Tag Archive for: Innovation

There are no defensive postures here. Undaunted by the potential for pandemic induced collapse in demand for commodities like sugar and cement, Nigerian billionaire Abdul Samad Rabiu sees only possibility – especially in agriculture, especially in Nigeria.

Not only is agribusiness relatively simple in terms of its business model, but it is urgent to save needed foreign exchange and to boost employment, he explains. Rabiu’s major focus is on promoting more production and processing to meet national demand and make more profits for his conglomerate BUA Group. BUA listed its subsidiary BUA Cement in January to raise capital for industrial projects in the glass, steel and oil sectors, citing the rigour and “scrutiny” of the process as a way of “de-risking” Nigerian opportunity for investors domestic and foreign.

“The opportunities are here,” enthuses the group chairman and chief executive during our videoconference, a portrait of South Africa’s former president Nelson Mandela beaming over his shoulder. That has not really been the case for the man on the Lagos Danfo, to twist a phrase – the city buses were restricted due to measures against transmission of COVID-19.

Most Nigerians are still reeling from the economic impact of the pandemic. Traders have ceased operation, farmers have thrown away produce due to the lack of transport, and businesses have mothballed investment projects. Most of BUA Group’s expansion programme remains undisturbed. Chief executive Rabiu unveiled plans for 3 million tonnes per annum (mtpa) in cement capacity and 50MW of power in Adamawa State in July.

However, he put off the announcement of a glass project that was slated for the postponed June France-Africa summit. While COVID-19 disrupted most firms, greater automation in BUA Group’s agribusiness and cement plants allows them to operate at about 40-50% of their normal capacity. “We are lucky for the fact we are even at 50%. Many others have not been able to work at all,” says Rabiu.

The ban on travel between Nigeria’s states was the greater challenge, “and that is lifting now”. He argues that “the impact [of the coronavirus] is going to be with us for quite some time” and that “entire industry business models are going to have to change.”

Better than 2019

Learning from operating his family business as a young man, Rabiu has built up his empire slowly but surely. BUA Group has moved from a trading company importing commodities to a manufacturing powerhouse in agribusiness and construction materials. From edible oils, through sugar and cement projects, the group also operates a shipping terminal in the oil town of Port Harcourt and owns a real-estate portfolio.

Cement is the industrial star. BUA Cement had a solid first quarter in 2020, banking nearly $60m in profit. This means, according to Rabiu, that it can absorb the slowdown from April to June, and have year-end results that may be “better than 2019”. That is not something many other Nigerian companies are predicting. It is bullish given the record year the company had in 2019; a 47.5% increase in turnover, with profit jumping nearly 70%.

He attributes the leap to the launch of a second line at the Obu plant in March 2019, adding 3mtpa to BUA’s output, and the first full year of the Kalambaina plant’s second line operations. The cement expansion does not stop; while BUA Cement currently has capacity for 8mtpa, Rabiu is targeting 14mtpa over the next few years.

Analysts do not share Rabiu’s optimism about the sector in the short term. “We expect the deterioration in the macroeconomic conditions – caused by the outbreak of COVID-19, which triggered a sharp decline in oil prices – to constrain activities in the construction industry as fiscal spending on capital projects weakens,” wrote Nigeria’s CSL Stockbrokers.

The scars will remain for some time for the Nigerian economy at large, Rabiu says, with the damage hitting the poorest first. “The price of goods has gone up, especially food items,” he says, partly as a result of the devaluation of the naira but also because the virus has hurt port logistics, making the clearance of imports difficult. That could be seen as an opportunity to intensify Nigeria’s great push to support food production, something that the government of President Muhammadu Buhari has supported for rice in particular.

As part of Nigeria’s CACOVID (Coalition Against Covid-19), an organisation of private-sector operators pooling funds to help relief efforts, BUA has put money into feeding programmes in Lagos and other cities, to cushion the blow of the pandemic. Fundamentally, Rabiu is unhappy about the high level of food imports. “It should not be happening at all, not only here in Nigeria, but generally in Africa. We have 60% of the world’s arable land. We have the people [to farm]. We have the climate. We have everything it takes.”

He is keen for that opportunity to go beyond food crops to cash crops, and again focus on keeping value in Africa. “The US, Germany, Switzerland and Belgium produce 75% of the entire chocolate production worldwide. And if we look at the cocoa industry worldwide, what are we talking about, $150bn-$160bn? And Africa gets maybe $10bn-$15bn of that?”

Sugar for resilience

He expects agriculture to provide the resilience that Nigeria needs in the post-COVID-19 era. Next year, for example, will see the ramping up or opening of operations at three major sugar plantations, including BUA’s own in Kwara State, as well as projects for Dangote Sugar and Golden Sugar.

BUA is Nigeria’s second-largest sugar producer after Dangote Sugar. “With that plantation, we will be able to produce 150,000tn of white sugar with millions of litres of ethanol, employing over 10,000 people in direct jobs,” says Rabiu.

He was inspired by a visit to Uganda’s Kakira sugar estate, run by the Madhvani family: “It was the most impressive sugar plantation I had ever seen.” And Mayur Madhvani told Rabiu that while he could get yields of 9tn per hectare in Uganda, the soils and potential in Nigeria were far greater.

 

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.

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

African grid operators that don’t put solar power onto their systems risk being bypassed as prices for solar production and storage continue to fall, John van Zuylen, CEO of the Africa Solar Industry Association, tells The Africa Report.
 
There are already many places where solar energy is the cheapest option says Van Zuylen, who is based in Kigali. That means the prospect of “a significant uptake of solar in the African energy mix, grid-connected but probably mostly off-grid. By rejecting solar, the national utilities may create themselves a new problem: losing their reliable customers.” Less than 1% of the world’s solar capacity is in Africa.
 
According to the Institut Montaigne in Paris, sub-Saharan Africa is the world’s only region where demographic growth since 2000 has been faster than the speed at which populations are being given access to electricity.
  • Only around 10 solar power plants of more than 5MW have been connected to the grid in the whole of sub-Saharan Africa, excluding South Africa, the Institut says.
  • Africa has been largely absent from the global solar power plant deployment, which constitutes a “collective failure”, the Institut argues.
  • It’s only going to get worse if nothing is done: in 2040, almost 95% of the world’s population without access to electricity will be in sub-Saharan Africa, the Institut says.
Many African national grids are in poor condition and cannot absorb more than 20-30MW in a single location, limiting opportunities, Van Zuylen says.
  • For grids that don’t have these technical constraints, questions about risk-sharing, government guarantees and bankable off-take agreements have significantly limited the number of projects coming to fruition, he adds.
  • Meanwhile, solar home systems and mini-grids still require heavy subsidies to provide electricity at affordable prices for rural populations, which are often the ones with the lowest available income.

Urban subsidies

National grids are best placed to do something about it. According to a global outlook for solar power to 2024 published by SolarPower Europe in June, African utilities with access to an urban customer base may be able to finance connections for poorer rural households by subsidising them with revenue collected in cities.
  • Projects situated near these urban centres are more bankable due to economies of scale, the possibility of future capacity expansions and a lower risk of under-utilisation, SolarPower Europe says.
Some countries are becoming supportive of solar. Van Zuylen points to the example of Senegal, which this month removed VAT on all solar products, including water pumping systems.
  • The decision is part of a strategy that seeks to achieve universal access to electricity in Senegal by 2025.
  • Institut Montaigne says that of the 10 plants connected to sub-Saharan grids, four are in Senegal.
The best thing to do for grid operators is to “guide and accompany a smooth integration of solar in their grids,” Van Zuylen says. “If they do not do so, it could very well be that more and more customers will gradually disconnect from the grid completely as solar plus storage is not only reliable but also increasingly cost-competitive.”

The Bottom Line

Foot-dragging national grids risk being left behind as falling prices for solar and storage equipment have the potential to be a game-changer.

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.

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

Earlier this year, in response to our clients request for shorter packages for their assignees, while still maintaining the same high level of service they were used to receiving, we launched our new product – the Integrated Program.

The Program centres around an online portal, through which assignees can access a wealth of information about the cities they’re moving to, as well as information about their relocation. The portal introduces the assignee to their Relocation Consultant and as well as providing them with a secure platform to store any pertinent documents for the assignment.

It also has an easy to follow new 20-step Relocation Overview guide, city guides, and videos. This information can be accessed from anywhere, at any time.

Thus far, the Integrated Program has allowed us to offer even more value to our assignees and business partners, while being more flexible for the assignees, it allows for cost savings for our clients.

Our MD, Rene Stegmann, with the 2019 Cartus Innovation Award.

Our submission to Cartus’ 2019 Global Network Conference awards was a chance for us to summarize the great achievements following on from the launch of this Program. In return, Cartus chose to award us their Silver Supplier Innovation Award at their banquet in Boston, MA in October 2019.

This recognition reinforces our drive to exceed client expectations, and continue innovating in the relocation industry as part of our promise to Embrace the Unknown.

 

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.

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

Ten years on from the global financial crisis, the world economy remains locked in a cycle of low or flat productivity growth despite the injection of more than $10 trillion by central banks. The latest Global Competitiveness Report paints a gloomy picture, yet it also shows that those countries with a holistic approach to socio-economic challenges, look set to get ahead in the race to the frontier.

The World Economic Forum‘s (WEF) latest Global Competitiveness Report 2019 showed that Singapore has overtaken the United States to become the most competitive nation in the world. The US is losing ground in measures such as “healthy life expectancy” and preparedness for the future skills needed in the 21st century, the report says.

Some of this year’s better performers appear to be benefiting from the trade feud between China and the US, including Singapore and Vietnam. Led by Singapore, the East Asia and the Pacific
region is the most competitive in the world.

Covering 141 economies, the index measures national competitiveness—defined as the set of institutions, policies and factors that determine the level of productivity and long-term economic growth.

The report measures the strength of 103 key indicators, such as inflation, digital skills and trade tariffs, arranged into 12 pillars. Each indicator, or ‘pillar’ uses a scale from 0 to 100, to show how close an economy is to the ideal state or ‘frontier’ of competitiveness in that area. With a score of 84.8, Singapore is the world’s most competitive economy in 2019, overtaking the US, which falls to second place. Hong Kong SAR, Netherlands and Switzerland round up the top five.

Top 10 performers on the 2019 WEF Global Competitiveness Report.

“The world is at a social, environmental and economic tipping point. Subdued growth, rising inequalities and accelerating climate change provide the context for a backlash against capitalism, globalization, technology, and elites,” the WEF warned.

“There is gridlock in the international governance system and escalating trade and geopolitical tensions are fueling uncertainty. “This holds back investment and increases the risk of supply shocks: disruptions to global supply chains, sudden price spikes or interruptions in the availability of key resources,” it said.

Singapore

Singapore has long been a thriving global financial center, and has built itself up despite limited land. After early years of turbulence and despite lacking natural resources and a hinterland, the nation developed rapidly as an Asian Tiger economy, based on external trade and its workforce.

The city-state is classified as an Alpha+ global city, indicating its influence on the global economy. Singapore is the only country in Asia with an AAA sovereign rating from all major rating agencies, and one of 11 worldwide. Singapore is a highly developed country and is ranked 9th on the UN Human Development Index, the highest in Asia for a sovereign state, with the 3rd highest GDP per capita in the world. It was ranked the most expensive city to live in from 2013 to 2019 by the Economist, and is identified as a tax haven.

Along with benefits from the ongoing US-China trade war, Singapore’s financial system and macroeconomic stability raised its rating.

Singapore ranked 2nd overall in the 2018 report. This year, the country ranks first in terms of infrastructure, health, labor market functioning, and financial system.

While Hong Kong was penalized in points for their lacking worker protection (scoring only 10 points, and ranking 116th in the category), Singapore ranked well, scoring 89 points, and ranking 18th for worker protection.

Singapore improves from an already high base on 10 of the 12 pillars, and its score on every pillar is between 4 and 19 points higher than the OECD average. The country ranks first on the Infrastructure pillar (95.4), where it also ranks first for road quality infrastructure, efficiency of seaport and airport services, and sea transport connectivity. It also tops the Health (100), Labor market (81.2) and Financial system pillars (+2.0 points, 91.3), and achieves a nearly perfect score for Macroeconomic stability (+7.1, 99.7, 38th).

Performance in terms of market efficiency (81.2, 2nd behind Hong Kong SAR) is driven by the fact that Singapore is the most open economy in the world. Singapore ranks 2nd (80.4) for the quality of public institutions, behind Finland, but its performance is undermined by limited checks and balances (65.9, 23rd)—Singapore notably ranks 124th on the Freedom of the Press Index—and lack of commitment to sustainability (63.5, 66th). Going forward, in order to become a global innovation hub, Singapore will need to promote entrepreneurship and further improve its skills base, albeit from a relatively high base (78.8, 19th).

Southern Africa

Led by Mauritius (52nd), sub-Saharan Africa is overall the least competitive region, with 25 of the 34 economies assessed this year scoring below 50.

South Africa, the second most competitive in the region, improves to the 60th position, while Namibia (94th), Rwanda (100th), Uganda (115th) and Guinea (122nd) all improve significantly, the WEF showed. Among the other large economies in the region, Kenya (95th) and Nigeria (116th) also improve their performances, but lose some positions, overcome by faster climbers, the report said.

South Africa

South Africa’s competitiveness has regained momentum after the recent political landscape shift and climbed seven places in 2019. The country is a regional financial hub (83.2, 19th), with well-developed equity, insurance and credit markets, all achieving a score of 100, the report said.

South Africa’s WEF Global Competitiveness Report 2019 scores.

It has also developed one of the most advanced transport infrastructures in the region (45th) and is among the top countries in Africa for market size (35th). Beyond these established strengths, health conditions—though starting from a low base (118th)—are better, adding 3.3 years to the average healthy life expectancy since the last assessment. Institutional quality has also improved (55th) but unevenly, the report said.

Some aspects of this category have achieved ‘remarkable progress’, including restored balance of powers across different state’s entities (16th), enhanced administrative efficiency of the public sector (39th) and corporate governance (26th).

Other aspects however, continue to perform poorly: security (135th) remains one of the main restraints to South Africa’s competitiveness, while transparency (62nd) and government adaptability to change (100th) are also below par, the report said.

“Further, South Africa’s competitiveness is being held back by relatively low business dynamism (60th), which is inhibited by insolvency regulation and administrative burdens to start a business, and a persistently insufficient labor market flexibility (111th),” the WEF said.

The report showed that flexibility of wage determination is limited (134th) and hiring foreign labor is difficult (123rd). “South Africa’s sensitivity to exports of mineral resources is likely to hit the country’s economic outlook and will make reducing unemployment (projected above 27%) challenging. “Against this backdrop, structural reforms are needed tore-ignite the economy and offer better opportunities to a larger share of South African citizens.”

How to get to number 1

The index examines the relationship between competitiveness and the two other dimensions of sustainable development – social cohesiveness and environmental sustainability. It shows that there are no inherent trade-offs between competitiveness and sustainability, and between competitiveness and social cohesiveness. This suggests a “win-win” policy space, where a productive, low-carbon, inclusive economy is possible, and it is the only viable option going forward.

  1. Be an all-rounder: The report is a reminder to apply a holistic approach and to better balance short-term considerations against factors whose impact is felt beyond quarterly results and election cycles. For example, the results of the index show that labor and education policies have not been keeping up with the pace of innovation in most countries, including in some of the largest and most innovative economies.
  2. Integrate tech: Governments must better anticipate the unintended consequences of technological integration and implement complementary social policies that support populations through the Fourth Industrial Revolution. The report shows that several economies with strong innovation capability like South Korea, Japan and France, or increasing capability, like China, India and Brazil, must improve their talent base and the functioning of their labor markets.
  3. Education: Talent adaptability is critical. It pays to enable the workforce to contribute to the technology revolution and to be able to cope with its disruptions. Talent adaptability also requires a well-functioning labor market that protects workers, not jobs. Advanced economies such as South Korea, Italy, France and, to some extent, Japan need to develop their skills base and tackle rigidities in their labor markets.

To read the full report, click here.

 

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

Sources: [1], [2], [3], [4]. Image sources: [1], [2].