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Africa money kenya seeks olympics dividend with investment drive

´╗┐Kenyan athletes competing at the 2012 Olympic Games may be forgiven for thinking they are in London to win medals and achieve sporting glory, but the government of east Africa's largest economy has other ideas. Joining, and possibly outnumbering, the 50 or so medal hopefuls in London will be Kenya's president Mwai Kibaki and a delegation of government officials, heads of state-owned enterprises and bankers, who will be attending a neatly timed investment summit and diaspora conference. In between the 10,000m races and the marathon - events Kenya is expected to win - pitches will be made and deals done and the hope is that a record medal haul for the country and the headlines it brings will help boost investment."Anytime that Kenya wins a medal you find that Kenya's name is mentioned everywhere," Ephraim Ngare, Kenya's High Commissioner to the UK told Reuters. "If you have your national anthem played time and again that's very good for the country. We will take full advantage of that opportunity."Kenya won 14 medals, including six golds, at the 2008 Beijing Olympics, its best ever showing. ENERGY FRONTIER Seasoned frontier market investors are no strangers to Kenya, whose capital markets are advanced by regional standards. An added draw is its potential as a crude oil producer after Tullow Oil announced discoveries earlier this year.

But the Olympics initiative is also aimed at potential investors who may only associate Kenya with its runners, safaris to see big animals and mobile money. Besides the investment summit, which will take place on July 31, Kenya has also taken over a three-storey building next to the Olympic Park in east London, called "Kenya House." It will showcase investment opportunities in Kenya, Ngare said, and host meetings between government officials and companies looking to invest in oil exploration or infrastructure projects. There will also be a diaspora conference on Saturday aimed at the estimated 130,000 Kenyans living in Britain.

GRABBING WORLD'S ATTENTION Taking advantage of sporting events to market a product or a nation is nothing new and Kenya is not the only country planning to woo potential investors during the Olympics. Nigeria will also be holding a 3-day conference in London next week, featuring its president, finance minister and billionaire industrialist Aliko Dangote, among others."When the world's attention is focusing on something and you're able to associate with that you can get part of the goodwill," said Terhas Berhe, managing director of Brand Communications, a brand agency working with the organisers of the Nigeria conference.

Whether sporting success translates into increased investment flows is difficult to measure, but South Africa's drama-free staging of the 2010 football World Cup did help to change investors' perceptions of the country. There is also evidence that sport can help to grow a product's market share. One of Berhe's clients, Ecobank, relaunched a money transfer product during the World Cup, running TV and commercials at half-time during matches. Within a year, revenue for the service grew eight-fold."That's what sports deliver for you," Berhe said. "They deliver an audience at their most engaged."Multiple victories for Kenya at the Olympics will not necessarily move a hard-nosed investor, but having the country's name up in lights can't hurt, said Sven Richter, head of frontier markets at Renaissance Asset Managers."It's quite smart to capitalise on it," he said. Daniel Broby, deputy chief executive at frontier markets boutique Silk Invest, sees parallels between Kenya's runners, many of whom come from the Rift Valley and train barefoot, and a country that has been able to succeed with the resources it has."Their economy is emerging. It's an economy that doesn't have much but they're in it for the long run," he said. "Clearly, there's an analogy to be made there."

Africa money memo to s africa economic woes begin at home

´╗┐* Marikana mine violence may lead to useful introspection* Government routinely blames euro crisis for economic ills* Social tensions join high energy, labour costs as worriesBy Stella MapenzauswaJOHANNESBURG, Aug 24 South African policy makers from President Jacob Zuma down routinely reach for external factors such as the euro zone crisis to explain why Africa's biggest economy cannot grow faster or create more jobs. But the bloody confrontation at the Marikana platinum mine last week, which killed 44 people and uncovered deep undercurrents of labour and social unrest, is forcing them to look closer to home for the sources of the nation's problems. What is being called the "Marikana massacre" - which saw striking miners armed with spears and machetes hack mine guards and police officers to death, followed by strikers being cut down by a hail of police gunfire - has done more than trigger a wave of anguished soul-searching among South Africans who thought such scenes were part of the apartheid past. It has also revealed another uncomfortable truth, grudgingly acknowledged by the central bank and finance ministry and cited by local businessmen: that domestic factors such as soaring power tariffs and high labour costs, combined with political uncertainty and simmering social resentment are as much, if not more, of a drag on business activity as the turmoil in Europe."This latest round of violence says to people - wait a minute, there's way too much uncertainty in South Africa," said analyst Mike Schussler, a noted local commentator from the private research company"I'm sure other countries also have violent strikes, but I don't know of many cases where policemen are hacked to death," he added, reflecting the blot Marikana has put on a post-apartheid South Africa which likes to project itself as distant and distinct from the poverty and suffering seen in Africa. With Europe absorbing about 25 percent of South African exports, no one is denying that the euro zone meltdown has taken a toll on the most powerful economy in Africa. With most sectors of the economy stuttering, Finance Minister Pravin Gordhan has warned growth this year will be less than the 2.7 percent projected in February. The World Bank has cut its own estimate to 2.5 percent from 3.1 percent.

In her latest monetary policy statement, Reserve Bank Governor Gill Marcus reiterates her by now familiar argument that "negative spillover effects" from the euro zone crisis on the South African economy are likely to persist and intensify. But Marcus and Gordhan acknowledge the economy is riddled with structural constraints that keep growth below potential. Domestic operating headaches cited by South African businesses include electricity tariffs that have soared by an average 25 percent per annum since 2009, and unsustainably high labour costs. South Africa's union-friendly labour legislation enforces a mininum monthly wage of about $230-$240, much higher than $55 and $70 in neighbours Zimbabwe and Mozambique."We're losing our competitiveness because our commodities are also produced in South America and elsewhere in Africa where the labour costs are a fraction of what they are here," Riel Malan, managing director of fruit and vegetable exporter Unlimited Group, told Reuters.

LOW MARKS FOR BUSINESS CONDITIONS Malan said his company saw a sharp euro zone-related fall in demand for citrus fruits and baby vegetables from nations such as Spain and Portugal, who are grappling with debt problems that have raised the spectre of a global recession on the heels of the last one in 2008/09. The previous downturn slashed Unlimited's exports by about 40 percent and it has not completely recouped the lost trade, despite cultivating new markets to augment sales to Germany, Britain and Switzerland, Malan said."The one good thing that came out of the recession is that we have become far more diversified in our marketing mix and are not as dependent on the European market as we used to be."By contrast, some of the domestic headwinds look a lot more difficult to reverse. A recent survey by the South African Chamber of Industry and Commence shows local businesses are downbeat in their assessment of the operating climate in terms of security, infrastructure and the labour market.

Participants rated the labour environment and ease of doing business in the country at a meagre 2.8 out of 10 for each of these categories while security and infrastructure also scored poorly at 3.4 and 3.9 respectively. But even if Europe were out of the equation, growth would barely reach 3.5 percent, the World Bank says, citing power bottlenecks as state utility Eskom's ageing infrastructure fails to generate enough to meet rising demand. By contrast, growth in Nigeria is seen at 6.5 percent this year while East African giant Kenya expects 5.2 percent expansion. A POTENTIAL SOCIAL TINDERBOX? The Marikana mine carnage also shines a harsh spotlight on South Africa's glaring income disparities and social inequalities, which fly in the face of the ruling African National Congress' promise to create a "better life for all" after the end of apartheid in 1994. Amid a growing perception that a much-debated government "black empowerment" drive has benefited only an elite and ANC-connected few, an increasingly restive black population has stepped up often violent protests against enduring poverty and poor basic services."The global headwinds have put into even sharper focus the demanding policy challenges of high inequality and unemployment in the country," said World Bank country director for South Africa Asad Alam. This is tweaking the nerves of local and foreign investors already jumpy about calls from radical factions of the ANC to nationalise mines and confiscate white-owned land. The country's Gini co-efficient, a measure of income inequality, is one of the highest in the world at 0.69, Planning Minister Trevor Manuel conceded last week, when he unveiled a growth plan whose ambitious targets include creating 11 million jobs over two decades and more than doubling per capita income. This was just days before the Marikana bloodshed added dark clouds of potentially spreading labour unrest and violence to the already glowering economic outlook.