NEWSLETTER 01 – 14 JULY 2013

Power Africa, Obama's Plan to Electrify Africa

On a visit to South Africa, Barack Obama has announced a US$ 7 billion plan, aiming at facilitating access to electricity in Sub-Saharan Africa.

"Doubling access to electricity in Sub-Saharan Africa." This is the goal set by the U.S. President Barack Obama in a speech at the University of Cape Town (UCT), on Sunday, June 30. In South Africa, which is the second stage of his African tour, the U.S. President announced a five-year US$ 7 billion plan five, called "Power Africa." This is to meet the huge energy needs of a growing continent, but whose development and investments are hampered by chronic power deficits.

"Accessing electricity is fundamental to seize the opportunities of this world. It’s the light that allows the child to study, the energy that allows ideas to be turned into big businesses," Obama said. Electrification "is insurance for families to meet their needs, but also the key to connect Africa to the world economy," he added.

Huge potential

"More than two thirds of the sub-Saharan Africa population lives without electricity and more than 85% of the rural population do not have access to. Power Africa will build on the huge energy potential of Africa, including new discoveries of large oil and gas reserves, and the potential development of clean energy, as well as geothermal, hydro, wind and solar energies", the White House mentioned in a communiqué.

The U.S. plan would "help countries to develop responsibly newly discovered resources, build power plants and power lines, and expand mini-grid and off-grid systems." Although this initiative was announced in South Africa, the country is not included in the Power Africa plan, even though it barely produces enough electricity to meet its needs. The United States will first work with Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania, being countries affected by frequent power cuts, but which are "ambitious" about the development of the power generation sector.

10,000 megawatts

The United States stated it would provide those countries with an extra 10,000 megawatts of "cleaner" electricity, which would benefit 20 million homes and businesses. According to the White House, the U.S. initiative will involve several government agencies and private companies, with the goal of eventually raising US$ 9 billion in private investment over the life span of the project. The U.S. giant firm General Electric will particularly ensure that Ghana and Tanzania produce additional 5,000 megawatts over five years.

The African Development Bank (ADB) declared it was to be part of the initiative. Over the last five years, the Pan-African institution has committed US$ 1.63 billion to finance energy-related projects in the six beneficiary countries.

On the other hand, Heirs Holdings, an investment company of the Nigerian businessman Tony Elumelu, has announced its intention to contribute up to US$ 2.5 billion for the Power Africa project.

"New Pattern"

The African tour was an opportunity for Barack Obama to take up again with a continent he is accused of negligence towards during his first term. The low commitment of the President of Kenyan origin was disappointing, compared with Bill Clinton’s, the originator of the African Growth and Opportunity Act (AGOA), allowing tax-free and privileged access for African exports to the U.S. market, or George W. Bush’s, who had strongly supported the fight against AIDS in Africa. In Johannesburg and Dakar, Barack Obama has shown a willingness to develop a "new pattern" of partnership between Africa and America. "A partnership that goes beyond mere assistance, and focuses on the capacity of Africa to solve its problems and grow", he promised.

Far behind China

This "new phase" of the U.S. approach to Africa is encouraged by the growing interest of U.S. domestic enterprises with growth prospects on a continent where the opportunities are accelerating. U.S. exports to 49 African countries amounted to US$ 21 billion in 2011, an increase of 23% according to the U.S. Trade Representative Bureau, quoted by Bloomberg. U.S. imports from Africa, meanwhile, jumped by 14%, with a total of US$ 74 billion in 2010, including US$ 60 billion of crude oil.

The United States remains behind China in Africa, which has significantly increased its presence and influence in recent years. The level of Sino-African trade is now twice as large as the African-American trade. A delay may be difficult to catch up without a real strategic reorientation.

Source: translated from the article “ Power Africa, le plan d'Obama pour électrifier l'Afrique", Jeune Afrique Economie www.economie.jeuneafrique.com

 

Trade between Cameroon and US Hit XAF 250 Billion Last Year – U.S. Ambassador

 

Trade between Cameroon and the United States amounted to XAF 250 billion in 2012, according to the U.S. Ambassador to Cameroon, Robert P. Jackson.

The American diplomat reviewed the bilateral cooperation between his country and Cameroon on July 2, 2013, in Douala at the ceremony to celebrate the 237th anniversary of American Independence commemorated every 4th July of the year, Mutations said on Friday, July 5, 2013.

For Robert P. Jackson, relations between the two countries have been strengthened since 2000, with the advent of the Act on Growth and Opportunity in Africa (AGOA).

Source: Business in Cameroon www.businessincameroon.com

 

Cameroon: a British Investment Fund Interested in AES Sonel

According to various sources, the British investment fund Actis is interested in 56% of the U.S. share of the national electricity company

AES might be seeking to sell off its 56% share of AES Sonel Cameroon. According to reports, two buyers were on the starting line. The British investment Fund Actis, familiar with energy infrastructure in Africa, and the Pan-African Washington-based Fund Emerging

Capital Partners (ECP), via Finagestion, a former subsidiary of Bouygues dedicated to electricity and water. The national daily newspaper revealed that so far, the case has evolved according to information drawn from a reliable source, the project presented by the British investment fund Actis is the most relevant. AES has been the electricity distributor in Cameroon since the privatization of Sonel in July 2001. Since then, Cameroon has been owning a 44% stake in the power company. This potential buyer of the American company was recently in the country for the usual checks, we were told by the national daily newspaper. These Actis officials had discussions with AES Sonel officials in Douala and in Yaounde. For now, nothing is official on the possible departure of AES Sonel in Cameroon or the arrival of Actis group.

However, it is known Actis was established in 2004 after spinning the CDC, the development branch of the United Kingdom, founded in 1948 to invest in the Commonwealth. Actis is used to major operations. In 2007, for example, it acquired Alexander Forbes for more than 800 million Euros, and in 2008, Alstom South Africa (today Actom) for 500 million. Investments in Africa were previously located in Rwanda (Banque Commerciale du Rwanda), Ivory Coast (Azito), Ghana (Accra Mall), South Africa, among others.

Source: translated from the article “Cameroun: Aes-Sonel intéresse les Britanniques", Journal Du Cameroun www.journalducameroun.com

 

 

ADB Grants US$ 450 Million to Cameroon

The African Development Bank (ADB) has reserved a portfolio of XAF 230 billion to Cameroon, 55% of which will be used solely for the construction of road infrastructures.

According to a representative of the African Development Bank (ADB) to Cameroon, cited by the African Press Agency (APA), the Pan-African institution has reserved a portfolio of XAF 230 billion (US$ 450 million) to Cameroon, 55% of which applied solely to the construction of road infrastructures. ADB seeks to promote a better flow of people and goods. "We also support the Government in terms of building infrastructures and developing domestic and international road network. Similarly, we provide support in terms of rural infrastructures", Racine Kane, Resident Representative of the ADB, said, quoted by APA.

Interconnection

The ADB funding will ensure a better interconnection of Cameroon with the countries of the Economic and Monetary Community of Central Africa (CEMAC). It is, among other things, Douala-Bangui and Douala-Ndjamena, which should encourage traffic between Cameroon and Chad on the one hand and the Central African Republic on the other hand. These two neighboring countries have no coastline and achieve more than 80% of their trade from Cameroon.

Source: translated from the article “ La BAD accorde 450 millions de dollars au Cameroun ", Jeune Afrique Economie www.economie.jeuneafrique.com

Gov’t, World Bank Restructure Value Chain Project

An emergency plan to make the project visible and augment credit consumption is underway.

The government of Cameroon and the World Bank Group are in the process of restructuring the over US$ 30 million (about XAF 15.3 billion) value chain project which they are jointly funding to render Cameroon’s economy more competitive. The project in the wood and tourism sectors is part of a wide-range of programmes which also include the US$ 26 million (about XAF 13.3 billion) Central African Backbone project to boost telecommunications in the country and agriculture with the agricultural competitive support programme (PACA).

The funding is through loans via the World Bank’s International Development Association (IDA) established in 1960, through which help is given to the world’s poorest countries by providing loans and grants for projects and programmes that boost economic growth, reduce poverty, and improve poor people’s lives.

According to the National Coordinator of the value chain project, Soua Ntyam Evelyne Françoise, the results obtained so far are not satisfactory and so there is need to review the project to attain desired objectives. This mostly concerns the wood and tourism sectors. With its 20 million hectares of forest, Cameroon is reportedly second to the Democratic Republic of Congo and counts well over 300 wood species in its thick and vast forests. A government-World Bank project drafted to solve the problem of local processing that has kept the sector at infancy is said to be suffering from some organisational lapses. The same problem holds for the tourism sector where the country also disposes unmatched potentials.

Stakeholders say there is need to carry out in-depth feasibility studies on the projects as well as take into consideration the timeframe needed in the public contracts code to draft a project; launch calls for tenders, award the contract and get the project implemented. Certainly with evolutions, a lot has to be readjusted in the project plan and a new execution calendar established by the two parties so that the projects do not perish or hurriedly executed as not to meet the aspirations of the donors and the needs of the targeted population.

Restructuring documents are said to have been prepared by government and are being studied by the technical authorities of the World Bank before forwarding to the Board of Directors for appraisal and final decision. The emergency activity plan would accelerate the putting in place of the project, make visible its fruit and improve credit consumption, all hitches that have been identified for slowing the project thus far. Source: Cameroon Tribune www.cameroon-tribune.cm “We Are Waiting For an Agreement with Cameroon”

In the following interview, Lu Fuqing, Chief Executive Officer, Cameroon First Automobile Manufacture CO., Ltd, explains what the project consists of, evaluates its state of advancement and what is left to take the much heralded project off the ground.

What does the Cameroon First Automobile Manufacture CO., Ltd project consist of?

It is working with the government of Cameroon to build a whole supply chain automobile industry in the country. Also, through the project, we will build technical schools through which our technology would be transferred to Cameroonians. For the start, the parts will be fabricated in China and the vehicles assembled in Cameroon. Gradually, we will guide Chinese auto-part manufacturing factories to also locate here in Cameroon to produce the parts on the spot.

In central Africa, Cameroon is a country with a stable political environment and a relative economic environment and the project seeks to grasp the opportunity of rapid economic growth of Cameroon and to jointly build Cameroon’s First Automobile Factory with the government. The location will be in Kribi and the project will boost employment and accelerate economic growth. Our target market is first middle Africa and then West, South and East Africa in the future. Our studies show that over 90 per cent of automobiles in the country are imported second-hand, which means safety by driving cannot be guaranteed. Also, it causes air pollution and more fuel is consumed. We want to produce cars that are adaptable to the context and environment of the country.

What has been happening from the time you met the Head of State last year till date?

All along, we have been carrying out preparations for the project. We have been carrying out analysis and research. For example, what kind of product is better preferred in Cameroon and what kind of technical support should be made and also how much the selling price would be better for the population. Yaounde is a hilly city and so the break and clutch should be very strong. Douala and Kribi are near the sea and the air is full of sea contents. So, the painting must be special for long-term use.

Have you come up with a brand that will be produced in Cameroon?

A local brand of Cameroon (Star of Africa) will be used and the technology of “Brilliance Auto China” will be on the body of the product. We have already signed a Memorandum of Understanding with Brilliance and other different automobile industries in China.

How much is the project going to cost and who will finance it?

The first stage should not be less than US$ 20 million (about XAF 10.084 billion). The project is a joint venture and the Cameroon government will invest in it and for our company, we have cooperation and financial partners. Our company and our financial partners will invest for the project. The Chinese party will take 70 per cent of the project and the government of Cameroon will take 30 per cent including the investment.

When is the project effectively taking off?

We are waiting for an operation agreement with the government of Cameroon. The working speed is not satisfactory to us. During our last visit in mid April, we, alongside representatives of our technical partners, held a big meeting with different ministries and we are still waiting. Source: Cameroon Tribune www.cameroon-tribune.cm

A Three-day International Forum on Finance Opens in November

 

A press conference was held in this regard last Monday in Douala, the economic capital of Cameroon.

“Excess liquidity, savings and under-funding of the private sector: what mechanisms and new techniques to solve the great paradox of the African economy”, is the theme of the first international forum on Finance in Sub-Saharan Africa, FIFAS.

The event is scheduled from 20 to 22 November 2013 in Douala. And it is in the same city, that FinAfrique Cabinet, organizer of the forum, held the press conference.

Fabrice Kom Tchuente, Executive Director of the audit firm, told reporters that the forum will bring together experts and participants from several African countries, an opportunity for them to exchange views on many topics related to the African economy.

Source: Business in Cameroon www.businessincameroon.com

 

 

Markets as at July 14, 2013

Against XAF (Indicative only)

XAF

USD 503.23

EUR 657.57

Source: Bloomberg