Dispatches from our Ambassadors in Africa

5 September 2019

ABUJA

Nigeria: A powerful partnership

Claire Ireland, High Commissioner, Nigeria

Photo of a scientific device.
NOJA Power. Credit: NOA Power.

With a mission to “Empower the World” and a vision to be the world leader in medium-voltage outdoor switchgear, Australian manufacturing company NOJA Power is tackling one of the African Continent’s biggest deficits — electricity availability in Nigeria.

Although Nigeria has a population of approximately 200 million, making it the most populous African country, its electricity firms produce a mere 2,800MW of electricity per year. To put this statistic into perspective, Edinburgh, the capital of Scotland, produces a similar amount of electricity despite having a population of 500,000.

According to the World Bank, approximately 59.3% of the Nigerian population have access to electricity, leaving 80 million Nigerians without access. Current population growth estimates predict Nigeria will be the third most populous nation by 2050, and efforts to improve electricity will be crucial for this growing economy.

NOJA Power is contributing to international efforts to improve Nigeria’s electricity network. In July 2018, NOJA Power partnered with Nigerian utility company Ikeja Electric on a pilot program which used NOJA Power OSM Reclosers (a type of switch gear used in electricity distribution networks) in the deployment of Ikeja Electric’s first smart grid. Smart grids use digital communications technology to detect and react to local changes in usage in order to prevent frequent feeder tripping. By installing the reclosers on a 17km line, Ikeja Electric has reportedly reduced outage times from 16 hours to under a minute, significantly improving the network’s performance.

Following this success, two more lines of auto recloser technologies were installed, improving distribution network reliability and market efficiency in Nigeria. Nigeria now joins the list of 88 countries using NOJA Power OSM Reclosers.

NOJA Power’s performance in Nigeria demonstrates the effectiveness of Australian companies operating in West Africa. It suggests that, with a proactive due diligence and risk management approach, there is scope for Australian companies with a little ingenuity to excel in complex markets.

ACCRA

West Africa: Challenges and opportunities

Andrew Barnes, High Commissioner, Ghana

There are many opportunities for trade and investment in West Africa. Growing populations and economies, as well as the sheer scale of the region’s undeveloped mineral resources, make it an area of great potential for experienced companies.

Australian mining and Mining Equipment, Technology and Services (METS) sector companies have an impressive footprint in the extractives sector, with investments focused primarily on gold, but also including lithium and mineral sands. Many Australian METS companies have stand-alone offices or representatives in the region, and subject to investment friendly regulatory conditions, there is potential for the Australian presence to increase.

Australian education providers have a growing interest in West Africa. Ghana — the second largest student recruitment market after Nigeria — has a rising middle class, young, literate population and high demand for quality international education.

Ghanaian students have recently been turning their interest toward Australia as an education destination in significant numbers. The number of enrolments in Australian education institutions has the potential to grow as relationships with local education agents strengthen, and as Ghanaians’ knowledge of the Australian education market develops.

There may also be opportunities in West Africa’s expanding agriculture sector. For instance, through its flagship “Planting for Food and Jobs” initiative, the Ghanaian Government hopes to boost the country’s agricultural production and promote agriculture/agribusiness as a key sector for future investment.

Companies looking to invest in West Africa will have to take into account a number of challenges to doing business, such as a lack of infrastructure and regulatory uncertainty. The security environment in some areas has also deteriorated significantly. It is important to be well informed about developments and manage risk appropriately. Other challenges, such as cultural differences, language and labour force issues, are also important for companies to consider.

Taking the time to carefully research the particular sector and African market before investing is critical in order to mitigate the risks of operating in West Africa. Despite these challenges, with careful preparation Australian companies are well placed to take advantage of the opportunities that West Africa provides.

ADDIS ABABA

Ethiopia: Hope and promise in Africa’s fastest growing economy

Peter Doyle, Ambassador, Ethiopia

Photo of person in a high visible vest standing infront of a light rail station , directing pedestrians.
The Addis Ababa Light Rail transit system, opened in 2015, is the first light rail system in sub-Saharan Africa.

Ethiopia is Africa’s second most populous country, and its fastest growing economy. Its mineral wealth is largely untapped, its lowlands similar to the Australian outback, and its location — next to Djibouti on the Red Sea — is very close to Gulf markets.

Its new government, led by H.E. Prime Minister Abiy Ahmed, has made peace with Eritrea, strong progress on human rights and media freedom, and is working with opposition parties to try to build a more inclusive Ethiopia. However, the risk of political instability remains.

Following decades of state-led development, Ethiopia is also opening up, inviting in private funds and foreign expertise, and leveraging its publicly built infrastructure to promote future growth. The Government has announced reforms, including the partial privatisation of state-owned enterprises, expanding its portfolio of public-private partnerships, and improving its ease of doing business score.

Large companies like Volvo, Heineken and China’s Harmony have set up, seeking to use Ethiopia as a hub for the Horn of Africa, or as a halfway house for exports to Europe.

There are growing prospects for Australian business, particularly in mining, agriculture, education, telecoms and logistics.

Australian businesses considering investing in Ethiopia will need to be comfortable with risk, be present in country, and willing to accept a long time horizon for realising profits. Travellers should also note that Ethiopian Airlines has announced that it is considering flying to Australia from 2020. A new connection would reduce travel time to 12-16 hours, from upwards of 20 hours.

Companies interested in exploring opportunities are welcome to contact the Australian Embassy in Addis Ababa at adba.info@dfat.gov.au for further information.

PRETORIA

Southern Africa: Blessed with Sun and Wind

Gita Kamath, High Commissioner, South Africa

Photo of technical wind equipment on a Windmill farm.
Windlab Amakhala-Emoyeni. Credit: Windlab.

Like Australia, the countries of Southern Africa — especially Botswana, Eswatini (formerly Swaziland), Lesotho, Mozambique, Namibia and South Africa — are blessed with sun and wind, with some regions boasting both renewable energy sources on any given day. In addition, all countries are experiencing an electricity supply deficit, with some regions not yet connected to the electricity grid.

This provides significant opportunities for Australian renewable energy providers, with some Australian businesses having been active in Southern Africa for many years. Rheem/ Solahart has been exporting its solar water heaters to Southern Africa for over 35 years. Windlab has built wind farms through South Africa’s Eastern and Western Cape. And Orion Minerals has signed a collaboration agreement with Juwi Renewable Energies for its copper and zinc project in the Northern Cape.

With advances in technology, additional opportunities now exist. These include for small scale solar PV units for household use in rural areas, as well as larger scale projects to support electricity supply to mines, farms, and other businesses in areas where there is limited access to the grid. Examples of larger scale projects include rooftop PV units on shopping malls and office buildings to augment electricity supply and windfarms that supply to the grid by way of Independent Power Producer (IPP) procurement programs. Countries where IPP programs are available include Botswana, Eswatini, Lesotho, Mozambique, Namibia and South Africa.

The Government of South Africa introduced a Carbon Tax from 1 June 2019 to prompt government bodies, industry and communities to consider alternative sources of energy, including solar and wind. The rising cost of diesel across the region is one push factor as businesses and individuals reconsider their diesel power generators and look to alternatives. Minister for Mineral Resources and Energy Gwede Mantashe has urged public discussions on energy transition that centres on security of supply, and is promoting all forms of energy to be part of South Africa’s energy mix.

Changes to South Africa’s regulatory environment for renewable energy are likely over the medium term. The Australian Government will continue to focus its efforts on assisting Australian industry and businesses take better advantage of the opportunities in this sector.

NAIROBI

East Africa: Much more than a tourist destination

Alison Chartres, High Commissioner, Kenya

Photo of High Commissioner to Kenya, Alison Chartres with construction workers.
Australian High Commissioner to Kenya, Alison Chartres at Base Titanium. Credit: Robert Sirotka on behalf of DFAT.

Dynamic, entrepreneurial and the source of many great innovations, East Africa is much more than a tourist destination — although it is certainly worth a visit! Home to a population of over 172 million that is projected to rise to 260 million by 2030, and a current average economic growth rate of 5.9 percent across its countries, this region is moving forward at a rapid pace.

Australian companies are taking advantage of this growth by investing in mining, education, infrastructure and tourism, bringing their skills and knowledge to build prosperity in the region.

In Kenya, President Uhuru Kenyatta’s “Big Four” agenda — food security, affordable housing, manufacturing and universal healthcare — provides further opportunities for Australian investment. To realise its vision of food security, for example, Kenya could reap the benefits of Australian expertise in contract farming, water management, harvesting technology and food innovation.

In 2018, a Gourmet Australia in Africa Tour showcased Australian produce in Kenya and Tanzania, including premium Australian Wagyu Beef prepared by Australian Chef Chris Wade. With changing tastes and growing disposable incomes, our food and wine products are in increasingly higher demand in the region.

The energy sector features prominently in Kenya’s economic plans as a critical enabler to achieving the country’s development goals. Years of significant investments and favourable policies are paying off, as Kenya is now ranked the second largest renewable energy investor in Africa.

In education, Kenya remains the largest recruitment market for Australian universities, but there are opportunities for growth in the larger regional market. Higher learning institutions are also keen on collaborative opportunities with leading Australian universities in research, curriculum development and exchange programmes.

Investment in the Technical and Vocational Education and Training (TVET) sector is a key priority for the Kenyan and Ugandan governments, opening up further opportunities for technical cooperation.

Kenya’s fintech sector is regarded as a leader in Africa, offering a diverse set of financial innovations in online payments, mobile money and international money transfer. Australian fintech companies have expressed interest in partnering with local start-ups to offer financial solutions, while retail companies are looking into listing their products on Kenyan e-commerce platforms.

Kenya faces a number of ongoing challenges and required detailed knowledge of the commercial risks and opportunities. Given Australia’s expertise in mining and energy, education and infrastructure, Australian companies are well placed to utilise Kenya’s rapid growth and innovative initiatives to not only bring prosperity to the region, but further Australia’s economic and commercial interests.

HARARE

Zimbabwe: Potential to reap rewards in the longer term

Brontë Moules, Ambassador

Zimbabwe’s economic potential is widely recognised. It has a wealth of natural resources, including gold, diamonds and platinum, whilst its historical status as the ‘breadbasket of Africa’ has lingered in many people’s minds. Complementing this natural endowment is Zimbabwe’s enormous wealth of human capital. Zimbabweans are the most literate population in Africa, English-speaking and highly entrepreneurial. Australian companies recognise the country’s potential, particularly in the mining and agriculture sectors.

Despite these assets, the business operating environment remains a significant barrier to investment. Among the challenges is uncertainty over land tenure — a legacy of the land redistribution policies of the 1990s — which continues to depress investor confidence. There have been positive steps towards compensation for dispossessed commercial farmers, though more work is needed on a permanent resolution to these issues.

The monetary and fiscal situation continues to face serious challenges as the government seeks to make painful yet necessary steps towards longterm economic reform. Foreign currency supply through formal markets is inadequate, inflation has been climbing, and fuel and power supplies have been limited.

A recent move by the Government to re-establish the Zimbabwe dollar and deauthorise the use of foreign currency as legal tender has added to the uncertainty. Although efforts are ongoing to clarify practical arrangements for the use and trading of the new national currency, this abrupt shift in monetary policy has further complicated local and international enterprise.

Notwithstanding the considerable challenges ahead, it is hoped that the economic reforms being pursued by the government could, if sustained, reap rewards in the long term. International Monetary Fund Staff Monitored Program outcomes will provide a benchmark for assessing the impact of the reform agenda. The remainder of 2019 could be crunch time for the government as it seeks to overcome the prevailing economic headwinds and operationalise more of its ‘Zimbabwe is Open for Business’ mantra, alongside essential political reform efforts.

RABAT

Morocco: a unique position connecting Europe and Africa

Berenice Owen-Jones, Ambassador, Morocco

Photo of a high speed train at the station.
Australian Ambassador to Morocco, Ms Berenice Owen-Jones’ trip from Rabat to Tangier on Morocco’s LGV (high-speed train) Al Boraq, late April 2019 - in two hours and ten minutes instead of the usual three hours and 45 minutes. Credit: DFAT.

Located only 14 km from Europe across the Gibraltar Strait, Morocco has capitalised on its unique strategic location at the nexus of Europe and Africa to emerge as a regional powerhouse and the fifth largest economy in Africa.

Over the last decade, it has undergone a remarkable transformation to build a diverse, open, market-oriented economy. Investments in ports, transportation and the establishment of free trade zones have boosted competitiveness and positioned Morocco as a strategic hub for trade and investment between Europe and Africa.

Situated along one of the world’s busiest shipping lanes, the Tangier-Med container port provides a bridge to Europe and is the largest transhipment hub in the Mediterranean and Africa. The port attracts hundreds of foreign companies manufacturing goods for export to Europe from its free trade zones, mainly in the automotive, aeronautics, textile and agricultural sectors. The industrial zone around the port has emerged as one of the fastest growing automotive hubs in the world and Africa’s numberone producer of passenger vehicles.

Continuing its long tradition as an international trading centre, Morocco has Free Trade Agreements in place with 55 countries, including the  US. While most of its exports go to European countries, Morocco is set to become the largest African investor on the continent, particularly in the telecommunications and financial services sectors. Further adding shine to its economy, Morocco jumped nine places — from 69 in 2017 to 60 in 2019 — in the World Bank’s Ease of Doing Business report.

Although challenges remain and Australian companies should take a rigorous approach to due diligence, Morocco is beginning to capture the attention of Australian businesses as a stepping stone into the EU market. Australia’s leading produce company, Costa Group, has invested in its African Blue multi-million dollar blueberry farm and packing facility in northern Morocco.

Costa Berry International Manager, Peter McPherson, said Morocco was Costa Group’s biggest investment overseas. “This is an expanding market in which we have full confidence. We are making the most of Morocco’s proximity to Europe and the excellent infrastructure of Tangier Med Port to deliver a premium fresh product 52 weeks a year to the European Union and beyond” said McPherson.

Photo of Ambassador Owen-Jones with Mr El Hafi, Director of Rabat-Agdal Train Station and two other train staff.
Ms Owen-Jones is accompanied by Mr El Hafi, Director of Rabat-Agdal Train Station. The line, which is Africa’s first high speed train, was inaugurated on 15 November 2018. Credit: DFAT.

PORT LOUIS

Mauritius: (Is)land of opportunity

Jenny Dee, High Commissioner, Mauritius

Mauritius, a small island developing state with a population of 1.3 million, is probably best known as a tourist destination. However, beyond its postcard image, it is building a reputation as an international financial centre offering investors a gateway to Africa.

With its stable democracy, strategic location in the Indian Ocean between Africa and Asia, independent legal system and capable workforce (English and French speaking), Mauritius is well positioned as a trusted platform for doing business in the region. It ranked 20th globally and first in Africa in the World Bank’s 2019 Ease of Doing Business report. It has a global network of investment protection and double taxation treaties and is a leading source of FDI to India.

Mauritius is also a major contributor to FDI in Sub-Saharan Africa — nearly USD30 billion investments were directed to Africa through Mauritius last year and more than 450 private equity funds set up in the Mauritius International Financial Centre.

The Government is committed to meeting international regulatory standards around transparency and taxation. The Government is also positioning itself as a fintech hub and introduced the Mauritius Regulatory Sandbox Licence (RSL) to cater for innovative fintech projects. The OECD in partnership with the Financial Services Commission launched its Regional Centre of Excellence for Africa in Mauritius earlier this year.

Australian companies have taken note. Australian education providers, including Curtin University, which opened a branch campus in Mauritius in 2018, are leveraging Mauritius as a regional education hub to recruit students across Africa and promote research linkages, particularly in the blue economy. Two Australian fishing companies — Austral Fisheries and Australian Longline — process thousands of tonnes of toothfish in Port Louis annually. While Australia’s reputation for premium food and beverage — highlighted during Gourmet Australia promotions in 2018 — supports a growing tourism sector. Air Mauritius services direct flights to Perth.

For more information about opportunities in Mauritius, please see Australian Chamber of Commerce, Mauritius (www.austcham.mu) and Economic Development Board, Mauritius (www.edbmauritius.org)

Image of a coin.

CAIRO

Egypt: Africa’s investment destination

Glenn Miles, Ambassador, Egypt

Egypt’s efforts to position itself as a global investment destination are reaping dividends.

Egypt has the third largest economy and population base in Africa. In addition, it has the second highest number of ultrahigh net worth individuals (those with USD$30 million or more in assets) in Africa. According to Rand Merchant Bank’s 2019 report on ‘Where to Invest in Africa’, Egypt remains the number one investment location across the continent, despite its difficult operating environment. It has the largest consumer market and one of the most diverse economies.

For a number of Australian companies — small and large — this has meant they have found success in Egypt.

Economic challenges remain with stagnant wage growth, worsening poverty and an increased debt to GDP ratio fuelled by investments in mega projects. However, Egyptian economic analysts consider that an IMF reform package has helped considerably in stabilising and improving overall economic conditions, paving the way for future economic growth.

GDP growth rates increased from 4.2 per cent in 2017 to 5.3 per cent in 2018, supported by private consumption, recovery in the tourism sector and developments in the gas sector.

Further reforms are needed to reduce the state’s role in the economy, increase regulatory transparency and eliminate corruption. Increased stability will offer further opportunities for Australian businesses, especially in the resources sector as Egypt also reforms its mining laws.


Last Updated: 2 September 2019