Capital Africa Industries Energy Logistics Manufacturing

Industry – Agriculture

An overview of the Agriculture Sector in Africa

Agriculture has, for many years, formed the backbone of Africa’s economy: contributing 60% of the Gross Domestic Product (GDP) and accounting for 80% of the continent’s employment, mainly in the rural areas. In addition, the sector contributes more than 75 per cent of the total export earnings and about half of the tax revenue, while providing for most of the continent’s food requirements.

Africa’s tea sector is a dominant and the coffee sector has started to pick up following a decline in the recent past. The horticultural and flora sectors have seen unprecedented growth over the past years as more companies venture into production and export of flowers and fresh produce. The sugar industry has faced significant challenges and it is the regulator’s intention to improve the sector. This industry is expected to show good growth over the next few years, should stated policies be implement.

The livestock subsector in particular is an integral part of Africa’s economy. The subsector contributes about 20% of the continent’s GDP. The livestock subsector as a whole contributes about 40% to the agricultural GDP and provides food which is consumed in the form of meat, milk, mile products and eggs. Other sectors where the country has significant resources include cotton, sisal, cashew nuts, forestry, and fishing. Africa’s agricultural sector directly influences overall economic performance through its contribution to GDP. Periods of high economic growth rates have been synonymous with increased agricultural growth.

Farmers In West, Central Africa Covered By IFCs $6m Investment

The International Finance Corporation (IFC) is investing $6 million into agricultural insurance for farmers in the West and Central Africa regions.

The Corporation is using the amount as an equity investment in Activa, an insurance group operating in Cameroon, Ghana, and other countries in the region, to help increase access to insurance for farmers, smaller businesses, and lower-income individuals.

IFC said its equity investment will help Activa expand into new markets in West and Central Africa, where few are able to access or afford insurance products.

With IFC’s backing, officials say Activa plans to offer innovative products, such as weather risk insurance for farmers, micro-insurance for lower income beneficiaries, and mobile insurance, where the insurance product is distributed via network operators.

“Through our partnership with IFC, we are extremely well positioned to take advantage of the many growth opportunities in African markets with very low insurance penetration through the development of products designed to cover low-income population and small businesses and the use of innovative distribution channels,” said Richard Lowé, CEO of Activa Group.

According to Yolande Duhem, IFC Director for West and Central Africa, a key focus of IFC’s financial services strategy for sub-Saharan Africa is to support regional insurers who aim to achieve mass market coverage and expand their operations in other countries.

Industry – Energy & Utilities

An overview of the Energy & Utilities Sector in Africa

Electricity generation, transmission and distribution in Africa is provided primarily through state owned companies such as Tanesco in Tanzania and KenGen in Kenya. These predominantly government owned companies are responsible for 95% of the continent’s electricity supply. Petroleum, hydropower and coal are the major source of commercial energy in the Africa. The biomass energy resource, which comprises fuel-wood and charcoal from both natural forest and plantations, accounts for 90 per cent of total energy consumption.

Research has shown that Africa has availability of enormous energy resources which far exceed energy requirements of the regions, most of these resources are grossly underutilized, particularly natural gas and hydro resources. Africa’s problem is not lack of energy resources but its development and utilization. The continent faces a unique set of initial conditions, defined mainly by its level and pattern of economic growth, social and demographic characteristics, energy resource endowment, location distances between supply sources and consumption areas, technological underdevelopment, and poverty-driven energy-environment conflict.

Capital | Africa actively assists clients in the energy and utilities industry sector particularly those focused in renewable energy such as wind and solar power.

Ghana’s Energy Sector To Receive Investment Of $250m

he Africa Finance Corporation (AFC) has announced that it will invest over $250 million into the power systems in Ghana, Kenya and Nigeria.

The investment forms part of the $7 billion ‘Power Africa’ initiative announced by US President Barack Obama last week in South Africa during his three-nation African tour.

The African-led international financial institution also indicated that it will be catalyzing a further $1 billion in additional investments in sub-Saharan Africa energy projects.

The AFC, in a statement said it “will invest over $250 million in the power sectors of Ghana, Kenya and Nigeria, while catalyzing a further $1 billion in additional investments in sub-Saharan Africa energy projects.”

The ‘Power Africa’ initiative is to increase access to clean, geothermal, hydro, wind and solar energy in Africa and it is expected to generate an additional 10,000 megawatts of power across the continent.

Industry – Tourism & Hospitality

An overview of the Tourism & Hospitality Sector in Africa

Although tourism has been and continues to be an important source of revenue for many African economies, and a source of livelihood for many, its dynamics have changed in the wake of terrorism and increased competition. The tourism industry in Africa has suffered from the issuance of travel advisories by foreign governments in the last two to three years as these advisories resulted in a reduction of foreign tourists, which in turn led to the closing down of hotels and the laying off of staff. The continent also faces increased competition from alternative tourist destinations such as Middle East and Asia.

Despite these challenges, the African’s tourism industry recorded a boom in 2005. The industry is however still very vulnerable to the dynamics affecting global tourism and the players realise the need to bolster the economy against this volatility. Both governments and industry players are responding to this challenge by increasing marketing activity, targeting tourists from diverse locations and providing incentives for local tourists amongst other efforts.

To meet the current demand and to strategically place themselves for the future, individual players are investing in and making internal changes to their businesses to increase their capacity and improve their processes. This growth increases business needs and requires a professional financial advisory partner.

Industry – Information & Communication Technology

An overview of the Information & Communication Technology Sector in Africa.

The efforts deployed by Africa to extend Information and Communication Technologies (ICT) access are bearing fruit, with more and more African nations embracing full-scale regulatory reform. Market liberalization and regulatory reform are designed to attract a surge of investment in the ICT sector and exploit the potential of low-cost technologies to provide affordable access to ICTs. A glance at the ICT policy landscape across Africa shows real signs of pioneering and innovation. For many African policy-makers it is clear that market reform will take the leading role in the continent’s development. Africa is the fastest growing region for mobile communications and may well present one of the most fertile grounds for ICT investment anywhere in the world.

The number of voice telephony subscribers (fixed and mobile combined) in Africa has more than doubled in the last three years. In 2003, Africa had 73 million total voice telephony subscribers (22 million fixed and 51 million mobile, up from a total of 35.4 million in 2000 (19.7 million fixed and 15.7 million mobile).The liberalisation of the telecommunications sector has created vast opportunities for investment in this market. International investors have had a strong positive influence over the growth of the industry. The greatest challenge is the rural areas that have less than 20% of the total communications infrastructure to serve close to 80% of the population.

Industry – Manufacturing

An overview of the Manufacturing Sector in Africa

The manufacturing sector is of significant importance in Africa’s economy. Up to 2006, the sector employed about 35% of Africa’s total monthly wage earners, making it the largest employer in urban areas. It remains to be the most reliable source of government revenue in terms of import sales, corporate and income taxes. The manfacturinng sector accounts for over half of the region’s annual revenue collection. Although exports from this sector have been in a declining trend, manufacturing still earns a fifth of Africa’s total foreign exchange, making it the third most important sector after agriculture and tourism.

Moreover, it is the manfacturing sector that provides a reliable platform for innovation and harnessing modern technologies to increase production output. Production has persistently been in the upward trend. Employment levels have similarly been rising and have exemplified steady growth, with an average rate of around 12 percent over the last decade. For the last three years, employment in the industry has grown.

Industry – Mining, Oil & Gas

An overview of the Mining, Oil and Gas Sector in Africa

South Africa, Ghana, Zimbabwe, Tanzania, Zambia and the DRC dominate the African Mining industry. Africa produces more than 60 metal and mineral products and is a major producer of several of the world’s most important minerals and metals including Gold, PGE’s, Diamonds, Uranium, Manganese, Chromium, Nickel, Bauxite and Cobalt. It is interesting to note that Africa’s contribution to the world’s major metals (copper, lead and zinc) is less than 7%. Although underexplored, Africa hosts about 30% of the planet’s mineral reserves, including 40% of gold, 60% cobalt and 90% of the world’s PGM reserves – making it a truly strategic producer of these precious metals. Unfortunately, the increase in exploration and mining development in Africa has been primarily focused on gold and diamond exploration. However, Mozambique, Nigeria and Madagascar are but a few countries that have tremendous potential for base metal and industrial mineral deposits.

In the Oli & Gas sub-sector, a 2008 BP Statistical Energy Survey indicates that Africa had proven oil reserves of 117.481 billion barrels at the end of 2007 or 9.49 % of the world’s reserves and in 2007 the region produced an average of 10317.6 thousand barrels of crude oil per day, 12.5% of the world total and a change of 3.1 % compared to 2006. Five countries dominate Africa’s upstream oil production. Together they account for 85% of the continent’s oil production and are, in order of decreasing output, Nigeria, Libya, Algeria, Egypt and Angola. Exploration is taking place in a number of other countries that aim to increase their output or become first time producers. Included in this list are Chad, Sudan, Namibia, South Africa and Madagascar while Mozambique and Tanzania are potential gas producers.