Africa's Infrastructure Woes

[EduardSA]

I think this thread is very good and informative! Good job hkskyline!

[hkskyline]

Looks like Africa's untapped resources are powering infrastructure FDI from abroad.

[PP Girls]

Zambezia’s Quelimane Airport Upgrade was underway in Mozambique. Does anyone know if this upgrade is complete now?

[hkskyline]

^ Couldn't find info in my search on the topic.

Renaissance bets on African consumer, infrastructure

LONDON, Oct 7 (Reuters) - Fast growth in Africa propelled by resource wealth as well as growing consumer demand and infrastructure needs make the continent an attractive proposition, according to Renaissance Asset Managers.

Guinness Nigeria, Benue Cement and Equity Bank are among the top equity picks for the fund manager, which launched two Africa funds this month. "During the crisis, Africa was the only place that grew," said Plamen Monovski, chief investment officer of the fund management arm of Russian bank Renaissance Capital.

"Africa is not commodity-dependent to the extent people thought. The majority of GDP (gross domestic product) is driven by the consumer, infrastructure investment, the emergence of private equity, the removal of the state from the economy."

Renaissance has launched one fund investing in sub-Saharan Africa, excluding South Africa, and a pan-Africa fund, which also invests in developed market stocks with African exposure.

The sub-Saharan Africa fund is targeting $250 million and the pan-Africa fund is looking to raise $1 billion, Monovski said.

Guinness Nigeria is part of London-listed Diageo Plc, and Renaissance said it is growing 22 percent year-on-year.

Attempting to capitalise on the continent's building needs, Renaissance also likes Nigeria's Benue Cement, which is due to merge with Nigeria's biggest cement maker Dangote Cement.

Growing consumer demand for financial services in the continent is also helping the banking sector.

Renaissance favours Equity Bank, Kenya's biggest lender by market value.

Renaissance's funds are focused on the larger African economies such as Nigeria, Kenya and Ghana.

"As we have learnt from BRICs (Brazil, Russia, India and China), it's a lot more interesting when countries are large," Monovski said. "In larger markets, you have more people, more interesting products being launched." Investors worry about corruption and the ease of doing business in Africa but Monovski said corporate governance had gotten better.

"It's improving, a lot of countries are making a concerted effort. If we recall what was going on in Asia, corporate governance was awful years ago. Corporate governance has contemporaneous improvements with GDP," he said.

[scottyaks143]

The African infrastructures are not bad at all..

[hkskyline]

Chinese money to fund Ghana's energy, infrastructure
26 October 2010

ACCRA, Oct 26 (Reuters) - Ghana will use a series of multi-billion dollar deals with China to finance infrastructure projects and transform its economy through gas- and oil-driven industrialisation, the government said.

A month after the government signed a total of $13 billion in agreements with the China Development Bank and China Exim Bank, the government has given some details on the deals, which must be approved by parliament.

Here are some of the main points from a speech on Monday by Hannah Tetteh, Ghana's minister for trade and industry, who said Ghana needed to invest $1.6 billion a year to tackle the country's infrastructure problems:

$3 BLN CHINA DEVELOPMENT BANK FACILITY

* Western Corridor Gas Commercialisation project

- Support establishment of gas-processing plant at Bonyere to use gas discoveries from Jubilee and Sankofa fields for power generation.

- Construct gas transmission pipeline from Bonyere to Western region.

- Project to be developed on design-build-operate and transfer basis.

* Industrial Minerals processing estate

- Develop mineral processing industries in the Export Processing Zone in Sekondi.

- Central to processing zone will be a new alumina refinery, to be developed as a joint venture between Ghana's government, China Africa Development Fund and Bosai Minerals Group of China, the majority owners of Ghana Bauxite Company.

- Proposed refinery to produce two million tonnes of alumina a year from the Ghanaian bauxite deposits in Awaso and Kibi.

- CDB funding also to be used to rehabilitate the Central and Western railway lines, roads linking the projects and Takoradi harbour.

* No further details were given on the financing agreements.

CHINA EXIM BANK AGREEMENT

- Ghana has said it has signed a $9.87 billion deal with China Exim Bank for road, railway and dam projects.

- Tetteh said that China Exim Bank had committed to a total of $5.9 billion for 19 projects in health, railways, agriculture and education.

- No reason was given for the discrepancy in figures, nor were any details given on the terms of the agreement.

BILATERAL AID, GRANTS AND DONATIONS

- A $250 million concessionary loan from China for the rehabilitation of the Kpong Water Works. Loan to be paid back over 20 years, with interest payments at 2 percent.

- A $20 million interest-free loan to build fish-landing sites for coastal communities.

- Another $12 million for a selection of other projects specifically requested by Ghana's president.

[hkskyline]

IBM signs 10-year contract with Bharti Airtel in Africa, terms not given
14 January 2011

ARMONK, N.Y. (AP) - IBM signed a 10-year contract with phone company Bharti Airtel last month to set up and manage the technology infrastructure supporting Airtel's expansion into 16 African countries.

IBM said Friday that it will consolidate and transform the 16 different information technology environments across Airtel's African operations into an integrated system. It will also oversee the management of servers, data center operations, applications and other areas.

Financial terms were not disclosed. IBM said the agreement extends its relationship with India's Bharti Airtel, which began in 2004.

Bharti Airtel, India's largest mobile phone company, bought the Africa assets of Kuwaiti cell phone operator Zain last June, expanding its global reach and tapping into the continent's emerging markets for the first time.

Shares of International Business Machines Corp. slid 6 cents to $148.76 in morning trading.

[DiscoZimpy]

"I called vehicle owners in Kumba to come and evacuate my cocoa to the market, but they told me they could not come because the bad state of the road will ruin their vehicles," he said.

[Enabulele]

The Mayor of Almería, Luis Rogelio Rodríguez Comendador, and government sub-delegate in Almeria, Andres Heras, yesterday (5 March 2011) opened the valve Medgaz connection with the Spanish gas system in a symbolic act that is part of the test sequence.

For the company is a major milestone that marks the start of imports of Algerian gas to Spain via the Medgaz. This new step has been developed by the Receiving Terminal, located in Playa del Perdigal, in the presence of the Head of Industry and Energy for the office in Almería, Luis Díaz de Quijano, and the director general of Medgaz, Juan Antonio Vera.

Last Phase Of Testing

The company is in the final phase of the test gas. After verification of all units in terminal Compression Beni Saf, on March 1 valve was opened offshore Algeria, to begin filling the gas pipeline, and begin testing with gas receiving terminal Almeria. The said event was attended by the CEO of Sonatrach, Noureddine Cherouati, and the president of Medgaz, Peter Miro, Algerian authorities and partners of the company.

The test sequence for commissioning of the pipeline comprises a phase of commissioning and start another. During the commissioning phase systems have been verified, while the boot is gradually introducing gas.

Currently, natural gas continues to circulate in evidence throughout the pipeline, and yesterday was connected to the Spanish gas system, through the pipe Enagás, to continue the process with increasing volumes up to the total system capacity in a stable and reliable. Medgaz expected that the pipeline is technically ready to operate within weeks.

Medgaz is the company responsible for building the Algeria-Europe via Spain. With an initial capacity of eight billion cubic meters a year, about natural gas from Beni Saf, on the Algerian coast to Almería.

From: Bimanie

[hkskyline]

Africa investment urged to boost world economy
AFP
Sat, Aug 6, 2011

With an ailing US economy, European debt battles and Japan rebuilding after a crisis, investors should be looking south -- to Africa, the head of the African Development Bank said.

Investing in the continent at a time when developed countries' economies are struggling would boost the world economy, Donald Kaberuka told AFP in an interview in Washington this week.

Africa is rich in mineral wealth and proven oil reserves, has a growing, urban middle class and undeveloped infrastructure.

And its leaders are working to improve security, stability and rule of law. They have also learned from the uprisings in North Africa and the Middle East that economic advances have to benefit a country's people, not just its president and his inner circle, in order to be sustainable.

"Opportunities elsewhere are not many. So Africa is the opportunity," Kaberuka said.

"Some of our bonds are better than, certainly, Greek bonds."

Economies in sub-Saharan Africa are projected to grow at 5.6 percent this year and 6.5 percent next year, with a dozen countries growing at the critical rate of seven percent, considered the minimum for sustainable poverty reduction.

"Growth now is happening in emerging markets," Kaberuka said.

"Imagine if there were no China and India or Brazil at a time when Europe and the US are in difficulty. It would be a big recession because China and India and Brazil are picking up the slack.

"If we could now add Africa, I think that that could give a boost to the world economy," he continued.

Besides Africa's oil and mineral wealth, which foreign investors have long had a hand in exploiting, Africa offers other business opportunities up for grabs.

"Forty percent of Africans live in urban areas. That means they want housing, infrastructure. They'll be using Colgate; they'll need fridges, household appliances," said Kaberuka.

"You have the choice of making it in Africa or importing it. Either way creates business."

The bank chief also advocated setting up free trade agreements with Africa.

Just last month, British Prime Minister David Cameron said that an African free trade zone could increase gross domestic product across the continent by $60 billion a year -- $20 million more than the world now gives Africa in aid.

"Rich countries would not have to give us aid; trade would create wealth," Kaberuka said.

African leaders agreed in South Africa in June to launch negotiations on creating a free trade zone that would include 26 countries with a combined economy estimated at $875 billion.

For their part, African leaders are working to improve stability and security and ensure that the continent's wealth benefits its people.

Kaberuka said the popular uprisings now roiling Arab countries highlighted the importance of "inclusive, shared" economic growth rather than national wealth figures alone.

"Tunisia was growing at about 5.5 percent for almost seven years, and many international organizations were effusive in their praise of its achievements. What they didn't look at were the growing inequalities and that an authoritarian model that was clearly denying rights to the people," he said.

"We can no longer turn a blind eye to these issues. Today we have to keep an eye on whether economies are growing and ask if the fruits of growth are getting to the people.

"Because if they aren't, this thing is not sustainable."

[hkskyline]

Japan plans to send engineers to South Sudan
AFP Excerpt
Sat, Sep 17, 2011

Japan plans to send a 300-strong military engineering team to South Sudan as part of a UN mission to help the African nation build badly needed infrastructure, a report said Saturday.

*****************

Japan plans to send about 300 personnel from the Ground Self-Defense Force engineering unit to the African country to help repair or build roads, bridges and other infrastructure, it said.

During a visit to Japan last month, Ban asked Japan to consider the mission.

South Sudan proclaimed independence from Sudan, Africa's largest nation, on July 9, when it became the world's newest country.

[mopc]

To say that Africa's infrastructure has "woes" is an understatement if there's ever been one.

[hkskyline]

South Africa to Lure Mining Companies With $40 Billion Boost For Railways
Bloomberg

Feb. 10 (Bloomberg) -- Duncan Clarke, chief executive officer of Global Pacific & Partners Ltd., talks about economic development and infrastructure in South Africa. He speaks with Louise Beale on Bloomberg Television's "Last Word." (Source: Bloomberg)

South Africa is ramping up spending on railways and roads to lure mining investment as the government fights off calls from within the ruling African National Congress to nationalize the country’s mines.

State-owned rail and port operator Transnet SOC Ltd. will spend 300 billion rand ($40 billion) over seven years to expand capacity on iron ore, coal and manganese export lines, President Jacob Zuma told lawmakers in his state-of-the-nation speech in Cape Town yesterday.

Mining “plays a critical role in the socio-economic development of the country,” Zuma, 69, said. “We remain committed to the creation of a favorable and globally competitive mining sector.”

Zuma’s government is battling to lure investment in mining as the ANC Youth League, led by Julius Malema, pushes for the seizure of mines in the world’s largest producer of platinum, chrome and manganese. An ANC-appointed task team to investigate the matter said nationalization would be a “disaster,” while recommending higher taxes.

“The mining industry has been battered by a lot of uncertainty with regards to policy, mostly centered around nationalization,” Kevin Lings, an economist at Stanlib Asset Management in Johannesburg, said in telephone interview. “They are trying to eliminate that uncertainty.”

Deterring Investment

Anglo American Plc (AAL), Xstrata Plc (XTA), Rio Tinto Group Plc (RIO) and BHP Billiton Ltd. (BHP) have operations in the country. Anglo American, the largest investor in South African mining, and AngloGold Ashanti Ltd. (ANG) are among companies that have said the nationalization debate is deterring investment.

“There are no mixed signals about this,” Zuma said in an interview with the South African Broadcasting Corp. today. “Nationalization is not the ANC’s or the government’s policy.”

South Africa needs to boost mining to more than 10 percent of gross domestic product from about 6 percent, Trevor Manuel, head of the National Planning Commission, said on Feb. 6. Mining production declined 5.1 percent in the fourth quarter compared with a year earlier, the statistics agency said yesterday.

“President Zuma has made clear that the South African government is serious about growing the mining industry and making it more internationally competitive,” Anglo American spokesman Pranill Ramchander said in e-mailed comments. “We are particularly pleased with the commitment to develop and integrate rail, road and water infrastructure, developing the capacity of our ports and containing electricity price increases.”

‘Industrialize the Country’

Zuma is betting that increased spending on infrastructure projects will help offset slower growth in Africa’s biggest economy and reduce the highest jobless rate among 61 countries tracked by Bloomberg. High port costs and a lack of rail and power capacity have been cited by the government as one of the major obstacles to faster economic growth.

“The massive investment in infrastructure must leave more than just power stations, rail-lines, dams and roads,” Zuma said. “It must industrialize the country, generate skills and boost much-needed job creation.”

The government plans to send officials to the Middle East next week to seek investment from the region’s sovereign wealth funds, Collins Chabane, the minister in the presidency, said in an interview on SAfm radio today. Transnet’s finances are strong enough to fund the projects over seven years, the South African Press Association reported, citing Public Enterprises Minister Malusi Gigaba.

Growth Slows

South African Finance Minister Pravin Gordhan has pledged to cut the budget deficit to 3.3 percent of GDP in three years from 5.5 percent in the current fiscal year.

Growth will probably slow this year to below 3 percent from 3.1 percent in 2011 as Europe heads toward recession, Gordhan said on Jan. 26. That’s less than half the 7 percent annual expansion that’s needed to cut the jobless rate to 14 percent by 2020 from 23.9 percent currently.

Rail, road and water systems in the northern Limpopo province will help unlock coal, platinum, palladium, chrome and other mineral deposits in the region and encourage investment, Zuma said. Railway lines in the eastern Mpumalanga province will be expanded to connect coal fields to power stations, while transport links between the central Gauteng province and the eastern port of Durban will be improved, he said.

‘Lead and Guide’

Transnet will spend 200 billion rand on rail projects over seven years, including links that will enable it to transport 82 million metric tons of iron ore a year, up from 60 million tons currently, Zuma said. The rail operator will build a rail-line to carry 16 million tons of manganese to the Coega port on the country’s south coast.

The government will reduce port costs for exporters of manufactured goods, saving them 1 billion rand, the president said. Zuma has also asked Eskom Holdings SOC Ltd., the state power producer, to curtail planned price increases.

“We see our role as being to lead and guide the economy and to intervene in the interest of the poor,” he said.

South Africa’s rand weakened 1.1 percent to 7.6688 against the dollar by 11:54 a.m. in Johannesburg, trimming its gain for the year to 5.5 percent.

[hkskyline]

Africa needs 'new ways to fund energy projects'
AFP
Thu, Feb 23, 2012

Africa needs to find new ways to finance energy projects as the continent seeks to massively expand access to electricity in the wake of the global financial crisis, experts say.

The public-private partnership (PPP) model for building and operating expensive infrastructure like power plants will no longer work as international banks shy away from long-term loans, bankers and industry insiders told the Africa Energy Indaba conference under way in Johannesburg this week.

"We've got to stop kidding ourselves that PPP is the answer," said Anthony Sykes of Japanese bank Sumitomo Mitsui.

"Lenders are going to be extremely unwilling to lend long-term to projects."

Africa's governments are desperate to roll out more major power projects.

According to the International Energy Agency, 70 percent of people in sub-Saharan Africa have no access to electricity, compared to 20 percent worldwide -- a fact that is hampering the continent's economic development.

The continent's largest economy, South Africa, is looking to more than double its current electricity supply from some 40,000 Megawatts to more than 89,000 by 2030.

The warning on funding difficulties came as South African Finance Minister Pravin Gordhan presented a budget Wednesday that includes almost two trillion rand ($250 billion, 190 billion euros) in spending on mega-electricity projects in the next eight years.

The country is already building two new coal-fired power plants that will generate a more than 9,500 Megawatts when complete, and also envisions some six new nuclear plants for a combined 9,600 megawatts and major investments in wind, solar and hydro power.

The finance ministry did not specify how the government would pay for the ambitious programme, saying there were various ways to finance public infrastructure.

"No good project will be short of funding," Gordhan said.

But Energy Indaba participants said a new paradigm may be needed.

"PPP works for the construction phase but not the overall life of the project," said Frederic Mariette of French investment bank Natixis.

Under the PPP model, dominant for the past two decades, governments entered into partnerships with private-sector backers for the lifetime of a project -- some 20 to 50 years in the case of a power plant.

Banks financing such projects borrow enough money to cover operating and maintenance costs for perhaps five years, then borrowed more money for the next five.

But the model has been eroding since Lehman Brothers collapsed in 2008, triggering the financial melt-down. Banks have become skittish about lending to each other, regulators began tightening capital requirements and PPPs began to look unviable.

Panelists suggested one new investment model could be to build power plants with private financing, then borrow money from pension funds -- which are flush with cash in some large economies such as Nigeria and South Africa -- to pay for running costs and upkeep.

They also cited the 'Chinese model,' already common in Africa, in which the Asian giant gives or lends the money for a large infrastructure project, brings its own workers and materials to build it, then turns it over to the local government as part of a wider deal, usually to source raw materials.

But Mark Beare, an independent consultant, said that approach has a fatal flaw.

"Who's going to maintain all of this? The (locals) aren't getting that skills and technology transfer that builds the internal capacity," he said.

[hkskyline]

Tanzania in 50 mln euro EIB loan to upgrade airports
Fri, Feb 10, 2012

DAR ES SALAAM (Reuters) - Tanzania has signed a 50 million euro loan facility with the European Investment Bank (EIB) to upgrade regional airports to boost tourism and air transport in east Africa's second-biggest economy, a senior government official said on Friday.

"This project will significantly open up and ease transport to and from the regions as it will provide access to cost-efficient air transport ... some of the regions are potential for tourism activities," Ramadham Khijjah, permanent secretary in Tanzania's finance ministry, told a news conference.

Khijjah said the 20-year loan facility would finance the upgrading of Kigoma, Tabora, Bukoba, Shinyanga and Sumbawanga airports.

Projects include the replacement of runways, and the reconstruction of taxiways and passenger terminal buildings.

Khijjah said the EIB was a key player in Tanzania's infrastructure development, with the bank having previously loaned the country $134.5 million for a power project.

Tanzania earned $1.4 billion from tourism in the year ended October 2011 from $1.2 billion a year ago, helped by a rise in tourist arrivals, according to central bank statistics.

[hkskyline]

Africa Finance Corp eyeing $3 bln deals in a year
Mon, May 14, 2012

NAIROBI (Reuters) - Africa Finance Corporation (AFC), a Lagos-based development financier, is considering potential investments worth $3 billion across sub-Saharan Africa over the next year, its chief executive said on Monday.

Created in 2007 to help increase much-needed investments in the key infrastructure, transport and heavy industries sectors in Africa, AFC - 46 percent-owned by seven west African states including Nigeria and Ghana - has already invested $500 million in projects worth a total $4 billion from Cape Verde to Zambia.

"In our sectors we see a lot of opportunities. We are currently reviewing investments totalling $3 billion across the continent. That is what our pipeline is," Andrew Alli told Reuters in the Kenyan capital.

"These are projects from Senegal down to Mozambique. Virtually every country in sub-Sahara Africa has a power deficit so there is obviously quite a lot of opportunity in power."

Alli said AFC - part of a growing phenomenon of Africans investing in their own continent - also looks for a commercial return on its investments, was looking to conclude the potential deals soon.

"It is almost certain that we won't invest in all of them but we would expect to review them and close them over the course of the next year or so," he said.

Alli, whose organisation invested $50 million in Kenyan cement firm Athi River Mining this year, praised the Kenyan government for policies aimed at encouraging private investments in the energy sector.

"We see potential for electricity investments in Kenya and particularly for renewables, both geothermal and also wind," Alli said, adding that they were in talks with other firms they could invest in.

"We probably are looking to put in total at least another $100-$150 million into Kenya in the next 18 months if things work out correctly."

NIGERIAN POWER

Other potential investments being evaluated include some in the Nigerian power sector where planned privatisations later this year could open up opportunities, Alli said.

AFC is also assessing investment opportunities in Senegal, Ethiopia, Ghana and Ivory Coast, where they have already secured approval to fund construction of a tall bridge in Abidjan, Alli added.

"Infrastructure is the skeleton that economic growth generally hangs," he said.

Alli said the main risks facing investments in Africa include a slowdown in the global economy, which could cut demand for export commodities, and changes in governments that often lead to sudden shifts in policies.

"Policy reversals happen quite often. When a new government comes in they reverse policies that the previous government had put in place and businesses that had reacted to the first set of policies can be left high and dry," he said.

This year's coups in Mali and Guinea Bissau had also shown the possibility of political turmoil that could affect investments was also lurking in the background, he said.

AFC aims to tap emerging opportunities after years of stable economic growth across several economies, the majority of its are held by private firms from Nigeria and Kenya.

Alli, who previously headed the International Finance Corporation's operations in Nigeria and Southern Africa, said they wanted more African nations to join the AFC as shareholders to fund the continent's development and make a profit.

"Investments in Africa have yields that are among the highest returns of different continents," he said.