Tag Archive for: Foreign Investment

Public Enterprises minister Pravin Gordhan says that the government would consider a shareholder structure similar to Telkom, for South African Airways.

Telkom runs independently from the government, despite it having a 37% stake in the listed entity, while state-owned Public Investment Corp holds approximately 15%. The rest is owned by institutional investors and the public.

“Telkom is an interesting model that we could actually look at as we go forward,” Gordhan reportedly said to eNCA.

The National Treasury last week committed to support and source funding for the airline’s new business rescue plan.

It is projected that R10.1 billion will be required to fund the plan. This money will be used to:

  • Clean up and establish the balance sheet;
  • Restructure the rest of the group entities that are not in business rescue;
  • Provide working capital for the rest of the group’s entities;
  • Create a stable and viable platform for a new restructured national airline.

The restructuring will also include severance packages to about 2,700 SAA employees who will be retrenched, the Department of Public Enterprises said.

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Investments will be pivotal for an African recovery after Covid-19. Last week the Africa Investment Forum’s founding partners unveiled a unified COVID-19 response to support Africa’s private sector, which includes 15 deals valued at about USD3.79-billion.

Increased and decisive investment will be the channel for Africa’s economic recovery post COVID-19. Partners of the Africa Investment Forum expressed confidence in the continent’s potential to rebound from the ongoing health and economic crises.

Africa will come out of this pandemic, tough as it is, and will build better and stronger economies. As partners of the Africa Investment Forum, the premier investment platform for Africa, our gaze must be clear. It must be to help Africa reboot its economy,” said African Development Bank President Dr. Akinwumi Adesina, during a two-day virtual meeting.

In a virtual marketplace which mirrored typical sessions of its annual market-days, the Africa Investment Forum convened over 190 participants including current and prospective partners, investors, and project sponsors. The Forum showcased its unified COVID-19 response and provided an update on its activities, as well as opportunities for new partners and investors to engage with the platform.

During the meeting, the Africa Investment Forum revealed 15 projects identified across five sectors for priority funding consideration under its unified COVID-19 response. The sectors include agriculture and agro-processing, energy, health, ICT and telecoms and industrial and trade. Collectively, these 15 deals which are from the Forum’s current portfolio, amount to USD3.79-billion and will help increase the continent’s self-sufficiency and resilience against future shocks. Four projects sponsors were invited to pitch their deals to over 100 investors present at the meeting. These included a dairy processing project in Angola, a vaccine manufacturing plant in Kenya, a cotton manufacturing project in Mozambique and a proprietary telemedicine platform in Nigeria.

Following the meeting, the Africa Investment Forum’s deal tracker mechanism was immediately deployed to capture investment interest and ensure effective investor-project matchmaking.

The meeting took place as the Africa Investment Forum continues to build on the successes of its first two years in bringing to market deals with transformative potential for Africa’s development.

“The Africa Investment Forum is not a talk shop. What we are trying to do is to focus our partner’s efforts on the platform’s bankable deals from the 2018 and 2019 portfolio, as well as some new ones in 2020,” said Chinelo Anohu, head and senior director of the Africa Investment Forum. “We are concentrating not just on the health sector, but also on other sectors that will help jumpstart recovery across the continent,” she said, adding that deals “more responsive” to the pandemic are being curated, in order to provide much-needed support to the private sector.

Beyond boardroom sessions, the Africa Investment Forum continues to support project sponsors through its Deal Tracker mechanism which monitors the conversion of investment interests to financing commitments and facilitates the progress of deals towards financial close. So far, the forum has facilitated the closure of eight deals valued at about USD2.18-billion from the 2018 portfolio.

The Africa Investment Forum, championed by the African Development Bank and its founding and institutional partners, is working to accelerate the closure of the continent’s investment gaps. Founding Partners are the African Development Bank; Africa 50; Africa Finance Corporation; African Export-Import Bank; Development Bank of Southern Africa; Trade and Development Bank; European Investment Bank; and Islamic Development Bank. Institutional partners include development finance institutions, multilateral development banks, commercial banks and institutional investors.

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This article was first published by The Africa Report.

The South African insurer sees lots of potential in the market, but it needs bancassurance allies and better messaging to reach more customers.

Partnerships between insurers and banks can help to increase the penetration rate of insurance in Tanzania in 2020, says Geofray Masige, chief financial officer of Sanlam General Insurance Tanzania. Bancassurance “has the potential to be transformative,” Masige tells The Africa Report. The country’s main banks now all have a physical presence across Tanzania, which Masige sees as “a very significant improvement. The levels of service will be quite high.”

Tanzania’s insurance penetration rate is among the lowest in Africa, at 0.5% in December, according to GCR Ratings in Johannesburg. GCR sees a “moderately healthy” outlook for growth, with gross premiums predicted to increase at a compound annual rate of 4% over the next five years.
For foreign insurers, Masige says, there is “a lot of potential in this market. The future is open for those who come here with products.”

The biggest challenge, according to him, is to use “local means to reach local people in a language and with a message that they can understand.” Clear examples of this working are so far lacking, he says. In terms of life insurance, “something has to change in the way we put across the message.”

The challenge is to convert informal community arrangements into modern insurance services, he says. “We need the right partners.” Increasing access to the internet in rural areas will help to spread the message: “The level of understanding is still very low.”

Banking partnerships

The fact that banks in Tanzania are now allowed to use their branch networks for insurance distribution is “a positive move”, Masige says. There has been “lots of appetite from top-tier banks,” he adds. “We should be able to make progress.”

Tanzanian government attempts at industrialisation are also increasing the size of the potential market. Sanlam, which is seeking operational expansion into areas such as Arusha, is open to partnership proposals from banks.

In Tanzania, Sanlam’s bancassurance partners include the National Bank of Commerce. Across Africa, the firm has teamed up with banks such as Fidelity, Zenith and Stanbic, as well as with telecoms giant MTN to extend its reach. Such a strategy aims at giving Sanlam protection against a slowdown in its in South African home market.

According to François Jurd de Girancourt, head of the McKinsey Africa financial institutions practice, African insurance is expected to grow by 7%-8% in local currency terms in the coming five years. South Africa is likely to be an exception to that rule, owing to “subdued local economic conditions, coupled with the maturity of the South African market,” says Yvonne Mujuru, head of insurance ratings at GCR.

Sanlam bought the remaining shares in Moroccan insurance company Saham for $1.1bn in late 2018. Faster-growing markets such as Kenya, Uganda and Tanzania could help mitigate challenging growth prospects in South Africa.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

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African countries running up debt they won’t be able to pay back, including to China, should not expect to be bailed out by western-sponsored debt relief, the United States’ top Africa diplomat warned.

The International Monetary Fund and World Bank began the Heavily Indebted Poor Countries (HIPC) Initiative in 1996 to help the world’s poorest countries clear billions of dollars worth of unsustainable debt.

But Africa is facing another potential debt crisis today, with around 40 percent of low-income countries in the region now in debt distress or at high risk of it, according to an IMF report released a year ago.

“We went through, just in the last 20 years, this big debt forgiveness for a lot of African countries,” said U.S. Assistant Secretary of State for African Affairs Tibor Nagy, referring to the HIPC programme.

“Now all of a sudden are we going to go through another cycle of that? … I certainly would not be sympathetic, and I don’t think my administration would be sympathetic to that kind of situation,” he told reporters in Pretoria, South Africa, recently.

Under Donald Trump’s administration, the United States has criticised China for pushing poor countries into debt, mainly through lending for large-scale infrastructure projects. It has warned those nations risk losing control of strategic assets if they can’t repay the Chinese loans.

Sri Lanka formally handed over commercial activities in its main southern port in the town of Hambantota to a Chinese company in 2017 as part of a plan to convert $6 billion (£4.7 billion) of loans that Sri Lanka owes China into equity.

U.S. officials have warned that a strategic port in the tiny Horn of Africa nation of Djibouti could be next, a prospect the government there has denied.

From 2000 to 2016, China loaned around $125 billion to the continent, according to data from the China-Africa Research Initiative at Washington’s Johns Hopkins University School of Advanced International Studies.

And a number of African countries form part of China’s $126 billion Belt and Road Initiative to link China by sea and land through an infrastructure network with southeast and central Asia, the Middle East, Europe and Africa.

China has rejected criticism of its lending in Africa. And debt campaigners point to the fact that much of Africa’s current debt load consists of commercial debt to western financial institutions or Eurobonds, which are more expensive to service than Chinese loans.

“All of these countries are sovereign states, so it’s for them to decide who they want to trade with,” Nagy said. “We feel we have an obligation to point out to them when we believe they are getting into severe economic difficulties.”


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Sources: [1], [2]. Image sources: [1], [2].