Africa Business Communities

[Interview] Bob Koigi, Africa Business Communities

Bob Koigi, multiple award winning journalist and East Africa Region Chief Editor at Africa Business Communities, was recently selected as one of the 100 worldwide most influential people of African descent under 40. We meet up with him and ask about his views on the African economy.

First of all, congratulations Bob! How did all this happen?

Thank you. The judges at the New York-based MIPAD organization selected me for my consistent coverage of vital subjects in Africa including the SDGs, development and Africa business landscape in the capacity of a multiple award winning journalist. It is a great and rare honour and I thank the judging panel for considering me for this prestigious recognition.

Many African countries heavily depend on the export of crude oil – for a country like Angola oil makes out about 90 percent of exports. How sustainable is this for decennia to come?

Global fuel price fluctuations, the shift to renewables, the impact of the US- China trade war have all far-reaching implications for oil producers and African countries stand to be the biggest casualties due to the overdependence on crude oil exports. While Africa’s contribution to global oil market continues to grow significantly more finds in traditional oil producers Nigeria and Angola and new entrants like Kenya, Uganda and Ghana are positioning Africa as a force in the world oil industry. However going by the changing global dynamics, reliance on crude oil exports alone cannot make these countries and the continent competitive in a world where oil producers continue to heavily invest in value addition to reap the full benefits of oil.

With a burgeoning energy demand from an expanding local consumer markets and the emergence of more industries, African countries should invest heavily in infrastructure, such as pipelines and refineries, address the corruption question and embrace intra-regional trade. It is a tough call and a capital intensive approach but striking a balance between exports and servicing the home market remains the only solution in an increasingly competitive industry.

Nigeria – that is Aliko Dangote – is investing in oil refining capacity. It is said many times: Africa must add value. Do you believe in the Dangote oil refining ambitions?

The 650,000 barrels-per-day refinery is a game changer in a country whose dilapidated refining system means it is hugely reliant on imports which has seen the economy take a major hammering. Take for example the period between late 2017 and early 2018 when Nigeria spent over $5.8 billion on fuel imports as it sought to tame a several fuel shortage that saw people queuing in filling stations for hours. That decision is still taking a toll on an already struggling economy.

The Dangote refinery allows the country to diversify its economy while reducing dependence on imported oil which robs a country the much needed foreign exchange earnings.

Sub Saharan Africa has more than 132 trillion barrels of proven oil reserves which represents over eight per cent of the global supply. However it exports a bulk of this to overseas refineries denying it the benefits that come with adding value from job creation, meeting the increasing domestic fuel demand, and generating foreign exchange through exports.

Adding value will also always insulate countries from the vagaries of international oil markets.

What are the opportunities for solar and wind energy in Africa?

Africa experiences a very high number of annual sunshine hours compared to the rest of the world and has some of the strongest winds due to its vast deserts and coastlines. Yet over 620 million people in the continent do not have access to electricity with both solar and wind emerging as frontrunners in providing affordable, reliable and sustainable energy to this undeserved population. In fact the potential for the two sources of energy is mind blowing. The African Development Bank 2017 estimated that the power generation potential for wind in the continent is 110 gigawatts and 1000 gigawatts for solar. Now imagine what this could do in covering even the remotest of communities and supplying the surplus to the national grid. It would not only light up every household in Africa with cheaper power, but would also address one of the biggest headaches for manufacturing sector in many African countries; that of exorbitant and unreliable energy that not only makes cost of doing business extremely expensive, but also makes manufacturing in the continent uncompetitive. The countries that are trailblazing in these sources of energy through landmark projects, from the Noor concentrated solar power plant in Morocco to Lake Turkana wind farm in Kenya have one thing in common. Political will, policy commitment and investments. Those are the factors that will drive the renewable energy renaissance in Africa.  

Is it true to you that Africa needs massive investment in infrastructure? How can this be realized?

Across sectors, Africa has been haemorrhaging billions of dollars due to dilapidated or underdeveloped infrastructure that has contributed to a broken value chain. Yet the continent doesn’t require to invest colossally in infrastructure to transform economically. What it needs is streamlining the infrastructure investment landscape by prioritizing needs. Of course such needs vary between countries but the bottom line is a clear and transparent approach. Cases of stalled infrastructure projects and white elephants have become commonplace. Political will to address and tackle corruption is the first step in ensuring investment in infrastructure is realized. Public private partnership equally holds key in boosting government’s efforts at investing in infrastructure and allowing countries to reap from that investment.

African ICT startups pup up all over the continent. How much future is there in this?

The African startup landscape has grown at unprecedented levels with the startups mushrooming out of a need to address numerous gaps in the continent. From ensuring financial inclusion, easing transportation, finding low-cost health solutions and providing pay-as-you-go solar solutions to communities not connected to national grid among others, the startups are thriving due to their unique approach of providing homegrown solutions to African problems. With a growing emergence of startup incubators across the continent from MEST in Ghana, iHub in Kenya and CTIC in Senegal that have successfully produced some of the most prolific startups whose work has appealed beyond the continent’s borders, and the growing appetite for investors to fund the local startups due to their unique approach to business, the space for startups can only get more promising. Africa’s Silicon Valley for example is now already a reality.

Somehow the importance agribusiness always seems to be overlooked. What is the potential? Could Africa feed itself? And Europe, the Middle East?

Despite Africa battling the effects of climate change and emergence of pests and diseases that have taken a toll on food production, investment in new age farming is redefining agriculture in the continent as we know it. With a urbane and suave youthful generation now getting its hands dirty, and farming now moving to phones and laptops, the green revolution in the continent has kicked off. Coupled with investment in small irrigation, high yielding stress-resistant seeds and a growing middle class that is expressing appetite for specialist food, African farmers are already on the path to creating a trillion-dollar market for their goods by 2030 as predicted by the World Bank.

Sleeping giant Ethiopia is waking up. What can other African countries learn – if anything – from Ethiopia?

Hailed by the IMF as the fastest growing economy in Eastern Africa, Ethiopia has made successful strides at economic prosperity due to the government’s commitment and investment to pro-poor sectors among them agriculture, health, education and infrastructure. The government allocates up to 70 percent of its budget to these sectors alive to the fact that they are the crucial building blocks of a successful economy. It has also invested in strengthening the capacity of private sector through incentives and regulation that eases cost of doing business while investing heavily on building small enterprises that then have catalytic effort on the rest of the sectors. For example these small enterprises provide products and skills to a large public housing scheme, which has necessitated creation of jobs. The focus on manufacturing is equally paying off. The textile, shoe and leather companies setting up shop for European and US markets have boomed in the last decade. Because of the incentives and the huge support the government has given to the sector, global brands like Calvin Klein, Zara and H&M among others now outsource to Ethiopia.

Same question for Rwanda. Good governance is said to be the most important export product of Rwanda…

From the 1994 genocide that brought Rwanda to its knees, the country has risen to be one of the trailblazers in Africa and a force to reckon with globally in what is attributed to strong leadership. Political stability since genocide has been pivotal in steering the country into economic stardom bolstered by government policies that have been a magnet for investors. From inclusivity in government and politics, the country has the highest number of women in politics world over with over half of members of parliament and cabinet being women, to a strong stand on corruption, which has seen Rwanda ranked the least corrupt country in East Africa, political will and good governance have been at the driving seat of Rwanda’s prosperity.

In your country – Kenya – tribalism plays a dominant role in politics and business. Should Kenya address this to be able to move forward? What are your thoughts?

Internal divisions in Kenya precipitated by tribalism have created a feeling of disenfranchisement with majority of citizens feeling power, wealth and national resources are concentrated among a few individuals and communities. These politics of tribe and feelings of marginalization have been the recipe for intermittent violence that has blighted Kenya’s democracy and gains over the years. Violence has since the introduction of multi-party democracy in 1992 become predictable with every election which becomes the only avenue through which people can vent their frustration. The destruction of property, the shutdown of businesses in the prolonged electioneering period and the knock-on effects to key sectors of the economy has taken a toll on the overall economic growth over the years. To address this, inclusivity in government must be felt across all communities who have to feel that they are enjoying a piece of the national cake. Devolved governments have to a great extent addressed this, but Kenya needs to consider negotiated democracy that seeks to accommodate everyone in government. It has worked elsewhere in Zimbabwe, South Africa and Rwanda. Kenya should borrow a leaf.

How will young Africans bring the continent further?

With the continent having the youngest population world over, constituting two thirds of Africa’s total population, Africa’s greatest asset is its demographic dividend. While the youth have traditionally been associated with Africa’s most pressing problems ranging from crime, migration and unemployment, we are increasingly seeing a new generation of educated, tech savvy youth who are finding homegrown solutions to local problems. From a flurry of applications to running startups that have caught global attention, the African youth are shaping and redefining the continent. What they need most now is an enabling environment in terms of favourable policies by governments, support from the private sector, whether it is affordable credit facilities from the banks or mentorship and the space to actualize their dreams. The Jobs for Youth in Africa strategy by the African Development Bank and the Tony Elumelu Entrepreneurship Programme that have created a youth entrepreneurship revolution are living examples of the great strides the continent can make by moving from youth empowerment to youth investment.

How can Africa take advantage of the USA-China trade war?

The increased tariffs on Chinese goods destined to US and the retaliatory practices are creating supply gaps that give Africa a chance to be an alternative trading partner to both China and the United States. As it looks for new sources of commodities to bridge the shortfall, China is likely to set sights on African imports.

On the other hand, the African Growth and Opportunities Act, AGOA, that grants African countries duty-free access to the US markets for thousands of products, now becomes a silver bullet for African countries which are presented with an opportunity as United States look at filling the vacuum occasioned by the slowdown in exports from China. However Africa will have to put its house in order and ensure that its goods are competitive in the global markets in order to seize these opportunities.


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