The lines were drawn across a giant map of Africa at this gathering of the great and the good in business, in Cape Town. The expensive business of pouring billions of dollars into making these lines on a map into trade routes plied by high-speed planes, trains and trucks, will make-or-break of the African dream.
More than 1,000 delegates arrived at the World Economic Forum (WEF) in Cape Town, on May 9, to discuss the practicalities of building infrastructure to nurture the emerging economies of Africa. It is a herculean task, to say the least, with the World Bank estimating the continent needs $93 billion to complete the job. Experts say the cost may be much more.
Plans have been drawn up for trade corridors traversing the continent. They include: a swifter trade route between oil-rich Angola and South Africa; plus, an ambitious plan to improve the rails, roads, ports and airports between Cape Town and Cairo—a dream that is likely to have the old colonialist, Cecil John Rhodes, chuckling in his grave in the Matopos Hills, near Bulawayo in Zimbabwe.
“It is ironic that democratic African nations, that have turned their back on colonialism, are trying to revive a plan hatched by the colonialist Cecil Rhodes more than a century ago,” says Ebrahim Patel, South Africa’s economic development minister.
To execute these plans, experts have drawn up a list of 50 priority projects that will be whittled down to 15 in the next six months. They include the expansion of the Grand Inga Dam hydroelectric plan in the Democratic Republic of Congo and the boosting of infrastructure to help extract gas from the waters off the coast of Mozambique.
“It is a wonderful vision but getting it done is something else,” says Nick Chism, the global head for Infrastructure at KPMG, who has been studying infrastructure worldwide for 20 years.
Chism believes a shortage of skills and finance are likely to be among the biggest hurdles. He also warns there could be tension between nations, before the list of 15 projects is decided, over what is built where.
“The idea is to build infrastructure in hubs, that is, a good airport in one country, a good port in the neighboring country and so on. As you can imagine, each country wants the best of everything built in their own backyard,” says Chism.
Despite these warnings and the dismissal by critics of WEF as a mere talk shop, there was optimism among the millionaires, entrepreneurs, technocrats and government officials, who gathered in Cape Town.
“I think things are starting to gel. We are in a lot better space than we were a decade ago,” says Trevor Manuel, South Africa’s minister of national planning.
Money, in a shallow world capital market, is likely to be the most insurmountable object. But Nigerian entrepreneur, Tony Elumelu, who invested recently in a $300 million power plant at home and put money into the launch of Rwanda’s new commodity exchange, sees hope.
“The best of Africa’s entrepreneurs are seeking investment opportunities in the continent… If we invest in Africa, we will get others to follow,” says Elumelu.
Folorunsho Alakija, reputed to be the richest woman in Africa, with a personal fortune, estimated by FORBES, of $600 million, has made her money through the license to the rich Agbami oil block off the coast of Nigeria. The block has 1.2 billion barrels of oil.
“We shouldn’t be waiting for handouts from other countries; we should get together to make our way forward, by ourselves, to give our people pride… There are plenty of opportunities in agriculture. Nigeria is importing so much rice. I do not think we should be importing anything from anyone,” says Alakija.
If optimism were cash, Africa’s infrastructure problems could be sorted before WEF reconvenes in Nigeria in May.
As it stands, there is a lot of fund raising and tough talking to be done. Cautious investors from New York to Beijing have to be won over. Despite the promise of returns of more than 20%, this is likely to be a hard sell. Africa is rising with an average growth rate of 5% at a time when the rest of the world is at a standstill. Few at this annual talk fest could disagree that the economies are moving, but finance needs to keep pace.

The Near  And Dear Dream

On Beira Road it seems everyone knows about the Grain House and its owner.
In the coastal city of Mombasa life runs in the slow lane, so it’s little wonder the constant rev and turn of 34-wheel trucks at Grain Bulk turns heads.
The ‘ordinary’ businessman near the end of the road is no ordinary neighbor in this coast-hugging, business enclave of Mombasa.
This extraordinary, ordinary man at the helm of Grain House is Mohamed Jaffer.
In 1976, when he was just a 26-year-old civilian in search of a quiet business life, Jaffer borrowed $240 to start a timber business. A few years later, he upgraded to exporting pallets to Jeddah, Muscat, Kuwait and Aden.
Little did he know that trading in wood planks and color-mixing boards for artists would end up as a multi-billion dollar port business spanning three continents.
It was in 1983, while running his pallet manufacturing businesses, that Jaffer started taking a keen interest in how grain imports were being handled at the Mombasa Port. He soon noticed something was not right. The process was mainly done manually. It was unhygienic, there was a huge amount of wastage of grain and there was also no accounting for discharged quantities.
“I began researching how developed countries were doing it,” he tells FORBES AFRICA.
“I observed that their handling system was highly mechanized, hence capital intensive. I was convinced that Kenyans are capable of importing technology and harnessing technical skills to maintain a state-of-the art terminal, which I was determined to install at the port of Mombasa.”
Coming up with the idea of a bulk, but efficient graining facility located next to the port took an eye for spotting out-of-the-box thinking. The implementation of the dream project would emerge in the installation of a mechanized handling system that would be commodity and environmentally-friendly and efficient.
But securing the funds to pull off his dream was like an upriver swim. So was planning for storage silos connected to the massive conveyor belts and the technology to control the systems seamlessly and to establish a safe exit route from the port. Jaffer knew he was biting off more than he could chew.
With revenues from the pallets business being a drop in the ocean of what he needed, he had to use someone else’s money—and lots of it.
Even with the funds and the vision, the project took 17 years to materialize. Some of the factors that contributed to the delays included prohibitive interest rates that made securing local financing suicidal, as well as the fact that Kenya was then blacklisted by virtually all foreign donors because of governance concerns.
“The business climate was hostile to local investors. The problem in Kenya is that government authorities view local investors with suspicion and will always frustrate you. Back then there was also a lot of politics around the project,” says Jaffer, now 64.
The adverse climate for funding from international financial institutions notwithstanding, Jaffer approached the Commonwealth Development Corporation (CDC) and the International Finance Corporation (IFC) for loans to implement his dream project. The two corporations recognized the potential of the proposed project and expanded their scope to cater for regional rather than national interests. With Jaffer’s astute negotiations they readily offered a credit line of $35 million.
The funds borrowed from IFC, CDC and Proparco eventually facilitated implementation of the project, which was commissioned on March 15, 2000 by the Kenyan president at the time, Daniel arap Moi.
The facility, now 12 years old, handles 1.8-2 million tons of grains annually, though its capacity is in the region of 3-4 million tons a year. The low volumes are attributed to Kenya being a net importer, bringing in expensive capital goods and other commodities while exporting very little, mainly tea, coffee and horticulture products.
The commissioning of the grain terminal revolutionized the handling of grain at the port of Mombasa.
Grain Bulk Handlers Limited (GBHL) is now a specialist in the discharge and handling of bulk grain imports at the port, which is regarded a main gateway for East and Central Africa. Its silos are built for both transit and long-term storage. Valued at $140 million, GBHL is one of the biggest private investments in East Africa, beating most listed companies at the Nairobi Securities Exchange in market capitalization.
GBHL boasts a turnover of $12 million and is the flagship company of MJ Group. Jaffer’s other business interests include Mbaraki Bulk Terminal in Mombasa, which deals in petroleum products; Africa Gas and Oil Company operating an LPG (Liquefied Petroleum Gas) terminal at the port; Great Lakes Port Ltd as well as a container freight station at Changamwe in Mombasa that’s due for implementation. Other projects awaiting implementation include dry ports for Tororo, Uganda and Miritini in Mombasa.
And he is not done yet. He says: “I will keep on investing despite the unfriendly business environment in Kenya. I am actually a coolie. I go for port projects. You can call me a coolie promoting investment in specialized handling facilities at port. I will therefore always work in port-related businesses.”
He’s spreading his wings too and it’s no mean feat that Jaffer has reversed the trend of investment flow. Normally, foreign direct investments move from developed economies like Europe, China and the States into Africa, but Jaffer is clearly swimming against the tide and with the big sharks, far away from the Indian Ocean.
The MJ Group, of which he’s also chairman, owns a grain terminal at the port of Lake Charles in Louisiana, in the States. The company is currently working to establish similar projects in Vietnam and India. This international expansion was boosted by IFG Fund LP, which in 2006 acquired an equity stake in GBHL and committed to grow the brand worldwide. IFG, through its affiliate Infrastructure Funding Group, brought in its financing expertise and global reach that made GBHL a stronger enterprise and positioned it for international expansion.
Jaffer is ready for the global expansion being a multi-linguist who speaks and writes in six languages: English, Urdu, Hindi, Gujarati, Cutchi and Swahili.
But Kenya is where GBHL has transformed the port of Mombasa—and Kenya. The port is a hub for relief agency operations, which facilitate quick, regional relief needed due to civil strife or famine.
Jaffer says others, who are part of the supply chain, have also benefited.
“In the case of millers and commodity traders, GBHL facilitates growth in their trade through provision of efficient services. Millers can now plan importation and receive consignments on a just-in-time basis. They no longer need to stock large quantities of grain as before.”
He adds that commodity traders can improve their outreach by stocking grain at GBHL silos. This allows them to promote ex-silo sales and eliminates lead times associated with sale of grain that is still aboard vessels en-route to the port. Adoption of ex-silo sales by commodity traders ensures quick supply of grain from the GBHL silos to buyers across the region.
Jaffer holds a diploma from John Hopkins University and qualifications from the College of Business Administration in Baltimore.
He ran the show for close to 30 years, growing the scrappy timber business in the yard of his father’s inland depot into an empire that will last for generations to come. Three years ago, he relinquished the role of chief executive to his son, Mujtaba Jaffer, and took the less hectic chairmanship position.
Sitting in his fifth floor office at Grain House on a humid spring morning, he remains modest about his lucrative grain imports handling business.
“Three things are God-given in life: wealth, health and children.”
He says his road to success has been paved with hurdles, but he chose to do things the right way and legally. “There’s a wrong perception that if you do things right you won’t make money. You are going to make money; in fact, you make more money because you don’t have to watch your back. Business done legally and right is much better. I have never defrauded customs, income tax or any taxes knowingly.”
He says success comes from hard work, honesty and dedication.
“You must be focused on what you want to do and accomplish it against all odds,” he says.
For him, working hard means finishing work on time.
“You are useless after seven hours of working and if you work more than this you are wasting your time and the time of people around you,” says Jaffer.
Jaffer also runs a foundation that provides water, medical care, education and rehabilitation of drug users in the coastal region.
“God has given us time for a night’s sleep of eight hours, eight working hours and eight hours of recreation.”
That’s the principle he applies across his businesses. He says a business is as good as its employees and to perform optimally they have to be motivated through better remuneration and making them part of the organization.
“You pay peanuts, you get monkeys,” he says.
Through the business, Jaffer has learned one key lesson: never trust a friend in business. He recalls how he was bitten this way. Being a religious man, he traveled to Mecca for the annual Hajj in 1974, and took a tour of pilgrimage sites in Iran, Iraq, India and Pakistan. Before he left Kenya, he gave his friend and partner in business power of attorney.
“When I came back, my partner had taken over everything. I lost all my investments. It was devastating,” he recalls.
He had to sell off four of his five cars to start all over again—and that has made Jaffer an extremely cautious man when it comes to choosing business partners.
But he adds: “I don’t believe in crying; I believe in positivity—negativity does not pay.”

How To Turn Pocket Change  Into Millions

Out-of-home advertising, such as billboards, is big business worldwide and is growing each day. The figure sits at $26.4 billion—an increase of 8.3%—in 2011 alone. Pinto saw a gap in the market when he watched thousands of unbranded delivery trucks sitting in traffic: why not use their perfectly unmarked platforms as a moving billboard?
Most trucks have Global Positioning Systems (GPS) that track their routes and location, which is the perfect tool for targeting local and national consumers.
“We have GPS units in all our advertising trucks so we know where they are at any time. Every month we produce an operational report that provides details of all the travel times of the advertisement on the truck.”
Pinto said that the advantage of this medium is that companies can choose which areas they wish to target such as the East Rand specifically or a road such as the M1 between Johannesburg and Pretoria or the whole city. Advertisers can choose the area they want to target and later move the same signage to another area, which allows them to monitor any change in consumer behavior. He points out that South African retailer Woolworths has taken advantage of their national distribution to brand themselves.
In South Africa, billboards dominate the outdoor advertising landscape. Primedia Outdoor, a leading South African media group, owns 15,000 advertising panels across the country and claims that motorists and commuters spend around 30-45 minutes daily, in weekday traffic and weekly peak hour traffic volume is as high as 277,726 commuters. This is a large market.
Pinto researched the outdoor advertising market in countries such as the United States and the United Kingdom and discovered a gap for the African advertising landscape.
Securing the rights to prime spots for billboard advertising is expensive. But trucks on the road are already using the routes and he believes that commuters will be drawn to an eye-catching billboard on the move.
“We have a large, varied fleet available, so whether the customer needs a print space of six meters wide or 15 meters wide we have three different size options for them to choose from,” he says.
“They are billboards without a fixed steel infrastructure and are very cost effective at about a third of the traditional cost of fixed billboard advertising,” says Pinto.
While street pole advertising can also be effective, Pinto said that it is becoming another piece of “street furniture” that is severely cluttered.
The concept doesn’t add to a carbon footprint as the trucks he uses are already on the road for commercial carriers.
“Given that trucks are already on the move, one may as well make use of them. They go everywhere,” he says.
He lists the advantages of truck-side advertising after conducting market research:
<ul>
<li>85% more reach and 20% more frequency than conventional media</li>
<li>91% of people report that they notice fleet branding</li>
<li>52% successfully record the adverts</li>
</ul>
Although the business is just getting off the ground—it was launched on September 1—advertising agencies have expressed interest and he has signed a number of business agreements with them and trucking logistics companies. For the trucking companies, it is another source of revenue and means little down time as the boards can be fitted within a few hours.
The key to managing the operation is the ease of construction and safety features. It takes two to three hours to fit the trucks with the tension frame that holds the signage.
“A truck can travel at 160 kilometers an hour with an 18 meter panel and it won’t come off,” says Pinto.
These can be fitted over the weekend when most trucks are not being used. It takes only an hour to switch one panel for another on a fitted truck. The panels are manufactured by local printers. The advantage is that the panels can be removed and displayed at different locations or routes depending on the needs of the campaign. The client also retains ownership of the panel as opposed to painted signs on trucks.
As for the threat from social media platforms, Pinto believes that the way to go is to integrate OOM advertising with social media platforms such as Facebook and Twitter to enhance the product offering rather than seeing them as competitors.
“We plan to work with those platforms. Their success is our success.”
He has agreements with companies in Johannesburg and Cape Town but says that within a year he will be offering the service in three cities using at least 100 trucks. Pinto admits that starting a new venture is difficult.
“Starting anything is really difficult but if you believe in your product, and you can get another 100 people to also believe in it, then success will come.”
Although born in Johannesburg of Portuguese decent, Pinto speaks with an American accent and has visited 22 countries after studying business management and philosophy at the University of Pretoria.
“I guess I just watched too much TV when I was young,” he says.
He is a firm believer in global entrepreneur Richard Branson and is an enthusiastic member of his Centre of Entrepreneurship in Johannesburg. He quotes Branson as saying: “Do good, have fun and the money will come.”

Tag: Trucks

FORBES AFRICA SOCIAL MEDIA

The Near And Dear Dream

How To Turn Pocket Change Into Millions

Moving The Message