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New Era Newspaper Tuesday December 19, 2017

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10 Inside BUSINESS

10 Inside BUSINESS Tuesday, December 19 2017 | NEW ERA Off-grid energy transforms rural lives in Kenya, Uganda Staff Reporter Windhoek New off-grid energy solutions hold the potential to provide much of Africa’s currently marginalised rural population with access to affordable electricity. To date, however, funding off-grid inhibited the potential of these solutions to transform Africa’s rural economy. In Kenya, approximately 50 percent of the population has access to electricity. In rural areas, it is as low as 5 percent - with the total energy consumed. In Uganda, approximately 14 percent of the population has access to electricity. This slips to electricity is supplied by generators, car batteries or solar photovoltaic units - not the national grid. “Beyond electricity generation, building and maintaining extensive and expensive distribution networks in Africa’s often large and sparsely populated countries does not make practical or economic sense,” says Stephen Lovell, Head, Corporate Financing Solutions, East Africa for Stanbic Bank, a member of the Standard Bank Group. Since a large portion of Africa’s population lives in remote and rural areas, receiving power from the grid could still be decades away. Business models for at-home off-grid power supply have been in existence for some time, particularly in the United States. The ability to take from or supply power into the grid (and pay or get paid for the energy consumed or supplied), coupled with favourable tax treatment on the structure, has created a competitive market for off-grid power solutions. Africa differs fundamentally from the United States in the sense that off-grid in its truest sense, needs to be just that, “and also affordable by households with very low disposable income”, says Lovell. As such, the cost of the basic technology (a few solar panels, light bulbs, a battery and phone charger) has to be reasonable, and be part of the overall budget a customer can afford. “This is critical if investment in this innovative technology is to be In East Africa, the combination of come together in a landmark off-grid solar transaction with the prospect to transform African growth. Stanbic Bank’s arranging of US million funding in Kenya and Uganda for M–Kopa, the world’s leading off-grid pay-as-you-go energy company, shows “how rapidly and effectively new disruptive off-grid energy solutions can provide affordable energy when coupled with in- . MARKET OVERVIEW Stephen Lovell What is exciting about the M-Kopa transaction, the largest off-grid debt funding arranged by a commercial bank in Africa, is that very soon payment records, and hence default rates, will become Change Latest 3 months 0.00% 7.14% 6 months -0.03% 7.72% CGP CAPRICORN INVESTMENT GROUP L 1800 0.00% 9 months -0.08% 7.95% NBS NAMIBIA BREWERIES LTD 3901 0.00% 12 months -0.12% 8.25% BVN BIDVEST NAMIBIA LTD 784 0.00% Change Latest FNB FNB NAMIBIA HOLDINGS LTD 4664 0.00% GC18 (R204 : 7.41%) -0.11% 8.32% ORY ORYX PROPERTIES LTD 2059 0.00% GC21 (R208 : 7.96%) -0.18% 8.78% NAM NAMIBIAN ASSET MANAGEMENT LT 72 0.00% GC24 (R186 : 8.93%) -0.22% 10.15% NHL NICTUS NAMIBIA 189 0.00% GC27 (R186 : 8.93%) -0.22% 10.54% BMN BANNERMAN RESOURCES LTD 58 -6.45% GC30 (R2030 : 9.39%) -0.20% 11.06% DYL DEEP YELLOW LTD 321 -7.23% GC32 (R213 : 9.46%) -0.20% 11.17% SILP STIMULUS INVESTMENT LTD-PREF 12129 0.00% GC35 (R209 : 9.62%) -0.21% 11.05% FSY FORSYS METALS CORP 178 9.20% GC37 (R2033 : 9.55%) -0.24% 11.55% TUC TRUSTCO GROUP HOLDINGS LTD 820 0.00% %Change Latest B2G B2GOLD CORP 3696 -4.10% Gold 0.23% $ 1,259.37 Platinum 0.98% $ 902.45 Copper 0.00% $ 6,886.00 Brent Crude -0.36% $ 63.57 %Change Latest NSX (Delayed) -0.13% 1196.93 JSE All Share 0.38% 57,629.16 SP500 0.90% 2,675.81 FTSE 100 0.44% 7,523.21 Hangseng 0.70% 29,050.41 DAX 1.59% 13,311.33 %Change Latest Financials 2.98% 16,793.80 Resources -1.38% 35,464.38 Industrials -0.38% 77,232.91 %Change Latest N$/US dollar -2.18% 12.8139 N$/Pound -1.87% 17.1278 N$/Euro -1.82% 15.1149 US dollar/ Euro 0.40% 1.1796 Latest Previous Namibia Inflation (Nov 17) 5.2 5.2 Bank Prime 10.50 10.50 BoN Repo Rate 6.75 6.75 known to other funders who should be able to lend on a portfolio basis to more off-grid energy suppliers. “This will rapidly increase the acquisition of this energy technology in Africa, placing affordable at-home off-grid power generating capacity in individual’s hands,” says Lovell. a positive correlation between energy use and economic growth, off-grid solutions are expected to have a measurable positive impact on the broader economy. The improved affordability of the technology, with most solar units being the size of an A4 piece of paper, has resulted in businesses like M-Kopa no longer having to rely solely on equity funding like other start-ups. Instead, the affordability of the product, along with the scale of take up, means that M-Kopa has been able to expand its funding sources to include “For Stanbic Bank, supporting M-Kopa in raising their single largest debt funding ever, entirely against their own balance sheet, was a landmark transaction in a new and rapidly changing sector,” says Lovell. By helping M-Kopa evolve and grow mercial bank lending, “Stanbic Bank proved a critical enabler in bringing in- for economic growth in Africa,” says Lovell. CAR settles backdated pay, debts BANGUI The Central African Republic’s embattled president has ordered the disbursement of two months’ backpay to state workers, local media reported. President Faustin-Archange Touadera instructed the payment – for unpaid salary dating to November and December 2013 – after reaching an agreement with the International Monetary Fund (IMF), they said on Sunday. Under it, the IMF gave the green light to a loan of US.2 million, its third tranche in a programme for the deeply impoverished country, as well as an increase in aid. “I am delighted by this decision (by the IMF) because we met every condition,” Touadera said. The backpay issue dates back to the regime of Touadera’s predecessor, Michel Djotodia, who was installed in March 2013 by a Muslim rebel coalition, the Seleka, only to be forced out in January 14 under international pressure. Unions representing state workers had warned of strikes if the money was not paid. Touadera also said the state would pay outstanding bills totalling nine billion CFA francs (US.1 millionto its contractors by March next year. One of the poorest countries in the world, nominally Muslim and Christian militias, which started after the 2013 overthrow of the then president, Francois Bozize. Outside of the capital Bangui, most of the country is in the hands of armed groups, who tions of alliances. – Nampa/AFP

Tuesday, December 19 2017 | NEW ERA Inside BUSINESS 11 SA minister calls on companies to support small businesses JOHANNESBURG South Africa’s Small Business Development minister, Lindiwe Zulu, on Monday urged companies to help the government in supporting and developing small and medium enterprises (SMEs). Speaking at a business forum on the sidelines of the ruling African National Congress conference, Zulu said backing for SMEs should not just come from government and state-owned enterprises. “In the three and a half years realized that there is a lot of talk about supporting small and medium enterprises. But somewhere along the line it falls short of understanding the real challenges that are faced by SMEs, that these small enterprises have to compete with big companies that have deeper pockets and have been operating for a very long time,” Zulu said. “If only we could use the same energy that we had when we were fighting apartheid to turn things around for small and medium enterprises, and if only South Africans could realize that everything that comes through it is about creating jobs and making sure that jobs remain here – it might look like something small but it would make a big difference.” Zulu said small businesses should also be ready to take advantage of support from the government, which was putting the necessary legislation in place and had declared that 30 percent of its goods and services procurement would be given to SMEs. “Yes, there is a political will to ensure that we support SMEs, but a political will on its own, not being supported by real activities, support, by ensuring that we create that conducive environment for SMEs, will almost be meaningless,” Zulu said. Zulu said there would be an announcement next year about support for SMEs and entrepreneurs from the European Union. - Nampa/ANA Political uncertainty among key risks for businesses in Southern Africa in 2018 - Control Risks JOHANNESBURG Political uncertainty through transitions and instability are among the key risks for businesses in Southern Africa in 2018, specialist global risk consultancy Control Risks said on Monday. In its annual political and security risk forecast, Control Risks said the coming year would see a continuation of divisions within South Africa’s ruling ANC following its December election of a new party president. “Competing factions and the possibility of a split in the party will drive policy uncertainty and political instability, with President Jacob Zuma likely to step down before the end of the year,” it predicted. The consultancy noted that a scandals had rocked South Africa in 2017. “Some businesses have learned the hard way that when a narrow set of interests undermines and subverts the integrity of state institutions, this provides a breeding ground it said. “Protecting reputation and understanding what might compromise it, has never been more important.” The political transitions in Zimbabwe and Angola, where new presidents have come into power, elections in Mozambique in 2018, and factionalism within the African National Congress “once again remind businesses in the region of the importance of gaining a clear understanding of the impact of such uncertainty on their risk environment”, it said. Across the African continent, businesses might see the negative impact of a potential renewed debt crisis coming. Many countries, Mozambique among them, faced the prospect of a sovereign debt crisis, a decade after they followed Ghana’s lead in entering the international bond market. “The problem is driven by high levels of external debt and persistent uncertainty over the recovery of commodity prices to fund repayments. Nonetheless, ongoing reforms and government recognition of these issues will drive improvements in 2018,” Control Risks said. - Nampa/ANA Major economic conference in China to tackle risk, pollution BEIJING China opened a major economic planning conference on Monday as it tries to pivot away from its model of no-holds-barred growth. The annual Central Economic Work Conference gives leaders the opportunity to review past policy and to plan for 2018. The pursuit of high growth at all costs made China the world’s second largest economy but led to severe pollution, rampant waste and a mountain of debt. President Xi Jinping has indicated the country would move in a new direction, telling the Communist Party Congress in October that it needs to shift from high-growth to high-quality development. Xi also notably omitted economic growth targets from his three-and-ahalf hour speech to the party leaders. Implementing his new approach will be the focus of the closed meetings convened over three days in Beijing, state news agency Xinhua said. The “three tough battles” for 2018 will be curbing major risks, eradicating poverty and controlling pollution, it reported, repeating Xi’s directions to the party congress. This year Beijing made halting progress tackling its ballooning debt, easing the speed at which it has been accumulating. Still the International Monetary Fund warned in October that the debt was growing at a “dangerous pace” and said earlier this month that banks should raise their capital to avert debt-related risks. Much of China’s debt is concentrated in large and unwieldy state-owned enterprises and analysts say the sector needs reform if China is to get state-owned companies, that would risks,” said Wendy Chen, a China economist at Nomura bank. “Corporate debt is the largest portion of China’s overall debt.” But Xi has shown little sign he will push through reforms to the state sector. He told the party congress of the need to make state-owned enterprises “stronger, better and bigger” and last week described them as the “backbone of China’s special socialist economy”. Another prong of the push – tackling the country’s noxious air pollution – is already showing signs of dampening economic growth. Official data last week showed industrial output slowing in November, as authorities in some northern cities have forced steel factories and smelters to cut production – with some running at half capacity. The industrial cuts and measures to switch the country to natural gas heating have given the capital a rare series of blue sky days but some analysts forecast a meaningful impact on growth. In a recent note, Julian Evans- Pritchard of Capital Economics forecast the aggressive crackdown on pollution “would shave just short of half a percentage point off gross domestic product growth” for beginning of 2018. - Nampa/AFP

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New Era Newspaper Vol 22 No 167