NCC Fine Impacts MTN Result Ending June 2016

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07/08/2016

MTN, a leading emerging markets mobile operator, connecting 233 million people in 22 countries across Africa and the Middle East has unveiled its financial results as at June 30, 2016. The company said it is committed to continuously improving customers’ experience and delivering a bold, new Digital World to them.

Financial results snapshot for the six months ended 30 June 2016
• Group subscribers remained flat at 232,6 million from 31 December 2015
• Revenue increased by 14,0% (1,5%*) to R78 878 million
• Data revenue increased by 32,2% (19,7%*) to R19 849 million
• Voice traffic and data traffic increased by 7,9% and 135,3% respectively
• EBITDA decreased by 3,3% (25,9%*) to R29 273 million
• EBITDA margin decreased 6,6 percentage points to 37,1%
• Headline loss per share of 271 cents**
• Interim dividend of 250 cents per share
• Capex increased by 26,9% (15,4%*) to R13 772 million
• Nigeria regulatory fine re-measurement impact of R10,5 billion

The Group’s results are presented on a regional basis in line with the Group’s new operational structure. This is comprised of South and East Africa (SEA), West and Central Africa (WECA) and Middle East and North Africa (MENA).
The SEA region includes: South Africa, Uganda, Zambia, Rwanda, South Sudan, Botswana (joint venture – equity accounted) and Swaziland (joint venture- equity accounted). The WECA region includes: Nigeria, Ghana, Cameroon, Ivory Coast, Benin, Congo Brazzaville, Liberia, Guinea Conakry and Guinea Bissau. The MENA region includes: Iran (joint venture – equity accounted), Syria, Sudan, Yemen, Afghanistan and Cyprus.
Although Iran, Botswana and Swaziland form part of their respective regions geographically and operationally, they are excluded from their respective regional results due to being equity accounted for by the Group.

Overview
MTN continued to operate in a challenging environment for the six months ended 30 June 2016. The financial performance for the period reflects the confluence of a number of material issues, which created the “perfect storm”. The Group has made strides towards resolving these challenges although many of these factors fall outside of its control.
The Group’s reported results were significantly impacted by the Nigerian regulatory fine. On 10 June MTN Nigeria resolved this matter with the Federal Government of Nigeria (FGN) and agreed to pay the FGN a total cash amount of 330 billion Nigerian naira (US$1,671 billion, using the exchange rate prevailing at the time) over three years in a full and final settlement.
This was agreed in addition to complying with certain other regulatory conditions imposed as part of the settlement reached. The 50 billion naira (US$250 million) paid in good faith and without prejudice by MTN Nigeria on 24 February 2016 forms part of the monetary component of the settlement, leaving a balance of 280 billion naira (US$1,418 billion, using the exchange rate prevailing at the time) outstanding. In June 2016 the first scheduled payment of 30 billion naira (US$124 million) was made. The remaining cash payable at 30 June 2016 amounted to 250 billion naira (US$882 million).
The Group has accrued the present value of 280 billion naira (US$1,418 billion, using the exchange rate prevailing at the time), which in total had a negative impact of R10 499 million on reported earnings before interest, tax, depreciation and amortisation and impairment of goodwill (EBITDA) and a R8 632 million negative impact on the Group’s reported headline losses, or 474 cents on reported headline losses per share.
The reported impact on the Group’s statement of cash flow for the period amounted to R5 870 million, which equates to the 80 billion naira paid during the period.
During the period, R1 324 million costs were incurred on a range of professional services relating to the negotiations that led to a reduction of R34 billion in the Nigerian regulatory fine to 330 billion naira (US$1,671 billion, using the exchange rate prevailing at the time).
The Board has exercised its judgement and approved the quantum of the professional fees incurred taking into account global benchmarks and the value delivered culminating in the final settlement of the Nigerian fine.
Apart from the Nigerian regulatory fine, the depreciation of local currencies against the US dollar had a substantial impact on the Group’s results. This resulted in foreign exchange losses amounting to R3 606 million during the period.
MTN South Sudan reported an impairment on property, plant and equipment (PPE) of R259 million** (using a Rand/ Sudanese pound exchange rate of 0.376). When the impairment write-off is presented on an organic basis the impairment amounts to R2 632 million* (using a rand/Sudanese pound exchange rate of 3.837). This organic impairment write-off had a significant negative impact on organic EBITDA.
The Group’s underlying performance was impacted by weak macro-economic conditions affecting consumer spending, the withdrawal of regulatory services in MTN Nigeria from July 2015 until May 2016 and disconnections of subscribers related to subscriber registration requirements, mainly in Nigeria.
MTN Nigeria disconnected the last batch of 4,5 million subscribers in February 2016. MTN Uganda and MTN Cameroon were also impacted by subscriber registration requirements. This resulted in significant free minutes provided for subscriber re-registration campaigns,
contributing to a 12,2%* decline in the effective voice tariff. The Group’s performance was further impacted byaggressive price competition and under-performance of MTN South Africa.
MTN Irancell (joint venture – equity accounted), MTN Ghana and MTN Cyprus delivered strong operational and financial performances for the period.

EBITDA reconciliation
EBITDA, excluding the impact of the Nigerian regulatory fine (R10 499 million), hyperinflation (R90 million) and the realisation of the deferred profit from the sale of towers in Ghana (R18 million), declined 3,3%.
This was positively impacted by foreign exchange movements (23%). Organic EBITDA declined 25,9%*, negatively impacted by R1 324 million in costs incurred on a range of professional services relating to the negotiations that led to a reduction of R34 billion in the Nigerian regulatory fine and the impairment of PPE in South Sudan of R2 632 million*.
The impairment for PPE of South Sudan impacted organic EBITDA by 8,7%*. MTN South Sudan’s full results impacted organic EBITDA by 9,8%*. Excluding the impact of professional fees relating to the Nigerian regulatory fine negotiations and the MTN South Sudan impairment, EBITDA declined 12,8%*.
The Group EBITDA margin declined 6,6 percentage points (pp) to 37,1%. This excludes the impact of the Nigerian regulatory fine, hyperinflation and the realisation of the deferred profit from the sale of towers in Ghana.
Losses from joint ventures and associates amounted to R1 692 million**. This included a charge of R1 039 million** incurred by MTN Irancell, mainly relating to the depreciation and amortisation of hyper-inflated assets that were historically written up under hyperinflation reporting.
Upon the discontinuation of hyperinflation accounting in Iran, effective 1 July 2015, hyperinflation adjustments are limited to the depreciation and amortisation charges on previously hyper-inflated assets until 2033.
The Group reported losses of R2 463 million in relation to MTN’s share of Nigerian TowerCo losses, which were mainly as a result of foreign exchange losses incurred on US dollar-denominated loans. In addition, the Group also reported short-term losses on MTN’s share in Africa Internet
Holdings (AIH), Middle East Internet Holdings (MEIH) and Iran Internet Group (IIG)(R494 million).
The Group reported a headline loss per share of 271 cents**, which was mainly as a result of the Nigerian regulatory fine (474 cents**).
Excluding the impact of the Nigerian fine, headline earnings per share (HEPS) declined 69% to 203 cents. In addition, the headline number was negatively impacted by losses from joint ventures and associates, which were negatively affected by hyperinflation of 20 cents** (positive impact of 40 cents** in 2015), losses from the TowerCo’s of 136 cents** (3,5 cents** in 2015), AIH, MEIH and IIG of 27 cents** (18 cents** in 2015) and net forex losses of 135 cents** (52 cents** in 2015).
This was further negatively impacted by a range of professional services relating to the negotiations that led to the reduction in the Nigeria regulatory fine (73 cents**). Excluding the impact of the fine, hyperinflation, losses from the TowerCo’s, AIH, MEIH and IIG, forex losses and a range of professional fees relating to the fine negotiations, basic HEPS declined 11,7% to 594 cents.

Financial performance summary
The Group continued to benefit from its significant scale and footprint, maintaining its leadership position in 15 markets. Group subscriber numbers remained flat at 232,6 million following 6,6 million subscriber disconnections over the six month period in Nigeria, Uganda and Cameroon.
Since October 2015 approximately 18 million subscribers across the Group were disconnected to ensure compliance with the subscriber registration processes. MTN South Africa reported a decline in subscriber numbers mainly as a result of strong competition and economic pressure in a highly penetrated market.

Group revenue increased by 14,0% to R78 878 million, benefiting from the average exchange rate movement of the rand against the naira.
On an organic basis, Group revenue increased by 1,5%*, impacted by a decline in outgoing voice and data revenue in Nigeria following the withdrawal of regulatory services from MTN Nigeria until May 2016.
This had a significant negative impact on MTN Nigeria’s revenue growth for the first four months of the period. This was partly offset by higher revenue growth by MTN South Africa, supported by strong device sales and an increase in data revenue during the period.
The Group benefited from healthy double digit data revenue growth in the majority of the markets in which it operates.
Group data revenue increased by 32,2% (19,7%*) and contributed 25,2% to total revenue despite a 46,9% decline in the effective data tariff (in constant currency US dollar terms). Digital revenue, including Mobile Financial Services revenue, contributed 32,1% to data revenue. This was supported by a 135% increase in data traffic and the increased take up of digital lifestyle services.
Outgoing voice revenue increased by 8,0% and decreased by 5,4%* on an organic basis. This was negatively impacted by a 12,2%* decline in the effective voice tariff (average price per minute, in constant currency US dollar terms) as a result of continued price competition, subscriber disconnections and free minutes used for subscriber re-registration campaigns.
The use of multiple SIM cards, increased substitution for data services and increased pressure on consumer spending also negatively impacted outgoing voice revenue.
MTN Nigeria’s competitiveness was compromised by the mandatory disconnection of subscribers and the suspension of regulatory services until May 2016.

Nigeria: Hospitality to Generate $500m by 2020- PwC

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07/08/2016

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Nigeria’s hospitality revenue should reach $507 million by 2020 thus beating 2015’s $321 million. This was revealed in a report on Nigeria’s tourism from PricewaterhouseCoopers (PwC) released last week, local media said.
In its report, PwC associates the increase to that of overnight stays and of corresponding average price. In addition, new hotels are being built across the nation. Nigeria is in fact expected to get 4,700 additional hotel rooms within the next five years.
It should be recalled that PwC has reviewed the Nigerian tourism industry in the 5th edition of its “Hospitality Outlook: 2015-2019” released in May 2015. In the report, the American firm said Nigeria’s hospitality market had been greatly affected by the Ebola-related health crisis and the 2014’s terrorist attacks. Earnings from room booking thus fell 2% while the three-four star hotels market recorded a 7.7% decrease in revenues.
However, according to the report, due to its economy growing, Nigeria’s hospitality sector attracted many investors and the number of hotel rooms should double in the next five years with most part of this growth coming from Lagos.
Also, overnights stays should record an average annual growth of 6.6% reaching 2.2 million in 2019 against 1.6 million in 2014.

MainOne Launches SME-in-a-Box Solution

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07/08/2016

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In delivering on its commitment to meet the needs of small and medium enterprises in Nigeria, MainOne has introduced into the market a new service called SME-in-a-Box, a converged solution of high-speed internet, fixed-voice and cloud solution designed to offer its world class services to smaller businesses in affordable packages.
SME-in-a-Box is a simple, plug and play service poised to drive business growth, productivity and profitability without compromising quality and value for money. It will help businesses deliver robust services to their clients because of the high quality experience and value the solution offers. This service is especially practical in today’s economic environment where businesses have to adapt to the new financial regime in order to remain viable.
Speaking during the product launch, the Product Manager, Value Added Services, Adeyemi Tanimomo, discussed the value of SME-in-a-Box.
“MainOne understands the challenges small businesses face especially in terms of costs and quality of service. You will find that the typical business is always changing service providers because of these two issues. This is why we created this solution, to enable businesses increase their operational efficiency and ultimately their bottom-line. SME-in-a-Box provides business owners a viable solution to meet their objectives of growth, improved efficiency and good service delivery.”
Tanimomo further explained that from MainOne’s perspective, SMEs are key drivers of the economy because of the vital role they play in alleviating poverty, providing job opportunities and building wealth. However, an SME is unlikely to be able to fully attain its potential without being powered by reliable internet connectivity.
“SME-in-a-Box is an expression of MainOne’s commitment to constantly innovate as we continue to provide the best connectivity and data network services in West Africa. We also want to provide SMEs access to the same quality of services enjoyed by big organisations to drive their growth and sustainability. The service is especially recommended for startups, professional services companies, architectural firms, law firms, schools, hotels, hospitals, e-commerce firms, retail malls and other businesses that require business support connectivity solutions from one, single provider.”
SME-in-a-Box is affordable and currently available in Ikeja and Apapa, with planned phased launches throughout Nigeria.

China’s Forex Reserves Fall to $3.20tr in July

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07/08/2016

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China’s foreign exchange reserves fell to $3.20 trillion in July, central bank data showed on Sunday, in line with analyst expectations.
Economists polled by Reuters had predicted reserves would fall to $3.20 trillion from $3.21 trillion at the end of June.
China’s reserves, the largest in the world, fell by $4.10 billion in July. The reserves rose $13.4 billion in June, rebounding from a 5-year low in May.
China’s gold reserves rose to $78.89 billion at the end of July, up from $77.43 billion at end-June, data published on the People’s Bank of China website showed.
Net foreign exchange sales by the People’s Bank of China in June jumped to their highest in three months, as the central bank sought to shield the yuan from market volatility caused by Britain’s decision to leave the European Union.
China’s foreign exchange regulator recently said China would be able to keep cross-border capital flows steady given its relatively sound economic fundamentals, solid current account surplus and ample foreign exchange reserves.
China’s foreign reserves fell by a record $513 billion last year after it devalued the yuan currency in August, sparking a flood of capital outflows that alarmed global markets.
The yuan has eased another 2 percent this year and is hovering near six-year lows, but official data suggests speculative capital flight is under control for now, thanks to tighter capital controls and currency trading regulations.
However, economists are divided over how much money is still flowing out of the country via other channels, with opaque policymaking and some inconsistency in the data raising suspicions that the fall in the yuan may be masking capital outflow pressure.
After the yuan slipped to below the psychologically important 6.7/dollar level on July 18, it has seen a mild rebound as the central bank stepped in to control the pace of its depreciation.
Still, most China watchers expect it will resume its descent soon, risking a renewed surge in outflows.
A Reuters poll on Wednesday showed analysts believe the yuan may fall more than 3 percent against the dollar by a year from now, more than expected just a month ago, as the economy struggles to maintain momentum and as the dollar edges up on views of an eventual U.S. rate rise.
China will keep the yuan basically stable and continue with market-based interest rate reform, the central bank said on Wednesday.
The country’s economy expanded slightly faster than expected in the second quarter but private investment growth shrank to a record low, suggesting future weakness that could pressure the government to roll out more support measures.

Check Point Unveils 1st Real-Time Zero-Day Protection for Web Browsers

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07/08/2016

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Addressing the exponential growth in web-based malware, phishing and social engineering attacks, Check Point Software Technologies Limited recently announced SandBlast Agent for Browsers with Zero Phishing technology.
As the newest member of its industry-leading SandBlast family of solutions, SandBlast Agent for Browsers is designed to protect users from these evolving threats by seamlessly incorporating key components of the security model into the browser.
It provides real-time protection, all while reducing the resources required to prevent today’s most advanced attacks.
To optimise business results and innovation, users now expect unconstrained internet access and immediate delivery of downloaded content and email.
At the same time, enterprises must contend with the changing threat landscape, as they strive to prevent the theft of sensitive customer information and their own intellectual property, while maintaining the efficiency of their critical business systems.
Files downloaded from the web represent a leading entry point for malware today, and data shows this threat is growing. Web-based malware and social engineering attacks targeting organisations are increasing in volume and sophistication, with cyber attackers using the latest evasion techniques and persuasive scams to infect their victims. A preview of an upcoming SANS survey, Exploits at the Endpoint: SANS 2016 Threat Landscape Study, reveals:
41% of the respondents experienced their most impactful security events through attacks that used drive-by downloads of malicious programs.
80 percent of organisations have been impacted by phishing attacks over the past 12 months, with 68 percent witnessing an increase in this type of attack.
Coupled with the fact that 63 percent of data breaches involved some form of credential theft through either weak, default or stolen passwords, according to Verizon’s 2016 Data Breach Investigations Report, it becomes clear preventing the full-range of web-based attacks from reaching end users is critical to maintaining business security.
“Within our expanding business, we’ve increasingly been challenged to maintain the security of our endpoints, especially as employees are targeted by hackers using more and more clever social engineering techniques,” said Saul Schwartz, Enterprise Security Manager, se2.
“Having a simple, easy-to-use browser extension that prevents attacks without slowing users down, will be a game-changer for our increasingly mobile workforce – particularly from threats such as phishing attacks.”
In this on-going struggle to protect their endpoints, enterprises want maximum protection, while minimizing the footprint of running, managing and deploying multiple endpoint products on every system. SandBlast Agent for Browsers addresses these requirements with features that include:
Proactive, real-time protection from advanced malware delivers safe reconstructed content within seconds
Dynamic analysis blocks unknown and zero-day phishing attacks targeting user credentials
Simple, easy-to-deploy browser plugin for Internet Explorer and Chrome that installs in minutes and operates with minimal overhead
Highest malware catch rate in the industry, utilising advanced sandbox technology and patented CPU-level detection
“As cyberattacks are growing in their complexity and frequency, enterprises are increasingly at risk of falling victim to a wide range of browser-based attacks,” said Rick Rogers, Area Manager for East and West Africa at Check Point Software Technologies.
“Existing technologies ask users to wait for content to be evaluated, or require multiple, intrusive software installations on every system. SandBlast Agent for Browsers brings the highest level of protection to users in a simple browser plug-in that blocks unknown and zero-day malware delivered via web downloads, while quickly delivering safe content within seconds.”

About Check Point Software Technologies Limited
Check Point Software Technologies Limited is the largest network cyber security vendor globally, providing industry-leading solutions and protecting customers from cyber-attacks with an unmatched catch rate of malware and other types of threats.
Check Point offers a complete security architecture defending enterprises – from networks to mobile devices – in addition to the most comprehensive and intuitive security management. Check Point protects over 100,000 organisations of all sizes.

Social/ Emotional Learning Software, The Social Express, Touches Down in Africa

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07/08/2016

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The Language Express, Inc., developers of the Award winning programme, “The Social Express has announced its partnership with Prognari, an Africa-focused education value-add organisation that seeks to develop social, emotional intelligence capabilities and life skills in children and young adults.
This strategic partnership supports both companies’ objective of equipping the 21st century African child with the skills required to be successful in school and life.
The Social Express® is an animated Social and Emotional Learning (SEL) software designed to teach children and young adults how to think about and manage social interaction situations. It helps them develop meaningful social relationships and ultimately succeed in life.
Marc Zimmerman, CEO of The Language Express, Inc. while commenting on the partnership, said:
“We are excited to bring The Social Express to the African market. Through user testimonials, we have seen positive results in over 70 countries. Prognari will bring the knowledge, reach and expertise that we wanted in a strategic partner for Africa.”
The World Economic Forum, in its March 2016 report titled, ‘New Vision for Education: Fostering Social and Emotional Learning through Technology,’ noted that “In order to thrive in the 21st century, students need more than traditional academic learning. They must be adept at collaboration, communication and problem-solving, which are some of the skills developed through SEL. Coupled with mastery of traditional skills, social and emotional proficiency will equip students to succeed in the swiftly evolving digital economy.”
Emmanuel Udoro, the Corporate Communications Director at Prognari said:
“Our overriding vision at Prognari, has always been to proactively equip African children and young adults for life in the 21st Century and beyond through experiential and targeted learning. Our partnership with The Language Express, Inc. moves us closer to achieving our objective and will see us taking The Social Express to the length and breadth of the African continent. The Social Express® is a digital and innovative learning program that aligns with the trend shifts in our digital world.”
The Social Express® which is accessed via the internet on mobile devices (currently available only on iPads) and desktop platforms, runs a series of interactive web episodes (webisodes) and mobile apps that can be used by the learner independently, or with a teacher in a group.
In addition to equipping children with SEL abilities, Prognari is working with The Language Express to reduce the incidence of bullying in schools through the Cool School programme. Cool School is an interactive and animated anti-bullying programme designed for elementary school learners; Cool School’s six week curriculum has been designed to teach young students about bullying through interactive videos and offline activities.
The program also addresses bystander behavior and how it can contribute to increase bullying within the school environment.

About Prognari
Prognari facilitates the acquisition of social, emotional intelligence and other life skills by children and young adults across Africa, thereby laying the foundation for their future success in life and work.
Prognari is dedicated to helping African students, parents, educators and the wider education ecosystem improve educational effectiveness and ultimately student outcomes to create the world leaders of tomorrow.

Rio Olympics 2016! The Aviation Factor

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07/08/2016

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Olympic Flame was Delivered in Four Lamps
The Olympic torch has been transported to Brazil from Switzerland by the official carrier of the games – LATAM Airlines. On May 3, 2016, the carrier flew Boeing 767 from Geneva to the host nation’s capital Brasilia, escorted by two F-5 fighters from the Brazilian Air Force.
The Olympic flame was transported in a passenger cabin and was kept in four separate lamps, fuelled by kerosene in order to avoid the extinguishment. A special structure was developed to secure the lamps in airplane‘s seats. As a safety precaution, they, along with carpets, were made from non-flammable fabric.
In all, the Olympic flame has been carried by 12,000 people, for the last 95 days. It also has visited 320 cities, covered 20,000 km byon land, and over 16,000 km by air.

Even Horses Require Special Air Transportation
The Olympic torch was not the only item that was specially delivered to the Olympic games by airplane. More than 300 horses from all around the globe were flown to Brazil on a uniquely fitted aircraft for equestrian events.The horses were loaded into special containers that were later put on the main cargo deck. The containers are able to fit up to three horses, but there is a common joke that two horses in one container fly in a business class, while one – in the first class.
It is no surprise that horses, just like human beings, have to have their documents cleared before the boarding.
“Documents are full of important data, such as a detailed physical description, with diagrams, a list of competitions competed in and a list of vaccinations taken,” said Alex Titan, Rio 2016 Sport Competition Manager.
During the transportation, the horses wear special traveling boots and protective bandages to avoid injuries. They are accompanied by professional flying grooms and vets, and may even require medication to cope with stress.

Great Honour for Airlines to Carry Athletes
Over 11 000 world’s best athletes from 205 countries will be participating in Rio 2016. It is a great honor for carriers to transport national teams, they try to create the most comfortable trip possible and even dedicate special liverys to the games. In return, some athletes, for instance, US sportsmen, advertise their carrier.
Even though the governments and carriers put special attention for athletes journeys, not every national team‘s trip has been safe and sound. The Nigerian soccer team missed its original flight from Atlanta, U.S. to Brazil, because of payment issues between the government and a charter company. Once they were solved, it turned out that another aircraft sent to carry the team was too small to transport the whole squad.
Luckily, the airport‘s managers contacted Delta‘s representatives, who were able to provide them with an airplane, normally used to transport NBA teams. The Nigerian soccer team arrived in Brazil with only 13 hours to rest before their first game with Japan.

Operation Hours Extended for Private Jets
The Olympic games attract not only world-class athletes but also crowds of fans, heads-of-states as well as, businessmen, many of whom travel by their own aircraft. In order to cope with arrivals of private jets, Rio airports have extended their operation hours.
Private aircraft will be able to land at city’s main Galeão International airport from 08:00 until 02:00, while Santos Dumont airport will accept arrivals from 06:00 until 00:00, allowing an additional 180 business jet flights per night.
The airspace cannot be opened for private jets all the time due to safety precautions. Rio‘s officials are preparing for the worst case scenario when aircraft crashes into one of the stadiums. In order to provide the maximum air security, F-5 fighters will be patrolling the skies of Rio.

Galeão International Airport has been Expanded
The Brazilian government expects around 2.5 million visitors during the period of the Olympic and Paralympic Games. Usually, Galeão International Airport handles around 40,000 passengers per day, but on the opening night, the airport expects the number reach 90,000.
To cope with passenger flow during the Olympics, and increasing travel demand in the country, the airport has opened South Pier in Terminal 2 that is 1 km long and is equipped with 26 boarding bridges.
As a result of the expansion Galeão’s annual capacity has risen from 17 million to 30 million passengers per year. The airport has also added 68 check-in desks, opened “eGates” to speed up customs and border control and expanded its car park capacity.
It has been over one hundred years since aviation sport – hot air ballooning was featured in the Olympic games. Despite not being in the official program, the aviation industry will have its significant input into the games and Rio 2016 without a doubt will be a sports event to remember.

African Economic Outlook 2016 Launched in Nigeria

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05/08/2016

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The 2016 African Economic Outlook (AEO) was launched by the Nigeria Country Office of the African Development Bank at an outreach event held at the Ahmadu Bello University in Zaria.
The theme of the 2016 AEO is Sustainable Cities and Structural Transformation. The report looks closely at Africa’s distinctive pathways towards urbanisation, and how this is increasingly shifting economic resources to more productive activities.
The publication covers all 54 African nations, with individual country notes and corresponding statistical annexes. Nigeria’s case formed the basis for exchange of views on the AEO, as well as deliberations on prospects for the Nigerian economy.
The July 29, 2016 event started off with a brief meeting with the university’s senior management, which expressed appreciation of the Bank’s efforts in reaching out to academia and encouraging scholars to engage in public policy space. In his remarks, the Country Director of AfDB’s Nigeria Office, Ousmane Dore, emphasised the importance of the report. “It significantly informs policy dialogue and feeds into the design of Bank’s projects to support government priorities,” Dore said.
AfDB Lead Economist, Barbara Barungi outlined the main findings of the report. According to the publication, Africa’s economic performance had been steady and was expected to remain moderate in 2015 and strengthen in 2016 against the backdrop of a fragile global economy.
The continent remained the second fastest-growing economic region after East Asia. The report predicts the continent’s average growth at 3.7% in 2016, increasing to 4.5% in 2017, provided the world economy strengthens and commodity prices gradually recover.
Urbanisation, the report states, is a megatrend that is transforming African societies profoundly. However, this is not accompanied by structural transformation, and therefore industrialisation remains rather slow. Two-thirds of the investments in urban infrastructure until 2050 are yet to be made, the report adds.
If harnessed by adequate urban planning policies, urbanisation can help advance economic development through higher agricultural productivity, industrialisation, services and foreign direct investment in urban corridors.
According to the report, Nigeria has had a sluggish economic growth of 2.8% since the end of 2015. At the time of the report launch, Barungi reported that the economy had contracted further by 0.36% in the first quarter of 2016, while inflation continued to rise, standing at 16.5%.
Policy reforms by the new administration are highlighted, and they include strong fiscal policy, improvements in public sector transparency and accountability, as well as adoption of a more flexible exchange rate.
Nigeria has been rapidly urbanising, with fast-growing cities such as Lagos and Kano facing increasing unemployment and income inequality due to poor urban planning and weak links between structural transformation and urbanisation.

About the report:
The African Economic Outlook is produced annually by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Development Programme (UNDP).

AfDB Commits $9m for Agricultural Finance in Nigeria

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05/08/2016

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African Development Bank Group meeting in Lusaka, Zambia.

The African Development Bank has approved a $9 million equity investment (approximately 12% of the fund’s capitalisation) in the Fund for Agricultural Finance in Nigeria (FAFIN) to provide expansion capital to agricultural small and medium-sized enterprises (SMEs).
FAFIN is a first-generation private equity fund that provides financial, capacity-building and technical assistance to commercially viable SMEs in the Nigerian agribusiness sector, through a unique value chain-centric approach, and using a combination of equity, quasi-equity and convertible loan instruments.
FAFIN implements its strategy and constructs its portfolio through a bifocal lens consisting of the twin objectives of competitive financial returns and measurable positive social impact.
The Fund is jointly sponsored by the German KfW Development Bank and the Government of Nigeria, through the Federal Ministry of Agriculture and Rural Development (FMARD).
The Fund Manager is Sahel Capital (Mauritius) Limited, a fund management firm incorporated in Mauritius in 2013.
The project is expected to deliver strong development outcomes from (i) household benefits and employment through the creation of a large number of jobs and the provision of certain agricultural products; (ii) positive gender and social effects through the implementation of out-grower schemes and supporting rural development; and (iii) private sector development through alleviation of financial constraints faced by agribusinesses and enhancing agricultural value chains.
The project’s contribution to inclusive growth is expected to be significant, given the large numbers of jobs to be created and out-growers to be reached at the level of sub-projects. Its contribution to green growth is expected to be low, because the Fund targets the agribusiness sector with some expected negative effects on the environment.
The Fund’s primary focus will be on SMEs across the agricultural value chain with crop value chain and geographic diversification. It aims at fixing broken value chains to increase efficiencies, reduce post-harvest loss, and increase smallholder farmer incomes and SME agribusiness profitability.
Investment instruments will be primarily quasi-equity (convertible bonds, preference shares and structured royalties) and direct equity. The ticket size ranges from $500, 000 to $5 million.
The Fund is aligned with the Bank’s Ten Year Strategy focusing on inclusive growth, strengthening agriculture and food security, and access to local SME finance; which is encapsulated in the Bank’ High Five Development Agenda for Africa, specifically Feed Africa and Industrialise Africa.
It is also in line with the Bank’s Strategy for Agricultural Transformation in Africa (2016-2025), Strategy on Jobs for Youth in Africa (2016-2025) and the Bank’s Country Strategy Paper for Nigeria (2013-2017), which supports an enabling environment for agriculture.

Interswitch Extols First Bank For Sustaining 100m Monthly Transactions Milestone

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05/08/2016

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Interswitch Group, Africa’s leading digital payments and commerce company today, formally recognized First Bank Nigeria Ltd. as the first financial institution in the country to achieve sustained transaction volumes of 100 million transactions, first in December 2015 and again in May 2016.
The record transaction volumes represent the total transactions processed by First Bank’s Front End Processor running on the Interswitch transaction-switching platform, which seamlessly links all financial institutions in Nigeria to facilitate better and quicker transactions across all platforms.
In December 2015, First bank was recognized as the first-ever financial institution in the country to achieve this feat. Being able to sustain this in May 2017 is a pointer toward the bank’s desire to promote the CBN cashless policy and boost economic growth via e-payments across Nigeria and the African continent.
In his remarks, Group Managing Director/CEO, Interswitch, Mitchell Elegbe commented
“It essentially reflects the strength and development of electronic transactions in Nigeria that a single banking partner can record 100 million transactions in a single month. When this figure is aggregated with that of our other partners, then you can begin to have an idea of the sheer size and demand for electronic financial services in Nigeria. Interswitch is excited by this sustained achievement by FirstBank and we look forward to partnering with the Bank to further consolidate the gains of digital transaction innovation.”
Also speaking, the MD/CEO of FirstBank, Dr. Adesola Adeduntan, noted that the bank will continue to employ novel approaches in providing secure and convenient banking services to its customers and promised to drive innovation and extend its leadership of the financial sector services with specialised and technology-driven products and services. In his words,
“First Bank’s investment in e-business reflects our commitment to promoting financial inclusion which is widely regarded as a lever for sustainable economic growth and development as well as enhancing entrepreneurship. Our passion to serve and extend financial services to the unbanked has since inspired several innovations and we thank our esteemed customers for their continued patronage and trust in our services whilst dedicating the recognition to them”.
It is on record that FirstBank was one of the foundational shareholders of Interswitch, prior to the company’s acquisition by a tripartite consortium led by Helios Investment Partners, and including the IFC and Adlevo Capital.
The milestone by First Bank is another marker of the scale of success recorded by Interswitch since its launch in 2002. It will be recalled that the company in 2014 was listed by Deloitte as the fastest growing tech company in Africa with a year-on-year growth rate of over 1500%.

U.S. Captive Insurers Benefit from Core Competencies

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05/08/2016

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Captive insurance companies rated by A.M. Best ended 2015 in strong form, recording pretax operating income of $1.4 billion, a 13.5% increase over 2014, according to a new A.M. Best special report.
The Best’s Special Report, titled, “U.S. Captive Insurers Benefit From Core Competencies,” states that the favorable overall results for the rated domestic captive group should continue to hold in 2016.
This view takes into consideration continued modest economic improvement, gross domestic product growth of approximately 2.5% to 3%, moderate loss cost inflation between 2% to 4% and an incremental rise in interest rates by year-end 2016.
Equally important, this view assumes a similar degree of price discipline on the part of group captives. A.M. Best believes that today’s prevailing low interest rate environment will help to keep aggressive pricing on the sideline.

Ozaremit, Africa’s New Top-Up Leader Accelerates Development

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05/08/2016

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Ozaremit, a new top-up leader, accelerates its development only 3 months after its launch.
Ozaremit currently covers 110 countries, including 35 countries in Africa. Ozaremit is a competitive, safe and fast online service to send airtime to family and friends living abroad. Ozaremit is already the cheapest service to send top-ups to phones in Nigeria.
Ozaremit is also pleased to announce it has secured funding from French investors Thibault Launay, Romain Girbal and Célia Grémy to boost growth. They have a vast experience investing in mid to early stage startups, including soon to launch Afrimalin, www.Afrimalin.com, a classified listing platform for Francophone Africa.
Ozaremit is also in discussion with top tech investors.
Ibrahima Soumano, Ozaremit co-founder and CEO, said: “We are pleased to get leading international entrepreneurs and investors on board to accelerate our growth. We will rapidly scale Ozaremit’s customer base and expand our activities beyond top-up. We are set to be the next fintech success story”.
The new funds will help ramp up marketing across multiple channels and allow Ozaremit to launch its agents’ network in an effort to make the service widely available to offline customers.
Send airtime, money and pay bills for your loved ones instantly: A new user interface offering cross border remittances for mobile airtime, bill payment and mobile money transfer will be unveiled in the coming weeks.

African Airlines Report 4.7% Passenger Growth in June

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05/08/2016

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The International Air Transport Association (IATA) announced global passenger traffic data for June showing that demand (measured in revenue passenger kilometers or RPKs) rose by 5.2% compared to the year-ago period.

This was up slightly from the 4.8% increase recorded in May (revised). However, the upward trend in seasonally-adjusted traffic has moderated since January. June capacity (available seat kilometers or ASKs) increased by 5.6%, and load factor slipped 0.3 percentage points to 80.7%.

“The demand for travel continues to increase, but at a slower pace. The fragile and uncertain economic backdrop, political shocks and a wave of terrorist attacks are all contributing to a softer demand environment,” said Tony Tyler, IATA’s Director General and CEO.

June 2016 (% year-on-year)	World share¹	RPK	ASK	PLF (%-pt)²	PLF (level)³
Total Market	100.0%	5.2%	5.6%	-0.3%	80.7%
Africa	2.2%	3.2%	5.9%	-1.7%	65.0%
Asia Pacific	31.5%	9.0%	7.2%	1.3%	79.1%
Europe	26.7%	2.0%	2.7%	-0.6%	82.9%
Latin America	5.4%	4.6%	1.9%	2.1%	80.8%
Middle East	9.4%	7.3%	14.4%	-4.6%	70.3%
North America	24.7%	4.3%	4.3%	0.0%	86.3%

% of industry RPKs in 2015 ²Year-on-year change in load factor ³Load factor level

International Passenger Markets
June international passenger demand rose 5.0% compared to June 2015. All regions recorded growth, led by airlines in Latin America. Capacity climbed 6.4%, causing load factor to slide 1.1 percentage points to 79.4%.

Asia-Pacific airlines’ June traffic increased 8.2% compared to the year-ago period. However, most of the growth relates to the strong upward trend in traffic seen in the final months of 2015 and into 2016, with June demand barely higher than in February. This could be a natural pause, but possibly is also a sign of Asian passengers being put off travel by terrorism in Europe. Capacity rose 7.3% and load factor inched up 0.6 percentage points to 78.2%.

European carriers saw demand rise 2.1%, the smallest increase among regions, reflecting the negative impact of recent terrorism. While demand tends to recover reasonably quickly after such events, the repeated nature of the attacks may have a more lasting impact. Capacity climbed 3.4% and load factor slipped 1.1% percentage points to 83.3%.

Middle Eastern carriers posted a 7.5% traffic increase in June, which was well down on the double-digit growth recorded earlier in the year. In part this could be owing to the timing of Ramadan, which tends to depress traffic growth Capacity rose 14.3%, which caused load factor to dive 4.4 percentage points to 69.9%.

North American airlines’ demand rose 4.0% compared to June a year ago, which was well up on the 0.5% year-over-year growth recorded in May. Capacity climbed 4.7%, causing load factor to dip 0.6 percentage points to 84.3%, still the highest among regions.

Latin American airlines experienced an 8.8% rise in demand compared to the same month last year, suggesting that carriers there have flown out of the soft patch seen in the first quarter. Capacity increased by 5.2% and load factor rose 2.7 percentage points to 82.4%.

African airlines’ traffic climbed 4.7% in June, an indication that the strong upward trend in demand that began in the second half of 2015 has paused. Capacity rose 7.4%, with the result that load factor slipped 1.7 percentage points to 64.4%, lowest among regions.

The Bottom Line : “The latest figures show that aviation and aviation related tourism delivers $2.7 trillion in economic impact and supports some 62.7 million jobs worldwide. It is a powerful force for good in our world. It is too soon to know whether recent terrorist attacks will have a long-term negative influence on demand, nor what will be the impact of Brexit and the events in Turkey. But it is vital that governments recognize and support aviation’s ability to contribute to global economic well-being and better understanding across cultural and political borders,” said Tyler.

ADB Bags 2016 Organisation of the Year Award

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05/08/2016

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The African Development Bank Group was named the African Organisation of the Year 2016 by the African Achievers Awards.
At a ceremony held in Abuja, Nigeria’s capital, the Bank was lauded for its immense contribution towards the economic growth of the continent and its commitment to raising standards of living in Africa.
Other recipients included the Bill and Melinda Gates Foundation, Nigerian Philanthropist, Chief Dumo Lulu Briggs, globally renowned Gospel Singer, Sinach, and Sierra Leone’s Attorney General and Minister of Justice, Joseph Fitzgerald Kamara for Excellence in Leadership.
In 2015, President Jakaya Kikwete and music icon Diamond Platnumz of Tanzania, Bishop Desmond Tutu, One.org and SABC Africa received awards in various categories.
Speaking on behalf of the AfDB President, Akinwumi Adesina, Nigeria Country Director, Ousmane Dore noted that Bank is humbled by the recognition of its efforts pledged to renew its commitment to follow through with its delivery priorities tagged the High 5s – to Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the quality of life for the people of Africa.
The African Achievers Award has been celebrated annually since 2003 and strives to bring into continental and global focus on public and private sectors, development partners and individual efforts in promoting development in Africa. It also showcases the human and material wealth on the continent, rejuvenating interest in foreign direct investment.
African Achievers Awards® is produced, managed and maintained by the Institute of Leadership and Management (a West African leading leadership institute) and Achievers Media.

Enhancing Africa’s Capacity for Climate Risk Response

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04/08/2016

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Chinedu Moghalu

The financial cost of the 2012 flooding across Nigeria was officially put at N2.6 trillion by the National Emergency Management Agency (NEMA). With housing and agriculture being the two highest affected sectors, the crisis dealt very hard blows on the affected communities and food production.

On the one hand, the huge financial loss highlights the scale of the natural disaster and the humanitarian needs that attended it.

On the other hand, the financial cost is so huge that, given the fiscal constraints to meeting these needs, the affected communities will bear the brunt of the disaster for many years. This is quite unfortunate.

In Africa, drought, flood and cyclones have been wrecking havocs on livelihoods in communities and across countries. For example, a severe drought between 2011 and 2012 affected the whole of East Africa. As a result, over 9.5 million people experienced crushing food shortages; and the disaster also brought about a refugee crisis.

The prospects of extreme weather shocks show that African populations are increasingly susceptible to climate risks. The grim reality is that some people would be traumatised again and again, by repeat experience going by the large size of the areas that are prone to these risks, and the harrowing experience of displacement.

Climate disasters are likely to occur more frequently in light of the rise in global temperatures and the rise in sea levels.

Precisely because of very limited capacity for crisis response, Africa is especially vulnerable to climate disasters.

With the certainty of natural disasters, the challenge to surmount them is how to build resilience in vulnerable communities and deliver timely assistance when the risks crystallise. These are no mean challenges at all, given my affinity to the Nigeria 2012 experience.

Many of us often dismiss the capability of Africa to rise to this and many other daunting challenges on the continent, citing lack of political will and effective policymaking to unlock the required resources; not least financing. But this is not always the case.

African policymakers came together in 2012, under the aegis of the African Union (AU), and founded the African Risk Capacity (ARC) as a specialised agency for financing climate resilience and crisis response.

The initial returnable fund of $90 million was provided the Agency by the governments of Germany, through BMZ and KfW Development Bank; and the United Kingdom, through DFID.

The objective is to provide African countries with early funds, linked to pre-defined national climate contingency plans, and for leading response in the event of climate disasters. This initial assistance is hoped to reduce Africa’s reliance on external funding to address climate risks.

The ARC is a weather insurance mechanism for the member-countries of AU with the combination of a climate risk analytic, the Africa RiskView; and a financial arm, ARC Insurance Company Limited. Africa RiskView is a risk modelling platform, which provides early warning and parametric insurance tools that trigger the need for an insurance payout when the risk that is covered crystalizes. This automated process aids the objective of delivering timely response.

The ARC is already off the ground. No less than 37 countries have signed up to the initiative, including Nigeria. The initial risk pool, which covered the 2014/2015 rainfall seasons, consisted of Kenya, Mauritania, Niger and Senegal. The drought insurance policies issued to the countries totalled nearly $130 million in coverage for a total premium cost of $17 million.

The first set of insurance payouts, totalling over $26 million, has been made under this initiative in January 2015, with Mauritania, Niger and Senegal benefiting as a result of drought conditions in these countries in 2014. Five other countries have since joined the pool. This has increased the drought coverage for the 2015/2016 rainfall seasons to over $190 million.

However, the ARC aims to do much more. It targets up to 30 countries for coverage of its drought, flood and cyclone policies, totalling approximately $1.5 billion by 2020. An estimated 150 million Africans will benefit from the risk covers.

For this, however, only $300 million in premium payments is required. This underscores the cost-benefit of early intervention through the African Risk Capacity which guarantees that every dollar spent on its insurance saves nearly four and a half dollars that would be spent after a crisis is allowed to crystallize. The potent question therefore is, how do Africans push towards the target coverage of the scheme? This question has engaged my thought as we need to ensure that Africa does not continue to be a graveyard for good initiative, due to lack of awareness, cynicism and inability to put our money where our mouth is.

Irrespective of the cost-benefit of this risk insurance, it potentially faces the general apathy towards insurance in Africa, which makes the continent the least insurance-protected region of the world.

This challenge can be surmounted, in part because of the governmental stakeholding of the ARC and because it can be a basis of peer review by the NEPAD (New Partnership for Africa’s Development) with regard to citizen protection from natural disasters.

But there is also a need to leverage local advocacy. Sufficient awareness needs to be raised at national level about this scheme. Civil society actors can take this further by intimating local representatives, especially legislators, on the need to provide covers for the vulnerable communities they represent rather than having to face the challenges of responding to the humanitarian crises that often follow such disasters.

Nevertheless, as it has been identified in some countries, payment of the required insurance premium could be daunting. From a fiscal point of view, it is admissible that many African commodity-exporting economies are already facing challenges in meeting existing commitments, as commodity prices have remained depressed.

However, the sheer impact of natural disasters as we have seen them in recent years can put even more serious pressure on the fiscal regimes. When the governments are confronted with the ensuing humanitarian crises, the financial and humanitarian costs of a crisis-response would very likely outweigh the insurance premium cost.

Therefore, it becomes the case of setting smart financial priorities, leveraging the little amount in premium payment to deliver quick and effective assistance to citizens affected by natural disasters.

The African Risk Capacity also constitutes a real opportunity for African philanthropies to leverage their charitable giving, making it more impactful.

In response to the 2012 flood crisis in Nigeria, the country’s billionaires were mobilised to raise financing for the humanitarian needs of the affected people. This ad hoc approach, for sure, cannot deliver assistance on a timely basis. However, the reactive model can significantly transform, if the private sector social funders help to contribute to the payment for insurance premium under the ARC mechanism.

Given the opportunity for public private partnership provided by the initiative, it would be appropriate for each national government that has signed up to the ARC to set up a central office to coordinate resource mobilization and private sector engagement.

The point is that Africa can leverage its recent successes in private sector development, reducing the dependence on development assistance from governmental and private foundations from outside the continent.

The ARC has a governance structure that is representative of its stakeholders. Signatories to the initiative make up the Conference of Parties, the main governance body for the Agency.

Africa’s influential global leader in finance and economic development, Nigeria’s Ngozi Okonjo-Iweala is the Chair of the Governing Board of ARC, with other executives of proven competencies running the Agency.

The ARC will likely show that, with little external assistance, combined with the resources of African governments and increased private sector prosperity, the continent can deliver disaster recovery to its vulnerable populations. This just has to be the case, given the outlook of climate risks.

Chinedu Moghalu wrote from Abuja

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