internet has reached the markets of Africa, now at 274 million Africans on Edge or 3G, has created a huge demand for local applications and services catering to the young and growing middle classes of Africa. 88mph is here to fund start-ups wishing to grab a portion of this growing market. So far, they have invested over $750,000 into 23 early stage start-ups.

The combination of a large market, young population and opportunities within the mobile/web industry makes this accelerator attractive to any tech entrepreneurs who are looking to solve real challenges in Africa.

"Looking 2-5 years ahead, the US and Europe will be stagnating at best. I think the biggest opportunities for return on investment will be in Africa and other emerging markets. Our accelerator program is a great opportunity for international tech entrepreneurs and returning diaspora to come, take advantage of the insane growth here, and work on solving some really interesting problems," concludes Barnwell.

Ends.

Additional Information:

• Application deadline is midnight July 15th, 2013

• Startups can apply now on 88mph.ac

• 88mph invests up to $100k per startup

• Equity will depend on the startup company valuations, which could range from $100k to $1mil

• Altogether 8 - 15 teams will receive an investment and get accepted into the 3-month program

• The teams will be notified if they have been accepted to the program by August 1st, 2013

• Program starts on August 26^th at the 88mph Garage in Narobi, Kenya

• Startups in the program will have access to tech hubs in Cape Town, as well as to 88mph's partner tech hubs across Africa

DuPont Photovoltaic Solutions - Enabling Materials during Africa Utility Week

CAPE TOWN, South Africa, May 13, 2013 – DuPont Photovoltaic Solutions (DuPont) will be exhibiting at African Utility Week 2013, May 14 – 15 in Cape Town, South Africa, showcasing technologies designed to improve the efficiency and lifetime of solar panels and lower overall system costs.  Dr. Stephan Padlewski, marketing manager for the Europe, Middle East & Africa (EMEA) region also will be a featured speaker at the co-located Clean Power Africa Conference on Wednesday, May 15^th, emphasizing the importance of materials to help ensure long term reliability, a lower levelized cost of electricity and improved investment returns for solar energy systems.  Visitors to the show can visit DuPont in Hall 1, booth S02.
            “It is not enough to know who makes the solar panels you buy, you have to know what is in them to understand if they will deliver the required power output over their expected 25 year lifespan,” said Padlewski.  “One of the key challenges for the solar industry is how to lower overall system costs to make solar energy more competitive with other power sources, without compromising performance.  This is where materials matter - they have a major impact on system performance and return on investments solar.”
DuPont will highlight key materials, including:

• DuPont™ Solamet® photovoltaic metallization pastes, that have doubled solar cell efficiency over the last 12 years.
• DuPont™ Tedlar® polyvinyl fluoride (PVF) films that provide 30 years of proven durability and reliability for solar panels exposed to the harshest outdoor conditions.
• Lightweight photovoltaic system solutions that are lightweight and easy to install, designed to reduce balance of system costs.

DuPont Photovoltaic Solutions is the leading global supplier of specialty materials to the photovoltaic industry.  To learn more, please visit http://photovoltaics.dupont.com.
DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802.  The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment. 

The future of mining in Senegal

The mining industry of Senegal has been dormant for the greater part of the 20^th century. From the 1960s to 2000, the extraction of phosphate was the major earner of revenue in mining. In 2005, the mining sector of Senegal expanded to encompass the exploration of base metals such as iron ore. At present, Senegal boasts of the 3^rd largest heavy mineral sands deposit with a major operation which commenced December 13, 2012.

Major discoveries of gold, copper and cobalt deposits have been made in recent years. Mr Ousmane Cisse, the Senegalese Director of Mines and Geology explained that gold deposits have been discovered in Kedugu, located in the eastern part of Senegal.

Senegal is home to regional headquarters to a number of multinational corporations due to its well developed infrastructure as well as political stability. “Senegal is the jewel of West Africa, it is the most stable country in the region and have many companies with their headquarters here even thought they don’t operate out of Senegal”, Mr Cisse reiterated.

“A Social Mining Programme was set up in 2008 in conjunction with the World Bank to encourage the move from social to economically viable mining for local small scale miners. This programme has empowered miners to generate revenue by equipping them with the necessary skills to mine efficiently,” said Mr Cisse

Senegalese President, Macky Sall

The future of mining in Senegal certainly looks bright and is set to contribute significantly to GDP growth as well as socio-economic development by 2017-2020.

“The iron ore deposits in Senegal are linked to large infrastructure development projects such as the development of 400km of railroad as well as the reconstruction of 350km more. There will also be a new harbor to be constructed for the transportation minerals to exports markets. Furthermore, railways from mines across the country to the existing port of Darkar are in the pipeline”, said Mr Cisse.

In order to encourage foreign and local investment into the mining sector, the government of Senegal is in the process of setting up a mining consortium to promote the issuing of exploration licenses. The arm of government will aim to minimize bureaucracy in the acquisition of information related to the mining industry in order to create a conducive environment for investors.

The government of Senegal is also promoting the value addition of minerals within the country with the aim of creating employment and generating business for small businesses offering services to the mining industry. This will also promote growth in other economic sectors such as agriculture where minerals such as phosphate are consumed.

Where is Africa when Africa is being discussed?

When the who ’s who of mining converge, one can expect nothing less than the finest thought provoking and somewhat mind-boggling numbers to be shared. The Investing in African Mining Indaba 2013 was no exception, attracting leaders from various facets of the mining industry from all corners of the globe. Africa, the new frontier of the 21^st century, is set to become the largest supplier of precious minerals, base metals and chemical minerals in the future. If current trends continue, Africa could be supplying 50 - 75% of the world’s minerals as the developed world experiences depletion in their own mineral resources. While many perceive Africa’s embryonic stage of economic development as an obstacle, the business world sees this as an opportune time to scramble for Africa yet again. The acquisition of assets at this stage is much more cost effective for those in positions to acquire funding and finance operations across all sectors.

While foreign investment is vital for the development of the mining sector, it comes with adverse effects that may see African economies further plagued with issues of lopsided distribution of income and neo-colonialism. Mining companies which presented white papers, among them Rio Tinto, Anglo American, Lonmin and other large corporations with operations in various parts of Africa, divulged current and future plans to bring about social development. It seems mining companies are of the standpoint that enough is being done to give back to the mining communities in which they operate while a prominent executive went on to say, “ governments often ask for more than they are willing to give…”

The extent to which this statement holds water may be debatable but the vital question that remains unanswered is “To what proportion do social development projects equate to the value of mineral resources mining companies stand to gain?” Taking into account the capital intensive business that mining is, it can be understood that miners should have room to somewhat dictate the terms. However, left in the bank, would the large amounts of money yield much without assets such as the rich mines of Africa to generate profit?

The debate of sustainable development rages on, perhaps a one sided one, as there seemed to be a bias towards those who have the voices to speak at such forums as the Mining Indaba. The consensus among speakers was to engage all stakeholders in mapping the way forward for African mining, yet sadly, all stakeholders were not well represented.

It may be easy to berate tales of injustice and negate the good that mining has contributed to Africa through backward looking but if Africa is to truly benefit from the vast resources she boasts of, a number of things need to be put in place. While this is not an antidote to the problem of Africa’s poverty, it may very well be one of the many steps to making Africa at large experience more economic growth.

• Easy access to information on opportunities available in mining
• Educate local communities on the various facets of mining to encourage participation
• Develop local and regional capital markets to encourage the participation of local junior miners to venture into the industry
• Education from the grassroots level of the geography and needs of Africa in order to foster innovative thinking
• Regional trade blocks to standardise regulations for the mining sector to eliminate double standards for multinational miners
• Regional research and training institutions to encourage development of home-grown solutions for deficits in technology and skills shortages
• Mainstream media to play a more active role in dissemination information and setting agendas that encourage participation