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Tanzania - Growth in Data Business Attracts Telecoms

16 September 2010 | By Abduel Elinaza

Dar es Salaam — The telecoms market is shifting from the saturated voice to data business, after heavy investment in the ICT infrastructure including undersea marine cable.

 

Data business is more profitable, which is estimated to generate an average of between USD 5.0 and 7.0 per month per user is outpaced by data that have a return of around USD 15 and 30 per month per user.

 

The change of business pattern comes after the introduction of marine cable to the country last year. Wholesale data prices have plummeted by almost a half of what was charged last year from an average of 200,000/- per 10 gigabytes per month.

 

Simbanet Corporate Sales Manager, Mr Chintu Patel, told the 'Daily News' that fiber optic cables improve the quality of services, speed, while creating ample capacity for the benefit of customers.

 

Data return per user per month is almost double of what the voice is generating per month: "Sending or receiving data has become a trend of the day," Mr Patel said. The Tanzania Telecommunication Company Limited (TTCL) Public Relations Manager, Mr Amin Mbaga, said the voice business in today world 'is no longer a cash-cow' in comparison with data.

 

He said calling business has relatively no big impact on revenue as people talk little: 'But sending data is voluminous and that is business,' especially in this era of globalization.

 

Mr Mbaga said the TTCL investment portfolio is directed to data as companies are changing as well from voice to data. On top to that data business is facilitating the country's economic growth.

 

According to Tanzania Communications Regulatory Authority's voice telecom subscription reached 17,985,919 subscribers up to the end of March, this year. Mr Patel said 'at the moment we are facing stiff competition' in the sector which has attracted about 20 players dealing with data business minus telecoms firms.

 

The competition would not only lower product prices but also migrate to "other upcountry towns after saturating the Dar es Salaam market," Mr Patel predicted. Zantel, Tigo, Zain, TTCL, Sasatel, Benson Informatics and Vodacom are now dealing in data business where SMS alone generated 1.07bn/- between October 2009 and March 2010.

 

Vodacom offers internet for as little as 500/- per day, with Vodacom's Cheka Internet. The company is charged 0.25/- per Kilobyte (KB). Following data business hot-up, Tanzania Communications Regulatory Authority (TCRA) embarked on a bid to collect customers data per provider.

 

 

Bharti hires IBM to manage African tech operations

20 September 2010 | By BusinessDailyAfrica

Bharti Airtel last week moved to deepen its presence in Africa with an announcement that it would be handing over its entire IT system management to global giant IBM. The agreement gives IBM a foothold in the growing African IT services market. It will deploy and manage state-of-the-art information technology infrastructure and applications to enable Bharti Airtel bring affordable and innovative mobile services to remote locations in Africa.

‘This transformational business delivery model will be a first in Africa’s telecom industry and will bring enhanced efficiencies to our operations and help us deliver world-class mobile services to

our customers,’ said Sunil Bharti Mittal, the chairman and managing director of Bharti Airtel. Analysts attribute Bharti’s success in offering low tariffs in its in its Indian home market to the implementation of comprehensive cost-cutting measures which the company said its keen on extending to its African operations.

IBM plans to deploy advanced technologies that it has created through its research arm, including the Spoken Web, a voice-enabled Internet technology that allows users to access and share information simply by talking over an existing telephone. 

 

‘The potential for this product is tremendous, especially in rural settings. You can imagine a farmer being able to find out the latest prices, seek new markets and even sell produce simply by talking into the phone, with little technological knowledge needed,’ said Samuel J. Palmisano, chief executive of IBM.

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Kenya - Mobile Industry Poised for Strong Growth

22 April 2010

Kenya has emerged as one of the leaders in ICT technology development in Africa. Since the liberalization of the Kenyan telecom sector in July 1999 and the formation of the country’s telecom regulatory body Communication Commission of Kenya (CCK), the country has witnessed a surge in the investments made in telecom infrastructure and has insured competitiveness in the country’s telecom sector. In the years to come, our research projects, that the country will witness a surge in the subscriber growth on the back of strong government support and increased competition level among the country’s telecom operators. As a result, our research “Kenya Telecom Sector Analysis” projects that the number of mobile subscribers in the country will grow at a CAGR of over 15% between 2010 and 2013. 

Our team of experts has further studied the Kenyan mobile market by segmenting it into various subsections: like by subscribers, by technology, and by service providers. At present, the GSM technology dominates the country mobile subscriber base accounting for around 97% of the overall mobile subscriber base. Various factors that are presently favoring the adoption of the GSM technology over CDMA technology have been extensively covered in our report. In addition to this, various opportunities in front of the CDMA technology have also been talked about in our report.

 

“Kenya Telecom Sector Analysis” gives an insight into the current market trends and substantiates the data with unbiased and rational analysis. The report provides industry forecast on various telecom segments based on feasible telecom industry environment in Kenya. These include: Fixed-line subscribers and penetration, Mobile subscribers and penetration, Internet subscribers and penetration, Broadband subscribers and penetration, and 3G subscribers.

 

We believe that the regulatory environment plays a significant role in the successful development of the telecom sector and, thus have tried to explain in detail the regulatory environment in the Kenyan telecom sector. The report also provides thorough analysis on the current and potential outlook of various emerging technologies, such as 3G, and WiMAX. Besides this, the research report also offers rational analysis on the telecom operators in the country.

 

 

Uganda - Telecom market revenues in Uganda to reach $1.23bn in 2015

9 September 2010 | By CRB Staff

The telecom market in Uganda generated $638m in 2009 and is estimated to grow at CAGR of 11.5% and reach $1.23bn by 2015, according to a new report from Pyramid Research. The Uganda's fixed broadband services is projected to join the mobile segment as new undersea cables land in the coasts of East Africa and the terrestrial fiber rings start reaching the country.

 

The report said that Ugandan mobile market is highly competitive, but the low level of mobile penetration at 32.8% in 2009 indicates that there is still much demand to be fulfilled. The main obstacle to increasing penetration has been the provision of affordable last-mile access to rural areas, where the majority of the Ugandans live and where income levels are low to justify individual subscriptions and handset ownership.

 

However, the report estimates that mobile subscriptions in Uganda to double during forecasting period and grow from 10.7 million in 2010 to 20.9 million in 2015, with a penetration rate of 52.7%. Pyramid analyst Kerem Arsal said that the real opportunity, however, lies in the broadband segment, and data revenue and adoption in East Africa will grow fast with the decline in the costs of international bandwidth due to the new undersea cables. "Adding to this the unfulfilled demand for Internet, the broadband market will comprise a quarter billion dollars in 2015, and fixed broadband will be the primary source of revenue growth in Uganda and will generate $229m in 2015," Arsal said.

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Tanzania - Dar Es Salaam Firm Touts E-Marketing

22 September 2010 | By All Africa

TANZANIA's business fraternity was on Wednesday challenged to utilise fully information technogy (IT) services by marketing their products online. SoukTrade.com Public Relations Officer Priya Patel told the 'Daily News' that the internet was one platform where everyone in the world could be connected within seconds. "It is an ideal platform for trade and marketing," she said. "Every corner of the world is on the internet, either socializing or making money. If that is the case, then why shouldn't Tanzania be one of those corners of the world that are on the internet and do business online.

She said that SoukTrade.com is a digital platform that creates opportunities for all trade players in Tanzania, as well as the whole of the East African Community in facilitating easier trade relations. Ms Patel said that the main aim of establishing such a platform was to bring buyers and sellers of various products in the region together.

 

This website offers businesses to create an online company profile, including a showroom where they can post their products and company information for free, she noted. The officer said that businessmen can view products, prices and search for buyers and suppliers using SoukTrade.com.

 

She added that there was no more hassles for businessmen to travel long distances, especially from upcountry to towns and cities all over East Africa and overseas, looking for their desired products and contacts of suppliers.

 

Indian IT firm set to invest in East Africa

By Trade Invest Africa Staff

Indian multinational firm The Institute of Hardware Technology says it’s setting up shops in East Africa to take advantage of opportunities in the region’s information technology sector, according to a report in the Daily Monitor.

 

Umesh Chaudhary, managing director of the IT training company, says Rwanda or Uganda, due to the ease of starting businesses, might be the company’s entry point to the region. The company plans to set up in Uganda through a master franchisee which will provide services with their technical and financial support, based on the company’s global business model. IHT also intends to replicate its model in India by extending IT training services in both urban and rural areas to improve IT access.

 

Global companies which recruit staff from the firm include; IBM, Bharti Airtel, TATA, Compaq, Siemens and The Gillette Company among others. Indian firms that have invested in Uganda recently, include telecoms firms Essar Group and Bharti Airtel, and tea companies Jay Shree and McLeod’s.

 

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Tanzania - TTCL mulls switching to new satellite

22 September 2010 | By Masembe Tambwe

THE Tanzania Telecommunications Company (TTCL) will save over 500m/- annually if it switches to new satellite provider, where it is going to pay on using the services, instead of the current fixed payment system.  "We are currently paying close to 1.5m US dollars (about 2.3bn/-) annually to Intersat at fixed rates, meaning that we are charged irrespective to our usage," the TTCL Chief Financial Officer, Mr Mrisho Shabani, said. 

 

Mr Shabani said this at a news conference in Dar es Salaam, when introducing the Regional African Satellite Communications Organisation (RASCOM) to the press.  He told the 'Daily News' afterwards that TTCL had sent a notice of negotiations to Intersat for reviewing the contract. 

 

"We hope to avoid the costs we are incurring by doing this. Our contract ends in 2016 and we will seriously think about employing the services of Rascom since their costs are cheaper," he explained.

 

The Rascom Director General and former TTCL Chief Executive Officer, Dr Jones Killimbe, said that knowing how the issue of affordability is of major concern, Rascom had purposely made sure that the satellite structure was cost-effective. RASCOM is an intergovernmental, commercial satellite organization.

 

 

Orange partners with Equity Bank to offer affordable devices

07 October 2010 | By Linda

With data access costs plummeting, Orange today moved to complete the package by addressing the issue of affordable devices. The landmark partnership with Equity Bank was signed by the Orange CEO Mickael Ghossein and Dr.James Mwangi the Equity Bank CEO in Nairobi. Growth in data access Ghossein said required a threefold approach targeting availability of bandwidth, affordable devices and reasonable pricing. The deal stipulates that Orange will provide the devices which will be available at all Orange shops countrywide while Equity Bank will finance their acquisition. Availability of affordable devices has been a hurdle for many Kenyans and Ghosse in said that this deal ensured that it would no longer be an impediment.

 

There are slightly over three million internet users in Kenya and over 20 million mobile subscribers. According to the recent Census report, a paltry 3.6 per cent of the Kenyan households have a computer while 63.2 per cent of households own at least a mobile phone. “In our estimation the ownership of mobile phones with internet access could be much lower”, said Ghossein.

 

Speaking during the signing ceremony, Ghossein said that Orange was committed to increasing the number of citizens who have access to both voice and data services. He noted that Orange was taking several measures to increase the speed and number of internet users in Kenya. Last week, the company launched a mobile internet service that costs a Sh 1 per MB, a few weeks after slashing its calling cost by more than half. In addition, Orange subscribers are set to benefit from even more reliable internet. This is after France Telecom-Orange signed an agreement for a new submarine cable in the Indian Ocean.

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VODAFONE Ghana outsources Tower Management to EATON Towers

05 October 2010 | By Africa Business

Eaton Towers, the African tower company, has signed a 10 year contract to take over the operations and co-location management of 750 telecom towers for Vodafone Ghana. Over the life of the contract Eaton expects to invest up to $80 million on upgrading and improving the existing towers and on improving Vodafone’s coverage in Ghana.

 

Over the life of the contract Eaton expects to invest up to $80 million on upgrading and improving the existing towers and on improving Vodafone’s coverage in Ghana. Eaton will also develop the existing infrastructure and build new towers. The agreement also enables Eaton to sell co-location and shared-infrastructure facilities to other mobile operators, generating future revenues from separate long-term contracts.

 

Tower sharing is a more cost-effective way for African operators to reach subscribers, with building and operating costs typically shared across multiple tenants. By outsourcing the management of its towers, Vodafone Ghana will immediately benefit from cost savings and significantly reduced capital expenditure.

 

Eaton will assume responsibility for all operational aspects of the passive infrastructure, including health and safety, security and power provision. Upgrades to the existing sites will include new power generation equipment and advanced management systems aimed at reducing diesel consumption and other costs.

 

Alan Harper, Chief Executive of Eaton said: “This agreement is good for everyone involved. Our co-location offering ensures that Vodafone’s infrastructure will continually improve, whilst maintaining the lowest possible operating costs. “Furthermore, our tower-sharing agreements will enable Ghana’s mobile operators to reduce costs, reach more subscribers and avoid the environmental impact of duplicating towers. “Most importantly, through our investments, and sharing of towers, Ghana’s mobile subscribers will benefit from better coverage and operators having a lower cost base – and that is good for economic growth and sustainability. We plan to bring the benefits of tower sharing to operators and subscribers across Africa.”

 

 

South Africa - New Cell C network rolled out

06 October 2010 | By Creamer Reporter

Six South African cities now have access to Cell C’s 4Gs network, after the evolved high-speed packet access (HSPA+) 900 network was launched in Durban and Pietermaritzburg. “Our 4GS network today covers around 98% and 93% of the city population of Durban and Pietermaritzburg respectively, and by January 2011 will cover 99% of both cities and their surrounding areas,” CEO Lars Reichelt said.

 

Cell C noted that, in real use conditions, its HSPA+ 900 network achieved average speeds of between 6 Mb/s and 7 Mb/s in downloads and speeds of between 1,5 Mb/s and 2,5 Mb/s for uploads, with a maximum technical throughput of 21 Mb/s in both cities. Since the launch of the 4Gs network in Port Elizabeth at the beginning of September, the network has been rolled in Bloemfontein, East London, Cape Town and now in Durban and Pietermaritzburg.

 

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Tanzania - Toshiba, Dell computers plan attack on brand counterfeits

30 September 2010 | By Guradian

Two major computer manufacturers, Dell and Toshiba computers, have decided to wage a war against counterfeits of their brands which are eating up their opportunities in Tanzania as well as other East African countries. Tanzania and East Africa in general is a major dumping destination for counterfeit Dell and Toshiba laptops and desktop computers, according to information made available to The Guardian. The two manufacturers want to flood the market with genuine Dell and Toshiba brands at affordable prices.

 

Dell and Toshiba computers plan to penetrate the market through Mitsumi Computer Garage Limited, a Kenya based company, with branches in Kampala and Dar es Salaam, a Ugandan newspaper disclosed recently. Toshiba Computers, a major manufacturer of lap top computers, external computer hard drives and cameras recently announced a partnership with the company, Mitsumi Computer Garage Limited, in which the firm will become a dealer in Uganda, Kenya and Tanzania.

Company officials say the partnership allows Mitsumi to have direct access to ex-factory Toshiba stocks which will be air freighted to the region from Germany and South Africa, cutting the length of waiting time between orders and delivery.

 

The Nairobi-based company has a similar agreement with Dell computers and plans to hold a press conference in Dar es Salaam today to explain how they are going to wage the war against counterfeits.

 

 

Kenyan Wins U.S. Software Competition

08 October 2010 | By Kevin

New York — A Kenyan software developer won the "Apps4Africa" competition sponsored by the US State Department on Wednesday. Charles Kithika developed a voice-based, mobile application that enables farmers to keep track of their cows' breeding cycles. Mr Kithika's innovation, dubbed iCow, will "help farmers get the most of their cows and their farms," the State Department said when announcing the awards.

 

Also honoured was an application that allows Kenyans to track the details of Constituency Development Fund projects in Kibera. Jamila Amin and Mikel Maron devised the software which can "review and map submitted reports on the real status of aid and development projects on the ground, in contrast to official government reports," the State Department said.

 

Secretary of State Hillary Clinton lauded the winners of the first annual contest in a video message from Washington. "Your work to develop 21st century solutions to Africa's challenges is a powerful example of what individuals can do to shape a dynamic, successful future," Mrs Clinton said.

 

Apps4Africa was launched in Nairobi in July as a US-sponsored contest to encourage technology entrepreneurs to build tools for non-governmental organisations and local communities.

 

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Wireless System Set to Revolutionise Transactions

11 October 2010 | By Johnstone

Payments for goods and services have been made easier following the launch a new solution that will use wireless platforms. The new system which has been launched by Paystream, will provide a central financial transaction interface for card and cash dealings, and the retailers' point of sale (PoS) terminals through the use of wireless telecommunication networks. It is expected to reduce the cost of transactions and improve reliability which has been lacking in the existing payment platforms that run on dial-up lines.

 

According to Paystream chief executive officer Sam Ndegwa, the payment system is expected to revolutionise transactional services by eliminating the need for cash-based payments. "The Paystream platform will enable merchants to shorten the transactional time, eliminate risk exposure through cash-based transaction and increase additional revenue through commissions," said Mr Ndegwa, with card based transactions gaining acceptance, Paystream expects to expand the reach of processing platforms in Kenya. Other payment services to be provided on the Paystream platform include topping-up of mobile phones and payment of utility bills such as electricity and water.

 

Paystream's entry into the Kenyan market will ensure that merchants can accept cash and card-based payments, including Visa, MasterCard, and debit cards issued by banks in the Kenyan market, as well as closed loop payment cards for select clients.

The system will centralise card based transactional services which are currently offered independently. This has forced retail outlets such as petrol station, super markets, drug stores, hotels and others to use separate PoS gadgets.

 

"Paystream is offering a unique and new product that will transform the way business is transacted in East Africa and beyond" said Ayisi Makatiani, CEO and Managing Partner of Fanisi Venture Capital Fund. "The Paystream business model indicates that African markets are ripe for payment systems that are ubiquitous, secure and easy to deploy," said Graham Gilmour the chief executive officer of Business Phone, a leading UK based firm that is partnering with Paystream in offering the service locally.

 

 

Kenya pumps $2.9m in building software hub

11 October 2010 | By Jevans

The outlook for technology and innovation in Kenya looks bright. As the country positions itself to ride the wave of web and mobile products and services, an emerging group of talented software developers, made up of fresh IT graduates and tech entrepreneurs, is opening a new growth area using technology. In a country where mobile phones are accessible to more than 50 per cent of households, high uptake of the technology is pushing more software developers to create solutions to tap into this global growth. Inspiration is coming from a number of successful software companies in Kenya, such as Craft Silicon and Software Technologies, two of the software pioneers in Kenya. University curricula are being updated with specialist courses. Big opportunities lie in the opening up of data, which will see more value-added services that will address emerging consumer needs. Mr Moses Kemibaro, co-founder of Dotsavvy Ltd, a digital services provider, says although Kenya has a number of local software development firms and entrepreneurs doing everything from building Sacco applications, mobile and web applications, it still lags behind.

 

“We have a long way to get to where India is today,” Mr Kemibaro says. India is the capital of software development and outsourcing in a global market estimated at $303.8 billion in 2008, an increase of 6.5 per cent from the previous year, according to market researcher DataMonitor, which forecasts that in 2013, the global software market will be $457 billion, an increase of 50.5 per cent from since 2008. Its software industry, mostly based in Bangalore, generated four million jobs, which accounts for 7 per cent of India’s total GDP, in the year 2008. India exports software and services to over 95 countries. It is these kind of stories that have the Kenyan Government smitten with the tech industry. It has created $4 million content generation grant for developers.

 

“We have seen the number grow,” says Communication and Information minister Samuel Poghisio. “It is a clear indicator that Kenya is rife with innovative talent and with requisite investment. It is expected that content will transform the way Kenyans live, work and play.”

 

This wave has given rise to hubs and labs to nurture innovation. One of them is Nairobi-based iHub, shorthand for Innovation Hub, founded by tech nerds and blogging enthusiasts, which seeks to link technologists, innovators and investors. Nailab, also based in Nairobi, incubates space for ICT-based start-ups. Nokia has also been active, with its Research and Sub-contracting Lab and User Experience Unit at the University of Nairobi. Google launched Android Market in Kenya, a distribution platform, to help developers sell applications developed for use on Android-powered cell phones. Recently, Safaricom unveiled Safaricom Academy at Strathmore University build IT talent for its business. Software developers have formed Skunkworks, a group that hosts online discussions with occasional real-life meetings.

 

Sharp eye on Kenya’s electronics market

 

Sharp Electronics, the Japanese manufacturer, has its eyes cast on Kenya, a market awash with cheap counterfeit electronics from China. How we made it in Africa’s Regina Ekiru caught up with Elji Taninaka, Sharp’s man responsible for sales in Africa, who was in Kenya for a two-day trip.

 

Kenya is the hub of the East Africa region due to logistics. In our point of view, operating in Kenya is a marketing strategy. Our success in Kenya will influence our entry and good performance in other East African states like Tanzania, Uganda and Ethiopia. It is very important for Sharp to grow and sustain this growth in Kenya. The demand for electronics in Kenya is huge. There is a growing market and demand for quality and hi-tech electronics. We do have headquarter offices in Egypt and South Africa. In the future we hope to open the same in Kenya (for the East Africa region) and in West Africa.

 

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Uganda: World Bank Gives $120 Million Loan for Power

 

THE World Bank has agreed to give Uganda a $120m loan to upgrade the Kawanda-Masaka transmission line.

This comes as support to the Governments' effort to connect quality electricity to towns and villages.

"Availability of electricity will increase opportunities for greater economic activity and improve the quality of lives of the people" Somin Mukherji, the World Bank team leader, said in a statement yesterday.

 

Part of the money, according to the World Bank, will be used to resettle people who will be displaced by the project, offer technical assistance during the project execution and build capacity in the energy sector.

 

The assistance comes at a time when the Government admitted that it had failed to achieve the 10% rural electrification target set 10 years ago.

Currently, rural electrification stands at 6%, according to energy state minister Simon D'Ujanga.

Uganda currently faces a 12-hour daily load-shedding after firms operating thermal power generators switched them off in protest of unpaid dues by the Government.

 

Today, Uganda's power supply stands at about 304MW, yet the demand for electricity is about 400MW, according to the Electricity Regulatory Authority (ERA).

This has created a shortage of over 50MW during the day.

 

However, the quality of electricity that the Kawanda-Masaka transmission line will extend to the rural people will depend on the availability of power.

Increased power generation, according to ERA, is expected to come from the Bujagali hydropower project which is near completion.

 

The World Bank has also approved a $50m policy loan for Uganda to build a robust financial sector which can support private sector growth.

"The loan will support the Government's financial sector reform programme, which aims at fostering financial intermediation and savings mobilisation," Javier Suarez, the bank's senior economist, said.

 

 

How to tap into Uganda’s virgin money market

6th July, 2011

IT pays to look beyond short term gain. This is what some visionary local entrepreneurs who chose to invest in a factory making AIDS drugs did and now their firm, Quality Chemicals is attracting some of the best global funding opportunities-only a dream to many local enterprises. 

Among the venture capitalists who have rushed in to seize and capitalise on the virgin money market in Uganda, ahead of the expected oil boom, are; Goldman Sachs, Morgan Stanley, Warburg Pincus, Norfund and Fanisi. Combined, they hold capitalisation level of over sh345b ($100b). 

Two other firms; Norfund from Norway and Fanisi from Kenya are also exploring the Ugandan market. Fanisi makes equity investments of between $0.5m - $3m per transaction in high growth businesses, including startups and early stage companies. 

Quality Chemicals is one of a few firms that have benefitted from the quickly growing venture capital funds. 

Venture Capitalists are wealthy individuals and firms who provide financing for start-up businesses or already existing business with high risk but high growth potential, by owning part of the business through equity or shares. 

“We see significant growth and opportunity in Africa, typically-we invest $4m to $6m per transaction, allowing us to target a niche market segment and companies that are cash generative and well placed to benefit from the rise of consumption of the middle class in frontier markets. Our focus sectors are healthcare, real estate, food processing, retail and consumer goods,” says Zain Latif, a principal with London based TLG Capital, a firm with a stake in Quality Chemicals. 

TLG Capital has invested over $7m in two Ugandan companies, Quality Chemicals and Vero Foods in the last two years. “A critical factor in investing in Quality Chemicals,” Latif said, “is because it is the only company in Africa certified by the World Health Organization WHO, to produce Anti-Retroviral drugs ARVs for HIV patients”. 

All of a sudden, there is money galore to lend to Uganda’s budding business especially Small and Medium Sized Enterprises (SME)’s. Not by commercial banks but by venture capitalists and investment bankers based in London and New York. 

Information Technology companies, software companies and bio-technology companies are among the popular choices to invest in, by venture capitalists due to their potential for high returns. This was experienced in India where venture capitalists entered the lucrative ICT industry in the 1990s and early 2000s. 

Per Emil Lindoe, Norfund investment director for Eastern Africa said Ugandan businesses could benefit from the array of management, ownership, technology and capital skills of Norfund. Lindoe said both financial institutions and small and medium sized enterprises stand to benefit. 

A series of information exchange and negotiations involving representatives of venture capital, brokers and potential beneficiary SME owners, precede a venture capital deal. 

“The advantage of venture capital,” says Susanna Wolf of the African Trade Policy Centre, “is that it provides equity instead of a loan. “Thus, no interest payments have to be made and no collateral is needed but the venture capitalist shares the risk and derives his returns from capital gains if the enterprise is successful. 

“Many venture capital funds do not only provide capital but also support the young enterprise with close mentoring, monitoring and technical and managerial support,” she said. 

Drawback 
But experts say this new capital lifeline is not without its draw backs for both the venture capitalist and the intended beneficiary. 

Yilmaz Akyuz, Chief economist at the South Centre in Geneva says inflow of western capital to Uganda and other African countries may not be good news. 

“Capital funded with cheap money in advanced economies is coming to developing and emerging economies not so much to create productive assets as to extract quick windfalls, buy into existing companies and take control over natural resources,” he said at a recent Conference in Geneva. 

Akyuz warned that the short-term benefits yielded by such capital can be more than offset by costs incurred as a result of financial turmoil and economic contraction that may be caused by the rapid exit of western capital currently flowing to Africa, mostly to Nigeria and Uganda. 

While South Africa has had a successful experience with home grown venture capital in which wealthy South Africans have invested in start-ups based in South Africa, there is mixed reactions to the entry of venture capital in Uganda. 

How local businesses can benefit from venture capital 

An entrepreneur must prepare to give up a seat on the board of directors to the venture capitalist who will not only share the risk but help steer the company forward. 

While appreciative of the arrival of venture capitalists, the Chairman of Uganda Investment Authority, Patrick Bitature doubts that Ugandan SME’s are ready for dealings with venture capitalists. 

“I have been telling people intending to bring money here that there are structural issues which hampers proper absorption of big capital in Uganda, many of our companies are yet to attain the level of compliance venture capitalists demand,” Bitature said. So to benefit, there is need to formalise and adapt global best practices. 

Local enterprises must brace for formal entities and look at partnerships as an opportunity for growth. 

Many SME’s should prepare to give up family ownership and dependence on the local market alone and adapt a global view of doing business to enable them expand. 

The capital markets should also fast-track the listing of local budding enterprises that are growing by the day but still scared of entering the stock exchange. This would make them more attractive to venture capitalists because traditionally they are comfortable investing with publicly listed companies as it easier to exit by selling their equity share in the stock market. 

 

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Uganda: Malawi Woos Local Investors

July 12 2011

Ugandan exporters and importers have been encouraged to exploit existing opportunities in virgin markets in Africa. The Malawi honorary ambassador in Uganda, Robert Mwesigwa, said there were opportunities Ugandans could invest in.

 

This was during a function to mark Malawi's 47th independence anniversary he hosted at his residence in Mbuya, Kampala last week.

"Trading partners can contribute to Malawi reform by ensuring stable and increased access to their market, especially in agricultural products, where Malawi's prospects are strong," he said.

 

According to Mwesigwa, Ugandan tourists and honeymooners, who often go to Mombasa, South Africa, Europe and the Seychelles Islands, Malawi could be a new destination.

 

"Tour operators can make their clients' journey unforgettable by linking the two country's attractions. It is also time Ugandan consumers added products made in Malawi to those imported from China, Japan or Europe," he said.

 

Daudi Migereko, the land minister, who officiated at the function, called for the strengthening of economic integration between African trading blocs.

"We have to exploit trade blocs like the Common Market for Eastern and Southern Africa and the East African Community if we are to free our countries from donor dependence," said Migereko.

 

"Our cultures, morals and political history are similar. "Speaking Malawi's Bantu dialects may be difficult, but one understands the other easily," he said.

The function was attended by Malawians living in Uganda, diplomats and other guests.

 

Uganda: Technology to Take Advantage of High Food Prices Introduced

July 13 2011

Stephen Otage

Government has launched a technology-adaptation and transfer scheme, where local welders are to be employed to fabricate post-harvest agricultural production technology for use in the sector, which is said to have started attracting youth.

 

The move is aimed at mechanising agricultural production as well as an initial step towards adding value to agricultural production so as to enable farmers take advantage of increasing food prices, which have continued to spiral.

 

This, coupled with the recently attained independence in South Sudan, and the increasingly unpredictable weather patterns, are viewed as opportunities that will guide the government's efforts to improve the sector.

 

While commissioning the first batch of welders on July 2, the Minister of State for Industry, Dr. James Mutende, said despite the different agricultural interventions government has introduced aimed at improving agriculture, farmers' produce is still of poor quality, which affects the pricing of their produce. He said they still experience post-harvest crop losses due to lack of quality control.

 

Among the new technologies that were commissioned were fresh cassava shredders and cassava press machines for production of gari. The other machines included maize cob sorters and sorghum threshers.

 

The scheme is expected to improve on skills of local fabricators, especially grain cleaners and threshers. According to Mr James Mugunisa the coordinator post-harvest and agro-processing, Sasakawa-Global 2000, because of the demand-driven nature of the agricultural market, the government has been forced to get the technology from abroad and reproduce it here cheaply.

 

"With South Sudan now independent, coupled with increasing food prices, we want the youth to start appreciating the role of agriculture in job creation. They can hire out these technologies on a commercial basis," he explained.

 

Dr Mutende said government is encouraging farmers to start selling their produce under cooperatives for enterprise development and marketing, where he advised the farmers to consider putting up warehouses for storage of the produce to make them one stop centers in the districts.

 

The government expects to generate between 100-300 metric tons of agricultural produce from parish to sub-county level with community-based facilitators based in the parish, who will become extension workers. The training of the fabricators is currently going on at the Uganda Industrial Research Institute in Kireka, Kampala.

The districts currently benefiting from the technologies include Lira, Bugiri, Kamuli, Bugiri, Jinja, Mukono, Buikwe, Luwero and Ntungamo.

 

 

Time for Africa to harness smart grid technologies

8-Jun-11 | OurWorld 2.0

Sub-Saharan Africa can improve access to electricity services by adapting 'Smart Grid' technologies to suit the region's pressing needs, say energy experts led by Morgan Bazilian, special advisor to the director-general of UN Industrial Development Organization (UNIDO).

At least 585 million people lack access to electricity in Sub-Saharan Africa and this is set to increase to 652 million by 2030 — the target year for an ambitious goal of assuring universal access to modern energy, set by the UN Secretary-General's Advisory Group on Energy and Climate Change.

To meet this goal, the region will need to develop extensive electricity infrastructure. Bazilian and colleagues say Sub-Saharan countries have a "unique opportunity" to adapt specific components of innovative, 'intelligent' electricity networks, known as Smart Grids, to improve access to electricity.

 

But to guarantee this access to energy services without marginalising the poor, it is important to implement socially just power systems, they say, ensuring reliable and low-cost energy access during off-peak times. Their concept of 'Smart and Just Grids' includes tools and practices that aim to optimise the operation of power grids; incorporate renewable energy; and make the electricity supply more reliable and efficient.

 

To meet this goal, the region will need to develop extensive electricity infrastructure. Bazilian and colleagues say Sub-Saharan countries have a "unique opportunity" to adapt specific components of innovative, 'intelligent' electricity networks, known as Smart Grids, to improve access to electricity.

 

But to guarantee this access to energy services without marginalising the poor, it is important to implement socially just power systems, they say, ensuring reliable and low-cost energy access during off-peak times. Their concept of 'Smart and Just Grids' includes tools and practices that aim to optimise the operation of power grids; incorporate renewable energy; and make the electricity supply more reliable and efficient.

 

Using ICT to charge for energy consumption via mobile phones, improving power lines and implementing regular maintenance schemes are just some of the socially beneficial elements that Smart Grids can offer. The technology could even "enable Sub-Saharan African countries to leapfrog elements of traditional power systems in terms of both technology and regulation", say Bazilian and colleagues.

 

They argue that Sub-Saharan Africa can learn from industrialised countries and progress without repeating their mistakes. But limitations such as lack of good governance, limited capital, failing infrastructure and shortage of trained personnel suggest that prioritising specific Smart Grid technologies is essential.

 

 

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Africa: Video-Conferencing is Going Mobile

20-Jun-11| Winsley Masese

Nairobi — Communication is key to improving business efficiency, relationships and achieving sustainable growth.

Conventionally, the managing director or CEO would convene a meeting with senior managers in a region far from their head or branch offices. This involves spending time to travel besides the huge expenses incurred in accommodation.

 

With video-conferencing, however, the time and resources spent on meetings can be cut drastically and channelled towards improving other operations.

The first model in the market involves the use of a screen in the office but with innovation, smart phones, iPads and laptops are being used to hold meetings.

A new technology that uses these gadgets has been developed by Commcarrier and operates the same way as the internet.

 

Ms Charlene Howell, Commcarrier public relations consultant says the use of smart phones, Ipad and laptop gives them a competitive edge with its known "Videoconferencing" service.

 

"Once you send a link to the receiver and gets connected, communication can follow through the use of a laptop, desktop and any remote area through the use of any smartphone for enhanced communication," she said.

 

With greater deployment flexibility and at lower cost, the system ensures intimacy, which is key to building trust between business partners, is not lost.

Mr Alnashir Hasham, a constructor with projects in Uganda, Southern Sudan and Dubai, says traveling with two of his workers is expensive.

"With this new technology, the cost drastically reduces by about 70 per cent," he says.

 

Mr Hasham says that the new technology will enable his colleagues who would not attend board meetings contribute from wherever they are.

It will also enable doctor-patient consultation remotely. The same can work between a student and his supervisor.

Mr Hasham's said communication is critical in business and by being able to make decisions at any given time, it ensures operations go on uninterrupted.

 

With some projects as far as Dubai, Mr Hasham says that the new technology will enable him present his plans much quicker as opposed to traveling.

"The time taken to approve decisions is key and the system will greatly assist me achieve targets," he noted.

 

Leasing the technology, Ms Howell says, is more affordable compared to purchasing it. Ms Howell says the system can be interfaced with other video-conferencing systems.

With the cost of bandwidth high, she says Commcarrier system utilises less of it and is thus good for firms with small budgets.

"This is absolutely vital when communicating over low-cost, general-purpose internet provider networks," she said.

 

 

East Africa: Key Sectors and Business Environment in 2011

Jul 17, 2011

Agriculture is the largest sector for all countries in the EAC. Total sector contribution is about one third of total GDP for every country in the region. Agriculture, and related industries, is also a major foreign exchange earner and employer of labor.  Countries in this region are major producers of tea, coffee, flowers, cotton, and tobacco. Agriculture remains the major revenue earner for this region despite major oil discoveries (Uganda) and massive expansion in commodity (gold) prices.

Despite the size and productivity of this sector, research and development is poor, farming is at a subsistence level, and credit is not easily available to agribusiness due to perceived high risk caused by poor infrastructure. These are areas of opportunity for investors. Further development of the agricultural value chain is key to boosting revenue earnings for countries in the region.

High Growth Sectors

Mining, agriculture, construction, finance, retail, and telecom are the fastest growing sectors in the region. Growing consumer demand and the need for new infrastructure are the main drivers of growth in construction. As an economy grows a country needs new ports, roads, rail, power plants, and other infrastructure. Consumers need new homes and businesses will build new offices and factories. The majority of monies raised from sale of bonds on the international market will go to the construction sector.

 

Growing appetite for commodities like gold due to quantitative easing and the push for greater exports from countries in North America and the Eurozone as a way out of their debt crises is driving demand for metals.

 

Abundance of these metals in Africa is not the major reason for growth, but the improvement in the rule of law, greater transparency, and economic reforms.

Economic growth and reforms in the last decade has meant that East Africans have a growing middle class. Demand for cars, electronics, and other consumer durables are up. The retail sector is still in an expansionary phase, competition is not strong and demand exceeds supply for these products and profits can be staggering. Consumers in Africa have little or no debt and are living in a part of the world where incomes will increase going forward.

 

The success of mobile telephony in Africa is no longer hidden and is one of the best things to happen to the continent in the last decade. The advent of cell phones has increased productivity and has coincided with a period of good growth. Telephone penetration rates across the continent is still low (40%) and there is still a lot of room for suppliers to make money. Airtel the latest entrant to the market is testament to this fact.

 

As economies in the region continue on the growth path, demand for mobile phones will continue to expand – it is crucial infrastructure for businesses and individuals. Major players in the region include MTN, Safaricom, and Airtel.

 

The finance sector is crucial to the growth of economies in the region. For an economy to expand, banks must lend to the real sector. The finance sector is still underweight in its contribution to GDP in the region. Bank lending to the real sector is grossly inadequate and stock exchanges in the region are not liquid enough to raise capital required for expansion.

 

Business Environment

Apart from Rwanda, which is considered a top reformer globally, every other country in the region deteriorated in the rankings, according to the World Bank Doing Business Report for 2010. This means that the business environment is still difficult, that infrastructure is poor, government is corrupt, and the rule of law is still not as effective as it should be.

 

However, the business and regulatory environment in the region has greatly improved in the last decade. It is expected that this trend will continue as countries in the region are eager to attract greater foreign direct investment needed to push past growth to development.

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Foton's Plant Construction Gathers Pace

Jun 13 2011

Chinese commercial vehicle manufacturer Foton Motor has launched its first domestically produced trucks in Kenya, after establishing a local subsidiary in the country in late 2010. The Foton Slip Double Cab pick-up truck was assembled at the Kenya Vehicle Manufacturers facility, where it will be assembled until Foton's own plant comes onstream. As part of a growing focus on Africa by Chinese auto companies, the company is building its own vehicle assembly plant, which is scheduled to begin operations in May 2012

 

 

Meeting The Rising Demand For Auto Parts

11 October 2010 | By Jevans

The rapid industrialisation and modernisation currently sweeping through many African countries has resulted in an increased demand for capital goods such as machinery, lubricants, spare parts, ball bearings and other mechanical goods and accessories. The market for automobile spare parts, in particular, has been an attractive sector for UAE-based enterprises, who have emerged as the leading supplier of these goods to many countries in East, Central and Southern Africa. 

The UAE has long been known as a major supplier of automobile spare parts both within the Gulf region as well as for Iran, CIS, Indian sub-continent and Africa.

After witnessing a depression recently, the automobile and spare parts industry in the country has once gain recovered to its optimum level. However, the increase in demand for quality spare parts has encouraged parallel imports into the country forcing leading automobile distributors and spare part companies to start a full-blooded campaign against illegal importers who operate from neighbouring countries, particularly across the border in Oman. As a result of illegal imports into the UAE, the major players in the local market have combined together to curb the inflow of excessive supply of spare parts through illegal channels.

 

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