With heightened black-out in Zimbabwe, increased load-shedding in South Africa, and partial or complete blackout in most parts of Africa, Facebook is pitching tent with a few investors who are looking to close the continent’s energy gaps. Backed by the DOEN Foundation, Facebook, Shell Foundation, and USAID, VentureBuilder, an energy-focused startup which aims to scale African-owned and managed off-grid solar enterprises expanding energy access to underserved populations in Africa, has officially been launched.
Here Is The Deal
VentureBuilder is not just the latest player in the off-grid energy market on the continent, it is also aggregating all the already existing renewable energy startups on the continent to tackle the lack of access to modern electricity services.
VentureBuilder hopes to help these indigenous distributors grow into high-impact solar companies.
This will be done by focusing on three key areas to close the electricity access gap on the continent:
Partnering with existing local African distribution enterprises that cater to rural underserved communities.
Investing the much-needed ‘patient’ capital alongside Enterprise Development Services to enable entrepreneurs to scale their business.
Rigorous tracking of key metrics associated with business performance and social impact.
“As Africa’s off-grid solar revolution has evolved, many industry insiders have recognised the need to empower a new generation of local enterprises,” says Dan Murphy, Managing Director of VentureBuilder. “We’re excited to partner with these local businesses and provide them with the human and financial resources they need to sustainably and profitably scale their impact”.
A map of some energy startups in Africa
‘Patient’ Early Stage Capital
In simple terms, VentureBuilder would not only be sitting down doing the aggregation, it would also be heavily investing in local renewable energy startups through a new investment model it calls ‘patient’ early-stage capital This investment in local partners across Africa, combined with a specialised suite of technical expertise, will accelerate each partner’s path to scale.
By doing so, VentureBuilder intends to tackle the lack of access to modern electricity
“The DOEN Foundation has supported dozens of energy access initiatives over the years. We believe VentureBuilder can be a gamechanger in supporting and scaling indigenous enterprises across Africa, in areas most in need,” says Saskia Werther, Program Manager at the DOEN Foundation.
VentureBuilder has been co-developed by Catalyst Off-Grid Advisors and Open Capital Advisors since 2017, leveraging both companies’ decades of experience in building, advising, and financing off-grid solar companies. The development phase was made possible with support from Facebook, who also committed additional financing alongside the DOEN Foundation, Shell Foundation, and USAID for the implementation phase.
The startup ecosystem in Eswatini still seems far off.
With roughly about 1.4 million people, Eswatini (formerly Swaziland) is nearly 70 times lesser in size than South Africa. However, comparison of countries by size may sometimes be misleading. For instance, even though Eswatini is about 24 times bigger in size than Singapore (a South East Asian country), Singapore’s economy (in GDP terms) is by far larger than Eswatini’s (about 74 times). This is even as both countries don’t have key export commodities such as oil.
Comparing both countries’ startup ecosystems further leaves less than desired. The most recent Startup Genome’s 2019 Global Startup Ecosystem Report rates Singapore as the #14 global startup ecosystem in the world and identifies Local Connectedness as one of its strongest traits. Apart from ranking 4th in the world, highlights from the report include that Singapore’s startup ecosystem has an estimated value of $25 billion, far exceeding the global average of $5 billion. The ecosystem ranks #5 on the Global Startup Ecosystem’s Fintech sub-sector. Early-stage funding per startup in Singapore is $202,000. Output Growth Index of startups in Singapore is 8 out of 10, indicating meaningful growth in total startup creation, calculated in an annualized growth rate.
Eswatini facts in basics
Part of the reasons why Singapore’s startup ecosystem has succeeded is because the Singaporean government supports young startups with its Startup Tax Exemption Scheme. The scheme exempts 75% of a company’s first $73,000 in income. Additionally, Singapore raised tax deductions for IP registration fees from 100% to 200% and qualifying expenses incurred on Research &Development from 150% to 250% in 2018. Thus, Singapore startups are able to put off paying taxes until they are larger and more established.
Below we examine why the startup ecosystem in Eswatini is yet to come of age.
Poor Ease of Doing Business
The latest World Bank’s Ease of Doing Business report ranks Eswatini as number 117 out of 190 countries in terms of ease of doing business .
Founders desiring to register a business as a Private Limited Liability Company in the country must pass through each of the following procedures: Preregistration (for example, name verification or reservation, notarization); Registration in the economy’s largest business city; Postregistration (for example, social security registration, company seal); Obtaining approval from spouse to start a business or to leave the home to register the company; Obtaining any gender specific document for company registration and operation or national identification card.
Each of these procedures starts on a separate day (2 procedures cannot start on the same day). Approximately, it takes about 12 days to obtain a trading license in Eswatini. However, a company might need more than one trading license if it does more than one activity. Each activity has a different license fee. For instance, if the company produces and sells its goods to the public.
No Noticeable Legislation Incentivising Startups
Eswatini has no legislated law granting incentives to its startup ecosystem or newly formed businesses. Although companies may be issued with a Development Approval Order (of up to a 10-year period) enabling them to pay only 10% as corporate tax instead of the standard flat rate of 27.5% applicable to all corporate entities, only Eswatini’s Minister of Finance is authorised by law to exercise such powers. The grant of a development approval order is also only applicable to approved new investment, business or development enterprises in manufacturing, mining, international services and tourism and which will not unfairly compete with existing Swazi companies. Swaziland and foreign investors are eligible to apply for this incentive but the application must be made by a company incorporated in Swaziland.
By concentrating the incentive only in the manufacturing, mining, international services and tourism sectors, and by placing the stringent requirement of Ministerial approval, the scheme may have deprived startups still struggling with raising initial starting capital from the opportunity of being granted such order.
Again, Eswatini’s National Policy on the Development of SMEs defines small enterprises as having assets of E50,000 to E2m (US$6500- 260,000), 4 -10 employees, and sales of up to E3 million (US$395,000). Medium enterprises have assets valued at E2–5m (US$260,000–650,000), up to 50 employees, and sales of up to E8 million (US$1,040,000). (E = symbol of Swaziland’s currency Lilangeni (SZL).
The purpose of this classification is not to provide support in terms of seed capital but to give exaggerated focus on the startup ecosystem — more or less pretending that a lot is being done for startups.
At policy level, the SME Unit in Eswatini’s Ministry of Commerce, Industry and Trade is responsible for researching and proposing changes to existing policy or developing new policy related to SMEs in such areas as finance and training.
Eswatini’s Small Enterprise Development Company (SEDCO) also provides business development services such as training on business management and registration of start-up ventures. SEDCO operates nine small industry estates and rents workshops to small business owners.
The SME Development Unit / Domestic Investment Department in Swaziland’s Investment Promotion Authority also provides extensive support to SMEs as well as operating a linkages programme to help establish business relationship between SMEs and larger enterprises.
However, no matter the extent of such policies, nothing could be more powerful as spread tax incentives, which small businesses or startups can access no matter how remotely located they are, as is the case with Singapore’s Startup Tax Exemption Scheme or South Africa’s Section 12J. Most of the times, only a handful of businesses may be selected for such trainings or linkages programmes.
The direct implication of the absence of these incentives is lack of appetite for equity investments by venture capital or private equity firms in Eswatini ’s startup ecosystem.
One of the enablers of economic growth in modern times is the degree of adoption of technological innovations by locals of a geographical territory. For instance today, the eight most valuable companies in the world are all tech companies. As at 2007, only one tech business, Microsoft, was among the 10 biggest companies in the world. Increasingly, globalisation has meant that many of these brands have significantly captured larger chunk of the global economy.
A 2014 statistic indicated that South Africa’s ICT fuelled by technological revolution contributed 2.7% to South Africa’s overall GDP, a statistic which is larger than agriculture, but slightly shy of tourism’s contribution of 3.1%. In other words, for every R100 that the South African economy produced in 2014, R2.70 was due to activities related to ICT. In Nigeria, Africa’s largest economy, the Information and Communications Technology’s (ICT) contribution to the Gross Domestic Product (GDP) stands at 13.8% as at September, 2019, a figure which may more than double Nigeria’s Oil and Gas contribution of 8.8% in two years.
Having noted the significance of technology in the growth of a country’s economy and by extension its startup ecosystem, the rate of internet penetration in Swaziland is still very low. As at 2018, only about 446,051 people in the country, representing a meagre 27.8 % of the entire Swaziland’s population have access to the internet. Compared to the East African country of Mauritius, these statistics are abysmally poor. Even though Eswatini is about 9 times larger than Mauritius in size (and even has more people than Mauritius), there are about 803,896 internet users as at Dec/2018 in Mauritius, representing about 63.2% of the Mauritian population. Unarguably, this is why the Mauritian ICT industry made a GDP contribution of 5.6% in 2017 for Mauritius. The implication of this is that so many activities are going on in the sector, and invariably the Mauritian startup ecosystem.
A major factor that explains this low rate of technology adoption in Mauritius is the poverty gap in the country. The socially and economically marginalised — particularly those at the intersections of class, gender, race or ethnicity — are unable to harness the Internet to enhance their social and economic well-being. Although the internet sector in Swaziland has since been open to competition with four licensed Internet Service Providers (ISPs), prices have however remained high and market penetration relatively low. Much of this is attributable to the country’s landlocked nature. As a result of this, the country depends on neighbouring countries for international fibre bandwidth. This meant that access pricing was high for many years, though prices have fallen more recently in line with greater bandwidth availability resulting from several new submarine fibre optic cable systems that have reached the region in recent years. Invariably, the startup ecosystem in Eswatini is also affected by lack of abundance of this.
Low Number of Tech Hubs And Incubators
Unlike other African countries with appreciably large presence of tech hubs, incubators and accelerators, Eswatini boasts only of a few.
In Southern Africa, for instance, where Eswatini is regionally located, Zimbabwe and Zambia recorded remarkable growth respectively doubling and tripling their number of active tech hubs in eighteen months in 2018 (13 vs 6 in Zimbabwe; 6 vs 2 in Zambia). However, there is only about one hub in Swaziland, out of over 420 hubs present in Africa. The Mbabane Hub is made up of young people in their own right, working together to promote technological innovations around the Mbabane city region— the capital and largest city in Eswatini.
Although the Swaziland government has, in 2012, initiated the Royal Science and Technology Park (RSTP), a parastatal under the Swaziland Investment Promotion Authority (SIPA), very much still remains to be done. The Biotechnology Park which falls under The Royal Science and Technology Park (RSTP) is situated at Nokwane and is a “one stop facility” that creates an enabling environment to investors wishing to settle within the Royal Science and Technology Park. RSTP hopes to foster the conception of inventions and facilitate their patenting and to help knit various elements of the Research & Development (R&D) cluster together. By 2022, RSTP hopes to have trained Swazis with new, innovative skills, providing them with the environment to experiment on new technologies. RSTP also hopes to inculcate a culture of entrepreneurship among Swazi graduates and to facilitate specially promoted research in response to national priorities and develop strategies for the development of human resources in Swaziland.
The importance of tech hubs, incubators or accelerators in the development of Eswatini ‘s startup ecosystem, for instance, can never be over-emphasized. Tech hubs can create an environment specifically targeted at helping young technology companies thrive by encouraging experimentation, not demonizing failure, and helping firms network with other like-minded individuals and enterprises. They can also make it easier for firms to meet investors in order to get their project funded.
Bottom Line
Eswatini still has a long way to go in terms of its startup ecosystem growth. However, it has a bright future on the flip-side. The country has a median age of 20.5 years, although with a life expectancy of just 31.88 years, the lowest documented life expectancy in the world and less than half the world average (largely because of large prevalence of several health issues, including HIV/AIDS and tuberculosis). With increasing accessibility to the country’s economy by foreign investors, most of whom are from South Africa, there may still be some hope on the horizon.
Egypt is fully committed to its program to sell minority stakes in state companies and is tackling a number of issues that have held it up, a government advisor on the share sales said on Thursday.
The government has been talking for years about selling the stakes but has repeatedly postponed the program, raising doubts among some economists about its commitment to privatization.
“From the meetings I attend on a weekly basis, the government is as keen as I have ever seen them on proceeding with the privatization program,” Mohamed Metwally, CEO of NI Capital, told Reuters.
“There has never been slack on this. It’s just a matter of sometimes you face things that take longer to prepare than expected,” said Metwally in his first interview with the media since taking over as NI Capital’s CEO in July.
The government set up NI Capital in late 2015 as a state-owned financial services company to help it navigate financial markets.
The government announced in 2016 that it was selling company stakes, with some to be sold by the end of that year. Since then it has sold only 4.5% of one company, tobacco monopoly Eastern Company in a transaction in March.
Metwally said the delays had been caused by weak markets, legal hurdles, the readiness of each company’s financial documentation and in the case of some companies a downturn in the business cycle.
Egypt last year released a list of 23 state-controlled companies to be brought to market as an initial batch.
The first sales will be companies already trading on the Egyptian Exchange, most likely Abu Qir Fertilisers and Chemicals Industries and Alexandria Container and Cargo Handling Co., sources familiar with the planned transactions told Reuters.
Metwally, citing reasons of financial compliance, declined to discuss individual companies before they reached the market.
He said stake sales could raise around 40 billion Egyptian pounds, roughly equal to 5% of the stock market’s current capitalisation of 750 billion-800 billion pounds.
Among the hurdles bringing companies to market has been a tangle of ownership structures, with different entities requiring different legal processes for selling their assets.
“We had a few transactions that were held up by this process, but now it’s behind us,” Metwally said.
Plans Affected By Aramco’s Planned IPO
A potential future delay to the Egyptian share sales could be the initial public offering of Saudi Arabia’s state oil company Aramco, which may be announced as early as next week.
“Right now liquidity is being sucked out of the market because of anticipation of the Aramco offering,” Metwally said.
If the Aramco sale raises more than $25 billion, it would make it the world’s biggest IPO.
“Now should it (the Egyptian sales) happen, let’s say, in November, or wait till January or February when the Aramco IPO is out of the way?” he said.
Another stumbling block has been the trade war between China and the United States, which by creating a glut in products sold by some of the companies reduced their prices by 30–40% and temporarily lowered valuations, Metwally said.
He said these issues were all being resolved, paving the way for a possibly rapid roll-out.
“Progress is happening in every single transaction,” he said.
“That might put us in a high-quality problem in the future, in which they’re all ready at the same time, and we’ll just have to schedule them one after the other as part of our capital markets management process.” (Reporting by Patrick Werr; Editing by Susan Fenton)
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
The case stems from a legal battle between the government and power producer IPTL, which led to the dismissal of several cabinet ministers in 2014.
Tanzania also faces at least two other multi-million claims from international investors.
Tanzania has been ordered by a World Bank arbitration court to pay $185 million to the Hong Kong subsidiary of Standard Chartered for breaching an energy contract.
The court’s ruling, which was released on Tuesday, adds to pressure on the country, which faces at least two other multi-million claims from international investors.
Here Is All You Need To Know
The case stems from a legal battle between the Tanzanian government and privately-owned independent power producer IPTL, which led to the dismissal of several cabinet ministers in 2014.
The award by the World Bank’s International Centre for Settlement of Investment Disputes is less than the $352.5 million sought by Standard Chartered Bank Hong Kong, which was not immediately available for comment.
The government of Tanzania denied any responsibility and said it was not planning to pay the damages.
“Neither the government nor (state power company) Tanesco, have a legal liability in these cases,” Tanzania government spokesman Hassan Abbasi said on Twitter on Wednesday.
Tanzania’s attorney general Adelardus Kilangi said that IPTL, not the government, would have to pay Standard Chartered.
“When the award says that the Tanzanian government should pay Standard Chartered Bank, the actual meaning is that the government should supervise IPTL to make the payment,” he told Reuters.
IPTL did not immediately respond to requests for comment.
Tanzania faces at least two other cases at the World Bank tribunal.
US firm Symbion Power said in 2017 it was seeking $561 million from Tanesco at the Paris-based International Chamber of Commerce’s International Court of Arbitration for breach of contract.
In 2017, a Canadian construction firm seized one of Tanzania’s new Q400 turbo-prop planes in Canada over a $38 million lawsuit related to a compensation ruling by the International Court of Arbitration.
Aviation sources said Tanzania reached a settlement to secure the aircraft, which was released in March 2018.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
As part of efforts aimed at helping Burkina Faso tackle the challenges posed by prolonged drought and collapse of commodity prices and improve on food security, the World Bank has granted Burkina Faso a loan of over US$200 million to finance its agriculture resilience and competitiveness project.
Burkinabe Minister of Economy, Finance and Development Lassane Kabore
The Burkinabe Minister of Economy, Finance and Development Lassane Kabore signed the loan agreement with Soukeyna Kane, World Bank’s Country Director for Burkina Faso yesterday in Washington D.C at the ongoing IMF/World Bank annual general meetings.
The agricultural project is designed to boost agricultural productivity and market access for small producers and small and medium agribusiness entrepreneurs for selected value-chains in the project-covering areas.
It will be carried out in many regions across Burkina Faso, enabling the cultivation of 5,494 hectares of land, including 4,497 hectares with complete water resources control. This project, approved on August 30, this year, is expected to close on November 30, 2025.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Efforts geared towards preserving one of Africa’s dwindling rain forest region in Gabon get a boost with support from Norway. This makes Gabon the latest African nation to receive funding to preserve its rainforests to mitigate the effects of climate change. As part of a 10-year deal, Norway will pay $150 million to Gabon to battle deforestation and reduce greenhouse gas emissions.
The deal is part of the Central African Forest Initiative (CAFI), which was launched by the United Nations in 2015 to link European donors with countries in Africa. The partnership sets a carbon floor price of $10 per certified ton and will be paid on the basis of verified results from 2016 through to 2025.
In 2014, Liberia was promised $150 million by Norway to completely stop cutting down its trees in return for development aid with the hope of stopping deforestation by 2020. Gabon, which is on the Atlantic Ocean, has just 2 million people and abundant natural resources. Forests cover almost 90 percent of the country.
Since the early 2000, it has created more than a dozen national parks to preserve the forests. Gabon also has around 12% of the Congo Basin forest, which is considered the world’s second largest tropical rainforest. The country hosts 60% of Africa’s surviving forest elephants, which CAFI describes as “a key indicator of sound natural resource governance.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
THE Angolan government says it remains committed to subsidies removal but needs to balance reforms with the goal of diversifying the economy away from its heavy reliance on oil. This is coming amid criticism from the International Monetary Fund (IMF) over the subsidies.
Angolan Minister of Finance Vera Daves
Speaking on the issue yesterday in Washington D.C. on the sidelines of the ongoing International Monetary Fund (IMF)/World Bank annual meetings, the Angolan Minister of Finance Vera Daves, the first woman to head the Treasury of Africa’s second-largest oil producer, says the government has ended support for industries, including electricity and water, but would continue to provide fuel subsidies for agriculture and fishing for the time being.
“We need to remove subsidies, that is right, but we also need to create conditions in sectors that are not as efficient as oil,” she adds. The IMF had in March, this year approved a $3.7 billion loan programme for Angola, has criticized the subsidies, saying they contradicted the government’s stated reform policy. The country has been working on economic diversification from oil to cushion the effect of price fluctuations.
THE conversation on ways to reduce poverty and spur growth at the ongoing IMF/World Bank meetings was, indeed a harvest of ideas. Jordan’s Minister of Planning, Mr Mohammed Al-Assiss, who was in the discussion panel, identified energy as a huge handicap in the country’s effort to stem the tide of poverty.
Jordan’s Minister of Planning, Mr Mohammed Al-Assiss
For Republic of Niger Minister of Planning Madame Aichatou Kane, her country is doing its best to transform the economic landscape and empower the people to excel and overcome poverty while Kenya proudly announced that it was, indeed, taking giant strides to effectively handle the issue of job creation for its youths.
The Governor, Central Bank of Kenya, Mr Patrick Njuroge, observed that though the issue of poverty might be huge in Africa, there was need to demonstrate sensitivity to the needs of the people. He was however optimistic that the African Continental Free Trade Area holds plenty of promise to the people and will help spur growth in needed ways.
President of the World Bank, Mr David Malpass, who played the neutral role of encouraging discussion in the crucial areas of economic development, commended the efforts of many countries in Africa but called for transparency and connectivity with the people in dealing with the issues inimical to growth and wealth creation.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
LINGERING trade tension between the United States and China as well as geopolitical rivalry across the world is weighing on global economic growth, according to IMF’s latest assessment published in the World Economic Outlook, released at the start of the IMF/World Bank annual meetings, in Washington DC.
Gita Gopinath, the IMF’s Chief Economist
President Donald Trump’s weaponization of trade against China is affecting global growth prospects as the IMF has downgraded economic growth by 0.2 percent from its last forecast in April to 1.7 percent in 2019 and would remain there in 2020. Gita Gopinath, the IMF’s Chief Economist, specifically blamed contracting manufacturing especially automobile due to rising tariff and prolonged trade uncertainty on weak growth prospects. Thanks to these factors, she said trade volume declined to 1% in the first half of 2019. In contrast with trade, services, according to Gopinath, continue to hold up and this has buoyed labour market and wage growth.
The uptick in growth projections in 2020 is anchored by emerging market and developing economies that are projected to experience growth rebound of 4.6 percent, according to the IMF. Emerging market economies that had experienced mild recessions such as Argentina, Iran, and Turkey are expected to see recoveries in 2020.
What to do to raise growth? Ms Gopinath says policymakers must undo trade barriers with durable agreements and reduce domestic policy uncertainty.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
RISING populism could be tamed if governments spend more on social services and progressive taxation can help in that regard. However, powerful vested interests are blocking international effort to reform international corporate system, says Wayne Swan, Commissioner, Independent Commission for Reform of International Corporate Taxation (ICRIC) at a forum on improving social spending at the annual meetings of the IMF/World Bank.
Wayne Swan, Commissioner, Independent Commission for Reform of International Corporate Taxation (ICRIC)p
He believes generating public support for progressive tax is critical to improve social services as well as create the institutional measures to monitor social spending. “Nothing can be more frustrating to fight for progressive tax and have money lost to wasteful spending,” he says.
For Winnie Byanyinma, Executive Director, Oxfam International, it is unacceptable to have 242million children out of school globally and 10,000 people die daily because they don’t have access to public health services. Putting a stop to tax dodging practices and implementing progressive tax policies will help pay for social services.
The failure of globalisation, for Ian Goldin, professor of Gobalisation, Oxford University, is reflected in the rise in excessive nationalism and populism with a high level of disdain for experts and knowledge. He calls on Policymakers to maintain a long-term outlook and avoid being captured by short-term interests.
Deborah Greenfield, Deputy Director-General of the International Labour Organisation views social spending as investments in health, education and social protection which could change hearts and help ease resistance to progressive taxes. The future of work with its attendant negative effect on low-skill workers requires a re-evaluation of the relationship between employment and business models.
For Tao Zhang, Deputy Managing Director of the IMF, what is important for the Fund is how to design social spending policies to make them country specific and sustainable.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
