Blogs

African Opportunity

South African imports from Africa have grown by a multiple of five to 12% of total imports since 1995 and its exports to the continent have almost doubled from 14% to 27% of total exports over the same period, positioning it second only to Asia as the major exporter to the continent.  As such it is interesting that Who Owns Whom has recently had a number of report requests on the food and beverage, telecoms and energy industries in Angola, Eswatini, Kenya, and Mozambique. South Africa competes with Portugal for wine exports to Mozambique, and in 2017 imports of South African wine declined to 970,000 litres (45% was white, 30% red and 25% sparkling) from 1.2 million litres, according to statistics from SA Wine Industry Information and Systems. About 10% of the wine consumed by Angolans is South African. South Africa’s three biggest sugar companies, Illovo Sugar, Tongaat Hulett and RCL Foods, are heavily involved in the Eswatini sugar industry through co-ownerships in production estates and mills. While we are aware of the significant market share MTN has in Nigeria it also has a material footprint in Kenya as has Vodacom via Safaricom. Due to Sasol’s liquified natural gas operations in Mozambique, South Africa is the main trade partner for petroleum gas, and further funding models for industry infrastructure, such as private-public partnerships, are being implemented. In the pipeline arebanking sector reports on Botswana, Kenya, Nigeria and Zimbabwe.  Already published is the banking sector in Angola.  Following the signing of the African Continental Free Trade Agreement, it is forecast that 90% of trade on the continent could be duty-free by July 2020. That is the African opportunity.

Liberia Snapshot

The effects of a long civil war, an Ebola crisis from 2014 to 2016 and the subsequent withdrawal of peacekeeping forces and aid continue to weigh heavily on the Liberian economy. Estimates of the country’s GDP, and its growth outlook, vary widely. African Development Bank figures indicate GDP growth was an estimated 3.2% in 2018, from 2.5% in 2017, driven largely by growth in mining and manufacturing. It said agriculture, forestry, and fishing dominate the economy, contributing 70.3% of GDP in 2017. It expects GDP growth of 4.7% in 2019 and 4.8% in 2020, but warns of the risk of debt distress, which could increase if borrowing to meet large public investment needs increases while the output of key export sectors declines. The World Bank’s lower estimates put Liberia’s 2018 GDP at 1.2% from 2.5% in 2017. It expects growth to slow to 0.4% in 2019 and remain at about 1.5% over the medium term to 2021, well below the rate of population growth of 2.6%, due to a lack of new investments in the mining sector and a modest improvement in agriculture With inflation reaching 28.5% at the end of 2018 and employment opportunities few, the population remains under serious financial pressure. According to an August article in the Economist, the world has “lost interest” in Liberia, and aid had slumped. United Nations peacekeepers, whose budget was about a quarter of GDP between 2007 and 2018,  have gone, leaving a failing economy and weak state beleaguered by corruption. Ex footballer George Weah, elected in 2017, has done little to transform the country’s politics or economy. All Africa reported that the opposition Alternative National Congress has called government “economic criminals” getting large salaries, allowances and benefits, “while the economy bleeds and the citizenry wallop in abject poverty.” There is one area where Liberia remains world class. Who Owns Whom’s report on The Maritime Transport Sector and Marine Manufacturing states that Panama has the world’s largest ship’s registry, followed by the Marshall Islands and Liberia as these countries offer incentives for ship and boat owners who register under their liberal “flags of convenience”. Liberia claims to have 4,400 vessels, or 12% of the world’s oceangoing fleet, in its registry, which is headquartered in Virginia, in the US.  However, few benefits flow through to the Liberian people or the economy, which continues to be vulnerable to external shocks, and whose infrastructure deficit continues to constrain development.

The indignity of inequality

Who Owns Whom’s MD Andrew McGregor believes South Africa needs to have tough conversations about labour broking if it wants to change direction on inequality. Read more on The Africa Report

Fighting Corruption, Money Laundering And Terrorist Funding

Murky ownership details give crooks places to hide Companies profiled by Who Owns Whom researchers are allocated a transparency rating based on their willingness to disclose information about themselves, from 1 (opaque) to 10 (fully transparent). Of the 15,241 active companies on file, 32.76% scored above 6. While this is a material percentage, it indicates that we still have some way to go to convince our business community that transparency is more conducive to a functional society than secrecy. Needless to say, Who Owns Whom scores 10. The most transparent sectors are travel operators, forestry, electrical machinery manufacture, precision instruments manufacture, printing and publishing, education and heavy machinery rental. Our latest report on the banking sector highlights the challenges faced by South African banks with foreign operations or foreign corresponding bank relationships in complying with the laws of foreign jurisdictions which have strict obligations to ‘know your client’ in the international fight against corruption, money laundering and terrorist funding. In 2017, former president Jacob Zuma reluctantly signed the Financial Intelligence Centre Amendment Act (Fica) at the last moment, narrowly avoiding international banks severing their correspondent relationships with South African banks. Fica places international standard know your client obligations on South African banks. A key component is ownership, but while the intention of section 26 of the Companies Act is to give the public access to the share registers of private companies, delinquent companies wishing to hide ownership simply drag the right to access process out in the courts for years. Amabhungane, The Helen Suzman Foundation and Who Owns Whom have made a number of submissions to the Standard Committee on Company Law at the Department of Trade and Industry over the last three years to strengthen this clause in the Companies Amendment Act in order to oblige private companies to lodge ultimate beneficial ownership information with their annual returns at the Companies and Intellectual Property Commission (CIPC) and for the public to have access to ultimate beneficial ownership information, as they currently only have access to a list of directors. This proposal has been included in the latest draft which is currently with Nedlac. As the CIPC makes some annual return financial information publicly available and once the ultimate beneficial ownership disclosure legislation is gazetted, it is going to be considerably more difficult for crooks to get a stranglehold on our country again.