The annual meetings of the African Development Bank Group (AfDB) are now scheduled to take place in Accra in May 2022. Ghana’s capital has previously been expected to host the meetings last year in a physical setting, but with covid-19 still disrupting continental travel, the meetings were held virtually, for the second year in a row.
While these are is the first-in-person annual meetings since Malabo in 2019, they will be held in a hybrid format with governors representing 54 African countries and 27 other nations who oversee the African Development Bank and the African Development Fund (ADF) meeting at the Accra International Conference Centre while other participants will join in virtually. Attendees will also celebrate the 50th anniversary of the ADF.
The 2022 annual meetings will be hosted by the outgoing Chairperson of the Board of Governors, Ken Ofori-Atta, Ghana’s Minister for Finance and the theme of the annual meetings is Achieving Climate Resilience and a Just Energy Transition for Africa. This is at a time when in South Africa, homes, highways, bridges have been damaged or swept away by floods and nearly 400 have died in what President Cyril Ramaphosa said was “a disaster of catastrophic proportions” while in Eastern Africa, the Intergovernmental Authority on Development (IGAD) has warned that rains will fail for the fourth consecutive year.
In terms of climate finance, the AfDB will support transitions to non-coal and non-nuclear projects including hydro-generation, geothermal, gas, wind, and solar – and countries will be invited to put forward bankable projects for financing to be arranged. However, with the continent still energy-starved, countries that want to pursue coal as part of their energy-mix plans, can do so but with financing from other sources.
The meetings will have knowledge events to promote discussion of policy and development of the continent. Some will be on building digital economies, green jobs for youth & women in post-covid Africa and supporting resilience in agri-food systems with a focus on rural economies.
Managers at Kenya’s largest stockbroker, EFG Hermes, held a media briefing on the state of investing in Kenya in 2022. This is at a time that the Democratic Republic of Congo is about to join the East African Community, potentially doubling its market size from over 100 million to 200 million and making the region more attractive to investors due to the regional transports links.
EFG Hermes Head of Frontier Market Research, Kato Mukuru said Nairobi is now the capital of East Africa and that local banks have become regional champions such as Equity which is now the largest bank in the DRC. The next step should be a common currency in East Africa but he lamented that different African governments were unnecessarily chasing digital currency (CBDC) projects.
EFG Hermes Kenya which has a 30% share of Nairobi Securities Exchange (NSE) trading activity, largely from institutional investors has now invested in wooing retail investors through an app they launched last August. The NSE has had shrinking liquidity, and the value of stock trades that used to be $8-10 million per day, is now at $2-3 million per day – and if liquidity can be pushed back up, other new products on NSE such as derivatives and day-trading will become more viable.
Overall EFG researchers think Kenya is on right track despite concerns about its debt, inflation and currency, the agriculture sector should keep the Kenyan shilling stable and compensate for increased energy prices – and they don’t expect currency depreciations movements like seen in Egypt and Pakistan.
The government needs to have a privatization agenda to boost the NSE. Safaricom was listed at the end of post-election violence in 2008 when Kenya was at its lowest and that produced one of the most valuable companies in Sub-Saharan Africa.
East Africa needs to create more formal jobs. Kenya has 5M formal jobs for a population of 50M while Vietnam has almost 50% formal employment. It may take the government to initiate a more planned economy system that targets creating real formal employment that goes beyond agriculture as it can’t rely on informal jobs forever.
Tanzania’s late President Magufuli has shown that a country can transform within one administration.
The way out of food inflation caused by the Russian war in Ukraine is by sourcing foods from other parts of East Africa e.g. start to eat matoke. The region is very resilient and will not be shocked as much as Egypt which is dependent on wheat imports from those states. The East African region is largely self-sufficient in food supply and Kenya, which may have droughts, could import other foods from Tanzania, Uganda or Rwanda.
DRC is very attractive in terms of its resources and the EAC would be further boosted if Ethiopia also joined. Kenya has strong links through the Nairobi-Addis highway and LAPSSET projects in which Ethiopia has been invited to participate.
With its balance sheet, Safaricom has the capacity to take on debt for their Ethiopia venture. They borrowed $400 million locally for the license and they can syndicate that, or draw on vendors or DFI’s, to fund more while continuing to pay dividends to shareholders.
A guest post from the first Russia-Africa forum held from October 2019, in Sochi.
The forum was held in the Olympics stadium in Sochi, Russia. If you are coming from Moscow, it takes a three-hour flight to reach Sochi, a beautiful coastal city located on the Black Sea. It has warm weather during the day and is slightly cool in the evening. This is the city where the Russian Presidents receive other presidents. Mercedes Benz is a well-loved brand in Sochi.
Sochi Stadium was estimated to have cost $50 billion; this was the world’s most expensive Olympics. The stadium was home, for two days for the Russians and the Africans who were attending the first-ever Russia – Africa forum and leaders from more than forty African countries were in attendance.
Besides the beautiful scenery of Sochi, the stadium had a few interesting sights, organized for the forum, including a display of army helicopters and AK47 rifles.
New businesses opportunities and new political dialogues happened.
In 2018, trade between Russia and Africa was valued at $20.4 billion in 2018. Also, there were 15,500 Africans registered in Russian universities, with the Russian government subsidizing half of their education costs through scholarships, according to the Botho Group.
During the forum, Russia’s President Vladimir Putin and his administration signed $12.5 billion worth of memorandums with more than 40 African governments for mining, oil and exploitation, nuclear energy, and military cooperation. Among these deals for data storage & software with the Democratic Republic of Congo and to build two 12,000 MW nuclear reactors in Ethiopia.
Nuclear energy received high attention and the State Atomic Energy Corporation, disclosed that it had signed memorandums and agreements with 18 African countries including Ghana, Kenya, Rwanda, Ethiopia and Zambia.
“Rosatom today is an indisputable leader in nuclear technology. We are building 36 power-generating units in 12 countries around the world. During the past 14 years we have commissioned 15 new generating units, and this year we are putting the first floating power plant into operation,” Evgeny Pakermanov, President, Rosatom State Atomic Energy Corporation. “Africa is a priority region for us, and we have projects in over 20 countries. We see an incredible demand and incredible interest in nuclear energy from the African countries.”
Focusing on military cooperation, Nigeria purchased 12 helicopters at the summit while several other African countries including the Central African Republic, Namibia, Madagascar and Uganda. Egypt, Gabon, and Rwanda declared their interest in military equipment such as tanks, planes, helicopters, rifles, and military advisers, marketing and inviting Russia’s investment in their countries.
“I encourage our Russian partners to set their sights on Gabon. Gabon is a very stable country,” Jean-Fidele Otandault, Minister of Investment Promotion, Public and Private Partnerships, added that “We have an entire ministry dedicated to private-public partnerships for projects that are valued over 200 billion and I would like to invite Russian investors to join.”
Francis Gatare, Chief Executive Officer, Rwanda Mines, Petroleum and Gas Board said “Right now, we are looking for international investors,”
Besides the wonderful talks and agreements, it is important to remember that Africa does have challenges that hinder trade between the two regions. Lack of information has been a key impediment to trade as both regions are not informed about the opportunities and how to capitalize on these gaps for financial benefits. It is crucial to address the lack of information to enable new and deeper forms of cooperation.
What are the stumbling blocks to trade?
Investing in Africa has always been considered risky due to factors such as political instability, unfavourable business climate, rigid tax policies and the infamous corruption. On the other hand, some investors want success in Africa without gaining market insights or visiting these African countries.
“Some of the main challenges that our companies are facing is lack of information, lack of experience, lack of confidence to enter new markets, including African and Middle Eastern markets,” Andrey Slepnev, Chief Executive Officer, Russian Export Center.
“Lack of information is one of the major problems in Africa. It is not there, and it is really hard to extract consistently,” said Mikhail Orlov, Partner, Head of Tax and Legal, KPMG Russia; Chairman of the Expert Council of the Committee for Budget and Taxes of the State Duma of the Federal Assembly of the Russian Federation.
Lack of information has often led to several wrong assumptions by investors such as that the whole of Nigeria is in conflict due to the famous Boko Haram conflict – yet the regions of trade (Lagos, Abuja, Enugu, etc.) are very far from the conflict zone. There is also the use of non-African business plans across Africa which often fail as all African countries have very different characteristics.
“Africa is still considered to be a very risky place. This needs to change. Africa must be defined as a place of possibility and business. We must discuss and diminish the risks and guarantee comfort for our investors,” Monica Juma, Cabinet Secretary, Ministry of Foreign Affairs and International Trade of the Republic of Kenya. “To provide the right environment for our investors we also need Public-Private Partnerships (PPPs) which are very attractive for a country’s economic development and from the fiscal point of view. This is our focus for enhancing social, economic and political trade between Kenya and Russia.”
For the continent to progress, infrastructure needs to be implemented to drive economic growth. The continent needs to resolve the lack of and poor infrastructure to attain the required goals such as education and health.
“Africa needs $50 billion in sectors such as energy, transport, and natural resources so that our sponsors can strive in business, implementing infrastructure projects,” Samaila Zubairu, President, Chief Executive Officer, Africa Finance Corporation (AFC).
Foreign businesses underestimate country specifics in Africa.
“I would like to point out a few common mistakes our businessmen make when they come to work in Africa. Lack of understanding local mentalities leads to the gravest of errors,” Galina Sidorova, Professor, Moscow State Linguistic University. “Another important aspect is that our businessmen are preoccupied exclusively with their profit. It would be nice to see them also thinking about the interests of African people.”
What solutions are African nations implementing?
Gabon stated its progress in creating favourable investment conditions by diversifying the economy since 2009 to attract foreign investments.
“One of the key sources that allowed us to build an oil refinery was project financing that attracted $4.4 billion for us. Today, we produce petrol that complies with European regulations. How did we get this kind of money? Through a regime that attracts international financial institutions and welcomes them into the country,” Ahmed Heikal, Founder, Chairman of the Executive Board, Qalaa Holdings, Egypt.
“In Ghana, it is far easier for the business sector to attract foreign investment than for the state. Why is that? Because the business sector is far more efficient, primarily in human resources and human capital,” Frank Adu Jr, Chief Executive Officer, Managing Director, CalBank.
“Stability is extremely important, it is a key aspect of developing investment and attracting the capital,” Bob van Dijk, Group Chief Executive Officer, Naspers, South Africa.
“We need to work on consolidating and coordinating the efforts on promoting Russian-African cooperation with all of the stakeholders. Expanding cooperation with our African partners not only via bilateral cooperation but using the multilateral institutional opportunities as well, including Russian business programmes,” Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP). “Stimulating the development of multilayer cooperation mechanisms to foster business cooperation by increasing the resource potential of Russian companies encourage involving small and medium-sized enterprises, as well as Russian and African regions via project financing and project groups.”
“It is a huge mistake to try to get as much profit as soon as possible and ignore the long-term investments. It is a huge loss. Thirdly, we do not support small and medium-sized businesses in Africa. They cannot exist there without state support. So, let us create a few support centres for business, for instance, North, South, West, and East. It would be extremely efficient in promoting our investments,” Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences, Corresponding Member, Russian Academy of Sciences.
Africa is attractive for investment and trade
Both Russia and Africa are well endowed with minerals, agriculture, human resources, and other sectors that will benefit if deals are well-structured and trade is enhanced.
“What do we see? Incredible opportunities – there are 55 countries and each one needs to be approached individually. Uralkali, as a business, is ready for that,” Dmitry Osipov, CEO Uralkali; Chairman, Russian-Nigerian Business Council.
“A promising area of cooperation involves attracting big Russian investors in industries strategic for many African countries, such as agriculture, mining or processing raw material,” Andrey Kostin, President and Chairman of the Management Board, VTB Bank.
“Africa is a large consumer of agricultural produce. Last year, the volume of our exports exceeded $4.6 billion,” Sergey Yushin, Head of the Executive Committee, National Meat Association.
“Rating agencies assess countries based on further investment in them, but our actual resources are much higher than the risks we are usually associated with. Our continent can only be perceived as a whole. $1 trillion is expected to be invested in infrastructure parts so that we could cooperate under our free trade agreement,” Paulo Gomes, Co-Founder, New African Capital Partners; Chairman, Paulo Gomes and Partners.
Russian companies are successful in Africa
“We have been working in Africa for over 10 years .. we have invested close to USD 2 billion in the African countries,” Evgeny Tulubenskiy, Chief Legal Officer, Corporate and Regulatory Affairs, Member of the Board of Directors, Nordgold.
The Institute of Africa of the Russian Academy of Sciences has stated that during the past 10 years Russian investment into Africa grew by 185% and reached USD 17 billion. This shows there is much more work for us.
“Having the large group of Africans was impressive because it demonstrated a deep interest in our desire to keep engaging with the greater global community to identify areas of continued cooperation. It was also interesting that the forum had a strong mix of private and public sector experts thus creating real opportunities for trade and other commerce activity,” Isaac Forkuo, CEO, Botho Consulting Group, Kenya. “This event had more action than talk.
There appeared to be a desire to create linkages among businesses, especially SMEs. African governments realize that leveraging the relationship with Russia through country-specific trade. From the Russian side, this forum provided an opportunity to re-engage with Africa also from a trade angle as African countries provide a market for Russian goods and services while also providing a market for diversification of Russian State and private investments.”
Let us wait and see how many of the signed memorandums will be implemented between Russia and Africa.
Next week at Abidjan, Cote d’Ivoire sees the return of the African Investment Forum (AIF) that is supported by the African Development Bank Group (AfDB).
This years’ summit, from December 1 to 3, will be a hybrid mix of physical and virtual sessions and is expected to feature the Presidents of Rwanda, Benin, Mozambique and Togo alongside other continental and international business leaders.
The 2020 annual meetings of the AfDB set out a focus for mobilizing financing towards infrastructure, regional trade and health care and those have carried on into the 2021 AIF whose theme is “Accelerating Transformative Investments in Africa.” It targets five priority investment sectors of agriculture & agro-processing, energy & climate change, health, ICT & Telecoms and industrialization & trade.
At the inaugural AIF in 2018 in South Africa, deals in demand were energy investments for Southern Africa, while East, Central, North and West Africa all had infrastructure top their deal discussions. Eventually, the forum secured $38 billion of investments for 49 projects across the continent.
At the next AIF in 2019, 2,200 participants from 101 countries discussed 57 deals worth $67 billion and eventually, investments were secured for 52 deals worth $40 billion. The 2019 forum also saw 16 SME’s and startups get to pitch in different boardrooms, now a staple of the AIF, alongside industry giants raising millions of dollars for larger projects.
There was no AIF last year, because of Covid-19, and the spotlight that should have been on deals to accelerate African Continental Free Trade Agreement (AfCFTA), has now taken on an added element of helping country economies rebound from Covid-19. The African Development Bank has provided support to different countries through a COVID-19 Rapid Response Facility. Also at the 2021 bank annual meetings, AfDB President Akinwumi Adesina announced that the G7 heads of state had heeded a call that $100 billion of the special drawing rights (SDRs) being issued by the IMF, be provided to support African countries as they tackle debt challenges while responding to Covid-19.
This year priority deals are being discussed that revolve around recovering from Covid-19 and include hospital projects in Angola, Cameroon and Nigeria. Another is to secure $45 million for a vaccine production facility in Eastern Africa that will manufacture three vaccines for the WHO, including one for Covid-19. There are also cotton industry projects for Burkina Faso and Mozambique as Covid-19 showed the need for self-sufficiency and a need to promote local manufacturing capabilities.
Highlights of the 2018 AIF: Afreximbank bank launched a project preparation facility, Mara launched an Android phone, there was an African creative industry showcase and social boardroom sessions for deals in Ghana and Zambia.
Highlights of the 2019 AIF: There were 6 concurrent boardroom sessions, a $600 million investment for the Ghana Cocoa Board, a financing deal for a road-rail bridge over the Congo River to link Kinshasa and Brazzaville, a forum on unclogging digital investments, and the launch of the (4th) Visa Openness Index report. It also featured sessions on opening the bank vault for women entrepreneurs, agro-processing industrial zones, climate change, an infrastructure financing trends report was launched, and a Lusophone compact for Portuguese-speaking African countries that reviewed six investment deals worth $702 million.
2021 AIF Format: Because of Covid-19 restrictions, the AIF will have 250 physical participants in Abidjan while over 2,000 others will connect virtually to participate in the boardrooms, virtual marketplaces, and virtual B2B meetings with investors and sponsors. In addition to the plenary sessions, there will be other parallel invite-only sessions that will feature heads of state, policymakers and industry leaders, some of which will be aligned for American and Asian timezones.
Anyone interested can register here for this year’s event, while companies and individuals are encouraged to join the AIF platform. There they will access financial and investment opportunities as they network with communities of other professionals.
EDIT: November 29. The Africa Investment Forum event was postponed at the last minute after a new Covid-19 variant made it difficult for delegations to travel to Abidjan and the organizers made a decision to put prioritize the health of participants. AIF teams will continue to have discussions with partners towards investment decisions until they can reconvene at a later date.
EDIT: March 2022:
The three day-virtual boardrooms of the Africa Investment Forum resulted in $32.8 billion of commitments to invest in bankable projects. These include:
$15.6 billion for the Lagos – Abidjan (via Accra, Lomé and Cotonou) corridor project led by ECOWAS, with the AfDB proving $40 million for feasibility studies towards the 1,081 kilometer highway.
$50 million – Makbel Dairy Farm in Angola that will turn the country into a net exporter of milk products.
$67 million – Mobihealth Telemedicine initiative.
$232 million – for a liquefied natural gas project in Guinea.
$3.3 billion East Africa railway corridor Tanzania-Burundi-DRC, with a separate line between Rwanda to Tanzania.
When it comes to support, from PayPal’s perspective, your value is worthless. PayPal is a terrible company to deal with; they will withhold money for quasi-fraudulent reasons, that have long been suspected to be pools that are linked to high interest-earning fixed deposit accounts or something along that line. When they withhold your money, they are actually playing monopoly with your money, and the reasons are always obscure. Your account will be shut down for even more obscure reasons.
PayPal never points to a specific issue, and since they are a near-monopoly, they are above the law, and you, in a third-world country, can only wait and pray. PayPal can act with impunity and there are no mechanisms for third-world individuals to hold PayPal accountable, and they know this, so it’s not implausible for them to take advantage. They do.
Stripe on the other hand is the king of double standards. When it comes to engagements with Westerners, Stripe is your friend through and through, but the minute you, a third-world resident, control a USA entity, the double standards come out. You can’t do certain things that other Western companies are free to do, and if you have a chargeback as a foreign-held entity, Stripe will hold and eventually shut down your account because it is deemed as high risk, even though you or your company might be a target of fraud.
Again, Stripe takes advantage of the lack of accountability. If you acquire Stripe through a 3rd party like Shopify or Woocommerce, then you will NEVER get your account approved, regardless of however clean and legitimate your paperwork is. They will always say their risk department is assessing your paperwork, and if that goes past 3 months, you will almost certainly give up. They want that. However, the double standard is worse, since Stripe is financing Westerners to come build fintech in Africa (e.g. Wave).
As for Flutterwave, it is a better experience. You are treated like an actual human being. You talk to people who speak your language, understand your problems, help you solve them and treat you like an actual human being. You have an actual telephone number you can use and talk to someone who will actually be concerned and help you overcome your hurdles. Flutterwave makes you feel like you belong, and it might be business at the end of the day, but it’s how it’s supposed to be done. With empathy!
Comment by a company founder who moved to Flutterwave.