B2B Waste to Energy and Renewable Energy Fair

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The Caribbean Community Climate Change Centre (CCCCC) in Partnership with GIZ and United Nations Development Program (UNDP)’s Japan Caribbean Climate Change Partnership (J-CCCP) project hosted Belize’s First B2B Waste to Energy and Renewable Energy Fair at the Belize Biltmore Plaza, in Belize City on the 9th November, 2016.

The presentation of the Potential Study on Producible biogas and renewable energy from biomass and organic waste in Belize by TNO Consultants Johan van Groenestijn, Robert de Kler and Marco Linders for GIZ / J-CCCP concluded that:

  • Large amounts of biomass resources are available in Belize that have a significant potential to produce biogas
  • All reported biomass resources have biogas production potential, but every case is different and has to be judged amongst others on its scale (amounts available), easiness of digestibility, alternative uses of the waste, location, etc.
  • For bananas, a best practice system comprises of a hammer mill and two…

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Emerging Markets on the Sell Side -Entrepreneurs, Exporters, and their Governments

Policymakers executives and entrepreneurs in emerging and frontier markets generally want to attract capital from abroad. They want long term, job creating capital invested in sustainable enterprises.

There are four areas in which management decisions and sound policy at the government level can increase the likelihood of such an outcome.

I. TRAINING & CAPACITY BUILDING

The best investors are attracted to strong management teams and staff with the skills to maximize productivity. Emerging market companies should focus their skill building efforts in three key areas:

  1. Quality management including, for example TQM and 6 Sigma practices
  2. Innovation to help orient the company toward growth and competitiveness.
  3. Compliance with international laws and regulations against corruption as well as customers’ regulations, in financial services and other sectors.

Training organizations:

Funders:

II. INVESTORS’ DUE DILIGENCE

Prior to any investment or contracting arrangement, companies will conduct the usual financial & operational due diligence to get an understanding of the nature of their investment. In doing so they should be mindful of several concerns:

  • Have suppliers and other 3rd parties had online compliance training?
  • Banks must comply with US financial regulations and so do their suppliers. Banks and other US companies must prepare suppliers to be audited by US bank examiners.
  • US & Western companies must maintain their “social license” to operate. This requires a deliberate demonstration of corporate social responsibility and should do all they can to purge human trafficking, child labor and other human rights issues from the supply chain.

III. DEMONSTRATE VALUE OF A LOCAL PARTNER

  • Provide guidance on local procedures protocol, cultural norms and customs
  • Commitment to excellence in performance and execution
  • Commitment to strong business ethics re corruption, human rights, CSR

IV. GOVERNMENTS MUST BALANCE INVESTOR FRIENDLINESS WITH NATIONAL AND CULTURAL PRIORITIES

  • Establish clear, well documented rules of the game
  • Active participation in multilateral bodies governing global trade
  • Maintain ongoing dialogue with major trading partners
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Raising Productivity& Prosperity in Six African Economies

There is a set of African countries whose economies have grown faster than the rest of the continent in recent years and show potential for above average growth into the future. Six of these countries have been dubbed African Lions by Haroon Bhorat and Finn Tarp in there recent book “Africa’s Lions: Growth Traps and Opportunities for Six African Economies.” The book was the subject of a panel discussion held recently at the Brookings Institution.

WHO ARE THE AFRICAN LIONS AND WHY?

The six African Lion economies are Ethiopia, Ghana, Kenya, Mozambique, Nigeria, and South Africa. The list includes Africa’s two largest economies—Nigeria and South Africa. These two along with Kenya and Ghana are also four of the five KINGS countries, so named by Ghanaian tech entrepreneur Eric Osiakwan for their leadership in Africa’s technology sector. Ethiopia, Africa’s second most populous nation has dipped a toe into light manufacturing. Mozambique is a potential agricultural powerhouse.

WHY HAVE THE LIONS NOT PERFORMED BETTER?

Poverty is down but not enough and poverty reduction has been uneven across the continent. Much of the poverty reduction has been due to strong commodity prices and natural resource imports by China. This type of economic growth does not reduce poverty by as much as in other emerging economies where more of the growth is driven by industrial activity and higher value exports.

In other words, as we all know African economies, including the African Lions suffer from excessive dependence on natural resources. They have been slow to industrialize, and slow to move up the value chain into higher productivity sectors which create more and higher paying jobs. While there may be inequities in the global trading system that work against them, the biggest obstacles blocking African productivity are more internal than external—they include business governance, quality of institutions, and strength of human capital.

HOW WILL THE LIONS TAKE AFRICA TO THE NEXT LEVEL ECONOMICALLY?

The issues of productivity and natural resource dependence are well known and have been hanging out there for decades. It was evident by the mood in the audience at Brookings that Africans are increasingly dissatisfied and are looking for new solutions!

Today’s challenges cry out for innovative new approaches and Africans must lead the way. The West—and the East can help. The challenge is big enough that the combined efforts of business, non-profits & foundations, academia & think tanks are needed. The West, and for the US in particular should beef up their efforts in 3 ways:

1. Engagement

American industry and American goods and services are generally well liked in Africa. But American business has been very much on the sidelines of African growth and development. Americans need to be present on the ground, even when there is not a deal immediately on the table. There have been a few good examples:

  • Mark Zuckerberg’s recent visit to Nigeria and Kenya. There to explore the technology and innovation sector in Africa, he wound up investing in a Nigerian software developer.
  • General Electric is making significant investments in the power sector in several countries, making use of the US government’s Power Africa initiative.
  • The Case Foundation, lead by Steve and Jean Case was a major supporter of this year’s Global Entrepreneurship Summit in Nairobi

There are resources that can help such as Corporate Council on Africa , certain accounting, legal and consulting firms, and a cadre of US trained professionals with deep experience and relationships in African business. Time to put them to work!

2. Training & Capacity Building

  • Management Training. In addition to making traditional business education available to more students, business and academia should make available advanced disciplines such as project management, quality management, and supply chain logistics as applied in an African context.
  • Innovation. Many western companies are using training programs that instill a culture of innovation. African business can use similar training to build on recent successes like M-Pesa and gain a competitive edge in the global marketplace.
  • Compliance. In order to become a productive member in a global supply chain, African companies like others around the world must be compliant with global standards designed to prevent corruption, maintain labor and environmental standards, and regulations specific to certain industries like financial services.

3. Financial Investment

With significant engagement and capacity building, comfort levels rise on all sides and perceptions of risk can change. Investments specifically linked to these efforts become attractive to private capital.

Deals designed to benefit from growth in consumption and from inclusion in global supply chains will provide significant, reliable returns to investors. So far there has been a lot of interest and a lot of dancing around. It’s time to pull the trigger!

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EMERGING MARKET SUPPLY CHAINS–LESSONS FOR INVESTORS

In my last post I gave an overview of the issues raised at a conference on supply chain risks and opportunities. Let’s now drill down a bit to consider how US and other western companies should address these issues as they being emerging and frontier market firms into their supply chains.

DUE DILIGENCE

Prior to any investment or contracting arrangement, companies will conduct the usual financial & operational due diligence to get an understanding of the nature of their investment. In doing so they should be mindful of several concerns:

  • Have suppliers and other 3rd parties had online compliance training?
  • Banks must comply with US financial regulations and so do their suppliers. Banks and other US companies must prepare suppliers to be audited by US bank examiners.
  • US & Western companies must maintain their “social license” to operate. This requires a deliberate demonstration of corporate social responsibility and should do all they can to purge human trafficking, child labor and other human rights issues from the supply chain.

SUPPLY CHAIN RISK

  • The current approach of international insurers to risk management is to understand the interconnectivity of risk. Experts recommend managing risks holistically rather than in silos. This holistic approach recognizes how operational risks impact legal risks and financial risks.

CORRUPTION

Western executives often complain of corruption and having to pay bribes in order to do business in emerging markets. (Of course for many westerners the answers is to pay bribes—it takes two to tango!) For US companies the Foreign Corrupt Practices Act means a jail sentence if caught making inappropriate payments. Cultivate long term relationship The strategies recommended by the experts at the EFMA conference and elsewhere boil down to the following:

  • Cultivate a long term relationship with suppliers to form a basis for trust. Building trust requires playing the long game so companies should budget for the time and resources required to form a long term relationship with suppliers and other stakeholders. It takes spending time in country. The desired outcome is a local partner for the long haul.
  • Get the incentives right. This includes not only sharing financial benefits, but also providing knowledge transfer via training and collaboration.

SUPPLY CHAIN DISPUTES

  • Implement controls that encourage performance and foster a long term relationship with suppliers.
  • Choose the right jurisdiction in which to set up the business entity and to contest disputes.
  • If necessary, seek advice on how to exit a market while retaining as much value as possible, and minimizing the loss of goodwill.

INTERNATIONAL TAX PLANNING

  • The natural and quite understandable inclination of most multinationals large and small is to locate profit centers in low tax jurisdictions. Some of these low tax states are disparagingly labeled tax havens. It is also not surprising that governments around the world have pushed back against the practice now known as “Base Erosion and Profit Shifting” or BEPS. The Organization for Economic Cooperation and Development has been a leader in understanding the use of tax havens. Companies would be advised to consult the OECD’s guidelines on BEPS and transfer pricing and to heed the advice of tax consultants and attorneys when setting up supply chain relationships in emerging economies.
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Making Supply Chains Work in Emerging Markets

I recently attended the Emerging and Frontier Markets Association’s conference on Supply Chain Risks and Rewards in Emerging Markets. I have long stressed the need for developing countries to move away from the model of natural resource dependence and reorient their economies toward value added industry and join the global supply chains that are the backbone of many key industries. This was the right forum at the right time.

The stage was set with a discussion of key risk areas companies face when emerging market companies become part of their supply chain. They are:

  1. Various forms of corruption—particularly the risk of violation of the Foreign Corrupt Practices Act and
  2. Working with companies that may be involved in human trafficking and other human rights violations.

Other important topics included due diligence, taxes and cyber security. These topics and others will help us understand what companies and governments in emerging markets can do to attract investment capital and join a global supply chain. The discussions also gave us some ideas on how Western companies can succeed in these markets where the opportunities are tantalizing and the risks are readily apparent. I’m looking forward to exploring the path to supply chain readiness in the blogosphere and in the real world marketplace.

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Africa’s Global Competitiveness–4 Themes to Consider

1. Is the commodity supercycle turning back upward?

  • Oil seems to have bottomed. After falling to the high 20s West Texas oil is close to $50 a barrel. Latest forecasts expect a plateau around $60
  • Metals are soft but not falling fast with gold just under $1300/ounce and copper about $2.17/pound.
  • Coffee rising—ICO composite index up 15% this year
  • Cocoa down 13% this year though up 20% over the last 4 years

2. Global growth forecast is a lackluster 3.1%-Africa slows to 1.6%

  • Has Africa hit bottom at 1.6% growth? Slowdown due largely to slowdown in commodities and reduced imports by China. With oil and other commodities recovering African economies should return to above average growth.

3. Are African leaders prepared to take the policy steps necessary to liberate their economies from commodity dependence?

  • UNIDO’s 2016 Industrial Development Report report discusses the nature of African industrialization and why it has not progressed further. African industrial activities ends to be resource based and has a low and decreasing percentage of global manufacturing value added.
  • The Brookings Institution’s Learning to Compete project notes the virtuous circle in which productivity enables exports and exports raise productivity.
  • The clear implication is that governments must implement policies that increase productivity, promote exports, and reduce dependence on natural resources.

4. The dialogue has started—time for public and private sector action!

  • Africa’s role in global value chains was discussed at this year’s IMF meetings.
  • EFMA Oct 13 conference on Supply Chain Risks in Emerging Markets will address challenges developing countries face in joining global supply chains.
  • We need policies that support sustainable growth and private sector investments that support these policies and offer favorable risk adjusted returns.
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8 WAYS TO ASSESS THE IMPACT OF #AFRICAN #TECH #STARTUPS

 

I. Jobs Created

  • We of course want to know the total number of jobs created by startups. In addition we need to understand the type of jobs created and how that fits with the profile of the national labor force. What are the salary levels and how do they compare to the local statutory minimum wage? Will these startups have a significant impact on their local labor markets?

II. Capital Raised

  • Are these startups attracting new capital to Africa?
  • Are they attracting foreign capital from other African countries?
  • Are they attracting capital from within their own countries?

III. Increase in Skills and Know-How

  • Are the startups introducing new technology or management practices
  • Are skills and know-how spreading beyond the universities to the general population?

IV. Return on Capital Invested

  • Have investors in African startups experienced favorable outcomes?

V. Export Revenue Within and Outside Africa

  • Are African startups exporting?
  • Are African startups enabling exports by other companies in their home countries?

VI. Supportive of African Business

  • In what other tangible ways have these startups helped foster the growth of African businesses?
  • Training
  • Access to customers
  • Access to capital

VII. Social Impact

  • Environmental
  • Education
  • Poverty reduction
  • Financial inclusion

VIII. Intangibles

  • Inspiration – Is there a 12 year old girl in a village saying “I want to be an entrepreneur too!”
  • Positive influence on government – Is there a community of entrepreneurs who can make their voice heard in the halls of government to strengthen the entrepreneurial ecosystem?
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5 KEYS TO INFRASTRUCTURE INVESTING IN AFRICA

US investors can find good deals in Africa and not leave all the action to the Chinese. How? By taking the long view, and aligning their investment strategy with countries’ development priorities.

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For example, Ghana has launched an initiative that links the obvious need for better infrastructure with the goal of industrializing the economy, with a sovereign wealth funds to back it up. Implementation requires billions in investment and technical assistance, largely from the private sector. Here’s how US companies can win business:

  1. Adopt a long term perspective. These are long term projects intended to transform Ghana’s economy and enable high value industry to thrive. The benefits to investors and operators are also long term in the form of offtakes that will continue well into the future. These benefits easily overwhelm concerns about currency fluctuation, or bureaucratic challenges.
  2. Make your presence known on the ground. Brazilian and Chinese investors send teams to explore the market even before any bid announcement or call for investors. Email and social media have their limits. You have to go there!
  3. Identify a local partner. Successful teams almost always include a local private sector player as a joint venture partner. There are consultants based in the US and abroad who can provide leads for good JV partners.
  4. Bring a complete solution. A complete solution brings financial and operational capabilities—someone to finance, build and operate. It also includes service, maintenance and training. Infrastructure giants like GE often have such capabilities in-house. Asian and European operating companies often have government backing. US investors should think in terms of assembling a consortium that includes these elements. A private equity shop or investor group, needs an operating partner. A builder or contractor, needs a financial investor able to provide capital. Agencies like OPIC and EXIMBANK can help manage risk.
  5. Identify skilled, knowledgeable advisors. There needs to be someone who understands the local environment, but also understands the priorities of a US-based investor.

In cases like Ghana, the projects are structured with offtake and other cash flow sources clearly identified. The Ghanaian government is prepared to help with advice and seed money via the sovereign wealth fund. Lots of guidance and support are also available in the US from government and private sources. This should be a win for US investors, and for the emerging world once we get in the game in a serious way.

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3 Lessons from the 2015 Africa Business Conference at Harvard Business School

As usual there was a palpable spirit of optimism at this year’s Africa Business Conference at Harvard Business School. While the facts on the ground may not be as rosy, I did come away with several observations that will be helpful in current tasks as well as in plotting strategy in the medium and long term.

1. Storage and transportation of both inputs and goods for sale are critical to improving farm performance.

2. Institutional Private equity is well entrenched in Africa and the characteristics of a successful deal are increasingly well known. In the second panel on closing the electricity deficit the parameters for funding power projects were clearly laid out:

  • A quality PPA deal is required. This is the guarantee of cash flow that investors look for. They’re not all created equal. For example, local currency denomination is a deal killer since it adds currency risk to the equation.
  • The PE folks will also need a sovereign guarantee as an indication that the government supports the project.
  • As always a strong management team makes the deal much more attractive.

3. Startup capital especially for non-tech ventures is extremely difficult to find. Angel investors and venture capitalists are slowly finding their way to tech-related, high growth startups. For others, it’s tougher but there are a few possibilities:

  • Impact investors. If one can demonstrate measurable social benefit in addition to financial returns then a new set of potential investors becomes available. Many impact investors use the IRIS standard to assess social benefit. African companies would be wise to seek out experts who can help the make their case using IRIS
  • Multilateral/DFI capital. Organizations such as the African Development Bank and International Finance Corporation sometimes have special programs for ventures with attractive features such as environments sustainability.
  • Trade promotion agencies. Agencies such as the U.S. Export-Import Bank can often provide funding or lean guarantees for capital purchases that meet certain requirements.

As always the Harvard Business School Conference showed us an Africa on the move—not without its issues, but with opportunities for businesspeople to benefit themselves, their organizations and the African continent. Successful entrepreneurs will assemble a skilled team that can execute on their vision and achieve financial and social results.

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Guess Which Caribbean Island Just Went 100% Renewable? Bonaire!

caribbeanclimate

Like many Caribbean islands, Bonaire originally relied on diesel fuel to generate electricity for residents, with a peak demand of 11 megawatts (MW). This fuel had to be shipped in from other nations, resulting in high electricity prices for Bonaire residents, along with uncertainty about when and how much prices might increase with changing fuel costs.

In 2004, everything changed when a fire destroyed the existing diesel power plant. Although tragic, the situation provided an opportunity for Bonaire to consider what kind of new electricity system to build. Temporary diesel generators were rented to provide power for the short term. Meanwhile, the government and local utility began working together to create a plan that would allow Bonaire to reach a goal of generating 100 percent of its electricity…

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