In this eighth edition, Fauconnier and Mandimika have focused on the need for efficient infrastructure – something they believe is key to unlocking opportunities and tapping into the growth that Africa has to offer.
The publication highlights some key findings – that Africa’s lack of efficient infrastructure shaves up to 2.6 percent off its average per-capita growth rate (The World Bank), placing significant strain on human development; that the annual infrastructure need is US$130bn-US$170bn annually (The African Development Bank); and that the continent’s available capital is insufficient to achieve this. In short, the lack of efficient infrastructure is one of the highest hurdles to business in Africa.
But Where to Invest in Africa also shows that this obstacle represents an opportunity to businesses involved in the development or financing of infrastructure projects. Says Fauconnier, “developing infrastructure is synonymous with developing Africa and unlocking her enormous growth potential.”
When Fauconnier and Mandimika talk infrastructure, they’re referring to hard or tangible infrastructure (transport, energy, ICT) or the physical structures connecting people, places or businesses to the economy; soft or intangible infrastructure or the development of services (education, health) or the policy environment; financing infrastructure, relating to who’s financing Africa’s infrastructure gap, how they’re being funded and what they’re investing in; regional infrastructure or on-the-ground programmes; and technological infrastructure or how new technologies (e.g. digitalisation) are impacting Africa’s economic outlook.
So, what are the challenges to infrastructure development? They are: weak legal, regulatory and institutional frameworks; weak infrastructure planning and project preparation; ineffective governance; and corruption, one of the consequences being limited private-sector involvement. The key to building well-targeted infrastructure connecting African economies to global value chains is “governments dedicated to the task,” adds Fauconnier. The Brookings Institution puts some numbers to that dedication, noting that to sustain 3-3.5 percent economic-growth rates in Africa, infrastructure spending as a proportion of GDP should be 5-6 percent annually. It is currently at 2 percent (average). “Only a few countries globally have managed this allocation,” continues Fauconnier, “but execution of these funds hasn’t necessarily been effective.” Medium term, Africa’s fiscal imbalances will hinder increased spending. “We see governments over the next decade emphasising implementing structural changes – more so than ever. And how better than by developing infrastructure?” she asks. “It’s vital that both public and private players have mechanisms to ensure that their investments provide the best returns possible.”
RMB has incorporated a ranking that encompasses both the hard- and soft-infrastructure qualities for 53 African countries. The top ten best-performing African economies are a mix between the island economies, southern Africa and North Africa.
Where to Invest in Africa examines hard infrastructure in relation to its deficits, challenges and projects – current and future. “Over the last decade, we’ve seen infrastructure-development emphasis shifting from ICT to electricity generation and road-infrastructure improvements,” says Fauconnier.
“This trend will continue over the medium term, as poor roads and unavailable or irregular electricity supply prove costly to operations.” When assessing the overall quality of hard infrastructure in Africa, Seychelles dominated the rankings, with its high-quality tourism infrastructure and strong ICT capabilities. North and southern Africa also featured highly –not surprising, since they’re home to some of Africa’s biggest, most diversified economies. According to the publication, common to the ten lowest-ranked countries is that they’re mostly fragile states, involved in conflict.
Hard infrastructure, core to growth, is essential for boosting economic growth levels. But it is soft infrastructure that’s key when it comes to the quality of economic growth – or inclusive growth – and therefore essential to overall growth. “Sadly, infrastructure build hasn’t catered sufficiently for soft-infrastructure development, implying that the economic-growth benefits haven’t filtered through to most Africans,” says Fauconnier. “Promises to improve soft infrastructure are used in election campaigning. But promises don’t always translate into implementation. The politicised nature of soft infrastructure and insufficient financing are major challenges in this space.” In Africa, the quality of services is difficult to measure. But taking specific human-development data (life expectancy, education, income) into consideration, one can, at least, see where they’re lacking. The North African, southern African and island economies dominate the higher rankings here, as they’re the most developed, with stronger institutions and policies in place than the rest of the continent.
“Closing the infrastructure gap in Africa is a mammoth task,” states Fauconnier, “But it must be taken on. And it must be addressed by both the public and private sectors.” In Africa, 90 percent of the projects underway are financed by public revenue through central governments or municipalities, the remainder, privately. According to the data, construction accounts for 83 percent of all ongoing projects being funded by the private sector, while the same sector draws just 12 percent of public investment. Governments, on the other hand, lean towards transport and energy-related projects, which together account for 84 percent of public investment and 13 percent of private investment. Nigeria, Ethiopia and Egypt (in that order) stand out as the three countries with the most publicly-funded infrastructure developments in Africa. Private funders show similar country preferences as their public counterparts, the notable exception being South Africa, the third-highest country by number of projects.
Top 10 investment attractiveness-ranked countries:
Egypt: Africa’s largest economy GDP-wise, boasting the biggest consumer market in the Middle East and North Africa, its diversified economy receiving large FDIs.
South Africa: Also still an FDI hot spot, with the country’s currency and capital markets a cut above the rest of Africa’s, according to Fauconnier. But she warns that subdued economic growth and this year’s upcoming elections have created political-party divisions, which hamper policymaking.
Morocco: Africa’s fifth-largest market, which, with its medium-term growth-rate expectation at 4 percent, boasts an enhanced operating environment and investment appeal.
Ethiopia: Set to be the fastest-growing economy in Africa, averaging 8.2 percent for the next six years – a slight normalisation from the 10 percent average experienced over the past decade. The robust momentum is supported by improved macroeconomic policies and higher government investment in local industries and human capital.
Kenya: Delivered a diverse economy and sustained expansion in consumer demand, urbanisation, EAC integration, structural reforms and infrastructure development, which include an oil pipeline, railways, ports and power generation.
Rwanda: Another fast-growing economy, boasting the second-best business environment. Although a small market, the government is investing heavily into its domestic industries, with a significant increase of FDI recorded over the past decade.
Tanzania: Expected to grow at 6.5 percent over the next five years. The economy is expected to overtake Kenya’s, supported by its resource-based manufacturing, tax incentives and development of special economic zones.
Nigeria: Jumped back into the Top 10 due to improved macroeconomics, supported by recovering oil prices and production and favourable demographics attracting FDI.
Ghana: Has strong growth rates concentrated around the oil and gas sector, while the non-oil sector growth is supported by pro-business reforms.
Has strong growth rates, supported by large infrastructure investment, particularly in transport and energy.
In assessing Africa’s most attractive investment environments, RMB considered two important conditions for viable investment: economic activity and operating environment.Eleven countries are forecast to grow above 6 percent; Ethiopia set to be Africa’s fastest-growing economy. Certain sectors provide opportunities for long-term growth. Resources will continue to be key in attracting funds – particularly in the hydrocarbon, base and precious metals spheres. The all-important demographic dividend – especially the strong growth in population, urbanisation and GDP per capita – also provides growth opportunities.
RMB also identified other growth opportunities. From a fiscal perspective, Africa has low levels of revenue collection. The IMF estimates that SSA could potentially collect an extra 3-5 percent of GDP in tax revenues by improving collection systems and broadening the tax net. Says Fauconnier: “Private-sector investment has also been lacking. This could change through more business-environment reforms, increased infrastructure and financial-market development and trade openness.”
The report found no real improvements in operating environments across Africa. Although findings reveal a slight improvement to the overall operating environment, access to financing, corruption, weak governance and inadequate efficient infrastructure remain problematic factors for doing business in Africa. The top five performers in terms of operating environments were Mauritius, Rwanda, Botswana, South Africa and the Seychelles. Mauritius is now in its 11th year of being the easiest business environment in Africa, and it keeps on improving.
Today marks a historic visit of Namibian President, Hage Geingob in Botswana on a one day tour of the Southern African Development Community (SADC) headquarters in his capacity as chairperson. The leading question as he enters the iconic building situated in the northern corner of the Central Business District (CBD) to meet and greet the Secretariat staff, is how ready is he to eliminate the longstanding allegations of corruption levelled against top management and cadres.
His visit to the country was announced by President Dr. Mokgweetsi Masisi on Saturday when addressing the media at the Sir Seretse Khama Airport upon his arrival from Davos where he attended the World Economic Forum. Masisi said he had an occasion when he was about to leave to go to Davos and when he was there to talk to President Hage Geingob who is the chairman of SADC.“I might as well let you know, he will be primarily visiting SADC headquarters as the chairman on February 1st (today) for a one day visit”.
A press release from SADC Secretariat circulated on Wednesday states that the key objectives of the visit are to enable the SADC Chairperson to appreciate the work done by the Secretariat in facilitating the SADC regional agenda and to provide guidance on the Secretariat’s implementation of SADC Programmes including the SADC Theme during the Chairperson’s tenure of office.
Geingob will also address the Secretariat staff, inform himself about the operation of the organisation and review the implementation of the decisions of the 38th Summit of SADC Heads of State and Government, held in Windhoek, Namibia in August 2018
Geingob, a sound administrator himself famous for intolerance of corruption is amongst the few regional leaders who spoke strongly against the alleged rampant corruption at SADC headquarters following the release of an audit report in 2011 which was first discussed in Gaborone in February 2012.
By then, Geingob was Namibian Minister of Trade and Industry and chairperson of the SADC Council of Ministers. Handing over the baton to Angolan Minister of Planning Ana Dias Lourenco, Geingob catalogued the corruption allegations levelled against top management cadres of the SADC Secretariat. He said they included issues such as recruitment and contracts, financial management, travelling expenses and per diem, as well as how often staff members are required to submit mission reports.
He further revealed that concerned staff members of the then SADC Secretariat requested the outgoing chairperson of SADC and Namibian President Hifikepunye Pohamba in 2011 to institute a forensic audit into operations at the Secretariat. Today, close to a decade later, though the allegations of corruption practices are still stated on annual audit reports and the perpetrators of the alleged white collar crime continue to walk scot free. After taking over as SADC chairperson in August, Geingob promised to promote the SADC Common Agenda to ensure sustainable and equitable economic growth and socio-economic development in the region and to promote common political values and maintain democracy, peace, security and stability in the region.
The Court of Appeal has reserved to February 8 a judgment of an appeal case in which Norilsk group had applied for leave of court to commence arbitration in the London Court of Arbitration. A panel of three judges being Presiding judge, Frederik Daniel Brand, Justice Lakhvinder Walia and Zibani Makhwade heard the appeal.
The marathon case has been running for the past three years since the defunct BCL who had entered into an a agreement to buy the Nkomati mine in South Africa owned by Norilsk at a cost of USD 270 million failed to take place subsequent to the two parties not agreeing on the sale price.Norilsk through its attorney of record, Collins Newman and Company approached the Court of Appeal having lost the first application at the high court where Justice Godfrey Radijeng refused their application to start the arbitration in London.
The purpose of the application was caused by the fact that it was agreed that Norilsk was selling the mine to BCL, but the dispute arose when BCL liquidator raised concerns that some of the conditions of sale have not been met, the main one being that the South African government where the Nkomati mine is situated, has not issued its consent.
They argued that without the consent, there was no obligation to pay the agreed purchase price of USD270 million. Norilsk is unshakeable in its position. They want the matter before the London Court of Arbitration but have approached the court because the Company Act states that, “before you launch proceedings against a company in liquidation, you have to get leave from court”.The Liquidator has also argued in a South African court that the Creditor (BCL) who in this case is Botswana Government does not have the resources to argue the matter in London.
The Norilsk application was first brought to court in December 2016, but was heard in December 2018 before Justice Ketlogetswe who was later transferred to the Francistown High Court. It was subsequently handed over to Justice Zein Kebonang. In order to ensure compliance, at some stage Norilsk through their lawyers alerted the London Court of Arbitration that they believe they have acted contrary to the Companies Act when they filed the matter in London and therefore requested them to wait or delay the proceedings since they needed to comply with the Act by seeking permission from Botswana court.
In his judgment, Justice Radijeng said before one can participate in liquidation, one first has to prove that one claims with the liquidator. However, Norilsk argues that the claim is not yet final. The appeal seating which took close to two hours could not end without the judges expressing their concerns and unhappiness as well as bashing the respondent’s attorneys.Justice Brand was not pleased with the line of approach to the appeal taken by the liquidator’s attorney. They had filed supplementary heads of arguments of an international case a week before hearing showing that one does not need the court’s authority to bring court proceedings in another country.
The liquidator had brought in a lot of paper work and this annoyed the judge to an extent of wanting to postpone the matter or even award costs against the Liquidator. The case has attracted great legal minds with Norilsk represented by Advocate Franklin SC assisted by Advocate Botha instructed by Virgil Vegeer and Walter Mushi of Collins Newman company, while the Liquidator is represented by Advocate Vivian SC assisted by Advocate Bheena instructed by Attorney Msiya Kindiano.
The appointment of Justice Oagile Key Dingake as an adjunct professor of Law, by a leading Australian University James Cook- soon after a similar conferment by the University of Cape Town, is confirmation of his intellectual depth. Dingake’s appointment was made on the 18th, December 2018. It makes him an Adjunct Professor of Law in the College of Business, Law and Governance.
Dingake is one of the most celebrated judges the country has ever produced. Some people believe that he is the greatest judge Botswana has ever produced, whose services are now sought in many jurisdictions. He is currently a Judge of the Supreme and National Courts of Papua New Guinea in the Pacific, North of Australia. He is also a Judge of the Residual Special Court of Sierra Leone (RSCSL) appointed by the Secretary General of the United Nations in 2013.Dingake is armed with a PhD in Law from the University of Cape Town; an LLM from the University of London and an LLB from the University of Botswana. He has a number of post graduates certificates in international development studies and political economy of development from the University of Oslo and London School of Economics.
He has been recognised as an exceptional and distinguished scholar by a number of Universities around the globe, including the University of Pretoria, Cape Town and James Cook University in Australia. The latter recently, in December, 2018, appointed him Adjunct Professor of Law. This is the second Professorship in Law that has been conferred on him by an international university after the conferment by the University of Cape Town. Confirming the appointment to Botswana Guardian, Dingake said it is expected that his engagement with the University will include sharing his extensive knowledge of the law with the University community; engaging with students and staff in legal research in areas of his expertise.
“It is also expected that in my role as Adjunct Professor, I will consult with the University and faculty executive on engagement with South East Asia and with African states. “I am obviously elated by the increased recognition, on a global stage, of my scholarship and jurisprudential output as a judge nationally and internationally,” Dingake said. In the last 15 years Dingake served in the Botswana judiciary and left an unprecedented mark in the development of the law in the country. His colleagues in the legal fraternity cite cases in Diau, Maphanyane, Mmusi, BOPEU, Bah and Mathambo as pure classics.
They say, intellectually, for a long time he and Justice Kirby ruled supreme. They say the two only differed in terms of philosophical outlook. Dingake was regarded by many as progressive and Kirby as conservative. Those who worked closely with him say the last decade in Botswana judiciary could easily be characterised as the age of Judicial Case Management (JCM) and Justice Dingake. He is recognised by his peers in Africa and globally as a judicial leader. He is the Chairperson of the Rules Amendment Committee of the RSCSL; former Chairperson of the Law Reporting Committee in Botswana; Chairperson of the African Centre for Justice Innovation (ACJI); President of the Africa Judges Forum on HIV/TB, Human Rights and the Law and Chairperson of the African Think Tank on HIV, Health and Social Justice.
In 2016 Judge Dingake ran and was shortlisted as a candidate of the UN Special Rapporteur of the Independence of Judges and Lawyers.Professor Werbner of Keele University in the United Kingdom, in his book: ‘The Making of An African Working Class- Politics, Law and Cultural Protest’, discusses and contrasts the judgments of Dingake J and those of Kirby JA in labour law and concludes that some of Justice Dingake ‘s judgements exudes amazing intellectual depth and brilliance. He actually goes so far as to say one of his judgements must be made “an annexure to the Botswana Constitution.” Dingake is an author of two important books - Collective Labour Law in Botswana and Individual Labour Law in Botswana.