Month: October 2010

South Africa and Kenya Ranked the Most Popular Tourist Destinations

A new research study finds that Kenya and South Africa too no surprise are Africa’s top tourist destinations.

According to research carried out by the Year Out Group the most popular gap year destinations are shifting, due in part to the number of people taking a career break, and also because of a shift in terms of what people now want from a gap year.

gap year is an extended break that some people take at a life transition, such as between studies, between study and work, or between careers.

Travelers are heading further afield and wanting to do something beyond just sitting on a beach in Thailand, for example. In celebration of this worldwide travel diversity Round The World Experts are today promoting round the world flights as the perfect way of visiting a number of these far-flung destinations all on the same trip.

The Year Out Group, a company who specialize in providing information on structured year out programs, has found that South Africa and Kenya are the most popular destinations for structured gap year placements, with increasing numbers of gap year travelers avoiding the traditional destinations of Australia and New Zealand, in favor of more exotic destinations and activities, such as going on safari to see the ‘Big Five’ in Africa.

Australia and New Zealand still feature in the Top Ten, at 4 and 10 respectively, but the lesser popularized destination of Peru in South America, also features in the list, along with the rather more unexpected destination of Canada.

A spokesperson for Round The World Experts said, “What we’re seeing is a truly globalized and diverse traveling community. Gap year travelers aren’t content with just a glorified holiday; they want exciting and varied destinations, cultures and activities to experience. Although the old favorites do offer these, more and more people are attracted to destinations that have been under the radar of traditional gap year travel, such as Peru, Tanzania and Fiji.

“Thanks, in part, to the larger numbers of people opting to take gap years later in life, and the increasingly adventurous nature of recent graduates, gap year travelers are now more willing to visit less chartered territories, safe in the knowledge that they’re bound to encounter other travelers doing the same thing.”  According to the Year Out Group.

Certainly, the success of the 2010 World Cup, plays no small role.

This is welcome news to both countries, especially since tourism is a big part of their economies. Their positions in African tourism is enhanced more.

Certainly more has to be done to exploit this good news. More exposure and recruitment should be done towards attracting foreign movie shoots in both Kenya and South Africa. They have to follow Canada, Sweden, Australia, South Korea and New Zealands lead in attracting foreign movie shoots in their locations.

Bookmark and Share

Burkina Faso Minister of Defense Visits U.S. Africa Command

Burkina Faso's Minister of Defense Yero Boly is welcomed to the U.S. Africa Command headquarters by General William E. Ward, U.S. AFRICOM commander, September 30, 2010. During his visit to Stuttgart, Boly met with senior leaders to identify areas of cooperation between Burkina Faso and the United States


The Defense Minister of Burkina Faso visited U.S. Africa Command.

STUTTGART, Germany, Sep 30, 2010 — Burkina Faso’s Minister of Defense Yero Boly met with senior leaders of U.S. Africa Command, September 30, 2010, to identify areas of cooperation between Burkina Faso and the United States.

Walking through a formation of honor guard and rifle cordon, Boly arrived at the command headquarters where he was welcomed by General William E. Ward, U.S. AFRICOM commander.

During briefings and office calls with senior leaders including Ward and U.S. AFRICOM’s civilian deputy Ambassador Anthony J. Holmes, Boly learned more about U.S. AFRICOM’s current and planned military-to-military activities in Burkina Faso, such as a special operations forces exercise called Exercise Flintlock which took place in May 2010 in Ouagadougou.

Exercise Flintlock is one example of how Burkina Faso and U.S. Africa Command are cooperating in mutually-reinforcing training exercises and operations areas to meet common objectives. The three-week exercise, led by U.S. Special Operations Command Africa, is designed to build relationships and develop capacity among security forces throughout the Trans-Saharan region of Africa.

The bilateral cooperation between Burkina Faso and U.S. Africa Command dates back to August 2008 when a bilateral military agreement went into effect allowing the exchange of logistic support, supplies, and services between the two nations. The Acquisition and Cross Servicing Agreement is designed to simplify the exchange process and provide more flexibility for the militaries to work collaboratively during training and exercises.

Following Boly’s visit to U.S. Africa Command, he will continue to the headquarters of U.S. Air Forces Africa in Ramstein, Germany to meet with senior leaders and tour the facilities.

Bookmark and Share

South Africa’s Airforce becomes more lethal

South Africa has gotten the first batch of Digital Reconnaissance pods for their Gripen fighter jets.

October 9, 2010: South Africa has received the first of several Digital Joint Reconnaissance Pods for their recon aircraft. This is a digital version of an older, and popular, recon pod that used film. The digital version has two digital cameras and an infrared one. The Digital Joint Reconnaissance Pod will be used on the Gripen aircraft South Africa has recently bought. Digital cameras are superior to film cameras because no film development is required, and digital images are more easily analyzed using software, rather than depending mostly on human photo interpreters. The infrared sensor records everything in the aircraft’s flight path, horizon-to-horizon. The pod records many gigabytes of data to onboard storage devices, and can also transmit data immediately to a ground station.

South Africa first took delivery of the planes in 2008. 26 were ordered.

Here is some background information on the Gripen .

This past summer, the Department of Defence awarded US aerospace group Raytheon a contract to supply Paveway 2 laser-guided air-to-ground bombs to South African Air Force’s (SAAF) Gripen aircraft.  This marked the first major sale of US defence equipment to SA in more than 25 years.

The Department of Defence has awarded US aerospace group Raytheon a contract to supply Paveway 2 laser-guided air-to-ground bombs for the South African Air Force’s (SAAF) Gripen aircraft.This marks the first major sale of US defence equipment to SA in more than 25 years.

The US group will provide the air force with laser-guided bomb kits that transform dumb bombs into precision- guided munitions for operational tests and evaluations on the new Gripen fighter fleet.

The new bombs are due for delivery next year.

The sale was negotiated with the assistance of South African defence group Atlantis Corporation and, in addition to the weapons, Raytheon will provide air- and ground-crew training.

Helmoed Römer-Heitman, South African correspondent for Jane’s Defence Weekly, said yesterday the contract was not entirely unexpected.

“The SAAF was faced with a large cost from Saab to convert the Gripen fleet to allow it use a locally manufactured air- to-surface bombs.

“So the SAAF elected to acquire an off-the-shelf, Nato standard bomb that allowed it to proceed with the Gripen’s operational test and evaluation programme without incurring further costs ,” said Mr Römer-Heitman.

Harry Schulte, vice-president of Raytheon’s Air Warfare Systems product line, said that the combat-proven Paveway family of weapons was “integrated on more than 22 aircraft and serves 41 nations around the globe, making this weapon the ideal choice for the warfighter”.

It is not the first time that the SAAF has used an off-the- shelf solution, after having bought the Iris-T air-to-air missile, currently used on the Gripen, from German group Diehl BGT Defence.

Mr Römer-Heitman said this system would also, in time, be replaced by A-Darter, a locally designed and manufactured air-to-air missile which was close to the end of its development programme.

Countries that operate the Gripen.


Gripen users 2010 in blue, orders in green


There were 155 Gripens in service in January 2010.

Czech Republic
Czech Air Force has 14 Gripens on lease, including 2 two-seaters, with all in operation as of January 2010.
Hungarian Air Force has 14 Gripens on a lease-and-buy arrangement, including 2 two-seaters (C/D versions). The final three aircraft were delivered in December 2007.
South Africa
South African Air Force ordered 26 aircraft (down from 28), nine two-seater D-models and 17 single seat C-models. The first delivery, a two-seater, took place on 30 April 2008. The South African Air Force has nine two-seaters and six single-seaters in inventory as of June 2010.
Swedish Air Force: 204 aircraft originally ordered, including 28 two-seaters (138 in service). Sweden leases 28 of the aircraft, including four two-seaters, to the Czech and Hungarian Air Forces. In 2007 the Swedish government decided that the future Swedish Air Force will deploy no more than 100 JAS 39C/D Gripen fighters.  A program to upgrade 31 of the air force’s JAS 39A/B fighters to JAS 39C/Ds was started. The SAF has 121 JAS 39s, including 53 JAS 39As, 10 JAS 39Bs, 45 JAS 39Cs and 13 JAS 39D in service in January 2010.
United Kingdom
Empire Test Pilots’ School: Under the agreement, ETPS instructor pilots and students undergo simulator training with the Swedish Air Force, and go on to fly the two-seater Gripen at Saab in Linköping, in two training campaigns per year (spring and autumn). The agreement was renewed in 2008.

Here are some videos of the Gripen.

Bookmark and Share

Delta Air Lines Responds to Increased U.S.-Africa Demand

With air traffic between the United States and Africa growing at more than 5% annually, the United States air carrier Delta Air Lines is steadily increasing its flights to the continent in response to strong customer demand.

In an October 4 interview, Landers attributed that growth to three key factors: strong economic growth across the African continent, the large number of African-born American citizens who are now traveling back and forth to Africa on personal and business travel, and increased investment in the continent’s oil and natural resource industries. “All of those together are driving growth,” he said.

Although Africa is growing from a fairly small base in comparison to Europe, Asia or other developed markets, Landers said, “in percentage terms, Africa is probably one of the fastest-growing markets in the world.”

“There has been an underserved U.S.-Africa demand for many years that historically has not had many options for service other than circuitous routings through Europe,” Landers said. “We began to fill that void in 2006” by beginning service to Johannesburg from Atlanta via Dakar. “Now that flight operates nonstop and has been very successful.”

Delta announced September 29 that it will add an eighth destination to its Africa route network with direct service between the United States and Luanda, Angola. Delta has grown from 22 weekly departures to and from Africa in the summer of 2007 to nearly 80 for the same time this year.

With its winter 2010–2011 schedule, Delta will operate flights to eight African destinations: Accra, Ghana; Abuja, Nigeria; Cairo, Egypt; Dakar, Senegal; Johannesburg, South Africa; Lagos, Nigeria; Luanda, Angola; and Monrovia, Liberia. Delta also intends to serve Malabo, Equatorial Guinea, and Nairobi, Kenya, once additional U.S. government approvals are received.

“With our entrance to Angola via Dakar, we once again will serve Senegal from both Atlanta and New York, creating another double gateway to Africa with service from two hubs in the United States,” Landers said. Delta also serves Accra from New York and Atlanta. Monrovia is an emerging destination, currently visited one day a week via Ghana. Landers said the Monrovia flight is playing an important role in helping Liberia to rebuild and he voiced hope that its frequency will be expanded in the near future.

Africa is critical to Delta Air Lines because “having a diverse flight network is important,” Landers said. “When there are economic downturns in other regions of the world, our business goal is to be diversified across all the continents to protect ourselves from regional downturns.”

“One of the great things about airlines is that our assets are mobile, so if situations require the adjustment of our network it is very easy to do so. But, by and large, we have been very pleased with Africa over the last four years.

“When we first entered the market, we immediately saw load factors, or the percentage of our seats filled, at 80 percent or greater, and that led us to continue to expand across the continent.

“In July 2007, Delta had 97 departures to Africa from the U.S. In July 2010, we had 320, so we tripled in size in three years,” Lander said. “We believe our hubs give us the right strength. New York has a very large local market [of people wanting to travel to Africa] and Atlanta, being the world’s largest passenger hub, gives us the ability to connect pretty much every community in America to Africa with one stop.”

Americans traveling to Africa, he said, choose Delta for time savings. “If you look at the Atlanta-Johannesburg nonstop rather than connecting in Europe, you save an average of six hours in each direction. So on a roundtrip we are giving 12 hours back” to the traveler, he said. “There is great benefit to more direct routings to Africa.”

Helping to pave Delta’s expansion into Africa have been many of its employees, some of whom were formerly with Pan American World Airways, Landers said. Delta acquired Pan Am’s trans-Atlantic routes in 1991 when the airline ceased worldwide operations.

(On May 20, 1939, Pan Am launched the first U.S. passenger air service to Europe. As the United States entered into World War II, Pan Am began providing military transport of U.S. troops into Europe, Africa and Asia. As the war ended, Pan Am went on to establish passenger and cargo routes throughout the continents of Africa, Europe, Asia and Latin America and became one of the world’s premier international airlines before its demise.)

“We have a lot of people with many years of experience in developing African markets and who are very familiar with the business environment and how to be successful in Africa, and that has paid off for us. … Pan Am really paved the way to Africa.”

Landers said Delta is expanding its partnerships with African airlines. Kenya Airways is now a full-fledged member of the Sky Team Alliance and Landers said Delta is working with other African carriers such as Air Nigeria and TAAG Angola to explore and expand code sharing (allowing single bookings across multiple airlines).

Bookmark and Share


More bang for your buck if you invest in Africa

You are more likely to return a substantial investment if you invest in Africa. It’s a low risk, high reward place to return a good profit, especially since there isn’t a lot of competition.

Africa is the place to go for the “frontier market investor” who is seeking a new investment venue with a high rate of return, says Donald Elefson, portfolio manager for the Harding Loevner Frontier Emerging Markets Fund, which invests the largest amount of its multi-billion dollar fund — about 33 percent — in Africa.

In a September 22 interview, Elefson said U.S. investment yields are at all-time lows, which can directly benefit emerging markets like Africa.

“I think you are seeing more and more people looking for return — be it yield or exciting equity-type opportunities — and that is where the frontier market [like Africa] is really coming to the forefront. … The frontier markets are going to be the biggest beneficiaries of the low interest rate environment that we have in the developed world,” he said.

Elefson recently told the U.S. investment weekly Barron’s that Africa offers “strong markets and huge potential.” Additionally, he said, people do not give Africa enough credit for confronting corruption — something that Elefson sees as a “generational” issue.

“When I go to Lagos, when I go to Nairobi, I see a lot of Africans who have been educated and have gained work experience overseas coming back home because of the potential that can be found there. They are a new breed. They are not like that older generation. They realize that you can get somewhere, you can accomplish things, without pursuing corruption. It is a new mindset. These are the new leaders. These are the Africans who will rise up and be the new leaders that will drive return on capital going forward.”

“I am speaking from the perspective of the investor, both what I do in terms of equity investments in companies listed on stock exchanges and companies that are not listed on stock exchanges but may in the future.” Elefson said that while his mutual fund only invests in listed companies, “I am a firm believer that the opportunity for both of those sectors is huge” Elefson told

Elefson explained why as a portfolio manager he is so “bullish” (enthusiastic) about investing in Africa. “First of all, we have a historical precedent to argue our case in Africa, and that is seen in the markets of Brazil, Russia and China.”

“I have been investing in emerging markets for 20 years. When I started, China and Russia were not open. When they started to open in 1992 and 1993, we were pursuing investments there but people were laughing at us. They would say, ‘We would never do that. Russia is an ex-command economy, China is an ex-Communist economy.’ You have heard the story. But now, try to find one listed equity fund that does not have China or Russia in it. You would be hard-pressed to find one.”

A similar situation now exists in Africa, he said.

He pointed to the example of Brazil. “When I started investing in emerging markets, Brazil was the attractive emerging market but it was also the biggest economic and political basket case in the world: inflation was 1,000 percent, corruption was present; Telebras [the telecommunications company] was a state-owned company; Petrobras [petroleum] was a state company. In the past 15 or so years, Telebras broke up the telecommunications monopoly and hived off different individual operating companies; Petrobras is now owned by everybody” as a private-sector company. “So what I am saying is that if it worked in Brazil it can work in Nigeria.”

In Nigeria, he said, Nitel — the Nigerian Telephone carrier and its companion mobile phone company — are both state-owned. “They are in the process of being liberalized, privatized and sold off, just like Brazil. NPC, the Nigerian Petroleum Corporation, is a similar entity to what Petrobras once was, and that is in the process of being liberalized.”

“The difference is Nigeria does not have control of their offshore economics. Nigerian companies participate in a very low level of offshore exploration and production … so not only do we have an oil company that can be liberalized, but also one that has increased market and revenue potential when that offshore potential is realized. But that is just Nigeria.”

Looking elsewhere in Africa, Elefson compared Kenya to Mexico of an earlier time. He said Mexico “made its bones” (became an international investment opportunity) by becoming more closely integrated with the United States and its neighbors to the south.

“Kenya is a part of the East African Community, which is made up of five potentially high-growing economies [Kenya, Uganda, Tanzania, Rwanda and Burundi], and Kenya is the leader of the pack. So there are quality companies now in Africa that would pass anybody’s test on fundamental analysis. … I could go on and on with examples, but my argument is that emerging markets have allowed many countries that nobody ever thought would grow into investment destinations to grow, and the same thing, I believe, is under way in Africa right now.”

Elefson said all of the new African companies that are sprouting up across the continent realize one thing: “If we are going to grow, we need capital and we cannot depend on our government any more to give us that capital. … We need foreign investors,” who require the transparent reporting of numbers and results. “So it is foreign investors rising in status that is forcing the change or confirming the trend of change at the company level, and it is impressive,” he said.

Information is one of the biggest factors aiding the investment and development trend in Africa, he said.

“Right now, they just landed two undersea cables to the East African portion of the continent. Broadband prices could go down as much as 90 percent [below] what they were even two years ago. That makes broadband Internet, data over the cell phone, and data to the home much more affordable. That means a person with an idea, with an aspiration, can log on immediately and see what other people are doing,” he said. “They have Facebook, Twitter and all of this stuff. I don’t use them. I don’t like them. But they are wonderful conveyors of information. They are catalytic. So that is going to stimulate a whole new breed of entrepreneurs. It is going to change the gestation period of an entrepreneur from ‘This is an idea, let’s think about it for years’ to ‘I can see an example of this so maybe I can do it sooner.’”

The word is beginning to spread around about the great investing opportunity in Africa.

The continent already has seen a record $54 billion in mergers and acquisitions this year, including Wal-Mart Stores’ offer of more than $4 billion for South Africa’s Massmart Holdings last week. A raft of Africa-focused funds also have been launched. The Renaissance Group is seeking $1.5 billion, while 8 Miles, a fund fronted by Bob Geldof, aims to raise another $750 million. For once, this enthusiasm seems warranted.


Growth is one reason. The continent’s gross domestic product should rise 4.6% this year, up from a recession-beating 2.5% in 2009. The industrialization of India and China should help underpin high commodity prices, still Africa’s principal resource, and both countries are investing heavily in the continent. Africa’s population could double to 1.8 billion by 2050. Poverty, and in some places crime, remains chronic. But the opportunities are huge: The consumer-goods, agriculture, resources and infrastructure sectors may generate $2.6 trillion in revenue by 2020 compared with $1 trillion today, according to McKinsey.

Africa also offers high returns on investment compared with other developing countries. Limited competition means margins are fat. For example, only four banks have a substantial presence across the continent: Barclays, Citigroup, South Africa’s Standard Bank and Standard Chartered. New competitors are being lured in. HSBC Holdings is in talks to buy South Africa’s Nedbank Group. Nigeria’s Guaranty Trust Bank and Zenith Bank may resume a crisis-interrupted push into neighboring markets. In the retail sector, Wal-Mart has stolen a march over Carrefour and Tesco, rivals largely absent from Africa.

Valuations are cheap. African consumer businesses are valued at less than 10 times forward earnings compared with more than 20 times in other emerging markets, according to Renaissance.

The improved economic outlook also could spur growth in often embryonic public markets as African-based companies seek more local equity and debt financing. That would provide more opportunities for investment funds to gain direct exposure to Africa’s development as well as easier exits for private-equity investors. As it is, Actis, a private-equity firm with $1.5 billion in funds under management in 17 African countries, managed to float 100% shares of Nigerian telecom company Starcomms locally in 2008.

Major constraints exist all the same: volatile exchange rates, corruption, poverty and political instability in key countries like Egypt, Nigeria and South Africa. Small economies—Massmart’s valuation is bigger than Zimbabwe’s GDP of $3.5 billion—could be swamped by capital inflows. Managing them and controlling inflation are big challenges for Africa’s young democracies.

Africa suffers from an acute skills shortage even in relatively developed countries like South Africa. But there is a real chance Afro-pessimism is finally giving way to Afro-optimism.

This is a great opportunity to make a good profit before the chances are reduced.  In the eyes of the investment world, Africa is widely viewed as a complete basket case. Comparisons with Asia, which also suffered the indignities of colonial exploitation, are particularly irksome, since certain people in Africa blame colonialism for the continent’s many economic failures.

The World Bank estimates that real income per head in the 48 countries of sub-Saharan Africa rose on average by only 25% between 1960 and 2005. In East Asia, real income rose 34 times faster. In the 1950s, high-technology South Korea was as poor as Ghana and Kenya. Now, South Korea is the world’s ninth-largest economy.

Africa today evokes images of grinding poverty, natural disasters and appalling infrastructure. More than 70% of Nigeria’s 140 million citizens live on less than $1 a day. Congo’s infamous child soldiers fight in a country wracked by violence. Somalia is a failed state whose civil war is spilling over to Chad. Zimbabwe’s Robert Mugabe has taken the mantle from Uganda’s Idi Amin as the new millennium’s poster child of an African dictatorship. Add to this reality the region’s world-beating political corruption — the most recent example is last week’s farcical elections in Nigeria — and it is clear why investors want to stay out of Africa. By all measures, Africa appears to be a colossal flop.

Investing in Africa: The Surprising Good News

“People love China and India, like Asia, are skeptical about Latin America and hate Africa” opined accurately the manager of one of the few African investment funds.

This conventional view, however, is surprisingly inaccurate. Over the past decade, parts of Africa have taken baby steps towards greater prosperity, security and democracy. Snake oil “African socialism” from the 1960s has been supplanted by private enterprise and freer markets. Even Nigeria, arguably the most corrupt nation on earth, is — by conventional standards — a macroeconomic success. Nigeria’s annual GDP growth had more than doubled between 2003 and 2006 to an average of 7.3%. Inflation in Nigeria dropped to single-digit percentages last year. And thanks to a boom in oil exports, Nigeria’s foreign exchange reserves are approaching $50 billion.

Nor is Nigeria alone. For the third year in a row, sub-Saharan African countries grew by an average of 6% and are nudging toward 7% this year. At this rate, Africa’s poverty rate will halve by 2015. Take India and China out of the equation, and sub-Saharan Africa is actually growing faster than Asia.

High oil and other commodity prices have provided a much needed tailwind to African growth rates. But here’s the surprising news: non-oil producing African countries are recording similar rates of growth. Thanks to pragmatic government policies and an emphasis on tourism, Kenya is one of Africa’s fastest-growing economies — despite having no commodities. Zambia’s copper exports are complemented by agricultural exports. Africa is even beginning to boast an emerging middle class. In Nigeria, mobile-phone penetration is 8% and rising fast. Optimists hope that a combination of debt forgiveness, improving infrastructure, and accumulated financial reserves have combined to create a momentum that could keep going even after the commodity boom ends.

Investing in Africa: Making a Mint in African Stock Markets

Another surprise: the few investors who can access African stock markets are making a mint. Between 1995 and 2005, African stocks showed compound annual growth of 22%. Last year, the stock market in Kenya rallied 46%, while the local index rose nine times, in dollar terms, over the past 10 years. In 2006, equities jumped: 75% in Morocco; 69% in Uganda; and 55% in Botswana. Nigeria’s stock market capitalization has doubled during the past 12 months to about $45 billion.

How is this all possible? It turns out that African companies are some of the most profitable and fastest-growing in the world. The very reasons not to invest in African stock markets — political uncertainty, corruption, poor infrastructure — mean that the firms that do succeed are some of the savviest around. Yet thanks to the “Africa discount,” they trade at half the levels of Western counterparts.

Investing in Africa: China Yet Again

While much of the West ignores Africa, China has become a new, eager suitor of the Dark Continent. China’s President Hu Jintao recently set off on an eight-nation tour through Africa. He promised $3 billion in soft loans and a doubling of Chinese aid to the continent by 2009. In the last 12 months alone, China’s leaders have visited 48 African nations.

China’s efforts are not borne of feel good development policies, but of pure economic self-interest. China needs Zambian copper, Nigerian oil, Tanzanian timber and South African platinum to achieve superpower status. The Chinese strategy is built on largess — a savvy exercise of “soft power.” Chinese investment has paid for roads in Ethiopia; financed the building of 100 schools and 30 hospitals in Liberia; rebuilt Angola’s once-famous Benguela railway; and set up a road-building program in Mozambique. Chinese investment has already revitalized large parts of Africa and areas of Africa have much better infrastructure than they did just a few years ago.

And, China’s efforts are paying off. Trade between China and Africa soared 40% to a record $55.5 billion last year. Direct investment has reached a cumulative $6.5 billion. A whopping one-third of Chinese oil now comes from Africa.

Investing in Africa: The Last Great Opportunity

Africa is widely perceived as poor and corrupt. But the best investment opportunities lie where perception differs from reality — where things aren’t as bad as they seem. Africa fits that bill perfectly. It’s hated. It’s undervalued. It’s difficult to invest there. It reminds me of how former Communist Eastern Europe and Russia were viewed in the early 1990s. As Hermitage Capital founder and Russia’s largest investor Bill Browder observed: “Russia is sh*t. But as long as it gets a little less sh*tty, I make a lot of money.” That’s why his investors have made 25x on their investment money in the last 10 years — and Browder walked away with more than $160 million in 2006 alone. If that’s not an incentive to look at Africa, nothing is.

Here are some video highlights of the investment opportunities in Africa.

Bookmark and Share

Wal-Mart tries to set up shop in Africa and why this is huge

A few weeks back it was HSBC announcing news of its talks for South Africa’s Nedbank. Now it is the world’s biggest retailer, Wal-Mart, seeking a foothold on the continent with a plan to buy South Africa’s Massmart for more than $4 billion.

Wal-Mart Stores Inc. made an aggressive but expensive bid to expand in Africa ahead of its international competitors, offering to buy South African retailer Massmart Holdings Inc. for 32 billion rand ($4.6 billion).

Wal-Mart’s proposed offer—the company’s biggest acquisition in more than a decade—would represent a relatively high premium for Massmart, a 290-store chain operating in 13 African nations.

Yet a deal would give the Bentonville, Ark., giant a critical foothold to expand in Africa and allow Wal-Mart to beat European multinational rivals Carrefour SA, Tesco PLC and Metro AG into the potentially lucrative sub-Saharan market.

Massmart would serve as “a fantastic entry point to a broader part of the continent,” said Andy Bond, a former chief executive of Wal-Mart’s U.K. subsidiary Asda, who is spearheading the purchase. Massmart already is expanding beyond its South Africa base, Mr. Bond said in an interview Monday.

Wal-Mart has learned the hard way that a first-mover advantage can be important in international retailing.

Carrefour, Wal-Mart’s global archrival, beat Wal-Mart to South America, opening stores in Brazil in 1975, nearly two decades before Wal-Mart. The France-based company also was the first major international chain to establish a presence in Asia, through a joint venture in Taiwan in 1989.

Despite investing billions of dollars building and buying stores, Wal-Mart still trails Carrefour in Brazil today. And Carrefour remains the largest international retailer in China, the most coveted retail market in the developing world. While Carrefour doesn’t have sub-Saharan operations, the chain has stores in northern Africa.

Wal-Mart’s African foray is risky, however. The offer is roughly 13 times Massmart’s pretax earnings and would place Wal-Mart into a politically combustible region.

South Africa is emerging slowly from the recession, is plagued by high crime and unemployment and marked with a heavily unionized work force known for long, sometimes violent, strikes. Other sub-Saharan nations carry even more political risks.

“Massmart is well positioned as a springboard for sub-Saharan Africa, but we believe that it will take a much longer time period for the company to earn its cost of capital in Africa,” said Janney Montgomery Scott analyst David Strasser. “For every relatively stable country like Botswana, there is a Zimbabwe.”

Nevertheless, Wal-Mart appears prepared to face those risks as it looks to extend its reach in emerging markets and expand its international business, which makes up a fourth of the company’s roughly $405 billion in annual revenue.

The international division clearly is Wal-Mart’s growth engine, now that sales at U.S. stores open at least a year have fallen for five consecutive quarters. The company is examining entering other emerging markets as well, including Russia and the Middle East. “Wal-Mart is a company that wants to aggressively expand world-wide,” Mr. Bond said.

But Wal-Mart hasn’t always managed to get its formula right abroad, in part because the retailer sometimes has failed to cater to local habits and markets. Wal-Mart in 2006 abandoned its Germany operation after spending eight years trying to crack the market, one of Europe’s most competitive discount-retailing environments. Wal-Mart pulled out of South Korea last decade.

South Africa, particularly Johannesburg and Cape Town, is an attractive prospect, drawing shoppers from Nigeria, Kenya and elsewhere on the continent because of its well developed roads and wide range of retailers, from discount stores to high-end, international brands.


Like Wal-Mart, Massmart operates low-cost, high-volume stores with a strong general retail business and an emerging food operation. Founded in 1990, Massmart operates several chains, including Game general-merchandise stores, Makro warehouse-club stores and Builders Warehouse for construction and home improvement.

Massmart is one of several large chains, including Shoprite Holdings Ltd. and Woolworths Holdings Ltd., that dominate South Africa and have expanded into neighboring countries. Massmart reported sales of 47.55 billion rand in the fiscal year through June, up 10% from a year earlier.

Wal-Mart made a nonbinding proposal that could lead to a cash offer of 148 rand ($21.08) a share for Massmart. The companies said Monday that they are in exclusive negotiations to try to hammer out a deal, which would be subject to regulatory approval.

The idea of Wal-Mart bidding for one of South Africa’s retailers had been around for a while as it focuses on international growth.  South Africa presents a compelling growth opportunity for Wal-Mart and offers a platform for growth and expansion in other African countries.

The expansion in the rest of Africa is key. Massmart doesn’t only have a presence in South Africa, it also has stores in 13 other countries in sub-Saharan Africa.  It could be a hugely significant deal from an African perspective.

Why this signals a big change.

This is a significant move is for investors. This acquisition, if completed, will be the biggest acquisition undertaken by Wal-Mart in 10 years – and of all places, it’s in Africa. For markets, this could be a game changer, and I venture there are many computer screens in trading floors around the world tracking this transaction very closely.

For quite some time, I have felt that corporate America was missing the Africa story. Like tourists frightened off by rumors of lions prowling the city streets of Nairobi or Lagos, America’s corporate sector has been bamboozled and bogged down in an old African landscape where the only opportunities are to be found in digging up raw materials, and the greatest challenges are with intractable or corrupt government bureaucrats. To be sure, that African landscape still exists, both in mind and in reality.

Last year, India, Inc. completed its second biggest acquisition anywhere, via the purchase by Bharti Airtel of Zain’s mobile phone network. The deal added up to a staggering $10.5 billion. That was quite a statement. China is simply everywhere on the continent, buying up oil reserves and copper mines, and building dams, bridges and roads. But despite all the news of America’s growing military footprint, through the newly established Africa Command, there was not a sniff of America, Inc. It was as if America understood the security and resource games, but that those were the only games in town.

This has changed with Wal-Mart now wanting to put Massmart in its shopping cart. The African continent remains the last frontier of the 21st century. Africa’s resources are vast and still not properly quantified, but the far greater value may be in Africa’s human capital: its consumers.

There are 1 billion souls in Africa, 40 percent of whom live in urban areas, and according to a McKinsey report on Africa’s booming opportunities, Africa already has more middle-class households than India. It’s fitting that a company like Wal-Mart that has always understood the economies of scale is leading the way for America. Africa’s consumer market has scale, and plenty of it.

This will prove a valuable acquisition for Wal-Mart. The company is set to reap an advantage as an early mover. The critics say that it won’t be easy since South Africa is a quirky market; its labor force is unionized and combative when compared with the rest of the world. However, when viewed as a “Gateway to Africa,” South Africa is a winner.

When Wal-Mart first announced its intentions to launch a presence in India back in 2006, many onlookers said they were crazy. Yes, India has an estimated $250 billion retail market and is the second largest country by population, but the government is very protective of its domestic businesses and Wal-Mart at the time was fresh from humiliating defeats in both Germany and South Korea.

What the critics and pundits failed to understand about the India initiative was that Wal-Mart is one of the most gangsta companies in the history of the world. They are as ruthless as their customers are fat. Fine, some of them are fat but you get the idea. They will go to any lengths and twist themselves into whatever contortions they need to in order to build the beachhead. And once they get a foot in the door, everything changes and the takeover begins.

In the 1990’s when Wal-Mart began establishing their beachheads in China and Brazil, there was similar talk of how the company didn’t understand the lay of the land or the culture or whatever. Meanwhile, they’ve since opened hundreds of stores throughout both countries – there is a Wal-Mart directly facing the massive statue of Chairman Mao in the middle of Beijing, talk about a juxtaposition!

Their foray in India has not been quite as successful yet, and the qualifier “yet” is important when you consider the hoops the company is jumping through just to be there. For starters, there is a law that says foreign retailers are not allowed to sell goods directly to the public, so Wal-Mart built a wholesale distribution center instead of their typical retail outlet. They launched a joint venture with the big Indian wireless company Bharti and it is Bharti that owns and operates the retail stores with Wal-Mart acting as supplier and “consultant”. See what I mean about the ruthlessness?

Indian opponents of Wal-Mart are calling it “backdoor retailing” in violation of the country’s laws. And they are right of course, but again, Wal-Mart is straight gangster. Besides, they’ve bought the local farmers’ loyalty as they not only pay 7% more for wholesale crops, they actually arrange for trucks to pick up the goods right from the farms themselves. No one else in India has the scale or the logistical know-how to compete with that. Wal-Mart still has just one distribution center in India, but having laid the groundwork over the past 2 years and established themselves favorably with the farmers, you can bet that their expansion plan throughout the massive nation is about to accelerate.

And if the foreign retailer restriction ever gets eased or lifted? Forgetaboutit. I wouldn’t bet against Wal-Mart in Africa and I wouldn’t ignore the peripheral investment opportunities that may arise because of it.

With a good deal of its supply coming from China, Wal-Mart will surely be able to take a knife to Massmart’s costs by bringing its scale to bear.

I think this acquisition will be viewed as transformative. And, when the competition sees Wal-Mart’s success, they’ll wish they had been early movers too.

Bookmark and Share

South Korean and South Africa agree on Nuclear power cooperation

Both South Korea and South Africa have signed a nuclear power cooperation agreement.

South Korea Friday signed a nuclear power cooperation agreement with South Africa, in hopes of securing lucrative deals for its companies in any future plant construction.

South Korea, with few natural energy sources, operates 20 commercial reactors providing 40 percent of its electricity.

It is eager to export its expertise further, after sealing a landmark 20.4 billion dollar deal last December to build four nuclear power plants in the United Arab Emirates and signing a cooperation deal with Turkey.

President Lee Myung-Bak expressed Seoul’s interest when he met South African Deputy President Kgalema Motlanthe, who arrived Thursday on a working visit focusing on sharing experience and technology in energy.

Lee “expressed hope that South Korea will be able to actively participate in South Africa’s power development projects including the construction of nuclear plants,” the Seoul presidential palace said in a statement.

Earlier, visiting Energy Minister Elizabeth Dipuo Peters and acting Foreign Minister Shin Kak-Soo signed the broad agreement on nuclear energy cooperation, including research and development and the exchange of personnel.

Motlanthe’s spokesman Thabo Masebe told AFP South Africa is working on a long-term energy development plan including the possible construction of more nuclear power plants.

Motlanthe also visited a nuclear power plant in southern South Korea and met top officials of the state-run electricity company KEPCO.

His talks also covered bilateral relations and cooperation in the G20 summit opening in Seoul next month. South Africa is the only African member of the group.

This is good for South Africa as it needs more investment in its electrical infastructure. Japan also recently this year signed a similar agreement with South Africa.

Bookmark and Share

Morocco will host World Economic Forum on MENA

Morocco will host the the World Economic Forum on the Middle East and North Africa (MENA). The event will bring together policymakers, business leaders, and representatives of civil society to find lasting solutions to the region’s economic issues.

Economic actors of the Middle East and North Africa region are expected to debate on strategies to improve their economies especially with the emergence of recent challenges, including the global economic crisis, the instability of oil prices and water shortage.

In order to find a solution to the global economic meltdown that has had far-reaching consequences in the region, the forum aims to address the political and business particularities of member countries that are likely to impact future decisions and plans on a case by case basis.

Presenting a unique platform that brings together businesses, governments and civil society from both member states and the international community, the forum, according to André Schneider, Managing Director and Chief Operating Officer of the World Economic Forum, will “address the challenges of the region and chart a course for action”.

European and Mediterranean cooperation

The World Economic Forum on the Middle East and North Africa should also serve as a suitable platform to spell out new orientations pertaining to the European and Mediterranean cooperation.

According to Abbas El Fassi, Moroccan Prime Minister, the forum will “provide an occasion to explore the perspectives of the future of European and Mediterranean cooperation and its implications for the region”.

Earmarked for October 26-28, under the theme “Sense, Resilience and Prosperity”, the event will see some 1,200 leaders from business, government and civil society gather in Marrakech, Morocco, a country that bridges Europe, Sub-Saharan Africa and the Middle East.

Morocco’s resilience in the face of the economic meltdown has been attributed to the modernisation of its infrastructure, which strengthened its position on the international level while providing more economic avenues for its population.

Here is a graph of the previous economic and projected economic growth for MENA countries.

The World Economic Forum on the Middle East and North Africa is a unique platform for leaders from the region and the rest of the world from business, governments and civil society to address the challenges of the region and chart a course for action. This is a good opportunity for Morocco to play a leadership and meaning role in the region.

Bookmark and Share

Morocco joins clean energy race

The Moroccan government has drawn up plans for becoming part of the renewable energy wave thats going on across the African continent.  The country has embarked on a leading solar energy plan and an integrated wind energy project, which will allow the kingdom to meet 42% of its energy needs by 2020, relying on clean and renewable energy sources.

Water, sun and wind: Morocco has launched an ambitious programme to harness the elements to produce “green” electricity to reduce its dependence on energy imports.

And eventually it even hopes to export the energy produced.

Lining the hills of Dhar Saadane, 126 windmills overlook the city of Tangiers, in what site manager Loubna


King Mohammed VI


Farabi says is the largest windmill park in Africa.

King Mohammed VI himself launched the site in June, one of the first steps towards Morocco’s avowed aim of exploiting renewable energy sources. It has a capacity of 140 megawatts (MW).

But to get that green energy requires a lot of money up front, especially when you are dealing with relatively new technology.

What has helped however, is the growing interest along the southern Mediterranean coastline among not just businesses but some European governments.

This has sparked interest in the Mediterranean to develop one of the region’s most abundant resources: the sun.

Ten years from now, by 2020, the plan is to generate 20 gigawatts (GW) of power in solar power across the southern Mediterranean countries, a quarter of which could be exported from Morocco into Europe.

Morocco’s project then, as ambitious as it is, is only part of a much larger plan put together by the 46-nation Union for the Mediterranean, which comprises the 27 European Union members and 16 Mediterranean countries.

For Mohammed Yahya Zniber, secretary general of Morocco’s energy ministry, this represents a real economic opportunity for the country.

And Energy Minister Amina Benkhadra puts it this way: by diversifying its energy sources Morocco can ensure energy security.


Morocco's 2000MW integrated solar energy project is attracting great international interest, Moroccan Energy Minister Amina Benkhadra said


The growing demand for energy in Morocco, on average up 6.5 percent a year, makes that argument all the more convincing.

At the moment, Morocco is importing more than 95 percent of its primary energy materials — oil, coal and gas — for the country’s energy needs. And it imports 18 percent of its electricity from Spain.

And while the country’s leadership has not ruled out looking at nuclear power, for the moment it has set itself the ambitious goal of increasing the share of renewable energy in its total output to 42 percent by 2020.

The plan is to share that out equally between hydroelectric, wind and solar energy: the wind park at Dhar Saadane then, is just one link in the chain and not enough in itself to meet the wind energy targets.

Morocco wants to produce 2,000 MW in wind energy alone by 2020 and for the moment, its windmills are only producing 280 MW year — and that will require an investment of some 2.2 billion euros (three billion dollars).

It will also have to build three dams to increase its hydroelectric production to 2,200 MW by 2020, said Zniber at the energy ministry.

But the real work will have to come in solar energy, a resource that until now has been underexploited.

Morocco is putting 6.6 billion euros into plans to produce 2,000 MW in solar energy by their stated deadline, said Mustapha Bakkoury, president of the Moroccan Agency for Solar Energy (MASEN).

And given the amount of sunshine the kingdom enjoys, Morocco can expect to get a good return on its investment in this area, said Bakkoury: for the yield from its site would be 20 to 30 percent than equivalent installations in Spain.

Five sites have been chosen for this part of the programme, the first of which will be developed in Ouarzazate.

Deep in the heart of Morocco, the desert city is perhaps better known for some of the films that have been shot there: from David Lean’s “Lawrence of Arabia” to “Star Wars” and Ridley Scott’s “Gladiator”.

The plan is to have the Ouarzazate producing 500 MW by 2015. Morocco will put the first part of the project out to tender before the end of the year.

The problem with solar energy, said Bakkoury, was that it was a lot more expensive that conventional energy.

“This effort could only be justified if we put it in a larger economic context: the aim of the solar plan is to establish a real economic sector.”

This comes in the foot steps of Egypt laying out its plans for investment in Solar and Wind energy. Its good to see nations across Africa joining the clean energy race especially when in the long term this will be very beneficial due to the fact that geographically Africa is blessed with enough Solar and wind energy.

For more on Solar energy in Africa, see this previous post on the topic.

Bookmark and Share


Qualcomm to open office in Lagos, Nigeria

Qualcommn has announced that they will open an office in Lagos, Nigeria.  The San Diego-based company said that the office will serve as a hub for the firm’s West Africa business operations, mobile operators and device manufacturers across the region.

Qualcomm Incorporated today announced the opening of a Lagos office by QCOM Wireless Technologies Limited, a wholly-owned subsidiary, to serve as the Company’s hub for West Africa business operations.

The office will provide support to mobile operators and device manufacturers serving countries throughout the region, including Nigeria, Ghana, Ivory Coast, Senegal and Cameroon.Commenting on the Lagos office launch, Alexander Dadson, senior director of business development and managing director of Qualcomm’s West Africa operations, said “Qualcomm supports growth and development of the West Africa ICT sector. Toward this end, we are collaborating with regional partners to make cost-efficient 3G mobile devices and services more readily available.”

Leading research organizations estimate that roughly half of Nigeria’s population lives in rural areas, much of which is beyond the reach of fixed line broadband solutions. The high cost of traditional computing devices, such as desktop computers and laptops, also creates barriers to reaching West Africa’s consumers. Qualcomm’s integrated, single-chip solutions are enabling its partners to offer Internet-capable 3G devices (CDMA2000 and WCDMA/UMTS) that support different tiers of market needs – from high-end smartphones to low-cost handsets. The Company’s Engineering Services Group also works collaboratively with operators to assist in their deployment of cost-efficient wireless networks for both dense urban areas and rural regions.

“Qualcomm is committed to supporting its partners regardless of which 3G CDMA technology path they choose,” continued Dadson. “We also recognize that fulfilling the industry’s promise of anywhere, anytime wireless voice and data services will not be easy; it will take time, resources and close partnerships with policy makers and operators to make this vision a reality.

Our new Lagos office not only reflects Qualcomm’s long-term commitment to the region, but it also allows us to maintain close proximity to the people, governments and important industry events that are driving the West Africa ICT sector forward.”

This a great chance for not just the local Nigerian work force but surrounding  business people around the region to gain international business management and exprience in the global supply business chain from a world wide leading company such as Quallcomm.

Good to see an American firm taking the plunge after consistently seeing Indian firms outpace their western rivals.

Bookmark and Share