Russia leads CIS towards Islamic banking and finance

While considerably new, Islamic Banking and Finance has now taken firm roots in Russia and other Commonwealth Independent States (CIS) countries are following suit.

The total volume of Islamic Banking and Finance has now exceeded $2.6 trillion globally. This amount represents transactions, assets and investments by over 2,500 Islamic banking and financial institutions around the global.

In the modern era, Islamic banking and finance can be traced back to the 1960s from Egypt and Malaysia and its dramatic spread over the Middle East, Africa and Europe. Interestingly, while Islamic banking and finance was slow to take foot in Commonwealth Independent States (CIS) countries, its unprecedented growth over the last few years indicates that CIS countries are the emerging Islamic banking and finance market for the future.

Some well known CIS countries include Russia, Armenia, Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan, Turkmenistan and Azerbaijan.

“The delay for Islamic finance initiative in CIS countries may count in many folds, it would be due to Russian influence in CIS countries,” suggests the Islamic Banking guru Mr. Muhammad Zubair Mughal who is the Global CEO of AlHuda Center of Islamic Banking and Economics.

https://theexchange.africa/zubair-mughal-wins-the-islamic-finance-recognition-award/

According to the seasoned banker, the mind set of Russian block and limited relations with International Banking and Financial Markets hampered development of Islamic Banking and Finance in CIS.

However, owing to what he described as ‘unstable Russian relationship with Europe’ and the sharp decline of oil prices has now compelled Russia to seek better financial alternatives, Islamic banking and finance.

Effectively, Russia has gone ahead and instituted friendly Islamic Banking policies and as a result geared-up Islamic banking and finance industry in CIS countries. This opens doors for enormous investment opportunities given that the Muslim population of CIS countries is estimated to be 75 million not to mention the non-muslim bankers that, like Russia, will opt for better banking options.

Russia also has a significant Muslim population and is with the recent government led initiative to support Islamic Finance it is expected that various Islamic banking and finance products will take root like Sukuk and Takaful.

Promoting Islamic Banking in CIS

AlHuda Centre of Islamic Banking and Economics (CIBE), a pioneer organization started its efforts to promote Islamic Banking and Finance is holding an Islamic banking and finance conference in Tashkent, Uzbekistan on 2nd May 2019.

The CIS Islamic Banking and Finance Forum will gather the CIS Islamic finance industry specialists and stakeholders on a single platform to promote Islamic banking and finance in the region.

In CIS countries, the Islamic banking and finance market can be divided into three parts. At first, there are countries such as Kazakhstan, Uzbekistan, Kyrgyzstan and Azerbaijan where the pace of Islamic banking and finance can be described as is satisfactory and where it is promoted and considered the sustainable financial alternative.

Secondly, there is the second group of countries, the likes of Tajikistan, Turkmenistan and Russia where the growth rate of Islamic banking and finance is rather slow. And the third group consists of countries in which there is no initiative taken so far, these are like Armenia, Ukraine and Belarus.

Kazakhstan leads the CIS in the growth of Islamic banking and finance. Started only in 1992, Islamic financing has grown drastically. More so, the growth can be noted following the global financial crises that started in 2008.

In Kazakhstan there is also considerable appropriate support of government institutions. Currently it has one full-fledged Islamic bank and 4 Islamic banking windows. They offer Takaful, Islamic leasing (Ijarah) and Islamic micro-financial institutions among other Islamic banking and Finance products.

Kazakhstan also launched an Islamic Agricultural Finance product with the financial assistance of the Islamic Development Bank. Further still, the recent establishment of the Astana International Financial Center (AIFC) places Kazakhstan as the regional center for Islamic Banking.

Azerbaijan comes after Kazakhstan but with much less government involvement. There is also no full-fledged Islamic bank in the country but there are at least 4 Islamic banking windows operating with limited Islamic Banking Regulations.

Uzbekistan follows and credit can be given directly to its new president H.E. Shavkat Mirziyoyev who has spearheaded the growth of Islamic Banking. Three Islamic banking windows are currently operational and accept deposits on Shariah bases.

Few Islamic leasing companies also offer Ijarah services, but it is predicted that after proper Islamic Banking and Finance regulations, Uzbekistan can supersede other CIS countries.

Neighbouring Kyrgyzstan also takes precedence its parliament passing the Islamic banking law in 2011 making it the only country in CIS to do so. In fact, there is at least one conventional bank that is in the process of becoming a full-fledged Islamic bank.

The most important factor of the growth of Islamic banking and finance industry in CIS countries is the Islamic Development Bank’s support.

https://theexchange.africa/emerging-trends-of-islamic-banking-and-finance-industry-in-cis-countries/

 

US firm cements African business with Ksh7Bn factory in Kenya

The factory can produce about 7.8 billion pellets of chewing gum annually

US headquartered Mars Wrigley Confectionery has cemented its business in the East and Central Africa region with the new state of the art Ksh7billion (USD68.9 million) manufacturing plant in Athi River, Machakos County, Kenya.

The plant was officially commissioned by President Uhuru Kenyatta on Tuesday. The President was represented by Industry, Trade and Cooperatives Cabinet Secretary Peter Munya.

Kenyatta has since hailed Mars Wrigley for putting up the new factory citing the need to invest in additional manufacturing capacity to create more jobs for Kenyans.

The investment gels well with his ambitious Big Four Agenda’s manufacturing pillar that seeks to increase manufacturing’s contribution to GDP from the current 8.5 per cent to 15 per cent by 2022.

“To create the desired jobs, we need to invest in existing and new industries that will grow our country’s manufacturing capacity from the current eight-point four percent to fifteen per cent of the Gross Domestic Product by 2022,” President Kenyatta said in a speech read on his behalf by CS Munya.

He added that the government was particularly keen on working with the private sector to achieve that goal.

“My administration remains committed to catalyzing even more private-sector-led growth in the manufacturing sector,” the President said.

The new factory which is constructed on a 20-acre piece of land in Mavoko, Machakos County has replaced the company’s old plant that was located in Nairobi’s Industrial Area.

According to the company’s management, investment in a new facility whose construction started three years ago, was driven by the need to meet growing demand for the firm’s products in Africa, while improving capacity and technology.

READ:Americans to build $70M chewing factory in Kenya

“With the rapidly expanding middle class and youthful population, we see our products becoming more and more integrated into people’s lifestyles.” Said Mr. Duncan McCulloch, Regional Managing Director for Mars Wrigley Confectionery.

The facility is expected to have a major impact on the Kenyan economy in terms of job creation both directly at the factory and indirectly through its expansive value chain a

US manufacturer Mars Wrigley Confectionery has cemented its business in the East and Central Africa region with the new state of the art Ksh7billion (USD68.9 million) manufacturing plant in Athi River, Machakos County, Kenya. It will serve a growing market of more than 14 countries - that includes Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Djibouti, DRC and South Sudan. The new factory will produce popular Mars Wrigley Confectionery brands, including Big G, PK, Doublemint and Juicy Fruit.
The main block at Mars Wrigley Confectionery’s new factory in Kenya.

s well as boosting the country’s exports.

It will serve a growing market of more than 14 countries – that includes Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Djibouti, DRC and South Sudan.

Mr. McCulloch commended President Kenyatta for his efforts in boosting local manufacturing through his government’s Big Four Agenda saying it will contribute to the expansion of employment and business opportunities for Kenyans, while cementing the country’s position as a leading industrial hub in Africa.

“Increased capacity and efficiencies made possible by this new facility will contribute significantly to the scaling up of our already existing entrepreneurship program. So far, over 1,000 youth and women from across the country have benefited from the program we call Maua. With the support from government and other partners, we hope to increase the number to 5,000 in the next two years,” Added McCulloch.

Maua is the company’s entrepreneur accelerator program designed to empower individual entrepreneurs as well as create large networks of micro-entrepreneurs and micro-distributors.

“As government, we remain committed to supporting local industries as part of the Big Four agenda under the manufacturing pillar. Our intention is to transform the country into a competitive global economy and improve the lives of Kenyans.” said President Kenyatta.

He added that the company’s decision to invest in Kenya on such a substantial scale is a clear affirmation of the country’s position as an attractive investment destination.

Mars Wrigley Confectionery is a global leader in the manufacture of chewing gum, confections and chocolates. The new factory will produce popular Mars Wrigley Confectionery brands, including Big G, PK, Doublemint and Juicy Fruit. Additionally, the company will also look to expand a wide range of their chocolate portfolio in the market.

The factory has the capacity of producing about 7.8 billion pellets of chewing gum annually.

Just recently, the new factory was recognized for adopting green building strategies and practices in its design and construction, becoming the first manufacturing plant in Eastern Africa and one of the few in Africa to achieve LEED GOLD certification status.

LEED, or Leadership in Energy and Environmental Design, is the most widely used green building rating system in the world. It is run and managed by the U.S. Green Building Council (USGB), a non-profit organization that promotes sustainability in building design, construction, and operation. It is a prestigious rating for environmentally conscious buildings and sites.

Mars Wrigley Confectionery is the world’s leading manufacturer of chocolate, chewing gum, mints, and fruity confections. Once the planned worldwide integration of the Mars Chocolate and Wrigley businesses is complete, Mars Wrigley Confectionery will employ over 34,000 Associates globally and have operations in approximately 70 countries.

Headquartered in Chicago, Mars Wrigley Confectionery will distribute its world-famous brands including M&M’s, Snickers, Twix, Skittles and Orbit in more than 180 countries.

In Kenya, the company has its headquarters in Athi River and has been operational since 1969.

 

NIC Bank expands digital platform on bonds trading

The portal allows users to quickly request for and receive an instant tender security

NIC Ventures, a subsidiary of NIC Group, in partnership with Masterpiece Fusion have launched an online platform dubbed “BeeDee” for trading of securities, in the wake of a strong demand in trade finance.

The platform offers a more convenient, quick and efficient self-service process for both customers and non – customers seeking to quickly request for and receive bid bonds.

BeeDee portal, is available on mobile devices and web through a mobile phone application and web portal respectively, allowing high availability and mobility since its accessible anywhere and anytime.

James Muigai, NIC Ventures Limited General Manager notes the new online service would offer companies and business entities convenient and fast access to bid bonds for various tenders they bid for since the online process takes few minutes, hence absorbing the delays experienced during the manual bidding process.

“The launch of BeeDee endeavors to offer end-to-end customer intuitive online system for bid bonds by digitizing the process and therefore offering unparallel value proposition to bidders including easy payment mode, all round the clock accessibility, convenience and safety. With this service, no one should be disqualified for delayed or late submission of bid bonds” He said.

“Our new innovative service is driven by a strong demand for trade finance and is aligned with our strategy of consolidating the notable gains we have made in digital innovations and our endeavor to go paperless in our offerings. BeeDee therefore affirms our commitment as NIC Ventures to build and roll out products to enhance customer experience and financial inclusion.” Muigai added.

The new system involves a one-off registration besides eliminating the need for an individual to belong to a bank or a network to access bid bonds. It also curtails delays due to unprocessed payments.

In addition, during key in, the system simultaneously run a detail verification process including ID, phone number, company ownership among others hence ensuring instant approvals.

The list of procuring entities covered in the new portal include: all banks, insurance companies, government parastatals, Non-Government Organizations and selected private institutions.

Bedee is a mobile and web-based solution framework that will enable NIC Ventures to provide a seamless interface with any trade finance customer. I

t is seeking an end-to-end customer intuitive system with robust know your customer (KYC) capabilities.

NIC Ventures is a subsidiary of NIC Bank’s group as a result of the restructuring that took effect on September 1st 2017, following approval from shareholders and the Central Bank of Kenya (CBK).

NIC Ventures mainly partners with non-traditional banking projects to enable the NIC Group to build and roll out products to enhance customer experience and financial inclusion.

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Kenya’s unit trust investments grow to US$ 574.8 million

Money Market Funds remain the largest Unit Trust Fund

Unit trust fund investments in Kenya recorded a 4.3 per cent growth in 2018, latest industry data shows, as investors moved to deepen the capital markets and provide alternative funding for businesses.

During the year, Total Assets Under Management (“AUM”) held by Unit Trust Fund Managers grew to Ksh58.0 billion (US$574.8 million) up from Ksh55.6 billion (US$551 million) recorded in 2017.

This came as the money market funds continued to be the most popular product with the AUM held by Money Market Funds, having grown by 8.9 per cent to Ksh48.5 billion (US$ 480.6 million) in 2018

This was up from Ksh44.5 billion (US$441 million) recorded in 2017, a report by investment firm-Cytonn shows, indicating that Money Market Funds are growing faster than the overall market.

CIC Asset Managers recorded the strongest growth in AUM of 36.3 per cent to Ksh20.3 billion (US$201.2 million) in the year under review, from Ksh14.9 billion (US$147.7 million) the previous year.

For the top ten fund managers by AUM, Sanlam Investments recorded the highest decline in AUM of 31.7 per cent to Ksh1.8 billion (US$17.8 million ) from Ksh2.6 billion (US$25.8 million ) in 2017.

CIC Asset Managers remains the largest overall Unit Trust Fund Manager with a market share at 34.9 per cent up from 26.7 per cent in 2017.

Money Market Funds remain the largest Unit Trust Fund, with a market share of 84.3 per cent in 2018, up from 80.7 per cent a year earlier.

A unit trust is a way to accumulate wealth in which investors’ contributions are pooled together to purchase a portfolio of financial securities, such as equities (shares), bonds, cash, and bank deposits,  managed by professional fund managers.

In 2018, the number of Fund Managers licensed by the Capital Markets Authority stood at 26.

New entrants into the Fund Management business include Cytonn Asset Managers Limited, the regulated affiliate of Cytonn Investments Management Plc, licensed on March 22, 2018.

Cytonn Asset Managers Limited has since launched its Unit Trust Funds including; Cytonn Money Market Fund, Cytonn Equity Fund and Cytonn Balanced Fund.

Commenting on the results, Cytonn Investments Chief Investments Officer Elizabeth Nkukuu said:“The performance by Unit Trust Funds had stagnated since 2016 but this has now improved, following the repeal of the rate cap, in September 2018, which has seen bank deposits rates drop making Money Market Funds more attractive to investors”.

“There is still more room for growth and it’s the work of Fund Managers to stimulate and deepen the capital markets, thus providing alternative funding for businesses consequently reducing the dominance by banks in the provision of funding,” she added.

READ:Kenya’s Unit Trust investments remain flat at Ksh55 billion in half-year

 

 

US investors seek co-investment opportunities in South Africa

The United States of America Embassy on Friday said that its country investors were looking to explore co-investment opportunities across sectors in South Africa.

A delegation of American investors was visiting Johannesburg to strengthen relationships with African pension funds, asset managers, and financial institutions for potential partnerships and co-investments.

The delegation — known as the National Association of Securities Professionals (NASP), –partnered with the U.S. Agency for International Development (USAID) in 2016 through a joint program called Mobilising Institutional Investors to Develop African Infrastructure (MiDA).

The program connects U.S. public plan in retirement, pension, and health sponsors, and other institutional investors with African counterparts to mobilise greater U.S. investment in South Africa and the continent, particularly in infrastructure development, real estate, and private equity.

Donna Sims Wilson, NASP chair, said they were looking forward to advancing their discussions with South African counterparts for mutual support and benefit.

“Our delegation of US institutional investors comes to South Africa with a keen interest to explore investment opportunities in the region. While there is currently limited exposure in South Africa, there is great opportunity to scale up these investments,” Wilson said.

The US investors delegation has already met with leaders at Standard Bank, the Association of Black Securities and Investment Professionals (ABSIP), the Batseta Council of Retirement Funds for South Africa (Batseta), and the Institute of Retirement Funds Africa (IRFA).

The delegation also hosted discussions with leading African pension fund trustees and executives around best practices and promoting inclusion in the financial services industry.

Jessye Lapenn, U.S. Chargé d’Affaires, said great economic opportunities exist for American and South African investors to create connections that will build infrastructure and contribute to prosperity for all.

“This program is one of many win-win initiatives supported by the U.S. Mission to South Africa to promote the mutually beneficial outcomes of trade and investment between our two countries,” Lapenn said.

MiDA-influenced U.S. institutional investments allocations extend to almost U.S.$800 million. An additional U.S.$200 million has been committed in offshore investment services offered by MiDA/NASP asset manager.

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The US Embassy said that MiDA was currently in the process of structuring three innovative capital markets transactions to support local pension funds co-investments, housing finance bonds, and the refinancing of infrastructure assets in South Africa.

Belt and Road Initiative to boost China – Africa trade

Standard Chartered Bank on Friday said that the “Belt and Road Initiative” will not only boost trade and investment opportunities between China and South Africa but will also provide economic development opportunities between China and various African countries.

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Kweku Bedu-Addo, chief executive of Standard Chartered Bank South Africa, said the Belt and Road Initiative was presently the most ambitious and far-reaching project of its kind in the world.

“The initiative will benefit all countries along the routes, contributing to global economic and social development,” Bedu-Addo said.

“We are present in two-thirds of Belt and Road markets, and our rich heritage, deep local knowledge and unparalleled connectivity mean that we are ideally placed to help our partners, clients and communities to make the most out of the initiative.”

The Belt and Road Initiative is a China-led strategy to strengthen global trade links across the world, in particular between Asia, Africa and Europe, with investment in an array of large-scale infrastructure projects along these two land and sea corridors.

The land route runs along the ancient Silk Road that for centuries connected China with Europe via Central Asia and Russia. Once completed, it will consist of a number of new road and rail routes, as well as energy pipelines and other key infrastructure.

The sea route is a maritime trade corridor built for the 21st century. It will stretch from Chinese coastal ports all the way to Europe via new and upgraded ports in the South China Sea, the Indian Ocean, the Middle East and the Mediterranean.

The potential size and scope, with related investments totalling as much as U.S.$8 trillion by 2020, is projected to boost global trade by 12 per cent, impacting more than 65 countries and nearly two-thirds of the world’s population.

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Bedu-Addo said that in 2017, Standard Chartered Bank globally committed additional financing for Belt and Road projects of at least U.S.$20 billion by 2020, and was involved in more than 50 Belt and Road deals worth more than U.S.$10 billion across a range of products and services.

He said that the Belt and Road Initiative has made significant headway in the past four years and has gained support from more than 100 countries and international organisations, and more than 80 of them have signed cooperation agreements with China.

Africa eyes US$1 trillion in Private Equity deals

Fund managers say ready to deploy up to US$1 trillion for investment in the continent

The African continent is set for a major shift in Private Equity investment trends after a major announcement was made in Nairobi this week.

During the 16th annual African Private Equity and Venture Capital Association (AVCA) conference, fund managers from around the globe, mainly the US and European markets said they are ready to deploy up to US$1 trillion for investment in the continent.

This is through PE funds, a move that now places the continent at a strategic position to tap into the funds for investments in various areas.

If tapped by local investment firms, the pool of funds could more than double the number and value of deals reported in the last six years, with regions such as East Africa, West Africa and Sothern Africa reaping big.

“It is a plus for Africa,” said Baba Alokolaro, Managing Partner at Nigerian law firm- TNP (The New Practice),“From what we have seen, investors are taking Africa more serious than they had in the past,”

Alokolaro who led a team of experts from TNP to the Nairobi event said the continent should angle itself for more deals this year, singling out Kenya as one of the countries set to benefit in East Africa.

“We expect to see a lot of deals going forward. In East Africa, Kenya will remain a top investment destination,” he said.

AVCA latest data shows the value of reported African PE deals between 2013-2018 was US$25.7 billion, on a total number of 1,022 deals. During the period, total value of African PE fundraising closed at US$17.8 billion.

The highest value in the six years was recorded in 2014 (US$7.8 billion) which went down to US$2.5 billion in 2015, the lowest during the period under review.

Last year, the value dropped to US$3.5 billion from US$3.9 billion in 2017, reflecting reduced investment activities by both fund managers and investment funds.

West Africa leads in both the number and value of deals reported during the period, where it accounted for 26 per cent(volume) and 25 per cent-share of total deals.

East Africa took a sizable share commanding 18 per cent of PE deals by volume , but lower on value which accounted for eight per cent of the US$25.7 billion.

The Nairobi announcement hence places the continent at a strategic position to revitalize the markets.

AVCA Chief Executive Michelle Essome has since expressed confidence over growth of the PE market in the continent.

“We are positive the PE market will continue growing presenting a unique asset class for Africa. The growth will enable companies to expand, create employment and improve lives in the continent,” Essome said told journalists in Nairobi.

AVCA Chairperson Tokunboh Ishmael said: “Our hope is that companies will grow to an extent where they will expand and increase intra-regional trade.”

According to Tokunboh, who is also the Co-founder & MD of Alitheia Identity, growth in investments will strengthen the continent, giving Africa a stronger bargaining capacity in the global scene.

East Africa

Kenya has continued to dominate the region’s PE space as investment firms hunt for deals in different sectors.

According to official industry data, the East Africa’s economic power house accounted for 59 per cent and 58 per cent of the value and volume of deals reported in the region respectively, between 2013 and 2018.

Uganda took 19 per cent of the volume of PEs and 11 per cent of the total value. Tanzania accounted for nine per cent on both the volume and value of deals reported in the region.

Ethiopia took an 11 per cent share of PE deals by value and seven per cent by volume, Rwanda six per cent (volume) and three per cent (value) while Djibouti had a seven per cent share of PE deals by value and one per cent (volume) of the total deals.

194 PE deals were reported during the six year period(2013-2018) valued at US$2.4 billion, of which US$6 million worth of the deals were median deal size.

“The average growth rate in East Africa was almost six per cent from 2010 to 2018, with Djibouti, Ethiopia, Rwanda and Tanzania recording above-average growth rate,” AVCA says in its latest report.

East Africa Venture Capital Association (EAVCA) data shows disclosed value for deals almost doubled to US$834.3 million last year, compared with US$446.78 million in 2017.

Ethiopia has the potential to be a key market for PE investment, AVCA has since noted, given the size of its population (at 108 million) , the second most populous on the continent.

This year’s event saw more than 500 top fund managers and strategic investors from across the globe meet in Nairobi to deliberate on industry challenges and investment opportunities, mainly in Africa.

The fund managers collectively manage more than $1.5 trillion (Sh151.3 trillion) in assets.

During the forum, the Kenyan government called on investors to put funds in projects that will help the realization of President Uhuru Kenyatta’s Big Four Agenda of Food Security, Universal Health Care, Affordable Housing and Growth of the Manufacturing sector.

READ:Kenya lures Private Equity, Venture Capital entities to fund Big 4

“We welcome you to take advantage of the investment opportunities in the country, mainly in the Big Four and other sectors,” Kenya’s Cabinet Secretary for Industry, Trade and Cooperatives CS Peter Munya said.

The government has since assured investors of protection for their investments in the country.

Top areas of investment

Sectors commanding huge numbers in PE investments in the continent include consumer staples (15 per cent), consumer discretionary(14 per cent),industrial(13 per cent),IT(11 per cent),real estate(nine per cent), Health Care(7%),utilities (6%),communication services(6%) materials(5%) and energy(3%).

“There is a lot to expect in the PE market with East Africa expected to remain bullish,” said Edward Muriu, Team Leader at MMC Africa, a leading advisor in the capital markets space.

READ:Why PE in Africa is becoming vital for growth

 

 

TMH Africa unveils rolling stock manufacturing facility in South Africa

TMH Africa, a subsidiary of Russian rolling stock manufacturing giant Transmashholding (TMH), on Tuesday said that it was entering the South African economy with the aim of reviving the once-thriving manufacturing industry.

TMH Africa unveiled its 45,000 square meters rolling stock manufacturing facility in Boksburg, Ekurhuleni, as part of its R500 million investment over the next three to five years in Africa.

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The investment will include upskilling of the workforce and upgrading of the facility acquired last November from DCD Rolling Stock.

Jerome Boyet, chief executive of TMH Africa, said their decision to invest in South Africa was in part a response to the call by President Cyril Ramaphosa for more investment.

“But it is also informed by our understanding that South Africa’s real potential to become a leader in rolling stock manufacturing for Africa remains untapped,” Boyet said.

“We will pursue opportunities for the assembling, maintenance and refurbishment for rolling stock in South Africa and on the continent. Our focus will be on the contractual manufacturing and services for both locomotives and coaches, based on key strengths of TMH Group.”

Premier David Makhua, who presided over the unveiling of the plant, hailed TMH Africa for preserving jobs at the plant after DCD closed down, and committed the government to work together with business to produce the necessary skills required by industry.

“The Gauteng provincial government remains committed to economic transformation. I am glad that TMH Africa has made the right decision and chosen to invest in this sector that can only grow in Africa. A lot of factories closed down in Gauteng after the ’90s due to changes in the global manufacturing industry,” Makhura said.

“So we are happy by this investment because many people in South Africa use the rail system, not by choice, but because it is cheaper. This is why rail is the backbone of our public transport system in the National Development Plan.”

Sam Bhembe, director of Mjisa investments — the 30 per cent partner in TMH Africa, said that South Africa needs to claim its rightful place as a locomotives manufacturing hub in Africa, adding that this plant would bring innovation and efficiency in the local manufacturing industry.

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“The biggest constraint for South Africa was that we only had two major clients for locomotives, and that has been Transnet and Prasa. But this facility is meant to export locos into other countries, so now inevitable you have to have a competitive edge for the markets that you are supplying outside South Africa,” Bhembe said.

“As Mjisa we are bringing everything right from direct management. So we will have executives who are serving to manage the operation, on the board we will have directors who are strategising and fine-tuning the vision. We have in our midst engineers with 30 to 40 years experience in train manufacturing industry, so we are also bringing the finer skills of engineering.”

U.S pension investors eye Kenya’s infrastructure

The country is seeking investors in energy, roads, water and housing projects

Kenya is hosting over 30 representatives of major U.S. pension and asset management funds on an initial mission to evaluate the investment potential and opportunities in infrastructure projects.

The team is being hosted by the Kenya Pension Fund Investment Consortium (KEPFIC) on a three-day fact finding mission.

Collectively, these funds manage assets worth Sh100 trillion (US$1 trillion).

The visit is supported by the U.S. National Association of Securities Professionals, the World Bank, and the U.S. government, through USAID.

“By moving from traditional investments in stocks and bonds to new opportunities in Kenyan roads, power plants and enterprises, Kenyan and U.S. pension funds will strengthen commercial ties between our countries.  These investments will benefit both countries and enhance the economic security of Kenyan and American retirees,” said U.S. Ambassador to Kenya Kyle McCarter in a statement.

Historically, infrastructure development has been financed by the public sector. The country’s current financing gap for infrastructure stands at about Sh400 billion, a gap that could be bridged by increased participation of the private sector.

During the mission, executives from the U.S. pension and asset management funds will discuss opportunities with KEPFIC and its membership of 12 Kenyan leading fund managers, which currently manage Sh 200 billion in assets.

Projects to be financed under this partnership would include roads, water and sanitation, energy and affordable housing, an initiative that will go a long way in supporting achievement of the Big Four Agenda for national development.

“The new partnership represents a good match for the country and signals a new development in the landscape of Kenyan infrastructure investment.  This represents an exciting model which has been successfully executed in emerging markets and could fill the existing infrastructure financing gap in Kenya, and Africa,” the U.S Embassy said.

The U.S. delegation is led by Mobilizing Institutional Investors to Develop Africa’s Infrastructure (MiDA), a partnership between the U.S. National Association of Securities Professionals (NASP) and the United States Agency for International Development (USAID) to increase private sector capital into infrastructure investments in Sub-Saharan Africa.

Since 2017, MiDA members have closed on new deals totaling close to US$800 million(Sh80.6 billion )focusing in Africa and other emerging markets.

“Our delegation of US institutional investors comes to Kenya with a keen interest to explore investment opportunities in the region. While there is currently limited exposure in Kenya, there is great opportunity to scale up these investments. We are looking forward to advancing our discussions with our Kenyan counterparts at KEPFIC for mutual support and benefit” said Donna Sims Wilson, President of Smith Graham and Chair of NASP.

KEPFIC says it has received proposals for a wide range of infrastructure investments, including energy, roads, water and affordable housing.

“Even as we work to ensure KEPFIC is properly structured with the highest governance standards and an appropriate investment strategy, we are excited at the prospect of partnering with US pension funds for investing in infrastructure and other alternative investments,” said Sundeep Raichura, Zamara’s Group Chief Executive, a member of KEPFIC.

The World Bank and NASP signed a partnership in 2017 to build the capacity of Kenyan institutional in understanding the risks, requirements, and rewards for private sector investments in infrastructure through a series of workshops held in Nairobi.

“The World Bank Group is committed to supporting infrastructure development in Kenya and this new model represents a comprehensive approach of leveraging private investments,” said Felipe Jaramillo, World Bank Kenya Country Director.

Logistical support for this initiative has also been provided by the United Nations Economic Commission for Africa and StanBic Bank.

World Bank Group support for the Kenyan pension sector is made possible with support from the Government of Japan and Financial Sector Reform and Strengthening Initiative (FIRST)Trust Fund.

South African business people upbeat after Ghana visit

South African business people who participated in the outward trade and investment mission to Ghana are confident that the leads that they generated during the mission will develop into concrete deals that will see them exporting their products to Ghana or investing in the West African country, according to the trade and industry department (dti).

The group of about 30 business people were due to arrive home on Sunday morning after spending four days in Accra attending seminars, engaging with Ghanaian business people in business-to-business meetings, and conducting site visits in search of trade and investment opportunities, the dti said in a statement.

“I will be going back to Ghana soon, as I have identified quite a number of business opportunities in the energy efficiency value-chain,” Sandiswa Qayi, from East London, said in the statement.

“The seminar provided me with valuable information on the Ghanaian economy and opportunities available for the South African companies to explore. Our company attracted a lot of business people that I met during the two days of business-to-business meetings. I am considering returning and investing in a plant in Accra,” Qayi said.

Stellenbosch winemaker Malcolm Green also had set up a bottling plant in Ghana as one of his objectives for travelling to Accra.

“I had fruitful meetings with people who are interested in helping our company establish a wine bottling plant there as part of our export growth strategy for Africa. The Ghanaian investment promotion agency is also keen to play a role in facilitating the implementation of the project because of its potential to contribute in creating employment opportunities for the Ghanaians. We are excited because this will enable us to export South African wines bottled in Ghana to the rest of the West African region,” Green said.

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Hendrik Naude of Gauteng said he travelled to Ghana with the aim of seeking a distributor for his company’s information and communication technology solutions

“From the numerous meetings that I held with the Ghanaian business people, I am coming back home with a list of three promising companies which we are likely to do business within the near future. I have also met a potential customer who has requested a quotation that can see our products making their way to Ghana in the near future,” Naude said.

Karien Jafta of Gauteng said her cosmetics products attracted an impressive amount of attention from potential clients and business people who were even willing to assist her to register her products in Ghana. She expressed confidence that positive results would be forthcoming from the meetings.

“I went to Ghana mainly to gather information about the country’s construction industry and the mission assisted me a lot in that regard. I met officials from the department of transport as well as some developers. I am positive we will be doing business in the country in future,” said Deon Duvenage from the North West.