June 2013 African Infrastructure Review

African
Infrastructure
Review
06 2013
|
03
Executive summary
The decision by the BRICS nations to set up a development bank for infrastructure
programmes in the major emerging economies poses as many questions as it
answers, not least what will it mean for Africa? ..3
The African Development Bank (AfDB) calculates that Africa needs around $390
billion over the medium term and trillions of dollars in the longer term to finance its
infrastructure development but that the continent should play a bigger role in raising
the vast sums of finance that is needed.....31
Chinas interest in Africa is by no means limited to acquiring resources, according to a
new analysis of its spending......32
Table of Contents
News & Analysis
Transport and Distribution....7
Energy...11
Telecommunications 15
Water.............................................19
Inputs.22
Companies.........................26
Finance and Investment29
Policy.....34
Market Indicators ...37
Summary of Recent News ...38
African Infrastructure Review is a quarterly

report produced on behalf of Nedbank Capital
by the VM Group.
Editor: Mike Cassell

Email: mike@vmgroup.co.uk
Analyst:
Paul Hannon
Email: paul@virtualmetals.co.uk
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African Infrastructure Review June/August 2013
Escape from Bretton Woods?

The Big Five emerging economies have agreed, with a great sense of urgency
according to South Africas Finance Minister Pravin Gordhan, to establish a
development bank that will help to boost infrastructure spending across the developing
world. The decision by the so-called BRICS group of nations Brazil, Russia, India,
China and South Africa represents the fledgling organisations first significant attempt
to move beyond well-meaning rhetoric to a phase of decisive action. But how decisive
and successful will it prove to be in setting up an institution that may not be in business
to see off the World Bank or the International Monetary Fund but which its founders
believe will reflect an irrevocable shift in global economic power and influence?
The idea may sound fanciful, but plans to connect Brazil, Russia, India, China and
South Africa via a 28,400 km marine telecommunications cable are deeply symbolic.
The proposed link, says South African President Jacob Zuma, will remove
`
dependency
on developed nations, allowing the five BRICS countries to communicate
directly on a south-south basis. The $1.5 billion project is, therefore, about a great
deal more than providing them with sound information and communication technology
infrastructure; it is seen as a tangible indication of the BRICS resolve to enable the
major developing nations to reduce their historic independence on Western institutions
they believe have served them badly.
As ambitious as it may sound, however, the marine cable may prove a lot easier to
bring about than the other ground-breaking initiative dubbed a new paradigm
embarked upon by the five BRICS countries at the start of April. At their Durban
meeting they proposed the establishment of a development bank, possibly armed with
$50 billion of seed capital and a $100 billion cushion in the shape of a contingency
reserve. Its job, to fund infrastructure projects across their own nations, worth anything
up $4.5 trillion. Despite talk of a new rival on the block, the new bank is essentially
being seen as an alternative, though not a replacement, to Western-dominated
financial institutions the Washington-based World Bank and the International
Monetary Fund that were created at Bretton Woods, New Hampshire, in 1944,
primarily to promote US interests. BRICS countries may be deeply enmeshed in the
status quo structure of international development finance but, in focusing on their own,
developing world, they believe they will be reflecting a shift in global power and
influence. The time has come, they say, to reflect the seismic shift in geo-political
dynamics by constructing an institution with a different ideology and new value system
that can end dependence on lenders who impose neoliberal conditions ranging from
privatisation to premature market liberalisation.
If a new, post-crisis international monetary order is, indeed, emerging then there is no
doubt that the BRICS nations have a strong hand to play. Together, they represent
43% of the worlds population, something over 20% of global GD a share that is
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rapidly rising and have combined foreign exchange reserves of more than $4 trillion.
Trade within the group surged to $282 billion in 2012, up from just $27 billion in 2002,
and it may reach $500 billion by 2015. Foreign direct investment into BRICS nations
reached $263 billion last year, accounting for 20% of global FDI flows. Given the
increasing frequency and magnitude of global financial crises, the addition of another
fund that can be rapidly mobilised in times of crisis and a new development bank that
promotes desperately needed infrastructure investment must be welcome. The World
Banks budget is clearly insufficient to finance required levels of global infrastructure,
while the processes involved in the release of its funds are complex and can be quite
burdensome. Neither does the creation of a new institution necessarily imply that it will
find itself competing with the likes of the World Bank and the IMF, especially as the
BRICS nations are deeply integrated in the existing order and are most unlikely to
become decoupled from it; it may be able to secure greater leverage in these
organisations but its foundation will be more of a response to an internal need, as
opposed to an externally focused agenda bent on dominating existing financial
institutions.
But the devil will be in the detail and the banks creation poses as many questions as
answers. The initiative has been met with considerable scepticism, not least in the
developed countries, which is nothing less than its supporters would have expected,
but even its backers acknowledge there is much work to be done before a new
institution can emerge. BRICS leaders meeting in Durban declared the proposal
feasible and viable but some difficult problems have to be resolved before any new
development bank could be up and running. Do they, indeed, have enough in common
and hold enough shared goals to function effectively? Intra-BRICS differences and
tensions are as significant as their similarities and the reality is that, since its first full
meeting in Russia in 2009, its achievements have been limited. As for making common
cause on global economic governance they failed to back a single candidate in the
search for a new IMF chief, resulting in the failure of a Nigerian candidate to get the
top job can they do it when it comes to much broader, bigger issues? Member
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countries hardly invest in one another, preferring the developed worlds major
economies; just 2.5% of BRICS foreign investment goes to other countries in the
group, while more than 40% goes to the European Union, the US and Japan. Brazil,
South Africa and Russia are big resource exporters while China and India are
importers. There are also border tensions between India and China and a fight for
influence in Central Asia between China and Russia.
A major factor is the likely dominance of China in any new institution set up by the fivenation club, a country that has been much more successful in projecting its economic
power globally than its other partners and which must be wondering what it can
achieve via a BRICS bank that it cannot continue to do through its own, statecontrolled financial institutions. The BRICS states have wide differences in GDP, with
Chinas economy four times larger than Russia or India and around twenty times that
of South Africa, so how, for example, will the initial $50 billion capital be carved up?
Will China inevitably dominate and, essentially, use its seat at the table to leverage
more business not only from other BRICS countries but also from those within their
realm of influence? The Chinese are renowned for offering no-strings development aid,
particularly in Africa, as opposed to the conditional aid demanded by many other
lenders, but the unbalanced nature of its trade links on that continent are already
giving rise to concern. They stand accused of taking a neo-colonialist approach to the
continent and of exploiting its natural resources; it recently doubled to $20 billion its
loan pledge to Africa, sparking a recent warning from President Zuma that Africa
needed to be cautious when entering into partnerships with other economies. The
governor of Nigerias Central Bank said last month that Chinas approach to Africa was
in many ways as exploitative as that of the West, a significant contributor to Africas
de-industrialisation and underdevelopment.
Per Capita GDP. Source: BRICS
South Africas role and standing in any new development bank is, in itself, a critical
issue. Its inclusion boosts its efforts to become an investment gateway into Africa and,
although the continent has its own, home-grown development banks, access to
another source of funds on the scale held by a BRICS bank offers the chance of a
massive additional injection of infrastructure finance. There are those who question the
validity of South Africa, a relative economic minnow, being a member of BRICS, given
its size and its ability to put up funds like its larger partners but failure to include an
African representative in the line-up would have left a gaping hole in the new
organisations claim to represent the developing world. Few, however, would deny that
the need to develop the continents physical infrastructure is critical to its continuing
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economic development.
Estimates suggest that Africa will need to invest at least $100 billion over the next
decade to extend and upgrade its infrastructure if it is to maintain its economic growth.
.
Africas
collective GDP is forecast to rise from $1.6 trillion in 2010 to $2.6 trillion by
2015 while its economies will expand by an annual average rate of 5.5% over the
same period. But a recent World Bank study found that the poor state of infrastructure
in sub-Saharan Africa, including electricity, water, ports, roads, rail and IT, reduced
average national economic growth by two percentage points ever year and reduced
business productivity by as much as 40%. With properly targeted infrastructure
development, the continents GDP could rise significantly, although the availability of
specialist skills needed to deliver enabling legislation, regulation and development
itself will be as important as the availability of funds.
Value of Imports and Exports of Goods/Commercial Services. Source: BRICS
But can South Africa, which invited observers from 15 other African nations to the
Durban summit, rise to the challenge? It vehemently defends its inclusion within the
BRICS grouping and claims that, given its comparatively well developed infrastructure,
the country can act as a catalyst within the new organisation to help the entire
continent deliver the infrastructure that is required. Through BRICS, it will be expected
to help encourage the integration of African nations, which in turn should attract
investment flows and encourage intra-Africa trade. The joining together of Rwanda,
Kenya, Tanzania, Uganda and Burundi under the East African Community umbrella is
considered to be working well, as is the Southern African Development Community, a
socio-economic union of 15 countries. A new development bank should also be able to
assist in the shift away from dependence on agriculture to manufacturing. Existing
development institutions, such as the Development Bank of Southern Africa, certainly
have no problems with the idea, claiming a BRICS development bank would play a
critical role in funding development and regional integration on the continent.
There is another set of questions to be asked if the bank gets off the ground. What will
be its lending criteria? Will it intend to lend at market rates and what policies of
conditionality will, if any, be attached to loans? The World Banks soft loan arm, the
International Development Association, lends money on easy terms, charging little or
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no interest, with repayments stretched over anything up to 40 years. So will there be

any strings attached to BRICS development bank loans? Much of the continent is still
suffering the debt hangover of the 1980s and early 1990s, following intervention by the
World Bank and the IMF who came to its rescue, demanding policy implementation in
return from privatisation, government spending cuts and higher interest rates. More
flexible policies have done little to change the negative perceptions of these institutions
across Africa. But the first steps at least have been taken. Everyone within BRICS
thinks that a development bank is a good idea, though no actual decision has yet been
taken. The positioning to ensure maximum influence within the group is underway and
haggling over issues such as initial funding and where the new bank will be based will
heat up. The BRICS leaders, however, have to remain realistic about just how far their
pledge to co-operate can go. If they can create a BRICS bank that can do the job, it
will be a tremendous fillip for them and for the status and self-confidence of the
developing world. There will be an interim BRICS meeting when the G20 gathers in
Russia in September, followed by a full BRICS summit in Brazil next year. Perhaps
then the organization will emerge with an agreed blueprint that enables it to aspire to
being a global force. But if the fanfares and cheering are eclipsed by the sound of
disagreement as old tensions resurface, then it may be well advised to drop the idea
before the plan becomes a lasting political embarrassment.
BRICS..Banking on each other
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Transport and Distribution

News
May 23: Selective charging of road users with the use of tolls was
critical to help pay for and maintain South Africas roads, Transport
Minister Ben Martins said.
May 21: A R2.3 billion project to upgrade the rail network between the
manganese-rich Northern Cape, South Africa, to the port of Ngqura in
Eastern Cape was approved by Transnet Freight Rail.
May 20: The Nigerian Federal government and the World Bank
agreed a $330 million loan to help finance road projects in the country.
May 14: Poor operations at Mombasa port was limiting Kenyas
economic growth, World Bank economist Wolfgang Fengler claimed.
May 8: The South African coal line to Richards Bay would include a
Botswana link in seven years time, operator Transnet said.
May 3: The East African Community said partner states had to reinvest heavily in railways systems to take the strain off the regions roads.
May 1: The Chinese government agreed to a $3.3 billion financing
package for the 753 km Ethiopia-Djibouti railway link.
April 29: Ekurhuleni, in Gauteng Province, South Africa, finalized
plans for its Aerotropolis project, which will integrate the city with the OR
Tambo international airport.
April 29: The World Bank said it would provide $80 million towards
the cost of the Ganta-Fishtown Highway in Liberia.
April 28: Transnet of South Africa started on-site feasibility tests near
Durban for a new port that could cost R100 billion ($11 billion).
April 23: Rwandas national road maintenance fund had only half the
resources it required for planned projects, the government said.
April 22: African transport costs are among the highest in the world,
constituting up to 50% of export values and hitting competitiveness,
according to a joint report from the African Development Bank and the
OECD.
April 18: The African Development Bank approved loans worth $232
million for the 157 km road project from Arusha-Holili in Tanzania and
Taveta to Voi in Kenya.
April 16: Rwanda awarded a contract for the new international airport
at Bugesera to the Chinese State Construction Engineering Corporation.
April 12: The Maputo Port Development Company said it was
investing $400 million, rising to $1.7 billion over the next five years, to
expand the facilities handling capabilities.
April 11: South African contractor Group Five announced a R1.8
billion road upgrade contract in Zimbabwe.
April 9: Ghana Airports Company said work would soon start on the
planned international airport at Tamale, the countrys northern capital.
April 5: Dube TradePort Corporation and Indian conglomerate Action
Group signed a R2 billion deal to develop a hi-tech industrial park near
King Shaka International Airport, Durban, South Africa.
April 4: Ghanas transport minister said Africas 3% share of global
air traffic was woefully inadequate.
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Analysis
Chinese back Transnet expansion
While the BRICS countries push ahead with plans for their own
development bank, China continues to shore up its role as Africas
major lender with mega-deals such as the March agreement to help
Transnet, South Africas state-owned ports and rail operator, upgrade
its infrastructure. An agreement with China Development Bank to
jointly finance, build and upgrade Transnet assets and also to pursue
cross-border infrastructure projects across the continent came with a
pledged R 46 billion ($5 billion) funding package. Last year, Transnet
announced an unprecedented R 300 billion investment programme
planned over the next seven years to expand railways, ports and
pipelines to help boost commodity exports; it indicated at the time that
the finance would come from its own resources and from fund-raising
on the capital markets. The deal, unsurprisingly, was hailed as an
example of what BRICS nations could achieve together it was
finalized at the BRICS summit in Durban though it also gave weight
to those observers who would claim such deals demonstrate that
creating a BRICS development bank is hardly necessary. Chinas
decision to back Transnet represents another measure of the
importance it attaches to ensuring that badly-needed commodities can
be easily transported, without incurring the bottlenecks that occur even
in countries with relatively well developed infrastructure such as South
Africa. For Transnet, the deal is a critical step in its plans to overcome
a long legacy of under-investment notably high port charges, long
waiting periods and the handling limitations of a rail network in need of
upgrading. Despite such problems, however, South African ports
remain regionally dominant and are unlikely to face serious challenges
to their position, at least in the short term, despite new investment
programmes being undertaken in neighbouring countries. While, for
example, Angolas recently upgraded line between the port of Lobito
and the Zambian border will help ease exports for landlocked countries
it will have minimal impact on South Africa. In similar fashion, Namibia,
Mozambique, Kenya and Tanzania are all planning to improve port
services. The port of Maputo, in Mozambique, for example, has shown
dramatic growth but it remains a comparatively minor player. By 2050,
however, it plans to be handling 50 million tonnes of cargo annually,
against 15 million tonnes currently. But rising competition between
regional ports should also improve the flow of trade in and through
South Africa.
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The Lamu Port-South Sudan-Ethiopia Transport (LAPSETT) corridor
Kenyas mega-port plans advance

Kenya expects big things of its new port at Lamu, part of a $25.5 billion
project intended to link landlocked South Sudan and Ethiopia to the
Indian Ocean port via a major highway, railway and oil pipeline. The
plan, first mooted in the mid-1970s, is to boost cross-border trade and
boost tourism and agriculture in particular. April saw another advance
for the plan when a Chinese company, China Communications
Construction, won a KSh 41 billion ($484 million) tender to build the first
three berths at the Lamu complex. China Communications in 2011
signed a deal to expand the number of berths at Mombasa port, east
Africas largest, and last year it agreed a $2.66 billion deal to update
some of Kenyas railways. Kenya believes that the corridor project, due
to be completed by 2016, will add between 2% and 3% to Kenyas GDP
by 2020 and says Lamu will boast 32 berths when completed in 2030.
At Lamu, the hope is that by starting work with the Chinese on the first
three berths, the government can encourage private investors to
become involved and enable the port to be fully developed. But the
corridor project is not without its critics. Some have called it a vanity
project, insisting the funds would be better spent on upgrading existing
infrastructure while environmentalists claim the port development will
destroy delicate marine life and choke coral groves and mangroves
while the transport corridor will disrupt communities along the route.
Even so, the Development Bank of Southern Africa has reportedly
expressed interest in contributing up to $1.5 billion towards the KenyaSouth Sudan-Ethiopia link. In April, the Kenyan government set up an
independent body to monitor the project, drawing its members from
government and the private sector.
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Uganda enlists World Bank help for roads

Ugandas poor road network only 4,000 km of the 20,000 km total are
tarmac surfaced stands as testament to historic budget restrictions but
there is now growing confidence in government that a new era of publicprivate-partnerships can begin to redress years of neglect and underinvestment. In a move intended to fast-track the construction of four,
multi-billion dollar road projects, the government has secured the
technical assistance of the World Bank in pursuing the projects while
also inviting Trademark East Africa, a trade organization funded by a
range of development agencies, to provide oversight and support to the
Uganda National Roads Authority, who will be managing the
construction programme. Agreements with both organisations should be
completed by the summer. In what will comprise the most ambitious and
expensive road projects in the countrys history, the government plans
to follow up construction of the $476 million Kampala-Entebbe
expressway with four projects worth more than $1.5 billion. They are:
the 80-km million Kampala-Jinja expressway, the Kampala Southern bypass, the Kampala-Mpigi expressway and the Kampala-Bombo
expressway. Unlike the Chinese-funded Kampala-Entebbe route, they
will all be financed through public-private partnerships, with investors
recovering their investments through toll income over a 20-25-year
concessional period.
More road tolls for South Africa

If cash-strapped governments do not want private investors to fund their
roads then another option is always to charge the motorists who will use
them. Toll roads are hardly new in South Africa, where they were first
introduced in 1983, but their spread has been rudely interrupted by
protests that brought embarrassment to the government and did their
cause no good. New tolls roads were due to be introduced in Gauteng,
the countrys richest and most populous province, in 2012 with the
South African National Roads Agency (Sanral) arguing it needed to
impose the tolls to repay the R20 billion loan it had taken to repair and
improve 185 km of congested freeways in and around Johannesburg
and Pretoria. But the plan was met with a wave of protests from
objectors who said they had not been consulted and could not afford it.
Trades unions staged a one-day strike and, despite a government offer
of a one-off payment to subsidies the tolls for private users, the protests
continued and the tolls were not implemented, pending a judicial review.
But now, given a legal all-clear, the government is set not only to
introduce the Gauteng tolls in July, Sanral says it is studying the
feasibility of building five new toll roads across the country. It says it is
increasingly forced to consider tolls because of insufficient funds to
build, upgrade and maintain national roads and its controversial stance
is being backed by ministers. Opponents are calling for a ring-fenced
road maintenance fund, claiming that fuel levies originally intended to
finance road schemes had been spent on other projects.
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10
Energy
News
May 25: Tanzania said it would continue building a Chinese-funded
$1.2 billion gas pipeline from the south to Dar es Salaam despite violent
protests over the project.
May 24: Egypt announced an electricity project that will connect it
with Saudi Arabia and allow for the exchange of 3,000 MW of power.
May 19: Democratic Republic of Congo officials announced October
2015 as the start date for work on the $14 billion Inga III hydro-electric
dam.
May 13: Officials said work would start soon on the power connector
between Rwanda and Burundi following agreement on EU funding.
May 9: Nigeria said the 4,000 km Trans-Saharan gas pipeline,
agreed in 2002 between Nigeria and Algeria, was now under review
because of changing gas market conditions.
May 7: The World Bank and African Development Bank said they
will fund 80% of the $1.26 billion cost of the 2,000 MW Ethiopia-Kenya
power transmission line.
May 7: The African Development Banks Climate Investment Fund
approved plans by six north African nations to proceed with an updated
version of a plan to create 1,120 MW of solar-powered energy.
May 6: Construction of the Lake Turkana wind power project should
start by the end of this year, the African Development Bank said.
May 4: South African power utility Eskom said sub-Saharan
countries should together create a super power grid for the region.
April 25: Mozambiques National Hydrocarbon Company said it was
to conduct a study for a 2,100 km gas pipeline that would cost $4 billion
dollars. Work could begin in mid-2015.
April 24: The Power Holding Company of Nigeria and the World
Bank signed a $145 million partial risk guarantee for Nigerias gas
sector, enabling the countrys Egbin power station to secure long-term
gas supplies.
April 24: Zimbabwes Multi-Donor Trust Fund, managed by the
African Development Bank, made $35 million available for improving the
countrys power infrastructure.
May 23: Africa needs an extra 22,000 MW of cross-border
transmission line capacity to close the continents energy gap, according
to the Tanzanian government.
April 15: A World Bank official called Ghanas plan to extend
electrification to rural areas as insane, given that the country already
suffered severe power shortages in its main population centres.
April 10: The Indian Electrical and Electronics Manufacturers
Association said it wanted to boost power transmission and distribution
exports to the African continent.
April 9: The African Development Bank made a $157.6 million loan
to the Republic of the Congo to implement a rural electrification project.
April 8: NamPower of Namibia and Eskom of South Africa said they
intended to acquire stakes in the Kudu power station in Namibia, due to
come on line in 2017.
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11
Analysis
Slow cure for Nigerias ailing power sector
Nigerias dysfunctional power sector has been on the receiving end of so
many political pledges about its impending improvement that
expectations of progress seem are scarce as uninterrupted electricity
supplies. Decades of bad management, political infighting and the
squandering of huge chunks of investment some calculate $40 billion in
two decades intended for the power sector have reduced it to a wholly
inadequate system that generates around 4,000 MW for a country of 170
million people. That is one-tenth that of South Africas, despite the
country being Africas top oil producer and holding the worlds ninth
largest gas reserves. Around $13 billion a year is spent on diesel, most of
it imported. So reforming the countrys power generating and
transmission sector is critical to its economic well-being the current 7%
GDP annual growth rate could hit double figures if it was resolved and,
since his election in 2010, it has been declared to be President Goodluck
Jonathans number one political priority. The countrys Finance Minister
said in May that the country planned to sell $1 billion in Eurobonds to
finance power projects while the Minister of Power said the federal
government was working around the clock to expand grid capacity by
2014. The dismantling of the old state power monopoly reached a
milestone in April when private sector bids worth $2.3 billion were
approved for 15 of the 17 state-owned generation and distribution groups
comprising ten generators and five distribution operations. A sixth plant
was not sold because bids failed to meet technical standards but it is
being re-offered for sale. The identities of some of the new owners have
raised doubts about the chances of success of the newly-unbundled
sector, although the inclusion of several recognized technical partners
such as Siemens has given some cause for optimism. But the
privatization programme itself is months behind schedule and the
government has disclosed that it will need about $3.4 billion to fund the
planned expansion and upgrading of the national grid between now and
2016, simply to enable it to take the generated power available. The
African Development Bank is providing $150 million to help transmission
improvements and some of a $1 billion debut Eurobond will also be
allocated to upgrades. Ministerial suggestions that most of the
investment finance will be provided by government, international
development banks and multilateral agencies was met with complaints
that Nigerian banks could themselves could fund transmission projects.
When President Jonathan launched his electricity reform programme in
2010, he said Nigeria could boost generation from 3,000 MW to 10,000
MW by the end of 2013 (from the present 4,000 MW) and to 40,000 MW
by 2020. That seems unlikely but investor interest has been high, with
companies from India, Israel and Kenya joining those from Europe and
North America. More likely is an increase to around 6,000 MW within the
next two years, rising to around 9,000 MW by 2020. But with potential
demand as high as 140,000 MW, the challenge is daunting. In early May,
the President forecast that, following the completion of the privatisation
programme, an annual investment of $10 billion was likely over the
following ten years. Even so, it could take 50 years before Nigeria attains
the same per capita electricity consumption as South Africa.
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12
South Africa must rethink energy plans

When South Africa has stopped patting itself on the back over the giant
strides it has been taking towards introducing renewables into its energy
mix, it had better take another long, hard look at its electricity blueprint up
until 2030, according to the findings of a study commissioned by the
countrys National Planning Commission. The study, conducted by the
Energy Research Centre at the University of Capetown (UCT), says that
the countrys 2010 Integrated Resource Plan (IRP) is already so out of
date that it is no longer valid for planning and that if it continues to form
the basis for investment decisions on electricity generation then the result
could be very costly to the economy, leaving South Africa with surplus,
stranded, expensive power plants. A new plan, it concludes, must be
developed. The IRP is, indeed, intended to be revised every two years
and a re-think is due now but the Department of Energy says it will not be
carried out until the master Integrated Energy Plan has been finalized.
When it does get round to it, the UCT conclusions will give it plenty of
food for thought. Its principal conclusion is that electricity demand growth
will prove to be much lower than forecast in 2030 running below 2007
levels because of a variety of factors, including demand responses to
higher electricity prices, and structural changes in the economy. It
calculates that actual demand by 2030 will reach 341 TWh (50 GW peak)
compared to the 454 TWh (67.8 GW peak) foreshadowed in the IRP.
Installed capacity by 2030 will be around 61 GW instead of the 89 GW
anticipated and, because of the lower demand growth and already
committed investment plans, very little further investment will be needed
before 2025, after which new capacity will be dominated by gas, with
solar thermal, wind and imported electricity meeting the remaining
requirements. And in a passage that will strengthen the arm of nuclear
power opponents, the study says nuclear costs will be considerably
higher than envisaged. Neither can it can see any reason for nuclear
power to be required before 2029 at the earliest and possibly not until
2040, compared to a date of 2023 in the governments IRP. Therefore, it
declares, a decision over whether or not to opt for nuclear power was by
no means a matter of urgency and could be made once more
information on issues such as the availability of shale gas, the costs of a
gas pipeline from Northern Mozambique and LNG prices was available.
The report, however, concedes that after a few years of stagnation in
demand growth, there could be a sharp rebound, implying higher growth
levels. The authors may get things wrong but the government is expected
to get them right.
Ghana struggles to end load shedding

Ghana needs all the electricity it can get so when a Chinese contractor
threatens to pull out of a $700 million project to help improve the
countrys gas supplies, alarm bells start ringing. Sinopec International
Petroleum Service Corporation warned in April that it would stop work on
the Atuabo gas processing plant in the Western region of the country
because it had not been paid. The project is being funded by the
government with a $3 billion loan from the China Development Bank and
the problem appears to have centred on late payments to the
contractors. When completed, the plant will treat raw gas from the
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13
floating production and storage vessel Kwame Nkrumah, which services

the Jubilee Field, for use in the countrys power plants, adding a
potential 1,000 MW to generating capacity as well as producing
valuable by-products such as liquefied petroleum gas. The issue was
resolved in early May but infrastructure projects such as Atuabo are vital
if the country is to resolve its ongoing energy crisis. Industrial and
domestic consumers have seen the addition of 265 MW of power to the
nations generating capacity in early 2013, notably from one of the units
at the $800 million, 400 MW Bui Hydro project and from a thermal
power plant at Takoradi, west of Accra, Ground has also been broken
on Takoradi 2, which will expand installed capacity from 220 MW to 340
MW when it is commissioned at the end of 2014. The situation will
improve further when the West African Gas Pipeline project, under
which natural gas from Nigeria is supplied to Benin, Togo and Ghana,
finally starts pumping natural gas to the Sonun Asogli plan, which will
generate 200 MW. The government says that Ghanas electricity
demand is rising about about 10% annually, requiring an extra 200 MW
of capacity each year. Since 2009, capacity has risen from 1,810 MW
to 2,576 MW and President John Dramani Mahama has pledged to
double installed capacity to 5,000 MW by 2016.
Kenya insists it will go nuclear

Shipping off eleven people for training in South Korea as nuclear
scientists suggests that Kenya, despite widespread domestic cynicism,
remains set upon developing its own nuclear energy sector to help
overcomes its power shortages. In September 2010 the government
said it aimed to build a 1,000 MW nuclear power plant by 2017,
describing it as a less expensive alternative to more thermal power
stations. The technology would be South Korean and the cost is now
put at around Sh250 billion ($3 billion), although officials have admitted
they have no funds lined up. The original deadline now looks fanciful
and, more realistically, if any nuclear project does go ahead it is unlikely
to start until around 2018, implying completion in 2022. It would add
1,000 MW to a national generating capacity that currently stands at
about 1,400 MW. The students will be taking post-graduate nuclear
engineering studies at the Kepco International Nuclear Graduate School
in Ulsan, South Korea and the intention is that they will return home to
help the Kenya Nuclear Electricity Board, along with South Korean
nuclear specialists, get the proposed nuclear programme off the ground.
Kenya-Ethiopia power highway launched

The official start of work on the 1,068 km high-voltage electricity
highway between Kenya and Ethiopia in May means that, within five
years, surplus power generated in Ethiopia should be flowing to
industrial, business and private consumers in Kenya. The $1.26 billion
project will not only improve access to affordable electricity for almost
900,000 households by 2018 it will also generate important, additional
revenues for the power generators and open up the possibility for power
trading across the wider East African region. The new transmission line
will run for 437 km in Kenya and 631 km in Ethiopia and will be capable
of carrying 2,000 MW in either direction. The African Development
Bank, the World Bank and the governments of Kenya and Ethiopia will
finance the power link and the French Development Agency is also
expected to part-fund the project.
_
14
Telecommunications
News
May 22: Researchers at IBM said they had redrawn bus routes in
Ivory Coast using mobile phone data. They said such data could be used
for planning infrastructure projects.
May 17: Indias Tata Communications denied suggestions that it
planned to sell Neotel, its South African subsidiary.
May 13: The 17,000 km Africa Coast-to-Europe submarine, fibre optic
cable was inaugurated in Ghana. The $700 million project will link Ghana
with 22 other countries.
May 9: The Independent Communications Authority of South Africa
shut down the operations of Eastern Cape-based Amatole
Telecommunications Services for non-payment of licence fees.
May 8: Epsilon Telecommunications linked with the SEACOM and
West Africa Cable System, giving the company undersea sable
connectivity that circumnavigates Africa.
May 3: An internet exchange point being developed in Tunisia should
cut costs and help the countrys efforts to attract business, according to
the Internet Society.
April 26: The Nigerian government enacted long-awaited mobile
number portability (MNP), allowing subscribers on the countrys four
major mobile networks to switch providers but retain their numbers.
April 26: Globacom of Nigeria signed a $750 million deal with Huawei
Technologies to expand the capacity of its Glo network.
April 24: Vodafone Group said it was boosting its investment in Africa
to offset stagnant earnings in Europe.
April 23: The Nigerian arm of MTN of South Africa signed a $3 billion
loan facility to expand its network. The loan was arranged by Nigerias
GT Bank but Citigroup, Standard Chartered and Nedbank were among
the lenders.
April 16: Rwanda was ranked among the top 10 countries in Africa in
a position to benefit from new communication technologies, according to
an index compiled by the World Economic Forum and the European
Institute of Business Administration.
April 10: Mauritius-based Liquid Telecom announced improvements
to its fibre network along the East African coast.
April 9: The Nigerian Communications Commission said that the
countrys CDMA (Code Division Multiple Access) operators had lost 1.4
million active subscribers to GSM (Global System for Mobile
Communications) over the previous year.
April 2: Finnish mobile maker Nokia and Indias Bharti Airtel
announced a partnership to sell communications services in Africa.
April 1: France Telecom agreed a deal to outsource more than 2,000
mobile towers across the Ivory Coast and Cameroon to African
infrastructure group IHS.
March 25: Zambia Telecommunications (ZAMTEL) said it would
introduce broadband services to rural areas.
_
15
Analysis
Nigerian mobile market still racing ahead
Given that 60% of Nigerians are living below the $2-a-day poverty mark,
millions of people would have to spend around 21 days of their food
budget to buy a basic mobile phone and thats what many of them must
be doing. A new analysis of the Nigerian mobile phone market by Gfk
retail and Technology Nigeria shows Nigerians spent NGN181 billion
($1.2 billion) in buying 21.5 million mobile phones in 2012. Of that total,
smart phones only accounted for about 4% of total sales. The figures
show that, driven by lower prices and a growing demand for broadband
services, subscriber growth rates mean Nigeria, with more than 100
million mobile phone users, has become Africas biggest and one of its
fastest-growing telecom markets.
Such rapid growth has led to problems with network congestion and
quality of service and huge amounts of foreign investment are pouring in
to provide additional base stations and fibre optic transmission systems
to support rising demand for increasingly cheaper bandwidth services.
Major infrastructure sharing deals have been concluded and several
high-speed long-term evolution (LTE) networks are being rolled out,
although commercial launches have been hindered by delays with
frequency spectrum allocations. Despite such rapid development, there is
also plenty of further potential for growth, given that market penetration is
estimated at somewhere between 75%-77%, with rural areas where
network rollouts are expensive yet to catch up.
Rural infrastructure delaying mobile spread

The economic growth potential of the African continent already ranks
among the highest in the world but it will only capitalize on its vast
opportunities if it pursues the rapid development of modern information
and communications technology, according to Lars Linden, the outgoing
head of Ericssons sub-Saharan business. ICT is the business that
enables other business to do business, he says and for every 10%
increase in broadband and mobile phone penetration GDP will increase
by one percentage point. Doubling of connection speeds alone can add a
further 0.3% in GDP. At present, the continent has about 45% mobile
phone penetration, compared with a global average of 70%, so there is
still plenty of scope for expansion and Linden says that although Africa
may be a challenging region in which to work, the combination of a less
mature market with rapidly rising demand laid the platform for explosive
_
16
growth as related infrastructure expands. The African Development Bank

(AfDB) estimates that the continents mobile industry contributes $56
billion to the regional economy, around 3.5% of total GDP and believes
that although the market will continue to grow, extreme pricing pressures
and regulatory risks will impact the investment environment. Factors such
as poor road infrastructure make it expensive to transport equipment to
set up mobile towers in the rural areas that yet have to be penetrated,
while a dependence on diesel generators to power towers in remote
areas also drive up investment costs. Tower sharing is one option now
being considered by operators in a bid to reduce infrastructure costs.
There are also immense challenges facing fixed-line infrastructure
programmes, although there has been some progress, with around one
dozen countries having launched plans for the development of national
backbone networks over the past two years. But many nations,
particularly in central and western Africa, where private sector investment
has been discouraged because of the diversity of regulatory frameworks
and the high cost of opening up new routes. While public sector spending
on ICT has increased significantly over the last decade, the private sector
continues to be the key driver for investment, injecting close to $50 billion
over the same period. The AfDB says huge potential exists for African
countries to build the requisite infrastructure, legal and regulatory
environment, as well as to develop advanced skills in software
engineering and project management.
Mathematics by mobile
The advent of mobile telephony has already had a massive impact on the
African economy but the communications revolution is also having an
increasing role to play in education across many parts of the continent.
So-called mobile learning is supporting and extending education in a
variety of ways that were previously impossible. As mobile hardware and
the networks that support them become more powerful, dynamic and
affordable, the mobility of these technologies offers new options for
teaching and learning. An example is Nokia Life, an information service
available in Nigeria, where its information channels deliver exam
preparation tips for middle and high school students and English
language learning. Mxit, Africas largest home-grown mobile social
network, not only allows youngsters to stay in touch but it also provides
live tutoring for mathematics homework. A project launched in 2007 has
already helped 32,000 school pupils work through maths problems by
connecting them with tutors for live instruction. But the barriers to
realizing the full educational potential of mobile technology remain
plentiful; tariffs may be falling but they remain too high for many Africans;
additional obstacles include a shortage of local language content and low
numbers of smartphones and tablets than can enrich and expand the
learning experience. But with 735 million mobile subscriptions already up
and running across the continent, accessibility is rising exponentially,
bringing with it open-ended education opportunities that may help to
compensate for any deficiencies in traditional education services.
MTN denies anti-competitive claims

MTN may be Africas biggest mobile phone company but it has denied
claims from the Nigerian Communications Commission that it has
become dominant in Nigeria, with 44% of the mobile market. The
Commission says that phone calls between MTN Nigeria customers cost
_
17
a third of the price to other networks, amounting to a calling club for

MTN subscribers. Its remarks form part of an industry shake up that it is
pursuing in an effort to reduce call charges for the countrys 109 million
mobile phone users. MTN is market leader with 47.4 million customers
and the Commission says it must now reform its mobile tariff policy and
will face further scrutiny to ensure competition between providers
remains fair. The company says it is mystified by the criticism the
Commission has not said the company has abused its market position or
made it clear whether or not it has to change its tariffs and is seeking
talks with the regulator. MTN in unfazed and says it is proceeding with
plans to sign up an extra 7 million subscribers by the end of this year, a
target that it may even surpass, given the arrival of almost 4 million new
mobile users in the first three months alone of 2013. It claims that, with
prices charged across Nigerias mobile phone operators dropping by half
over the last twelve months, competition would appear to be alive and
well.
_
18
Water
News
May 25: The Ghana government said it needs $225 million annually
to construct sustainable water and sanitation facilities.
May 23: Uganda became the first African nation to become a member
of the Water Cost Index, developed by water consultancy Waterfund and
IBM. It will calculate the cost of producing water in an effort to attract
funding for water projects.
May 21: The South African Department of Water Affairs said it would
start rolling out its new interim water supply programme, aimed at
clearing the backlog in municipal water-related services.
May 21: South Africa needs to invest an estimated R670 billion
($69.9 billion) in new water and sanitation infrastructure over the next
decade, the countrys Water Affairs minister said.
May 20: The African Development Bank launched a project to cut the
acute shortage of water in Burkina Faso.
May 20: There could be a shortage of clean water in South Africa if
consumers did not conserve it, the government warned.
May 17: South Africa approved the R12 billion ($1.25 billion) second
phase of the Lesotho Highlands water project, which will supply extra
water and electricity for Lesotho.
May 14: Djibouti was given a $35 million loan by the Arab Fund for
Economic and Social Development to improve drinking water supplies.
May 7: Aging water infrastructure in South Africas Gauteng province
meant 106 trillion gallons of water were lost in 2011-12, according to
official figures.
April 30: The Namibian government reiterated its determination to
continue with the Neckertal Dam, despite challenges to the tender award.
The dam will irrigate 5,000 hectares of land.
April 23: A water supply and sanitation system supported by the
African Development Bank was launched in Malawi. The project will cost
$80 million and supply water to seven centres.
April 16: The Zimbabwe Multi-Donor Trust Fund implemented the
first phase of its $29 million Urgent Water Supply and Sanitation
Rehabilitation project in five municipalities.
April 11: Nigerias Minister of Water Resources said the government
needed to spend $2.4 billion annually to deliver water services to the
population.
April 6: Libyan ministers and officials met a delegation of Egyptian
businessmen to discuss co-operation on water and sanitation
infrastructure projects.
_
19
Analysis
Urgent need for South African water skills
South Africa needs to spend an astonishing R670 billion ($74 billion) on
its water resources over the next decade if the country is to meet
demand for clean, potable water. With a huge funding gap already
apparent, the challenge is not only to finance new water infrastructure but
to fund the maintenance and refurbishment of existing systems that
invariably provide insufficient supplies of poor quality. Above all,
however, according to Prof Tally Palmer, director of the Unilever Centre
for Environmental Water Quality at Rhodes University in Grahamstown,
an equally crucial infrastructure issue centres on wastewater treatment
works and the need to improve water management skills which given
the critical shortage of water engineers in the water sector could
provide an important new source of sustainable employment. She claims
that inadequate wastewater treatment is reducing water quality and
diminishing the capabilities of river systems to cope with contaminants
and that industry as well as government has to play a role in improving
standards. In South Africa, the intervention that would make the most
difference to river health is efficient and sufficient waste water treatment.
Many of our treatment works are currently held together and are
operated beyond design capacity by engineers. But with a yawning
funding deficit the countrys National water Resource Strategy has put
it at more than R300 billion significant tariff increases for consumers
somewhere along the line look increasingly inevitable.
Ghana faces water emergency

Ghanas economic growth may be outpacing many of its neighbours but
the resulting demand for water is also running far ahead of the countrys
ability to supply it. The country, according to its president, is burdened
with a water emergency, the legacy of stagnating investment over the
past 50 years. Ghana Water cannot account for 55% of the water it
produces, either because consumers illegally siphon it off from pipes or
because an aging water supply infrastructure breaks down or leaks.
Recently, the endemic shortages have been made worse by the crisis in
electricity production, exacerbated by the failure last year of the West
African Gas Pipeline, cutting the supply of gas to thermal power plants
and reducing the power available to water treatment facilities. Companies
faced with no water have to resort to paying private water hauliers rates
many times higher than those levied by Ghana Water and complain that
the problem is directly impacting upon economic output and profits.
Domestic consumers are also badly hit; almost one quarter of Accras
four million population do not get water from a tap while the national
figure is nearer 40%. In rural areas, around 63% have sustainable
access to safe drinking water, a figure which is only marginally higher in
urban centres against a 70% target for 2015, set down under
international targets. Foreign investors are co-operating in the
construction of water treatment and desalination plants but more
resources are required. With water and sanitation two of the key drivers
for infrastructure development in Ghana over the medium to long-term,
the government has initiated a programme intended to improve water
_
20
supplies to 600,000 people living in rural areas via the provision of

20,000 boreholes. Progress may be slow but, by comparison with nations
like Malawi and Zambia, Ghana can at least be said to be making some
advances.
Source: Unicef
Water subsidies must end

Despite heavy investment in water infrastructure, water utilities across
the African continent continue to make losses, requiring governments to
sustain them with huge subsidies a situation that can no longer be
afforded, according to Tanzanias Minister for water. Tanzanias water
problems reflect those in many African states, according to Prof Jumanne
Maghembe, who challenged water companies to reduce losses, many of
them the result of water theft or leakages through the supply chain.
Ghana Water, for example, cannot account for 55% of the water it
produces, either because consumers illegally siphon it off from pipes or
because an ageing water supply infrastructure breaks down or leaks.
Prof Maghembe said there was a notion among consumers that water
was free but they had to realize that they had to pay to reflect the heavy
investment made to carry drinkable water to populations centres.
Tanzania itself is currently investing $1.4 billion improving the water
supply in Dar es Salaam, where water coverage is around 68%. The
target is to reach 100% coverage by June 2015. In rural areas, coverage
is only about 58% and the government wants to raise this to 75% by
2016.
Source: UN Aquastat/World Bank

_
21
Inputs
News
May 21: The Turkish Steel Exporters Association said it wanted to
explore co-operation and business prospects with South African
companies.
May 20: The former Cement and Concrete Institute of South Africa is
to continue as a newly-constituted body the Concrete Institute.
May 19: The Nigerian government said it intended to impose tariffs on
imported bulk cement because of a glut in the domestic market.
May 16: PPC, South Africas biggest cement maker, said it aimed to
see 40% of its production outside its home base by 2016. It plans to
build a $200 million cement plant in the Democratic Republic of Congo.
May 20: Tanzanias government is losing large tax revenues because
of cement smuggling and improperly taxed imports through Zanzibar,
according to Erik Westberg, managing director of Tanga Cement.
May 20: South Africas National Union of Mineworkers said it wanted
pay rises of up to 60% from gold and coal producers.
May 17: South Africas Aggregate and Sand Producers Association
said the countrys quarries were not being used to their full capacity
because of lack of skills.
May 16: Zambias National Council for Construction attacked cement
price increases, warning that they would raise construction costs.
May 16: Double-digit wage hikes in South Africa were unacceptable,
according to the UNI Global Union, which represents 15 million trade
union members worldwide.
May 13: Sasol Chemicals faced a Competition Tribunal to reject
claims that its propylene and polypropylene prices are excessively high.
May 10: South African steel shipments from ArcelorMittal rose by
4.2% in Q1 2013 compared to the last quarter of 2012.
May 9: Dangote Cement said it would build a crude oil refinery in
Nigeria to reduce petrol imports.
April 23: The National Union of Metalworkers of South Africa
demanded a 20% across-the-board pay rise for workers in auto
assembly, tyre making, iron, steel and base metal manufacturing sectors.
April 17: Aviation fuel sold in Africa is, on average, 21% more costly
than in other international markets, the International Air Transport
Association said.
April 17: The Cement Manufacturers Association of Nigeria called for
a review of the industrys code of standards to make them more robust
and uniform.
April 17: Shares in steel maker ArcelorMittal rose after news that the
fire-damaged Vanderbijlpark steel plant had resumed output.
April 10: In an effort to stem rising fuel costs, the Zimbabwean
government approved a new ethanol blend 85, in addition to the alreadyapproved E5.
April 10: Egypt-based Suez Cement said it had scaled back output
last year by as much as 30% because lack of fuel supplies hit production.
April 9: South African cement maker Afrisam said it would expand
into other African countries.
March 27: Demand for cement in Zambia may double over the next
10 years, according to the local unit of Lafarge SA. It rose 13% last year.
_
22
Analysis
South African steel sector suffers
South Africas steel manufacturing sector has been having tough times,
with production falling sharply in the early months of this year, record
imports of cheaper steel from Japan and Korea, ongoing technical
problems at mills, strikes and a dearth of new mining and other industrial
capital projects. Output, according to the World Steel Association was
down 12.5% in March, having fallen by almost 17% in the previous month
bringing Q1 production down 11.3% year-on-year. Steel producers
usually track growth in GDP but this has not been the case in South
Africa, where both major operators have been recording losses and
failing even to match production with growth in a weakened economy.
Demand from the construction industry has been falling, given delays in
major infrastructure projects and even the automotive sector, the fastestgrowing customer market for steelmakers, has lost steam. Neither does
the outlook appear to be any better, given not only the domestic picture
but the difficult conditions in global markets, where long-term steel pricing
contracts are, increasingly being replaced by spot market prices, driven
by Chinas rapid economic growth. Chinas own steel output the
industry is a major importer of South African iron ore grew by just over
9% year-on-year in Q1 of this year, against a global production increase
of 2.3%. No wonder that some eyebrows are being raised at the
governments apparent enthusiasm for establishing a new steel producer
that, it says, would create competition in a market dominated by
ArcelorMittal and Evraz Highveld. A feasibility study, the Department of
Trade and Industry says, has made significant progress and a number of
overseas investors, including the Chinese, are being approached. Given
the recent funding deal between Transnet and China Development Bank,
the Chinese are being tipped as a likely backer of any new steel
production project, especially given its heavy involvement in the countrys
metals and minerals sector. In the meantime, the government says it is
planning to intervene in the steel sector by setting steel prices, setting
national production targets and limiting exports of iron ore. The idea is to
secure local steel at developmental prices, making it available for
downstream manufacturing industry. Critics say the measures wont do
anything to make South Africas steel industry more competitive in
markets dominated by much bigger players.
New controls to halt price-fixing

The common perception that corruption and malgovernance in South
Africa was a creature of the public sector has been shot to pieces by the
revelation that all of the countrys major civil engineering and construction
companies have been involved in infrastructure related collusion and
price-fixing. Economic Development Minister Ebrahim Patel declared in
April that the problem was huge and pervasive and that the government
was now taking steps to wipe it out. The State has reportedly lost billions
of Rand as a result of contractor malpractice on several completed
infrastructure projects. Inquiries by the Competition Commission, which
included several stadium developments and the rapid transport rail
system in Gauteng Province, found evidence of collusion and price fixing.
Around 400 admissions of collusion have already been made and, under
_
23
a fast-track system intended to save time and avoid a lengthy legal

process, voluntary disclosure and a commitment to end any cartel
arrangements would be followed by appropriate fines and penalties. The
competition authorities have used the findings of their investigations to
identify networks and channels used by companies to collude and these
will be subject to internal, preventive controls to ensure they are not
repeated. In addition, any company awarded an infrastructure contract
will be required to sign an integrity pact that commits them to
competitive and non-corrupt practices. Chief executives will carry
personal responsibility and liability for such a commitment; the new
conditions are already being piloted in a number of current infrastructure
tenders and should be fully implemented over the remainder of the year.
Bitumen tariffs lifted in South Africa

There is a long-running argument over whether concrete or bitumen is
the best material for making roads but, while it continues, South Africa
has run into a shortage of bitumen that has already hindered road
building plans and threatens to continue to do so, unless supplies are
improved. The shortages, exacerbated by unplanned shutdowns at
refineries where the bitumen is produced as a by-product of oil refining
meant imports were brought in from Singapore and Malaysia at a 20%
price premium over local supplies. With the countrys four main refineries
unable to meet demand, local bitumen output only accounted for bout
80% of demand, leaving 17,000 to be imported annually. Major road
builders such as Raubex and Basil Read have secured supplies for this
year to avoid contract delays and are confident that, barring further
unplanned refinery closures, supplies will prove sufficient this year. Basil
Read is also building a plant in Western Cape to produce specific grade
bitumen from a local refinery. Even so, the government has moved to
ensure no further shortages arise by effectively waving the 10% import
tariff on bitumen for the next three years, through a rebate scheme
organized by the Revenue Service. The decision should see imports rise
above 20,000 tonnes this year.
Dangote starts to export cement

Lagos-based Dangote Cement, Africas biggest building material
producer, said it had started to export cement supplies in the first quarter
of 2013 and it expected other African markets it will target 13 other
nations and invest $2.5 billion to provide a large chunk of its future
growth. The companys revenues and profits rose by 24% in 2012 after it
opened two new plants in Nigeria, bringing domestic production capacity
to 19.25 million tonnes a total it intends to raise to 29 million tonnes by
2015. The companys output means that Nigeria is now self-sufficient in
the building material and that Dangote has almost 60% of the Nigerian
cement market. Retail cement prices in Nigeria are amongst the highest
in the world and per capita cement usage demand rose by 16% in Q1,
2013 is still low by African standards; a huge housing shortfall should
help maintain recent rates of growth in demand.
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24
Nigeria explores alternative cement product

The Cement Manufacturers Association of Nigeria is welcoming efforts
to produce an alternative cement for use by the construction sector but
has warned that it must meet industry standards. The Nigerian Building
and Road Research Institute is working on the production of an
alternative product, known as Pozzolana cement, which can use fly ash,
volcanic ash, pumice or any material blend which reacts with lime and
water to form a mass. The manufacturers describe the initiative as a
potentially useful boost for the construction sector, provided standards
are met. The Institute is developing a machine with a daily production
capacity of up to 5,000 tonnes a day and says the alternative cement
could also be used in conjunction with Portland cement to provide an
affordable construction material for housing and other building projects.
Warning of higher SA fuel prices

The South Africa government has been warned that its determination to
see cleaner petrol and diesel production by 2017 will have to be passed
on to consumers, with a knock-on impact on the economy. The South
African Petroleum Industry Association said that its members would be
unable to foot the bill for making the conversion to cleaner fuels and that
the government would have to ensure that the costs would be recovered
through the price structure, which meant passing them on to end-users.
The refineries stress that with fuel prices regulated by the government,
they were being squeezed between higher production costs and price
controls; they have been encouraged by this years budget which spoke
of a support mechanism for biofuel production and refinery upgrades but
the governments intentions remain uncertain. The refiners said they
were conducting talks with the Department of Energy and the National
Treasury and were hopeful that policy would become clearer during the
summer.
_
Official Retail Fuel Prices in Sub-Saharan Africa March 2013

25
Country
Type
Local price/litre $ /litre
South Africa (Gauteng)
Petrol
R13.08
$1.43
Companies
News
May 23: Equinox International, the infrastructure technology
company, said it was opening a new headquarters in Lagos, Nigeria.
May 15: South African state rail and ports operator Transnet said it
will invest R15.7 billion ($1.71 billion) in fiscal year 2014, up 12% from
the preceding year.
May 1: General Electric of Nigeria said the sustainable development
of Nigerias infrastructure was a key factor in attracting foreign direct
investment into the country.
April 23: Bharti Airtel, Indias largest telecommunications company,
agreed to buy Warid Telecom in Uganda, The deal will make it the
second-largest telecom operator in the country.
April 23: Total South Africa said that following agreement on a new,
15-year lease with Transnet National Ports Authority in Durban, it would
invest R140 million in upgrading its Durban Island View lubricants plant.
April 14: Indian engineering company Larsen & Toubro said it was
seeking partners in Africa to bid for airport and power projects.
April 12: Telecommunications group MTN said it may spend $8
billion on acquisitions in Africa, Asia and the Middle East.
April 4: Rail engineering group Racec, based in Cape Town, said it
had secured short-term finance to fund any dispute resolution
proceedings arising out of a railway project in Sierra Leone.
April 1: Chinese mobile phone maker Tecno has agreed a deal with
local partner Zenco Communications to exclusively market its phones in
Lagos, Nigeria.
March 16: Airports Company South Africa said international
passenger traffic using its airports rose by 2% last year.
March 4: Egyptian authorities barred the chief executive of Orascom
Construction Industries from leaving the country while allegations of tax
evasion are investigated.
Analysis
BPs growing confidence in Africa
BPs decision to invest more than R5 billion in South Africa and
Mozambique over the next five years on building and upgrading
infrastructure represents a clear vote of confidence in its ongoing role
across the African continent. Much of the investment is focused on South
Africa, where the company has recently opened with Sasol a fuel depot
at Alrode outside Johannesburg, and where it will now invest in various
projects, including refinery, terminal and rail network operations.
Upstream, the group is also pursuing business opportunities in Angola,
Algeria, Namibia, Libya and Egypt while, downstream, it is improving and
upgrading fuel import infrastructure in Mozamibique.
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26
Transnet defends monopoly

South African state transport operator Transnet mounted a vociferous
defence of its monopoly ownership of the countrys eight ports and 16
cargo terminals, declaring that it would make no sense to allow other
operators to enter the market. Transnet chief executive Brian Molefe said
the business represented a natural monopoly as ports did not compete
against each other, so the only question to be asked was whether they
performed better in state or private hands? Income from its ports and
terminals account for around 40% of Transnet earnings, with revenues
running at $1.7 billion one-third of group sales. But it will be the
government and regulators who decide whether Transnet continues to
have a free run on the sector and that cannot be guaranteed with
companies like Bollore of France openly making clear its interest in
expanding its African ports operations. Bollore manages 14 ports but
says it wants to raise this to 19 and is investing around 300 million
annually to expand and improve its African assets. It is particularly keen
to expand in South Africa and the authorities may soon have to consider
whether some degree of private participation in the countrys ports
management, not least to share investment and risks, is desirable.
Mi-Fone to manufacture in Nigeria

Mobile phone maker Mi-Fone, based in Hong Kong but with regional
headquarters in the United Arab Emirates, says it is finalizing plans to
build a $30 million manufacturing plant in Nigeria. The new factory is due
to come on stream later this year and while its output will be destined for
the rapidly growing Nigerian market, the manufacturing base will enable
to company to pursue its strategy for becoming a pan-African phone
brand. It already supplies phones to 14 African nations. Chief executive
Alpesh Patel says Mi-Fone will focus on affordable smartphone sales,
although low-end models would also be available, though the emphasis
will vary, depending on local market needs.
African Clean Energy sets the pace

Indian wind turbine maker Suzlon Energy and its local partner African
Clean Energy Developments (ACED) started work on what will be the
continents largest wind farm the 138.6 MW Cookhouse project about
150 km north east of Port Elizabeth in Eastern Cape. The first batch of
giant turbines there will be 66 in total arrived in early April and the
farm should be supplying power to the countrys electricity grid by Q2 of
2014, providing enough energy for 145,000 low-income homes. The R2.4
billion project was among the first selected in the first round of the South
African governments renewable energy procurement programme. ACED
is a joint venture between African Infrastructure Investment Managers,
owned by Old Mutual Investment Group and Macquarie Capital, and
Mauritian-registered AFPOC. It is fast establishing a platform for the
development of renewable energy assets and its plans embrace in
excess of 1,500 MW of wind and solar projects under the governments
renewable programme. The Cookhouse Wind Farm Community Trust,
whose beneficiaries are the local communities, holds a 25% stake in the
project.
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Wind Towers builds Port Elizabeth factory

South Africas first wind tower manufacturing plant, to be built at a cost of
R300 million outside Port Elizabeth, will produce its first units by
November and reach full output early next year, owners DCD Wind
Towers announced. The company, a subsidiary of South African based
engineering group DCD, will supply around 100 tubular towers a year,
possibly rising to 180, which will be used by successful bidders in rounds
two and three of the governments independent power producers
programme. The unit will create nearly 600 construction jobs and 200
operational posts once it is in production and will help lend weight to
efforts by organisations like the Coega Development Organisation (the
factory will be sited in the Coega Industrial Development Zone) and the
Industrial Development Corporation to establish the Eastern Cape as an
energy hub.
Tanzanian company powers up rural areas

A Tanzanian-based energy company has big ambitions to grow a
business that sells pre-paid solar-powered electric to rural consumers,
forecasting that it could be supplying 10 million off-grid homes across
Africa within the next decade. Off.Grid: Electric, located in Arusha, has
developed a system for delivering power through a system that retrofits
off-grid cell phone towers as solar charging hubs and then distributes the
power to local communities. Consumers who would otherwise be using
kerosene lamps and back-up generators can access electricity under a
plan that costs as little as $6 to install and $1.25 a week to run for two
house lights and a cell phone charger. The major obstacle was the
location of the towers, which are invariably some distance from peoples
homes, requiring costly distribution lines. But the company has
developed systems that can be deployed inside users homes. The
company claims the technology will allow it to serve consumers that the
national grid does not find profitable enough to supply.
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Finance and Investment

News
May 27: The African Development Bank said it plans to inject more
than $9.5 billion into its African Development Fund for onward grants and
loans to African countries.
May 23: The Nigerian government said the $500 million African
Development Bank loan to fund power infrastructure had been activated.
May 24: The African Development Bank launched its second Uganda
shilling denominated bond on the domestic capital market.
May 17: The Moroccan government said it was expecting an annual
loan package of $1 billion from the African Development Bank for
infrastructure projects over the next four years.
May 17: Africas economic development was being back by a
hemorrhage of illicit financial flows, which may be getting worse, the
African Development Bank warned.
May 16: African nations should focus on smaller infrastructure
projects that required less financing, Jay Ireland, chief executive of
General Electric Africa said.
May 15: Ghana said it planned a Eurobond worth up to $1 billion to
refinance debt and to fund infrastructure projects.
May 14: The Development Bank of Southern Africa said it aimed to
attract local and foreign pension fund money into infrastructure
investments.
May 10: The City of Johannesburg said it had budgeted R30 million
for infrastructure development for the next three years.
May 8: The Central Bank of Kenya cut its central bank rate for the
first time in a year, from 9.5% to 8.5%.
May 2: Diamond Bank of Nigeria said it was planning its biggest ever
fund raising up to $750 million in shares or bonds to finance more
projects.
April 29: African states were ready to provide favourable conditions
for Russian business to join infrastructure projects, Russias foreign
minister said after talks with the African Union Commission.
April 26: The African Development Bank said it would hold a future
annual meeting in Ghana if the country was ready to host it.
April 25: Nigerias National Economic Council approved a $9 billion
loan from lenders for investment projects.
April 24: South African metalworkers pension funds said they would
invest $1 billion in renewable energy projects within the country.
April 22: The World Bank confirmed it was working on setting up a
global infrastructure facility to channel finance into priority projects.
April 20: More than 800 infrastructure projects worth a combined
$706 billion are in assessment, planning or construction stages in Africa,
according to a report from Ernst & Young.
April 15: Stanbic Bank of Ghana lent Tanzania $600 million to
finance road and energy projects.
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Analysis
AfDB - African capital markets must do more
The African Development Bank (AfDB) calculates that Africa needs
around $390 billion over the medium term and trillions of dollars in the
longer term to finance its infrastructure development and that the
continent should play a bigger role in raising the vast sums of finance
that is needed. Early May brought news that the bank itself is trying to
help solve the problem via the creation of an infrastructure bond that
could be as large as $50 billion, first targeting the foreign reserves of
African banks and, secondly, sovereign wealth funds, pension funds and
other global investors. If African banks alone contributed 5% of their
reserves to the bond, the AfDB acting as an investment conduit could
raise $22 billion. The development followed publication of a new report
by the AfDB on structured finance techniques and economic growth in
Africa. It says that rapid economic growth across the continent is creating
a pool of financial resources and now that domestic capital markets are
growing and becoming more sophisticated in several countries, Africa
must start to leverage its own resources more in order to ensure that
badly needed infrastructure projects materialise. It points out that Africas
own natural resource extractive industries will contribute more than $30
billion annually in government revenues over the next 20 years and that
some of these revenues could help fund a substantial part of
development budgets. As a result, AfDB concludes, there are growing
opportunities for the use of project bonds; Kenya, for example, has
launched infrastructure bonds from both central government and from
state-owned enterprises such as state utility KenGen while other
emerging markets, particularly in Latin America, are using bonds as a
way to catalyse investor interest. But no-one is suggesting that the
spread of project bonds will be an easy or a quick fix, given that the
product has no real track record on the continent and that while pension
funds and institutions are interested in buying the cashflows of mature, or
at least completed, infrastructure assets, they will prove a lot more
reluctant to take on such up-front risks. Many project finance deals are
also government linked, so governments will have to demonstrate that
their domestic capital markets operate to the highest standards before
potential investors are ready to participate. Financial market reforms will
also be an essential pre-requisite in many countries before efficient bond
markets develop enough to become a primary course for infrastructure
finance.
Rwanda issues infrastructure bond

In April, Rwanda became the latest sub-Saharan country to issue a debut
international bond, primarily to refinance infrastructure projects. The $400
million bond was issued with a yield of 6.875%, with a 10-year maturity
and reflects growing investor appetite for African sovereign bonds.
Rwanda Central Bank governor John Rwangombwa, said the bond was
specifically for infrastructure projects and not to help reduce the budget
deficit We wanted to finance various economic and structural projects
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30
and their costs added up to $400 million. The fact that we were able to
sell our story shows that we are strong managers of the economy and
committed to implementing new programmes.
Africas Sectoral Growth
Source: McKinsey Global Institute
China not just after natural resources

The announcement in April that South Sudan has clinched a major loan
deal with China to help finance a range of post-war infrastructure
projects, such as the half-built Juba International airport, key roads and
vital electricity links, is yet another indication of the donor countrys
spreading influence in Africa. Just how far China is prepared to go in
what it sees as a programme of mutual co-operation of benefit to all
parties has again come under the spotlight with the publication of
research data by William and Mary College in the US state of Virginia
which suggests its soft power financial commitments on the continent
between 2000 and 2011 were significantly larger that previously
estimated, though still less than the estimated $90 billion pledged by the
United States. Possibly even more surprising, however, is evidence to
suggest that the countrys involvement does not principally centre on its
need for resources, as invariably portrayed. Of 1,700 projects identified,
worth $75 billion, there are few mining projects while transport, storage
and energy initiatives account for some of the largest sums. Health,
education and cultural projects have also attracted huge chunks of
investment examples being a school for the visual arts in Mozambique
and a 1,400-seat opera house in Algeria. Less than a fifth of the
database projects ($16m) would count as official development assistance
under OECD rules. The findings may well fire up the ongoing debate
about Chinas intentions in Africa, possibly rebutting traditional criticism
that it is engaged in a one-way resources grab, in return for which it
supplies cheap consumer goods. Critics will claim, however, that many
non-infrastructure projects are intended merely as upfront sweeteners
to win longer-term advantage.
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More AfDB loans for infrastructure

The critical role of the African Development Bank in helping infrastructure
development across Africa has been further underlined with a fresh
tranche of grants and loans. A principal beneficiary has been Nigeria,
which has received $3.75 billion from the bank since it began operations
in the country 42 years ago. At the start of this year, $2.17 billion dollars
had been approved for thirty active projects 40% in the public sector
and the balance in the private sector and, in announcing the banks
2013-2017 strategic plan in April, it said that it had just approved N47
billion ($300 million) loans for improving Nigerias transport network,
power capacity and other infrastructure programmes. The bank also
revealed that it has provided $211.6 million in grants and loans to Ghana
since 2012, a record year for its engagement within the country, where it
has operated since 1973. Overall, AfDB says it has financed 105 loans
and grants in the country, valued at around $3.75 billion, largely in
transport, energy, agriculture, water and sanitation. In March the AfDB
also approved $73 million of grants and loans to Malawi, largely centred
on agriculture but also including finance for the rebuilding of one of the
countrys major trunk roads, running from Mzuzu to Nkhata Bay, seen as
vital for economic growth in the countrys northern region.
SA Development Bank to refocus lending

The Development Bank of southern Africa has acknowledged that in
recent years it had veered away from key sectors of its core mandate,
straying into areas such as agriculture, tourism and leisure, but that it
now intended to refocus its efforts on infrastructure projects across
Southern Africa. The bank, which is wholly-owned by the South African
government and is expected to make job cuts after recent losses, says it
aims to have a loan book worth R91 billion by 2017. It would be
identifying projects in transport, water, energy and IT and aiming to work
in partnership with governments to help bring them about. As a result,
there would be less emphasis on supporting municipal projects. The
bank is now a signatory to two agreements reached at the BRICS summit
in Durban the Infrastructure Core Finance Agreement for Africa and the
Co-operative Agreement for Sustainable Development.
Djibouti seeks $5.9 billion in loans

Djibouti is in talks with India, China, Brazil, Russia and some Arab
investors to finance a series of infrastructure projects, including a
doubling of capacity at the Doraleh container port to 3 million containers
annually by 2015 and a $600m oil refinery that will allow for the import of
crude oil from South Sudan by pipeline. There are also plans for a $2.6
billion LNG terminal that will enable the annual export of 10 million cubic
metres of gas from Ethiopia to China from 2016. The country intends to
create six ports to handle commodity exports; there will be a new facility
at Tadjourah and work has started on building another port at Ghoubet.
South Africa leads investment drive

South Africa invested in more projects throughout the rest of Africa last
year than any other country, especially in helping to develop the service
sectors needed to diversify economies in the region, according to a
report from Ernst & Young. It calculates that while China and the
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32
European Union remain the biggest investors in value terms, South

Africa is playing a leading, strategic role as multinational corporations
expand across the continent. Most of the new projects attracting foreign
direct investment last year were in service sectors such as banking and
telecommunications, which are proving to be the biggest job creators,
and South Africa led the way. Michael Lalor, from Ernst & Young, says
that the countrys growing investment in the service sectors mainly
financial but also logistics and transport is helping to reduce
dependence on natural resources and to diversify economies. Investment
flows into Africa fell last year, in line with the global trend, but have risen
by a compound rate of 12.8% since 2007, according to Ernst & Young.
The main South African companies investing into Africa were MTN,
Standard Bank, Shoprite, Sanlam, Tiger Brands and Nampak.
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33
Policy
News
May 23: The World Trade Organisation said that East African
governments had to improve roads, ports and trade procedures if the
region was to meet its full economic potential.
May 14: African countries could not afford to adopt a stop-go
approach to infrastructure development and had to ensure that it was a
continuous process if skills were to be retained, Eskom chief executive
Brian Dames said.
May 9: The infrastructure boom in Africa presented governments
with a great opportunity to work with private investors to root ourt
corruption, Deloites South Africa said.
April 23: Large revenues from mineral exploitation could, if used
wisely, fuel economic growth, cut poverty and transform Africas state of
development, the World Bank said.
April 20: Libya said it was going to invest $314 million on building
stadia this year to host the 2017 Africa Cup of Nations, helping to
maintain the countrys double-digit growth rate.
April 18: Africas health sector needs at least $30 billion of
investment over the next ten years to bridge the health infrastructure
gap, a senior World Bank health specialist said.
April 17: South Africas minister of finance unveiled plans to finance
R827 billion worth of infrastructure projects over the next three years, up
from R642 billion over the previous three year period.
April 10: The Angolan Ministry of Energy and water defined the
expansion of the countrys energy networks as its budget priority for the
period up until 2016.
April 8: Gemalto, the Dutch-based digital security specialist, was
appointed prime contractor and turnkey supplier to provide Ghana with
a new border control and management system.
Analysis
World Bank calls for key partnerships
Africas economies may be showing strong growth but their record on
competitiveness remains poor by international standards, demanding
big improvements in public institutions and infrastructure, according to a
new report* on competitiveness published in May by the World Bank. In
order to achieve that, it concludes, far great collaboration between
public and private sector is an urgent priority if Africa is to secure better
roads, efficiently run ports, reliable electricity and other infrastructure
improvements that will make countries more attractive to job-creating
investors. With the World Banks own figures suggesting that the
continent needs $93 billion a year over the next decade to fund its
infrastructure needs (15% of the regions GDP) $60 billion for new
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34
projects and the rest for maintenance the need for securing finance
from the widest possible range of options is paramount. Enter public
private partnerships (PPP) which increasingly are being considered as
individual nations seek to redress their infrastructure deficits. But this
development finance model, in which the state shares risks and
responsibilities with private companies but, ultimately, retains control of
assets, throws up many challenges if it is to deliver value for money and
give the investor confidence. The most significant can be political
instability and a shortage of capacity and experience in a public sector
that is used to conventional public procurement rather than working in
collaboration with the private sector. Case studies suggest that PPPs are
complex, demanding and time-consuming but that, under the right
conditions and in the right sectors, they can offer benefits to
governments, the private sector and to consumers. Perhaps the biggest
obstacle, however, is convincing consumers that free, undervalued or
heavily-subsidised services and infrastructure cannot be sustained and
that the price of progress, apart from potentially higher user costs, is
conceding the need for increasing, carefully regulated private sector
involvement. *The Africa Competitiveness Report 2013. World Bank.
IFC has to step up game in Africa

The International Finance Corporation, the World Banks private sector
lender and adviser, has acknowledged that it, too, has to show the way in
Africa by becoming more ambitious when it comes to identifying key
bottlenecks and being more bold in delivering infrastructure projects and
services. Incoming IFC head Jin-Yong Cai says the organization has to
step up its game in ensuring deals are put into place that could help
Africa clinch infrastructure projects required to help with the continents
transformation. There are deals that can be done but we need to make
them bankable. To do that we have to find ways to mitigate risk, allocate
risk and create an investment climate that gives investors clarity and
transparency. He said the global financial crisis and stringent capital
requirements had reduced the number of big banks willing to provide
project financing; local banks were willing to step in but did not have the
capacity to provide long-term loans for infrastructure investment. Last
year, IFC mobilized $3.4 billion for infrastructure globally, of which $688
million was earmarked for Africa.
Maintenance deficit threatens programmes

The emphasis on building major new projects across Africa is proving to
be to the detriment of the continents existing infrastructure, creating a
maintenance deficit in which means about 40% of existing assets now
require some form of attention. The problem, according to South Africas
Industrial Development Corporation (IDC), is that the range of skills
needed to maintain them is in short supply. To help address the problem,
the Pan-African Capacity Building Programme (PACBP) part-funded by
the IDC as well as the Development Bank of Southern Africa and Agence
Franaise de Devloppment played host to the first intake of students,
all government officials from across Africa, who will sit for a new Masters
Degree on infrastructure management that is in the process of being
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35
developed. The intention, says the PACBP, is to create a network of

technically equipped professionals across Africa. The skills shortage
associated with the initial development of infrastructure projects was
also highlighted recently by Pravin Gordhan, South Africas Minister of
Finance, who said that slow progress with many capital projects created
major frustrations and that delivery by the public sector was
fundamentally handicapped by a shortage of planners and engineers
with the ability to prepare suitable concept specifications and tenders.
To add to the problems, poor capital expenditure planning and badly
managed procurement programmes were commonplace.
Republic of Congo gears up for Games

The Republic of Congo is playing host in November to the Infrastructure
World Initiative, bringing together African governments and international
corporations, but in the meantime it is pursuing its own extensive
building programme ahead of the African Games, which it will host in
Brazzaville in 2015, the city where they were first held in 1965. Officials
are now engaging with countries like South Africa to leverage their
experiences from staging similarly large events, such as the 2010 World
Cup. Congos President, Denis Sassou NGuesso says the African
Games will be used to help further stimulate economic growth in a
country that has been regularly achieving an annual GDP growth rate in
excess of 6%. Almost $3 billion has been invested in infrastructure over
the last decade, including the construction of eight airports, more than
1,000 km of roads and a six-fold increase in electricity generating
capacity. Ongoing projects include the construction of more power lines
to unserved rural areas, the improvement of power distribution networks
in Brazzaville and Pointe Noire, the rehabilitation of the Djou Dam and
construction of the Liouesso Dam. Feasability studies for construction of
the Dream Coastal Road, which will follow the Congo River and include
a multi-million dollar viaduct are being conducted by French consulting
group Egis International. The first phase will be funded by the French
Development Agency and the second phase by the Republic of Congo
government.
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36
MARKET INDICATORS
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37
Summary of Recent News

Transport and Distribution
Mar 5: Zambia awarded a $40 million contract to Dalbit International to build four fuel storage depots. The new depots
will boost the countrys strategic petrol storage to 23 days supply.
Feb 28: The South African subsidiary of Hamburg-based Oiltanking said it would buy Grindod Tank Terminals, a
division of freight logistics and shipping company Grindod, for an undisclosed sum.
Feb 19: Toyota Kenya opened a Sh500 million ($5.83 million) truck and bus assembly plant Changamwe.
Feb 14: Niger said Turkish Airlines will be a partner in a new national airline for the country.
Feb 13: The Mauritian government launched tenders for a 28- km light rail system linking Port Louis and Curepipe.
Feb 13:The South Korean government said it was conducting a feasibility study of building a shipyard and repair
facilities in Equatorial Guinea.
Feb 4: APM Terminals opened a new 7.3 hectare inland container freight station 4 kms from Kenyas primary port of
Mombasa. The group also unveiled plans to invest $135 million expanding its handling capacity at the Lagos-Apapa
container terminal in Nigeria.
Dec 11: South Africa transport group Transnet said it would be going ahead with the construction of a dedicated
berthing terminal for cruise liners in Table Bay Harbour, Cape Town.
Energy
Mar 7: Construction work resumed on the Medupi power plant in South Africa following a period of labour unrest.
Mar 4: Denmark agreed to offer technical assistance and DKr 40 million ($6.9 million) financial support for the
development of wind power in South Africa.
Feb 22: The European Union approved a 68 million 88.4 million) grant to improve power generation and
transmission in Burundi.
Feb 21: Sierra Leone energy minister Oluniyi Robin-Coker said output from the countrys Bumbuna hydroelectric
power plant halved to 10 MW due to maintenance work.
Feb 8: The International Atomic Energy Agency concluded a 10-day review of South Africas nuclear infrastructure.
South Africa is expected to make a decision on a nuclear plant building programme by June.
Jan 31: US power group General Electric said it would invest $1 billion in Nigeria over five years building a
manufacturing plant to support power generation and oil production.
Jan 17: Forty eight foreign and local gas plant workers were killed in a terrorist attack on a gas facility in southern
Algeria.
Jan 10: Coal shipments from the Richards Bay coal terminal in South Africa in 2012 rose 4.3% to a six-year high of
68.3 million tonnes.
Jan 1: Botswana Power Corporation entered a new 100 MW three- year firm-basis supply contract with South African
power generator Eskom. It also agreed a 200 MW supply on a non-firm basis to July 31.
Telecommunications
Feb 21: Moroccan telecommunications group Maroc Telecom said net profits for 2012 fell 17% to 6.7 billion dirhams
($783 million).
Feb 8: Econet Wireless Zimbabwe bought out the minority shareholders in local retail financial group TN Bank as part
of its internet banking strategy.
Feb 6: South African mobile phone group MTN agreed to buy the 50% shareholding in MTN Cyprus owned by its
local partner Amaracos Holdings.
Jan 31: Kenyan telecoms group Safaricom suspended a total of 2.5 million unregistered SIM cards as part of a
government crackdown on fraud.
Jan 22: South Sudan will lay a fibre-optic link this year between the capital Juba and offshore submarine cables, state
telecom officials said.
Jan 21: Zambian telecoms group Zamtel said it planned to build 400 new 3G sites this year as part of its plan to
double its subscriber base to 2 million.
Dec 20: Vodacom Tanzania said it would invest Ts250 billion ($153 million) developing its network in Tanzania in
2013.
Dec 14: Angola Cables inaugurated a fibre optic submarine cable linking Angola and Brazil.
Inputs
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38
Feb 21: Malawian government workers ended a two-week strike following agreement to raise salaries between 5%-61%,
depending on pay grades.
Companies
Feb 25: South African Breweries said it would build a R700 million ($76.4 million) maltings plant in Gauteng, South
Africa.
Feb 25: South African builder WBHO reported a 43% rise in revenue to R12.02 billion for the six months to endDecember, with post-tax profit7.8% higher at R412 million.
Feb 25: South African aluminium group Hulamin boosted headlineearnings 19% to R64 million for the year to end
December. Operatingprofit rose 44% to R245 million.
Feb 21: South African equipment leasing group Eqstra made a R146million offer to buy the remaining 67.2% of
engineering group ProtechKhuthele it does not already own.
Feb 20: South African and US business groups set up the UnitedStates-South Africa Business Council to encourage bilateral tradebetween the two countries.
Feb 18: US beverage group PepsiCo opened a Sh2.6 billion ($30.3million) soft drinks manufacturing plant in Nairobi.
Feb 15: US electrical infrastructure contractor Symbion acquired a67% stake in troubled South African power
transmission and distributiongroup EJ Power.
Feb 15: German group G Power Cement announced plans to build aCFA franc 45 billion ($89.2 million) cement plant in
the coast city ofLimbe, Cameroon. The plant will be operational by 2015 and have anannual output of 800,000 tonnes.
Feb 13: South African building contractor Group Five boostedoperating profit 23% to R270 million in the six months to
end-December.Revenues were 16% higher at R5.1 billion.
Feb 6: South African builder Murray & Roberts cut its Middle Eastworkforce by 28% following a drop-off in business in
Qatar.
Jan 22: JSE-listed construction and engineering group Basil Read was awarded a R279 million two-year contract to
upgrade a 33-km section of South Africas National Route 5.
Dec 12: South African cement group PPC bought a 51% stake in Rwandan cement company Cimerwa for $64.9 million.
Finance
Feb 26: Tanzania set an initial price guide of 600 basis points over Libor for its forthcoming issue of a $500 million sevenyear amortising bond.
Feb 22: Angola announced plans to raise $1 billion in a debut eurobond later this year to pay for infrastructure
development.
Feb 21: Kenyan electricity producer Kengen said it planned to raise Sh30 billion ($350 million) through a 20-year bond to
build geothermal power plants.
Feb 19: The World Bank approved an additional $60 million in financing to improve the availability of electricity in rural
Rwanda.
Feb 4: Botswanan Finance minister Kenneth Mathambo said the troubled Morupule B power station would receive a
further Pula 200 million ($24.3 million) funding in the current financial year.
Jan 31: Zambia Railways said it plans to issue a $500 million eurobond this year to fund expansion of the rail network.
Jan 23: The International Finance Corporation unit of the World Bank announced plans to issue its first nairadenominated bond, worth the equivalent of $50 million, to develop Nigerias domestic capital markets.
Jan 11: Ivory Coast signed a $500 million low-interest loan agreement with China's Export-Import Bank to build a 275
MW hydropower station near Soubre.
Dec 19: Zambia signed a $55 million loan agreement with the African Development Bank to support the 120 MW ItezhiTezhi hydropower and transmission line project.
Policy and Institutional Investment

Mar 6: The World Bank launched a major international campaign to expand the use of geothermal energy in developing
countries.
Feb 27: The South African Cement & Concrete Institute said it was closing down.
Feb 27: Tanzania rejected calls from local cement makers to impose tariffs on imports.
Feb 1: Kenya's National Construction Authority began a nationwide audit of the countrys 10,000 building contractors to
weed out bogus companies.
Jan 23: Kenyan president Mwai Kibaki attended a ground-breaking ceremony at the planned $15 billion Konza Techno
City project 60 kms southeast of Nairobi.
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39
Nedbank Capital
Investment Banking Infrastructure, Energy and Telecommunications
Mike Peo
Brett Botha
Head: Infrastructure, Energy and Telecommunications

Tel: +27 (0)11 295 8419
mikepe@nedbankcapital.co.za
Lead Principal Infrastructure

Tel : +27 (0)11 294 3402
brettb@nedbankcapital.co.za
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40
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June 2013 African Infrastructure Review

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June 2013 African Infrastructure Review

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African

African Infrastructure Review is a quarterly

Editor: Mike Cassell

Escape from Bretton Woods?

Per Capita GDP. Source: BRICS

Value of Imports and Exports of Goods/Commercial Services. Source: BRICS

no interest, with repayments stretched over anything up to 40 years. So will there be

BRICS..Banking on each other

Transport and Distribution

The Lamu Port-South Sudan-Ethiopia Transport (LAPSETT) corridor

Kenyas mega-port plans advance

Uganda enlists World Bank help for roads

More road tolls for South Africa

South Africa must rethink energy plans

Ghana struggles to end load shedding

floating production and storage vessel Kwame Nkrumah, which services

Kenya insists it will go nuclear

Kenya-Ethiopia power highway launched

Rural infrastructure delaying mobile spread

growth as related infrastructure expands. The African Development Bank

MTN denies anti-competitive claims

a third of the price to other networks, amounting to a calling club for

Ghana faces water emergency

supplies to 600,000 people living in rural areas via the provision of

Water subsidies must end

Source: UN Aquastat/World Bank

New controls to halt price-fixing

a fast-track system intended to save time and avoid a lengthy legal

Bitumen tariffs lifted in South Africa

Dangote starts to export cement

Nigeria explores alternative cement product

Warning of higher SA fuel prices

Official Retail Fuel Prices in Sub-Saharan Africa March 2013

Transnet defends monopoly

Mi-Fone to manufacture in Nigeria

African Clean Energy sets the pace

Wind Towers builds Port Elizabeth factory

Tanzanian company powers up rural areas

Finance and Investment

Rwanda issues infrastructure bond

Africas Sectoral Growth

Source: McKinsey Global Institute

China not just after natural resources

More AfDB loans for infrastructure

SA Development Bank to refocus lending

Djibouti seeks $5.9 billion in loans

South Africa leads investment drive

European Union remain the biggest investors in value terms, South

IFC has to step up game in Africa

Maintenance deficit threatens programmes

developed. The intention, says the PACBP, is to create a network of

Republic of Congo gears up for Games

Summary of Recent News

Policy and Institutional Investment

Investment Banking Infrastructure, Energy and Telecommunications

Head: Infrastructure, Energy and Telecommunications

Lead Principal Infrastructure

Nedbank Disclaimer and copyright

2013 Nedbank Limited

African Infrastructure Review June/August 2013

Image page 6: Globalpost.com

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