Category Archives: ALN

Can Kenya avoid the Resource Curse?

This week, the big announcement was that Kenya has found oil – but is that good news?

From the Archives – March 2006 I am hoping that we don’t find oil fields/reserves in Kenya and not just because we are unlikely to escape the much-written-about oil curse that has plagued so many countries. We simply don’t have the governance systems in place to manage oil revenues which the Economist referred to as oil money flows from big oil to the big man and Kenya will become the latest example to confirm that resource-rich countries grow more slowly than resource-poor ones.

Kenya’s oil is likely to be found in remote parts of Coast, North Eastern, Eastern or Rift Valley provinces and these are areas that have not received much development in 43 years of independence. Discovery of oil is likely to be met by hostility from these residents (who are often armed to defend themselves from bandits and raiders) and who will have the view that “you” (other Kenyans/central government/Nairobians) don’t consider us to be Kenyans, you have never cared about us and now you’re only taking an interest in us because we have oil – so F__ you, we want our own country and we’ll cut our own oil deals, maybe even with Sudan, Ethiopia or Somalia.”

Also, the discovery of oil will not help other vibrant & diverse industries, especially agriculture-based, which will be hurt by the distorted foreign currency positions that oil will create. Also, oil & mineral industries never create as many jobs for locals as they promise – and agriculture, which supports a majority of Kenyan households & families will suffer leading to increased poverty.

There Hope: So how can Kenya escape the resource curse? At an African Leadership Network (ALN) Forum in Addis Ababa in October 2011, Oxford Economist Prof. Paul Collier, outlined steps for countries to escape the resource curse (which should begin even before oil/minerals are found)

5 Steps for Handling Resources
1. In terms of discovery of natural assets, geological information has to be made public before government’s call in the private companies (..Kenyan insiders are dealing away oil drilling leases.)
2. Have a good taxation system to benefit the society – (Africa’s resource history is one of missed revenue, and misaligned contracts so it is important to get the right contracts)
3. Involve & manage the local community (avoid a Niger Delta problem)
4. A substantial portion of income should be saved rather than consumed
5. Save in what? Africa needs sovereign development funds, not sovereign wealth funds. However Africa does not have much of this capability, and there is a need to build capacity, i.e. invest in investing to manage the resource depletion and erratic commodity prices.

At the same ALN forum, Dr. Donald Kaberuka, President of the African Development Bank (ADB) spoke about helping countries avoid the oil curse saying ..Diamond-rich Botswana has shown that it is possible to do this. Oil exporting countries have made mistakes but recently when an African country (he did not name) discovered oil, the ADB went to see the President and offered their advice as the ADB is helping countries negotiate good contracts through a legal support facility, and avoid signing bad deals which are difficult to wiggle out of without damaging investor confidence.

Idea Exchange: TED Global, Richard Branson, Student Opportunities

The 2011 Africa Awards ceremony take place in Nairobi on December 8 and reward entreprenual excellence & efforts. This year the odds are strong that the winners of the total $400,000 of funding prizes won’t be Kenyans as the nominees shortlisted are soleRebels, – Ethiopia, Unique Solutions – Gambia, Expand Technology – Mauritius, Chocolate City Group , FASMicro, and Pepperoni Foods (3 from Nigeria) Cellular Systems International – Senegal, Victoria Seeds – Uganda, Securico – Zimbabwe and InvesteQ – Kenya.

The Awards are held in conjunction with Convergence Africa also in Nairobi on the same day and which features Richard Branson among other speakers and leaders.

Africa Leadership Academy: The world famous school in South Africa is taking on the next crop of students leaders. Application details are online and the Deadline is 12 December 2011.

Africa Enterprise Challenge Fund: Has a new round of financing for renewable energy and climate adaptation technologies. It is aimed at for-profit companies with eligible projects in the East Africa region and Funding will be in the form of grants and repayable grants of between US$ 250,000 to US$ 1.5 million. Details here.

Google Photography Prize: Google + is seeking photographs submitted in ten categories (main ly by university students). More details.

NetFund: Identify individuals, educational or community institutions with project, initiatives or campaigns that contributes towards environmental management and are worthy of an award. Details here and deadline is January 30 2012.

Reuters Business News Workshop Fellowships: This is a five-day course in London next year, that is open to as journalists or regular contributors to print, broadcast or online media organizations. D/L November 25 (Found at Yipe)

TEDGlobal 2012 takes place in Edinburgh, Scotland in June 2012 with 50-plus speakers and performers from all over the world. See registration details.

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Australia Awards: The Government of Australia has scholarships to Kenyans in priority development sectors. They include masters levels (D/L Feb 28) and short term professional development (D/L 16 December). More details here.

Chevening Scholarships: The Chevening Scholarship Programme for Kenya 2012-13 is now open for applications. It facilitates post graduate study program in the UK available for up to 12 months or for short courses or research. details here and the deadline is Jan. 23, 2012.

CNBC Africa: Top Trader is a new reality television show that will in 2012 follow the trials and tribulations of Africa’s top amateur traders> The competition is now open to public; there are more details on CNBC Top Trader and the D/L is Jan 21.

FiveByTwenty program of the Coca Cola company to create five million women entrepreneurs in the coca cola ecosystem by 2020. The pilot had 100 young women trained in Nairobi in financial & distribution training and become sales partners and more are invited to apply to coca cola 5 BY 20 technoserve as producers, suppliers, farmers (project nurture) etc. if they meet some criteria.

Google Africa Internships: This is a continuation of their summer internship program, now open for new applicants, and more Google Internship details can be found at the Africa blog.

Pasha: Latest round of funding from the Kenya ICT Board. Details here and D/L is Dec 3.

CNNMultiChoice African Journalist 2012 Awards. Details here and D/L is Jan 26.

ALN 2011 Day 3

The final day of ALN, brought calls to embrace politics, more lessons in banking & political leadership, an update on the status of the network, and appearances by 50Cent and African royal(think ‘Coming to America’)!

(Excerpts, not the full-day proceedings)

Needs and Leads (N&L): This was a mid-morning session for attendees to find tangible ways to collaborate with other ALN members. Each speaker had three minutes to talk about their work and their needs, without using slides or PowerPoint to make a connection. They included

  • Mike of Fenix International said that they (in partnership with MTN) had developed a solar power set in Uganda, which small businesses could use to charge other batteries and devices for members in a community. It retails for ~$150 and can break-even for the owner/investor in about 6 months. They hope to scale up and introduce the device to millions of others in Rwanda and South Africa and are looking for entrepreneurs to distribute the devices.
  • The second N&L speaker was from a private equity business in Johannesburg that has a team of over 400 programmers working on customer development & billing application software for the private sector, telecommunications companies, large SA banks, and the Government (SA’s revenue agency). They are seeking to grow in Kenya by finding leads into Kenyan businesses in software development, telecommunications and the government.
  • Lindsay of Sanergy talked about the slum residents in Nairobi who don’t have access to sanitation. So her company builds toilets for them, collects sewage, and converts this to fertilizer and energy – making money as an independent power and fertilizer producer. There is great potential in this and she is seeking fertilizer distributors, Kenya government officials (in sanitation & standards) and micro-finance banks and institutions.
  • Laila runs a property firm in Nairobi and is the Chairlady of the Kenya Property Developers Association, and focuses on urban development in cities. They have mobilized $25 million to develop middle-class properties, and with an IRR of 30% where they have exited – and they are seeking to mobilize $100 million as risk capital and mezzanine finance to develop low costs housing, budget hotels in East Africa, as well as senior private equity professionals, to become a partners & board members.
  • Arjuna from the Omidyar Network, lives in Silicon Valley and, is looking for people who want to change lives in Africa to bring their ideas forward.
  • Ann is working to establish meaningful social games for change and reach young people to work on projects around wealth and prosperity, and she is looking for experienced Africans in games design, and social innovation projects as well as partners, investors, and interns.
  • Andy from USAID spoke about the overlap of needs and mutual interest between Africa and America and are they are seeking young people to engage with, and help them craft meaningful, impactful programs for Africa and be sounding boards of feedback.
  • Joseph from Congo grew up in a refugee camp in Uganda with limited schooling & learning resources, and is now a graduate of the ALA. He, and other refugees, co-founded a youth organization – Coburwas which looks at the common needs of refugees which are common across and now wants to expand the education program and help kids finish school. By 2010 85 students, and 15 were completing A level, including 5 girls – the first ever to complete school from the camps. He needs mentors to advise on foundation decisions, and need $13,000 of funds to take 100 kids to high school for the next one. Within 10 minutes, another attendee (Colin Gayle of Bounce Back Media) got on the stage and told Joseph, that a benefactor (Curtis Jackson, a.k.a 50 Cent) had committed to funding the entire $13,000.
  • Debbie of Aecom/Stanford Business School focuses on entrepreneurship and innovation in emerging markets, especially at the bottom of the pyramid, helping people to deal with poverty issues that can scale. They are seeking entrepreneurs (in Africa, Asia, and Latin America) who would want assistance from Stanford and are willing to do case studies for research
  • Swaady from Cote d’Ivoire has set up a luxury tea company and is seeking customers, funders, and partners.
  • Isis from inMobi spoke of the scalable potential for mobile advertising to the 500-600 million phone users in Africa as that will be the main way people access the net. She is seeking talented women to work at the company.
  • Nuradin a former Somali refugee and now Dutch citizen is the MD of a company that distributes Massey Ferguson tractors in Africa. They plan to set up agriculture learning centers in Africa, on 100-hectare model farms to teach farmers how to use tractors and implements and he is looking for partner dealers in Africa.
  • Monica has set up an agro-processing company working on alternative foods (non-Maize) for the larger populations and is seeking people to assist in branding, supply chain & distribution strategies.
  • Nena of Blackbox noted that there is little research done on young women consumers in Nigeria, no one knows them, or how to market to them. So they want to do a study for women 0-18 what are they doing, needs, gaps in services, and data from this will be used for brands to do product development and governments to provide better service. They are seeking funding for the study, people interested in buying the study, and others who may wish to run similar studies in their own countries.
  • Oliver from LGT Capital invests $200,000 – $1 million in expansion business models in education, health, resource management. They have invested in Bridge International an institution that is growing for-profit schools (now 38) in low-cost areas in Kenya at a student cost of $4 per month. They are primary investors but are looking for capital from Africa to invest, entrepreneurs with ventures, and partners who can bring expertise to the group.
  • George of Angels Finance spoke of a project he’s developing in Uganda where people can donate a portion of their phone airtime to charities – and he is seeking mentors, a bank to be the trustee, and developers to put it on phones
  • Brian (a co-founder of Seacom who recently stepped down) has founded Black Rhino which invests in infrastructure in Africa. He notes that such developments should have social inclusion, smart financing (governments should not put crippling liabilities on their balance sheet) and smarter (transformational) technology. They are seeking people with experience in social work, and environmental work, especially French-speaking ones.
  • James of Dahlberg talked about the long history of philanthropy in Africa. They want to identify and celebrate champions of philanthropy across Africa, map out high givers of interest, create a platform for collaboration, and acknowledge their efforts.
  • Arthur, the deputy prime minister of Zimbabwe, said that despite his background (McKinsey, MIT, Rhodes) he felt lonely as there were no other political leaders present. He urged ALN members to make sacrifices and take a plunge into politics, (become political gangsters) in order to be true continental leaders.

Don’t ignore Politics: This was underscored by another speaker Tutu Agyare who lamented that while most in the room were comfortable with big positions, or making money from foreign corporations, they had to take more risk to build their countries as they could do better jobs than the minister in our countries. Also, it was important to take more risks at a young age as you don’t have to be 70 years old to run an African country.

ALN Award The inaugural ALN Award was given to James Mwangi, the CEO of Equity Bank. He talked about the large price and sacrifices you have to make – like he did in 1992 when a mutual fund (Equity Building Society) in his village was about to be closed by the Central Bank (CBK) for insolvency (no funds, no trial balance for 3 years and other governance issues) and he was approached to intervene. He did, but the CBK Governor asked him to take over the society’s management as a condition to keep it going, and he foolishly did, going from a top bank job earning Kshs 400,000 to about Kshs 50,000, and with the added danger of losing his house which he had bought through the society.

He also talked about the need to have a belief in something like the society (now bank), not just an interest, to transform it from 2,000 to 7 million customers (more than the number of people who voted in Kenya’s presidential elections). Also, while success is not always celebrated, having a belief enables you to do things like persuading villagers to convert their society savings into investments in the society and they have been paid back to a point that the village Nyagatugu may be the richest rural village per capita in Africa.

He also mentioned the need to focus on innovation and use it to develop communities & societies. Equity is edging away from branch banking to mobile phones & agency banking model to a point that 40% of their transactions are being done by shopkeepers, as well as distribution of relief food funds in Kenya and they sell more policies than all insurance companies in Kenya. Also that next week, they will launch the first free transfer from the diaspora to the continent in partnership with MasterCard.

Talk from a King: The closing Keynote was given by King Kgosi Leruo Molotlegi II of the Royal Bafokeng Nation in South Africa.

Who’s the King? He’s a taxpayer, architect, and a trained pilot who’s worked with the SA air force and reads on culture & economies which helps him run a $4.5 billion fund. He said the issues that leaders face are universal, problems are generic and that prosperity is partly about finding the right formula, but mostly it’s about having the will to act and maintain a vision.

He spoke of the people of Bafokeng who migrated to their current homeland around the year 1450. Their then king forged a friendship with colonial leaders and noted the interest in their land and decided to obtain title to the land to avoid land grabs. Bafokeng citizens went to work in the Kimberly diamond mines, and portions of the money they earned was saved – and the King got help from a missionary who they asked to buy the land in his name and hold it in trust for the Bafokeng community.

Later in 1925, platinum was discovered under the land that the Bafokeng owned, and despite clashes over land rights with mining companies and the government, courts sided with the Bafokeng as genuine owners of their land. As such, they have derived income from mineral extraction for 60 – 70 years which has funded many of their expansion plans and brought wealth to the nation.

However they are aware of the resource curse and the challenges it brings such as population influx, crime, unmet expectation, social ills, complacency and corruption – for the nation of 150,000 people (in 29 villages) are something of an island of prosperity ($300 per month average income) in a sea of rural poverty.

The Kingdom has a Plan35, a detailed blueprint for the next quarter century (to 2035) and their portfolio is now 60% in mining, and 40% in property, communication oil gas – though holding firms, enterprises, education, and sports firms that ensure sustainability.

He was asked (and answered questions) about the supreme council of elected leaders who help run the state (are elected, and are now more representative with women and youth among them), welfare programs (dependence on the state), the need to develop entrepreneurship (a big challenge as there has not been an incentive to work for 70 years and some people have the mindset since everything is given to them) and communal land tenure (which is an obstacle to enabling people to obtain development loans).

State of the network: Acha Leke and Fred Swaniker spoke about ALN whose membership is now a mix of South Africa (25%), US/UK/Europe (17%) Nigeria (17%) Kenya (11%) and other countries but weak in Arab and Francophone Africa. It is also male, 28% female, and dominated by the private sector (heavily finance & consultancy) at 89%, and non-profits are 6%, against a goal of having 30% from the public sector.

In 2012 they will grow in the above areas that are missing, as it is not meant to be a business network, but a leadership one. They will target to have two events a month across Africa – regional gatherings, from which a lot of where membership tends to spring – next in Cairo, Dakar, Abidjan, and Luanda. Also, they will take a group of ALN leaders to visit China, and, after two years in Addis, Ethiopia, will have next year’s event at a new venue in Accra, Ghana.

ALN 2011 Day 2

Day 2 of ALN brought out the importance of observing trends & change, understanding markets, engaging with partners, appreciating the arts and making tough decisions as leaders

Imagining the Future: Dr. Chris Luebkeman of Over Arup, spoke of trends that will drive the future which were:

1. Change is constant – no matter where you go, the context, or the duration it takes, and it is important to stop and look up every once in a while, and not do things forever without thinking. Think STEEP (social, technological, economic, environmental political) most make decisions based on three of the five

It also matters where you’re standing, as an exercise he concluded showed; While most ALN attendees believed that the driver of the future in Africa was education infrastructure and the influence of China, outsiders’ views on Africa were that the main issues would be corruption, education infrastructure, and water.

Tools he advocated for assessing future trends & decisions are STEEP modeling (social, technological, economic, environmental political), as well as population pyramids which all thinkers should analyze for their countries and cities.

2. The future is fiction; no one knows what will happen tomorrow. It is a story each one writes, the outline, and characters. Visions can become reality. E.g. A former MIT professor had a vision those 15 years ago that you’d grow organs, and this year at the TED conference, a kidney was printed, on the stage.

3. Participation is what shapes the world – so stay active.

Avoiding the Resource Curse: Oxford Economics Prof. Paul Collier, spoke about the opportunities Africa faced in terms of resources and how to avoid resource curse pitfalls.

As much as the continent is known for mineral & resource wealth, it has still been barely searched, and there could be much more to find. However the history of such resources in Africa is sad in that rather than transforming economies, they have been plundered, not saved or reinvested,

He listed five decisions & steps for resources to be handled right

1. In terms of the discovery of natural assets (already been done wrong), geological information has to be made public before governments call in the private companies (manage discovery)
2. Have a good taxation system to benefit the society – the history is one of missed revenue, and misaligned contracts so it is important to get the right contracts
3. Involve & manage the locals – avoid the Niger Delta problem
4. A substantial portion of income should be saved rather than consumed
5. save in what? Africa needs sovereign development funds, not sovereign wealth funds. However Africa does not have much of this capability, and there is a need to build capacity, i.e invest in investing to manage the resource depletion and erratic commodity prices.

There is a natural resource charter document that is a guide for these steps.

China in Africa: China expert Buddy Buruku and journalist Adama Gaye shared their views on the state of China–Africa relations

Buddy talked of the difficulty finding consistent data on China’s investments in Africa, but that about 3% of global investments were coming to Africa, with the largest recipients being South Africa, Sudan, Nigeria, Zambia, Algeria, Tanzania, Mauritius, Egypt, Madagascar (no Kenya in the top 10)

China’s trade with Africa has been growing exponentially, and their main imports from Africa were mineral fuel and ores. The top importer from China is South Africa (19%), while Angola is the top exporter to China (41%) as well as the largest trade partner in terms of combined exports & imports.

It is also difficult to quantify the type of Chinese aid, as a lot of it is bundled. However it mainly takes the form of concessional loans with China issuing $31 billion worldwide – and Africa getting 22 billion of that. Other (smaller) forms of aid are debt cancellation in-kind aid and grants.

It is also tough to track what is pledged versus delivered in terms of Aid & trade, but contrary to expectations, trade is not just about oil, e.g. Their main focus in Zambia is on manufacturing, in SA there was the large finance deal via an investment of $5.5 billion in Stanbic Bank, in Nigeria it is manufacturing and EPZ, while in Mauritius, Tanzania and Ethiopia the investments have been for manufacturing capacity.

She added that Africa should look at China as a resource, and the onus is on Africans to engage with China in a mutually beneficial way – use access to capital, and access to markets. In terms of capital: no other country is providing debt & equity to Africa as much as China, and the $5 billion China Africa Development Fund is the continent’s largest, seeking out infrastructure and renewable energy projects for which they have extensive capabilities and history.

Adama said that China’s interest in Africa is a transformative force, that may give Africa the chance it may never have for centuries. However this is not a new engagement, and they have prepared for this for decades, and they will engage with Africa as long as there is some gain or disappear (he cited the DRC crisis in 2009 when mines were closed)

Adama said African countries can come up with the same (joint venture) demands that western companies got faced when they wanted to go to China, insist on waived tariffs and access to the 1.4 billion population China market, require the transfer of know-how and technology, but that instead of negotiating as 54 small countries, regional blocks should step forward for that. He also said countries should appreciate & utilize Africans who were trained in the 195’0s on engagement with China, and their diplomats who worked there.

Making Phones for Africa: Alpesh Patel, the founder & CEO of Mi-Fone, spoke of his company which is making a luxury brand of mass-market phone for Africans who earn less than $200 a month.

With 800 million people in Africa, and only 5% have internet access, the phone screen is the most potent real estate in Africa – capable of delivering banking, music, sports, entertainment, email web loyalty, mobile advertising, social media etc.

In just over 3 years, they have revenue of $15 million, have partnerships with 9 GSM carriers in 12 countries, and they have done branded phones like the Mi-Obama phone which sold 10,000 handsets in Kenya and Uganda the day he was inaugurated. They have also done Western Union handsets, formed partnerships with local musical artists (like Kenya’s Liz Ogumbo) and will soon launch the first Facebook phone in Africa and an application store for mass-market consumers.

Leadership in Africa: The keynote speech was given by Dr. Donald Kaberuka, President of the African Development Bank (ADB). He talked about the failure of leadership in rich countries to address the financial problems they are facing now which constitute the worst crisis since World War II – with some potential impact on Africa – but having to undertake harsh structural reforms that African countries undertook a few years ago

He said leadership was about making tough decisions – like Helmut Kohl accepting to exchange East Germany’s currency at ten times its value in the interest of reunification, Gorbachev ending communism and Mandela ending apartheid and reconciling South Africa, and not the kind of leadership that watches the next elections.

In Q&A:
Leaders he admires? He believes in Institutions! So they should be built & strengthened even as leaders go bad; but he admires Ellen Johnson Sirleaf

What will it take for ADB to go back to Cote d’Ivoire? He lamented that Kenya, Cote d’Ivoire, Zimbabwe, and Madagascar were all on their way to middle income, but were re-railed by political setbacks. He said they may go back to their CIV headquarters soon, and when the Bank governors decide

Integration for Africa? Economic integration is not new – East Africa had one currency, central bank, airline etc. China is one, Brazil is one, and India which is very diverse in terms of people & religion is one. But many African countries have too small GDPs, while others have some resources. African countries combined have 400 billion dollars in reserves, which is more than India, where many countries go to borrow.

Helping Countries Avoid the Oil Curse?. He said Diamond-rich Botswana has shown that it is possible to do this. Oil exporting countries have made mistakes but recently when an African country (he did not name) discovered oil, ADB went to see the President and if they could advise. The ADB is helping countries through a legal support facility to help countries negotiate good contracts, as the bad deals they previously signed became difficult to wiggle out without damaging investor confidence.

Advice for countries?: When he worked in post-conflict Rwanda, he knew they would be aid dependent for a while as tax base was low; still they insisted on some budgetary support for domestic resource (tax) mobilization and it worked. Also, it is important to fight corruption to the core, which is not just a moral issue, but a is a break on development. Rwanda did not even create an anti-corruption authority, as they emphasized that the existing institutions be functional, and he also said that leaders should show that they are sacrificing.

Employment in Africa: Chinezi Chijioke of Mckinsey said that while there are more school, more jobs, unemployment has dropped, and discretionary income is up across Africa, 2011 has been one of the most tumultuous years in African history.

So is economic growth lifting all boats? how inclusive has it been? There are frustrations due to:

– Unmet expectations;, with more schooling there is higher unemployment (North Africa tertiary education graduates have the highest unemployment)
– The excluded: consumer class has grown, number of households that are excluded, not participating, has grown
– The vulnerable & the unemployed. While there is 9% unemployment, another 63% are considered vulnerably employed and the combined figure of 70% is scarily high (Latin America is 30%)

It is therefore important to address:

1. Accelerate the creation of jobs: Countries should move from mere economic growth targets to economic growth & job creation strategy; they should try and understand which sectors will catalyze jobs and promote entrepreneurship in those sectors. Mining and finance sectors don’t create jobs unlike those in retail, hospitality, agriculture, government and social services that do.

2. Improve labour supply – Ensure there are people who are job ready (Many companies have trouble filling jobs as candidates are not job ready – have no technical, soft, experience or schooling).

3. Match those two. E.g. a study found that in Nigeria small enterprises will create jobs, while in Kenya middle and large enterprises are the engines for jobs.

Solar for Africa: Asif Ansari of Suntrough Energy spoke about power generation which is crucial as a world bank study found that a 1% increase in power generation, 3% on GDP. However, power infrastructure was a very complex process, combining servicing debt vs. fuel. E.g. a 100MW power plant may cost $100 million to put up and one can get a bank to finance, that but it will cost $1 billion of fuel during the life of the plant. He advocated that sustainability requires the use of some indigenous fuel – anything available locally – biogas, solar water etc. and we cannot be held back by climate change advocates, since Africa did not cause that, and needs energy now.

Africa is one of the wealthiest regions in the world – but the tremendous resource is underutilized so far, noting that 5% of the Sahara Desert can power the world for 24 hours a day – and solar is half the cost of natural gas (diesel costs 25c, wind 9c, gas 9c, coal 6c, hydro 6c, and Morgan solar 5c)

In terms of funding, multi-lateral banks are there, but it takes time to get a loan going, so you should structure something that can be financed by private equity such as middle east investors or local sovereign equity.

They use Morgan solar technology and there are also employment opportunities in developing standardized solar hybrid plants of  10 – 20MW. You can actually bring them here early and fabricate them in Africa. Power plants expectancy is of 50 years.

Invest in the Arts: Cobhams Asuquo a music producer and the CEO of CAMP (Cobhams Asuquo Music Productions), spoke of challenges in the indigenous arts including the low premium placed on the arts, high infrastructure costs, piracy, pressure to adapt to westernize styles, and little regulatory assistance from bodies to market & sell African arts. he urged more people to invest in the arts in sectors like film distribution, and this was followed by one of the artistes on the CAMP label, Bez Idakula who gave some great, Stevie Wonder-ish, performances.

Deputy PM Wows ALN: Few people outside Ethiopia can name another leader besides their Prime Minister, Meles Zenawi. But at a dinner at the historic palace of Emperor, Ato Hailemariam Desalegn, the Deputy Prime Minister and Minister of Foreign Affairs engaged in a Q&A session on various topics put by ALN members. His fast answers included;

– Plans to open up communications sector They are focusing on completing the inland national fibre backbone first, and when complete they will now talk to private sector players (who are biased toward urban rather than rural consumers)

– Advice Kenya on Somalia? Kenya tolerated Al Shabab for too long and now has disturbed the tourism sector. The movement must be defeated at all costs to help Somalia find some stability after 20 years and Kenya is right by international law of self-defence.

– Gibe dam impact on Lake Turkana communities: All infrastructure has some impact but this was assessed by international standards and found to be minimal. The dam has the support of the Kenya and Uganda governments, and the noise about the dam is caused by NGOs who have politicized the debate. Ethiopia may later sell power to Uganda, Sudan, Kenya, and Djibouti.

– Do Funders impose conditions? Domestic savings are not enough for all the loans so they have sourced funding loans unconditionally from China, South Korea, Turkey, Brazil, and India.

– Lessons for other African countries? The western model of development for Africa from Bretton woods is dead, so they got examples from Asian tigers and are pursuing a development-state model where the government intervenes in some sectorst. They focus on agriculture and manufacturing and this ensures that Ethiopia has a low gini coefficient (equivalent to Scandinavia) through growing high-value crops like Denmark and New Zealand, building capacity in textiles, and the deployment of 62,000 agricultural extension workers to advise farmers, showing them kaizen bench-marking and seek out export markets.

He also said that African leaders should be drawn from productive private sectors (not rent seekers interested only in wealth accumulation from land taxes government contracts and corruption who are disruptive elements)

– Plan to join the East Africa community? He hinted that another country was not comfortable with an 80 million population country joining, but will start as observer-member before going for full membership. Regional integration is the way to go – under Nepad, South Africa pioneered transport integration and Ethiopia will do power integration as a start with Gibe.

ALN 2011 Day 1

Day 1 of the Africa Leadership Network’s (ALN) Annual Gathering in Addis Ababa, Ethiopia, was spent reconnecting the network – making new friends, learning about Ethiopia’s investment & agricultural potential, and learning about the arts & corporate succession

Investment opportunities in Ethiopia: The country with 85 million is larger than Spain and France combined. Zemedeneh Negatu of Ernst & Young explained that it is the fifth largest economy in Africa (behind South Africa, Nigeria Angola, and Sudan), and as one of the fastest growing economies (with an annual target of 11%) it is poised to, by 2025, be the third largest behind Nigeria which will be tops and mature South Africa.

This is due, in part, to the large young population (now 85 million, but projected to reach 120M in the next decade), and the potential there as Ethiopia is one of the least urbanized, and they have a target to electrify 75% of the country in the next decade – following the path that the Chinese and Indians followed.

Sectors with large potential for growth include agriculture (a lot of Indians and Chinese are investing here after the Government allocated 3.6 million hectares of arable land for foreign investors (size of Belgium) – but he qualified that, adding that while this was about 5% of arable land in Ethiopia, NGO’s had latched on to that as a land grabbing

Others were manufacturing (Ethiopia’s average manufacturing wage is $80 compared to $430 per month in China and there is a lathe industrial park being set up outside Addis to capitalize), infrastructure ( $155 billion), mining, oil & tourism.

A big source of funds is Asia (China, India), then the Middle East, then Europe and then the US and he mentioned two large beer deals had been recently signed by Diageo and Heineken. The Ethiopian diaspora investing but not substantially, yet.

Later the head of Omega Farms, a returnee from the Diaspora, spoke about the potential of Ethiopia’s agricultural sector where there is good availability of fertile land that can produce year-round, and a variety of climates in the country, that means that every conceivable green food could be grown. But he also spoke about the current paradox of her & other African countries that grow fruit but buy juices packed in Dubai or of knowing that some foods are exported from Ethiopia to Europe, only to be re-packed and re-exported to West Africa.

– The future is bright at a time when the air boundaries are reducing with Ethiopian Airlines able to reach the Middle East, Europe and most COMESA markets with short flights (They recently ordered 777 freighters that can carry 90 tons or fly non-stop to Beijing), or 12 – 18 days by sea to most world markets. There are also opportunities to produce flowers, fruits, nuts, and seeds for exports and local markets (next to Mexico, Ethiopia is one of the largest growers and consumers of corn and chili).

– Incentives available to agricultural investors include tax holidays of 2-7 years, lease-based land acquisition (upfront costs are low), duty-free importation of agricultural capital goods (100% tax-free) and up to 70% development bank project financing.

Mo & Me: In the afternoon Salim Amin previewed his award-winning movie Mo & Me about life with his father, the late photojournalist Mohammed Amin. It was poignant because it was in Ethiopia where Mo Amin’s powerful footage brought him his greatest fame, but it was also where he lost one of his arms (and in the film we learn that this probably affected his later career), and he made his final flight from here as he died when an Ethiopian Airlines flight was hijacked and crashed into the Indian Ocean.

Salim Amin was an only child who worked, reluctantly, with his father and after Mo’s death, he inherited the company, which he runs to this day. Salim spoke quite a bit about this and you have to admire that he has kept the company going for 15 and used Mo’s film to introduce a new worldwide audience to his late, distant, Dad.

Perhaps, as an only child, he had that obligation, but time has played into his hands as the content that his dad accumulated (3 million photos and 20,000 hours of video over 30 years) is a massive archive that may have immense value once he completes the challenge to digitize, caption, archive and re-produce it in meaningful ways, perhaps in the educations sector.

((Sadly, for me, another large company I was familiar with is facing the auctioneer’s hammer less than two years after the death of the family patriarch & founder.)).