As M-Pesa has shown, the continent’s true potential lies in its ability to innovate, writes Victor Kgomoeswana
Africa was the toast of the week at the World Economic Forum. Young entrepreneurial pioneers from the continent, such as Ashish Thakkar of the Mara Group, were mobbed by admirers. M-Pesa and how this mobile payment solution brought about a revolution in Africa and elsewhere in the world dominated discussions in Davos, Switzerland. However, back home, Africa had more compelling headlines to look at.
Bitter-sweet lessons and trends from the West
Nigeria is not only Africa’s largest economy. It is also the most populous country, with more than 150 million people. It is the continent’s largest oil producer and home to Africa’s richest man, Aliko Dangote, and the world’s richest black woman, Folorunsho Alakija (who is also the 96th most powerful woman in the world, according to Forbes). What happens to or in Nigeria therefore affects not only West Africa, but all Africans.
It is for this reason that Boko Haram is not a northern Nigerian issue, but a global crisis. Just like piracy and Ebola, it affects all of us.
This week, there was more proof that Boko Haram was a bigger emergency than we realise.
JPMorgan put the country on a negative index watch, hinting that it could remove Nigeria from its Government Bond Index-Emerging Markets unless it demonstrated enough liquidity in its interbank market.
Why the need for liquidity in the interbank market, you ask?
Investors like to know that they can liquidate their investment with ease when it is time to cash in. Insufficient liquidity would mean an investor who is under pressure to sell would struggle to find a buyer.
Nigeria’s financial market is crucial because of the sheer size of the economy, its vibrant banking sector and the centrality of the economy.
JPMorgan, reassuringly, also said: “Conversely, if liquidity improves and investors are able to transact with minimal hurdles, Nigeria will be removed from index watch negative.”
Lesson: it is all very well for Nigeria to bask in the glory of being Africa’s largest economy, but this comes with proportionately greater external attention. The higher the number of investors watching what you do, the greater the number of opinions and perceptions you have to fight.
It is therefore more crucial for Nigeria to be more decisive about Boko Haram, while addressing the concerns of JPMorgan, if it is to build on its stature for the long term. We all need it to.
Ghana is another rising star of West Africa that caught my attention, with the International Monetary Fund (IMF) lowering its global growth forecast.
As the land of Kwame Nkrumah looks to the same Bretton Woods institution for a bailout to aid its ailing currency, one wonders, as many others are doing, if this could condemn the country to yet another phase of hardships – as it did in the 1980s. Back then, the first implementation of the structural adjustment programme let to subsidies being cut, jobs being shed and wages being kept painfully low.
The result? The economy recovered, but at a huge cost to the quality of life for ordinary Ghanaians.
Is the country, now an oil producer of note, likely to experience another period of hardship?
The IMF’s managing director, Christine Lagarde, has played down this risk. She said structural adjustments had occurred way before her time and the IMF no longer resorted to these.
This suggested that the conditions of a bailout would be more lenient and negotiable. We shall see.
The last of the worrying developments in the past week or so was in the Ivory Coast.
While Yaya Toure and Company are battling it out at the 2015 edition of the Africa Cup of Nations, an Abidjan court dealt a South African investor a heavy financial blow.
The Public Investment Corporation (PIC), a development finance institution with a 13.9 percent shareholding in Ecobank in Lomé, Togo, was ordered last week to pay the former chief executive of Africa’s largest bank by footprint $15 million (about R172m) for defamation.
Although the PIC and Ecobank will be contesting the judgment, former chief executive Thierry Tanoh, an Ivorian, is probably fancying his life after the windfall – particularly as he is also expecting a court ruling in an unfair dismissal case.
Who is Thierry Tanoh, and why has his corporate ghost come back to haunt the PIC and Ecobank?
He was replaced as chief executive by Albert Essien in March in connection with allegations of management fraud and poor corporate governance.
Unluckily for his former employers, he is now deputy general secretary in the office of Ivory Coast’s President Alassane Ouattara – hardly a position anyone can scoff at.
I am curious to see how this one plays out, because it would be a bitter yet important lesson for business leaders across Africa: because politics and business are so interwoven in Africa, beware of who you fire – they may just pop up somewhere else sooner than you expected, and with more power!
The highlights from central and southern Africa are grim
Eskom, Africa’s largest power utility, remains on the centre stage with its outage debacle, sending those lucky enough to afford them scurrying to the nearest supplier of back-up generators.
Africa’s most sophisticated economy, South Africa, is flirting with more rating downgrades and even slower economic growth on this one.
Could leaders please hurry up with Medupi and Kusile, create better incentives for cleaner energy, and allow more private power producers into the game!
Mozambique and Malawi have experienced some of their worst floods – yet again exposing African countries’ poor capacity to deal with natural disasters. These two countries are such gems in southern Africa that they should not be held back by floods. Mozambique has attracted a range of investors, mainly in coal mining and natural gas. Malawi has investors in agriculture and uranium mining.
Although I am sure investors will not be running for the trees because of the floods, we lose far too much because of this type of disruptions.
My toast of the week comes from the East
Africa’s true potential lies in its opportunity to innovate. As Davos was raving about how mobile payments improved the African business landscape and quality of life, I found myself looking for more stories of successful innovation.
M-Pesa, which is what the mobile payment service is called in its land of origin, Kenya, is one of East Africa’s world-famous innovations. It has since been exported to West Africa, South Africa, India and Romania. The solution took a country with no banking industry to write home about and turned it into a pioneer of access to banking, with the help of Vodafone’s technology.
This week I read two stories that strengthened my faith in East Africa as the hub of innovation, and I decided to share one of them.
Have you ever imagined that animal blood, spilled during slaughter, could be turned into a source of electricity? That is exactly what the Maasai pastoralists are doing.
About 320 farmers have devised a creative way to generate biogas, using animal blood and waste from the Keekonyokie slaughterhouse. Initially, this facility, in Kenya’s Kajiado County, used the gas it produced to generate electricity to power its cold room and processing equipment. Then it started piping gas to hotels.
Keeko Biogas has gone a step further. With 120 cattle and 400 sheep a day being slaughtered, this free source of biogas is – according to project leader Michael Kibue – expected by March to be sold in 6kg cylinders priced at about $8 each. That is half the cost of liquefied petroleum gas in Kenya.
Just as with M-Pesa, Keeko Biogas is a local initiative launched with the help of an external partner.
The project receives technical support from the Kenya Industrial Research and Development Institute and is funded by the World Bank through the Kenya Climate Innovation Centre.
It saves the pastoralists money that used to be spent in disposing of the blood to comply with environmental legislation, reduces the destruction of trees, and offers a recycling success story that will help to meet the high energy needs of East Africa’s economic powerhouse.
Look it up to get more information, but the Keeko Biogas project is my African toast of the week for innovation!
Lest we forget: African history and icons for inspiration
The liberation struggle hero of Guinea-Bissau and Cape Verde, Amilcar Lopes da Costa Cabral, was assassinated on March 20, 1973 – and the date is celebrated as Heroes Day in both countries.
This agricultural engineer, thinker, writer and revolutionary is credited with influencing and leading the struggle that led to the liberation of the two countries.
Of his quotes, the one I most remember – and which is as apt today as it was when he used it in his 1965 party directive – is: “Tell no lies, claim no easy victories.”
In it Cabral warned his fellow combatants against believing that the masses supported the struggle because they bought into “ideas (or) anything in anyone’s head”. Instead, he argued, people were fighting to “win material benefits, to live better and in peace, to see their lives go forward, to guarantee the future of their children”.
A strong advocate of self-reliance and education of the young, he concluded the same directive with the words: “Hide nothing from the masses of our people. Tell no lies. Expose lies whenever they are told. Mask no difficulties, mistakes, failures. Claim no easy victories.”
Makes me wonder what he would say to some of Africa’s political leaders today.
* Victor Kgomoeswana is author of Africa is Open for Business, anchor of CNBC Africa’s weekly show Africa Business News, and anchor of the daily show Power Hour on PowerFM. He writes in his personal capacity.
** The views expressed here are not necessarily those of Independent Media.