NextBillion.net - Development Through Enterprise - Sub-Saharan Africa

Fight for MTN, Leading Mobile Operator in S. Africa, Warms Up

Manuel Bueno — Tue, 13 May 2008 08:52:17 -0500

Vodafone yesterday insisted that it had no plans to make a bid for MTN, a leading mobile phone operator in Africa and the Middle East.

The UK group last week reviewed the case for making a bid for MTN after Bharti Airtel, India's largest wireless operator, made an informal offer for a controlling stake in the Johannesburg-listed company.

Bharti's indicative offer was for 51 per cent of MTN's equity at R160 per share. That valued MTN's entire equity at about $37bn.

Toll-Free Mobile Service Gives Rural Africa Access to Medics

Derek Newberry — Fri, 09 May 2008 10:30:19 -0500

A toll-free mobile service being launched in selected remote areas in Africa promises to save lives by connecting people with emergency medical cases to health personnel.

Under the initiative launched in Nairobi on Wednesday, health workers will also be trained through mobile phone sessions on day to day skills like collecting and sharing basic household health information.

Telecommunication equipment provider Ericsson and mobile phone service provider Zain have adopted the new approach in a bid to stimulate the demand of mobile solutions in areas they consider commercially challenging.
The two companies have entered into a partnership that will ensure they provide network access, mobile phone handsets, sim cards and toll-free emergency numbers in remote areas in order to stimulate demand for cellular phone solutions in those areas.

The initiative is being rolled out in Tanzania, Uganda and Kenya.

In Kenya, Ericsson and Zain subsidiary, Celtel, are rolling out a pilot programme in North Garissa in Dertu village targeting some 5,200 inhabitants.

According to the President of Ericsson, Mr Carl-Henri Svanberge, the partnership also includes the Earth Institute and will benefit 400,000 people in Africa.

In the partnership, Ericsson will provide network connectivity in the identified areas, while the mobile service providers will provide the SIM cards and airtime, while the handset manufacturer Sony Ericsson will provide the handsets.

Small-scale Dairy Production in Zambia

Francisco Noguera — Mon, 14 Apr 2008 09:42:15 -0500

By Joan Chirwa

Dairy farming is one of the most rewarding agri-businesses which can help reduce poverty in rural areas, says Rebecca Mumba, a retired journalist.

An industry largely driven by small-holder farmers located in different parts of the country, the dairy sector has recorded numerous improvements over the years, with the small-scale producers accounting for the largest milk production figures on an annual basis.

According to recent statistics, smallholder dairy farmers last year contributed 60 per cent of the total milk production in Zambia. The medium to large-scale commercial farmers accounted for the remaining 40 per cent of Zambia's milk production in 2007. However, a number of smallholder dairy farmers face numerous challenges in milk production, among them lack of electricity to run the cooling system for milk before it is sold.

"All the dairy farmers under the Fisenge Dairy Business Association in Luanshya do not have electricity at their farms and this is one of the major challenges we have in milk production," said Mumba who is also director of the Fisenge Dairy Business Association in Luanshya and secretary of the Twikatane Women's Co-operative Group.

How Africa's Top Entrepreneurs Can Reach Global Markets

Derek Newberry — Thu, 10 Apr 2008 10:03:39 -0500

Swaziland alone has 70 000 such micro enterprises. Why is this the case?

Money? That's usually what an SME owner will say. Indeed, SMEs needs capital to start up and expand. In developed economies, most start-ups are self-financed with help from the four Fs: founders, family, friends and foolhardy strangers.

In Africa this strategy is possible only for a lucky few. For unproven entrepreneurs, or those lacking adequate collateral, capital can be very hard to come by. Here, most banks are lending at prime (currently 14.5 percent), plus between 2 and 4 percentage points for the riskier SMEs - a heavy debt burden for a start-up enterprise.

But capital, although essential, is rarely adequate, particularly for companies wishing to target external markets.

In the northwest corner of Swaziland, Sdemane Farming is exporting baby vegetables to Europe through South African distributors. Its quality is excellent and buyers are eager for more products. Its success is due not only to having secured capital, but to the entrepreneur behind the business.

In 1996 Temba Dlamini joined a foreign-owned company exporting baby vegetables. He steadfastly worked his way up, becoming the farm manager in five years. In 2005 he bought the farm and pack house with the help of a loan from a local financial institution. But it is his vast technical knowledge, selfless commitment and strong relationships with key international distributors that ensure the success of his business. Is such an entrepreneur born or bred? Given Dlamini's passion for success, we think it's a bit of both.

So, what will it take for more African SMEs to link into the international markets?

What if Microfinance Flourished in Nigeria?

Francisco Noguera — Tue, 01 Apr 2008 11:00:23 -0500

Microfinance is often considered as one of the most effective and flexible strategies in the fight against global poverty. It is sustainable and can be implemented on a massive scale necessary to respond to the urgent needs of those living on less than N120 ($1) a day, i.e, the world's poorest.

If we close our eyes to the cities for a while and go back to the villages and rural areas, the effect of poverty and the developmental roles of microfinance can be felt in its fullest force.

There are still hundreds of villages in Nigeria where people cannot afford to give their children eggs in many years, where rice is cooked only on Christmas or Ileya days, where children eating food with beef or chicken are still considered greedy or "longer throat," where children manage to get clothes only once a year and where girl child cannot be sent to school but nurtured from birth to be given out in marriage on already agreed bride prices. For such villages, if a woman is given a loan of N5000 (less than $50) she may buy chickens so she can sell eggs. As the chickens multiply, she will have more eggs to sell. Soon she can sell the chicks. Each expansion pulls her further from the devastation of poverty.Microfinance therefore typically consists of making small loans, usually less than N25,000 , to individuals, mainly women, to establish or expand small, self-sustaining businesses. Microfinance also includes several support systems that contribute greatly to its success. This is why microfinance institutions offer business advice and counseling, while clients provide peer support for each other through solidarity groups and circles. Another aspect of microfinance (particularly in the village banking where every one knows every body) that is equally important is the recycling of funds. As loans are repaid, usually in six months to a year, they are re-loaned to group members. This continual reinvestment multiplies the impact of each naira credit by the microfinance institution.

Microfinance has a positive impact far beyond the individual client. A vast majority of global micro loans go to women. In 2005, a magazine article reported that "of Grameen Bank's 6.39 million borrowers, 96 percent were women." The vast majority of the loans go to women because studies have shown that women are more likely to reinvest their earnings in the business and in their families. "As families cross the poverty line and micro-businesses expand, their communities benefit. Jobs are created, knowledge is shared, civic participation increases, and women are recognized as valuable members of their families and communities all over the world."

How Private Health Care Can Help Africa

Derek Newberry — Mon, 24 Mar 2008 09:43:57 -0500

How private health care can help Africa

A study of sub-Saharan Africa's health care sector finds that the private sector plays a significant-and growing-role in meeting Africa's health care needs.

The increasing demand could translate into $20 billion of additional investment to the region's private-sector health care infrastructure over the coming decade.

Health care provision will account for half of the total investment opportunity, with the remainder divided among distribution and retailing, pharmaceuticals and medical-product manufacturing, risk pooling, and medical education.

Private-sector shortcomings-such as inconsistent quality of care, unethical business practices, and inadequate regulatory frameworks-must be addressed if the private sector is to most effectively benefit the health of Africa's people.

Ethan Zuckerman Reviews “The Bottom Billion”

Derek Newberry — Fri, 14 Mar 2008 09:20:52 -0500

I've got a hip-high pile of books by my bedside, including several manuscripts written by good friends. But after Paul Collier's talk at TED, his book moved to the top of the pile, and I spent a rainy Saturday diving into his new book, "The Bottom Billion". It was time well spent. Collier has dedicated the last thirty years of his life to the study of African economics, as director of the development research group of the World Bank and now as Director of the Center for the Study of African Economics. While he's got a wealth of technical papers, "The Bottom Billion" is his first consumer book - at TED, Collier explained that he hoped to write an economics book that could be read on the beach. That might be a stretch, but it's a good, quick and enlightening read, assuming you're interested in the basic questions of development economics.

The most basic question addressed in development economics is "Why are some people poor?" There tend to be two highly political answers to this question: "Because capitalism is unfair" or "Because poor people don't work hard enough." Neither's an especially satisfying response, and neither is well supported by data. The rise of China, India and Asia has had far more to do with embrace than rejection of the principles of capitalism, and those societies have collectively pulled hundreds of millions of people out of extreme poverty. On the other hand, hard work and embrace of free market principles isn't likely to have much impact on a rural farmer in Chad.

Most development economists avoid arguments this simplistic, but they're subject to their own polarization. Two of the most influential popular economic books offer the contradictory advice that rich countries need to give the developing world a whole lot more aid, and that development aid is, for the most part, a near-criminal waste of money that damages as much as it helps. Collier, to his credit, references both Sachs and Easterly in "The Bottom Billion". A warning to my Sachs-phobic readers - he's a fan of Sachs's economics, though he's far more critical of his advocacy for increased aid.

Doing Business in BoP Africa (Spanish)

Derek Newberry — Tue, 04 Mar 2008 11:41:22 -0500

Crear riqueza es mejor que repartir riqueza. Dan razón a este planteamiento un número creciente de personas que, en distintas partes del mundo, se empeñan en aportar al desarrollo de los países menos favorecidos.

La creencia tradicional es que los negocios se enfoquen en la parte de la población con recursos. Según el Banco Mundial, el sector privado descuida la oportunidad de negocios que representan los 4.000 millones de pobres que hay en el mundo, mercado que representa unos $5 billones.

La "Marca África". Los umbrales de pobreza de África (900 millones de personas en 54 países) han empeorado en los últimos 25 años, por lo que con solo el 13% de la población tiene el 30% de los pobres del mundo. En las oficinas de turismo, las imágenes más frecuentes son los safaris y los noticieros se extienden sobre los conflictos armados.

The Impact of Cell Phones on Grain Markets in Niger

Derek Newberry — Mon, 25 Feb 2008 11:22:01 -0500

A new research study by Jenny Aker, an independent PhD candidate at the University of California-Berkeley has looked at the impact of mobile phones on the prices of farm produce in the African country of Niger - which faced serious food shortages in 2005. In theory, the increasing use of mobile phones should have improved distribution efficiency and hence lower the variations in prices around the country. The study set out to see if that was the case.

With an estimated 85 percent of the population living on less than US$2 per day, Niger is the lowest-ranked country according to the United Nations' Human Development Index. The majority of the population consists of rural subsistence farmers, who depend upon rainfed agriculture as their main source of income. Grains (primarily millet and sorghum) are dietary staples, accounting for over 75 percent of food consumption. These commodities are transported from farmers to consumers through an extensive system of markets that run the length of the country, which is roughly three times the size of California.

Support the Bottom Billion - "Buy Africa"

Derek Newberry — Thu, 21 Feb 2008 16:12:32 -0500

Economies are prospering but political stability is fragile

Some hedge funds, brokerages and offshore investors believe that the time is ripe to "buy Africa". It is certainly the case that price-earnings ratios for many African stockmarkets were above their sectoral equivalents in mature markets in 2007, but the ongoing fallout from the subprime mortgage crisis in the US should act as a reminder that what goes up eventually comes down.

The markets can turn very quickly-and very substantially. In Africa 1.01: Unlocking Investment Potential, published before subprime realism had begun to set in, emerging-market investment bank Renaissance Capital concludes that the continent "has probably turned the corner on its relative economic decline," thanks to "a supportive global backdrop for commodity exporters", hugely improved national balance sheets and "a political commitment to better economic policies".