New impact investment fund for high-potential small businesses in rural Africa

New fund is the first to bridge the financing gap for small businesses in sub-Saharan Africa (SSA) with a gender lens, while generating a financial return for investors
It will help improve the lives of 500,000 rural households and create more than 3,500 jobs – at least 60% for women
Two key impact investment areas: agriculture (40% of GDP in SSA) and off-grid solar energy (600 million people lack access to electricity)
London: 22 August, 2019: Global consultancy Palladium has announced its first impact investment fund to bridge the financing gap for small businesses in sub-Saharan Africa.

The “Palladium Impact Fund I” is expected to raise USD 40 million to provide much-needed capital for SMEs in emerging markets. The fund, which will focus on agribusiness value chains and off-grid clean energy in Nigeria, Ghana and Kenya, aims to alleviate poverty and economically empower over 500,000 rural households. It intends to create at least 3,500 full-time jobs, of which 60 per cent will be for women.

Investors will include foundations, family offices, pension funds, and institutional investors. Palladium will manage the fund, anchored by a $5 million investment of its own capital. The new fund will make debt and mezzanine investments of between $250,000 and $2 million into small companies.

Andrew Tillery, Head of Impact Investments at Palladium, said:“Fifty-four years of experience has taught Palladium that for an investment to have impact, it has to be sustainable, which means it needs to generate a financial return. For this first fund, we’ve chosen to invest in empowering African women, as women perform the majority of agricultural activities, own a third of all firms and are key to the welfare of their families. Gender equality and empowerment in the region can raise productive potential and boost the continent’s development.”

Palladium has already made two direct impact investments, including in Naasakle, a mother and daughter-owned shea nut harvesting and processing business in Ghana, and PEG Africa, an off-grid solar energy project. Palladium has a further 10 investments under due diligence.

Mr Tillery added: “Solar and clean energy technology is hugely important particularly in rural Africa as it provides vital electricity to households. The social benefits are significant: for instance, 24-hour lighting enables more effective infant care and in turn can lower the infant mortality rate. It’s also the catalyst for the development of small, growing businesses as the working day is longer and more productive. Clean energy can power enabling technology, such as irrigation for farmers, to mitigate many of the risks associated with primary production like adverse weather conditions.”

Christopher Hirst, CEO of Palladium, said: “After three years investing our own capital, we feel now is the right moment to raise our first Impact Investment fund and begin to channel others’ capital to deliver impact. We’re ideally placed to use our extensive international development work and global reach to source ideas for potential, credible investment opportunities. Our relationships with USAID, DFID, DFAT, governments and private sector clients are directly relevant as we seek to ultimately bridge the gap between aid and impact investing, with Palladium as the intermediary.”


Source: Infrastructure

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The Dollar, the Euro, the Yen — and Now the West African Eco

By Tope Alake and Alonso Soto August 6, 2019, 6:00 AM GMT+2 Updated on August 6, 2019, 7:50 AM GMT+2

Nigerian trade consultant Bamidele Ayemibo says it’s easier to sell his bean cake snacks to China than to neighboring Benin.

Trading with any of the other members of the Economic Community of West African States requires him to find expensive money changers to convert local currencies, adding to costs that are already high due to dilapidated roads. He prefers selling to customers who hold hard currencies in London or New York. Even business with China is more straightforward after the Nigerian government signed a currency-swap deal with Beijing last year.

His transactions would get a lot easier if the 15 countries of Ecowas, as it’s called, follow through on their plan to create a single currency. The area, which stretches from Cape Verde in the Atlantic Ocean to Nigeria in the east, is as populous as the U.S. but only 13% of its trade is with other countries in the region. The nascent currency will be called the “Eco.”

“Through Eco, people can have more formal trade, because they can export and know they will get their payment,” said Ayemibo, whose Lagos-based firm also exports corn meal and liquid soap.

After nearly two decades of failed attempts, Ecowas leaders agreed in June to gradually adopt the Eco starting in 2020. The sheer differences in the size of their economies and exchange regimes make that deadline highly problematic. The euro, now the single currency of 19 countries, took six years of planning followed by three years of full currency integration before euro cash arrived. Moreover, member countries of the future Eco don’t all agree about how the new money should work.

On the plus side, eight Ecowas members already have a single currency: the CFA franc. Established after World War II to help France import goods from its colonies, the tender is pegged to the euro and its convertibility is guaranteed by the French Treasury. Former British colonies Nigeria and Ghana, the two biggest economies in the region, have their own currencies.

Common currencies aren’t unusual in Africa. In addition to the West African CFA franc, six countries in central Africa also use a CFA franc. In southern Africa, Namibia, Lesotho and eSwatini are part of a monetary union with South Africa; all their currencies are pegged to the rand.

To join the Eco, union members have to meet economic convergence criteria that include keeping public debt below 70% of GDP and single-digit inflation. Last year, no single member met all the criteria, according to Ecowas’ latest macroeconomic convergence report. Inflation in Sierra Leone averaged 16.9% in 2018 and general government debt in Cape Verde surged to 121% of GDP, according to estimates by the International Monetary Fund.

Still, even if the Eco takes much longer than expected, the renewed commitment to integration and improved economic indicators could give a boost to African leaders’ efforts to create the world’s largest free-trade zone, said Ronak Gopaldas, director of Cape Town-based consultancy Signal Risk.

“The value of this is that it provides the right behavioral nudges for countries to aspire to a certain goal, but realistically 2020 is never going to happen,” Gopaldas said. “This could be a precursor to the African Continental Free Trade Agreement and create sufficient momentum that they complement each other nicely.”

Read more about the African Continental Free-Trade Area

A stable Eco could help development industries and bolster investment to more than double intra-regional trade in Ecowas, said Kofi Apraku, Ecowas commissioner for macroeconomic policy who is leading preparations to launch the common tender.

The plan is for the Eco to be backed by the international reserves of union members under the management of a new regional, independent central bank that will target inflation.

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Absa to expand its agriculture loan book in Africa

JOHANNESBURG – Absa Corporate and Investment Bank (CIB) yesterday said that it planned to expand its agriculture loan book to countries such as Ghana, Kenya, Tanzania, Uganda and Zambia, due to good long-term growth prospects in the rest of the continent.

Absa CIB agriculture head Roux Wildenboer said the lender wanted to grow its footprint in both its domestic market and the rest of the continent due to strong demand.

“Agricultural debt is relatively higher than it was in recent history and the ability of agricultural businesses to borrow to reinvest has been curtailed, which has a snowball-effect on investment in the sector,” Wildenboer said.

“This is seen as a cyclical phenomenon, and even though on aggregate borrowing is not as strong as it used to be, there are still businesses which are growing aggressively.

“This is the reason why Absa is optimistic about prospects in the agricultural sector.”

However, Absa CIB warned that the big concern in South Africa was the economic performance of the economy, which had stymied demand for agricultural machinery and implements, particularly the sale of tractors and combine harvesters in the past two years.

Data from the South African Agricultural Machinery Association (Saama) showed that July tractor sales plunged 30 percent year-on-year in the month from 525 units to 368 units, while year-to-date combine harvester sales were almost 13 percent down on last year.

Saama chairperson Greg Cadman said two main factors were holding sales back.

“Firstly, uncertainty in the market caused by the current political environment, exchange rates and final crop harvests. Secondly, farmers are very wary about their cash-flow situation,” Cadman added.

“The current industry perspective is that sales should pick up towards the end of the year. Nevertheless, it is likely that tractor sales in the 2019 calendar year will be at a level between 15 and 20 percent below the 6 700 units sold last year.”

South Africa’s agricultural sector is facing uncertain times over the mooted land expropriation without compensation policy.

Last year, the National Assembly adopted a motion to amend Section 25 of the Constitution to allow expropriation without compensation.

The Presidential Advisory Panel on Land Reform’s report released last month also endorsed expropriation without compensation, especially abandoned land; land held purely for speculative purposes and land held by state entities that wasn’t being utilised, among other qualifications.

Wildenboer said the lender saw potential for further growth and commercial success in the agricultural sector in South Africa, but that the government would need to reassure investors that the proposed land reform programme  implementation would not affect investor confidence.

“Notwithstanding some headwinds in certain areas, Absa CIB sees agriculture as a vibrant and strategic market.

“It is the bank’s intention to increase its involvement across the continent in the agricultural sector, and appetite to embark on this strategy has been reaffirmed,” Wildenboer added.

BUSINESS REPORT


Source: Infrastructure

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Africa investor releases African Infrastructure Investment Awards 2019 shortlist

Cape Town, South Africa, One & Only Hotel; 3 September 2019: Africa investor (Ai), a leading international investment and communications group, today announced the highly-anticipated release of the shortlisted candidates for the 2019 Ai Infrastructure Investment Awards. The Awards will be presented during the African Sovereign Wealth and Pension

 

Fund Leaders’ Summit on the 3 rd September 2019 in Cape Town – South Africa, which will run to the eve of the World Economic Forum on Africa (WEF).

The Ai Infrastructure Investment Awards are a unique platform for infrastructure investors,financiers, operators and governments, in Africa’s fast-growing infrastructure sector to gauge and compare their performance, achievements and investment success stories. The 2019 Ai Awards will showcase African public and private sector, project investment innovations and the growing international competitiveness of African infrastructure as an investable asset class.

Commenting on the awards shortlist Hubert Danso, Ai, CEO and Vice Chairman said, “Africa investor is delighted to note that Ai is successfully attracting and seeing many new entrants participating in Africa’s infrastructure investment opportunities. We wish all the nominees best with their entries.”

The prestigious, highly sought-after Ai Infrastructure Investment Awards formally recognise achievements across the main infrastructure sectors in Africa. The Awards reward the institutions and personalities driving transactions and improving the continent’s infrastructure investment
climate.

Data sourced from: DEALOGIC & ACURIS

See below for the full shortlist.

CATEGORY 1 – Ai Advisor of the Year
1. Lazard
2. Citi Group
3. LionTree Advisors LLC
4. Rothschild & Co
5. Bowmans Law
6. HSBC Group
7. Standard Chartered Bank
8. Standard Bank
9. Bank of America Merrill Lynch
10. Fieldstone

CATEGORY 2 – Ai Advisor of the Year
1. ABSA Bank Ltd
2. Nedbank CIB
3. Standard Chartered Bank
4. Standard Bank Group Ltd
5. FirstRand Ltd
6. Attijariwafa Bank SA
7. HSBC Group
8. FirstRand Ltd
9. Société Générale
10. Afrexim Bank

CATEGORY 3 – Ai Advisor of the Year
1. Africa50
2. WSP
3. Telkom & SGTM
4. Platinum Power
5. China Civil Engineering Construction Corporation (CCECC)
6. Nedbank
7. Uganda’s People’s Defence Force
8. Microsoft
9. Enel
10. Finasi Roko Construction SPV Limited

CATEGORY 4 – Ai Advisor of the Year
1. Liquid Telecom South Africa
2. Rwanda Utilities Regulatory Authority
3. Airtel & Telecom
4. Jumia
5. Lebashe Investment Group
6. Rectron
7. MTN Nigeria
8. AirtelTigo Ghana
9. Westcon-Comstor Sub-Saharan Africa
10. Paratus Group

CATEGORY 5 – Ai Advisor of the Year
1. African Development Bank (ADB)
2. China Communication Construction Company (CCCC)
3. SBC Uganda
4. GE Transport
5. Kenya Ports Authority
6. Wesgro
7. Themis Transport
8. Transnet
9. China Road and Bridge Corporation
10. De Beers Group

CATEGORY 6 – Ai Advisor of the Year
1. Econet
2. Themis
3. Globaleq
4. Enel Green Power
5. Actis
6. Mainstream Renewable Power
7. African Development Bank (AfDB)
8. Nachtigal hydroelectric plant
9. Africa Finance Corporation (AFC)
10. SN Power

CATEGORY 7 – Ai Advisor of the Year
1. Africa 50
2. Emerging Africa Infrastructure Fund
3. Africa Finance Corporation
4. Harith
5. AP Moller Capital Africa Infrastructure Fund
6. Actis
7. African Infrastructure Investment Managers (AIIM)
8. Pembani Remgro Infrastructure Managers
9. Meridiam
10. Climate Investor One

CATEGORY 8 – Ai Advisor of the Year
1. Africa 50
2. Development Bank of Southern Africa (DBSA)
3. Denham Capital
4. Africa Finance Corporation
5. Rand Merchant Bank
6. Standard Chartered
7. China Development Bank
8. InfraCo Africa
9. Trade Development Bank
10. IFC InfraVentures

CATEGORY 9 – Ai Advisor of the Year
1. NSSF Uganda
2. Kenya Power Pension Fund
3. Kenya Pension Fund Investment Consortium
4. Botswana Public Officers Pension Fund
5. Rwanda Social Security Board
6. Government Employees Pension Fund (GEPF)
7. Eskom Pension and Provident Fund
8. Namibia Government Institutions Pension Fund (GIPF)
9. Zambia National Pension Fund
10. KENGEN Staff Retirement Pension Scheme

CATEGORY 10 – Ai Advisor of the Year
1. Ghana Infrastructure Investment Fund
2. Nigeria Sovereign Investment Authority
3. Pula Fund Botswana
4. Kenya Sovereign Wealth Fund
5. Fonds Gabonais D’INVESTISSEMENTS (FGIS)
6. Agaciro Development Fund
7. FONSIS Senegal
8. Egyptian Sovereign Wealth Fund
9. Equatorial Guinea Fund for Future Generations
10.Uganda Petroleum Fund

CATEGORY 11 – Ai Advisor of the Year
1. African Infrastructure Investment Managers (AIIM)
2. Lake Turkana Wind Power
3. Investec Energy
4. EDF Energy
5. Themis
6. SN Power
7. Africa Finance Corporation (AFC)
8. Eleqtra
9. Globaleq
10. Mainstream Renewable Power

CATEGORY 12 – Ai Advisor of the Year
1. Themis
2. GE Africa ( Bateka Gorge)
3. ENGIE
4. WESGRO
5. Trade Development Bank – TDB
6. African Development Bank
7. Southern Africa Power Pool
8. Ethiopian Roads Authority
9. Energy Environment Partnership Africa
10. Infrastructure Concession Regulatory Commission (ICRC)


Source: Infrastructure

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Rwanda to invest US $13m in new primary and secondary schools

The government of Rwanda is set to invest US $13m in construction of new primary and secondary school classrooms, latrines and washrooms among other school facilities.

Rose Baguma, the Director General of Education and Planning in the Ministry of Educationannounced the reports and said the moves comes after the Ministry of Finance increased the budget for the education sector.

Decongestion of schools

The investment is aimed to decongest schools and significantly reduce the distance that the students, especially in rural Rwanda, travel to school. Under the plan, the Government will construct 1,100 classrooms and over 1,000 toilets, increasing the ability of students and teachers to access school facilities.

“This is part of the Government’s campaign to uplift academic standards all over the country. This will ensure that no student travels more than 2km looking for a school,” said Rose Baguma.

The Director General acknowledged that the government”s previous efforts towards uplifiting in education sector. In the 2016/2017 fiscal year, some 416 classrooms and 470 latrines were constructed. The number rose to 1,043 classrooms and 1,344 latrines in the following year before further rising to 1776 classrooms and 1452 latrines in 2018/2019.

Baguma also disclosed that that the World Bank has committed US $200m to the education sector this year. Part of the funding is projected to add some 27,000 extra new classrooms and 3,600 toilets, and therefore bringing the total number of new classrooms to 38,000.

“About 70 % of the project will go towards school infrastructure such as increasing the number of classrooms, equipping them and reducing the number of students so as to decongest classrooms,” said Rose Baguma.


Source: Infrastructure

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Zambia, Botswana to construct railway across Zambezi

Zambia and Botswana have signed a US $259m agreement to construct a 430km long railway to link the two countries across the Kazungula Bridge.

Zambia Railways Ltd and Botswana Railways’ boards resolved during a meeting held in Kasane to facilitate the construction of the lengthy line and a show of cooperation. According to Zambia Railways board chairperson Lubinda Linyama, construction of the project scheduled to begin soon after the 900-metre-long Kazungula bridge is completed and commissioned by June next year.

Mosetse-Kazungula-Livingstone railway

The railway project  dubbed, “Mosetse-Kazungula-Livingstone”, is aimed to reduce transit time and transportation costs for both the people and boost trade trade in the Southern African Development Community (SADC). The actual cost of the project will be established after undertaking a feasibility study.

“The project was proven feasible and as a quicker means of  transporting  goods and passengers in addition to roads to ease transportation problems and once completed will benefit all other countries in the 16-country-member region and bolster trade in real time,” said Mr. Lubinda.

“Zambia is up to date with its financial obligations for the construction of the Kazungula bridge which we are co- financing with Botswana to accelerate its completion,” he added.

Linyama also allayed fears that the bridge would not be complete in due course following rescheduling of the completion timetable but assured that the two countries were determined to ensure the project was completed as planned despite challenges faced in recent months.

“We are determined to undertake this (railway line) project despite the challenges that may arise.” said the board chairperson.


Source: Infrastructure

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Tanzania begins construction of US $1.38bn Rufijii hydropower plant

Tanzania marked the beginning of construction of Rufiji power plant Rufiji Hydropower Project (RHPP) at Stiegler’s Gorge with President John Magufuli laying the foundation stone.

The government officially handed over the area around the 2,115-MW Rufiji hydro project to joint venture contractors Arab Contractors Company and Elsewedy Electric Company. Arab Contractors received a contract to design and construct the dam and power plant in October 2018.

“Today we save the people of Tanzania from shortage of power. Our envisaged industrial economy needs adequate, cheap and reliable power supply through hydrogeneration. This project has stalled for many years. We will build it with our own money,” said President Magufuli.

Rufiji power plant

Construction of the facility will involve building a main dam and appurtenant structures, with expected reservoir length of 100 km, covering an area of about 1,350 square km. The dam height is about 134 meters. The dam will be fourth largest in Africa and ninth in the world.

The power plant which is being built for the Tanzania Electric Supply Company Limited (Tanesco), upon completion will will more than triple the country’s current installed hydropower capacity of 562 MW. The project will cost an estimated US $1.38b and is set to be completed in 2022.

Shadow minister for energy John Mnyika however said the project is costly and will have an adverse economic impact. He said in parliament that construction of the power plant could take nine to 12 years, contrary to the government’s insistence that it is a three-year project. He pointed out that costs are likely to jump from US $1.38 bn to US $9.8bn as a result of cost overruns.


Source: Infrastructure

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Construction of US $180m brewery plant in Mozambique on track

The construction of US $180 million brewery plant in Mozambique is on track despite the late start of the ambitious project by beverage company Cervejas de Moçambique’s (CDM’s). 

The late start and constraints saw geotechnical specialist Franki Africa make efforts to ensure partial handover of the foundations and lateral support to allow the main contractor progress with construction works.

“We have managed to partially handover different areas to allow the main contractor carry on with works smoothly. The design team is working in hand with the client’s engineers are working tirelessly to overcome any arising challenges,” said Botelho.

Brewery plant

CDM, the project owner broke ground last year December for construction of the two million hectolitre brewery in Mozambique’s Marracuene district which is about 30 KM North of Maputo.

The project is one of the largest in the beer sector in Mozambique since the inception of CDM in 1995. The new brewery is scheduled to begin producing its first batch of beer at the end of the year. The plant is expected to produce about 200 million litres of beer annually.

Franki will carry out geotechnical works on the project and will also be responsible for the installation of foundation and lateral support piling for different structures of the brewery, according to the company’s engineer Marta Botelho.

The project’s duration has been extended from five weeks to ten weeks and as a result, the contract value has increased from US $1.5m to US $2.5m owing to additional works required. This is attributed to the late start of the project which has attributed to the project’s stringent timeline.


Source: Infrastructure

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South Africa unveils plans for Gautrain 2 project

South Africa has unveiled plans for the second Gautrain project. Gautrain CEO Jack van der Merwe, revealed the reports while addressing the Southern African Transport Conference.

The CEO said that the agency is set to to construct additional 150km of railway line and another 19 stations to the existing network. Van der Merwe declared that the public-private partnership (PPP) feasibility for the project dubbed Gautrain 2 and which is a strategic infrastructure project in the National Development Plan (NDP) has been finalized and the agency has already presented the report to the national treasury and what remains now is authorization for the project.

Gautrain 2 project

The need for Gautrain 2 according to Jack van der Merwe was triggered by the estimated growth in Gauteng’s population, which is expected to escalate by 48% to 19.1 million people by 2037 (from 12.9 million in 2014).

In addition, the number of workers in the province is estimated to upturn by 44% to 9.2 million by 2037 (from 6.3 million in 2014), which would mean that 18 million people would take home-to-work and work-to-home trips daily.

Jack van der Merwe said that if the South Africa’s president and cabinet allocates money to the NDP and start funding it, South Africans should expect the construction works to commence four years from now. Phase one of the development is projected to begin from Lanseria through Little Falls into Randburg and all the way to Marlboro.

Gautrain 1 has private sector debt of about 12%, with the balance comprising of provincial borrowings and budget allocations through the national government. The agency wishes to increase private sector funding to 33% with Gautrain 2, which if built, will create 210 000 employment opportunities.


Source: Infrastructure

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World’s largest entertainment city to open to the public in 2022

The world’s largest entertainment city which is currently under construction in Al Qidiya, 45 km southwest of Riyadh in Saudi Arabia is set to open to the public in the next 3years.

Construction works on this one of a kind structure featuring sports, cultural and recreational facilities begun in April 2018. The project has been divided into five development nodes; a Resort Core, a City Centre, an Eco Core, a Motion Core, and a Golf and Residential Neighborhood.

Entertainment city

The entertainment city’s design, was made by a consortium that includes Bjarke Ingles Group (BIG), a Denmark-based company after extensive consideration of the natural patterns of site.

The designers agreed that construction shall only cover 30% of the entire land set aside for the project, which is 334 sq. km, leaving the rest of the land for natural conservation. The project is being developed by the Qiddiya Investment Company (QIC) which is fully owned by the Public Investment Fund (PIF) of Saudi Arabia

Phase one of the project which is expected to be complete by 2022, will have six Flags Qiddiya, a family-oriented park filled with rides and attractions distributed throughout six themed lands.

Neighboring this pedestrian-oriented district shall be a major outdoor entertainment venue, capable of accommodating events that can host 5,000 to 40,000 heads in a park-like setting, punctuated with active skating and skiing facilities.

The entertainment city is expected to make a qualitative leap in the Kingdom and support the country’s vision to achieve more prosperity, progress for society and raising the status of the capital Riyadh to the best top 100 cities for living in the world.

It is also expected to contribute into the diversification of the kingdom’s economy away from oil-based sources of revenue while creating job opportunities for Saudi’s young population.


Source: Infrastructure

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