The ancient technique transforming construction

Building new homes can be a time consuming, expensive process. In Africa, communities are going back to an ancient technique to build sustainable homes that don’t break the bank.

Since the year 2000, the Nubian Vault Association has been using masons with knowledge of the Nubian Vault technique to build roofs out of mud bricks as well as training up the next generation.

This is helping to reduce communities’ reliance on materials such as costly corrugated iron and sawn timber beams.

The bricks used by the association and its builders are made from local earth and water and then dried in the sun.

Houses with this style of roof are said to be cheap to make, retain heat during the night and remain cool when the weather is hot.

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“In ordinary houses cement and raw materials are very expensive and have to be brought in, they are not found in my village,” said Bassirou Coulibaly, a Nubian Vault Mason from Niéna, a rural community in the south of Mali.

Alex Dembele is national co-ordinator for the Nubian Vault Association.

“The advantages of working with (the) NVA are not only a reduction in construction costs,” he said. “The houses have a very stable climate all year round… (and) it also provides employment for the community,” he added.

According to the association, as of September 2015 380 Nubian Vault masons – in Burkina Faso, Mali, Senegal, Benin, Ghana and Mauritania – had been trained, with more than 1,800 Nubian Vault buildings finished in 700 locations.

“Our slogan is: Roof, job, market place,” Dembele said. “The technology is in place to be able to pass these skills onto a great number of people,” he added.

The association says that 20,000 people have benefited from their buildings, with around 55,000 tons of CO2 equivalent potentially saved when compared to other techniques.

The association also states that its economic impact on “local economies” is more than €2 million ($2.27 million).

For Coulibaly, there have been economic as well as housing benefits. “Once I’ve finished building my house, I have other clients waiting,” he said.

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Source: cnbc

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Foresight Africa 2016: Banking on agriculture for Africa’s future

As countries across sub-Saharan Africa grapple with the challenges of sustaining high levels of economic growth, plunging commodity prices, and the effects of climate change, revitalizing agriculture must become a priority on the continent.

The latest World Bank report warns that anemic recovery in emerging markets will weigh heavily on global growth prospects.  Its 2016 growth forecast for sub-Saharan Africa stands at 4.2 percent, up from 3.4 percent in 2015.

A vibrant, sustainable and resilient agriculture sector is vital for sub-Saharan Africa’s economic future. Indeed, African agriculture stands at the cusp of transformational change. The numbers are compelling:

Farming is the primary source of food and income for Africans and provides up to 60 percent of all jobs on the continent.

Food production in sub-Saharan Africa needs to increase by 60 percent over the next 15 years to feed a growing population. Africa’s food and beverage markets are buoyant and expected to top $1 trillion in value by 2030.

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The continent is bursting with potential: At 200 million hectares, sub-Saharan Africa is home to nearly half of the world’s uncultivated land that can be brought into production. Africa uses only 2 percent of its renewable water resources compared to 5 percent globally. Together with abundant resources, including a resourceful, enterprising youth population, strategic investments in agriculture can unleash virtuous growth cycles. How can Africa, then, capitalize on these opportunities?

First, African farmers need new technology—higher-yielding, more resilient food crops that deliver bountiful harvests. New techniques are beginning to boost yields in rice and cocoa, among other crops. Second, African farmers need more electricity, more irrigation, and better infrastructure that links them to lucrative regional food markets. Third, we need sound policies that do not discriminate against the farm sector.  Women produce the bulk of food in Africa, and yet they are largely locked out of land ownership, access to credit, and productive farm inputs such as fertilizers, pesticides, and farming tools. Further, they are often bypassed by extension services, limiting their productivity.

At the just-concluded climate talks in Paris, the World Bank unveiled a bold new plan that calls for $16 billion in funding to help Africa adapt to climate change and enhance the continent’s resilience to climate shocks, including a focus on climate-smart agriculture and supporting the vision for accelerated agricultural transformation of the Malabo Declaration.

As policymakers struggle to accelerate growth and tackle prevailing headwinds, it is worth noting that the agriculture sector has been shown to be two to four times more effective than other sectors in raising incomes among the poorest people.

Banking on African agriculture is an idea whose time has come.

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Source: brookings

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Fair Share: Toward an Equitable Resource Revenue System

Myanmar’s government currently collects much of the trillions of kyat generated by oil, gas, gemstones and other minerals each year, primarily through its state-owned economic enterprises (SEEs). In the face of such centralized control over revenue, many ethnic groups have long asserted their right to make decisions over resource management in their states. In fact, combatants in areas of active conflict and leaders from several ethnic minority parties—particularly those associated with Kachin, Rakhine and Shan states—have openly called for greater resource revenue sharing.

These appeals are only expected to get louder as the NLD forms a new government. In its election manifesto, the party promised to “work to ensure a fair distribution across the country of the profits from natural resource extraction, in accordance with the principles of a federal union.” This statement implies at least two things: First, that the party intends to transform Myanmar into a federation, where states and regions have true sovereignty over some government responsibilities; and second, that it intends to enact a natural resource revenue sharing system.

A resource revenue sharing system will undoubtedly be on the table during evolving discussions on federalism. However, as we have seen in other countries, these systems come with considerable risks. In the most extreme cases, such as Peru, they can actually exacerbate conflict, encouraging local leaders to use violence to compel greater transfers from the central government or gain control over mine sites. While these experiences are atypical, natural resource revenue sharing often leads to financial waste, local inflation, boom-bust cycles and poor public investment decisions.

Myanmar is particularly susceptible to these risks as overall resource revenues officially recorded in the budget remain small—due to smuggling, underreporting, weak tax collection, and revenue retention by SEEs, among other causes. This means that there are limits to how much revenue sharing can help affected communities without the government first putting effort into capturing a bigger share of profits for the state.

How much money is at stake today? According to conservative estimates from Myanmar’s first Extractive Industries Transparency Initiative (EITI) report, the government collected nearly 2.6 trillion kyat in oil and gas tax and non-tax revenue and another 442 billion kyat in mining revenues in fiscal year 2013/14. Together, oil, gas and mineral revenues made up 47.5 percent of government revenues (excluding the significant sums that SEEs retain for themselves) in the same year.

However, official revenue figures vastly underestimate the true size of the non-renewable resource sector. EITI figures only cover a portion of jade sales. And illegal mining and smuggling of minerals, especially jade, has been well documented. Some independent estimates put the true size of the mineral sector at more than 10 times official figures.

Currently, the 42 percent of resource revenues that are not retained by SEEs in their own so-called “Other Accounts” are pooled with other fiscal revenues in the Union budget. Some are then distributed directly to state and regional governments, which are responsible for financing local infrastructure, agriculture and some cultural institutions.

As part of the government’s effort to decentralize fiscal responsibilities, the amount of the overall budget allocated to all states and regions has increased in recent years, from 3.4 percent in 2013/14 to 7.6 percent in 2014/15 to 8.7 percent in 2015/16. The government now says that it is using population, poverty and regional GDP indicators to determine how much it gives each state or region from this pool of money.

Research from the Natural Resource Governance Institute’s (NRGI) new report “Sharing the Wealth: A Roadmap for Distributing Myanmar’s Natural Resource Revenues,” generally corroborates this claim, but with qualifications. Our research indicates that, in practice, the Union sends more money per capita to regions and states that have greater development needs, are conflict-affected, and whose politicians are more assertive. This year, for instance, Chin, Kayah, Tanintharyi and Kachin received the highest per capita allocations, while Ayeyarwady, Bago, Mandalay, and Yangon received the lowest.

But just because more money is going to states and regions does not mean that there is more accountability or that social services and infrastructure are improved relative to other parts of the country. Nor does this fiscal decentralization address local demands for greater autonomy over natural resource revenues.

Most state and regional officials still report to Union authorities in Naypyitaw. Furthermore, state and regional governments still have low capacity to develop and implement budgets effectively. This means that state and regional spending is not necessarily efficient or linked to a coherent economic development plan.

While true federalism—partial sovereignty for states and regions—would require constitutional reform, there are three steps the new government can take now to “ensure a fair distribution across the country of the profits from natural resource extraction.”

First, the government can start building national consensus on a natural resource revenue sharing formula. This way, all parties would have clarity on the issues and feel a sense of ownership over natural resource governance. This is the principle means through which resource revenue sharing can help stop violent conflicts. Indonesia spent nearly two years negotiating a resource revenue sharing deal with conflict-affected Aceh before coming to an agreement. The ongoing Union Peace Dialogue could be one forum for discussion of how a revenue sharing system could be administered. This discussion would not be a substitute for formal parliamentary and public discussions, but could support government efforts to build peace.

Second, the government could further decentralize by making state and regional politicians and officials accountable to local residents. It could also delegate resource management and expenditure responsibilities to these officials slowly, so they have time to learn how to perform these new roles. This can be done even without constitutional change. The Colombian and South African experiences offer some lessons for how decentralization can be achieved in unitary states (though neither case is an unmitigated success).

Third, the government could improve the transparency and oversight of natural resource revenues by cracking down on smuggling and illegal mining and publishing project-level information on all extractive projects. Without this information, state and regional governments cannot verify the value of minerals being extracted on their land and therefore cannot trust that they would receive their due under any revenue sharing formula. Myanmar could look to Bolivia and Mongolia, which lead the way when it comes to extractive sector transparency. For instance, the Bolivian government publishes, in a clear and understandable format, online data on transfers to and between subnational authorities and on hydrocarbon production by province, field and company.

Natural resource revenue sharing can be a key component of peace-building and decentralization in Myanmar. Mineral-rich Kachin, Mandalay, Sagaing and Shan, and onshore oil-rich Magway and Bago would undoubtedly benefit. Governments in other states and regions with pipelines that transport offshore gas may also profit. But unless done properly, resource revenue sharing can help perpetuate conflicts that have gone on for far too long.

Source: irrawaddy

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Growing Africa’s SMEs through CSR initiatives

As many African countries grapple with economic uncertainties, resulting in increasing rate of unemployment, business leaders believe that the sure way to reverse the ugly trend is to train future entrepreneurs that will help leapfrog the continent through enterprise and innovation. David Audu reports on Corporate Social Responsibility, CSR, concept as one of the components of such social enterprise initiatives.

As global unemployment rate soars, with the International Labour Organisation, ILO, projecting that an estimated 212 million people may be jobless by 2019, most countries are adopting remedial policy measures to avert the looming crisis and by so doing, mitigating the socio-economic damages to their economies.

Conscious of the negative effects of burgeoning unemployment in their domains, political leaders, businessmen and other development experts are consensual in their views that entrepreneurship, particularly among the youth population, remain the key to guaranteeing the future of the countries and people and laying enduring foundation for their real social, economic and political transformation. They agreed that the only way to achieve this lofty dream is to increase the number of entrepreneurs so as to minimise the increasing rush for formal, white collar jobs by young school leavers and giving them the right orientation about entrepreneurship and its potential for their self fulfilment. Besides, the new emphasis on entrepreneurship development assumes that entrepreneurs will in turn provide employment for others along the value chain. It has also become a known fact that small and medium enterprises are globally regarded as the backbone of any economy. According to experts, when given adequate support, SMEs can spur significant economic growth.

According to the United Nations Industrial Development Organisation, UNIDO, SMEs have a significant role to play in economic development. According to UNIDO, SMEs form the backbone of the private sector; make up over 90 per cent of enterprises in the world and account for 50 to 60 per cent of employment. “They also play an important role in generating employment and poverty alleviation”, It said. The National Bureau of Statistics, NBS, put the total number of SMEs in Nigeria at over 17 million. However, because of some challenges in the economy, a lot of SME operators in the country fi nd it very difficult to effectively play their role. Some of these constraints include competition, infrastructure, taxes, accounting, management, marketing, economic, planning and finance. Also, poor economic conditions, which also imply poor finance and inadequate infrastructure, have been identified as the most crucial limiting factors. Again, poor access to finance at relatively cheap cost is also one of the most crucial problems hindering SMEs to have significant contribution to national output in Nigeria.

There is no doubt that Nigeria as a nation, since attaining independence in 1960 has tried out various economic policies in a bid to achieve meaningful economic development. Most of these policies, some analysts say, are centrally planned and government dominated. The resultant impact of this excessive government domination of the economy left much to be desired leading to massive divestment in the 1990’s by the government. This was done under the economic policy of “privatisation and commercialisation”. The shift of emphasis thus created a challenge of building capable, dynamic and resourceful entrepreneurs to take the baton of economic revitalisation from government. These entrepreneurs incidentally have to fulfi l this onerous task through the establishment of business that could mainly be classified as small and medium scale in nature. However, over the years the task of creating a sustainable environment for SMEs to thrive was a difficult one, and for obvious reasons. One, the dwindling state of the economy has made it difficult for people to save and thereby little capital accumulation for investment. Further, the private sector was long undeveloped making experienced entrepreneur and small business managers scarce. Today, there is a growing consensus among policy makers, academia, industrialists and economic planners, that the development of local entrepreneur and encouragement of the establishment of small and medium scale business is the only penance to our economic growth. With this reality in view, a number of private organisations and individuals have taken it upon themselves to provide the necessary impetus to encourage young people to embrace entrepreneurship.

One current example among others is the chairman of Heirs Holding Mr. Tony Elumelu whose foundation, Tony Elumelu Entrepreneurship Programme, TEEP, which in its current drive towards this end has earmarked about $100m as grants to about 1000 young people from Nigeria and other African countries to train and mentor in various entrepreneurship projects. According to Elumelu, “African destiny lies with us African to realise”. The project, though with an African wide focus, has about 50 per cent participants coming from Nigeria. Launched in December 2014, the TEEP project is a $100m initiative to discover and support 10,000 African entrepreneurs over the next decade, with a target of creating one million new jobs and $10bn in additional gross domestic product contribution to African economy by the end of the programme. Economic analysts have described the programme as the first of such initiative to be launched by an African philanthropic organisation targeting the entrepreneurial space designed to empower the next generation of Africans entrepreneurs. Areas of focus by the programme include agriculture with 30 per cent participants; commerce and retail have nine per cent, while education and training have equally nine per cent each respectively.

Other areas include ICT, eight per cent, manufacturing, eight per cent, while healthcare and fashion have five and four per cent each. Energy, power and construction have three per cent; waste management, transportation, financial services, tourism and hospitality have two per cent each. While the programme covered 51 African countries, 49 per cent are from Nigeria followed by Kenya with 16 per cent; Uganda, four per cent; Ghana 3.6 per cent and South Africa with 3.2 per cent. At the TEEP boot camp in Otta, Ogun State last year attended by dignitaries and government officials, the need to harness Africa potentials through creating conducive environment and empowerment for Africa entrepreneurs to thrive was highlighted. Vice president, Yemi Osinbajo, underlined the need for African leaders to pay attention to developing entrepreneurs to move the continent forward. Restating the plight of Africa as a continent, which he stand in the throes of poverty and disease, and having the highest ratio of unemployment, and therefore the need for concerted efforts to pull it out, adding that entrepreneurship and handwork are the instrument of growth and development. He enjoined all to embrace integrity, rule of law, transparency and self discipline to entrench enduring business ethics in Nigeria and on the continent in generals. He charged the aspiring entrepreneurs to embrace the spirit of trust, integrity, and consistency, reminding that enduring success comes from respect for the rule of law and commitment to set objectives He commended the Heirs Holdings for initiating the programme, noting that “economies cannot be developed without social entrepreneurs like Tony Elumelu”.

He said Elumelu invoked the daring spirit successful enterprise by investing substantially in the ideas of entrepreneurship of the young Africans. By doing this he is shaping the future of the continent as he empower them to embrace entrepreneur to enable them direct the economic affairs of the continent in the coming years. He said government on its part will continue to provide enabling environment for entrepreneurs to thrive Acting United States Consul General, DI Gilbert likened the gathering to African Union meeting in Nigeria and described it as the ‘future Africa’. She said it is education that gives people the working tool that will make them productive. Asking how we can do things differently? She charged the beneficiaries to look for a creative new way of doing things to add value to society.

To African leaders and business men, she reminded them of the potentials that lie in Africa. “With 30 per cent of your population under 30, the energy is there and therefore the need for you to get going through right economic initiatives such what the Elumelu foundation has done”. Guest of the occasion, Prime Minister of the Republic of Benin, Lionel Zinzou, lauded the initiative while describing every effort to boost entrepreneur in Africa as the urgent thing the continent requires for growth and development. He said every country in Africa and indeed Africa as a whole need innovative idea which young talents who are beneficiaries of the TEEP project will bring Kaduna state governor, Mallam Nasir El-Rufai who was at the event urged the beneficiaries of the programme to convert their ideas into work that will make Africa proud. Speaking on what government can do to encourage entrepreneurs, he said only government through workable policies and good legislation can provide the level of trust that is required for successful entrepreneurship.

“Nothing is possible without a functional government. No matter how rich you are, without a minimal functional government to provide the basics such as road, power and other infrastructure you are lost.” He therefore urged the federal government on the need “to take a pragmatic approach to policy redemption and investment in Africa”. He noted that Africa with it large population stands at a great advantage if it leverage on the huge demographic dividend but will be a disaster if it fail to do so, while urging African political leaders to boost their economies through appropriate policies and legislation that will encourage entrepreneurship. Managing director Bank of Industries, BOI, Mr. Rasheed Olaoluwa, noted the impact the programme will have on the continent and Nigeria in particular. He said the bank will work with the candidate to help them evolve successful business that will enable them be employers of labour in the future. Explaining further his vision for Africa’s entrepreneurship project, Elumelu noted that only the present Africans can develop the continent for the future, stressing that “Africa needs multiple successful private sector business to make its mark on the world stage”. Advising the young entrepreneurs, Elumelu urged them to imbibe the spirit of hard work, discipline and the need to think long term in their vision. The entrepreneurs would receive $5000 seed capital each to enable them start their dream projects.

Source: nationalmirroronline

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Nuclear affordability emphasised, as Zuma unveils economic ‘turnaround plan’

President Jacob Zuma unveiled the skeleton of what he described as an economic “turnaround plan” in a State of the Nation Address dominated by the current plight of the South African economy, which was unlikely to grow by more than 1% in 2016 and would not nearly approach the 5%-plus levels outlined in the National Development Plan.

The address – initially interrupted by opposition Members of Parliament, which eventually resulted in members from the Congress of the People and the Economic Freedom Fighters leaving the National Assembly chamber – laid particular emphasis on the need to reignite growth and cut waste.

Growth was held up to be at the heart of the country’s “radical economic transformation”, with the President arguing that faster growth was vital to creating jobs, ensuring business profitability and creating the basis for the tax revenues needed to increase the “social wage” of education, health and security. The absence of growth was placing downward pressure on tax revenues, while threatening South Africa’s investment grade credit rating. “Importantly, our country seems to be at risk of losing its investment grade status from ratings agencies. If that happens, it will become more expensive for us to borrow money from abroad to finance our programmes of building a better life for all – especially the poor.” Zuma said the turnaround plan, and avoiding a downgrade by the rating agencies, required government and its social partners in business and labour to forge a “common narrative” that was supportive of improving the investment climate and positioning South Africa as a “preferred investment destination”. “If there are any disagreements or problems between us, we should solve them before they escalate. This is necessary for the common good of our country.” Zuma announced the creation of an Inter-Ministerial Committee on investment promotion, which would seek to set up a “one-stop shop” to facilitate direct investment into the country. In addition, he said a draft migration policy would be placed before Cabinet this year, with a view to easing the regulations for the entry of skilled foreign workers into the country. The response plan required “doing things differently”, acting more decisively in cutting red tape and bringing policy certainty, with Zuma specifically urging Parliament to finalise its deliberations on the Mineral and Petroleum Resources Development Act, which he sent back to lawmakers on Constitutionality concerns.

It would also require the mandates and governance at State-owned companies to be tightened and for those agencies not playing a developmental role to be “phased out”. No mention was made, however, of possible privatisation, a point picked up upon by the leader of the Democratic Alliance Mmusi Maimane, who said the President should have prioritised the sale of State companies and assets to help fund programmes, such as infrastructure, that could help stimulate growth. TWO CAPITALS UNAFFORDABLE? Belt tightening within government was raised in the address, with Zuma even calling on Parliament to urgently review the financial sustainability of having separate administrative and legislative capitals, in Pretoria and Cape Town, while announcing that government would be cutting back on overseas travel, conferences, entertainment and catering. Even on the contentious area of South Africa’s plan to build 9 600 MW of new nuclear capacity, which many feel to be unaffordable, Zuma injected a new tone of prudency, saying any procurement would only proceed at a scale and pace that the country could afford.

He did not turn his back on nuclear altogether, however, announcing that the market would be tested to “ascertain the true costs” of the programme. The importance of renewable energy, coal and gas in the future electricity mix was also emphasised, with the announcement that independent power producer procurement programmes would either continue or be initiated during the year. Grant Thornton director: infrastructure advisory Grant Penrose applauded the emphasis placed on nuclear affordability.  “His admission to this massive cost and South Africa’s current state of the economy, is laudable.  We hope this process will be open and transparent going forward,” Penrose said. However, Maimane said that the cuts outlined were insufficient and that Zuma should have rather announced a trimming of his Cabinet to 15 Ministries, rather than repeating a number of plans that had already been canvassed, including a consolidation of the two capitals.

Source: engineeringnews

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Opinion: If Africans Don’t Exploit Opportunities In African Logistics, Foreigners Will

Global logistics and transportation firms have expanded operations in Africa despite infrastructure challenges — or because of them — in a sector that holds huge potential and opportunities for investors, according to a guest column in AfricaTimes by entrepreneur and legal consultant Erukilede Julius.

The shipping numbers speak to the positive outlook for Africa’s logistics business, said Charles Brewer, managing director of DHL Express Sub-Saharan Africa, a leading logistics company. In light of the economic pressure Europe is experiencing, DHL’s dependency on Europe has been reduced, while Intra-Africa trade has picked up significantly, Brewer said.

E-commerce has helped to grow African logistics business. More Africans are buying online rather than at physical shops. The size of the outsourced logistics market in Africa has grown by 38.4 percent in the last four years.

But sub-Saharan Africa remains a challenging frontier for many companies, despite recent growth and investment in the sector, according to the 2016 Agility Emerging Market Logistics Index report. More than 43 percent of the 1,100 global logistics industry executives surveyed said they have no plans to set up in Africa; 21.2 percent said their companies have operations in the region. Another 12.7 percent said they plan to enter African markets.

Africa probably isn’t the best destination for companies looking for fast returns, Julius said. For businesses with a long view, it holds huge potential. “The continent needs better transport infrastructure, more connectivity across borders, and an improved business environment.”

Other than South Africa’s relatively developed transport and logistics infrastructure, African countries are struggling. Roads are the most common mode of transport, but are poorly developed. Regional road and rail networks are few and far between. Just 27.6 percent of Africa’s 2 million kilometres of roads are paved, according to a 2008 report by the OECD (Organisation for Economic Co-operation and Development).

Of those paved roads, 19 percent are in sub-Saharan Africa, versus 27 percent in Latin America and 43 percent in South Asia. Just fixing the existing thousands of kilometers of roads that need attention will require huge investment.

Absence of good roads makes transportation and logistics expensive in Africa. Transport costs throughout Africa average 14 percent of the value of exports compared to 8.6 percent in all developing countries, and can be as high as 50 percent of export value for Africa’s 15 landlocked countries –56 percent for Malawi, 52 percent for Chad, and 48 percent for Rwanda, according to the OECD report.

Moving goods across borders can cost official and unofficial fees that amount to extortion.

In Africa, it takes 39 days to export a container of goods including documentation, inland travel, customs clearance, and port or terminal handling compared to 26 days in East Asia or 15 days in high-income OECD countries, according to World Bank’s Doing Business report. Shipping costs an average $2,201 per container compared to the median estimate of $864 for East and Pacific Asia countries.

This is where businesses with long-term strategies can get rich. Ghana, Kenya, Nigeria and South Africa are the most promising logistics markets in sub-Saharan Africa, according to the 2016 Agility Emerging Markets Logistics Index.

Transportation and logistics of food and agri-business will be key, according to Analytiqa.  Facilitating this trade will require improvements in cold-storage services.

“There is a huge amount of optimism from (third-party logistics providers) about the future of logistics markets across Africa, as economic growth drives stronger consumer demand and creates higher market attractiveness for retailers and manufacturers alike,” said Analytiqa research director Mark O’Bornick.

If Africans don’t identify these opportunities and take advantage of them, foreigners will, Julius said.

Source: afkinsider

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Vaal River City, a new riverfront development pushing boundaries

Portions of the barren riverbank of the Vaal River, south of Gauteng, are in for grand development plans over the next 15 years.

The greenfield site along the Vaal River will soon see a new multi-billion city start to unfold at the end of the year – reviving the economic and industrial activity of the

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Vaal River City is a mixed-use development which is one of the five new corridors identified by the Gauteng Provincial Government, which is set to create new economic nodes, cities and industries.

The planned city in Gauteng’s Southern Corridor – which is made up of the Sedibeng district – is earmarked to revive the area’s once thriving steel industry which collapsed about two decades ago.

It is dubbed South Africa’s “first post-apartheid city”, a private-public partnership with an estimated construction cost of R4 billion but on completion the valuation will balloon to R11 billion, according to Kukama’s estimates. The proposed development, which was unveiled to the media on Friday, resides in a 250-hectare piece of land, spanning the upper end of Vanderbijlpark, Sharpeville and Emfuleni City through to Sasolburg and the Vaal.

Sedibeng has lacked proper investments, resulting in poor infrastructure and lack of proper job opportunities. On a social level, the dearth of facilities has led to residents travelling far to work, retail and healthcare amenities.

See the planned development below:

Screen Shot 2015-05-18 at 1.23.01 PM

Source: The Vaal River City Development Company

A new city born

Over the past ten years, gated and exclusive mixed-used developments have mushroomed catering largely to well-heeled individuals, but Vaal River City’s mandate is to be affordable and accessible to surrounding communities. It has been in the making since 2008 when developer Reggie Kukama had a vision to create a city that all individuals had access to.

“I wanted to break the mentality where there are certain things that don’t belong to you, but it is for someone. I bet you 90% of people at Sharpeville have never been to the Vaal River. When are people in this country going to enjoy these things?” Kukama asks.

Portions of the Vaal River are privatised, but the appeal of having a potential city with a 6km riverfront expanse made the investment case for the development strong. Also, the site is anchored by well-established road infrastructure such as the R15 into Johannesburg and two bridges across the river to Sasolburg, Vanderbijlpark and other townships – meaning there would be less capital invested in upgrading surrounding road infrastructure.

Kukama, who has been in the built environment for 18 years approached government to plug in his vision, which he says was an easy sell, given that it was in line with government’s focus on mixed-income and high-density human settlements.

“All we need to do was bring our fresh ideas to develop the site,” he says.

The government usually favours projects which have a potential for job creation – and Vaal River City is eyeing ambitious employment figures. “There will be 10 000 job opportunities during construction and a further 19 000 people will be employed after construction across the development’s components,” says Kukama.

The land for the development belonged to seasoned developer Giuseppe Plumari who owned it for about 20 years.  The land was non-core to Plumari and he sold it to The Vaal River City Development Company, a black economic empowerment consortium headed by Kukama. Plumari, who has a 30% shareholding in the development, is also involved with insurance baron Douw Steyn in the mega-mixed use development Steyn City, sandwiched between Dainfern and Diepsloot.

The development’s features 

The master plan of the development promises many features. It will boast 400 000 square metres of commercial office space, with various municipalities making an intention to set up offices in Vaal River City.  The Emfuleni and Midvaal local municipalities will consolidate with the Sedibeng district municipality to establish a single metropolitan municipality. A court of law and various government departments will set up at the new city.

The development will also have a 60 000 square metre regional shopping centre and a healthcare facility. Commercial and retail space will make up 75% to 80% of the Vaal River City development.

Furthermore, four-storey apartment buildings with 5 000 units will be on offer. Howard Rawlings, who is involved in the town planning process of the development, says developers can buy land at the site and turn it into residential space. The apartments, Rawlings says, will largely fall into the category of affordable units – valued at R400 000 to R800 000.

The government might also get into the residential act through leasing units, in a bid to address South Africa’s housing backlog. It is expected that 60% of people who reside in the development will be from the Vaal.

The Vaal University of Technology is a stone’s throw away from the planned city which also presents opportunities for student accommodation within the development, says Kukama.

Kukama says the vision for Vaal River City is for it to be as pedestrian friendly as possible, as it will have a 20-hectare bird sanctuary and parklands with walkways and picnic spots.

As part of the development’s sustainability agenda, buildings at Vaal River City will have environmentally friendly features. They will be designed to incorporate energy efficient heating and cooling, lighting, water saving systems, designs allowing for the use of natural lighting and recycled construction materials, says Nishal Mistry of DBM Architects.

“Those are the conscious initiatives that we will put in and obviously the rest become determined by budget. The intention is to go as green as possible and get some of the buildings green star rated in the long term,” Mistry explains.

For now, the priority for developers is luring more partners to invest in making Vaal River City possible. Kukama says the phases of the development are fluid, as he foresees up to five phases; the first focusing on road infrastructure to the tune of R2 billion.

Part of the road infrastructure spend will be dedicated to make way for public transport access, as Rea Vaya Bus Rapid Transit System stops will be dotted across the city,  together with taxi ranks. Cycle lanes are also in the pipeline.  Another pressing issue facing the developers is dealing with sewerage at the site, as it is “the biggest issue to address in the area.”

Projects of this nature are capital intensive and a return on investment might take a while to materialise. At this point, key players behind the development are cautious about targets. “My view on property is we never look at short term returns, everything we do is on a long term basis,” Plumari says.

Source: Moneyweb


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