Analysts have started exploring opportunities inherent in the proposed single currency for the West African region; The Eco. It could be recalled that leaders of the 15 member states of the Economic Community of West African States (ECOWAS) met in Abuja, Nigeria, and formally agreed on the name of the planned common currency the “ECO” The currency according to a release from ECOWAS Secretariat Abuja, would be based on a flexible exchange rate regime, coupled with a monetary policy framework focused on tackling inflation.
Observers say there seems to be a sense of urgency in this latest efforts, maybe being buoyed by the recently signed Africa Continental Free Trade Agreement (AfCTA). This is because the target launch date for Eco has been postponed several times; in 2005, 2010 and 2014; since the concept first arose in 2003. Now the Economic Community of West African States (ECOWAS) is planning to launch the currency in 2020, with member states agreeing to name it the ‘ECO’ there seem to be a new sense of urgency.
Reports indicate that governments in the region are keen on more integration and a single currency will facilitate trade, lower transaction costs, and payments amongst ECOWAS’ 385 million people.
Currently, eight of ECOWAS countries i.e. Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo jointly use the CFA franc while the remaining six members have their own independent currencies.
Some analysts are of the view that the single currency if properly implemented will improve trade by allowing specific countries to specialize at what they are good at, and exchange it for other goods that other countries in the bloc produce more efficiently.”
A report by the African Development Bank Group (Afdb) indicates that the 2020 deadline for the single currency will most like be postponed again unless the region can align with its monetary and fiscal policies.
Countries are required to meet a ten convergence criteria, set out by the West African Monetary Institute (WAMI), by the 2020 deadline. The primary four beings: a budget deficit of not more than 3%, an average annual inflation rate of less than 10%, Central Bank financing of budget deficits should be no more than 10% of the previous year’s tax revenue and gross external reserves worth at least three months of imports.
The six secondary criteria to be achieved by each member country are: Prohibition of new domestic default payments and liquidation of existing ones, tax revenue should be equal to or greater than 20 percent of the GDP, wage bill to tax revenue equal to or less than 35 percent, public investment to tax revenue equal to or greater than 20 percent, a stable real exchange rate and a positive real interest rate.
However, reports indicate that although countries may meet the criterion by the deadline they fall behind thereafter thus posing the main difficulty in inconsistencies.
As at today, only five countries, viz; Cape Verde, Ivory Coast, Guinea, Senegal and Togo of the region’s fifteen countries currently meet the single currency’s criteria of a budget deficit not higher than 4% and inflation rates of not more than 5%, as noted by Charlie Robertson, chief global economist at Renaissance Capital.
Additionally, while ECOWAS says the integration will be gradual as countries meet the criteria, it’s unlikely that a 2020 launch date is feasible as there is no significant progress in the design, production, and testing of the currency notes.
Given that various economies in the region are at “dramatically different levels of development,” the leadership of ECOWAS is being unrealistic in both its timing for the currency’s launch and expectations of what it might achieve, Robertson says. “You’ve got very different levels of debt, interest rates, and budget deficits. Trying to align these countries to operate as one is extremely difficult,” he says. “What currency policy is right for two such divergent countries like saying Ghana and Burkina Faso?”
There is also the glaring disparity in the economic size of Nigeria in the region. For example, Nigeria is 67% of ECOWAS’ GDP, so really this isn’t a single currency for 15 countries, this is the Nigerian Naira plus a few countries.
How the leaders hope to close all these gaps between now and next year remains to be seen.
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.
Good day for South African businesses, bad day for their Nigerian counterparts. This is because there are still so many issues surrounding equity crowdfunding in Nigeria. Below, we discuss the legal implications of crowdfunding in Nigeria more intensely.
Crowdfunding sometimes appears the only alternative for start-ups, in the face of stifling interest rates on loans from banks and financial institutions, and lack of funds from family and friends as well as the absence of venture capitalists and angel investors. Crowdfunding is a way of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Here is a quick grasp of reality.
The United States
The United States’ Securities and Exchange Commission has made a lot of rules on Crowdfunding which will enable eligible companies to offer and sell securities through crowdfunding. Thus in the US, all transactions under Regulation Crowdfunding take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal. A company is to raise up to a maximum aggregate amount of $1,070,000 through crowdfunding offerings in a 12-month period. However, there is a limit on the amount individual investors can invest across all crowdfunding offerings in a 12-month period. Securities purchased in a crowdfunding transaction generally cannot be resold for one year.
South Africa.
There is no substantial legislation on crowdfunding in South Africa, except that equity crowdfunding is a form of securities. However, South’s Africa’s first equity crowdfunding platform Uprise.Africa was launched after being told by the Financial Services Board (FSB) that the platform does not fall foul of the Collective Investment Schemes Act, the platform’s founder and COO Patrick Schofield said. Inge Prins, the Chief Marketing Officer Uprise.Africa, had hinted the platform, in one of its numerous success instances, paid out investment funds to a local brewery, Drifter Brewery following a successful campaign that raised R3,889,000 (US$293,000), far exceeding its stated goal by almost R1,000,000.
Understanding How Crowdfunding Works
Crowdfunding refers to raising money from the public (who collectively form the “crowd”) primarily through online forums and social media.
Crowdfunding models include: Donation-based crowdfunding (in which donors are not typically granted anything in return for their donation)
Rewards-based crowdfunding (in which backers contribute funds in exchange for some reward–in many cases the item produced by the campaign)
Equity crowdfunding (Equity crowdfunding refers to raising money from small public investors (who collectively form the “crowd”) primarily through online forums and social media. In exchange for relatively small amounts of cash, investors get a proportionate slice of equity in a business venture).
Debt/lending crowdfunding (in which lenders provide money and expect their loan to be paid back with interest).
Crowdfunding For Private Companies Cannot Work Unless Nigeria’s Companies And Allied Matters Act (Nigeria’s Chief Company Legislation) Is Amended.
The idea of having crowdfunding for companies is that the general public would be allowed to contribute towards the formation of the companies. Now while the public can contribute to an idea, the same is not possible for a company. By section 22(5) of Nigeria’s CAMA, it is impossible for a private company to invite the members of the public to subscribe to its shares. It is also impossible for equity crowdfunding to work because the idea of equity crowdfunding is that the public funds the formation of the company expecting to be repaid their contributions by way of shares in the company.
Again, under Section 22 of CAMA, the maximum number of persons a private company shall have shall not exceed fifty, not including persons who are bona fide in the employment of the company.
Nigeria’s Securities and Exchange Commission and Crowdfunding
The Commission determines governs all company securities in Nigeria. Section 13 of the Investment and Securities Act (the chief Act that regulates securities of companies in Nigeria) empowers the Commission to:
regulate all offers of securities by public companies and entities;
register securities of public companies;
prepare adequate guidelines …necessary for the establishment of securities exchanges and capital trade points.
register and regulate the workings of venture capital funds and collective investments schemes in whatever form;
Consequently, by Section 67(1) of the Act, no person shall make any invitation to the public to acquire or dispose of any securities of a body corporate or to deposit money with anybody corporate for a fixed period or payable at call, whether bearing or not bearing interest unless the body corporate concerned is-(a) a public company, whether quoted or unquoted, and the relevant provisions of Act are duly complied with.
To this effect, the SEC, which was empowered to do so, has gone ahead to give the listing requirements for any company in Nigeria to include that the company must be registered as a public limited company with no restrictions on the transfer of fully paid shares; have a minimum of three (3) years operating track record; have a pre-tax profit from continuing operation of not less than N300million cumulatively for the last three (3) fiscal years and a minimum of N100 million in two (2) of these years. Hence, since equity crowdfunding is ideally a thing for new, mostly private companies limited by shares, there is no way any of them would be able to fulfill the listing requirements, to be able to offer their securities to the public.
The continued ban on equity crowdfunding in Nigeria by SEC, therefore, is not a surprise, even though the Commission said it is looking at the crowdfunding rules in the US and Canada.
The SEC believes that crowdfunding cannot be effective in Nigeria in the meantime because of a lack of rules.
Bottom Line
While equity crowdfunding remains banned in Nigeria, donation and reward-based crowdfunding are however excluded from the SEC’s regulatory remit. This explains why there are a number of donation crowdfunding platforms, and not one for equity crowdfunding. Nigeria’s first equity-based crowdfunding platform, Malaik, launched in 2015 is now down and is up for sale at $3795 on HugeDomains.com, while other donation-based platforms such as Donate-ng.com, and Imeela have since carried on.
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.
Nigerian born author Lesley Arimah has been declared the winner of The 2019 Caine Prize for African Writing for her short stories. Her short story titled Skinned won the Award. This win is coming against the backdrop of her being shortlisted for the Award on three previous occasions.
The Shortlist for this year came alongside Meron Hadero of Ethiopia for ‘The Wall’, Cherrie Kandie of Kenya for ‘Sew My Mouth’, Ngwah-Mbo Nana Nkweti of Cameroon for ‘It Takes A Village Some Say’, and another Nigerian Tochukwu Emmanuel Okafor for his work titled ‘All Our Lives’.
Arimah’s story was first published in McSweeney’s Quarterly Concern (Issue 53). A statement by Caine Prize said, “‘Skinned’ envisions a society in which young girls are ceremonially ‘uncovered’ and must marry in order to regain the right to be clothed. It tells the story of Ejem, a young woman uncovered at the age of fifteen yet ‘unclaimed’ in adulthood, and her attempts to negotiate a rigidly stratified society following the breakdown of a protective friendship with the married Chidinma. With a wit, prescience, and wicked imagination, ‘Skinned’ is a bold and unsettling tale of bodily autonomy and womanhood, and the fault lines along which solidarities are formed and broken.”
In 2016, Arimah was shortlisted for the Caine Prize for her short story which became the title story of her collection of short stories, ‘What It Means When A Man Falls From The Sky.’ In 2017, Arimah’s ‘Who Will Greet You At Home’ which was shortlisted for the prize was first published in the New Yorker.
The £10,000 prize is the most prestigious literary award for a short story on the continent. Dr. Peter Kimani, the Chair of Judges when announcing the prize said, “The winner of this year’s Caine Prize for African Writing is a unique retake of women’s struggle for inclusion in a society regulated by rituals.
According to a statement from the judges, Arimah’s Skinned defamiliarizes the familiar to topple social hierarchies, challenge traditions and envision new possibilities for women of the world. Using a sprightly diction, she invents a dystopian universe inhabited by unforgettable characters where friendship is tested, innocence is lost, and readers gain a new understanding of life.
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.
Nigeria officially joined the African Continental Free Trade Area (AfCFTA) as President Muhammadu Buhari signed the Agreement Sunday in Niamey at the opening of the African Union (AU) Summit.
President Buhari appended his signature to the treaty at exactly 10: 47 a.m. in the presence of African Heads of State and Government, delegates and representatives from the private sector, civil society, and the media attending the 12th Extraordinary Summit of the African Union on Launch of the Operational Phase of the AfCFTA.
In his remarks shortly after signing the agreement, the president declared that Nigeria’s commitment to trade and African integration had never been in doubt nor was it ever under threat.
He told the summit that Nigeria would build on the event by proceeding expeditiously with the ratification of the AfCFTA.
‘‘Nigeria wishes to emphasize that free trade must also be fair trade.
‘‘As African leaders, our attention should now focus on implementing the AfCFTA in a way that develops our economies and creates jobs for our young, dynamic and hardworking population.
‘‘I wish to assure you, that Nigeria shall sustain its strong leadership role in Africa, in the implementation of the AfCFTA. We shall also continue to engage, constructively with all African countries to build the Africa that we want,’’ President Buhari said.
The Nigerian leader also congratulated Ghana on being selected to host the secretariat of the AfCFTA.
President Buhari stated further: ‘‘I have just had the honor of signing the agreement establishing the African Continental Free Trade Area (AfCFTA), on behalf of my country, the Federal Republic of Nigeria.
‘‘This is coming over a year since the AfCFTA Agreement was opened for signature in Kigali, Rwanda, at the 10th Extraordinary Summit of the African Union, on 21st March 2018.
‘‘In fact, you will recall that the treaty establishing the African Economic Community was signed in Abuja in 1991.
‘‘We fully understand the potential of the AfCFTA to transform trade in Africa and contribute towards solving some of the continent’s challenges, whether security, economic or corruption.
‘‘But it is also clear to us that for AfCFTA to succeed, we need the full support and buy-in of our private sector and civil society stakeholders and the public in general.
‘‘It is against this background that we embarked on an extensive nationwide consultation and sensitization program of our domestic stakeholders on the AfCFTA.
‘‘Our consultations and assessments reaffirmed that the AfCFTA can be a platform for African manufacturers of goods and providers of service to construct regional value chains for made in Africa goods and services.
‘‘It was also obvious that we have a lot of work to do to prepare our nation to achieve our vision for intra-African trade which is the free movement of ‘made in Africa goods’.
‘‘Some of the critical challenges that we identified will require our collective action as a union and we will be presenting them for consideration at the appropriate AfCFTA fora.
‘‘Examples are tackling injurious trade practices by third parties and attracting the investment we need to grow local manufacturing and service capacities.’’
President Buhari noted that Nigeria’s signing of the AfCFTA and its Operational Launch at the 12th Extraordinary Summit was an additional major step forward on the AU’s Agenda 2063.
Meanwhile, with Nigeria and the Benin Republic signing the Agreement at the Summit, 54 out of 55 African countries have signed the world’s largest free trade area deal, encompassing 55 countries and 1.2 billion people.
Eritrea is the only African country yet to sign the agreement.
A total of 26 African countries have deposited instruments of ratification, with Gabon being the latest after depositing her instrument of ratification during the Extraordinary Summit.
The AfCFTA Agreement entered into force on May 30, 2019, thirty days after having received the twenty-second instrument of ratification on 29 April 2019 in conformity with a legal provision.
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.
Glovo now exists in Kenya, Morocco and Cote d’Ivoire, with plans to expand to Ghana, Nigeria, and Tanzania. The startup which was co-founded by the 26-year-old Barcelona -based Oscar Pierre in 2015 has raised over $340 million since it was founded and is already displacing major players in the crowded delivery industry.
Here Are Quick Facts About Glovo:
Barcelona-based Glovo is the on-demand delivery app that allows customers to order anything — restaurant meals, groceries, flowers — from more than 1,000 participating businesses and have it delivered in less than one hour.
Simply put, the startup is known as the “anything” delivery app.
Glovo makes profit by charging a service fee, plus a commission on their partners, depending on the cost of the product or item.
The most interesting fact about Glovo may be that despite being founded only about 4 years ago in 2015, the company already has a presence in 178 cities across 23 countries.
The startup’s vision is to be a lifestyle app with all urban services available easily through its smartphone application.
Food delivery service remains its most popular service. Other services available on the app include Groceries, Pharmacy, Desserts, Courier, and Quiero (anything).
While most companies are very focused on food only, Glovo can, however, deliver everything.
The food business allows users to find and place orders with their favorite restaurants which is picked up when ready and delivered to the user’s doorstep. Today, more than 85% of Glovo’s orders in Europe are for food.
Unlike the other couriers — namely the UK-based Deliveroo and US-based UberEats — Glovo couriers don’t just pick up food for customers of the app. They’ll also buy them a particular dress in a size 12 from Zara, or grab some painkillers from a pharmacy if the customers so request.
While this model continues to be its flagship service, the company is reportedly experimenting with CloudKitchens and Grocery Darkstores.
In fact, the startup has become so successful that Bloomberg said Glovo could now be worth €650 million ($730 million)
The firm’s revenue jumped from €18 million ($20 million) in 2017 to €81 million ($91 million) last year.
Over 200 key players are defining the Barcelona startup tech ecosystem
‘‘We…Found Our Gap’’
Glovo is not the first delivery app out there. Oscar knew this. In fact, at the time of starting up Glovo, there was already the US firm Postmates (which inspired him) that delivers anything a city-dweller might need or want, as well as Uber and Amazon’s Deliveroo that do similar things. This means the startup is already in direct competition with those companies. Thus, it is rather surprising that Glovo would make such quick success.
‘‘It makes the market more difficult,’’ Oscar told Spanish online magazine Viaempressa. ‘‘We have found our gap; we are the only platform in Europe that supplies the user with anything in the city, and I think that this is the key; the offer is broad. It doesn’t scare us that the competitors are large, being small is a competitive advantage because it means we can react quickly to these monsters. They are very powerful, but they move slowly. A clear example is our partnership with McDonald’s, for which we competed against Uber Eats and Deliveroo. We got it because we were the quickest to come up with a model that McDonald’s needed, it is specific for them on a technological and logistical level. When you are a startup, you bargain more easily.’’
Pierre also said there are many differences between Glovo and other national or international startups.
‘‘Our freelancers will buy for you whatever you want,’’ he said . ‘‘Another major difference is that our service is based on immediacy. We have a totally different model compared to other apps dedicated exclusively to transport people or deliver food. In addition, we are not a logistics company, nor do we want to be. These companies are only dedicated to collect and deliver while we put a whole city open to anyone.’’
Getting The Timing Right is Crucial
Getting into a crowded market could be easy but staying successful would remain the toughest game startups will face. Oscar Pierre, however, said getting the timing right is crucial. Glovo doesn’t come on board a country where there are already two dominant players (which is the case in Mexico, Colombia, and the UK), he said.
‘If we went to the UK today it would be super tough or impossible to become one of the main food delivery companies. It’s a snowball effect; as you don’t have the volume, you don’t reach to the top chains or restaurants which doesn’t give you the growth,’ Oscar told Sifted, a new FT-backed website that launched early 2019.
Again, the startup succeeded in Spain mostly because it brought big brands such as McDonald’s and KFC onto its app and this led to ‘massive growth’. Before then, competitors like Deliveroo refused to meet the big companies’ demands. This was an opportunity Glovo held onto. ‘‘We literally built anything they wanted,’ Pierre said.
Today, Glovo is the biggest food delivery service in Spain (where it is profitable and takes around one million orders per month)
Oscar said: ‘Every single city needs between six to nine months to reach operational break-even. Structure-wise, it’s been super interesting You have to delocalize — otherwise the company stops. You need to find super strong regional teams. In Buenos Aires, Argentina, we have a very senior team, with almost a CEO and CMO, and they take all of the decisions.’’
‘‘We pitched to 118 funds, and all of them said ‘no.’ ’’
Oscar said building the startup did not come without a fight. He said the startup pitched to 118 funds before its current progress.
“For our series B round, we pitched to 118 funds, and all of them said ‘no.’ We were very close to going bankrupt, maybe a month away. All our competitors were huge. Two years ago, there was no way to convince investors that we’d really be competing face-to-face with Uber Eats or Deliveroo. There was very little conviction about food delivery back then.
Being from Barcelona was always very tough because when you only operate in Spain, you don’t have access to the VCs in London or in France. The Spanish ecosystem of VCs is very small and very risk-averse,” he said.
In 2017, Glovo raised $30 million in a series B funding round led by the Japanese tech giant Rakuten. Rakuten ended up being a company with a famous connection to Barcelona that came to Glovo’s aid.
‘‘One day, Rakuten came out of the blue and decided to invest in us,” Pierre said.
Since then, two other funding rounds have followed, the latest of which, totaling 150 million euros, or $170 million, was led by the early Spotify investor, Lakestar, in April, 2019 taking the startup’s total funding to $340 million.
Glovo renders delivery services for anything the city has to offer and is learning, growing and improving fast.
Remembering those periods in the startup’s story, Pierre said he didn’t know if he were doing a rational thing then.
‘I have to say, I don’t know if it was a very rational investment at that moment — when you have over 100 smart investors saying no, it might mean something,’ he said.
Oscar said the most important factor that has guaranteed the startup’s continuous growth is its quest to remain profitable.
‘‘Only those who focus on profitability get funding,” he said. “We make sure we are not only growing, but that the cities are not in negative numbers for many months. We know there are cities that need only six months to show losses and others, 12 months, because it all depends on size; but we know that sooner or later we will get good numbers. In Spain we have seen more than 10 proposals similar to ours and many of them have failed. The margins are small and if you do not look after them well, it will not work,’’ he said.
Focusing on profitability has helped the startup to steer clear of loss. In 2016 Pierre said the startup obtained 1.1 million net euros in profit, which represents the commissions from their partners and shops along with what the user paid for the service, and that meant tenfold growth. In 2017, barely two years and two months old, the startup took a millionth order. The number has since doubled.
‘When a sector is overfunded…investors disappear’
Pierre said the urge for startups to get funded almost always comes with a price — a sudden disappearance of investors.
‘‘Delivery is a complicated sector. Between 2010 and 2012, there was overfunding in Barcelona. It was new and grew quickly because it clearly had value. A lot of projects were funded that began to close down in 2014 and that went on for another couple of years. That was just the moment when we began looking for funding. The investors saw that the sector was in fashion, but that it had problems. And what happens when a sector is over-funded is that the investors disappear,’’ he said.
The Best Way To Confront Fund-Raising
Pierre said the best way to confront fund-raising is by being humble.
‘Our most important core value is humbleness. I tell it to the team a lot. I’ve seen companies burst because of lack of humbleness,’ he said.
‘Every time I go to the board, I’m like, “Oscar man, if you’re not taking big steps you’re not going to be the best CEO for this company.” So I just keep that in my mind all the time.’
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 Bank will also participate in the meetings of the 37th NEPAD Heads of state and Government Orientation Committee.
African Development Bank Group President Akinwumi Adesina will next week lead a delegation of top Bank officials to the extraordinary summit of Heads of State and Government of the African Union (AU) in Niger’s capital, Niamey.
High on the agenda of the July 7-8 summit are discussions on the African Continental Free Trade Area (AfCFTA). President Adesina will meet African leaders to review the continent’s development issues and hold talks on the effective implementation of the AfCFTA.
As a member of the continental Task Force, the Bank will participate in several executive discussions, including the deliberations of the 8th meeting of African Trade Ministers, as well as a meeting of the 37th Steering Committee of Heads of Commerce.
The Bank will also participate in the meetings of the 37th NEPAD Heads of state and Government Orientation Committee, as well as in the 1st mid-year coordination meeting of the AU and Regional Economic Communities.
President Adesina will share the Bank’s vision on empowering African women and on the AFAWA (Affirmative Finance Action for Women in Africa) initiative.
On the sidelines, there will be discussions between the Bank and major African private sector representatives on the AU’s 2063 vision of an integrated, inclusive and prosperous continent.
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.
Russia’s renewed engagement with Africa is built on a high level of trust and mutual respect, said Sergey Lavrov, Russia’s Foreign Minister, who assured participants that Africa is Russia’s important partner in the global struggle for truth and fairness.
According to the minister, both partners have increased high-level political and parliamentary dialogue to forge friendly and mutually beneficial ties. “We are moving towards broadening our relationship especially in our cooperation on security and peace-making,” he said while denouncing unilateral imposition of sanctions by the United States.
Lavrov
Lavrov pointed out that Russia’s relations with African countries are valuable in their own right and should not be subject to the shenanigans in the international arena. By relying on the accumulated experience of productive cooperation, Russian diplomats, he said, are pursuing a consistent policy of deepening Russia-Africa relations.
Lavrov also disclosed that Russia has over the years increased investments in Africa, reaching $20 billion in 2018. These include investments in mining, energy and railway construction. He specifically mentioned a nuclear power plant and an industrial park, both in Egypt.
The ongoing annual meeting of Afreximbank is positive momentum for the mutually beneficial cooperation between Russia and Africa. To further deepen the partnership, Lavrov informed participants that the first Russia-Africa Summit is scheduled to take place in Sochi, Russia in October, this year. It will be co-chaired by President Vladimir Putin of the Russian Federation and President Abdel Fattah Al-Sisi of Egypt, who, incidentally, is current chairman of the African Union (AU).
In his remarks, Gabriel Aduda, Permanent Secretary, Political and Economic Affairs, Office of the Secretary to the Government of the Federation of Nigeria, recalled Russia’s support for the decolonization of Africa, especially in ending the apartheid policy in South Africa. He projected that Russia’s renewed engagement with Africa will deepen the friendship between the two partners as well as boost bilateral trade.
Aduba commended Afreximbank for its innovative products and services such as the Counter-cyclical Trade Liquidity Facility which helped many countries weather the storm of the global financial crisis and the commodity super-cycle. Afreximbank, he says, has forged international partnerships to create a win-win situation which will lead to structural transformation in Africa.
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.
Independent report reveals the economic impact of Africa’s top hotel conference
An independent assessment by the international tourism advisory expert, Martin Jansen van Vuuren, a partner at Futureneer Advisors, has quantified the significant economic benefits to host countries of the influential Africa Hotel Investment Forum (AHIF).
He reveals that when AHIF returns to Addis Ababa at the end of September, it could bring over one and a half million dollars in direct benefit to the local economy, an additional two million dollars in indirect benefit and over a quarter a million in tax to the Ethiopian host government if spending at the 2019 event is a mere 10% more than when it was held in the city in 2014. This assessment is based on recent research of attendees at AHIF and a study on the economic impact of previous editions of the conference.
Looking back over the history of AHIF since the first conference in Casablanca in 2011, the event has made a total impact on the local host economies of $21.24 million of which $8.64 million in direct and $12.6 is indirect. In doing so, it has helped to create or sustain over 6,000 jobs and generate $1.4m in tax to the governments of the host countries. But that’s not all, the primary purpose of AHIF is to facilitate dialogue and ultimately deal-making between the top businesspeople present.
Two surveys of delegates attending AHIF events between 2011 and 2018 (segmented by delegates that did or did not conclude a deal) indicated an average value of $12.2 million per transaction in 2018 and $4.6 million over the 8-year period. On the assumption that these findings, which were based on a sample of delegates, were representative of the whole group of attendees, AHIF facilitated around $2.8 billion of investment in the hospitality sector across Africa in 2018 and $6.2 billion between 2011 and 2018.
Martin Jansen van Vuuren, said: “One important measure of AHIF’s success is the high-level of the delegates it attracts – the attending CEO’s and MD’s do not only spend more than average by staying in the best hotels but much more importantly, they are people with the ability to make decisions, including whether or not to invest in a destination – and that’s reflected in the value of deals done.”
Martin’s report also highlights intangible benefits that flow from hosting AHIF. These include increased awareness of the destination’s conference and tourism offering, improved credentials, which will assist bidding for future events and employment opportunities and skills transfer for workers in local supplier companies.
Matthew Weihs, Managing Director of Bench Events, which organises AHIF, said: “It’s exciting and gratifying to see how much the conference adds to the destinations we visit and to the hospitality sector across Africa. At this year’s event, I am aware of more serious investors coming with more money behind them than ever before, so it feels to me that the hospitality industry in Africa is rapidly becoming more mature and sophisticated.”
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 African Development Bank Group said on Friday that two General Electric Co subsidiaries would be temporarily barred from bidding on power contracts as part of a settlement of misconduct cases.
The agreement bars GE Power units in Egypt and Germany from bidding for up to 76 months, the bank said. The units, former parts of Alstom that GE acquired in 2015, were found to have engaged in bribery and fraud in 2006 and 2011, the bank said.
“This conduct happened long before GE acquired Alstom’s power business and we cooperated fully with the investigation,” GE said in a statement. “Ethical behavior and compliance are foundational to GE’s ability to successfully operate in more than 180 markets around the world.”
Other development banks may also enforce the bans, the bank said. “We have no reason whatsoever to doubt that the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group will follow the African Development Bank’s lead,” Johann Benohr, a senior advisor to the director of the office of integrity and anti-corruption at the African Development Bank Group, said in an email to Reuters.
The barred entities are Alstom Egypt for Power Projects S.A.E., based in Cairo, and GE Power Systems GmbH, based in Mannheim, Germany, the bank said.
GE is trying to restore profits at its money-losing power business as the conglomerate slims down to three main product lines: power plants, jet engines, and wind turbines.
African Development Bank turns to a hedge fund to offset the risk
The pioneering deal comes as supranational face pressure to expand lending capacity
The African Development Bank is paying a New York hedge fund to take on some of the risks of losses on its loans in a pioneering deal which illustrates the growing financial sophistication of supranational institutions. The AfDB has bought insurance on a $1bn portfolio of loans from a group of investors led by Mariner Investment Group through a so-called synthetic securitization, in which the hedge fund does not acquire the assets but will take on $152m of default risk in exchange for returns in the low double digits.
Supranational organizations, which are backed by groups of nations and so enjoy the world’s highest credit ratings, are under pressure from the governments that fund them to seek new ways of bolstering their lending capacity. By turning to Wall Street to take on some of its lending risks, the AfDB has reduced the amount of capital it has to hold against the loans and thereby freed up more lending capacity. While this financing structure has already been used by banks — Mariner signed a similar deal last year with Crédit Agricole — it is the first time that a supranational development bank has engaged in this kind of financial engineering.
The deal will “super-charge our ability to invest in urgently needed projects across Africa”, according to AfDB president Akinwumi Adesina. “It leverages our financial resources so we can have more impact, and it creates new pathways that enable long-term investors to support Africa’s development while getting excellent financial returns.” In the decade since the financial crisis supranationals have significantly stepped up their capital markets activity, with their low cost of capital making them a cost-efficient way of financing development and infrastructure projects. However, they are still small by comparison to sovereign states’ finance-raising volumes — the assets of the world’s multilateral development banks are approximately equivalent to those of a medium-sized international investment bank.
Given governments’ reluctance to boost supranationals’ capitalization through additional financial contributions, the AfDB-Mariner deal has attracted political attention. Canada helped advise on its structure, the European Commission has insured a $100m tranche of the loans and Africa50, an investment platform backed by 27 African nations, also invested in the deal. Bill Morneau, Canadian minister of finance, said: “Attracting more private capital into global development efforts is critical to building economies that work for more and more people around the world. “That is why Canada and our G20 partners have been calling on multilateral development banks to use their existing resources as efficiently as possible and to look for new ways to attract more private capital.”
A report by thinktank ODI earlier this year concluded that synthetic securitizations were the best mechanism by which multilateral development banks could increase the amount of financial firepower they had available to lend. The AfDB’s deal covers approximately 40 loans to power, transport, finance and manufacturing projects across more than 15 African countries.
The bank has promised to lend the freed-up funds to projects which meet sustainable and social impact targets. The AfDB will take the first $20m of losses on the portfolio. Mariner portfolio manager Andrew Hohns said the deal “may well provide a template for unlocking significant private sector and impact capital into urgently needed projects in developing economies”. Mariner now hopes to sign similar deals with other multilateral institutions. Mizuho structured the transaction.
AfDB imposes debarments to restore integrity in project development.
March 25, 2019
Following years of investigation into alleged bribery and fraud, the African Development Bank (AfDB) and GE Power have reached a settlement on legacy Alstom misconduct.
The AfDB imposed debarments of 76 months and 12 months on former Alstom companies after it was found to have engaged in bribery and fraud in 2006 and 2011 in relation to two bank-financed Egyptian power generation projects. GE Power acquired the companies in 2015.
Last week, the bank announced a conclusion of a settlement agreement with GE Power, thus resolving sanctionable practices committed by former Alstom companies.
“Corrupt practices in the power generation sector directly undermine the African Development Bank’s operational priority to light up and power Africa. This can never be accepted by the Bank”, said Bubacarr Sankareh, manager of the investigations division within the Office of Integrity and Anti-Corruption.
Sankareh added: “We are very pleased that GE Power is joining us today in our efforts to fight corruption and to ensure the delivery of value for money to the bank’s regional member countries.”
Corrupt practices
An investigation conducted by the bank’s office of Integrity and Anti-Corruption established that in 2006 and 2011 the companies, then named Alstom Power Generation AG, Alstom Power GmbH, and Alstom Egypt for Power & Transport Projects, engaged in two instances of corrupt practices and in one instance of a fraudulent practice in the context of the bank-financed Suez Thermal Power Plant Project and the El Kureimat III Power Project, both in Egypt.
GE Power assumed control over these three companies in 2015 after the misconduct had occurred when it acquired Alstom’s thermal power generation business. As part of the settlement, the bank imposes on former Alstom Egypt for Power & Transport Projects S.A.E. (now known as Alstom Egypt for Power Projects S.A.E.), based in Cairo, Egypt, and on former Alstom Power Generation AG (now known as GE Power Systems GmbH), headquartered in Mannheim, Germany, a debarment of 76 months.
Debarment period
The debarment period may be reduced to 48 months if the companies comply with all conditions of the agreement early.
This debarment may be enforced by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.
Further, pursuant to the settlement, former Alstom Power GmbH (now known as GE Power GmbH), equally based in Mannheim, Germany, is debarred for a period of 12 months.
Among other conditions for release from debarment, GE Power commits to collaborate with the Office of Integrity and Anti-Corruption in the fight against corruption in the power generation and transmission sector.
Tender processing
In 2006, Alstom Egypt for Power & Transport Projects S.A.E. and Alstom Power Generation AG participated in a tender for steam turbine generators in the context of the Bank-financed El Kureimat III Power Project.
The companies indirectly paid an amount of €963,477 to their local agent.
The Office of Integrity and Anti-Corruption has concluded that one purpose of the payment was to ensure the support of public officials involved in the procurement process in order to gain an unfair competitive advantage in the tender.
Further, the Office of Integrity and Anti-Corruption established that the companies had erroneously only declared €50,000 in fees paid to its local agent.
In 2011, Alstom Egypt for Power & Transport Projects S.A.E., Alstom Power GmbH, and Alstom Power Generation AG, by then renamed Alstom Power Systems GmbH, participated in a tender for a steam turbine generator and condensers for the Bank-financed Suez Thermal Power Plant.
In the context of this tender, the companies indirectly offered €1.7 million to their local agent.
The Office of Integrity and Anti-Corruption has concluded that one objective of the offer was to ensure that public officials would assert undue influence on the procurement process in favor of the companies’ bid.
In reaching this settlement, the African Development Bank took into account General Electric’s substantial cooperation with the investigation of the legacy cases as well as the high quality of the company’s comprehensive compliance programme, which now applies to the Alstom entities acquired by GE Power.
African Development Bank debars CHINT Electric for 36 months for fraudulent practices
The African Development Bank Group has announced the conclusion of a settlement agreement with CHINT Electric Co., Ltd., a power transmission and distribution equipment manufacturer and EPC contractor.
An investigation conducted by the Bank’s Office of Integrity and Anti-Corruption established that CHINT Electric engaged in a multitude of fraudulent practices: In bidding for contracts in the context of numerous Bank-financed power projects, the company misrepresented its experience with similar assignments in order to meet qualification requirements.
As part of the settlement, in consideration of the company’s cooperation with the investigation, the African Development Bank imposes a debarment on CHINT Electric for a period of three years, subject to the company enhancing its corporate compliance program within that period to the institution’s full satisfaction.
During the debarment period, the company is ineligible to be awarded contracts under any African Development Bank-financed project or to be a subcontractor, consultant, supplier, or service provider of an otherwise eligible firm in the context of a Bank-financed project.
The debarment qualifies for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.
The African Development Bank will verify the adequacy of CHINT Electric’s compliance framework and the robustness of its implementation prior to any release decision. In addition, CHINT Electric commits to cooperate with the Office of Integrity and Anti-Corruption in its investigations of unrelated cases of misconduct in African Development Bank-financed projects.
The period of debarment may be reduced to 24 months if CHINT Electric complies with all conditions of the agreement early.
“Procurement under the Bank’s rules aims at ensuring optimal value for money for the Bank’s Regional Member Countries,” said Bubacarr Sankareh, Acting Director of the Office of Integrity and Anti-Corruption of the African Development Bank. “The misrepresentation of a bidder’s qualifications materially undermines this objective and is therefore taken very seriously by the institution.”
Between 2012 and 2017, CHINT Electric participated in the tenders for: the supply of 132-kV and 66-kV substation equipment for the Mendi substation and others in the context of the Bank-financed Rural Electrification II Project in Ethiopia, the supply of substation equipment in the context of the Bank-financed Emergency Power Infrastructure Rehabilitation Project in Zimbabwe; the design and supply of 132-kV equipment for the Yabello and Buee substations in the context of the African Development Bank-financed Rural Electrification II Project in Ethiopia.
It also participated in the design and supply of a total of four substations at Iringa, Dodoma, Singida and Shinyanga in the context of the Bank-financed Electricity Transmission System Improvement Project in Tanzania; the transmission rehabilitation of the Marvel and Chertsey substations equipment in the context of the African Development Bank-financed Emergency Power Infrastructure Rehabilitation Project – Phase II in Zimbabwe; works and equipment for the Prince Edward Dam substation and others in the context of the Bank-financed Emergency Power Infrastructure Rehabilitation Project – Phase II in Zimbabwe; and the transmission rehabilitation of the Sherwood and Orange substations in the context of the African Development Bank-financed Emergency Power Infrastructure Rehabilitation Project – Phase II in Zimbabwe.
In the context of the above tenders, CHINT Electric misrepresented the technical specifications, the value, the execution period and/or the degree of completion of contracts used as credentials in order to qualify for the tenders.
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.
One of Africa’s youngest billionaire businessmen, the 39-year-old founder of Springfield Energy, Kevin Okyere will be honored with the Entrepreneurship Award at the FACE List Awards gala during the 2019 Pan-African Weekend in New York City July 18-21st. At the age of 11, Kevin Okyere was already showing interest in entrepreneurship as he sold iced water to football supporters at the Kumasi Sports Stadium in Ghana to make extra cash. This surprised many considering he was from a wealthy home.
Born in 1980, Okyere completed his high school education in Ghana before moving to the United States where he studied Accounting at the George Mason University in Virginia while doing varying jobs including working as a security guard. Coming from the Ashanti region of Ghana, his father had made enough fortune in construction, steel manufacturing, and large-scale cocoa farming before becoming a traditional belief.
Yet, Okyere, with his entrepreneurial spirit, would take on jobs with textile companies in the U.K. during his family’s annual summer vacation trips to London, according to an article on Forbes. He would later, become the founder and Chief Executive Officer of the billion-dollar oil company, Springfield Group, a successful energy conglomerate in West Africa that he established and has managed for over 10 years.
Okyere has been able to build the Springfield Group from a $70 million investment into a $1 billion (annual revenue) multifaceted Ghanaian oil giant, according to Forbes. An entrepreneur, Kevin uses his razor-sharp skills in business strategy, finance and negotiations to envision and execute high-end commercial and developmental projects. Kevin is widely recognized by his peers, and local and international media as one of the pioneers in Africa’s energy sector.
In 2008, Kevin established Springfield Energy, one of the leading energy actors in Ghana who over a period of five (5) years, has supplied 12.5% of Ghana’s petroleum products requirement. The Company has also supplied hydrocarbons into other countries along the Gulf of Guinea. The Company is the first Ghanaian Independent Firm to lift crude oil from the TEN field (Ghana).
Kevin established Springfield Ashburton Limited in Nigeria, the only indigenous Ghanaian company to be involved in energy-related trade out of Nigeria. Kevin is the driving force behind Springfield Exploration & Production Ltd, the first wholly owned independent Ghanaian firm to own and operate a deep offshore oil block in Ghana. As a matter of fact, Springfield E&P is the only African company to own and operate a deep offshore asset.
Previously, Kevin operated a telecommunications company in Ghana after leaving a thriving career in the Accounting and Finance sector in the USA. He sits on the board of numerous companies including Aker Solutions Ghana Limited, a joint venture between Fairfax Oilfield Services Limited, a Springfield Group Company, and Aker Solutions of Norway, a leading global provider of oil field services. He also holds a highly influential position as a board member of the Society of Petroleum Engineers (Ghana Section).
Kevin is also a passionate leader and public speaker. He has engaged with business leaders, entrepreneurs, and students at Harvard Business School and the University of Ghana Business School on the topics of energy, governance, and entrepreneurship in Africa.
He is an esteemed philanthropist, establishing alongside the Springfield Foundation, the Kevin Okyere Foundation, an entity that delivers impactful initiatives in health and education.
The FACE List Awards are a prestigious celebration of pan-African achievement that honor the black diaspora’s most influential pioneers and trailblazers, while providing an opportunity for the business community to connect and celebrate our success stories.
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.
