Category Archives: DRC

Book Review – King Leopold’s Ghost

A quick reading of a fascinating book, by Adam Hochschild, about the history of the Congo between the years 1885 and 1908 when it was controlled by King Leopold II of Belgium.

Starting Out: The Berlin conference did not partition Africa, the spoils were too large at that point it took many more treaties. At the time of the conference, Europeans thought of African wealth in terms of coastlines, not the interior. Leopold got the centre of Africa while other nations focused on the coast as they did not realize how vast the Congo was.

Revenue: Etat indépendant du Congo (the Congo Free State) was a very profitable venture for Leopold thanks to ivory and rubber. The Congo was a private state of the King and got half the profits from concession companies. Records from one of them, the Anglo Belgian Indian Rubber Exploration Company, showed that ABIR spent 1.35 Francs per kilo to harvest rubber in the Congo and ship it to their headquarters in Antwerp where it sold for up to 10 Francs per kilo – and in six years to 1898 rubber prices had gone up thirty times. Transportation costs aside, harvesting wild rubber required no cultivation, no fertilizer and no capital investment, only labour, for which the concession companies brutally used the people of the Congo as slave labour.

Leopold kept the Congo profits as secret as possible so as not to stir up demands that he pay back sums owed to the Belgian government. To achieve this the Congo state did not publish a budget and it presented understated revenue reports.

Bonds: With time, Leopold was able to issue bonds that brought in as much revenue as rubber. He issued bonds worth 100 million Francs (half a billion in today’s currency). Some were for as long as 99 years and he knew paying back the principal would be someone else’s problems. He even wrote to the Pope, urging the Catholic Church to buy Congo bonds as that would promote the spread of religion.

Use of Funds The money raised with bonds was for development in the Congo but little of it was spent there. The funds went to build monuments, new palace wings, museums including at the seaside resort of Ostend, a golf course at Klemskerke, renovations to a luxurious home at Laeken etc. many of which he gave back to the country with great fanfare. There was also an incomplete World School of Colonialism in Belgium.

Negotiations Out: Once the extent of the atrocities done to the people in the Congo were exposed by authors, organizations and leaders in the UK and US, there was pressure for Leopold to sell. He argued that if Belgium did not take it soon, some powerful country might, such as France and Germany who were jealous of the rubber profits from Congo.

Negotiation began in 1906 but got bogged down as the Belgian Government could not get a full accounting of the state of finances in the Congo, and included some entities that had been incorporated in Belgium, Germany and France.

The End: Finally, it was agreed Leopold would give the Congo up to the Government of Belgium in exchange for them assuming 110 million Francs of debt. This comprised bonds that he had dispensed over the year to his friends and also included 32 million of bonds that he himself never paid back. They also agreed to pay 45 million Francs towards completing building projects of the King, with a third going to complete the one at Laeken. Leopold was also to receive 50 million as gratitude for his sacrifices made to the Congo, and the change of ownership took place in November 1908. After Leopold died, his family and the Belgian government continued to try to clean up issues to do with the Congo and a lot of records of the atrocities of the era were lost.

EDIT Extras

  • Versions of book, including kindle ones, are on Amazon.
  • The last comeprehensive book I read on the country was Michael Wrong’s In the Footstep of Mr. Kurtz about Mobutu Sese Seko and his years as President.

Idea Exchange: Anzisha, Obama, Elumelu, HEVA

EDIT The African Banker Awards that will take place during the African Development Bank Annual Meetings on 11th June in Malabo, Equatorial Guinea are now accepting entries for the awards of African Bank of the Year, African Banker of the Year, Investment Bank of the Year, Best Regional Bank in Africa, Best Retail Bank in Africa, Innovation in Banking, Infrastructure Deal of the Year, Deal of the Year (Debt), Deal of the Year (Equity), Award for Financial Inclusion, and Socially Responsible Bank of the Year. All financial institutions (banks, micro-financiers, investment banks, DFIs and others) are invited to compete. Completed entry forms should be submitted by Monday 1st of April.

Edit Africa CEO Forum Awards recognizes outstanding business leaders and this year includes a  “Gender Leader of the Year” prize and “Disrupter of the Year” award to go with other existing awards for CEO of the Year, African Champion of the Year, and International Company. Some nominees include Mohamed El Kettani – Attijariwafa bank and Tewolde Gebremariam – Ethiopian Airlines for “CEO of the year”, Banque Centrale Populaire, Ethiopian Airlines, OCP Group and Royal Air Maroc for “company of the year”, Absa Group, Access Bank, First Bank of Nigeria and Unilever for “gender leader” and Africa’s Talking, Baobab+, InTouch, Jumia and Kobo360 for the “disruptor” award. The awards will be given during the 7th Africa CEO Forum on 25 – 26 March 2019 in Kigali, Rwanda.

Africa Netpreneur Prize Initiative (ANPI) will officially open its call for applications starting from the 27th of March 2019. The ANPI is a US$10 million Prize competition for African entrepreneurs, founded by the Jack Ma Foundation, where ten finalists from across the continent will compete for US$1 million in total prize money. Deadline for applications is 30th June 2019

EDIT Class 5 of the Alibaba Global Initiatives eFounders fellowship is open to founders/co-founders of digital ventures from Botswana, Cameroon, Chad, Kenya, Rwanda, or Uganda. It is jointly organized by Alibaba Business School and UNCTAD and the deadline is March 17. Note that the fellowship does not cover air tickets and transportation/pick-up services to and from Hangzhou, China.

The Anzisha Prize is Africa’s biggest award for her youngest entrepreneurs and hands out over USD $100,000 every year in funding to entrepreneurs from all over the continent.  Details here.

EDIT  The British Council Future Leaders Connect, is a global network for emerging policy leaders seeking to connect to a long-term network of emerging leaders from around the globe, who want to change the world through policy making. To take part you must be aged 18-35 and live in one of our participating countries – Canada, Egypt, India, Indonesia, Kenya, Mexico, Morocco, Nigeria, Pakistan, Poland, Tunisia, UK and USA. Applications from Egypt and the USA are by invitation only. Applications close on Monday 6 May 2019.

EDIT Cities Alliance a global partnership supporting cities to deliver sustainable development, hosted by the United Nations United Nations Office for Projects Services (UNOPS), is offering grants up to USD 50,000 to people working on innovative and accessible solutions for improving tenure security and land and property rights in any African country. It is open to Innovators, microenterprises, social entrepreneurs, community-based organisations, and national and local NGOs working in African cities.  Deadline to apply for the Cities Alliance is  March 14, 2019.

Edit Coca-Cola Beverages Africa and PETCO have launched an innovation challenge, dubbed the Beyond Baling Innovation Challenge (BBIC), that aims to provide innovative solutions to bale post-consumer PET plastic in order to ease their transportation for recycling and manufacturing.

DRC Innovation for Financial Services 2019:  The Central Bank of Congo, in partnership with FSDA Africa and Elan DRC, has launched Innovation for Financial Services 2019, a competition for businesses and entrepreneurs aimed at promoting the development of innovative and relevant financial services and payment solutions in the DRC. The winner of each category will then have access to FSD Africa’s investment process with the possibility of raising up to US$130,000.

The Tony Elumelu Foundation, the leading African-funded and founded philanthropy committed to empowering African entrepreneurs, has announced its last call for applications into its prestigious 2019 Entrepreneurship Programme. Selected beneficiaries will join 4,470 current alumni and will receive $5,000 seed capital, access to mentors, bespoke training and numerous opportunities to impact policies at the local and global level.

The programs is a 10-year, $100 million commitment to identify, train, mentor and fund 10,000 African entrepreneurs, the Programme’s objective is to generate at least 1,000,000 new jobs and create at least $10 billion in new business revenue across Africa. Applicants can apply on TEFConnect, the largest digital networking platform for African entrepreneurs by March 1.

HEVA Fund: HEVA has launched a Growth Fund in collaboration with Agence Française de Développement (AFD), targeting mature businesses in the creative economy – fashion, apparel and accessories; live cultural events (music, shows, venues, festivals); and digital media content production and distribution. – that have been in operation for at least 5 years, with annual revenues exceeding KES 10 million. The targeted businesses are in the following creative economy value chains:  HEVA will be investing a minimum of KES 5 million and a maximum of KES 10 million in each successful enterprise. Deadline is 13th March 2019. HEVA is also receiving applications for its Cultural Heritage Fund and for a Young Women in Creative Enterprise Fund.

The Inter Region Economic Network (IREN) has launched the IREN Technologies and Innovations Platform 2019 (ITIC 2019) to promote the best mix of technology and innovation to processes along the agribusiness value chains. Innovators are expected to address the region’s challenges in value addition, energy, storage, logistics and marketing. The Lake region is known for fish, grain, vegetable, cash crop, dairy and livestock production. IREN welcomes Institutions and established companies to participate in the final ITIP 2019 Trade Fair to be held later in November 2019.

Edit MEST: Five promising start-ups from across Africa have been chosen as regional winners in MEST Africa’s annual Pan-African pitch competition, moving one step closer to winning $50,000 in equity investment, a place in the MEST Africa incubator of their choice and global mentorship to help their company scale. The winners who were chosen from over 1,000 applicants are AMPZ.TV – a ‘LinkedIn for Sports’ (Nigeria), OZÉ – a financial data insights company (Ghana), Snode – real-time cyber security (South Africa),  WayaWaya – a fintech company (Kenya) and Seekewa – an agricultural financing platform (Cote d’Ivoire).

Obama Founder Leaders Africa Applications are live for the Obama Foundation Leaders Africa Program which aims to identify a group of emerging African leaders from all sectors—government, civil society, and entrepreneurs—who have demonstrated a commitment to advancing the common good. Apply by February 28, 2019.

Edit  Pivot East: East Africa’s premier entrepreneurs’ program is back for its 6th year after a two year break with a call for applications opening on 11th March 2019 and the startups pitching competition and conference event happening on 27th June 2019. Applicants can be in software and hardware in five categories of finance, enterprise, entertainment, social Impact and utilities.

Sanofi, the global pharmaceutical company, extended the registration deadline for entries to this year’s edition of the VivaTech innovation conference. 17 Kenyan start-ups have registered so far and are expected to participate in the conference.

Vivo Energy – London IPO prospectus peek

Last week Vivo Energy had the largest African listing at the London Stock Exchange since 2005 and the largest London IPO so far in 2018. Vivo  raised £548 million by selling 27.7% of the company at 165 pence per share, which valued Vivo at £1.98 billion.

The company which operates fuel businesses in 15 Africa countries, will have a secondary listing in Johannesburg while it will report primarily to the London exchange.

A peek at the 288-page prospectus

Performance: In 2017 revenue increased by 16% to $6.6 billion and earnings before taxes were $210 million, a 21% increase. Revenue was 66% from retail (Shell fuel stations, convenience stores, restaurants) and 29% from commercial business (large customers, LPG), with the rest from lubricants business.

Vivo has Subsidiaries: in Madagascar, Tunisia, Senegal, Burkina Faso, Cote d’Ivoire, Guinea, Uganda, Kenya Ghana, Mali Mauritius, Morocco, Cape Verde) and a 50% investment in Shell & Vitol Lubricants. All these companies are registered in Netherlands or Mauritius. Prices are regulated in 12 of the 15 countries that they operate in, including Kenya.

Engen: The company is in the process of buying Engen for $399 million, and this will comprise a payment of $121 million in cash and 123 million new shares of Vivo, after which it is expected that Engen will own 9.3% of the company. The Engen deal which is expected to be completed later in 2018, adds 300 stations and brings on 9 new countries to the group.

Johannesburg: Another 10% of Vivo is being availed to get the company listed in South Africa. The listing at Johannesburg will cost $16.3 million which includes payments for legal advice $4M (Freshfields Bruckhaus Deringer), $2.6M to the reporting auditors & accountants (PWC), other legal advisor fees of $1.5M and $142,000 to Bowman, JSE fees for listing and document inspection of $180,000, and $7.1 million in other expenses in South Africa.

Taxes: Sale of shares in the UK will attract a stamp tax duty of 0.5% of the offer price, while a tax of 0.25% is payable on every sale in South Africa.

Managers & Employees: There is an extensive listing in the prospectus on Vivo’s key managers and directors, their roles, compensation and other benefits. For directors, it lists current and past directorships e.g. Temitope Lawani, the co-founder and Managing Partner of Helios Investment Partners, has 47 current directorships. A top Kenyan official is David Mureithi, the Executive Vice President for Retail, Marketing, and East & Southern Africa.

Vivo has a long-term incentive plan for executives and senior directors and also an IPO share plan for employees. They have a total of 2,349 employees, with 240 in Kenya, which is third in employ size behind Morocco (579) and Tunisia (270).

In Kenya: they had sales of $1.3 billion in 2017 up from $1 billion in 2016. They have 189 stations in the country (56% of which are in Nairobi) and are the number one in the country (due to the strong Shell brand) with a 27% market share. They also supply jet fuel at four airports and sell lubricants. And while employees of Engen have just filed objections to the deal in Kenya, going by past transactions, Kenya’s Competition Authority will approve a deal as long as there is no severe loss of jobs.

Shareholders: Prior to the listing were Vitol Africa B.V. 41.6%, VIP Africa II B.V. 13.3%, (Helios) HIP Oil B.V. 2.4% and HIP Oil 2 B.V. 41.8%. After the deal, with a full subscription, it is expected that Vitol goes to 28.9%, VIP to 9.2% and HIP 2 to 30%.

Litigation: A government ministry in DRC has tried to put a hold on the sale of the Engen subsidiary in DRC (in which the government owns 40%), but Vivo believe the case has no basis and are contenting this.

Guide to Kinshasa

A guest post by @Cathkemi on a visit to Kinshasa, the capital city of the Democratic Republic of the Congo (DRC).

Getting There: I used Kenya Airways for Entebbe – Nairobi – Kinshasa; The cost was about $900-1,000 but booked at the last minute.

On arrival: Clearing was very easy at the new efficient airport. But leaving is a hassle. You have to pay $55 worth of taxes to leave, and there are endless checks.

Getting around: Public minibus taxis are popular in the city centre. Luckily I got around with the office car, rides from colleagues, and taxis. Walking around is generally secure depending on where you are. But at night need to be extra careful. You can’t just stroll around, and you need to be extra careful about which taxis you get into.

Staying in touch: I used my Ugandan line and it was very expensive. Both local and international calls are all expensive.

Where to stay: Not sure, as I haven’t stayed in a hotel. Most tourists stay in the up class neighbourhood of Gombe. Or near the UN mission HQ. It has nice restaurants and bars etc. though is expensive. Electricity is not very reliable; our office is in an upper-class neighbourhood but power can cut out several times a week. You need a generator there.

Out & About: The main dishes are fufu with meat, fish, vegetables etc. It’s basic but can be tasty depending on who makes it. Beers are easy to get. Not sure how much but should be around $3-5 and Tembo is the most popular one.

You need some level of French to get around. Not a lot of people speak English. Politics are a major discussion point as the  DRC is in a political crisis, with the President not stepping down after his two terms in office running out.

Shopping & Sightseeing: The nightlife would be the main sightseeing. Lol. Also going to restaurants, hotels etc. by the Congo River. Most people will tell you Goma in the East is the main tourist destination, and many people buy African print material as gifts to take back.

Dollars are the easiest currency to use. They are accepted everywhere – even for phone credit.

Biggest surprise in the country: Houses are very small – housing is cramped my guess is because the city is overcrowded. There is not a lot of outdoor space.

But in richer neighbourhoods, the opulence is astounding. Also, national buildings are extremely big, as are their avenues. Bigger than anything else I’ve seen on the continent. My friends tell me it’s because DRC is a big country so it’s translated into national buildings – which makes sense, and this gives you an idea of how big the country is even if you don’t travel out of Kinshasa.

Also, see a guide to Bukavu, which is on the other end of the vast DRC. 

Kenol Kobil 2016 AGM

KenolKobil had its annual shareholders meeting on May 12, at the Hilton Hotel in Nairobi. The board chairman spoke of the company’s performance in the three years since they had lost Kshs 6.2 billion. They had thereafter embarked on a turnaround that involved reducing costs, divesting from non-performing territories, focusing on profitable business rather than growing their market share, paying down debt, and corporate governance moves (separating the role of  Chairman & CEO role) .

Highlights

Regional Business: 

  • Tanzania: The company would up their short foray in Tanzania where they were losing $2 million a year. They had a depot that was part of their venture was an expensive lease, and while fuel prices in Tanzania are set by the government, many companies sell below that price as they don’t pay taxes. The directors said that Kenol was a responsible company that could not and decided to close shop.
  • DRC: They invested here, but did not ship product there as they were not happy. with the business climate and decided to sell out.
  • Burundi is doing well despite the political turmoil there.

The board faces shareholders at the 2016 KenolKobil AGM

Dividends: One shareholder said the dividend was too low, but the chairman said they have a consistent policy of paying 25% of net  profit as dividend, while the Group MD (GMD) said they still had to pay down a lot of debt.  One long-term shareholder told the meeting, that it was better for the company to be conservative with dividends, rather than aggressive, like other companies, and come back in a  few years to ask shareholders to invest more money in a right issues

Property: They have decided not to put up an office building in Haile Selassie street in downtown Nairobi for now as the office property market is saturated.

Goodies: Lunch box (which Hilton guards would not allow to be eaten on site), and tote bag. Some shareholders pleaded for the company to provide them with caps and umbrellas to promote the brand.

Odd Point: One shareholder asked why the AGM had not started with  prayers. The Chairman said it would not be productive, as they would have to have prayers for Christian, Muslim, Jewish, and traditional African religions  to be fair to all shareholders present.