HABA – Horn of Africa Business Association

‘The lack of infrastucture’ is a familiar refrain for many of those unwilling to invest and engage in the HABA region. To those who take the trouble to visit, this story is beginning to change, but the picture remains a complex one. Years of regional conflict and neglect have ensured that the Horn of Africa and adjacent regions has some of the poorest roads in Africa. Now there is a realisation in national governments that if potential is to be unlocked the infrastructure challenge has to be met head on and this means serious investment. To many China has arrived with a seemingly tailor made solution, not only offering the technical knowhow, but also the finance to initiate such capital projects, a powerful combination that few governments find able to resist. Whilst in theory the building of new roads or the patching up existing ones is good for local connectivity and thus development, there are a multiplicity of factors that need to be examined and scrutinised with care if problems are not going to be stored up for the future. Already there are signs of recent projects demonstrating poor design and friability within months of being constructed.

To date no government has had the courage or foresight to establish an online cadastral survey, one that makes clear who owns what land and has the added potential to also feature valuable data concerning mineral and hydrocarbon assets and licences. Central governments the world over have a habit of commissioning road building projects with scant consultation with local communities and then are surprised and indignant when plans rather than being welcomed are greeted with hostility. Already urban centres across the HABA region are fast losing what little green space that exists and peri-urban areas are being blighted by constant encroachment and despoilation. Compensation schemes and judicial protection are inadequate, with the legal process all too often weighted in favour of the goverment. Anyone familiar with the Lamu Port and Lamu-Southern Sudan-Ethiopia Transport Corridor (LAPSSET) project will be aware of how little effort is made to carry out genuine environmental impact surveys. National interest, such as it is invariably trumps local concerns every time. There are of course other matters to be considered, such as the effect of the extremes of temperature and the managing of water runoff. Sadly, a number of the new roads being constructed have inadequate substructures to deal with rain water and those being built in urban areas rarely are built with sewage management systems in mind. HABA has anecdotal evidence that poor quality gravel and inferior bitumen is often being used and this further increases the likelihood of increased wear and tear. Traffic usage on new roads is extremely heavy and set to grow enormously and yet on-going maintenance is rarely factored into the costs, nor are proper safety proceedures with a view to minimising the number of accidents and fatalities on the roads. For a region so well suited to solar lighting, it is regrettable that solar solutions rarely if ever feature. The region desperately needs improved connectivity, especially to regional centres, but it also requires a greater degree of joined up planning and thinking that has long term solutions in mind.

For further information visit:

http://www.infrastructureafrica.org

http://transport-links.org/transport_links/filearea/documentstore/Draft%20Gravel%20Guidelines.pdf

http://www.savelamu.org

As many international companies start to reassess their view of possible business opportunities throughout Africa the Horn of Africa Business Association (HABA) is pleased to report increased commercial activity in the Horn of Africa. A rash of regional developments from the extension of fibre optic connectivity and broadband thanks to the likes of Somcable (www.somcable.com) to the generating of renewable energy by Reykavik Geothermal (www.rg.is) in Ethiopia are helping Africa’s terra incognito to be viewed anew. Recent developments such as the opening of a make-shift British Embassy in Mogadishu, with the Netherlands and EU set to follow suit is indicative of a return to a degree of normality that will help foster further commercial activity.

“Perception and misconception play a very large part in business confidence and it is encouraging that international and Diaspora businesses are eager to learn more about the region and its opportunities. HABA is delighted to see the British Foreign & Commonwealth Office (FCO) in conjunction with the Department for International (DFID) organising a Somali Business & Investment event in London (8/5/2013). This is a positive initiative that we whole heartedly support and are happy to be part of. Anything that allows foreign investors and the Diaspora to have a better understanding of the real situation on ground has to be a good thing.” – Mohamed Ali, Operations Director, HABA.

HABA (www.ha-ba.com) as a non-political organisation is committed to helping others realise the enormous economic potential of the region and works assiduously to address the current knowledge deficit.

“Reliable economic data is often in short supply, so as in all business activity there is always a degree of risk. We urge companies large and small to endeavour to do their due diligence and constantly work to be culturally sensitive and pragmatic in approach. The Horn is a fascinating region, ripe with potential, with a near unrivalled strategic location. From Berbera to Omdurman there is a wealth of commercial activity that belies the myth that this part of Africa is poor. If you take the HABA region as a whole it is a massive market with approximately 300 million people and rising. Yes there are difficulties, but with our own regional market and sector intelligence HABA’s view of things is one of grounded optimism.” – Mark T Jones, Executive Director, HABA.

HABA is proud to have been at the forefront of highlighting opportunities in the field of hydro-carbons, but also believes that there is even greater potential in the area of renewable energy, particularly solar. In the coming years it sees a number of sectors proving particularly attractive to both local and foreign investors:

·Agriculture and agro-processing

·Construction and Real Estate

·Fisheries

·Livestock

·Transport & Logistics

All of these sectors should go some way to alleviating the greatest of the region’s challenges, that of youth unemployment. HABA believes that with a continued spirit of pragmatism, co-operation and mutual respect attitudes towards the region will continue to change for the better.

HABA works in the following countries: Djibouti, Eritrea, Ethiopia, Somalia and Somaliland (The Horn of Africa), Kenya, South Sudan, Sudan, and Uganda (The Greater Horn) as well as forging further business links being forged with Burundi, Rwanda and Tanzania.

For further details visit the HABA website (www.ha-ba.com) or contact:

PRESS RELEASE

Issued 28th April 2013

Potential is a marvellous thing, but sadly it is not always realised. For all the current hype surrounding the possibilities for economic development in East Africa, one of the greatest challenges remains access to affordable and reliable sources of electricity. Anyone familiar with the woeful performance of the likes of the Tanzanian Electricity Supply Company (http://www.tanesco.co.tz/) knows full well that in certain countries the situation is likely to get worse before it gets better. Years of under investment, neglect of the regions, poor infrastructure, ineffective leadership, corruption and a lack of empathy and political will have combined to create a problem that at times has looked near insurmountable. As in Nigeria, many of the elite have been quite content to have their own diesel generators and as a result have spared little thought for others or for the detrimental effect that power cuts and a spasmodic electricity supply has had on economic development. Recent major oil and gas discoveries may be seen as a boom by various regional central governments, but with the sums of foreign capital being invested the demands and requirements for reliable electricity become ever more pressing. HABA is not alone in believing that help may finally be at hand in the form of various renewable forms of energy, namely solar power and geo-thermal.

Whilst hydrocarbons have tended to receive the media coverage, geo-thermal projects in particular are being discussed with increasing intensity. Kenya looks set to be the main beneficiary, with experts having calculated that the country has the potential to generate between 7,000 – 10,000 MW of electricity. Much of the Great Rift Valley appears to present ideal conditions, and there is already optimistic talk in Kenyan Government circles of geo-thermal generating half of the country’s energy needs by the end of the decade. Agil (http://www.africa-geothermal.com) and Ormat Technologies, Inc (http://www.ormat.com) are both operating successfully in the region south of Lake Naivasha, with the Kenya Electricity Generating Company (http://www.kengen.co.ke/) eager to see similar initiatives. Elsewhere from Rwanda to the Comoros Island there are signs of exploration and expansion with regard to geo-thermal energy. In the summer of 2012 China’s Sinopec (http://www.sinopecgroup.com) and the Government of Djibouti signed a Geothermal Resource Cooperation Framework Agreement, whilst Iceland’s Reykavik Geothermal (http://www.rg.is) has invested in geo-thermal plants in Ethiopia and Rwanda. The African Development Bank (http://www.afdb.org) has committed itself to providing assistance funding for similar projects throughout the region. Germany, as befits a country with a strong commitment to renewals, has been particularly active and has been instrumental in helping establish the Geothermal Risk Mitigation Facility for East Africa (http://www.grmf-eastafrica.org).

HABA recognises that for all the investment and grounds for optimism a raft of challenges remain, of which the following are just a few:

• Competing priorities in the energy sector, especially from oil and gas

• Insufficient pricing support

• The remote location of the majority of geothermal plants

• Limited availability of both human and technical resources

• Inadequate regulatory framework, particularly in regards to mining and concession rights

Issues to do with land ownership and land seizures have been such that concerns have already been raised by the International Institute for Environmental Development (http://www.iied.org). One thing is for certain, and that is that the Horn and East Africa cannot ignore the power paralysis, and it would appear that geo-thermal and solar energy may well provide a lasting solution to what has been a perennial problem.

To the wider world and much of the West in particular the image of Ethiopia seems stuck in a Band Aid Time time-warp. It is as if the clock had stopped in 1985, an era of partial drought, famine, harrowing news footage and the indignation of international pop stars. Mengistu Haile Mariam and the Derg have long since gone (with the former living in luxurious exile in Zimbabwe). The era of transformation under the late Meles Zenawi witnessed both an ideological and economic step change that has seen Ethiopia assume a role of regional and pan-African leadership not seen since the formation of Organisation of African Union (OAU) during the reign of Emperor Haile Selassie.

As Africa’s second most populous nation, Ethiopia recognizes the need to ensure a greater internal and external connectivity. This quest for greater connectivity has galvanised a variety of sectors. In aviation Ethiopian Airlines has worked hard to become a major continental player in recent years, but it is on the ground that the bulk of activity has begun to manifest itself, primarily in a whole raft of construction projects. State investment in roads, dams, centres of education and low cost housing is currently driving a construction boom. Agencies such as the Ethiopian Road and Transport Authority (http://www.rta.gov.et) are wrestling with the increasing traffic in Addis Ababa, as well as overseeing arterial roads and highways to connect the interior. Considerable energy and resources is being directed to opening up new road and rail links to Ethiopia’s neighbours, this being a particular preoccupation at present as currently 98% of the country’s international trade passes through Djibouti. This over reliance on Djibouti has resulted in the exploration of other options including Port Sudan, Berbera and Lamu, the later in the form of the Lamu Portand Lamu Southern Sudan-Ethiopia Transport Corridor (LAPSSET) being by far the most ambitious of regional infrastructure projects. Projects such as Addis Ababa – Adama Expressway and the construction of 100km-long road, stretching from Asosa to Kormuk are stimulating trade and fuelling the demand for key commodities such as cement.

In common with the majority of its neighbours, Ethiopia has turned to the Chinese to carry out the lion share of its road and rail projects. The huge quantities of cement needed for such projects have been supplied by both international and local companies. Lafarge SA and Dangote Cement Plc are two of the most prominent international providers, whilst local companies such as Derba Midroc Cement (owned by the Ethiopian-born Saudi Billionaire Sheik Mohamed Hussein al-Amoudi), the state-owned Mugher Cement Enterprise and the Ethiopian People’s Revolutionary Democratic Front’s Messebo Building Materials Production Plc have all benefited from the boom. Other capital projects such as the Grand Ethiopian Renaissance Dam have become emblematic of Ethiopia’s vision, although not without controversy. This ambitious hydro-electric dam project awarded to the Italian construction firm Salini Costruttori (http://www.salini.it/en/) without a competitive bidding process has caused particular alarm in Egypt and Sudan where there is a fear that it will reduce water levels in the River Nile downstream. Human rights concerns have also been raised over land seizure and forced deportations of ethnic Amharas from the Benishangul-Gumuz ethnic state in western Ethiopia in the region where the dam is being built.

Hailemariam Desalegn, the current Prime Minister of Ethiopia, seems intent on continuing the modernization process begun by his predecessor. The fact that the Ethiopian PM holds a bachelor’s degree in Civil Engineering and a master’s degree in Sanitation Engineering means he is likely to be well disposed towards those individuals and companies intent on bringing about a transformation through construction projects.

For further information visit:

http://www.doingbusiness.org/data/exploreeconomies/ethiopia/

http://www.eiabc.edu.et/

http://www.globalwaterforum.org/2013/02/18/the-grand-ethiopian-renaissance-dam-and-the-blue-nile-implications-for-transboundary-water-governance/

The recent 19^th anniversary of the 1994 genocide in Rwanda reminds the world not only of the horrors of the recent past, but also the extraordinary progress made in recent years. The vision, drive and self reliance of the Rwandan people continues to amaze. In a wider world bedevilled by economic woes and apparently rudderless governments, Rwanda has an aspiration and determination that is resonating with and inspiring confidence in foreign investors. Foreign Direct Investment is growing steadily, with a recent report showing that figures FDI stood at $356.7 million in 2011, the previous year it had been $343 million. With returns on equity in 2011 at 19.5%, up from 13.4% in 2010 (the global average is 7.1%) Far from being complacent Rwanda is keen to capture further investment. Whilst mining and tourism are buoyant, the big successes have been financial services, ICT, manufacturing and agriculture. The renewable energy sector is also attracting considerable interest and with Rwanda’s mission to win further plaudits with regards to the ease of establishing a business and minimal corruption, the signs are very promising indeed. HABA clients frequently comment on the growing connectivity including aviation links as well as a policy of appointment on merit as key factors that are helping foster a healthy and positive business environment. Whilst Rwanda has to wrestle with the challenges of being land-locked, and having limited agricultural land it is fast proving an attractive business hub from which to operate. South African, Indian and Chinese investors are not the only ones waking up to the possibilities, if leading EU nations are examined, in 2011 the UK was in the lead with 1359 investment projects, then Germany (1237) and France (647). As with much of the region, there is still an enormous disparity between future investor perception and the reality on the ground. Those who have visited Kigali recognise just how far the country has travelled since the dark days of 1994. Whilst plenty more remains to be done, it is clear to HABA that Rwanda is country determined to prove itself an exemplar for Africa and the wider world.

For further information visit:

http://www.rdb.rw/

http://www.rwandahc.org/trade-and-investment/key-factors-for-foreign-investors/

http://www.statistics.gov.rw/