Wednesday, December 27, 2006

Uganda-Africa's Newest Investment Darling?

It is always good to have a positive role model. Especially one who has endured the occasional long and harsh roads and is still here to tell about it. Generally, this type of role model not only earns the respect of their peers; but also gains a stable of followers.

In the African context, if we are talking about recent economic growth amidst large hurdles, it is difficult to disregard Uganda. This is a country that has endured some major trials and has slowly over time edged it's way back into a period of sustained economic growth. Does this make Uganda a role model for other developing economies wishing to grow foreign direct investment?

If we take a peek at Uganda through the lens of foreign direct investment we can see that this country is making bigger economic strides step by step and year by year.

Foreign Direct Investments to Uganda have increased by four times during the first financial quarter of the year, according to a report released by the Ugandan Parliament on Thursday.

The parliamentary committee measured the number of licensed investment projects, as recorded by the Uganda Investment Authority between July and September of this year versus last year. Between July and September of 2005 there were 67 projects totaling $ 126m; while the same time span in 2006 yielded 135 projects totaling $584m.
The breakdown by sector is as follows:

  • Tourism 20%
  • Real estate 20%
  • Transport & Communication 16%
  • Manufacturing 15%
  • Water & Energy 14%
  • Followed by agribusiness and mining
Economic experts are expecting these investments to add 16,738 new jobs to Uganda's economy.

By the way Uganda has had some major mountains to climb very recently. Climatic changes which reduced the nations coffee supply, plus security issues on the Uganda/Sudan border have both been tough problems. However, total exports still managed to go up during this time frame. Between July and September of 2006 Ugandan exports grew (by 20%) when compared against 2005.

In conclusion, over a short period of time Uganda has come a long way economically. Although this country is not perfect, I believe that other developing countries would be wise to take notes on both Uganda's foreign direct investment promotion and it's economic reform policies .

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Thursday, December 21, 2006

Today's Profiles in Entrepreneurship: Arthur Karuletwa

photo courtesy of Christian News Today

Recently, I have been hearing more and more buzz about Rwanda's economic reforms and rapidly improving investment climate. One way to gauge market improvements is to study the successes of local entrepreneurs. This is why today the focus of our Today's Profiles in Entrepreneurship is Arthur Karuletwa. Although he has resided in the America's northwestern corner of Washington since 1995, Mr Karuletwa hails from Rwanda. He sought refuge in the U.S. during the genocide that took place in Rwanda some 12 years ago.

Arthur has been very busy since he has been here in the States. His athletic gifts took him to America's basketball courts when he was still a teenager. The place that he would eventually end up at was Master's College in Valencia, California. This is where Mr. Karuletwa studied business and also met his wife-Amy Karuletwa.

It just so happened that when the couple met Amy was working at Starbuck's. The two shared a passion for coffee and Arthur was able to land an internship with a local coffee supplier. One fateful day, after the pair were married they wrote a business plan which was aimed at working very closely with Rwanda's coffee farmers. Shortly after penning the business plan they learned that Rwanda's president, Paul Kagame, was going to be visiting Boston for trade promotion. They went to Boston and heard the president speak. As a result they soon packed their bags, headed to Rwanda, and a dream was born. Inzozi, which means "dreams that come to life", is the company that the husband and wife team co-founded together.

Today Inzozi Coffee Traders has impacted the lives of people from many different walks of life. The company acts as an export partner or broker for Rwawandese coffee farmers. Within a short span of time Arthur has been able to help modernize Rwanda's coffee industry. He is also credited with helping the farmers to cut several layers of middlemen. By doing so he has helped many of these small farmers to double and even triple their incomes. He has also made customers in America very happy by importing high quality coffee beans with a story that may be even more relevant than the coffee itself. In fact very soon his label will hit the stands in Costco
and that my friends will be Rwanda's latest victory-thanks to entrepreneurs like Mr. Karuletwa.

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Monday, December 18, 2006

A Different Perspective on Africa's Diamonds

photo courtesy of King's Jewelry

With recent events and buzz diamonds may not be in the "hot" columns at
the moment, but this story shows why they could still be a business person's
best friend.

This story also highlights the fact that many of the diamonds coming out of
Africa are not "blood diamonds".

"Local businessman, Mclean Letshwiti, has partnered with Tiffany's & Company
to open a diamond cutting and polishing company in Botswana.
The company, which has already been registered, will be operational by March
next year. Tiffany's is a renowned jewellery retailer with a US$ 3 billion yearly
turnover and a US$ 6 billion market capital value.

In an interview with Mmegi, Letshwiti did not reveal the figures involved in
the partnership but however said his shares are of substantial value.
"At the moment I am going at it alone but I will be inviting other
Batswana to join me in the partnership. I am not just going to keep it
to myself."

courtesy of AllAfrica

This article seemed interesting to me because Botswana
enjoys one of Africa's highest per capita incomes and derives the bulk
of it's income from diamonds. Additionally, Botswana recently
expereinced a slight reduction in foreign direct investment in it's
diamond industry. However, this was not due to press associated with
"blood diamonds". In fact this contraction was due to a statement made
by a diamond executive at a leading diamond cutting and polishing
company about Botswana's diamond supply. It just illustrates the
sensitivity of small developing economies to damaging public relations.

Hopefully, this does not happen in Sierra Leone.

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Thursday, December 14, 2006

Outsourcing Business Processes to Africa

For those of you who have not known me long, you may not have known me long-but you do know that I am crazy about letting others know why they should be doing business in Africa. But people are imperfect, as I wholeheartedly admit that I am an example of human imperfection. It has occurred to me that sometimes in my zest for talking about Africa's business environments, I may tend to speak in a very general sense. But maybe if you have been on the receiving end of such a conversation, and you have said to yourself-"what type of business in Africa?" or "Africa, I thought that people only go there to help the needy".

Well, I am taking this opportunity to go a different route. Export oriented businesses in Africa are generally what I am referring to when I talk about doing business there. An industry that I am interested in learning more about is business process outsourcing.

Coincidentally, I just so happened to come across a website which relates to this very topic. After finding it, my next move was to learn more about the entrepreneur sharing this information. As fortune would have it, she is a business person from Kenya and I believe that her company is a poster child for both outsourcing to Africa and also for export-oriented African businesses. Because her story sort of fits into more than one category this is not the Profile format that I have used over the last several weeks. In essence, this is more like publicity for her company and the Africa's business outsource industry itself.

Mugure Mugo is the entrepreneur that I am referring to and her business is called Preciss Patrol. Her company provides online research for internet content developers. Though, I have never personally done business with Preciss Patrol, there is a US-based business person, James Bacon, who has. Here's what he says of doing business with PrecissPatrol of Kenya:

"We couldn’t shake hands over the Internet. I couldn’t even look her in the eye. But Mugure inspired confidence. Her command of written English was better than that of most Americans. She quickly grasped what I was looking for. And she stayed on top of things: She did everything she said she would, and she did it when she said she would. Despite the seven-hour time difference between Richmond and Nairobi, our extended work days overlapped by several hours. I thought things would work. We had a deal."
Courtesy of Bacon's Rebellion

Oh, I think that Miss Mugo gives a much better explanation of business outsourcing than I do. Here it is:

"Some of the services most commonly outsourced to developing countries include professional services such as:


*Construction engineering
*Customer support
*Internet research
*Software development
*Web site design and maintenance
Also popular are information processing services such as:
*Data capture and processing
*Translation services
*Transcription services such as legal and medical transcription
*Secretarial services
*Claims processing such as health insurance claims processing
*Mailing list management
*Text keying

Over the years, there has been a change in the type of work that developed-country firms have been willing to outsource. There has been a shift from outsourcing of clerical type work, to more skilled, professional type of services.

If charted on a scale, outsourced projects will usually fall within three categories:

  • Level 1 – routine clerical work, usually requiring only basic skills. This would include data processing and order taking.
  • Level 2 – technical work requiring some level of technical training such as call centers and other forms of customer support.
  • Level 3 - professional work requiring training and certification in a particular area such as market research, accounting, architecture and software development.

Why developing countries?
Reasons why US and European firms are increasingly partnering with firms in developing countries include the following:
Ability to obtain skilled labor for positions that would otherwise attract less qualified staff in developed countries. For instance, companies outsourcing their customer support function are able to obtain university-graduate-level staff in developed countries, who are usually willing to take on such assignments.

Lower labor costs. Contracting companies are able to obtain 30% – 40% cost savings as labor costs are considerably lower in developing countries.

Differences in time zones – this is especially important where 24 hour service is required by the contracting firm. A company in Africa or Asia, for instance, may take on work during hours when their US clients have closed for the day.
Improvements in some areas of developing economies have also led to their increased ability to attract work from abroad. Some of these include:

Improvements in telecommunications infrastructure – in Africa for instance, improvements in telecommunications infrastructure and other necessary services such as power and transportation have been key in enabling African firms source work from abroad

Improvements in educational standards – countries such as India and Kenya have a large population of well trained, English speaking professionals

Accessibility – improvements in air travel in many of these countries have encouraged foreign firms to outsource work to them. In some instances, contracting firms may require to visit locations where they have established working relationships with local firms.

It is now becoming clear that for many outsourcing firms, what began close to 25 years ago as a cost-cutting measure has evolved into an important way of achieving efficiency within the organization.

It is expected that in the next few years, the relationship between contracting firms in developed economies and firms in Asia, Africa, The Caribbean and Latin America will continue to evolve, and to foster partnerships that will be beneficial to both parties in the long run."
Courtesy of va newswire
If any of you are wondering if this post is sponsored it's not. I am recommending PrecissPatrol to anyone having online research needs simply because I believe in what Mugure Mugo is doing.

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Monday, December 11, 2006

Looking Towards the Diaspora for Investment

Here is a trend that The Benin Epilogue has not yet addressed which has been growing steadily over the last several years. Africa's expatriates living abroad in the Diaspora are indirectly strengthening Africa's economies.

African migrants abroad are helping to bring about an economic boom in Africa in two ways:

  • Sending cash remittances home
  • Investment in both Africa's stock markets, as well as private business ventures at home.
Here are some key numbers, provided courtesy of Africa Recruit:
  1. Foreign Direct Investment flows into the African continent are US$ 300b and 15 % of that or US$45b is the remittance from Africans abroad( in the Diaspora).
  2. Over 30% of the Diaspora remitters are sending over $300.00 to to their respective countries in Africa each month.
  3. Approximately 33% of these remittances are earmarked specifically for investment.
Here are some additional figures: The following is a quote from the Kenya Diaspora Investment Forum that recently took place in London over the past weekend:
"Top African receiving countries are Egypt ($3.4bn), Morocco ($2.2bn), Nigeria (1.7bn), and Tunisia (0.8bn). In 2002 remittances to Nigeria ($2bn) accounted for 5% of the GDP playing a large part of the economy positively helping the balance of payments."

"The Government estimates that the Kenyan Diaspora remits close to $600 million every year to their families and for Investment purposes (Kelley 2005): Source Economic Commission for Africa Report on International Migration and Development: Implications for Africa September 2006."

Another interesting note on this trend is that these remittances are expected to continue growing over time. Of course this movement is not without challenges. There are several challenges to Diasporian Investment that I have heard on several occasions. The two that seem to be more major are the small numbers of "one-stop-shop" business start-up/investment centers in Africa and also the ease of obtaining information (or lack thereof) relative to making investment decisions.

However, over time I believe that these are obstacles that can and will be overcome. The sheer growth in numbers of Africa's Diasporian ( plus Foreign Investors) investing in Africa almost neccessitates this. Furthermore, these challenges and risks could be part of the reason that Africa's stock markets have outperformed some of the world's most bullish markets.

I believe that the continuance of this trend could bring about a full scale economic renaissance accross the African continent. Those are my thoughts, but we'd like to hear yours.

Also, do you have any experience in this area that you would like to share? Or is it something that you have considered-we'd like to know. Please feel free to post your comments below.

This link was provided by Joel but since it did not display properly, I have put it here
it is a page that discusses the reasons to invest in Kenya. Thank you very much Joel!

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Friday, December 08, 2006

The Investment Safari

You can now find "Which City in Africa is Considered Best for Business?" on The Investment Safari. This blog is authored by Benin"Mwangi" and it is dedicated to guiding you on a virtual tour of Africa's top business destinations by industry category.

I hope to see you there!

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Sunday, December 03, 2006

Today's Profiles in Entrepreneurship in Africa (Week 3): This Could be You!

Good day to all! I hope that you are rested up and ready for week 3 of Today's Profiles in Entrepreneurship in Africa. Although this is a realtively new column (and blog for that matter), so far the tone of this weekly column has been that entrepreneurs from Africa can and do find success in their respective communities. Well, what if I told you that not only are entrepreneurs from Africa making big strides in their local regions, but that each year growing numbers of entrepreneurs are leaving their homes in the Americas to pursue business in Africa? What if I said that you could too, would you believe me? And, before you say it...this is not an enlistment of any sort, but simply a challenge for you to investigate and learn for yourself whether you could picture yourself doing business in Africa.

For this reason, we are going to highlight not one; but three entrepreneurial success stories- all starting in the America's* and ending in various African countries. In the interest of keeping your attention, these will be summaries rather than full profiles.

First, let us meet Mr. Greg Wyler. He is an entrepreneur from the U.S. who has built his reputation in the IT field. One of his most notable achievements involves what he is doing to boost Rwanda's tech industry through his Terracom venture. Terracom is an internet communications provider which has recently made headlines after announcing plans to build Africa's largest fiber optic cable network -connecting telephones, internet, and tv access across the central African country's population. So far Greg Wyler's company has installed roughly 220 miles of cable underground and still plans 700 more miles of fiber over the next few years. This has been beneficial to Rwanda's consumers in the form of savings ( in 1999 broadband connections were $1,000USD/month now they are roughly $60USD/month ), not to mention that connection speeds are much higher now than ever before. His aspirations don't stop there, over the next five years Mr. Wyler believes that he will be able to reach more than one million customers in this small nation. That may sound like a tall order, but from what I've heard Rwanda is rapidly amongst international IT circles, coming to be known as the IT hub of Africa. Now we may not own a crystal ball, but doesn't it seem like there's a very bright future for Rwanda and Mr. Wyler?

Next on the list is Mr. Samer Bishay, founder of Iristel, Inc. Samer is from Canada, but that is only 10 percent of the reason that he is being mentioned here. It started for him when he was granted a carrier licence by the Canadian Radio-television and Telecommunications Commission at his tender age of 26 years. From Canada he went to the Ivory Coast to set up part of his VoIP technology business there. What is most striking about this gentleman is that he was able to build a solid foundation in the Ivory Coast during a time of unprecidented civil unrest there. He was eyeing the market for African expatriates in Canada and America who wanted a more affordable way to speak to their friends and families at home. If you have ever tried to make a phone call from that part of Africa to the Americas or vice versa you surely must see the same lightbulb that motivated Mr. Bishay to stay when many others fled the country. Staying turned out to be a valuable decision for him-from his VoIP telephone system in the Ivory Coast he was able to expand into two other West African Francophone countries-Senegal and Benin. The contract that his company negotiated with Senegal is estimated to be worth over $Five Million USD, while his contract with the Republic of Benin is worth over $ One Million USD. Next on the agenda for Mr. Bishay is the completetion of a VoIP software program designed to allow cellphone users in Africa or abroad to call outside of their local coverage area without the extra long distance costs. Will someone please let me know when I can get that service?

Our final highlight of this post is on a husband and wife duo known as Dr. Paul Lartay and Dr. Alexandra Graham. They were actually born both in Africa, Dr. Lartay in Ghana and Dr. Graham in Nigeria. Likewise, they each came to America to complete their graduate degrees and eventually made America* their homes. They each have strong organic chemistry backgrounds and have worked as executives in the pharmaceuticals industry. Starting a pharmaceutical company, LaGray Chemical Company, that produces drugs in Ghana seems like a natural outgrowth of their commonalities and experiences. It might even sound simple, but consider that their company is planning to manufacture drugs that could help cure among other ailments-malaria and HIV/AIDS. Their company is the first in Sub-Saharan Africa to do this, just as noteworthy is the fact that they are employing trained labor from the regions which they are serving. They plan to pave the way to lasting impact on health in Africa by building a business that's able to maintain modern production in Africa, while also creating profits. This is a company that just may have what it takes to succeed in changing lives, changing industry trends, and profits all at the same time.

I hope that you have enjoyed this segment and see why it's subtitle is "This Could be You". As always, I would like to know what you think, please feel free to post a comment and/or tell a friend about this post. If you are not able to comment on this particular post but would like to let us know that you were here , please sign our guestbook. View my guestbook


Friday, December 01, 2006

Made in Africa!

Recently I have had some very interesting conversations about doing business in Africa. Namely on the type of businesses that are both profitable and deliver tangible benefits to the communities in which they operate. The recurring theme that seemed to come up in each of these conversations was that they would like to see more export and/or added value oriented businesses. Let me note that there is nothing wrong with starting a business in Africa that is based on imports from another region. However, this shared sentiment did highlight two things:

  1. Export oriented businesses such as manufacture, agriculture, fishing, textiles, etc tend to employ larger numbers of workers.
  2. There seems to be less competition here thus the potential for more profit.
  3. These types of businesses can help a local economy earn much needed foreign exchange.
With this converation as the backdrop I present to you some pieces to a really fascinating article that I saw in CNN Money :

"Africans feeding Americans - it sounds like one whopper of a fish tale. Africa remains a continent of episodic starvation and chronic food shortages; tens of millions of sub-Saharan Africans are unable to reliably and consistently feed themselves. But as implausible as it might seem, these imbalances coexist with pockets of increasingly vibrant commercial farming throughout much of the continent.

Africans are starting to prove that not only can they feed themselves, but they'll help feed the rest of the world too," says Ken Stalder, president of SW Africa Holdings, of Rockville, Md., which ships lobster tails from Mozambique to Florida and the Northeast.

Investors and agriculture experts from the world over are flocking to Uganda, seeking ways to ride the emerging boom in African agribusiness. Israelis are building greenhouses and setting up the latest in hydroponic irrigation systems. Indians are growing rice and sunflower seeds. South Africans and Americans have invested in cotton gins. Europeans have opened fish-processing plants.

A few years ago, Uganda suddenly emerged as, in Murphy's view, the world's highest-quality supplier of vanilla beans. Prices soared because of a crop failure in Madagascar, traditionally the vanilla king. Ugandans filled the breach, reaping large revenue increases from 2002 to 2004. At the peak of the boom in 2003, cured vanilla beans sold for about $200 a pound, 20 times the historical rate.

One recent morning Veverica is showing the Ugandan owner of the country's largest fish hatchery how to best separate different sizes of baby catfish. Digo Tugumisirize, a former air traffic controller at Entebbe, operates the complex of spawning ponds, covering about a dozen acres. He watches Veverica prepare bait in a fish trap; there are 9,000 baby catfish in the pond, and with the help of the trap, the scavenger fish that eat the young fingerlings will be captured and removed. Tugumisirize now sells about 200,000 baby catfish a month, mostly for use as live bait by people fishing for the Nile perch being exported to the United States and Europe. "We need to first double and triple our output, and then double and triple it again," he says. Then our fish farmers can start feeding the world--and agribusinesses here can get rich!

Africans need help finding markets and establishing links to far-flung customers. Americans are good at knowing how their own markets work."

I am really glad to have come across this article from CNN. Hopefully, you enjoyed it too. Please let me know your thoughts...Of course, I love your comments. But, if you can't comment at this particular time- but would like to let us know that you were here; please sign and View my guestbook



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