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Africa money franchises target africa with fashion, food and fitness


From fried chicken to ice cream and body-building supplements, international franchises are making inroads into Africa, tapping into consumers' hunger for their brands as developed markets stagnate. Hilton Hotels, owned by asset manager Blackstone, Yum Brands' Kentucky Fried Chicken and the fashion retailer Mango are some of the companies driving the growth of franchising in Africa. Others in the fast food, automotive and education sectors are also expanding into the continent. Franchising creates opportunities for African entrepreneurs and provides jobs in the formal sector, while for brands it is a chance to enter a new market at a lower cost and with a business partner who is familiar with the terrain."It's an inexpensive means to expand using the money of others," said Kendal Tyre, editor of a new book on franchising in Africa. "You have a franchisee who is coming in and paying a franchise fee to have access to your system that you've developed over some period of time."However, weak judicial systems, corruption and poor infrastructure are still deterrents for potential franchisors. The repatriation of profits from some African countries can also be difficult and there are concerns about the protection of intellectual property. Until recently, franchising in Africa had only taken hold in the continent's more advanced economies, such as South Africa and Egypt. South Africa's 300 billion rand ($36 billion) franchise sector accounts for 12 percent of GDP, according to Standard Bank. The industry employs around 500,000 people directly. Nearly 700 brands operate franchises, including KFC and McDonald's, and home-grown businesses such as Nando's, a chicken restaurant. But as Western brands face slowing growth at home they are paying closer attention to the rest of Africa, encouraged by legal and economic reforms and governments keen to spur the growth of small businesses, said Tyre, who edited Franchising in Africa: Legal and Business Considerations.

Countries such as Nigeria, Kenya and Zimbabwe have established franchise associations, which can provide a code of ethics and standards and also assist in disputes. The African Development Bank (AfDB) is also helping Senegal, Tanzania and Ethiopia set up their own associations. As more Africans enter the middle class, franchisors also hope to benefit from pent-up demand for their products. By 2020, Africa's consumer spending will amount to $1.4 trillion and 128 million households on the continent will have discretionary income, according to McKinsey."There's a growing middle class that is really eager for a lot of goods and services that aren't currently available," said Tyre. "And it's not simply fast food. It's automotive, beauty, clothing stores, professional services, childcare."

NIGERIAN ALLURE Franchising in Nigeria, whose 160 million people have an almost insatiable desire for imported goods, is still in its infancy but firms see it as too big to ignore, said Anayo Agu, a commercial specialist at the U.S. consulate in Lagos."In the last two years we've noticed tremendous interest in Nigeria," he said. "If you can access Nigeria you actually have the whole of Africa to tap into."KFC, which entered Nigeria in 2009, is the most well-known international franchise. Spanish fashion retailer Mango also has three stores in the country, adding to its five in South Africa.

Two major fast food retailers are due to set up franchises before the end of the year, said Agu, declining to name them. He added that an ice cream retailer was also looking to move in. Other U.S. firms that have signed deals include Crestcom International, which provides management training, Precision Tune Auto Care and IN2IT, a nutrition and fitness franchise which offers kickboxing and pilates classes, along with muscle building pills and protein shakes. Agu believes franchising may be the best way of limiting Nigeria's huge informal sector as it gives entrepreneurs a template for running a business."The biggest problem is getting people to understand that the only way you can run a business and grow it is if it is system-driven," he said. "Once you have a system like that you can't avoid tax. You must play by the rules."Many countries have made progress in the areas of intellectual property protection and repatriation of profits, but franchisors often find it difficult to seek legal redress for problems because of inefficient legal systems, according to the AfDB, which is planning its first conference on franchising in Africa next year. Perhaps the biggest sign of progress would be the proliferation of McDonald's restaurants throughout Africa. It is only in a handful of countries, like South Africa, Mauritius and Egypt, suggesting others do not meet its stringent rules and standards."It gives you a good indication of whether or not there's something important missing," said Robert Zegers, chief investment officer at the AfDB.

Albanian government to pay debts, vat to business pm


* Albanian PM says to pay debts to private sector* Cycle of debt has created a financial deadlockTIRANA, Sept 19 Albania's government will pay debts and un-reimbursed VAT totalling 400 million dollars to the private sector to break a deadlock hurting the economy, new Prime Minister Edi Rama said on Thursday. Both the World Bank and the International Monetary Fund have advised the previous government to pay the money because it was hurting businesses and linked it to rising bad loans."We cannot continue to tolerate the deadlock created by the debt to the private sector," Rama told a conference of the Central Bank of Albania and Oxford University. "We are working to re-pay this debt as soon as possible."

He said the debt had pinned down the economy, choked businesses and practically paralysed to a considerable degree the power of banks because of the whole chain of debt."We cannot ask the banks to be more active if we do not re-pay the debt and we shall repay it at any cost," Rama said.

Lending to the economy increased by just 0.9 percent in the second quarter of this year compared to the same period of 2012. A weak economy and perception of insecurity by businesses is holding back demand for credits in addition to more stringent conditions by banks. Albania's gross domestic product grew 1.7 percent last year. However, this marked a slowdown in rates of annual growth of 6 percent over a decade until 2009 when the recession in neighbours Italy and Greece hurt one of Europe's poorest states.

Rama, whose government was installed on Sunday, did not say where he would find the money to make the payments, which will help businesses to re-invest and repay their loans. Albania's public debt at the end of the first quarter of this year stood at 63.3 percent of GDP, exceeding a maximum 60 percent recommended by the International Monetary Fund. The budget deficit for the first eight months of 2013 was 54 billion leks

Bank of tokyo mitsubishi ufj opens islamic finance business in dubai


Oct 29 Japan's Bank of Tokyo-Mitsubishi UFJ (BTMU) has launched its Islamic finance business in Dubai, to focus on sharia-compliant loan syndications with later plans to offer project financing, a bank official said. Large Asian lenders from China to Japan are increasingly interested in Islamic finance as a way to tap large pools of liquidity in southeast Asia and the Gulf. In July, BTMU received approval from the Dubai Financial Services Authority to operate an Islamic window, which it plans to use as a hub for the wider region, said Shichito Tobari, BTMU's regional head for the Middle East. Islamic windows allow conventional banks to conduct Islamic finance by segregating assets from conventional interest-bearing funds, an approach popularised by Western banks such as HSBC and Standard Chartered.

BTMU will initially target commercial loans and trade finance equivalent services, leveraging its existing client base of government-related entities, Tobari said."Our intention is to extend finance on a case by case basis and participate in syndications," said Tobari, adding that BTMU could extend between $50 million to $200 million in financing as part of those transactions. A growing role in Islamic finance of Japanese lenders, traditional heavyweights in project financing, coincides with an industry push to facilitate large-scale infrastructure deals.

BTMU is the banking arm of Mitsubishi UFJ Financial Group, which has $2.4 trillion in assets."The next step is to expand the product line to ijara and istisna. The first half of 2016 is a target to deliver this."

Ijara is a common sharia-compliant sale and lease-back contract, while istisna is a manufacturing contract in which a price is paid for goods that are subsequently manufactured and delivered at a later date. In 2008, BTMU's Malaysia unit set up an in-house sharia board and since then has completed sharia-compliant financing deals in Malaysia, Singapore, Brunei and Indonesia. In September last year, BTMU became the first Japanese commercial bank to issue sukuk via its Malaysia unit.

Bnp paribas loses geneva trade finance head


GENEVA, March 29 French bank BNP Paribas' Geneva-based managing director and head of trade finance, Jacques-Olivier Thomann, has left his role, according to several banking sources. Thomann's decision to leave was a personal choice, and his successor will be revealed shortly, according to a BNP Paribas source, adding that he has accepted an advisory role at the bank's Paris headquarters.

BNP Paribas is one of the most active banks in trade finance, an industry that has come under increasing pressure from Basel regulations on capital adequacy and from a shortage of dollar liquidity among European banks.

Last week Thomann told Reuters the bank was planning to launch a fund this year to drum up new liquidity for trade finance.

Thomann is also president of industry body the Geneva Trading and Shipping Association.