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2017

March 2017

27 March 2017

How Angola can win back scarce oil investment dollars

By Rui Amendoeira, head partner of oil & gas, VdA

As the oil price was on its downward spiral from an all-time high of $147 per barrel circa mid-2008 to bottom out at $26 in early 2016 many development and production projects became unprofitable. Suddenly, the principal criteria driving the investment decisions of oil majors, independents and even national oil companies were no longer the size of potential reserves or the prospects of a particular area but rather more objective considerations around low production costs and operational efficiency. Several countries hitherto considered safe bets for the oil industry fell out of favour with investors because of their high-cost environment. Angola, long seen as a costly country in which to operate, is among the producers most affected by the oil price tumble. If Angola wants to retain its status as a leading African oil producer in the long run it must decisively move towards offering a more cost-efficient environment for present and future operators. While some cost levers (labour and housing, for example) can only be applied gradually as the economy cools down after its oil price peak period, certain actions could be taken in short order that would markedly improve Angola’s attractiveness for oil investors.

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27 March 2017

New railway links Addis Ababa with Djibouti

The recent opening of the Addis Ababa – Djibouti modern electric railway by Ethiopian Prime Minister Hailemariam Desalegn and President Ismaïl Omar Guelleh of Djibouti, which links the capital of landlocked Ethiopia with the port of Djibouti on the Gulf of Aden, is expected to transform connections across the region and to global trade routes.

The 752 kilometre track, Africa’s first standard – gauge international railway, will more than half journey times. When commercial services start using the line, the transport time of a container from Addis Ababa to Djibouti should reduce from three days to twelve hours, with costs coming down by a third. More than 95 percent of Ethiopia’s foreign trade passes through Djibouti.

The new line was built between 2011 and 2016 by the China Railway Group and the China Civil Engineering Construction Corporation. Financing for the new line was provided by the Exim Bank of China. A total of US $4 billion was invested in the railway with the objective of facilitating mobility and trade and transforming Djibouti into an East African gateway to the world.

The new railway is linked with the US $15 billion infrastructure expansion programme, led by the Djibouti Ports and Free Zones Authority (DPFZA), which will expand Djibouti’s port facilities while constructing new highways and airports as a major boost to the country’s economy.

For more information:

Patrick Orr
Patrick@raittorr.co.uk
+44(0) 20 7922 7713

2017

March 2017

01 March 2017

Japanese automaker Isuzu buys 57.7% stake in GM East Africa (Kenya)

By Staff Writer | Business Daily, Kenya

Japanese automaker Isuzu Motors Limited has bought out General Motors’ 57.7 per cent stake in General Motors East Africa (GMEA) for an undisclosed sum.

The transaction will see the motor dealer change its name to Isuzu East Africa in April to reflect the change of control.

Most of the dealer’s sales are bus, pick-ups and truck brands of the Japanese multinational whose status shifts from a vehicle supplier to an owner.

Detroit-based GM will also take away its Chevrolet franchise from GMEA as part of the termination of the alliance between the two automakers.

“Isuzu Motors General Motors have reached an agreement that Isuzu will invest in General Motors East Africa. Isuzu is making this investment with the intention of expanding its commercial vehicle production and sales in Eastern Africa,” Isuzu said in a statement.

Isuzu’s partners in GMEA are Centum Investments with a 17.8 per cent stake, ICDC (20 per cent), and Itochu Corporation (4.5 per cent).

The deal comes at a time when the dealer has steadily grown its market share in the local new vehicle market to a record 35 per cent last year, with Isuzu brands representing more than 95.6 per cent of the sales.

Source: https://asokoinsight.com/news/japanese-automaker-isuzu-buys-57-7pc-stake...

01 March 2017

Vodacom $226 million IPO to break Tanzania capital records

By Staff | The Citizen, Tanzania

The Capital Markets and Securities Authority (CMSA) has given Vodacom Tanzania the go-ahead to sell its shares to the public later this month.

CMSA Public Relations Officer Charles Shirima confirmed to The Citizen yesterday that the authority approved Vodacom’s prospectus on Monday, paving the way for the firm’s initial public offer (IPO) at the Dar es Salaam Stock Exchange (DSE).

“What I can say is that we have endorsed Vodacom’s IPO. I cannot reveal details of what is in the prospectus because the rules and regulations don’t allow me to do that,” he said.

A senior official of the lead manager, Orbit Securities Limited, told The Citizen that the IPO would start within two weeks.

“It’s ‘all systems go’. We received the approval letter on Monday and will later today (yesterday) meet with the issuer (Vodacom) to consult on some details. We expect the IPO to start in the next two weeks. By tomorrow (today) we might be able to announce the exact date of the IPO,” Orbit Securities General Manager Simon Juventus said.

He added that the logistics of printing and distributing copies of the prospectus nationwide were being sorted out.

“Tanzania is a big country. We have to print enough copies of the prospectus for distribution countrywide before we can hold the IPO.”

Vodacom Tanzania Managing Director Ian Ferrao also confirmed the development.

“Vodacom Tanzania confirms that the Capital Markets and Securities Authority (CMSA) has approved Vodacom Tanzania Plc’s prospectus ahead of its Initial Public Offer (IPO) and subsequent listing of 25 per cent of its shares on the Dar es Salaam Stock Exchange (DSE),” he said in a statement yesterday.

Mr Ferrao added that Vodacom plans to raise Sh476 billion ($226 million) by selling 560 million shares at Sh850 per share.

The IPO is expected to raise the biggest sum in the history of capital markets in the country, breaking the record set when the East Africa Breweries Limited (EABL) IPO raked in Sh122 billion after offering 20 per cent of its shares in 2012.

The National Microfinance Bank IPO raised Sh63 billion in 2008 when the equivalent of 42 per cent of the lender was sold through DSE.

Upon listing at the DSE, Vodacom Tanzania will boost DSE’s market capitalisation by 2.4 per cent to about Sh20.6 trillion, according to an analysis conducted by Bloomberg News Agency based on data from the bourse.

Vodacom, with a 31 per cent market share of the mobile market in the country, becomes the first telecoms firm to qualify to sell its shares to the public as required by the Electronic and Postal Communications Act (Epoca), 2010 as amended in 2016. The Act gave mobile telephone companies until December 31, 2016 to sell at least 25 per cent of their shares to the public.

Other companies that sought to comply with Epoca are Millicom International Cellular SA (Tigo) and Bharti Airtel Ltd.

However, their applications have stalled. Tigo is embroiled in an ownership dispute in court, while Airtel has some issues to sort out with regard to its prospectus.

Mr Shirima said yesterday that Airtel was yet to submit a revised prospectus.

Tanzania Telecommunications Company Limited has yet to submit its application to CMSA.

Source: https://asokoinsight.com/news/vodacoms-share-sale-set-for-this-month-tan...

2017

February 2017

28 February 2017

Burundi to wait longer for Southern African Development Community membership

By Brian Ngugi | Africa Review

Burundi will have to wait longer to join the Southern African Development Community (SADC) after a ministerial meeting ruled against immediate admission of the country to the 15-member regional bloc.

Tanzania’s Foreign Affairs and East African Cooperation Minister Augustine Mahiga said Burundi’s application was assessed by the Inter-State Politics and Diplomacy Committee of SADC’s Organ on Politics, Defence and Security Cooperation, which convened in Dar es Salaam on February 24, 2017.

Mr Mahiga said Burundi, currently locked in a political turmoil, had been directed to put its house in order first before its request could be considered.

Umbrella Opposition

However, President Pierre Nkurunziza’s government last week once again refused to attend peace talks to negotiate with the main umbrella opposition movement, the National Council for the Restoration of Arusha Agreement and Rule of Law (CNARED) — which is exiled in Brussels. The talks are mediated by former Tanzania President Benjamin Mkapa.

Should Burundi join Tanzania as a member of the SADC, the move could complicate the direction the East Africa Community takes for the remaining phases of integration.

Source: https://asokoinsight.com/news/burundi-to-wait-longer-for-southern-africa...

28 February 2017

Green bond to steer Rwanda to boost agriculture

By Staff Writer | The Exchange

Infrastructure development is one of Rwanda’s agenda seen as a possible stronghold to move closer to vision 2020. The agricultural infrastructure of the country is quite “immature” and in need of financial breakthrough should it succeed. One of the forces they can induce is the green investment.

Green investment is associated with socially responsible investment with aim of going green. Green investment can include both direct and indirect investment for environmentally sustainable projects to achieve sustainable Infrastructure for agriculture.

One of the possible ways is financing through green bonds issuance. So, what is a Green Bond? A green bond is a tax-exempt bond issued by federally qualified organizations or by municipalities for the development of brownfield sites. Rwanda could generate funds through green investment and issue of green bonds for developing agricultural infrastructure.

Agriculture in Rwanda accounts for a third of Rwanda’s GDP; constitutes the main economic activity for the rural households (especially women) and remains their main source of income. This sector meets 90% of the national food requirements and in return generates more than 50% of the country’s export revenues.

In agriculture, there is lot of potential through development of sustainable agriculture projects, irrigation projects, land conservation and water management projects. Green bonds could be used as good alternative for financing such projects in Rwanda.

African Development bank issues green bonds for funding energy efficiency and renewable energy projects in Africa.

South Africa is one of the African countries using funds generated through green bonds to finance its renewable energy projects.

In Rwanda, National Bank of Rwanda and commercial banks through capital market could issue long term green bonds to develop agriculture infrastructure and renewable energy projects in agriculture as well. It will help in enhancing the country’s agriculture output, trade surplus as well as achieving concept of green economy.

Source: https://asokoinsight.com/news/green-bond-to-steer-rwanda-to-boost-agricu...

28 February 2017

Nigeria unveils $20 billion ‘Gas Revolution Industrial Park’

By Staff Writer | ESI Africa

On Monday, Nigeria’s acting President, Yemi Osinbajo, represented by his spokesperson, Laolu Akande, announced a public-private partnership industrial plan.

The gas industrial park, valued at $20 billion will be dedicated at the development of gas-based industries in the Niger Delta region, local media Premium Times reported.

Tagged the Gas Revolution Industrial Park (GRIP), the plan is reported will be developed by a consortium comprising the GSE&C of South Korea, the China Development Bank, Power China and several other global operators from Asia and the United Arab Emirates in the Middle-East.

Osinbajo stated in his address that the project, to be located at Ogidigben, Delta State, is envisaged to be a regional hub for all gas-based industries.

Gas Revolution Industrial Park

Akande further stated that the project sits on 2,700 hectares with fertiliser, methanol, petrochemicals, and aluminium plants located in the park that has already been designated as a Tax Free Zone by the federal government.

“Under the plan presented today by the consortium to the acting President, about $20 billion would be invested to develop the Gas Revolution Industrial Park, and generating 250,000 direct and indirect jobs in the process.

“The industrial park would be a cluster for several industries in one location benefiting from an efficient, cost-competitive and abundant supply of natural gas, proximity to a deep sea port and centralised utilities, and services such as uninterrupted power, world class telecommunications and processed water,” he said.

Gas Reserves

Akande continued: “The park, originally conceived by NNPC, is located about 60km from Warri, and is about 1km away from the operational base of Chevron Nigeria Limited. It will be connected to over 18 trillion Cubic Feet of gas reserves in fields such as Odidi, Okan, Forcados, located within a 50km radius.

“It is equally planned that the park will be connected to Nigeria’s most dominant gas pipeline network-ELPS, enabling supply of gas to and from the park.”

Osinbajo was quoted as saying: “we already have a Steering Committee in place, chaired by the Honourable minister of state for petroleum resources and that shows the level of our commitment. We are unwavering.

“We take the project very seriously and glad to see you are committed and ready to make several other commitments. This is a process that we intend to see happen.”

Source: https://asokoinsight.com/news/nigeria-unveils-20-billion-gas-revolution-...

28 February 2017

Medu Capital takes 15% stake in South Africa’s HeroTel

By Anna Lyudvig | Africa Global Funds

Medu Capital, a private equity company focused on established medium sized owner-managed businesses, has acquired a 15% stake in Hero Telecoms (HeroTel) at an enterprise value of R495m.

Siya Nhlumayo, Partner at Medu Capital, told Africa Global Funds, that the firm identified the telecommunication sector as an attractive sector to investment its private equity capital largely due to the fundamentals, in particular for wireless internet service providers (WISPS), over the medium to long term.

“HeroTel is an ideal entry into telecoms for Medu due to HeroTel’s track record in successfully executing its acquisitive growth and organic growth strategy. Further, there was great alignment with the management team of HeroTel,” he said.

“They control the business and the subscription proceeds from the Medu investment is going into the business to fund further growth. HeroTel was looking for a partner with capital, track record for institutionalising owner managed businesses and has the empowerment credentials,” he added.

HeroTel was established in 2014 with a mission to consolidate the wireless internet service provider (WISP) market and connect South Africa to high-speed wireless internet.

At the time of Medu Capital’s acquisition, HeroTel has successfully concluded acquisitions of nine WISPs, thus establishing a footprint in KwaZulu Natal, Western Cape, Mpumalanga, North-West Province, Limpopo and Gauteng.

The capital raised from the Medu Capital investment will be utilised to further HeroTel’s investment and acquisitive growth strategy.

Nhlumayo said that HeroTel is looking to grow organically: “It has acquired nine wireless internet service providers over the last three years and they are all experiencing sustainable growth.”

“There is an opportunity to make further acquisitions as part of the regional expansion and customer acquisition. Medu will support HeroTel should further capital be required to fund new acquisitions,” he said.

When asked about investment plans for 2017, Nhlumayo said that Medu is still investing in third fund and has a few deals in various sectors on its pipeline.

“We continue to pursue investment opportunities that meet our investment criteria,” he said.

Medu Capital invests at least R50m in established businesses that require equity risk capital and/or BEE partners.

The company has a record of investing in 25 businesses in diverse sectors including retail, manufacturing, industrial services, chemicals, plastics, transport, construction, mining, healthcare, technology, telecommunications and education.

Source: https://asokoinsight.com/news/medu-capital-takes-15-stake-in-south-afric...

28 February 2017

Shell mulls integrating renewables into its sub-Saharan Africa operations

By Antony Kiganda | Construction Review Online

Oil super major Shell mulls integrating renewables into its operations across sub-Saharan Africa, a senior company official said.

Shell’s new business development manager for the region, Tayo Ariyo, asked the wider oil and gas industry to invest in renewables “as a way of enabling access to energy in far-flung sites”.

“As an industry we must concentrate on developing lower carbon solutions, and we must swiftly invest in renewables, like solar, hydro and wind,” said Ariyo. “This will necessitate the development of pioneering new partnerships and business models that flawlessly incorporate renewables into the energy mix.

“The sort of project we should be doing more of in Africa is what Shell presently has in Oman – a hybrid gas-solar project that Shell employed in the Amal oilfield,” she said during a speech at International Petroleum Week in London.

In 2012, Shell invested in GlassPoint Solar, a US company that utilizes solar-thermal technology to help recovery of hard-to-extract oil deposits.

GlassPoint’s thermal enhanced oil recovery (EOR) system is designed to generate the steam required to help get at heavy oil that is too thick to be pumped to the surface using usual methods.

A 7MW pilot of the system was first installed by Petroleum Development Oman (PDO) at a site in the Middle Eastern sultanate. PDO later revealed plans for the giant 1.02GW Miraah solar-thermal plant that was intended to help oil extraction at the Amal field from 2017.

“Gas use was cut by 80% in the oilfield activity, which means we could utilize what we saved somewhere else,” said Ariyo.

Now Shell is eyeing related projects to power up its African oil projects, though Ariyo gave no information about where and when this technology could be executed.

She said: “Gas and renewables is the ultimate joint venture to tackle the challenge brought on by amplified energy demand.

In order to have triumph, we need new trusted affiliations between governments and industry in order to guarantee access to energy is a certainty for Africans in Africa.”

“Thus, as an industry, we have to keep on making substantial investments across all sectors, as well as oil and gas, and renewables. But we will need to do all this while extenuating climate change issues,” she said.

Source: https://asokoinsight.com/news/shell-mulls-integrating-renewables-into-it...

28 February 2017

Road linking Ethiopia and South Sudan to be constructed

By Antony Kiganda | Construction Review Online

Two major roads linking Ethiopia and South Sudan are set to be constructed following the signing of an agreement by the two countries.

Ethiopian Prime Minister Hailemariam Desalegn and South Sudanese President Salva Kiir last week signed several bilateral agreements that include the immediate commencement of construction of two major road links.

They agreed that the construction will commence with immediate effect, to start the construction of the Gamebella – Pagak – Palouge and Dima – Raad – Boma – Bor roads.

“When they get the peace back and the economy gets stronger, they will pay us back,” said Mr Hailemariam, indicating that Ethiopia would finance the construction of the roads within South Sudan.

They said once the project is over the two countries’ trade agreement will be on the rise and that will see the locals improve their lives.

The south Sudan counterpart added that they will ensure that they get more funds so that the project can be easily completed within the time frame that they will agree on.

“We are neignbours and we must ensure that the two countries promote each other through working closely towards achieving the goals that we have set” he added
On the trade protocols he said that the construction of both roads on the Ethiopian side was complete.

The two leaders signed a total of eight memorandums of understanding, covering energy, preferential trade, border trade protocol, health, communications, information and media.

Mr Hailemariam noted that the agreement on energy and electricity was meant to connect South Sudan to the national grid in Ethiopia, to enable the former buy electric power from the latter.

They said that they will ensure that they partner so that they can improve all the sectors that they believe each of the country has strength on.

Source: https://asokoinsight.com/news/road-linking-ethiopia-and-south-sudan-to-b...