Angel fair Africa 5th Nov 2020

All Female Investors and Entrepreneurs Panel @ 8 th AFA

The 8 th Angel Fair Africa would feature an all female investors and entrepreneurs panel; thus building on our 2016 all female investors panel. The investors pane, consisting of Hannah Subayi, Partner of Dazzle Angels, Evelyne Dioh, CEO of WIC Capital, Lelemba Phiri, Partner of Enygma Ventures and Maya Famodu, CEO of Ingressive Capital, will be moderated by Salimatou Diallo, Partner of SD Avocats.


The entrepreneurs panel, consisting of Magatte Wade CEO of Skin to Skin, Jamila Zomah CEO of Africa Dish Out, Isseu Diop Sakho CEO of Mburu, and Sassoum Niang CMO of InTouch SA, will be moderated by Eva Sow, Director of i4Policy.

“The Africa investment and entrepreneurial ecosystem is maturing to the point where we have strong participation of women across the entire value chain. Our all-female panels are meant to showcase this important development” said Eric Osiakwan, Co-Founder of Angel Fair Africa. This year’s investors panelists are actually some of the most active investors during the pandemic. For example Maya Famodu closed her $10m Seed Fund during the pandemic. Lelemba Phiri, Evelyne Dioh and Hannah Subayi have all made significant investments during the period. Therefore their panel will focus on how they ensured these achievements, and the lessons to be learnt therefrom. The entrepreneurs panel, on the other hand, is made up of those who have defied the pandemic to grow their businesses. For example, Jamila Zomah whose Africa Dish Out saw 44% growth. Isseu Diop Sakho of Mburu who actually got money??? during the pandemic. They would be sharing these stories on their panel.

The lockdown in Africa during the pandemic, created a positive domino effect, where we saw mergers and acquisitions (M&A) picking up pace across the continent. Therefore we are replacing our Exit panel with an M&A panel, Here we have Endre Opdal, CEO of HotelOnline, Dare Okundjou, CEO of MSF Africa, Gregory Rockson and CEO of mPharma sharing their recent M&A activities. This panel will be moderated by Winnie Mwangi, a VC and Impact Investment Professional from Kenya.

These feed into our overall theme of exploring Lucy Quist’s Bold New Normal within the new normal of “doing deals in a virtual environment”, featured on:

5th November 2020 on the platform.

Being a thought leader, as well as the Chief Diversity and Inclusion Officer of Morgan Stanley, Lucy would open the day with her views on how Africa’s Bold New Normal would work within the World’s new normal.The format will be a fireside chat with Ian Ziddah, Partner of Chanzo Capital. Teresa Clarke, Chairman and CEO of will follow with a lunchtime keynote fireside chat on how she exemplified the bold new normal. She left Goldman Sachs in New York, relocated to Johannesburg, South Africa, and proceeded to build from the ground up into a media empire, which last year acquired iAfrica. The day will end with Musi Skosana of MSM Property Fund interviewing Tim Draper of Draper. VC on his bold new normal of investing globally from Silicon Valley into companies like Baidu, Tesla, Hotmail, Skype, etc which all redefined their industries.

Angel Fair Africa is an event that brings together accelerators, incubators and emerging businesses from across the African continent and investors to do deals. is a media holding company with an extensive array of platforms that reach a global audience interested in African content and community.’s interests include a business publisher’s network, content syndication, the website at, email newsletters, various social media platforms, and internet domain names ending with the “” extension. operates from Johannesburg, Lagos, and New York, and has a presence in Cape Town and Nairobi.

Dalberg ( ) is a global group of change makers (entrepreneurs, innovators, designers, creative problem solvers, thinkers and doers) working to build a more inclusive and sustainable world where all people, everywhere, can reach their fullest potential. We partner with and serve communities, governments, and companies throughout the world, providing and innovative mix of services.

Source: Infrastructure


Curtain falls on the African Development Bank 2020 Annual Meetings as Governors endorse President Adesina’s bold development program

Adesina: “I am deeply grateful for the collective trust, strong confidence and support of our shareholders”

ABIDJAN, Ivory Coast, August 28, 2020/APO Group/ — Newly reelected African Development Bank ( President Akinwumi Adesina voiced great optimism about Africa’s future as the institution closed its 55th Annual meetings. The Bank’s Board of Governors today unanimously voted for a second five-year term for Adesina, giving him a mandate to renew a focus on the institution’s priorities, including closer continental integration, boosting renewable energy sources and developing infrastructure.

The election of the president was the centerpiece of the two-day meetings, held virtually for the first time in the Bank’s history amid the ongoing COVID-19 pandemic.

The pandemic formed a backdrop that underscored the Bank’s critical leadership role in assisting African countries to marshal responses to its health and economic impacts. A wider commitment to grow Africa’s resilience by building back its economies post-pandemic with an eye to mitigating climate change and assuring more equitable growth, is also an important agenda for the Bank.

In a 16-point communique, Governors lauded the Bank’s swift response to the pandemic, endorsed its strategic priorities, and urged greater emphasis on building out primary healthcare infrastructure and supporting member countries meet their Paris Agreement commitments.

“We urge the Bank Group to deepen its collaboration with the African Union and the Regional Economic Communities (RECs) to fast-track Africa’s integration and economic and social transformation particularly in view of the implementation of the African Continental Free Trade Area, which has the potential to increase growth, enhance competitiveness, improve the business climate, as well as ensure greater investment and development of regional and continental global value chains,” the communique stated.

In closing remarks, Chairperson of the Board of Governors, Niale Kaba, the Ivorian Minister of National Planning, noted the Governors achieved consensus.

“I note with satisfaction that we were able together to face up to all of these challenges. Let me seize this opportunity to tell you this was the outcome of collective work and I was able to benefit from the wise advice of many regional and non-regional governors for us to be able to reach a common ground.”

Kaba also observed that the meeting’s virtual format had deprived Cote d’Ivoire of the opportunity to showcase its beauty to visitors. The Minister, whose term as Chairperson has come to an end, commended Bank Secretary General Vincent Nhemielle for his partnership and dynamism in organizing the meetings virtually.

She also congratulated Adesina on his re-election. He is the Bank’s eighth elected president and the first Nigerian to hold the post.

“I am deeply grateful for the collective trust, strong confidence and support of our shareholders for electing me for a second term as President,” Adesina said. “It is yet another call for selfless service to Africa and the African Development Bank, to which I will passionately devote myself. “I look forward to working closely with each and every one of you for the urgent and difficult task of supporting Africa to build back better, smarter and boldly from the COVID-19 pandemic.”

Adesina’s first term focused on the High 5 priorities: Light up and Power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the People of Africa.

Bank Governors are typically the finance and economy ministers or Central Bank Governors of the 54 African regional member countries and 27 non-regional member countries.

Ghana’s Foreign Minister Kenneth Ofori-Atta assumed the Chairmanship of the Board of Governors from Niale. “It is with great honor and humility that I accept on behalf of the Republic of Ghana to chair the Board of Governors and host the Annual Meetings for 2021,” Ofori-Atta said.

The 2021 Annual meetings will be held next May in Accra, Ghana.

Distributed by APO Group on behalf of African Development Bank Group (AfDB).

Media Contact:
Olufemi Terry
Senior Editor
Communication and External Relations Department

About the African Development Bank Group:
The African Development Bank Group ( is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 41 African countries with an external office in Japan, the Bank contributes to the economic development and the social progress of its 54 regional member states. For more information:

Source: Infrastructure


Dr. Akinwumi Adesina re-elected as President of the African Development Bank Group

The election took place on the final day of the 2020 Annual Meetings of the African Development Bank Group

ABIDJAN, Ivory Coast, August 27, 2020/APO Group/ — Dr. Akinwumi A. Adesina has been re-elected to serve a second fiveyear term as President of the African Development Bank Group ( on Thursday, August 27, 2020 by the Board of Governors of the Bank.

A globally renowned development economist and a World Food Prize Laureate and Sunhak Peace Prize Laureate, Dr. Adesina has distinguished himself in driving a bold agenda to reform the Bank and accelerate Africa’s development. He was first elected as President of the Bank on May 28, 2015.

As newly re-elected President, Dr Adesina, a former Nigerian Minister of Agriculture, will begin his new term on September 1, 2020.

The election result, which gave him a hundred percent of votes of all regional and non-regional members of the Bank, was announced by the Chairperson of the Board of Governors of the Bank, Mrs. Niale Kaba, Minister of National Planning of Côte d’Ivoire.

The election took place on the final day of the 2020 Annual Meetings of the African Development Bank Group, which was held virtually for the first time in the Bank’s history.

Minister Niale Kaba, said, “I am delighted that the Board of Governors have re-elected Dr. Adesina for a second term in office as President. As shareholders, we strongly support the Bank and will give him all the necessary support to carry forward and implement his compelling vision for the Bank over the next five years.”

Adesina’s first term focused on the bold new agenda for the Bank Group based on five development priorities known as the High 5s: Light up and Power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the People of Africa.

During Adesina’s first term, the Bank achieved impactful results on the lives of 335 million Africans, including: 18 million people with access to electricity; 141 million people benefiting from improved agricultural technologies for food security; 15 million people benefiting from access to finance from private investments; 101 million people provided with access to improved transport; and 60 million people gaining access to water and sanitation.

The Bank has maintained its AAA-ratings by all major global credit rating agencies for five years in a row. The Board of Governors of the Bank Group approved a 125% increase in the General Capital of the Bank, raising its capital from $93 billion to $208 billion, the largest in the history of the Bank.

The African Development Fund received a $7.6 billion pledge from donors, a 32% increase, for support to lowincome countries and fragile states. The Bank was ranked the 4th most transparent institution globally by Publish What You Fund, bolstering its strong governance credentials for transparency and accountability.

Under Adesina’s leadership, the African Development Bank’s Board of Directors approved a $10 billion facility to support African countries to address the COVID-19 pandemic. The Bank also launched a $3 billion COVID-19 social bond on the global capital markets, the highest US dollar denominated social bond ever in world history, which is listed on the London Stock Exchange, Luxembourg Stock Exchange and NASDAQ.

Adesina said, “I am deeply grateful for the collective trust, strong confidence and support of our shareholders for electing me for a second term as President. It is yet another call for selfless service to Africa and the African Development Bank, to which I will passionately devote myself.”

The African Development Bank is Africa’s premier development finance institution, comprising 54 regional and 27 non-regional member countries.

“The future beckons us for a more developed Africa and a much stronger and resilient African Development Bank Group. We will build on the strong foundations of success in the past five years, while further strengthening the institution, for greater effectiveness and impacts,” Adesina said.

Distributed by APO Group on behalf of African Development Bank Group (AfDB).

Media Contact:
Nafissatou Diouf
Ag Director
Communication and External Relations Department
African Development Bank

About the African Development Bank Group:
The African Development Bank Group ( is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 41 African countries with an external office in Japan, the Bank contributes to the economic development and the social progress of its 54 regional member states. For more information:

Source: Infrastructure


South Africa’s Infrastructure Fund is here, minus corruption vows National Treasury

South Africa’s R100bn (about $5.8bn) Infrastructure Fund is here, but there will no repeat of the large-scale corruption witnessed in 2010, says National Treasury director-general Dondo Mogajane.

“We will ensure that [which] we had seen during the construction of the 2010 infrastructure roll-out does not happen. We’ve got lessons we’ve learnt from what we picked up when we rolled out the 2010 infrastructure,” says Mogajane.

The National Treasury, the Development Bank of Southern Africa (DBSA) and the newly established Infrastructure South Africa have partnered to make the Infrastructure Fund a reality.

This is two years after President Cyril Ramaphosa announced an Infrastructure Fund.

Once fully up and running, the fund will be used as gap funding for infrastructure investments, according to the parties. The National Treasury, DBSA and Infrastructure South Africa have entered into a memorandum of agreement, outlining each entity’s roles and responsibilities.

The support from the Infrastructure Fund will include blended co-funding, capital subsidies, as well as interest rate subsidies and government guarantees. The government has earmarked R100bn over 10 years, with the first R10bn provisioned in the February national budget.

“The R10bn is there, we didn’t touch it,” says Mogajane. That is despite considerable pressures on the fiscus arising from the COVID-19 crisis, which necessitated a reprioritisation of government spending.

Public procurement and the riddle of corruption

In the build-up to the 2010 Soccer World Cup, South Africa experienced an infrastructure boom, aided by the construction of stadiums and associated facilities.

However, that was marred by endemic corruption which resulted in major construction companies incurring massive fines for collusive pricing and tendering.

In recent weeks, National Treasury tightened emergency procurement regulations to stem the occurrence of widespread corruption. The initial regulations were intended to speed up the procurement of personal protective equipment (PPE) and make the process less onerous.

READ MORE South Africa VS Coronavirus: Public finances looking prickly

But the PPE procurement process has been mired in controversy. President Ramaphosa’s spokesperson is currently on a leave of absence following revelations her husband might have allegedly irregularly benefited from a PPE tender. The National Treasury and DBSA have moved to dispel perceptions that the Infrastructure Fund will fall foul of governance.

Maximum vigilance

“… As custodians of public finance, we will ensure that we are like eagles and hawks on top of the funds,” assures the National Treasury director-general, pointing out that, “we’ve got procurement rules in place, and we will be strengthening them.” The Infrastructure Fund process should be transparent, fair and competitive, adds the National Treasury’s most senior official.

“We are not going to accept – whether it’s the corruptor or the corruptee – … into this space,” insists Mogajane. The National Treasury will facilitate funding requirements through the budget process and finance 50% of the Infrastructure Fund’s running costs.

But why the two-year delay? “Unfortunately, [there has been] … no proper pipeline of projects,” explains Mogajane. Now, however, there are 55 projects – and others with potential.

READ MORE Social infrastructure investment, a development priority in Africa

“I couldn’t agree more with Mr Mogajane on the corruption … [and] making sure our procurement is in no way compromised,” says Patrick Dlamini, the DBSA CEO. “We want this thing to work. We are not going to disappoint you on this one.”

Infrastructure pathway to greener future

Dlamini explains there is a lot of funding becoming available from international bodies, which will be able to come in and blend finance. Crucially, this funding will come on stream during the early stages in the form of risk capital.

Dlamini envisages that brownfield projects, greenfield projects, sustainable development and green energy will form part of the infrastructure mix. “We will see all manner of projects talking to the sustainable development of this country,” says the DBSA CEO.

A key consideration will be how projects will contribute to South Africa’s low carbon trajectory. “We are one of the signatories to the United Nations. How do we [then] drive the ambition of the Paris Accord,” says Dlamini.

Some of the answers lie in sustainable infrastructure development. Kgosientso Ramokgopa, the Infrastructure South Africa CEO, said: “The fund is an instrument. There is a robust exercise in terms of prioritising and packaging projects.”

By Xolisa Phillip, in Johannesburg

Source: Infrastructure


$39b Nigerian infrastructure company gets green light

The Central Bank of Nigeria (CBN) has received approval to create an infrastructure development company that would finance the revamp of critical transport infrastructure throughout the country.

The company would leverage local and international funding, and would be co-owned by the CBN, African Finance Corp., and Nigerian Sovereign Wealth Investment Authority. It would be exclusively managed by an independent infrastructure fund manager.

The company would initially inject $39 billion in Nigeria over five years.



Nigeria gets green light for infrastructure development company

The Nigerian government has been granted approval to establish a 15 trillion naira ($39.5 billion) infrastructure development company with the country’s sovereign wealth fund.

InfraCo PLC will be co-owned by the government, the Nigeria Sovereign Investment Authority, Abuja, which has 649.8 billion naira in assets, and the Africa Finance Corp. The AFC is a banking institution that funds and develops projects in sectors including power, transportation and logistics and natural resources.

The approval was noted in a news release detailing the outcome of the bank’s monetary policy committee meeting held on July 20 and published last week.

The company will leverage local and international funds to rebuild critical infrastructure across Nigeria, the release said. Assets will be managed by an independent infrastructure manager “that will mobilize local and foreign capital to support the federal government in building the transport infrastructure required to move agriculture and other products to processors, raw materials to factories, and finished goods to markets,” the release added.

Details on when a manager will be appointed were not available.

The 15 trillion naira in assets are expected to cover an initial five-year period.

Spokesmen could not immediately be reached for comment.


DHL’s Saloodo! partners AfricaPLC to grow intra-African and global trade

Saloodo! will be the first logistics partner to provide digital road freight solutions on the AfricaPLC e-trade marketplace

AfricaPLC assists to digitize African SMEs, so they can participate in
and support the African Continental Free Trade Area (AfCFTA)
 The partnership expects to expand across the continent by early 2021
Johannesburg, South Africa – Digital road freight platform Saloodo!, a
subsidiary of DHL Global Forwarding, has signed an Memorandum of
Understanding (MOU) to be the first logistics provider to offer digital road
freight solutions on AfricaPLC, an innovative industrial eCommerce
Marketplace and FinTech platform, managed by the Africa Investor (Ai).
Ai is an institutional investment holding platform that vets and promotes
infrastructure, private equity and technology investment opportunities in
The partnership will address some of the biggest obstacles facing
businesses seeking to expand across Africa and global markets, such as
access to trade opportunities, sourcing of credible partners, trade finance
and reliable logistics solutions. Saloodo!, backed by DHL, the world’s
leading logistics player, will inject greater transparency and efficiency by
enabling shippers – from small enterprises and start-ups to large
multinational groups – to find trusted and reliable freight carriers across
Tobias Maier, CEO of Saloodo! Middle East and Africa said, “Our
partnership with AfricaPLC is an exciting opportunity for Saloodo! to
showcase our intuitive digital platform that will offer shippers and
transport providers a single, simple, reliable interface to optimise costs,
routes, cargo and transit times. Road freight continues to form the
backbone of Africa’s logistics industry and I’m convinced that our digital
solution will further its progress as the economy recovers.”

According to the World Bank, intra-African trade is one of the best
solutions Africa has to eradicating challenges such as poverty and
hunger. Intra-African trade not only provides for solutions and
opportunities for businesses to grow, but also expands the African
economy through diversification and inclusion. Initiatives such as the
African Continental Free Trade Area Agreement (AfCFTA) will speed up
economic growth and digitalization can be the impetus to accelerate this
“AfricaPLC is committed to supporting the growth of any organisation,
particularly SME’s, through the African Continental Free Trade Area
(AfCFTA) and globalising African e-trade ecosystems,” said Hubert
Danso, Chairman, AfricaPLC. “By partnering with Saloodo!, our SME,
Corporate, Public Sector and Trade Finance customers can be assured
that fulfilment is carried out by a reliable and compliant provider, who can
provide full visibility and transparency throughout the shipping process.
This allows our partners to channel resources on further growing their
business intra-Africa and to global markets and efficiently managing their
budgets and supply chain networks.”
In the current Covid-19 pandemic for example, AfricaPLC has been
supporting its public and private sector partners to facilitate the trade and
transport of critical Personal Protective Equipment (PPE) across the
African continent.
“Since our entry into South Africa last year, Saloodo! has successfully
expanded to the rest of the continent and is perfectly positioned to further
push the envelope of digitalisation to improve the state of logistics
services in Africa,” added Maier. “The demand for digital transformation
will be driven by emerging markets globally and this crucial partnership
with AfricaPLC will allow us to explore solutions that will help boost
economic activity on the continent through logistics services and
encourage intra-Africa trade.”

Media Contact:
Account Director
Lydia Luvhengo
TEL: +2787 255 1396
MOB: +2773 526 1163
DHL Asia Pacific & EEMEA
Corporate Communications, Sustainability and Brand
Jenny Yeo / Fiona Teo
Tel: +65 6879 8332 / +65 6879 8333

Press contact
Wendy Edwards
Tel: +27 11 7832431
E-mail: wedwards

About Saloodo!
Saloodo! combines the best of two worlds: The digital freight platform,
founded by Deutsche Post DHL Group in 2016, combines the logistics
expertise and infrastructure of a global player with the flexibility and digital
skills of a start-up. Saloodo! simplifies the day-to-day processes of
shippers and hauliers with a powerful end-to-end, digital solution for
commissioning and handling shipments. This maximizes the transparency
and efficiency of the entire transport process.
By offering the free choice of a neutral online marketplace and the
security and convenience of a digital freight forwarder, Saloodo! is the
answer to the progressive digitization in the highly fragmented transport
DHL – The logistics company for the world
DHL is the leading global brand in the logistics industry. Our DHL
divisions offer an unrivalled portfolio of logistics services ranging from
national and international parcel delivery, e-commerce shipping and
fulfilment solutions, international express, road, air and ocean transport to
industrial supply chain management. With about 380,000 employees in
more than 220 countries and territories worldwide, DHL connects people
and businesses securely and reliably, enabling global sustainable trade
flows. With specialized solutions for growth markets and industries

including technology, life sciences and healthcare, engineering,
manufacturing & energy, auto-mobility and retail, DHL is decisively
positioned as “The logistics company for the world”.
DHL is part of Deutsche Post DHL Group. The Group generated
revenues of more than 63 billion euros in 2019. With sustainable business
practices and a commitment to society and the environment, the Group
makes a positive contribution to the world. Deutsche Post DHL Group
aims to achieve zero-emissions logistics by 2050.
About Africa PLC – Globalizing Africa eTrade
AfricaPLC is an innovative, B2B and B2G multi-sector, industrial
eCommerce Marketplace and FinTech platform, focused on improving
intra-African trade flows, cross border payments, supply chain
transparency, logistics and access to trade intelligence and global
AfricaPLC provides, secure and easy to use transaction platforms and is
continuously innovating blockchain and RegTech trade enabling
solutions, to assist facilitate our clients and partners digitally originate,
transact, track and settle B2B and B2G transactions across the African
continent and worldwide.
AfricaPLC is committed to connecting the African Continental Free Trade
Area (AfCFTA) with global markets, by simplifying cross-border trade and
procurement transactions for SMEs, large businesses, financial
institutions and African governments.

Source: Infrastructure


African Asset Owners Co-investment Partnerships 27 August, 2020

Africa investor (Ai) partners Bloomberg African Asset Owner Series

Africa investor (Ai) partners Bloomberg and The Continental Business Network (CBN) on first ever African Asset Owner Series on Co-investment Partnerships.

This inaugural event in the series, will feature two panels focused on the African Union’s 5% Infrastructure Investment Agenda and global co-investment partnerships in support of the African Union’s Agenda 2063.

The African Asset Owners Series is designed to connect senior leaders and analysts from across the globe to explore the changing dynamic of asset owner investment on the African continent. This is the first of three virtual events taking place throughout 2020.

To register for the event go to: CLICK HERE >>

Source: Infrastructure


Ai Supports African Infrastructure Investment Trusts Initiative

A defined solution to the infrastructure financing gap – Infrastructure Investment Trusts (IIT)

Africa investor (Ai) partners African Capital Market leaders and the Global Listed Infrastructure Organisation (GLIO) on Africa’s first Infrastructure Investment Trusts (IIT) initiative – as recommended in the recent G20-OECD Infrastructure Working Group Report.


Source: Infrastructure


China’s Infrastructure-Heavy Model for African Growth Is Failing

In Ethiopia and Kenya, the attractive illusion of the “China model” has had grave financial consequences.

The strategy of “infrastructure-led growth” (growth, not economic and social development) seems to be showing its limits in Africa, where China has largely been instrumental in promoting it.

This strategy is based on the Keynesian multiplier theory whereby any increase in aggregate demand would result in a more than proportional increase in GDP. In other words, any investment in infrastructure would induce growth, regardless of its true economic and social profitability. The implementation of this theory greatly explains why China has been able to maintain very high growth figures over the last 15 years. Whether or not infrastructure investment is redundant, whether it takes place in China or abroad, the result for China is the same. Thus, by financing African infrastructure investment, China is causing an increase in demand for the goods and services it produces and thus an increase in its own GDP. This is the virtue to systematically tying the granting of a loan with an almost exclusive sourcing of goods and services produced in China. It should be remembered that this tying practice is normally banned for OECD/DAC members (which do not include China) and that only France and the United Kingdom would actually comply with this rule.

This infrastructure-led strategy has been prescribed in Africa by the World Bank and supported since 2008 by its former chief economist, Lin Yifu (Justin Lin, who since the end of his mandate has become a very active lobbyist for Chinese companies in Africa through his own think tank). However, the least favored African countries — Ethiopia will serve as an example here — do not enjoy an economic environment as favorable as that of China. Admittedly, over the last 10 years (2000-2019), as a result of the Keynesian multiplier, the average annual growth rate of Ethiopian GDP has been around 6 percent. This remarkable growth was coupled with an equally striking increase in imports, largely to support infrastructure investment. However, over the same period, neither the growth of exports (17 percent growth in 2019), nor that of personal remittances, foreign exchange reserves, or even foreign investment can fill a growing financing gap. At the same time, the external debt service (almost half of which will be for China alone in 2019) is soaring in the country’s finances. Ethiopia was forced to devalue its currency, the birr by 15 percent in 2017.

Both the first Growth and Transformation Plan (2009/10-2014/15) and the second (2015/16-2019/20) were based on the idea that investment in infrastructure (in particular the Addis Ababa-Djibouti railway line and electrification) would attract foreign investors to special economic zones where production would be generated for export, which should have made the infrastructure profitable. However, apart from aberrant timing (a Chinese loan initially for 15 years, then rescheduled over 30 years, for railway infrastructure that needs 50 to 75 years to be amortized), this strategy has shown its limits, which are highlighted by the rather pathetic performance of the footwear sector, despite its promotion to the status of a herald of Ethiopian industrialization and Sino-Ethiopian cooperation.

Lin Yifu’s first trip when he was appointed chief economist of the World Bank was to Ethiopia the very day after his appointment in June 2008. In March 2011, again in his capacity as World Bank representative, he reportedly recommended to Ethiopian Prime Minister Meles Zenawi the setting up a special economic zone and making specific use of Chinese companies. Lin also suggested that Meles develop the footwear industry with the skins produced in abundance by Ethiopian cattle, sheep, goat and camelid farms, and he encouraged the prime minister to visit manufacturers in this sector in China. In August 2011, taking part in the opening ceremony of the Summer Universiade held that year in Shenzhen, Meles met Zhang Huarong, a shoe manufacturer, whom he invited to Ethiopia. The following month Zhang flew to Ethiopia for a week, where he found that the wages were only a tenth of those paid in China and that the skins available are of good quality. In November, the Huajian International Shoe City (Ethiopia) was born, with the first pair of Guess shoes coming off the lines the following May.

Today, for Huajian and the other shoemakers, hopes seem to have been partly dashed. Demand has increased, the quality of the hides has been affected, strikes have broken out, some of Huajian’s renowned customers have decided to change suppliers, and the railway line between Addis Ababa and the port of Djibouti — through which exports must pass — is barely operational because of a lack of electricity. In spite of these pitfalls, exports tripled since the arrival of Huajian, but in 2018 they accounted for just over 1 percent of total Ethiopian exports; their economic impact is therefore minimal and they cannot be relied on to amortize infrastructure investments.

Much more impressive, in contrast, is the simultaneous soaring of footwear imports, almost 90 percent of which are Chinese: four times the amount of exports in 2018! While Chinese shoe manufacturers have set up shop in Ethiopia, where they are having difficulty exporting their production, none of them seem to be thinking of manufacturing shoes for the local market. Neither did the Ethiopian government, which should have seen this as an opportunity to implement an import substitution strategy. This classic approach, once adopted by the small Asian dragons to develop, has one advantage: it limits investments in infrastructure, or at least develops them not in anticipation of possible demand, which is all the more uncertain because it is external, but after domestic demand has actually emerged. This brings us back to the question of the railway line.

The IMF, in a report on Ethiopia issued in early 2020, now acknowledges the limits of this “public investment-driven growth model.” Perhaps it would have been better to question the relevance of the choices from the outset. No doubt it would have been wise for the Chinese advisers and the Exim Bank of China to have initially checked the profitability of a railway project (or even its actual feasibility) before financing it. Yet the parties involved powerfully encouraged Ethiopia (and also Djibouti) to choose a solution that was certainly splendid – and a perfect showcase for Chinese technologies — but absurdly expensive for very poor countries in view of its very limited profitability. Ethiopia is now classified as a country at high risk of financial distress.

But then again, how could Lin Yifu, the World Bank, and the Exim Bank have conceived, supported, and financed such a railway project without considering that Ethiopia would eventually reconnect with neighboring states and thus be able to challenge the de facto monopoly that the port of Djibouti enjoys over Ethiopian exports? In March 2019, Ethiopia announced that it would build a new road to Berbera with the support of the Abu Dhabi Development Fund and DP World, which is developing the Berbera Port. However, as early as 2015, the African Development Bank was concerned about the consequences of this competition and construction for Djibouti’s future. In June 2019, Ethiopia also announced that it was building a railway line between Addis Ababa and Port Sudan with the support of the African Development Bank and the New Partnership for Africa’s Development (NEPAD). Also in 2019, it was reported that a new railway between Addis Ababa and the port of Massawa in Eritrea (as long as the railway line between Addis Ababa and Djibouti) was planned, the study of which is being financed by Italy. Finally, while Ethiopia and Djibouti have gone into financial distress over the Chinese railway line, Addis Ababa has secured an African Development Bank injection of $98 million for the development of the Ethiopia-Djibouti road corridor, through which 90 percent of Ethiopia’s imports and exports still pass today. In short, not only does Ethiopia produce neither enough electricity nor enough goods to power its magnificent but ruinous railway line, but it also plans to finance three routes to competing destinations at the expense of Djibouti’s ports and terminals. It is clear that neither Lin Yifu, the World Bank, nor the Exim Bank were able to effectively advise Ethiopia, as the initial project failed both to take into account the likely evolution of Ethiopia’s geopolitical situation and to accurately assess the country’s economic potential.

Although the details are different, the story of the construction of the railway line between Mombasa and Nairobi (entrusted to a Chinese company and financed by Exim Bank) is similar. When the Kenyan government came up with the idea of upgrading this line, building a brand new standard gauge railway was not considered an economically sound strategy. In August 2013, a cost-benefit analysis described four alternatives. The first was a plan to rehabilitate the existing metric gauge network; the second was to upgrade the existing network to a higher standard using the same gauge; the third considered upgrading the existing network to a standard gauge system on the same network; and the fourth proposed building a standard gauge railway on a new line (the option ultimately chosen by Kenya).

The comparative analysis of investment costs and expected benefits then concluded that a new standard gauge railway would require three times as much growth to be financially viable. Although a renovated metric gauge network would have been the most appropriate option in economic and financial terms, the government justified its final decision by saying it was confident that GDP growth would be high.

Debt distressed African countries certainly bear responsibility for their own debt, but China and the World Bank, which have lulled and fed their illusions with the success of the “Chinese model” without putting its implications and transferability into perspective, also bear a very large part of it, if not perhaps the main part. The strategy of infrastructure-led and Chinese-financed growth has clearly shown its limits, as it has too often failed to assess the relevance and profitability of the projects it promoted.

This article is presented by Diplomat Risk IntelligenceThe Diplomat’s consulting and analysis division. Learn more here
By Thierry Pairault
July 30, 2020

Source: Infrastructure

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