Although sub-Saharan Africa has not been famous for its status as a leader in female inclusion within the economic sector, African women are surprisingly beating the odds and defying the obstacles in the field of entrepreneurship in the region. High Female Entrepreneurship Rate Holding a comparison between some of the most developed economies in Africa and in other regions, Nigeria outranks the US and the UK in terms of percentage of entrepreneurs among women with a rate of 41% for the African country against 10% and 5.7% for the two developed countries respectively. Yasmin Belo-Osagie, co-founder of the organization She Leads Africa, stated that, “Sub-Saharan Africa has the highest rate of female entrepreneurship across the globe, with more women starting businesses in Africa than anywhere else in the world.” The extent of the presence of female entrepreneurs is, however, not symmetrically spread across all African countries. Some strong leaders do drive up the rate in the region, namely Kenya, Ghana, Nigeria and Zambia. In fact, the percentage of female entrepreneurs in the three latter surpasses 50% of their total pool of entrepreneurs. Barriers to Female Entrepreneurship The aforementioned figures become even more impressive when considering that the road for African female entrepreneurs is not paved with roses. Women entrepreneurs are facing and circumventing various obstacles pertaining to the social context prevalent within their countries. The dominant culture in sub-Saharan countries is still one that expects women to hold a traditional role confined to home making and child rearing. This has been supported by a study published by the French Development Agency in 2013, which reported that “Time surveys from 11 cities in sub-Saharan Africa show that women spend more time on domestic activities than their male counterparts regardless of household status—head of household, wife, or daughter.” Hence, society might not be open to female entrepreneurs pursuing business ambitions that would take them away from their homes. Business is all about networking. Well, that’s another closed door in the face of African women. Indeed, most networking events take place in mostly male-dominated venues, such as bars of membership clubs, where a woman’s presence by herself might be ill-perceived by social standards. African female entrepreneurs also have limited access to finance in comparison with their male counterparts. Experts estimate the unmet yearly financial needs for women-owned businesses worldwide to be between $260 billion and $320 billion. According to the 2014 Findex report, only 30% of women in sub-Saharan Africa have access to bank accounts. Besides, women in Nigeria and other developing economies have shown to be 20% less likely than men to have a bank account and 17% less likely to have borrowed formally. Factors such as legal restrictions on women to open bank accounts without a male relative’s authorization do contribute to the low account penetration rate among women in the region. Initiatives for Female Entrepreneurship Development Despite the presence of these barriers, there are various development initiatives set in different African countries aiming to alleviate the difficulties and promote female entrepreneurship. In east Africa, 1,200 micro-businesses and 200 small and medium businesses benefited from the Women’s Entrepreneurship in Renewables Project (wPOWER) since its launch in 2013 by the U.S. State Department. The aim of the project was to train female solar entrepreneurs in business management and project financing. In Zambia, the “WECREATE” program launched by USAID has mentored 28 female potato farmers in 2015 on how to expand their business operations. MasterCard has, on its part, committed to three partnerships directed at promoting women entrepreneurship in Egypt, Nigeria and South Africa. These partnerships will be centered on providing young African women with the necessary education, training and mentorship to develop financial literacy, and providing them with easy access to a network of women with an interest in entrepreneurship. Empretec, a capacity-building program created by the United Nations Conference on Trade and Development (UNCTAD) that assists aspiring and female entrepreneurs in strengthening their entrepreneurial and business skills, was recently launched in Kenya, Ghana and South Sudan. The second batch of 40 female entrepreneurs completed the Empretec course on entrepreneurial skills in South Sudan in October 2016. The legal situation in the region is improving as well. According to the World Bank’s 2014 Gender at Work Report, sub-Saharan Africa has reduced the number of gender discriminatory laws against women, mainly regarding property ownership and inheritance rights, by more than half between 1960 and 2010. To sum it all up, African female entrepreneurs are fighting their way to the top despite discouraging cultures and unfavorable business environments with the increasing support of international organizations, local governments, and corporate sponsors that channel their resources and expertise into helping female entrepreneurs fulfill their ambitions. Meryem Khaled, Associate at Infomineo References [1] http://www.idgconnect.com/abstract/10416/sub-saharan-africa-highest-female-entrepreneurship-rate-globally [2] http://documents.worldbank.org/curated/en/884131468332686103/pdf/892730WP0Box3800report0Feb-02002014.pdf [3] http://thenationonlineng.net/financial-inclusion-can-boost-women-entrepreneurship-others/
Is the Italy-Africa relationship taking off? Africa has been one of the fastest growing region in the last decade, holding for long periods the highest rate of return on foreign investment than in any other developing region[1]. Despite a recent slowdown in term of GDP growth rate, there are at least three positive trends that are sustaining Africa’s attractiveness[2]: By 2034, Africa is expected to have the world’s largest working-age population (1.1 billion), Households and business consumption are expected to growth, mainly due to the urbanization processes, African economies are well positioned to benefit from rapidly accelerating technological change. This perspective led the African region to receive USD 54 Billion of FDI in 2015[3]. In this context of opportunities, how does Italy position itself, in terms of actual and perspectives footprint? The past Starting since 1882, Italy has been a colonial power as well as other European countries were, although its presence in Africa evolved in a different way and lead to different historical and socio-economics consequences. In the period of maximum expansion, the Italian colonial possessions covered less than 4% of the overall colonial surfaces, including three African territories (Libya, Somalia, and Eritrea) to which would be later added Ethiopia.[4] Since the end of the Second World War and the progressive loss of colonial possessions, Italian presence in Africa went decreasing, especially when compared to other countries, relegating Italy to a secondary role in terms of economic footprint. The present Today, among the WTO countries, Italy is the 7th mayor exporter to Africa and the total value of the exported goods and services exceeded USD 26 Bln in 2014. Italy to Africa export[5] It is worth to highlight how between 62% and 65% of total Italian export to African countries can be attributed to six main product categories, as the following chart shows[6]. These categories include product like: Machinery and mechanicals appliances, including: dishwashing machines; machinery for cleaning or drying bottles or other containers; turbojets, turbo-propellers and other gas turbines; taps, cocks, valves and similar appliances for pipes, boiler shells, tanks Mineral fuels, mineral oils and products, especially including petroleum oils and oils obtained from bituminous minerals (excl. crude) Electrical machinery and equipment: electrical apparatus for switching or protecting electrical circuits, transformers, converters, wires and cables Iron and steel like bars and rods Vehicles and parts: tractors, motor vehicles for the transport of ten or more people, cars, vehicles for the transport of goods Articles of iron and steel: structures and parts of structures, tubes and pipes, etc. Among African countries, the following markets stand out in terms of size and popularity of Italian products: Tunisia and Morocco, given the geographical proximity South Africa, which is believed to hold about 50% of the overall purchasing power of the continent[7] Ethiopia, to which Italy is bound by mentioned historical reason. The following chart shows the recent trends for the top African market, in terms of value of overall value of products imported from Italy[8]. As for direct investment in African countries, Italian outward flows have considerably increased in the last years, as the following charts show. Italian investment flows in Africa[9] This become particularly relevant when compared to other countries flows, especially because Italy showed no divestments in the last years. The African business environment for Italian companies increase its attractiveness thanks to the strong presence and dynamism of some huge operator. The most relevant among them could be ENI, the national oil company, whose footprint is already well established in 14 countries[10], but also expanding in others – how shown by the exploration permits recently obtained in Morocco[11]. But Africa is also where several entrepreneurial Italian success stories took place, like the case of Mr. Gabriele Volpi’ Orlean Invest, major player in the field of logistics in Nigeria, Angola and Mozambique[12]. The future On May 18th 2016, the biggest Italian ministerial conference ever realized about Africa took place in Rome. In the presence of the institutional leaders, a delegation composed by high-level representatives from 52 African countries met the heads of the most important Italian economics and cooperation bodies, to discuss about migrations, economic and socio-environmental sustainability, peace and security.[13] The Prime Minister Matteo Renzi made clear how Africa became the new priority for the Italian foreign policy. Renzi himself addressed to African countries 3 trips in the last two years (Angola, Mozambique and Congo-Brazzaville in 2014; Ethiopia and Kenya in 2015; Nigeria, Ghana and Senegal in 2016)[14]. Happening for the first time since the foundation of the Italian Republic, this circumstance reveals a strong willing in strengthen the bilateral relationships between the “Bel Paese” and the African economics. Antonio, Analyst at Infomineo. Know more about Antonio. [1] Source: http://www.mckinsey.com/global-themes/middle-east-and-africa/whats-driving-africas-growth [2] Source: https://www.weforum.org/agenda/2016/05/what-s-the-future-of-economic-growth-in-africa/ [3] Source: World Investment Report 2016: http://unctad.org/en/PublicationsLibrary/wir2016_Overview_en.pdf [4] Source: http://www.treccani.it/scuola/tesine/centocinquant_anni_anni_di_guerre_e_di_pace/rabuiti.html [5] Source: Infomineo analysis on ITC data [6] Source: Infomineo analysis on ITC data [7] Source. http://www.investireinsudafrica.org/?page_id=1201 [8] Source: Infomineo analysis on ITC data [9] Source: Infomineo analysis on OECD data [10] Source: ENI 2015 annual report: https://www.eni.com/docs/en_IT/enicom/company/integrated-annual-report-2015.pdf [11] Source: https://www.eni.com/en_IT/media/2016/03/eni-enters-into-the-upstream-of-morocco [12] Source: http://www.orleaninvest.com/ [13] Source: http://www.vita.it/it/article/2016/05/18/italia-e-africa-si-corteggiano/139435/ [14] Source: http://www.rivistaeuropae.eu/esteri/esterni/lafrica-priorita-politica-estera-litalia/
In many African countries, a significant portion of the labor force is engaged in the agricultural sector, including Nigeria’s agricultural landscape. Despite its crucial role in the economy, the sector is marked by lower productivity levels compared to the non-agricultural sectors. Moreover, the contribution of agriculture to GDP is often less than its share of employment across the continent, highlighting a gap in efficiency and output. Even as global trade expands, the participation of African nations, notably Nigeria’s agricultural sector, in the international market is minimal, accounting for only two percent. As noted in one of the McKinsey recent reports, “African agriculture is at a turning point, and a long-awaited ‘green revolution’ may be within reach”. In fact, the focus is now shifting towards African agriculture, not only because most people work in the sector but also because an investment in the sector usually leads to desirable incomes. Evidence shows that investment in the agricultural sector is between 2.5 and 3.0 times more effective in enhancing the income of smallholders whose income is below the poverty threshold than investment in the non-agricultural sector. Agricultural growth is indeed a primary source of alleviating poverty compared to the general growth. The reverse is also true, the decline in agricultural growth leads an increase in poverty and hunger. It is unsurprising that, during 2008 and 2010, there were increased poverty levels and hunger in developing countries when food prices rose worldwide. This paper is the first in a series that will seek to examine the role of agriculture in selected African countries. The paper focusses on Nigeria and provides a broad overview of some of the key developments in agriculture. It features and analyzes the sector’s progress from 1960s to date, and some future prospects. Is Nigeria’s Agricultural sector progressing? Facts & Figures: Nigeria’s imported 3.5million tons of rice in 2014, spending about US$ 2.5bn. Nigeria is the world’s largest cassava producer, producing 38 million tons in 2014, but accounts for 0% of the global trade of value-added cassava products. In 2012, Nigeria produced 1.56million tons of tomatoes. But, over 50% was reportedly wasted after harvest due poor infrastructure. Nigeria spends $162m importing tomato paste. In 2013, only 1% of all commercial loans were issued to Nigerian agriculture and agri-business related industries. In less than four years, Nigerian agriculture has attracted US$5.6bn investment from the private sector investors, with the bulk of the investment come from local companies. Brief History In the 1960s, the share of agriculture in Nigerian GDP was 60 percent. The sector was very important in terms of its contributions to employment. Both the government and private investors gave the sector adequate attention. Up to 75 percent of Nigeria’s export were from the agricultural sector, and crops formed a significant part of Nigerian foreign exchange earnings. Nigeria was equally a key player in the global agricultural market. Current status 50 years later, Nigerian status as agricultural powerhouse has declined, significantly. Agriculture is no longer the primary foreign exchange earner. The role is now played by oil. While the country is still home to abundant water resources and arable land, the declining crops prospects is eminent. Crop yield per hectare in Nigeria is about 20% of the world’s highest yield. In the 60s, Nigeria was the leading Palm oil exporter globally—ahead of Malaysia and Indonesia. The country accounted for 47 percent of all groundnut exports—ahead of the US and Argentina, and produced 18 percentage of the World’s cocoa—only second to Cote d'Ivoire. These trends sharply contrast the current situation. For instance, cocoa production in the country continue to shrink, currently accounting for less than five (5) percent (down from the 18% in 60’s) of global production. The country has transitioned from self-sufficiency in food to being a net importer, spending over US$4.35bn in 2012 importing rice, fish and sugar alone. Underlying issues The Nigerian is declining prominence as an agriculture powerhouse is partly attributed to the negative impact of the oil boom. Unstable and often inappropriate economic policies (of trade, pricing and exchange rate) and the relative neglect of the sector especially in the last decade has also been blamed. In addition, agricultural lending in the country is uncharacteristically low. In 2013, only one (1) percentage of all commercial loans were issued to Nigerian agriculture and agri-business related industries, yet the sector still contributes over 20 percent to the GDP. Agribusiness Opportunities In spite of the above shortfalls, Nigeria remains a significant producer of a number of crops that are of great importance to African smallholders. Currently, the country is the world’s largest producer of Cassava——producing 38 million tons in 2014—and accounted for 19% of global cassava production. The country targets to produce 51 million tons in 2017. However, the country’s ability to process the crop into high-value products remains very low. Currently, Nigeria accounts for Zero percent of the trade of value-added cassava products globally while Thailand, which produces only 10 percent of global cassava, accounts for 80 percent of the trade in its value added products. Cassava products include high-quality cassava flour, cassava cake, glucose, starch, chips and a popular traditional West African staple food, garri among others. These products' demand is constantly high and is expected to rise rapidly due to increasing urbanization in Nigeria as well as the global increase in grain prices. Value Proposition: By processing its cassava into high value and exportable products like glucose, dextrose, and other related products, Nigeria could save millions currently spent on importing the same items each year. In 2011 alone, Nigeria spent US$ 42million importing 70,391 tons of glucose and dextrose mainly from the US, South Africa, and Asia.During the same year, only one company, Ekha Agro—situated in the western region of Nigeria—was producing glucose in the country. While the company’s annual processing capacity currently stands at 26,000 tons—50 percent of Nigeria’s glucose requirement—it produced only 13,000 tons of glucose in 2011. The company attributed the low output to the inadequate supply of quality cassava roots at competitive prices as well as the high energy cost in the country.Inadequate cassava processing in the country undoubtedly leads to high post-harvest losses, which together with low-value addition, leads to reduced income for farmers. Apart from Cassava, Nigeria is also the largest producer of tomatoes and rice in sub-Saharan Africa. All communities in Nigeria uses the two products. In 2012, Nigeria produced 1.56million tons of Tomatoes—65 percent of all tomatoes produced in West Africa. However, more than 50 percentage of this production was reportedly lost after harvest through poor storage and transportation as a result of the poor road network. Consequently, there is a lack of reliable supply of the fruit during certain periods of the year. The situation has partly contributed to the rising import of tomato paste in the country. Nigeria is currently, the largest importer of tomato paste in the continent, and 4th globally after Germany, Italy, and the UK—spending about US$ 162million importing the product in 2011. Value Proposition: The demand for tomatoes and processed products in Nigeria far outweighs the current domestic supply. The supply gap provides a perfect opportunity for investment in the tomato industry while taking advantage of the liberalized trade in West Africa (ECOWAS). Already, Dansa Foods, a subsidiary of Dangote Group, is capitalizing on this opportunity. The group plans to commission a Tomato Processing plant with an installed capacity of 1,200 ton. The plant is poised to be the largest plant of its kind in the continent. Rice is another very important crop in Nigeria. Rice consumption per capita in the country increased steadily from about 18.4kg in 1990 to 34.4 in 2013, largely driven by the country’s growth in population and urbanization. However, production per capita of the crop has stagnated at 16kg over the same period. The trend has seen Nigerian rice imports rise at an average of 16 percent per annum. The country spent over US$ 2.5bn importing 3.5 million tons of rice in 2014. Value Proposition: Rice is emerging as the most profitable sector in the country, with players indicating a two (2) years return on investment. This lucrative sector is currently attracting private investor’s attention, both locally and internationally. Already, OLAM Rice Mill has invested over US$ 400million in a rice milling plant in Lafia while Dangote Group has also committed US$1bn to the commercial rice production and milling. Agriculture Prospects There is no doubt, Nigerian agricultural sector faces challenges synonymous to most developing economies. However, there are indications of a brighter future for the sector. Firstly, the increasing government's commitment to the future of the country's agricultural sector is gladdening. In a recent interview with the Bloomberg TV Africa, the Minister for Agriculture, Dr. Akinwumi Adesina, underscored the need to boost Nigeria’s competitiveness and reduce imports through an agricultural transformation agenda. Dr. Adesina hailed the increased private sector confidence in the sector. The past three and half years alone, he says, the sector attracted US$5.6bn investment in from the private sector investors, with the bulk of investment coming from local companies. He attributed this increased investor confidence to the incentives provided by the government to encourage companies to set up through a Staple Crop Processing Zones (SCPZ). The country has completed fourteen such zones, and the Minister expects this to add US$9 billion to the Nigerian GDP and boost rural development. Secondly, there is significant investment in the physical infrastructure such as roads, warehouses, power, and gas, especially in the high production rural areas. The World Bank and AfDB have already committed US$1bn to upgrade and improve some of the country’s physical infrastructures. Thirdly, the successful outcome of the presidential elections held on March 28-29 and for Governorship on April 11, 2015 is a pointer of Nigeria’s good macroeconomic prospects and a boost to the investors’ confidence. In a nutshell, Nigeria is on track towards redeeming its status as an agriculture powerhouse. The country seeks to add 20million tons to the domestic food supply and create 3.5 million jobs through agriculture. Some of the crops that have attracted great private sector investors’ attention include rice, cassava, tomatoes, cocoa among others. McKinsey estimates that the country’s agricultural output could reach US$263bn by 2030, 135 percent up from the 2013 output. Impacts of Climate Change The above prospects and optimism in the sector can easily mask the underlying issue of the impact of climate change in Nigeria. The World Bank predicts about 20-30 percent drop in crop output by 2030 due to more erratic rainfall and higher temperatures. According to the World Bank report, the effect is likely to make food and water security harder for the country to achieve. The impacts on different agricultural components are expected to be far-reaching. For instance, the declining crop yields is predicted cause a 40 percent increase in rice imports to meet the growing demand from the fast-growing population that largely depends on rice as a staple food. On the production of livestock, the impact of climate change is expected to see a reduction in the feed, as well as increased thermal stress to animals.This calls for the adoption of better farming practices that incorporates sustainable land management and conservation agriculture that can protect the vulnerable rain-fed crops against the harsh eminent climate change. Sources: AfDB, (2015). AfDB committed to Africa’s transformation through improved agriculture. Retrieved May 06, 2015 from https://bit.ly/1651L6S Cleaver, K. (2012). Scaling up in agriculture, rural development, and nutrition: Investing in agriculture to reduce poverty and hunger. Washington, D.C.: International Food Policy Research Institute (IFPRI). Retrieved May 04, 2015, from https://bit.ly/1OTWkM0. National Bureau of Statistics. (2015). Agriculture. Retrieved from Nigerian Statistical Office Website: https://bit.ly/1cKM2Zw. Author’s calculation based on Trademap data, accessed on May 05, 2015 from https://bit.ly/1zeXtXj. World FactBook (2013). Agricultural Lending as Share of Agricultural GDP in Selected African Countries. CIA. Retrieved May 05, 2015 from https://1.usa.gov/18yjCgH. African Farming and Processing, (2014). Nigeria sets target for 2017 cassava production. Retrieved May 06, 2015 from https://bit.ly/1FPeIA5. Author’s calculation based on FAOSTAT data, accessed on May 05, 2015 from https://bit.ly/QIPNHr. Cassava Value Chain Analysis in the Niger Delta. Abuja, Nigeria: Partnership Initiatives in the Niger Delta. Retrieved May 5, 2015, from https://bit.ly/1Icr45p. Etebu, E., & Enaregha, E. (2013). Postharvest Spoilage of Tomato and Control Strategies in Nigeria. Journal of Biology, Agriculture and Healthcare, 3(11), 49-55. Retrieved May 6, 2015, from https://bit.ly/1AEXwav. Author’s analysis based on FAO’s data, accessed on May 05, 2015 from https://bit.ly/1Icr45p. Vitus, Emmanuel (2015). Dangote launches tomato processing factory in Kano. Retrieved May 05, 2015 from https://bit.ly/1bv8BV0. Author’s calculations based on USDA data, accessed on May 06, 2015 from https://1.usa.gov/1nYdnwg. Natsa, R. Tene (Leadership Newspaper, 2014). Food Import Bill drops by US$2.6bn in 3 Years. Retrieved May 06, 2015 from https://bit.ly/1whd0m3. Adesina, A. (2014, September 29). Nigeria in Focus: Agriculture Minister, Dr. Akinwumi Adesina. (E. Giokos, Interviewer) Bloomberg TV Africa. Lagos. Retrieved May 5, 2015, from https://bit.ly/1AAa8zx. Leke, Acha et al, (2014). Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy. Retrieved May 05, 2015 from https://bit.ly/1Id4hGC. Cervigni, R., Santini, M., & Valentini, R., (2013). Toward climate-resilient development in Nigeria. Washington, D.C.: The World Bank. Retrieved May 5, 2015, from https://bit.ly/1JlrTrg.
Exploring the Nigerian banking sector, regulated by the Central Bank of Nigeria (CBN), reveals a complex network of commercial banks, development finance institutions, and more. As Nigeria positions itself as an economically attractive landscape, with corruption being actively addressed and an annual economic growth rate of nearly 7%, the banking sector stands as a testament to this transformation. This article delves into the financial standing of the Super Eagles' nation, offering insights into its banking industry's resilience and growth. In 2005, Nigeria’s government made a consolidation of the banking sector, taking the number of banks from 89 to 24, with capital reserves reaching 25 billion Naira, from the initial 2 billion. The country’s economy was doing well and banks were performing. In 2007, Nigerian capital market was one of the world best-performing ones. (more…)
Private equity seems to hold the African growth promise. Amid the sluggish economy and the lengthy deleveraging process that the developed countries have been going through, Africa is rising as a fertile, promising, and untapped playground for foreign investments. Investors are shifting gears towards the black continent, not only to diversify away from a slowing economy, but also to grasp the unrivalled opportunity that Africa has to offer. Africa’s real GDP has been growing at an average compound rate of 5% in the last 5 years, a pace that is faster than that of developed nations. Other economically viable reasons to set foot on the continent, to name a few, are: a booming consumer market that is expected to reach US$1 trillion by 2020, an advancing and more efficient financial sector, and more importantly new governmental measures that aim at bolstering new opportunities through reforms and diversification from oil industries. (more…)