Archive for November 2013 | Monthly archive page

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As against 80 inter-regional private equity firms looking to invest in South Africa’s real estate market, 30 in Egypt and 40 in Kenya, only 16 of such companies are interested in Nigeria’s real estate market due, in part, to difficulty in registering property and doing business generally.

The Central Bank of Nigeria (CBN), which disclosed this in the 2012 report on Nigerian economy by the Nigerian Economic Summit Group (NESG), adds that there are also 10 domestic and private equity firms looking to invest in the country.

Private equity investments in Africa have seen phenomenal increase from $151 in 2002 to $3 billion in 2011 and, according to Emerging Markets Private Equity Association, South Africa accounted for the largest portion of these investments, leaving Nigeria with just 10 percent of the continent’s total.

On account of demographics and strong buying power, Nigeria is seen as a green field and an investment haven, yet investors are slow in moving into the market due to unfavourable business environment.

In its 2011 report on ‘Doing Business’, the World Bank ranked Nigeria 180 out of 183 countries in terms of ease of registering property. Currently, there are 13 steps in the registration process which can take up to 82 days. Four of the steps carry their own associated costs which on average total 20.8 percent of a property’s value, according to the NESG report.

In an earlier report, BusinessDay had quoted Olusola Olubode, former managing director of Refuge Homes Savings and Loans Limited (mortgage bankers), as saying that Nigeria lagged behind countries like Ghana, Thailand and New Zealand in ease of registering property, pointing out that in Ghana it required just five procedures, 34 days and 1.3 percent of a property value.

Olubode also hinted that in New Zealand, property could be registered online in two days at a cost of 0.1 percent of the property value, stressing that Nigeria was one of the world’s most difficult places to register property, especially when, in Thailand, registering property required just one step, less than a day and 1 percent of property value.

Similarly, Abdulrahman Kadiri, CEO of Lagos-based Oak Properties, told BusinessDay that in Dubai, United Arab Emirate (UAE), in less than 72 hours a buyer should have perfected his land titles, adding that “you don’t even have to pay through your nose to get building approval”.

Dapo Ojo of Estate Links Limited also said that in the UK, it took 1-2 months, six procedures and 4 percent of the value of the property to register a property, while it took the same 1-2 months, six procedures and between $1,000 and $8,000 to do the same thing in the USA.

Actis, easily the most bullish private equity investment firm with special focus on emerging markets in sub-Saharan Africa, laments that “land and capital are major challenges to investors, especially in Nigeria”.

The company’s director, real estate, Chu’di Ejekam, explains that to find a well-priced land at the right place is a big issue, adding that land price which is not supposed to be more than 10 percent of the construction cost is so high, especially in Lagos, that oftentimes it makes projects unworkable.

Capital, he explains further, also poses a major obstacle because to build a world-class retail mall like The Palms or Ikeja City Mall in Lagos, for instance, requires huge capital outlay of about $100-$150 million.

“To build a mall of an appreciable standard requires 50 percent equity and 50 percent debt such that building a mall like Abuja Jabi Lake Mall, for instance, which is estimated to cost $130 million, requires an investor to bring as much as $65 million equity to the table, and not many banks are ready and able to provide the $65 million debt,” he adds.


Source: Business day online

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Dubai: Africa is becoming an attractive market for mall developers and grocery retailers, according to Irwin Barkan, CEO at BG International.

According the World Bank’s Africa Pulse report in April, economic growth in sub-Saharan Africa is expected to reach more than 5 per cent on average between 2013 and 2015, making Africa among the fastest growing regions in the world. Increased investments is supporting the region’s growth performance, it said.

Africa’s middle class is growing, with Nigeria, a country with a population of 170 million, has the region’s largest middle class outside of South Africa.

East Africa is the fastest growing region of the continent, according to Barkan.

The future of retail “is going to be in sub-Saharan Africa,” he said, describing Kenya as “the powerhouse of the region”.

West Africa, too, is growing, with Ghana and Nigeria leading the way, he said.

South African retailer Shoprite is targeting Ethiopia and Kenya, while similarly, Massmart Holdings, South Africa’s biggest food and household-goods wholesaler, is looking at an acquisition in Kenya. Consumer spending accounts for more than 60 per cent of Africa’s GDP.

Morocco’s retail scene is also developing. Hypermarket chain Carrefour opened its 40th market in Casablanca last month and has 30 supermarkets and 10 hypermarkets with plans to expand, Barkan said. In addition, the country has Morocco Mall, one of Africa’s largest shopping centres.

However, the situation in other areas of the North Africa region, including Libya, Tunisia, Algeria and Egypt, “has a dampening effect on investor appetite,” Barkan said.

The region has also seen more mall projects, some of which include Atterbury Property Holdings’ West Hills Malls in Ghana’s capital Accra and BGI’s Mallam Junction Mall.


Source: Gulf news

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VENTURES AFRICA – South African financial services company, First National Bank (FNB) plans to expand retail banking operations to Ghana and Nigeria by 2014 to boost growth.

South Africa’s economic climate had changed and retail banking market was becoming more competitive in the region, hence the decision to expand further, said Jacques Celliers the bank’s CEO.

According to a BDlive report, FNB will try to get a banking licence in Ghana, build up the brand organically and then make a small to mid-sized acquisition to build scale.

This year, the lender’s efforts to clinch a deal in Ghana did not materialise, leaving it with an option to apply for a banking licence or explore another acquisition opportunity.

In 2011, FirstRand resorted to building the FNB brand organically in Zambia after efforts to acquire Finance Bank of Zambia fell through. That Zambian operation has expanded from seven branches in mid 2012 to 10 in June this year.

“…you can’t always wait for deals,” Mr Celliers said regarding the company’s Ghana market entry plans.

FNB, a division of FirstRand Limited with operations in Namibia, Botswana, Mozambique, Tanzania, Swaziland and Lesotho, had previously indicated interest to acquire banks held by Asset Management Corporation of Nigeria, which holds Mainstreet, Keystone and Enterprise Bank.

Bloomberg however reported that the group had narrowed its interest to Keystone and Mainstreet.


Source: Ventures-Africa

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Dubai: Turkish brands are looking to expand in the Middle East and North Africa (Mena) region, with the UAE and Saudi Arabia on top of their priority list, according to Cem Eric, general manager of Kanyon Real Estate Management Co. and board member of the Turkish Council of Shopping Centers.

Eric was speaking at RECon 2013, a retail conference which runs until Tuesday, in Dubai.

He said that brands across different retail segments, including fashion, jewellery, home decoration, and textile, view the region as an avenue for further growth. Most of the entrants in the market are mid-market brands, he said.

“By 2023, Turkish brands plan to have over 4,000 stores in the Middle East and North Africa region,” Eric said.

“There are strong local brands in Turkey that are competing with international brands. If they can do it in Turkey, they can do it anywhere else in the world. They prefer to go to markets where retail is less developed, like Egypt, Iran, Iraq and Lebanon. In order to be successful in the region, you have to show yourself in developed retail markets where there are a lot of international brands. That’s why they go to Saudi Arabia, UAE and Qatar,” he said.

The region is attractive to Turkish retailers due to the good retail companies and logistics.

Turkish fashion brand Koton, which already has a strong presence in the region, with 28 stores in Saudi Arabia and 12 in the UAE, plans to open 140 stores in Mena by 2017, according to Eric.

Also, LCW, an apparel retailer, which has over 20 stores in Mena, expects to have 1,000 stores outside of Turkey by 2023, one-third of which will be in Mena. It plans to have stores open in the UAE, Kuwait, Qatar and Bahrain next year.

Meanwhile, food and beverage retailer Simit Sarayi expects to have 100 new outlets in Mena in the next five years, including the UAE, Qatar, Iraq and Iran.

Similarly, Pasabahce, a glassware and accessories retailer, plans to have its first stores in the region in 2014, including the UAE and Saudi Arabia.

The retail scene in Turkey is growing, too. According to the Turkish Council for Shopping Centres, there are 320 shopping centres in Turkey, with a gross leasable area (GLA) of 9 million sq. metre.

It is expected that retail supply will grow up to 50 per cent in the next five years in Turkey.

“The number of Turkish brands will increase significantly, from 550 stores up to 4,000 stores in Mena in 10 years,” Eric said.

According to David Macadam, CEO and vice chairman of the Middle east Council for Shopping Centres, most of the brands coming into the market are from Western Europe and North America. He expects that in the coming years “Dubai will have more brands than any other city in the world”.


Source: Gulf news

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Panelists at a roundtable dialogue to discuss the competitiveness of Ghana called for collective efforts to promote the brand image of the country.

They said branding must first start with the citizens and efforts must be made to ensure that everybody was satisfied before it is sent to the outside world.

The programme organised by Brand Ghana in collaboration with Brand South Africa was to map up strategies to promote the country as well as the continent as a whole. It is also to sensitise the public on the need to rally support for the agenda to promote the country positively to the outside world to enhance the socio-economic growth of the country.

Ms Hannah Serwaa Tetteh, Minister of Foreign Affairs, said as a country, we needed to learn from South Africa to appreciate and do things differently to change the fortunes of the country.

She admitted that South Africa’s brand image was one of the most successful story on the continent and stressed the need to for all to learn from them to re-brand the country to make citizens feel proud to be Ghanaians. The Minister noted that that effort called for awareness creation and national cohesion to achieve that goal and tasked the media to be more committed to the task by setting positive agenda for the rest to follow.

Ms Tetteh stated Ghana had created the brand image to be the most peaceful and stable country on the continent and urged the public to give policy makers their necessary support to safeguard that position to expand the economy and also enable the country to achieve the better Ghana agenda. She therefore tasked the media to desist from glorifying evils and delved into human interest stories that would inspire the society and also build quality brand image for the country.

“There is lots of work going round that we do not have to wait to be invited before we write on such issues,” she added. Ambassador Jeanette Ndhlovu, South African High Commissioner to Ghana, said the dialogue was to complement the work of both President John Dramani Mahama and President Jaco Zumah in spreading the message of Africa’s preparedness to open up for investments. She said: “over the years we have allowed others to tell our stories for us but the time has come that we tell our own stories and let the whole world to know that Africa is ready for investment, engagement and also ready to take up its own destiny”.

Mr Miller Matola, Chief Executive Officer of Brand South Africa, nation branding is a conscious effort by all to tell positive stories about the continent at the same time addressing the challenges facing the continent. He explained that the critical elements of branding  was where a nation started and where it was going to and stressed the need to deconstruct the existence of a nation’s brand to involve collective effort of all the citizenry.

Mr Mathias Akotia, Chief Executive Officer of Brand Ghana, noted that in Ghana, branding really shows   who we are as a country and where have reached. “It takes collective efforts to make a country distinctive and we need to rally the support of all to get there,” he added. Ransford Tetteh, Editor of Daily Graphic, pledged the media’s commitment to promote the brand image of Ghana.

He however said there was no way “we are going to achieve re-branding if we continue to disrespect time frame. He noted “it is unfortunate that most of the participants to the programme which is to discuss the branding of the nation are late to the programme”. Ransford Tetteh therefore called for the need for integrity and honesty in the way we do business to promote the brand of Ghana.


Source: Ghana Business News

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VENTURES AFRICA- Nigeria’s Minister of Industry, Trade and Investment, Olusegun Aganga has identified the retail sector as a major driver that could channel economic growth, job creation and wealth for West Africa largest economy.

“The retail sector is the glue that binds economic activity together, by connecting the final consumers, to products from the producers. The impact of retail in Nigeria cannot be over- emphasized because anywhere in the world, it is a major driver of the economy,” the Minister said.

According to Aganga, Nigeria has great opportunities for existing and new investors to take advantage of, adding that the country attracted over N205.4 billion ($1.3bn) into the retail sector in the last two years.

Speaking at the inauguration of the Retail Council of Nigeria (RCN) in Abuja, the minister said: “Globally retail trade accounts for 27 per cent of the world’s GDP (gross domestic product), which means we have about $19 trillion of retail sales each year.”

“Retail sector also employs 17 per cent of the global workforce, which is about 800 million people.”

He pointed out that “in the United States alone, one in every 10 people work in the retail sector. If retail is the sector to grow, then Nigeria is the market to be.”

Citing Nigeria as the most promising market on the African continent, Aganga pointed out that with a population of 167 million people (the 7th largest in the world) and over 80 million people living in its metropolitan areas as well as a consumer spending excess of about $100 billion a year and a fast growing middle class; Nigeria was definitely the most promising market on the African continent.

On the inauguration of the RCN, Aganga said the council will accelerate the growth and development of the nation’s retail sector as well as the national agenda to develop the retail sector, given that the ministry recently developed strategies for domestic, African, and international trade.

The Chairman, Board of Trustees, RCN, Chief Olusegun Obasanjo, thus advised that the government and the private sector should collaborate in order to fast-track the development and growth of the retail sector and the nation’s economy.


Source: Ventures-Africa

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THE owner of Edgars and Jet, Edcon, will open stores in Ghana and Nigeria next year, CE Jürgen Schreiber said on Thursday.

As the world’s second-fastest growing region, the continent’s booming economies have caught the eye of retailers in search of higher yield and untapped consumer spending potential.

Edcon continues to use discount fashion brand Jet as a beachhead to move into new African markets.

The budget-conscious offerings of Mr Price and Pep are proving to be increasingly appealing to an emerging middle class, which is still price-sensitive.

Woolworths, which targets a more affluent customer has decided to exit the Nigerian market as operating in the West African country failed to provide the right level of return.

Trading in African countries is not risk-free and exorbitant rental costs, corruption, bureaucracy and supply chain issues pose as challenges.

“This (Africa) remains an exciting opportunity going forward. We normally go into a new country with Jet. In Zambia though, we went in with Edgars too — it’s working well. In the second half of next year, we’ll go into Ghana with both Edgars and Jet, because the market is quite strong. In Nigeria we’ll take a discount approach and not an Edgars one at this point,” Mr Schreiber said.

Outside of South Africa, Edcon operates 154 stores across Botswana, Namibia, Lesotho, Swaziland, Zambia and Zimbabwe.

Edcon, which is South Africa’s largest clothing retailer, reported 5.9% increase in retail sales to R6bn for the three-month period ended September 28.

Same-store sales increased 1.2%, mainly as a result of strong cash sales of 17.4% and despite the disruption caused by the refurbishment initiatives in the Edgars’ division and credit sales for the group reducing by 4.3%. An improvement was seen in the company’s discount division, which includes Jet and Legit, on the back of a strong performance in ladies and menswear.

The 72-store refurbishment programme of its core Edgars chain is near completion, Mr Schreiber said. Edcon, which has underperformed its peers and lost market share since its highly leveraged private equity buyout in 2007 by Bain Capital, has also put in place strategic initiatives which include improved sourcing, beefed-up merchandising teams and the addition of international brands such as Dune, Lucky Brand and TM Lewin to attract footfall.

Edcon’s net loss narrowed to R724m in the period compared with a restated R2.7bn a year earlier.

Due to the weak credit environment, Edcon ended the period with 100,000 fewer customers able to access credit.

On a 12-month rolling basis, credit sales decreased from 51.4% in the prior comparative period to 49% of total retail sales. The slowdown in unsecured lending, which gave South African retail sales a significant lift prior to last year, has been one of the major contributors to the decline in spending, as local consumers who are feeling pressure from soaring utility costs, also battle to repay loans and settle accounts.

Foschini Group, which sells about 60% on credit, in November noted that it had seen strong growth in cash sales over the last six months.

The Edgars’ division grew retail sales 3.4%, and same-store sales were 1.6% lower, affected by disruptions from transformation initiatives.

The Edgars revival project has cost R443m so far.

The Discount division saw sales increased 10.3% and same store sales were 5.4% higher. Sales from its Africa division contributed 11.4%.

Edcon expects to spend R1.2bn on capital expenditure in the 52-week period ending March 29 2014.


Source: BD Live

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A delegation of 75 Kenyan businesses is in the country to assess the business environment with a view to scaling up investments.

Heads of companies from construction, agribusiness, manufacturing, real estates, education services, energy sector and export industry, among others, are currently exploring viability of their business in the country.

Samuel Kirubi, the managing director of Equity Bank and head of the delegation, said the investors have not only been attracted by the conducive  business environment in the country, but also the need to take full advantage of  the  recently signed Tripartite agreement between Uganda, Kenya and Rwanda.

“Rwanda has become a popular destination for investment on the continent. This is a great opportunity for Kenyans,” Kirubi said.

John Mwangemi, the Kenyan ambassador to Rwanda, said his compatriots were making the right choice by choosing to invest in Rwanda.

“The choice you are making is timely. There is no doubt that two countries have a lot to offer each other, especially in bilateral trade,” he said.

Mwangemi added that Kenya must learn from Rwanda’s experience, especially in business reforms and investor-protection.

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Rwanda was last month ranked 32nd business-friendly country out of 189 countries in the World Bank Doing Business report 2014. It was ranked second in Africa.

“There is no doubt that Rwanda has done remarkably well in these areas,” the envoy said while meeting the delegation in Kigali yesterday.

He also called upon the business community from both countries to take full advantage of the regional integration, especially the recently signed Tripartite framework on a single customs territory.

“Kenya has and will continue to facilitate cross-border trade by making it easy for Rwandan business community  to do business in Kenya. It now takes only seven days to transport goods from the Port of Mombasa to Kigali compared to 23 days as was previously. We intend to reduce this duration further,” he added.

Herbert Ruzibiza, the head of financial services at Rwanda Development Board, said having more foreign investments in the country will drive the Second Economic Development and Poverty Reduction Strategy (EDPRS2) objectives home and lead to economic sustainability.

“When you look at our EDPRS2 plan, you clearly see a lot of investment opportunities; this is where you should take full advantage. The government is ready to facilitate investors,” Ruzibiza said.

Makran Ashfaq, the sales director at Dream Power Company, said they will commence investments in Rwanda once the feasibility study they are conducting has been completed.

Mary Wangari Mwangi, the director of Demachi, a Kenyan printing and stationery industry, also confirmed to this paper that her company will be commencing investments soon.

Other investors who have already expressed interests include Samsy International Agency, an international freight forwarding and total logistics firm.

There are Several Kenyan firms in the country, including Equity Bank, KCB, Fina Bank, I&M Bank, Bata, Unilever, Nakumatt Holdings and Deacons Kenya.

Others include HassConsult, Noah Management, Knight Frank and CB Richard Ellis, and Mount Kenya University.


Source: New Times

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Nigeria attracted over N205.4 billion worth of fresh investments into her retail sector in the last two years, the Minister of Industry, Trade and Investment, Olusegun Aganga, has said.

The minister, who was speaking at the inauguration of the Retail Council of Nigeria in Abuja, on Monday, identified the retail sector as a major driver of economic growth, job creation and wealth generation globally; pointing out that Nigeria had great opportunities for existing and new investors to take advantage of.

Mr. Aganga said that Nigeria was beginning a journey to strengthen and deepen one of the most important segments of the economy, adding that the retail sector was the glue that binds economic activities together, by connecting the final consumers, to products from the producers.

He said the impact of retail business in Nigeria cannot be over- emphasized, considering that anywhere in the world; it was a major driver of the economy.

“Globally retail trade accounts for 27 per cent of the world’s GDP (gross domestic product), which means we have about $19 trillion of retail sales each year,” the minister said.

“Retail sector also employs 17 per cent of the global workforce, which is about 800 million people. In the United States alone, one in every 10 people works in the retail sector. If retail is the sector to grow, then Nigeria is the market to be. There is simply no better retail market right now than the Nigerian market,” he added.

Nigeria, the minister said, was a retailer’s delight, pointing out that with a population of 167 million people (the 7th largest in the world); consumer spending well in excess of $100 billion a year, and a fast growing middle class, Nigeria was definitely the most promising market on the African continent.

In addition, he said over 80 million Nigerians live in metropolitan areas, creating huge opportunities for formal retail to thrive, noting that over the last two years alone, the Nigerian retail market attracted over $1.3 billion (about N205.4 billion) in investments into the formal retail space, describing the pace of developments within Nigerian retail sector as breath-taking.

Mr. Aganga said that the inauguration of the RCN would accelerate the growth and development of the nation’s retail sector, adding that the Ministry of Industry, Trade and Investment would work together with all the stakeholders to grow and strengthen the sector.


Source: All Africa

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Kenya’s energy regulator has cut the unit cost of electricity, which could translate to savings of about 11 percent for all customers on their electricity bills, it said on Tuesday.

High electricity costs and frequent outages are cited as some of the biggest challenges facing businesses and households in east Africa’s biggest economy.

The Energy Regulatory Commission (ERC) said cost per kilowatt hour of electricity will ease to 15.51 shillings ($0.18) from next month to June, before dropping to 13.44 shillings in the following year.

During the fiscal year starting July 2015, the cost will fall further to 12.26 shillings, ERC said, attributing the cuts to rising energy generation as new plants are commissioned.

Both commercial and private customers will enjoy an average savings rate of 11.2 percent in the 2014/15 fiscal year on their bills and an average of 6.4 percent in the following year, ERC said.

($1 = 86.5000 Kenyan shillings) (Reporting by Duncan Miriri; editing by Drazen Jorgic and James Jukwey)


Source: Reuters

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