The natural resource discussion in sub-Saharan Africa can be pessimistic and fatalistic at times. Some struggle to see the upside, basing fears on challenges with infrastructure, local content and skills shortages. Others are fatalistic, suggesting that natural resources are a curse for the continent and its economies.
The reality is that much of sub-Saharan Africa’s abundant natural resources are still undiscovered.
Exploration in a number of countries will boost output and reserves for some already big producers as well as create a few first-time producers in the near term. That said, fund managers have struggled in 2016 to raise capital for sub-Saharan Africa-focused natural resource funds.
Let’s say you’ve raised a $1 billion fund to chase after the lucrative opportunities in the sub-Saharan Africa natural resources space. Here’s a look at the African market through that lens.
End of a commodity super cycle
Commodity prices started skyrocketing in 2000. Slowed temporarily by the global financial crisis of 2008 and a slight decline in 2011, the boom nevertheless persisted nearly 14 years. By the end of 2011, average prices for energy and base metals were three times as high as the previous decade. In some cases, some commodities – such as gold, iron ore and oil –were near the highest levels in 110 years.
If this was still 2013, there would be little discussion of potential decline or drastic downturn. But it is 2016 and we know what happened during the end of 2014 and throughout 2015. Slowing Chinese growth – not too far from the slower days of the late ’80s – has lowered the expectations on commodity prices.
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Brimming with bookings, but nowhere to sleep
Availability in Cape Town, along the Garden Route, and in the Kruger National Park is hard to find as many operators face a record year, with some even having to turn business away.
In a recent poll on Tourism Update, 42% of readers said they had experienced record bookings for the 2016/2017 Southern African summer season, however operators are struggling to accommodate bookings in areas affected by capacity issues.
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Why The Bad News Of 2016 Spells Opportunity For Investors In Africa 2017
The natural resource discussion in sub-Saharan Africa can be pessimistic and fatalistic at times. Some struggle to see the upside, basing fears on challenges with infrastructure, local content and skills shortages. Others are fatalistic, suggesting that natural resources are a curse for the continent and its economies.
The reality is that much of sub-Saharan Africa’s abundant natural resources are still undiscovered.
Exploration in a number of countries will boost output and reserves for some already big producers as well as create a few first-time producers in the near term. That said, fund managers have struggled in 2016 to raise capital for sub-Saharan Africa-focused natural resource funds.
Let’s say you’ve raised a $1 billion fund to chase after the lucrative opportunities in the sub-Saharan Africa natural resources space. Here’s a look at the African market through that lens.
End of a commodity super cycle
Commodity prices started skyrocketing in 2000. Slowed temporarily by the global financial crisis of 2008 and a slight decline in 2011, the boom nevertheless persisted nearly 14 years. By the end of 2011, average prices for energy and base metals were three times as high as the previous decade. In some cases, some commodities – such as gold, iron ore and oil –were near the highest levels in 110 years.
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Ethiopia’s Incentives To Investors Attracts Foreign Firms, Grows FDI
Ethiopia, one of the fastest growing economies in the world, has seen an increase in foreign direct investment (FDI) as more foreign companies set up in the horn of Africa nation attracted by government incentives to investors in various sectors.
The country expects about $1.7 billion in FDI flows in 2016, surpassing East Africa’s leading economy, Kenya, that has projected about $1.1 billion this year.
Last year, Ethiopian government had predicted a record $1.5 billion in FDI, Financial Times reported.
The nation is reaping the fruits of providing an investor-friendly environment that has low wages, cheap power and tax holidays such as 100 percent tax exemptions on capital goods imports and income tax exemptions for nine years in the horticulture sector.
Some of the foreign companies that have set up there in recent years include Asian Paints, one of the largest paint manufacturers in India and Unilever, one of the global giants in manufacturing of consumer goods, which opened a factory in Dukem in June, targeting the South Sudan and Somalia markets, Fbc reported.
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IDs of 300 pupils can’t be verified
About 300 pupils with unverifiable identity documents (IDs) have been found in an Eastern Cape school with an enrolment of 1000.
These could be among 30000 ghost pupils uncovered by the provincial education department during the verification process this year, saving the state R60-million this year.
The province has more than 5000 schools.
A member of the National Council of Provinces (NCOP), Ntombovuyo Nkopane, said there were 300 pupils, who had unverifiable IDs at Maluti High.
She said there were about 1000 pupils enrolled at the school, which is located close to Lesotho.
“About 300 have no authentic IDs. They are there but are not recognised by the system. There are challenges with the allocation of resources.”
Nkopane said the school was not properly fenced and only had one security guard.
There was also a problem of drug usage because of shebeens that were close to the school.
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