• Industry: KPMG in Africa
  • Type: KPMG information
  • Date: 2/6/2013

Invest Africa Episode 33: Africa’s top six infrastructure projects 

The latest Infrastructure 100 Report released by KPMG identified the top 100 infrastructure projects in the world – six of these projects are from Africa.  


Key points:

Invest Africa


Challenges facing infrastructure development

Africa’s infrastructure is seen as unreliable and expensive. Financing costs, the lack of skilled labour and efficient project management are just some of the factors holding back development.


According to the African Development Bank (AfDB), a shortage of water, housing, roads and adequate sanitation reduces the output in sub-Saharan Africa by as much as 40 percent. Despite all the challenges facing infrastructure development on the continent, there have been some impressive success stories.


Infrastructure 100 Report

The latest Infrastructure 100 Report released by KPMG identified the top 100 infrastructure projects in the world – six of these projects are from Africa. With projects like these setting the standard, transforming Africa’s infrastructure seems to be on the correct path. The current infrastructure boom will not only support urban cities, but will also be able to provide for grass-root communities.


The Infrastructure 100 project looked at infrastructure projects around the world in various sectors and identified 100 top projects based on selected criteria (innovation and sustainability being two such criteria).


Durban Waste to Energy Project

Among the six projects from Africa are the Durban Waste to Energy Project and the BRICS cable project. The Durban Waste to Energy Project could potentially provide electricity to 6,000 households, via the methane gas harvested from waste dumps. The potential to take projects like this across the continent is huge.


BRICS cable project

The BRICS cable is among the largest and most ambitious project on the Top 100 list. The BRICS submarine cable is a 34,000 metre underwater fibre-optic cable system that will link the cities in the BRICS economies (Russia, India, China, and South Africa) with the USA. This project is aimed at substantially improving broadband capability on the continent.


Other Africa projects on the Top 100  


  • O3b Network Project
  • The Lagos Blue Line railway system
  • Ethiopia’s Djibouti Railway Line
  • Mamohato memorial hospital in Lesotho


The AfDB is committed to infrastructure development on the continent. Within East Africa, numerous big infrastructure projects are currently being funded by the AfDB. Cost management of infrastructure projects is a particular concern for the AfDB. The reasons for cost overruns on large infrastructure projects include the lack of timely procurement processes, failure to properly prepare and package projects, unrealistic implementation schedules, a lack of technical and financial audits, and corruption. 


Many Development Finance Institutions (DFI) are looking at ways, through local capital markets, to raise long-term financing for infrastructure projects in local currency. It is much easier to deploy local currency into local projects as it reduces concerns over exchange rate risks.




  • De Buys Scott – Head Infrastructure Africa, KPMG
  • Wale Shonibare – MD Investment Banking, UBA Capital
  • Gabrielle Negatu – E.A Regional Director AfDB


Commentary from:


  • Tim Scweikert – President, General Electric SA
  • John Tambi – NEPAD Coordinator, PICI


You can watch the full broadcast, including previous episodes, on

Previous Episodes


Episode 32: Challenges of investing in Zimbabwe

Key points:

Invest Africa

Zimbabwe is home to 12.8 million people. The country has been experiencing an economic recovery after what has been called, ‘the lost decade.’ During the recession, the economy shrank by almost 40 percent, attributed mainly to alleged mismanagement and corruption by the ZANU-PF-led government and the controversial land redistribution of 2000, which hurt the agricultural sector (the backbone of the economy). 


One of the hallmarks of the downward spiral was hyperinflation, which peaked at around 79 billion percent per month in 2008. However, in a textbook turnaround, month-on-month inflation bottomed at -3 percent in March 2009 after the newly-formed Government of National Unity stabilised prices through the introduction of multiple currencies. Soon economic growth in the country rebounded, with the economy gaining much of what was lost. Growth slowed down to 4.7 percent from 9 percent in 2011.  In 2011, the economy was valued at US$9.9 billion from US$7.5 billion in 2010. This growth was due (in part) to growth in the mining industry, which contributed 44 percent to GDP in 2011.   According to the African Development Bank, Zimbabwe’s economy is set to grow by 5.5 percent in 2013. 


The economy still faces economic difficulties including political uncertainty, infrastructure and regulatory inefficiencies, a large external debt burden, and insufficient formal employment.

Zimbabwe is open for business, and opportunities are spread across all sectors of the economy. 

Lack of policy clarity and follow-through in the Zimbabwean banking sector is still a deterrent for investment. A significant amount of uncertainty still exists in the banking sector. Policy reform and the recapitalisation of the banks will increase investment opportunities in this sector.

Foreign Direct Investment

The significant growth that the Zimbabwean economy enjoyed post-dollarization has been on the back of very little Foreign Direct Investment (FDI). Growth in FDI will rebound once the economy has been reintegrated into the global economy. 

The Zimbabwean ‘brand’ has been severely damaged and negative perceptions still prevail amongst potential investors. The key challenge amongst investors is if a political regime that has been in power for 32 years can renew itself and provide the security and clarity that investors require.

There has been much controversy around Zimbabwe’s Indigenization and Empowerment Act. This act has resulted in investors assessing whether current and prospective investments in the country are viable.  The act requires foreign-owned companies with an annual turnover of US$500,000 or more to transfer 51 percent of their shares to indigenous Zimbabweans. The effects of the law are numerous.  However, with long-standing investments in the country, many companies have not made a move to withdraw. Notwithstanding, the indigenization act is a major disincentive for new investments. It will be very difficult for the country to reach any investment targets if the policies being put in place are predatory towards FDI – this raises questions as to the sustainability of the act. Ultimately, the state needs to be enabling towards foreign investors, not predatory.

High levels of corruption, in both the private and public sector, are also a serious deterrent to investment.


Suresh Chaytoo – Regional Manager, Banks and DFI’s, RMB
George Manyere – Managing Partner, Brainworks Capital Management
Martyn Davies – Chief Executive Officer Frontier Advisory

Commentary from:
Yvonne Mhango – Senior Economist, Renaissance Capital
Simon Reid – Chief Executive Officer, IMARA SP Reid

Episode 31: Risks of investing in Africa

Key points:

Invest Africa

Economic risks including weak policies, high taxation rates, talks of nationalisation, inadequate infrastructure, and red tape are common obstacles to doing business in Africa. Understanding and operating in a specific market first, may minimise these risks. In some jurisdictions there may be legal requirements such as citizenship ownership, and changes in the structures of such legislations may cause uncertainties which may deter investors.

According to the Insomnia Index Report, political risk still ranks as one of the biggest challenges to doing business on the continent.

There is a significant gap between the perceived risk of doing business in Africa and the reality thereof.

Proper, country-specific risk analysis prior to investing in a particular jurisdiction is essential. Africa cannot be viewed as one homogenous continent. Strategies need to be adapted according to each specific country – a ‘copy/paste’ approach will not succeed.

Local partnerships

Local partners are often essential to a successful Africa investment strategy. Often there is a legal requirement to have a portion of your capital in the hands of local firms. The business efficacy principle suggests the use of a local partner as an effective risk-mitigation tool.

Human capital is a significant part of a risk mitigation strategy. Having the right people running your business in-country is essential. African business cannot be run on an expatriate basis – good local talent is paramount to ultimate success. Failure to attract and attain top talent is a challenge in many countries on the continent.

Political risk

The political risk scenario in Africa poses many risks for investors. There are a number of sub-categories within the overall category of political risk e.g. the expropriation of assets, enforceability of contracts and regulatory risk. Although it is possible for companies to insure against regulatory risk, insurance providers will not underwrite political risk policies in certain jurisdictions.

Public / private partnerships have a huge role to play in mitigating investment risk in Africa.

Many feel that corruption is often over-played as a risk factor when doing business in Africa.

The AON Risk Management Survey has identified two new risks in the top ten risks of doing business in Africa: failure to innovate and meet customer needs; and technology and system failure.

Tips for success in mitigating risk:

• Local partners
• Local knowledge
• Cultural understanding
• Proper deployment of expats (in ratio to local partners)
• Insurance policies to mitigate risk


• Anton Roux – Chief Executive Officer, AON sub-Saharan Africa
• Scott Nelson – Executive Head, Africa Practice, ENS

Commentary from:

John Saker – Partner, Africa Advisory Practice, KPMG
• Praveck Geenanpersadh – Director, Risk Advisory, Deliotte

Episode 30: Investing in Mauritius

Key points:

Invest Africa

Since its independence in 1968, Mauritius has made strides from a low-income and agriculturally-based economy towards a middle-income, more diversified economy.

Mauritius is home to roughly 1.3 million people. The country’s four-tier economy (sugar, textiles, tourism and financial services) has shown solid macro-economic performance. The country still remains fragile due to the uncertainty of the global environment.

GDP Growth

Although GDP growth slowed marginally to 4.1 percent in 2011 from 4.2 percent in 2010, the country presents positive growth prospects. Growth for 2012, however, is projected to grow at a rate of four percent due to subdued demand in the Euro Zone. Mauritius, being a net importer of goods, created a trade deficit which further widened due to strong trade links with the European Union.

Real estate sector

The real estate and construction sector in Mauritius accounts for more than 40 percent of total Foreign Direct Investment (FDI) and 19 percent of GDP. Various incentive schemes within this sector have contributed to this number.

Tourism sector

Initiatives such as the Integrated Resort Scheme (which facilitates the construction of luxury villas and golf courses) have resulted in countries such as Great Britain, France, USA and Italy investing in the country’s tourism sector.


Mauritius has made progress in its campaign for social equality and poverty reduction. Youth unemployment remains one of the country’s biggest challenges.

Mauritius has a small, limited economy and investments into the country need to be considered accordingly. Investments need to be seen in context of the size of the island.

The government is attempting to diversify the economy by growing sectors outside of tourism and sugar. Sectors of focus include manufacturing and healthcare.

Potential over-development in certain sectors due to the small size of the country is one challenge of investing in Mauritius.

Foreign Direct Investment

The government has embarked on a campaign to incentivise Foreign Direct Investment (FDI). Various investment incentives have been put forward in sectors such as free ports, ICT services, financial services, tertiary education and emerging markets.

The package of incentives provided to investors includes:

• Low corporate tax rate of 15 percent
• Exemption from custom and excise duties on imports of equipment and raw materials
• Free repatriation of profits, dividends and capital
• Reduced tariffs for electricity and water.

Mauritius ranks high on the East of Doing Business scale. The country ranks as one of the easiest countries in Africa within which to do business (World Bank).

The country’s trade policies aim to make the country an open and globally competitive economy in order to become well integrated into the world trade system. The establishment of special export zones in Mauritius is one of the country’s most significant steps towards export diversification and an important part of its integration into the global economy. 60 percent of Mauritian exports are destined for Europe and due to insecurities within this region; Mauritius is attempting to strengthen its trading ties with Africa.


• James Ehlers – Managing Director, Atterbury Property Developments
• Kemp Munnik – Head, International Tax & Advisory, BDO

Commentary from:

• Dev Chamroo – Chief Executive Director, Enterprise Mauritius
• Anthony Withers – Chief Executive Director, Mauritius Commercial Bank

Episode 29: Investing in Botswana

Key points:

Invest Africa

After 46 years of independence from the United Kingdom, Botswana has enjoyed four decades of un-interrupted civilian leadership. Progressive social policies and significant capital investment have led to the creation of one of the most dynamic economies in Africa. Despite this, various socio-economic challenges prevail.


Botswana is home to around two million people. Tourism, financial services and agriculture make up the country’s biggest economic sectors. Diamond mining remains a key revenue generator and accounts for approximately one third of GDP, 80 percent of export earnings and about half of government’s revenue.

Botswana’s heavy reliance on a single luxury export was a critical factor in the sharp economic contraction of 2009, reflected in the negative GDP growth of -4.9 percent.

The economy rebounded strongly, aided by improved global demands for diamonds, and grew by 7.2 percent in 2010 and 6.4 percent in 2011. Botswana’s economy is predicted to slow to 4.8 percent in 2012 and 6.7 percent in 2013.

Investment challenges

Botswana is still faced with high levels of poverty, inequality and unemployment as well as a high HIV/AIDS prevalence rate. The country is addressing these challenges through a number of poverty-reduction initiatives. The country is also making good progress in its targeted Millennium Development Goals, especially regarding education and gender empowerment.

Although sentiment is positive regarding Botswana as an investment destination, certain challenges still exist. The process of starting a business in Botswana still involves a significant amount of red tape. A current challenge is the issuing of residence and work permits for expatriates. The government is actively dealing with these barriers to investment.

Investment opportunities

The Botswana Investment and Trade Centre (BITC) was created to encourage government to make Botswana more investor friendly. The BITC encourages the development of a ‘one-stop’ investor service centre.

Overspecialisation in a limited economy like Botswana is counter-productive. According to a recent report in the African Review, given threats of dwindling diamond reserves, Botswana is looking to end its over-reliance on mining and is exploring the prospects of economic diversification.

The diversification of the economy has been made a priority in the government’s economic plans. In an attempt to diversify the mining sector, the country is looking to beneficiation as an option. Coal has presented a viable diversification option because of its export and electricity-generation capabilities. The Coal Development Unit is expected to facilitate the development of the entire coal value chain.

The National Economic Diversification Drive Strategy is an initiative also intended to enhance the productive capacity of local firms. This is expected to contribute significantly to job creation and economic growth within other sectors of the economy. Tourism, agriculture and financial services are other key sectors targeted in the diversification programme. The Botswana Innovation Hub has been created to develop the ICT sector within Botswana.

The government of Botswana has made great strides in the privatisation of state-owned enterprises to further encourage foreign investment.


• Craig Featherby – Regional Head, Devere Group Africa
• Johan Meiring – Chief Executive Officer, Blue Financial Services
• Terrence Dambe – Managing Partner, Minchin & Kelly

Commentary from:

• Cynthia Carrol – Former Chief Executive Officer, Anglo American
• Kenny Kapinga – Botswana High Commissioner to South Africa

Episode 28: Challenges of investing in real estate on the African continent

Key points:

Invest Africa

Africa is experiencing a population boom; by 2050 the continent will be home to two billion people. In the next 40 years, approximately 800 million Africans will either migrate to or will be born on the continents urban nodes, leading to increased demand for homes and office space.

With the African consumer becoming more sophisticated, there is a growing need for convenience. Consumers are looking for a ‘one-stop shop’ and there is now clear evidence of a transition from informal to formal retail practices.


Although investors are moving into the retail space, accessing funding for property development in parts of sub-Saharan Africa still remains a challenge. Developers often need to put down a 50 percent deposit to fund projects. Once developers are able to move past the funding hurdle, huge successes may be achieved. A good example of this is the Accra mall in Ghana which has an occupancy rate of almost 100 percent and has been a source of employment opportunities.

At a time when western economies are faltering, the outlook for Africa remains positive. This makes Africa the obvious choice for investors looking for higher yields.

African real estate is becoming increasingly popular as an investment class.

Although the primary growth sector remains retail, demand for office space in Africa is rising significantly. The demand / supply imbalance is huge and represents many opportunities for developers.


In terms of the risks associated with property investments, retail property is considered less risky. Balancing the return profile with risk perception is important. Risk is often successfully mitigated by finding the right partner on the ground.

Ownership laws in various territories on the continent could impede investment in the real estate sector. Land ownership restrictions can be overcome via local partnerships.

More diversity in investment models is needed, for example listed property investment vehicles.

There have been some significant inroads into real estate legislation in many countries on the continent. Many countries are making changes to both land-ownership and taxation legislation to create a more enabling environment for investors.

The countries that offer the most opportunities in the real estate sector include Zambia, Kenya, Ghana and Nigeria.

Tenant confidence in Africa is growing. The strategies of many tenants are evolving and tenants are making a concerted effort to be more present on the ground.


• Louis Depp – Director, Real Estate, Actis
• Elvis Ndimurukundo – Africa Strategist, Jones Lang Lasalle

Commentary from:

• Simon Field – Head, Property Finance, FNB
• Jacob Mothlhabane – MD, Turnstar Holdings

Episode 27: South Africa and Nigeria Relations

Key points:

Dubbed Africa’s economic giants, Nigeria and South Africa account for half of sub-Saharan Africa’s GDP and are potentially two of the biggest economic drivers of the region. The intra-regional and financial links between the two countries have expanded significantly in recent years. A lot still needs to be done to achieve optimal economic integration between the two countries.


During the Apartheid era Nigeria was one of the foremost supporters of the South African liberation movement. The Nigerian government issued more than 300 passports to South Africans who were looking to go abroad. The end of Apartheid in 1994 saw South African business supporting the emigration of professionals into South Africa. This was followed by an influx of Nigerian citizens.

The relationship between the two countries became soured by reports of organised crime linked to Nigerian syndicates. The fact that South Africa is seen to have unfriendly investment laws, particularly towards Nigerian businesses, has contributed to failing relations.

Economic relations

The Nigeria-South Africa Chamber of Commerce was established in 1998, shortly after the end of military rule in Nigeria. The sister organisation, the South Africa- Nigeria Chamber of Commerce was established shortly thereafter.

The biggest strain on the South African and Nigerian relations is economic in nature. South Africa, known as the largest economy in Africa, gained the reputation as the go-to country for companies wanting to invest on the continent. South Africa’s growth prospects remain subdued due to the country’s close trade links to Europe, with GDP growth predicted to be less than in 2012. Nigeria, on the other hand, is forecast to grow at a rate of more than seven percent, challenging South Africa’s gateway to Africa status.

Nigeria and South Africa have proven to be each other’s key trading partners on the continent. According to South Africa’s Department of Trade and Industry, total trade between the two countries grew to almost R23 billion from R174 million between 1999 and 2008. Trade volumes are expected to rise even higher due to Nigeria’s massive oil reserves. There are approximately 100 South African companies operating in Nigeria.

There is a perceived race between the two countries in terms of prominence on the continent. South Africa’s inclusion in the BRICS and the G20, and the recent appointment of Nkosazana Dlamini-Zuma as the Head of the African Union seems to have skewed South Africa’s position in the economic race for Africa. Many feel, however, that the South African government has not done enough to court the rest of Africa.

A bi-national commission between the Nigerian and South African governments was established in 1999. Engagement between business and government is essential to facilitate growth in relations.

Nigeria and South Africa have differing areas of strength and each country could benefit from learning from the other. The key is dialogue and the sharing of knowledge.


Yunus Suleman – Chairman, KPMG South Africa
• Diana Games – Chief Executive Officer, Africa at Work

Commentary from:

Anthony Thunstrom – Head, Africa High Growth Markets, KPMG
• Bassey Archibong – Deputy High Commissioner, Nigeria

Episode 26: The extractive industry in Mozambique

Key points:

Mozambique is home to approximately 23-million people. Although classified as a dual economy, the agricultural sector is the biggest contributor to GDP and employs 80 percent of the working population. Over the past few years, Mozambique has managed to maintain a GDP growth rate of over 7 percent per annum. In 2011, the country registered a growth rate of 7.2 percent with 7.5 percent expected for 2012 and 7.9 percent for 2013. This growth is underpinned by robust investment inflows into large projects, particularly in the mining and gas sectors.

Foreign assistance

Although Mozambique has embarked on a number of fiscal reforms, the country still remains heavily dependent on foreign assistance. The United States remains the country’s largest donor. Bilateral trade between Mozambique and the Unites States has increased by 68 percent in 2011, reaching US$487 million.

Mozambique and Tanzania currently represent the two primary investment destinations along the east coast of Africa. There has been a significant increase in business activity and investor interest, with many multinational firms now participating in the extractive industry.

Extractive industry

Mozambique boasts gas reserves estimated to be in excess of 100 trillion cubic feet, making this one of the biggest reserves in the world. Investment revenue of over US$60 billion is expected from gas exploration.

Mozambique is approaching the developments in the extractive industry cautiously. The country is consulting broadly on these developments and is currently reviewing regulations for the gas industry that will govern exploration and production. A law came into effect in 2011 that provides for Public Private Partnerships (PPPS) and large-scale projects to be undertaken in a more structured manner. The government is cognisant of the challenges associated with growth in the extractive industries, as well as the requirement for socio-economic investment to accompany foreign direct investment. The government is also aware of local content and employment issues. The country is faced with the challenge of creating an investor-friendly environment without losing sight of the expectations of the population.

Policy continuity

Policy continuity is a trademark of the Mozambican government. In the last decade, the government has had the same set of policies towards capital markets, investment and business. Although regulations and legislation may not yet be properly in place for the extractive industries, there has been very little investor uncertainty as to the policy direction of the government.

Investment hot spots outside of the extractive resource sector include:

Power – Mozambique has extensive hydro-power capacity and could potentially become the power-house of southern Africa Agriculture – the country is not water-constrained and great agricultural potential still exists

Investment challenges

The private ownership of land in Mozambique is restricted. These restrictions remain a concern for investors. Land restriction forms part of the overall economic model of the state, which provides for all land to vest in the state. Due to this provision, large investments and agricultural developments are undertaken on the basis of long-term leases.

There is a distinct education and skills training gap in the country. In order to foster beneficiation in the country, a focus on education and skills development is necessary.

A key deterrent to economic growth in Mozambique is ailing infrastructure and inadequate access to rail and port structures which are essential enablers for the export of coal and the potential export of LNG (Liquefied Natural Gas).The government is open to inward investment and private sector participation in infrastructure development. To capitalise on its own infrastructure development goals, the Mozambican and Portuguese governments recently founded the Mozambique National Investment Bank which has facilitated and managed several large infrastructure projects.


• John Fer raz – Director, Project Finance Department, ENS
• Fazel Moosa – Head Project and Infrastructure Finance, Investec

Commentary from:

• Stephan Morais – Deputy Chief Executive Officer, Mozambique National Investment Bank
• Bernard Swanepoel – Chief Executive Officer, Village Main Reef

Episode 25: The Investment Case for Africa

Key points:

Shot at KPMG’s Africa Partners Conference, this episode of Invest Africa shares insights on the overall investment case for Africa and touches on the investment landscapes of various regions and countries.

Africa’s investment case

The great African business migration has begun. Businesses across the globe are recognising the business opportunities and the growth potential that Africa offers.

Although the African economy was also negatively impacted by the global economic downturn, the continent has, on average, maintained positive economic growth. This continued, positive growth has stimulated interest in Africa’s emerging markets.

Africa has a rapidly-growing middle class. These consumers are not yet being offered products or services commensurate with their lifestyle and aspirations. There are, therefore, significant opportunities across many sectors.

Africa is endowed with mineral and agricultural wealth and is well positioned to fill the resource gaps that are becoming apparent in the world economy.

When it comes to an investment strategy for Africa, a combination of a bottom-up and a top-down strategy is ideal. A bottom-up strategy provides local management input into customer requirements, and a top-down strategy helps to realise the benefits of international experience.

A key success factor for doing business in Africa is to have a strong local presence and an understanding of the marketplace.

West Africa

Historically, West Africa was known as a region of dictatorships and revolutionary governments. The instability associated with these forms of government was a deterrent to foreign investment. Over the last few years, there have been tremendous changes, with democracy taking hold across the region. Ghana has had a democratic government since 1992, and the European Union has recently indicated that they will no longer be observing elections in Ghana due to the mature nature of country’s democracy.

Countries across the region are placing emphasis on the infrastructure deficit and huge infrastructure projects are being rolled out across the region. West Africa is endowed with mineral wealth and successful extractive industries. The region has a fast-growing middle class, which creates opportunities for consumer-related industries. These countries are well positioned to contribute to the emerging market phenomenon that is unfolding in Africa.

Nigeria as an investment destination

Nigeria is ranked 133 out of 183 countries in the World Bank’s Ease of Doing Business Index. Governance, corruption, sanctity of contract and reputation remain the biggest challenges facing the country. The realities of doing business in Nigeria are often far removed from investor perceptions, but perceptions are key to building investor confidence.

The recent banking reforms in Nigeria have gone a long way in increasing investor confidence and improving Nigeria’s reputation.

East Africa as an investment destination

Recent oil and gas discoveries off the east coast of Africa have positively affected investor appetite for East Africa. The average growth rate in the region has been between five percent and six percent over the last few years. With lower returns in the developed world, there has been a much higher interest in East Africa. Sectors of greatest opportunity and growth include oil and gas , telecommunications , infrastructure and consumer markets.

There is currently a lot more focus on developing the common market within east Africa (as part of the East African Community). This will open up additional opportunities, particularly with the establishment of policies allowing the free movement of goods and services.

Rwanda is a big influence in the East African Community. The country has shown phenomenal growth and is one of the highest-rated African countries on the Ease of Doing Business Index.

The East African Community has a population of approximately 120 million. With the potential inclusion of Ethiopia, this number will jump to nearly 200 million people. This represents a sizeable market with significant investment opportunities.

There is a big infrastructure deficit in east Africa and many opportunities exist in this sector.

Mozambique as an investment destination

Opportunities exist in numerous sectors in Mozambique, but specifically in energy and natural resources .

Mozambique is a post-conflict country and this is often a deterrent to investment. The effort to build a peace-culture within the country is underway.

Laws have recently been enacted enabling greater participation of local organisations in the extractive industries in Mozambique. There is awareness that wealth needs to be distributed amongst the populous. These factors will contribute to the creation of a peaceful environment and greater participation of stakeholders within the economy.

Zimbabwe as an investment destination

Zimbabwe has tremendous potential. The country is endowed with mineral resources (gold, diamonds, platinum, gas) and vast tracts of arable agricultural land. Zimbabwe has the highest literacy rate on the continent and as such the country’s human resources are attractive.

The opportunities in Zimbabwe are undeniable. Political risk, however, dampens these opportunities.

Commentary from:

• Michael Andrew, Global Chairman, KPMG
• Joe Winful, Senior Partner, KPMG in West Africa
• Seyi Bickersteth, Senior Partner, KPMG in Nigeria
• Patrick Petit, Senior Partner, KPMG in Francophone Africa
• Filipe Mandlate, Senior Partner, KPMG in Mozambique
• Charlie Appleton, Partner, KPMG in East Africa
• Brian Njikizana, Partner, KPMG in Zimbabwe

Episode 24: Mining Crisis

Key points:

Resource-rich countries are determined to capitalise on high commodity prices in order to bolster weak balance sheets. This has led to a renewed debate on the role of government in Africa’s mining sector. This week’s Invest Africa panel of experts explores this question in light of the recent mining crisis in South Africa.

African governments are now exploring new channels through which strategic mineral extraction can be optimised. Companies are looking at ways to extract minerals in a more sustainable, cost-effective manner. This has evoked pressures on African governments to take a more proactive and strategic role in the mining sector.

Government involvement in mining takes on various forms and extends from outright nationalisation and appropriation of national resources; to control measures by corporations. According to a recent survey on the business risks facing mining and metals, resource nationalism is top of the ten most troubling risks in the sector.

Countries like Namibia, Botswana and Zimbabwe have taken a bold approach towards state ownership. This year, the Namibian government announced its intention to grant its state mining company exclusivity in the exploration of its strategic minerals.

There is not necessarily a correlation between poor performance and state-owned mining companies. There are certain positive examples, as in the case of Botswana.

The tax regimes governing the African mining industry have been a key talking point for most governments this year.

Factors such as access to water, energy supply, and labour unrest are examples of issues affecting the stability of mining companies on the continent.

Current extraction models are not all ideal. Models vary from a purely state-owned extracted beneficiation chain, to a purely privately-owned extraction and beneficiation chain. Various models exit between these two extremes.

The current South African model sees mines owned by private shareholders who are listed, and therefore, by extension are owned by the public. 

Changes are expected in the way Africa currently exploits its mineral resources. They manner in which minerals are extracted has become less efficient over the years. Nowadays, mines operate on a much more short-term basis due to the threat of nationalisation, wild-cat strikes and changes in legislation. There is a perception that mining today is undertaken in a far less sustainable manner than it was thirty years ago. Sustainability is the key to effective long-term operations. Sustainability is the change that many hope to see.

The following factors are essential in order to facilitate positive change in the mining sector:

• Certainty
• Consistency
• Collaboration and cooperation (between governments, unions, management and workers)
• Education
• Transparency

In South Africa, one of the most important changes that has been made between the previous minerals model and the current one is an emphasis shift from a purely shareholder model to a stakeholder model.

The losses incurred in South Africa due to industrial action amounted to the following:

• Almost 50 killed
• R10.1-billion loss
• 200,000 jobs could be shed within the next 10 years
• Ratings agency downgrade
• Loss in investor confidence
• Although there may be fears that South Africa’s mining crisis may stream into the broader mineral-producing community in Africa, African leaders are looking to find ways to bring stability to all sectors contributing to the economy.


• Kobus Nel, Mining Analyst, Stanlib
• Peter Major, Mining Analyst, CADIZ Corporate Solutions
• Warren Beech, Head of Mining, Routledge Modise Inc.

Commentary from:

• Bheki Sibiya, President, SAMDA
• Susan Shabangu, Minister, Mineral Resources South Africa

Episode 23: Private equity in Africa

Key points:

2011 witnessed the largest number of private equity funds being invested in Africa.

In the year to come, the average growth rate is expected to return to the pre-crisis levels of 5.5 percent. In return for part-ownership, private equity firms can provide the cash injections needed to revive ailing businesses in Africa. This funding helps to provide innovation and job creation.

Africa is growing at a rapid pace and this growth cannot be funded by governments alone.

Private Equity investments
According to the Emerging Markets Equity Association, private equity investment in sub-Saharan Africa was US$1.3 billion at the end of 2011. In the last year, more than 50 private equity firms set up shop in East Africa alone, and together they gathered over US$700 million in funding which has assisted in reducing costs across various sectors.

Financial Model
Private equity has become one of the more preferred financial models. Whereas banks have been the traditional financiers, founded mostly on loan interest and service fees, private equity provides business growth due to the fact that investors only make money when the business gains value.

Private equity companies also face various challenges. According to a recent survey, investors entering into emerging markets such as Africa find that the commercial, operating and reputational due diligence are not on par with that of more developed markets. This is due to the overlap between public and private sectors, as well as the unreliable regulatory and political environment.

In order for businesses in Africa to continue to thrive, a balanced approach to regulation and a nurturing business environment is necessary.

Private equity stimulates growth, it helps in the development of management talent and skill sets. The level of awareness of Private Equity funding is, however, low and a fair amount of education is still needed.

Global economic growth
Funding worldwide has become difficult following the general slow-down in economic growth due to the economic crisis. It is particularly difficult to raise funds in Africa as inventors require a track record of success.

Private Equity legislation in South Africa and Nigeria
In South Africa there is legislation in support of the private equity industry. There is legislation regarding investments made by pension funds where funds are explicitly allowed to invest in private equity. This broadens the investment landscape and opens up opportunities for increased investment in Africa. The pension fund regulator in Nigeria has also embraced the idea of alternative investment options and has recently approved legislation where up to five percent of pension fund investments can be allocated to private equity.

Sustainability is a key investment factor that private equity firms take into consideration. African governments seem to be supportive of open-market strategies.


• Colin Rezek – Director, Vantage Mezzanine
• Dapo Okubadejo – Head Financial Advisory, KPMG Nigeria

Episode 22: South Africa as an investment destination

Key Points

South Africa is home to some 48-million people. After its turbulent history, characterised by violence and racial segregation, South Africa held its first multi-racial elections in 1994. The 1994 elections brought the 46-year Apartheid policy to an end and ushered in a majority rule by the African National Congress (ANC) under the leadership of Nelson Mandela.

Black Economic Empowerment
In a bid to address past inequalities, the country implemented Black Economic Empowerment (BEE), a strategy that was designed to increase the participation of historically disadvantaged South Africans in the economy. These types of policies, as well as other regulations, have impacted on business practices and foreign investment. 

Despite comprehensive approaches to eradicate poverty and hunger, poverty and inequality remain prevalent, making South Africa one of the most unequal societies in the world.

Economic growth
Although still a middle-income country, South Africa is an emerging market heavily endowed with natural resources such as gold, diamonds and platinum. 

The European Union (EU) still remains the country’s main trading partner. Because of these trade ties and the current financial crisis in Europe, the country’s GDP has remained subdued. The country’s growth forecast has been downscaled by the International Monetary Fund (IMF) to 3% from 3.3% for 2013.

The primary focus of the South African government is to boost investments in order to generate employment for South Africans.

With the recent wildcat strikes, South Africa has been in the spotlight as an investment destination. The strikes have resulted in capital outflows and a weakening of the rand to a three and a half year low. 

Bilateral Investment Treaties
Bilateral Investment Treaties (BITs) play an important role in an investor’s decision to invest in a particular market.  South Africa has many BITs.  After the Apartheid era, the South African government embarked on ways of creating an investor-friendly environment and therefore concluded a number of BITs, more notably with the EU.  In July 2012, the South African Department of Trade and Industry announced the country’s intent to refrain from entering into any additional BITs.  This decision will see the gradual phasing out of the European countries who contribute over 80% to total Foreign Direct Investment (FDI) into the country.  This has also increased fears of nationalisation. The threat of nationalisation is a key deterrent for investors.  Consistency on South Africa’s stance on nationalisation is essential.

Factors that encourage investment
There is, however, still a compelling case for investing in South Africa.  Factors that encourage investment include:

• It is easy to do business in South Africa
• Investment in South Africa offers competitive returns
• South Africa boasts good GDP growth
• The country has a growing stock market
• Developed infrastructure
• A focus on corporate governance
• South Africa boasts strong manufacturing technology
• South Africa’s financial markets are sophisticated and integrated with the rest of the word
• South Arica has a strong regulatory system

Despite the challenges that the country faces, growth prospects remain positive, given the investments made in recent years.


• Greg Nott – Director, Werksmans Attorneys
• Dawie Roodt – Chief Economist, Efficient Group
• Yinka Sanni – Deputy CEO, Stanbic IBTC

Commentary from:

• Roeland van de Geer – EU Ambassador to South Africa
• Philipp Roesler – German Vice Chancellor

Episode 21: Agriculture in Africa critical

Key Points

Agriculture in Africa critical

Africa’s agriculture sector could positively influence global food security if it can be grown to keep up with the demands of rapid population growth. Regulation challenges and a lack of infrastructure, as well as concerns around beneficiation for subsistence farmers, are challenges that must be addressed to ensure sustainable growth.

By 2025, 16 of the top 20 fastest-growing cities in the world will be in Africa, and the population of five of the fastest growing cities will double. Africa’s middle class is growing rapidly and productivity is predicted to grow by three percent annually. Africa’s agricultural sector is, however, lagging behind.

African women grow 80 – 90 percent of the food in sub-Saharan Africa, but own less than two percent of all land. 3.5-million additional tractors are needed to put Africa on par with other regions, and 70 percent of Africa’s arable land remains uncultivated.

Food production has not kept up with Africa’s population explosion. As a result, the value of annual food exports is expected to rise to US$11-billion by 2020. Africa is aiming to increase trade rather than aid as a way to alleviate poverty. A two percent increase in Africa’s share of global trade could halve unemployment. In terms of agricultural land, Africa has a significant global competitive advantage.

Regulatory advances and challenges

In 2003, African Heads of State signed the Maputo Declaration on Agriculture and Food Security. Under this declaration, countries have committed to increasing their agricultural budget to at least 10 percent of their national budget within five years.

Since the signing of this declaration, there has been a notable shift in a handful of African countries. Countries such as Rwanda, Malawi, Mali and Kenya have all secured agricultural investments way beyond the targeted 10 percent.

Policy issues remain one of the biggest challenges hindering the development of the agriculture sector in Africa. Inadequate infrastructure is also a challenge and increases the costs of doing business. There is, however, a strong will amongst most countries in Africa to put policies in place to enable agricultural growth.

The policy environment needs to make the agricultural sector competitive enough to retain farmers involved in commercial production. The regulatory environment for agribusiness does seem to be improving in many countries. Despite this, a lot of work still needs to be done to change the perceptions of investors.

Foreign direct investment is key

A successful agricultural environment depends on a combination of various mechanisms. There needs to be an enabling regulatory environment, adequate infrastructure and proper financing mechanisms  (to name but a few).

Although agribusiness is regarded as a risky endeavour, over the past few years, companies and foreign governments have been acquiring land in some of Africa’s poorest countries. If the correct measures are put in place, foreign investment  can help African countries create jobs, increase foreign earnings and use more advanced technologies. There is a concern, however, that villagers will be forced off their land and that family farming will be marginalised.

Ideally, foreign investors should embark upon partnerships with African land-owners but many, like China, do not follow this model and prefer to buy up huge tracts of agricultural land. A responsible investment protocol is one that attempts to bring the small-holders into the commercial value-chain. More beneficiation is necessary in the agricultural sector in Africa.

Global food security

The global demand for food and agricultural commodities creates a new opportunity for African farmers. It also highlights the need for public policies and infrastructure to support those agricultural sectors.

Education and training and the transfer of skills is essential in the development of a long-term sustainable agribusiness.


• John Purchase: CEO, AGBIZ
• Antonie Delport: Country Head, Sygenta SA
• Hans Balyamujura: General Manager, Agribusiness Frontline & Africa, ABSA
• Hugh Scott: Director, Africa Enterprise Challenge Fund (AECF)

Commentary from:

• Dr. Lawrence McCrystal: Chairman, Agrifica

Episode 20: Gabon

Key Points

Invest Africa

Home to roughly 1.6-million people, Gabon enjoys a per capita income four times that of most sub-Saharan African countries.  However, due to high income equality, a large proportion of the population remains poor.  Human development indicators remain below the average for middle income countries with unemployment currently standing at 30 percent of young people.

Export Goods

The oil sector dominates the economy and accounts for approximately 50 percent of GDP, 60 percent of revenues and 75 percent of export goods. Other export goods include uranium which the country exports to the USA, Australia and Malaysia. Import partners include France, China and the USA from which machinery, food products and chemicals are sourced.
In 2011, GDP grew by an estimated 5.8 percent, down slightly from 6.6 percent in 2010. Economic activity has been boosted by extra public investment in building and infrastructure, in preparation for the 2012 African Cup of Nations. 


Gabon is faced with declining oil production which has been the backbone of its economy since it gained independence. The country is now faced with a two-fold challenge:  to create a diverse economic environment; and to integrate the unemployed youth into the working economy. 
Challenges to doing business in Gabon include the language barrier, poor IT infrastructure, and a weak ban


Gabon is endowed with 22-million hectares of rainforests, 1-million hectares of exploitable arable land and 13 national parks which would allow for the significant development of the timber and high-end tourism sectors. 

Gabon, an investment destination

President Bongo has increased efforts to increase transparency and is taking steps to make Gabon a more attractive investment destination by diversifying the economy and by increasing government investment in human resources and infrastructure.

The fundamentals of government and governance seem to be intact. 

Due to some concerns about the validity of President Bongo’s rule, a certain amount of political risk exists.  Many investors have adopted a ‘wait and see’ approach.

Government incentives for investors

Bureaucratic challenges are minimal.

The government offers significant incentives to investors.  For example, timer companies investing special economic zones are offered the following incentives:

A 10-year exemption on corporate tax
• No customs duty for 25 years
• VAT exemption for 25 years
• 50 percent discount on electricity costs 

These investment incentives are driving Foreign Direct Investment.

Gabon aspires to become an emerging country by 2035.  To achieve this, the country would need to have regulatory policies that support and foster economic and social development. 


• Abel Myburgh – Head, Africa Desk BDO
• Sanjay Dev – Country Director, Abhijeet
• Sven Richter – Head, Frontier Markets , Renaissance Capital

Commentary from:

• Shanta Devarajan – Chief Economist, World Bank
• Alex Wong – Head, Basic and Infrastructure Industries, World Economic Forum 

Episode 19: Angola

Key Points

With oil reserves estimated at 13 billion barrels and production at more than 1.8 million barrels per day by 2011, Angola is now sub-Saharan Africa’s biggest oil producer after Nigeria. In Episode 19 of Invest Africa, experts unpack the opportunities and challenges that exist for investors in the country.  

Angola is home to approximately 18 million people. Conflict between the People's Movement for the Liberation of Angola (NPLA), and the National Union for the Total Independence of Angola (UNITA) plagued the country for almost a quarter of a century. By the end of the war in 2002, 1.5 million lives were lost and 4 million people displaced. Angola is now faced with the daunting task of re-building its infrastructure.  

With oil reserves estimated at 13 billion barrels and production at more than 1.8 million barrels per day by 2011, Angola is now sub-Saharan Africa’s biggest oil producer after Nigeria. Angola’s biggest oil export partners are China, the USA and India. Other sources of revenue include the exporting of coffee, diamonds and fish.  

Although agriculture provides the main livelihood for most of the population, half of the country’s food is still imported. Other import commodities include machinery, medicine and vehicle parts from import partners Portugal, China and the USA.  

Angola’s economy is growing. In 2011, GDP growth increased slightly to 3.5 percent from 3.4 percent in 2010. This was driven by rising oil prices and a strong non-oil sector that grew by almost 8 percent. Growth is expected to expand to 8.2 percent in 2012.  

Oil has historically been the mainstay of the Angolan economy. According to the Economist Intelligence Unit (EIU), the country started to diversity its economy by increasing its revenues from the non-oil sector, therefore increasing its pull as an attractive investment destination. The EIU estimated that approximately 1 000 new businesses were registered in the first three months of 2012 - creating nearly 7 000 jobs. However, the World Bank Doing Business Report ranks Angola 167th out of 183 countries in terms of the ease of doing business.  

Despite the effects of the global financial crisis, Angola’s financial sector had continued to expand, with the banking sector dominating the financial system. Angola has developed a new foreign exchange policy for its oil sector which is expected to pump billions into the banking system.  

Challenges to investing in Angola include the language barrier, a lack of human resource capabilities, bureaucracy and corruption. Joint ventures with local partners are one of the better ways in which to do business in Angola. The government of Angola is introducing tax reforms to address the issues of corruption and bureaucracy. A new foreign investment law was introduced in May 2011.  

Opportunities continue to be focused in the oil and gas and mining sectors. The services industry is growing and is a potential area of opportunity for investors.  

Due to the years of conflict, Angola’s infrastructure needs to be rebuilt. Significant progress has already been made and there are currently massive infrastructure projects underway.  

Energy is a key area in which to invest.  


Jose Silva – Managing Director, KPMG Angola
• Roger Ballard-Tremeer – Honorary Chief Executive, Angola Chamber of Commerce   

Commentary from: 

• Nema Ramkhelawan-Bhana – RMB 

Episode 18: Namibia

Key Points

Namibia holds great opportunities in the mining sector with the country being the world’s fourth largest producer of uranium. In this episode, experts discuss Namibia as an investment destination.

Home to approximately two billion people, Namibia is the world’s fourth largest producer of uranium. The country also produces large quantities of zinc and is a small producer of gold and other minerals. The Namibian economy is heavily dependent on the extraction and processing of these minerals for export, mainly from the Southern African Customs Union (SACU) region from which it imports petroleum products, chemicals, machinery and fuel. Mining only employs 3% of the population and accounts for 8 percent of GDP, but provides for more than 50 percent of foreign exchange earnings.

A modest performance in mining and agriculture (due to severe flooding in the north of Namibia), coupled with a dampened demand for minerals, resulted in economic growth slowing to 3.8 percent in 2011, from 6.6 percent in 2010. Growth prospects for the medium term are, however, positive. Risk factors to Namibia’s growth include the global economic downturn, structural reductions in the SACU, poverty and inequality.

The government of Namibia has devised a targeted intervention programme for employment and economic growth, with a total funding of N$9.1 billion. This programme is aimed at addressing economic growth and targets government support to facilitate the growth of strategic sectors in the economy. The government is encouraging increased investments in agriculture, agro-processing and manufacturing. The aim is that, by 2030, 80 percent of the country’s GDP and 70 percent of its export receipts will come from the manufacturing and services sectors.

In terms of capital markets, the Namibian Stock Exchange (NSE) is still dependent on dual-listings from South Africa and other countries. The government is, however, driving a financial sector strategy that requires the listing of the four Namibian banks. This will provide some growth for the NSE.

Namibia is an attractive investment destination. The country has demonstrated democratic governance since its independence and there have been successive free and fair elections. The government has a prudent fiscal policy and the financial system is one of the most sophisticated in Africa. Regulatory policies are sound and economic fundamentals are strong. Namibia’s record in terms of the enforcement of contracts is one of the best in the world.

Namibia’s stable political, economic and trade environment is complemented by modern infrastructure which is in line with the sustainable industrialisation of Namibia by 2030.

Namibia’s economy is closely linked to that of South Africa.

The population of Namibia is relatively small when compared to that of other African countries. As such, opportunities in the retail sector are not as prevalent. There is, however, demand emanating from Angola for consumer products. Namibia’s proximity to Angola presents opportunities for companies to push consumer products through Namibia to Angola.

Significant opportunities exist in the mining sector, with China and Russia showing interest in this sector.

The government of Namibia still retains control over strategic infrastructure sectors (power, rail and port). Opportunities exist for Public Private Partnerships.

Gas has been discovered in the Southern part of Namibia and exploration activity is currently underway. The opportunity exists to use Namibia as a ‘launching pad’ into other oil and gas markets in the region (particularly land-locked countries).

Land delivery remains a challenge in Namibia and is currently one of the areas of greatest concern for business in Namibia.


• Tandiwe Njobe – Head: Coverage and Invest Banking , SCA, Standard Bank
• George Osahon, CEO, GEO-Concept Technical Ltd
• Tarah Shaanika – CEO, Namibia Chamber of Commerce and Industry (NCCI)
• John Mandy – CEO, Namibian Stock Exchange.

Commentary from:

• David Wellbeloved – Project General Manager, Namibian Marine Phosphate

Episode 17: African growth in Oil and Gas

Key Points

Africa’s oil and gas industry promises investors exponential growth. It is also vital to the continent’s overall economic growth. According to this week’s Invest Africa panel, the continent’s energy potential is blossoming at a time when global demand is rising faster than new discoveries.

Oil reserves abound

The majority of oil and gas reserves in Africa lie in six countries: Angola, Nigeria, Sudan, Egypt, Libya and Algeria . The oil and gas sector has become a key contributor to the continent’s economic growth.

Ghana has recently joined the ranks of oil producing countries in Africa, with daily production averaging around 70,000 barrels per day. Niger also commenced its first oil production with around 20,000 barrels per day in October 2011.

The growing importance of gas

Globally, gas is the fastest growing fossil fuel in terms of demand. Discoveries in Mozambique and Tanzania are positioning the East African region as a new gas frontier. The International Energy Agency predicts a 25 percent production growth over the next five years. This fossil fuel is forecast to emerge as a crucial form of energy, for both local use and to meet African export demands.

Africa’s west coast holds 32 percent of natural gas reserves and potential liquefied natural gas (LNG) projects could open up export markets to the Middle East and Asia. LNG exports are likely to drive increases in gas production between 2012 and 2015.

Short- to medium-term outlook

Oil and gas should remain an important economic driver in the short-to-medium term. This will continue until such time as governments are able to diversify economies so that oil and gas play a lesser role.

Infrastructural limitations, uncompetitive gas pricing and the capital-intensive nature of gas projects have kept large-scale gas investments limited to a handful of African countries. Refineries in many oil and gas producing countries in Africa do not work to full capacity, and as such significant infrastructure investment is needed.

Regional cooperation is essential in order to effectively monetise natural gas in Africa, especially as it is predicted that, in the long-term, gas will be more prominent in the energy mix.

Opportunity from adversity

Despite the various challenges faced by the oil and gas sector world-wide over the past few years, recent discoveries have increased competition between oil and gas exploration companies.

The phasing out of fuel subsidies in many African countries in response to sustained fiscal pressures and the disincentives they provide for investors, is one way governments can influence investor behaviour through regulatory laws and policies.

In conclusion, oil and gas remains an important sector for investors into Africa. It provides opportunities not only for energy companies, but for infrastructure developers as well. The sectors role in Africa’s economic growth is likely to remain important.


• Rajen Reddy, CEO, KZN Oil
• George Osahon, CEO, GEO-Concept Technical Ltd
• Bradley Cerff, Vice President Operations, SACOIL

Commentary from:

• Arsenio Mabote, Chairman, National Institute of Petroleum, Mozambique
• Nosizwe-Nocawe Nokwe, CEO, Petro SA

Episode 16: Zambia

Key Points

Zambia has enjoyed impressive growth since 2005 – a trend that is expected to continue over the next few years. Mineral resources including oil, infrastructure development and agriculture, as well as the country’s ideal placement to serve as an access point to Southern Africa, are all expected to drive Zambia’s growth in the near future. Invest Africa’s panel, including Jason Kazilimani, Senior Director, KPMG in Zambia , explore these and other opportunities for investment.

Zambia is home to approximately 14 million people. Like most African countries, agriculture is a significant economic contributor and accounts for 21 percent of GDP. Top revenue generators include copper, cobalt, electricity and tobacco, which are exported to China , South Africa and Switzerland. Import partners include the DRC, South Africa and China from which machinery, transport equipment and petroleum are sourced.

Zambia’s economy has experienced strong growth in recent years, with real GDP growth averaging more than 6 percent per year between 2005 and 2011. Economic growth slowed to 6.6 percent in 2011 from 7.6 percent in 2010, mainly as a result of weaker mining sector performance. The medium-term economic outlook does, however, appear favourable, with the economy expected to grow 6.9 percent in 2012 and 7.3 percent in 2013.

Significant macro-economic reforms have been implemented since the 1991 return to multi-party democracy. These include the privatisation of state-owned enterprises, the equalisation of the market and the scrapping of exchange controls.

One of Zambia’s priorities is the increase in domestic revenue collection due to infrastructure projects that will require additional resources. The government is aiming to fill the US$750 million funding gap by means of a bond issue. This infrastructure investment is expected to boost growth.

Zambia’s location provides an opportunity for the country to become the ‘hub’ of Southern Africa. Zambia shares its borders with eight other countries and serves as a transit and access point to over 170 million people.

Zambia’s power deficit has resulted in the creation of many investment opportunities within this sector. Opportunities also exist in real estate, which has experienced a growth surge due to the rising Zambian middle class.

Zambia’s vision articulates its aspiration to become a prosperous, middle-income country by 2030 and to transform itself into a competitive, outward-oriented economy where hunger and poverty are significantly reduced.

FDI inflows into Zambia totalled US$5.4 billion in 2011. The World Investment Report 2012 reports that Zambia’s FDI inflows for 2011/2012 ranked third in Africa.

Key sectors for accelerated growth include:

•Mining (copper and cobalt, precious stones, uranium, iron ore, diamonds and oil)
•Agriculture (cotton, tobacco, horticulture and floriculture)
•Financial Services Technology (Infrastructure and IT Convergence).


•Andrew Chipwende, Director General, Zambia Development Agency
Jason Kazilimani , Senior Director, KPMG in Zambia
•Rodwell Zvarayi, Group Executive International, Business Connexion
•Cuthbert Malindi, Director, POSTdotNET

Commentary from:

•Robert Sichinga, Minister of Commerce, Trade and Industry
•Ravi Naidoo, Group Executive, Development Bank of South Africa

Episode 15: Insurance

Key Points

Though Africa’s insurance sector is not as large as that of more developed countries, or perhaps because of this, opportunities for investment in this sector are plentiful. This episode of KPMG-sponsored Invest Africa focuses on the challenges insurers face across the continent, and what the returns of overcoming these could be.

Africa’s insurance market remains very small when compared to those in developed countries. The market contributes approximately 2 percent to GDP, and caters to less than 5 percent of the population. Insurance is a grudge purchase and is heavily influenced by income levels.

Short-term insurance currently makes up 90 percent of the African market and life insurance a meagre 10 percent.

Some of the issues plaguing the African insurance market include:

•Low per capita incomes
•Capital inadequacy
•Lack of capacity
•Underwriting expertise
•Consumer confidence in insurance products.

Insurance companies in most African markets have traditionally targeted only the top 5 percent of the adult population. As such, these companies are fighting for market share in an already served market and need to start extending their reach.

South Africa is currently the dominant player in the African insurance market. Outside of South Africa, the market consists of small, indigenous insurance companies. Not many multinational insurance firms have a footprint in Africa (outside of South Africa). As such, huge opportunity exists for cross-border expansion and growth.

The big insurance companies in Africa include Sanlam, Hollard, Mutual & Federal and Chartis. Being able to adapt to specific country-related client demands is essential.

Offering re-insurance capacity from South Africa is one way of getting a foothold in the African insurance market. Re-insurance enables companies to mitigate risk exposure and to cover loss in a major event. It also allows an insurer to expand more aggressively, increase solvency and ensures delivery on mass payouts with less associated risk. Many African countries have localisation laws where foreign insurance firms have to be underwritten by a local firm.

A conducive regulatory and supervisory infrastructure framework will serve global insurance companies well and foster consumer confidence.

Political risk insurance is particularly important for trade and investment in Africa. Bank assurance is critical in the African insurance market. It has gained significant traction in Kenya and has become one of the main drivers of growth. Insurance growth markets include Ghana, Nigeria and Kenya.

KPMG’s annual review, The South African Insurance Survey 2012 explores these opportunities in more detail in a 54 page section dedicated to the insurance sector in other African countries.


Jaco van der Sandt: Head of Insurance, KPMG in South Africa
•Guy Scott: CEO, Aon Risk Solutions
•Risto Ketola: Insurance Analyst, SBG Securities
•Stephen Wandera: MD, British-American Insurance Co.

Commentary from:

•Adam Samie: CEO Lion of Africa
•Mike Durek: MD, Chartis Insurance

Episode 14: Healthcare

Key Points

CNBC Africa’s Invest Africa series explores the challenges and opportunities in Africa’s healthcare sector. KPMG’s Head of Healthcare, Sven Byl , joins the panel this week to talk about some of the solutions to Africa’s toughest healthcare challenges, some of which are also part of the UN’s millennium development goals.

Sub-Saharan Africa accounts for 11 percent of the world’s population, yet bears 24 percent of the global disease burden and, according to the International Finance Corporation, the continent demands less than 1 percent of global healthcare expenditure.

Though the healthcare sector has shown remarkable improvement over the last few years, Africa’s healthcare industry is still characterised by huge disparities in healthcare access – there are only two physicians per 10,000 people.

Local healthcare professionals are increasingly turning to technology to enable them to consult in rural areas. This technology is helping to bridge the great distance that the poor have to cover while seeking healthcare. Connectivity in rural areas is, however, a huge challenge for this kind of project. (Read Global lessons in eHealth implementation for more.)

The pharmaceutical industry is the largest of its kind in Africa. Many governments have identified it as one of the key drivers of economic growth. The demand boom has increased the opportunities for investment in Africa’s healthcare sector, which has a strong need for hospital equipment, medical services and medication. The growing middle class in Africa is willing to pay for better medical treatment and this has opened the door to the private sector.

The UN’s Millennium Development Goals (MDGs) aim to achieve a lower mortality rate and greater accessibility to healthcare by 2015. Business can still contribute to the realisation of this goal.

The distribution of health human resources is a significant challenge in Africa, but the right skills are the key to providing sustainable access to healthcare across the continent. The difficulty lies in meeting the demands of a billion plus population. 

The sector other challenges – how to ensure the ongoing development of people and the servicing of equipment. According to the World Health Organisation, 50 percent of equipment installed across the continent is non-operational.

Another MDG is to reduce maternal mortality by two thirds by 2015. Half of the maternal deaths that occur in the world are in sub-Saharan Africa. If the problem of maternal deaths can be dealt with, life expectancy in many African countries can be dramatically improved. Every year of extra life expectancy that a country is able to generate leads to increased economic development and activity.  

Intellectual property regulations are essential in encouraging good healthcare practices. Most African countries have solid laws regulating intellectual property and patents. The regulatory environment in the healthcare sector is essential as it ensures that safe standards are upheld across the board.

Significant opportunities exist for collaboration between the public and private sectors. In many cases, there has been very little collaboration between private healthcare providers and governments. Private institutions produce solutions for the emerging middle class in Africa, but this is not where the biggest need exists. Partnerships and collaboration are essential.

More innovation is needed in the healthcare industry in Africa. New models that fit the continent’s specific issues need to be identified. 


Sven Byl, Head of Healthcare, KPMG in South Africa
•Tim Ramestse, Managing Director, Medscheme Africa
•JJ Von Dongen, Vice President, Phillips Africa
•David Cochrane, Partner, Spoor and Fisher

Commentary from:

•Professor Gerhard Coetzee, Head of Inclusive Banking, ABSA South Africa 
  •Kofie Amagashie, Head of Africa Operations, Adcock Ingram 

Episode 13: ICT and Telecoms

Key Points

Although the African telecommunications market is in its developmental stage, it is growing at a faster rate than the rest of the world. However, while Africa accounts for 14.3 percent of the world’s population, it only accounts for 3.6 percent of the world’s internet subscribers. Africans with access to broadband connections account for a mere 1 percent of global broadband subscribers. South Africa, Morocco, Egypt, and other smaller economies such as Mauritius and the Seychelles, account for the majority of internet connections and activity on the continent.

Obstacles to internet access include low internet literacy rates, poor infrastructure and the high costs of internet services. Unreliable power supply across the continent also poses a significant challenge.

Even so, the market is growing quickly – there are currently more than 500 million mobile subscribers on the continent as opposed to 240 million in 2008.

Sufficient capacity
Various projects are in place to increase Africa’s bandwidth. These projects aim to cut down costs for the both the operator and the end-user. (Two of these projects were honoured in the recently released KPMG Infrastructure 100: World Cities Edition report.)

Africa has significant telecommunications capacity with many new cables coming on board over the last few years, particularly on the east coast.  Though there is sufficient capacity, more cables will be supplied for redundancy purposes. Most of the continent’s connectivity problems stem from inland transmission networks, i.e. how capacity is accessed and distributed throughout the continent.

Mobile operators are recognising that, while shared services models need to be implemented, there are significant regional differentiators. As such, there has been a move amongst mobile operators to create shared services models within regional hubs – north, east, south-west and central. It is important for operators to identify regional differentiators in order to provide a tailored service to various segments within geographical areas.

ICT opportunities abound
Opportunities in the ICT sector vary by market but are generally evenly spread across the continent.

Stakeholders such as the World Bank have long been involved in ICT reforms in Africa, and these have helped attract US$30 billion in private investment for mobile network infrastructure.

The number of countries in Africa with an ICT regulatory framework has grown from 26 in 2000 to 44 in 2007. This facilitates the ease of doing business within these countries.

Mobile money transfer services are the most talked about ICT success story in Africa, as these have allowed Africans to side-step evasive infrastructure constraints and make information sharing easier.

Players such as MTN, Airtel and Vodafone have solidified their African footprint and captured their share of the African market. According to a research report by Morgan Stanley, better coverage by big-money firms could see a decrease in tariffs and a more competitive market. Mobile is expected to be the dominant platform for years to come.


• Dobek Pater, ICT Analyst, Africa Analysis
• Aidan Baigrie, Head of Business Development, Seacom
• Craig Holmes, Telco Executive, IBM MEA

Commentary from:

• Casper Chihaka, MD, Wholesale Services , Telkom
• Alex Wong, Head, Business and Infrastructure, WEF
• Ramasela Magoele,  Acting CEO, Broadband Infraco
• Alan Knott-Craig, CEO, Cell C

Episode 12: Invest Africa explores Ghana

Key Points

In the 12th episode of CNBC Africa’s KPMG-sponsored business talk show, Invest Africa, a panel of experts explored the investment opportunities in Ghana, one of Africa’s fastest growing economies.

Well-endowed with natural resources, agriculture accounts for approximately a quarter of GDP and employs more than half the country’s workforce. Gold, cocoa and timber exports are the major sources of foreign exchange. Imports such as capital equipment, petroleum and food products are sourced mainly from China and the US.

After pumping oil for the first time at its Jubilee Field in November 2010, Ghana became one of the world’s fastest growing economies in 2011. This sent GDP soaring by nearly 15 percent. Sound macro-economic management and high gold and cocoa prices also helped to sustain GDP growth. The growth rate is, however, expected to slow down this year.

Ghana has remained an oasis of stability in a region plagued by coups and civil unrest. The death of President John Atta Mills is not expected to result in much policy change. Ghana has a high level of political stability – most political parties have similar agendas and the split between political parties is very small. Elections are expected to be held in December 2012.

Despite an expected slow-down in economic growth in the near future, Ghana is still expected to attain rapid growth going forward. The country currently produces approximately 80,000 barrels of oil per day and significant growth is expected in this sector. The Agri-processing sector is also expected to grow.

FDI into Ghana tends to be focussed in the Services sector but, going forward, a strong influx of FDI is expected in the oil and gas sector. Ghana is a very progressive country in terms of its regulatory environment and investors are granted a ten-year tax holiday. The discovery of oil will transform Ghana’s economy. It has put the country in a position to consider non-concessional sources of financing.

Education and poor infrastructure tend to be two of the biggest challenges facing Ghana. Important steps have, however, been taken to address the infrastructure issue. For example, General Motors recently committed to investing over US$1 billion to revive the ailing railway system. The country has also recently accepted a US$3 billion loan from the China Development Bank, which will be used to bridge the infrastructure gap identified in the National Development Strategy.
Ghana recognises that it still faces important challenges in its developmental trajectory. The World Bank and other institutions are committed to helping the country sustain its economic growth, reach the Millennium Development Goals (MDGs) and move forward in achieving its aim to attain middle-income status.

In terms of equity markets, the Ghana stock market is not wholly representative of what is happening in the economy. Growth that is being seen in the economy is not feeding into the market and market liquidity is an issue.

Key investment sectors in Ghana include: Banking

• Consumer markets
• Branded goods
• Outsourcing
• IT
• Agri-processing


• Grant Hatch: Executive Director Strategy Practice, Accenture SA
• Thabo Ncalo: Portfolio Manager, Stanlib Africa Equity Fund
• Alex Darko: MD, Cardo Consulting

Commentary from:

• Former President: John Atta Mills
• Sansui Lamido Sansui: Governor, Nigeria Commercial Ban
• Ronak Gopaldas: Country Risk Analyst, RMB

Episode 11: African Consumer Market

Key Points

The International Monetary Fund (IMF) has projected that seven African economies will have growth rates of more than 8 percent this year and that ten of the top fastest-growing economies in the world will come from Africa. The African consumer market is considered to be one of the next investment frontiers.

By 2020, 17 percent of the world’s population will live in Africa. This puts the continent in the perfect position to start playing the ‘numbers game’. Although the continent has a low per capita income, average income is growing. Investors are particularly interested in cashing-in on the rising consumer markets in Kenya, Ethiopia, Uganda, Senegal, Ghana, Zambia and Angola.

Africa’s consumer spending is set to reach US$1.4 trillion by 2020. It is expected that 50 percent of households will have disposable income by 2020. Disposable income is defined as income in excess of US$5,000 per year. This growth is facilitated by fast-paced urbanisation which results in higher levels of productivity and higher income levels.

The integration of markets is essential in the bid to increase income per capita on the continent.

The rise of modern retail in Africa is in its infancy. Progression is steady, but slow. Many investors are selectively testing the waters. Although the demand for formal shopping is growing, 90 percent of African retail is still informal. Retail investments are being driven by consumer-capturing strategies. Retail is a key growth stimulator for local economies.

The creation of various trade blocs within Africa makes the goal of creating a single African market realistic. Investors need to have an intimate understanding of the market they plan to invest in – as consumer preferences and regulations vary significantly from country to country.

Affordability and necessity are key things to take into account when investing in the consumer market.Key issues include the ability of governments to continue with sustainable economic reforms, the availability of real estate and cultural differences.

The rising consumer class in Africa has the following characteristics:

• Young and optimistic – 51 percent of African consumers are under the age of 20 and 84 percent believe they will be better off within the next two years
• Brand and quality conscious – more than 50 percent of African consumers are loyal to one brand
• Modern, sophisticated taste
• Digitally-driven – 53 percent of African consumers are online every month, 25 percent are online daily.

Amongst others, opportunities exist in following sectors:

• Home and personal care products
• Branded packaged food products
• Quick-service restaurants


• Martyn Davies – CEO, Frontier Advisory
• Bill Ruso – Director, McKinsey & Company
• David Cooke – Director, Actis Africa Ltd.
• Esili Eigbe – SSA Consumer Analyst, CIB Research , Standbic IBTC.


• Elizabeth Thabethe – SA Deputy Minister, Department of Trade and Industry
• Tendani Mantshimuli – Consumer Economist, Liberty.

Episode 10: Tanzania

Key Points

Home to 43-million people, Tanzania ranks among the poorest countries in the world. The country is reliant on Agriculture, which accounts for more than 25 percent of GDP and 85 percent of exports. The sector also employs 80 percent of the country’s workforce.

Despite this heavy reliance on agriculture, Tanzania is endowed with vast natural resources and is the only country in the world where Tanzanite is found. The country is also the third-largest producer of gold on the continent, which it exports to China, India and Japan.

Although Tanzania is a very poor country it is showing positive growth, averaging a 7 percent GDP growth rate per year in the 2010 to 2011 fiscal period, on the back of strong gold production and tourism. Recent offshore oil discoveries are expected to boost domestic growth still further.

Of the five countries that make up the East African Community (EAC), Tanzania ranks fourth in terms of ease of doing business. Its socialist background is one of the reasons for this low rank as it has influenced the current economic structures and business environment. This legacy will take time to overcome.

Gold mining and tourism are the key economic sectors in Tanzania, besides agriculture, and will continue to play an important role. Consumer-facing industries also have huge prospects. While 45 percent of the country’s population is under the age of 14 and 75 percent of the population are rural, the combination of urbanisation growth and the income demographic dividend of the young emerging consumer, means good opportunities for consumer-facing industries.

The discovery of natural gas in Tanzania is significant for the country. It could, going forward, enable the country to produce electricity for use within its own borders and for export, ensuring huge opportunities for investors.

Power is one of biggest challenges facing the country and further investment in this area is essential. The Tanzania Ministry of Energy and Minerals has devised a plan to tackle the country’s power constraints. If successful, this plan could see a 65 percent increase in the country’s energy capacity within 12 months.

Other challenges include skills development and shallow capital markets. Capital markets are virtually non-existent in Tanzania. There are very few companies listed on the Tanzania Stock Exchange. Raising capital within the country is thus not a viable option for investors. Attempts have been made within the EAC region to create an East African Stock Exchange.

In terms of infrastructure, if Tanzania addresses its port issues, it has the potential to replace Mombasa as the main port for the East Africa region.


• Scott Nelson: HOD, ENS Africa
Nick Matthews: Head Mergers & Acquisitions KPMG
• Sandeep Khapre: CEO, BDO East Africa

Commentary from:

• Elisas Masilela: CEO, Public Investment Corporation
• Mfundo NKuhlu: Managing Executive, Nedbank Corporate

The full broadcast, as well as previous episodes can be accessed on

Episode 9: Power supply

Key Points

Unreliable energy supply is one of the biggest challenges facing the African continent. A well-developed energy sector drives most other economic sectors within a country and is an essential tool in boosting investor confidence. Fast-growing industrialisation and a booming population are driving up the demand for electrification.

It is estimated that informal traders can lose as much as 6 percent of sales revenue due to an interrupted energy supply. Countries can lose approximately 2.1 percent of GDP due to inefficient power supply.

Current trends on the continent include the privatisation and restructuring of government-owned power companies.

There is a persistent call for sustained energy production. In addition, the environmental policies of African countries are slowly being aligned with global trends. Modest starts to renewable energy projects are already underway in many countries across the continent. There is, however, some doubt as to whether Africa has the regulatory framework and necessary funding to successfully undertake renewable energy projects.

There has been significant debate as to the best funding models for renewable energy projects – and on how to monetise Africa’s natural resources. Projects with an international focus enhance capital raising prospects.

There is huge hydropower potential in Africa – preliminary work has been done in a number of countries. Significant opportunities exist in Angola, Mozambique and the DRC. The capex requirements within the hydropower space are, however, high. The discovery of hydrocarbons and natural gas in Africa will help to regenerate the energy sector.


• Paul Eardley-Taylor – Head of Oil & Gas, Standard Bank
• Eloise Kanza –
• Jean Madzongwe – Energy Specialist, DBSA
Klaus Findt – Partner, KPMG Infrastructure Group
• Thomas Garner – CEO, Cennergi
• Silas Zimu – CEO, Zuzlon Energy
• Kadri Nassiep – CEO, South African National Energy Research Institute

The full broadcast, as well as previous episodes can be accessed on

Episode 8: Rwanda

Key points

Rwanda is one of Africa’s fastest-growing economies. The country’s GDP growth accelerated to 8.8% in 2011 from 7.6% in 2010 – mainly due to an improved harvest, rising exports and increased credit extensions. This rate is, however, expected to drop back slightly to 7.6% in 2012 due to fiscal consolidations. Overall, observers expected the country to maintain a very positive growth rate. There has accordingly been increased interest in Rwanda as an investment destination.

A significant challenge for Rwanda is the high cost of trade. The cost of exporting from the country is often three times more than in other regional economies. Local import costs are also higher due to the country’s geographical location. High trade costs, among other issues, may be responsible for the country’s high trade deficit. Rwanda is taking steps however, to address these issues by leveraging regional trade through the East African Community (EAC), aligning its budget, and formulating policies that enhance its business environment.

Rwanda ranks third on the African continent in terms of the ease of doing business. Rwanda’s success is based on, among other considerations, an economy run on an empirical basis and the scientific approach employed in running its government. The country has a focused, single vision and very clear concept of what defines national interest – a definition that is missing in many other African countries.

The key investment sectors are ICT and healthcare.

Challenges still facing Rwanda include the following:

• Export costs (the biggest challenge)
• Human capital
• Power supply.

Regarding power supply, there are projects in place to address the shortage. Many of these are managed via relationships within the EAC. The Rwandan government aims to increase power capacity 10 times by 2017.

Policy reforms since 2001 have been very promising and have encouraged many companies to consider Rwanda as an investment destination. The country has implemented 22 new regulatory reforms, one of which includes streamlining the procedures for registering and starting a business. Rwanda is a very clean country in terms of corruption. President Paul Kagame has asserted the rule of law in terms of corrupt behaviour.

The decision by the International Monetary Fund (IMF) to ease the restrictions on the country’s borrowing capacity has served Rwanda well. This will give the country access to foreign capital and will allow it to fund much-needed infrastructure projects.

Two of the biggest infrastructure projects include:

• The Isaka-Kigali Railway Project (estimated investment of USD3.7 billion) – aims to connect Rwanda and Burundi
• Bugesera International Airport.

Rwanda’s vision 2020 outlines the roadmap for the country’s future. It aims for greater integration between Rwanda and the rest of the world, and to be a spur to the nation’s wellbeing by fast-tracking economic growth.


• Safiyya Patel – Partner, M&A practice, Webber Wentzel
• Aly-Khan Satchu – CEO, Rich Management
• Paul Runge – MD, Africa Project Access.

Commentary from:

• Robert Futter – Director, CRESCO Project Finance
• Michael Whitehouse – Head of Infrastructure, Wragge & Co LLP.

Episode 7: Regional Integration and Cooperation

Key points

Inefficient cross-border procedures are costing southern Africa US$48 million per year, according to the African Development Bank. Trade barriers are dampening trade between African countries, as well as between Africa and the rest of the world.

Intraregional trade has doubled. Half of this trade takes place within the SADC region. Trade between Africa and the rest of the world has also increased considerably, with imports and exports accounting for close to US$1 trillion. This led to an increase in global trade of 3.1% in 2011 from 2.5% in 2005. Despite this growth, the regional trade agenda remains a challenge.

Although observers have noted significant political drive, individual groupings have not made much progress in terms of regional integration. Political rhetoric about regional integration abounds, but there are not many tangible results in terms of the movement of people, capital and goods between African countries. To date, African countries are fundamentally disconnected from each other.

A significant speed bump on Africa’s road to economic recovery is the rehabilitation of the continent’s roads infrastructure. It is estimated that an investment of US$32 billion in road rehabilitation would lead to a US$250 billion trade increase over a period of 15 years.

Connecting African countries is essential in realising a single-market economy. Trans-African highways are being developed with the aim of promoting trade. In total, these highways are expected to cover almost 57 000 km. Significant progress has been made in the development of these Trans-African highways with only about another 1 000 km still needing rehabilitation.

Other such projects include:

• The Beira Corridor
• The Ncala Corridor
• The North-South Corridor
• The Ethiopia-Djibouti Corridor
• The Lobito Corridor.

These projects aim to close the gaps in African infrastructure links.

Funding for infrastructure rehabilitation in Africa comes mostly from China (as well as from traditional funding partners). Strategic partnerships between the public and private sector can help fill the funding gap.

The time taken to firm-up agreements within the Tripartite Free Trade Agreement has received significant commentary. However, the Tripartite group is a huge bloc, consisting of more than 30 countries in Africa. It takes time to align the interests of all participant countries and to firm-up the uncertainties of such an agreement. Securing an agreement on the free trade of goods is an essential start – the movement of capital and people will hopefully follow. This bloc, once fully realised, could link 600 million people and 26 countries.

Regional integration is the only way to make Africa even more viable to the rest of the world. So long as it remains a number of individual countries, Africa is largely irrelevant. As such, aspiring to some form of economies of scale (in the form of trade blocs) is essential.


• Dr. Lyal White – Director, Centre for Dynamic Markets, GIBS
• Memory Dube – Senior Researcher, SA Institute for International Affairs
• Matthew Stern – MD, DNA Economics
• Lolette Kritzinger van Niekerk – Programme Manager, Trade Mark SA.

Commentary from:

• Tim Scweikert – President, General Electric SA
• Brian Molefe – CEO, Transnet
• Donald Kaberuka – President, African Development Bank.

Episode 6: Nigeria

Key points

Nigeria is the most populous country on the African continent with approximately 150-million people. It is the 32nd largest country and the 41st largest economy in the world.

According to the World Bank, Nigeria is classified as a mixed economy, emerging market. Nigeria has reached middle income status, with well developed financial, legal and transport sectors. Nigeria boasts the second largest Stock Exchange in Africa and enjoys an annual economic growth of 7%.

Since 2008, the Government of Nigeria has shown the political will to implement market-oriented reforms in order to advance economic growth. These reforms include modernising the banking system and curbing inflation. Nigeria is set to emerge as the second largest economy in Africa.

Nigeria is endowed with natural resources as well as many underexploited mineral resources including natural gas, coal and gold. Despite these huge deposits, the mining sector in Nigeria is still in its infancy. Nigeria is the 12th largest producer of petroleum, which accounts for 80% of government revenue.

The World Bank has ranked Nigeria 133 out of 183 in terms of the ease of doing business. Nigeria is a challenging country in which to do business, but the process is slowly improving. Significant government reforms are largely responsible for this.

Key challenges when doing business in Nigeria include the following:

• Bureaucracy
• Navigating some of the corruption issues, particularly within the civil service
• Understanding the regulatory environment
• Infrastructure
• Security
• Logistics – particularly problematic in FMCG sector
• Hidden interests amongst policy makers and businessmen

Despite the challenges associated with doing business in Nigeria, the country is one of the top five investment destinations within emerging markets and Africa. Nigeria’s 2020 vision is to make Nigeria one of the world’s 20 largest economies by 2020. The Government has initiated specifically targeted investments to drive this growth. One of these investments is in the power sector – government is going through a privatisation process that will see 18 companies privatised. Once the power bottleneck within the country is addressed, economic growth will follow.

The Government of Nigeria is making a concerted effort to improve the country’s infrastructure. Significant work is being done to get the country’s infrastructure back on track and the Government has opened itself up to support from the rest of the continent.

Nigeria has the fastest growing telecommunications sector in the world. The country is expanding its infrastructure to space-based telecommunications. This will enable people in remote rural areas to have access to ICT-based services. Growth within the ICT sector represents significant opportunities for potential investors.

Specific investment opportunities in Nigeria include:

• Banking – only 10% of Nigerians are banked
• Infrastructure – especially power (probably biggest opportunity)
• Real Estate – residential, commercial and retail
• Mid-cap SME (manufacturing, agro- processes and mineral beneficiation


• Diana Games – CEO, Africa at Work
• Joel Chimhanda – Principal, JC Capital
• Suresh Chaytoo – Sector Director, Banks and DFI’s, RMB

Commentary from:

• Dewalt Potgieter – Africa Representative, railway sector
• Ignatius Sehoole – Group Executive, Business Risk Management, MTN

Episode 5: Tax and regulation

Key Points

A supportive regulatory framework is essential in ensuring that business in Africa can be done with ease. According to a recent World Bank report, there are 10 areas of business regulation that determine the ease of doing business in a country including:

• Establishing a business
• Resolving insolvencies
• Cross-border trading
• Access to electricity.

South Africa, Rwanda and Mauritius are the top countries in which to do business in Africa based on their regulatory frameworks. Countries like Angola, Chad and Congo are still catching up in establishing business-friendly environments.

Key challenges on the continent include a lack of clear regulation. The absence of clear regulation is counter-productive to the development of economies. The application of existing regulation is also, on occasion, problematic – there is often a disparity between what has been written and how it is applied by governments. Often, regulators are toothless and do not apply the rules properly. A lack of institutional capacity is also a hindrance to development.

To improve the application of existing regulation, Africa needs

• more recourse to arbitration
• the abolition of corruption
• increased transparency.

A greater amount of regulatory harmonisation is needed across Africa. The proliferation of trade communities can result in duplicity and a failure to build confidence in regulatory institutions. Often countries are members of more than one trade community – as all these communities have the similar purposes, greater integration is needed.

The regulatory environments in sectors like trade and infrastructure are of concern.

Tax regulation

Development requires a tax revenue-to-GDP percentage of around 25%. The overall Africa figure is 15%.

The streamlining of taxation processes encourages business to become formally registered. That in turn leads to an expanded tax base, increased revenue and ultimately, a growing economy. Robust, friendly, clear tax regimes are essential. High tax rates and burdensome administration are a deterrent to both international investors as well as to local businesses. A lack of double tax agreements can be a significant hindrance to doing business.

The West African Institute of Taxation has been established to look into various tax issues within the West Africa region. Treaties are already in place between Nigeria and Ghana.

Transfer pricing can be a big concern in terms of regulating a particular environment. The Organisation for Economic Cooperation and Development (OECD) has guidelines for acceptable transfer pricing.

The harmonisation of tax legislation is key for Africa.


• Roger Ballard Treemer – Former South African Ambassador to Angola
• Andile Ncaba – Chairman, Convergence Partners
• Francois Strydom – MD, Senwes
• E. Daniel Kinnear – Senior Executive Associate, Africa Strategy Group
Michael Fortmann – Associate Director, KPMG
• Sebastian Thouvenot – Executive , ENS Africa
• Ernie Lai King – Tax Executive ENS
• Tunde Fowler – Chairman, Lagos State Revenue Service.

Episode 4: Kenya

Key Points

Kenya is regarded a regional hub for trade and finance in East Africa, and many large corporations have their Africa headquarters in Nairobi. Continued economic and political transformations are essential in order for Kenya to maintain this status.

Kenya boasts advanced markets and high market adoption rates. Technological advances are significant due to the country’s fast adoption of applications.

Increased interaction with customers and stakeholders through social media has caused a revolution on its own. This means that social media cannot be ignored.

Infrastructure remains one of Kenya’s biggest challenges. In order to achieve the goal of transforming Kenya into a middle-market economy, infrastructure development is essential. Significant infrastructure projects are underway – many of which are financed through China. Infrastructure development needs to be a priority for the country’s government and the private sector.

There is a renewed commitment by the EAC governments to make the free movement of goods, people and commerce easier. All governments within the EAC have a real appetite and dedicated support to get regional integration back on track. The private sector has also shown significant support.

While corruption is still evident in Kenya, it is less now than it was in the past.

The identification of a local partner when investing in Kenya is essential. Key investment areas continue to be tourism, agriculture and technology. Oil has recently been discovered in Kenya and is likely to become an important investment area.

Vision 2030 aims to transform Kenya into a magnet for business investment. A key objective is to achieve sustained growth of 10% per annum from 2012. The tenets of Vision 2030 are aligned with Millennium Development Goals (MDGs). Some flagship projects are now coming on-stream. The pillars of Vision 2030 provide a rallying focus point – all aspects of the economy are attuned to achieving these goals. Public-private partnerships are essential to the achievement of Vision 2030.


• Sven Righter – Head Frontier Markets Renaissance Capital
• Martin Odour-Otieno – CEO Kenya Commercial Bank
• Johnny Aucamp – General Manager Business Development, MTN Business
• Yarron Assabi – CEO Digital Solutions Group

Episode 1: The World Economic Forum on Africa

Key Points

The 22nd World Economic Forum hosted over 700 delegates from around the world who discussed and debated some of the issues required to drive Africa’s growth agenda. With the ongoing financial turmoil in traditional investment markets such as the United States and Europe, investment and expansion into Africa was at the top of the forum’s agenda. The forum highlighted the fact that there are huge opportunities for great investment returns in Africa and there was a specific focus on integrating and expanding Africa’s capital markets.

Agricultural Industry

With a large portion of African farmers regarded as subsistence farmers, and with the continent boasting 60 percent of the world’s arable land, transformation of the African agricultural industry remains a priority.

The New Partnership for Africa’s Development

With the implementation of The New Partnership for Africa's Development (NEPAD) as a social and economic development platform for Africa, and through mechanisms such as the African Peer Review mechanism (which promotes transparency and accountability amongst governments) there has been a reduction in the perceived risk of doing business in Africa. The investment appetite has increased. Africa was the second highest recipient of Foreign Direct Investment (FDI) in 2010 and this trend is expected to continue.

Regional integration

The importance of regional integration was a key focus at the forum. The dearth of financial institutions that are able to facilitate regional activities is a stumbling block in regional integration efforts.

The East African Community seems to be ahead of the game in terms of the free movement of goods and services. The biggest driver for East African integration was the realisation that differences in regional economies can be beneficial to the regional as a whole. For example, regional integration would mean that the innovation currently being produced in Rwanda could be utilised in a much bigger market; and the productive land in Tanzania could serve a much larger population. Successful regional integration requires an identification of comparative advantages in regional blocs, and the pooling large infrastructure projects.

The development of the Triple Free Trade Agreement and the Cape to Cairo Free Trade are examples of regional integration efforts. The Cape to Cairo Free Trade Zone aims to integrate 26 African economies. The linking of land-locked countries is essential in realising Africa’s full potential.


Given the crucial role that infrastructure and investment play in facilitating Africa’s transformation, delegates across the board acknowledged that, although there has been substantial progress, a lot more still needs to be done

Discussions around infrastructure development formed a large portion of the Forum. The NEPAD Business Foundation in partnership with the WEF, held a private session to discuss three broad themes: funding and financing of infrastructure projects; new, innovative Public Private Partnership (PPP) models; and local economic developments impacted by infrastructure projects.

Under the Programme for Infrastructure Development for Africa (PIDA), 51 broad infrastructure projects have been identified. Of these, seven priority projects have been highlighted. Mobilising private sector support for these projects and finding innovative funding mechanisms is now a focus.


Innovation on the continent is booming. Africa has quantum leapt the rest of the world in terms of the use of innovative technology and Africa is leading the rest of the world in the delivery of technology solutions.

The discussions at this year’s WEF are evident of the changing perceptions of Africa as an investment destination.


Josphat Mwuara – Chief Executive Officer and Senior Partner, KPMG East Africa
Yunus Suleman – Chairman, KPMG Africa
• Lynette Chen – Chief Executive Officer, NEPAD Business Foundation

Commentary from:

• Clifford Sacks – Chief Executive Officer, Renaissance Capital Africa
• Arunma Oteh – Director General, Securities and Exchange Commission, Nigeria
• Brian Molefe – Chief Executive Officer, Transnet
• Kanayo Nwaze – President, IFAD
• Ngozi Okonjo-Iweala – Minister of Finance, Nigeria
• Pravin Gordahn – Minister of Finance, South Africa
• John Rwangombwa – Minister of Finance and Economic Planning, Rwanda




Moses Kgosana
Chief Executive, KPMG in South Africa
Senior Partner, KPMG Africa Limited
Tel: +27 (0)11 647 8012