Crowe Horwath
TM
African Footprint
Technical Newsletter of the Crowe Horwath International African firms
Issue 6 - January 2013
South Africa
Inside This Issue:
- The Rainbow Nation
South Africa - The Rainbow Nation
1
The Tax System and Incentives
for Foreign Investment in Algeria
3
Spotlight on the East African
Tourism Environment
4
The Indian General
Anti-Avoidance Rules (GAAR)
5
Horwath Zeller Karro
- Celebrates 75 years!
6
Transfer Pricing - Law and
Practice in Kenya
8
Sub-Saharan Africa “On the
Growth Path”
10
Case Study - Hotel Park Inn Dakar
11
South Africa is often referred to as “the rainbow
nation”, a term coined by Archbishop Desmond
Tutu and used by former President Nelson
Mandela to describe South Africa's multicultural, ethnic and religious diversity
and cosmopolitan mix of inhabitants.
South Africa's population totals approximately 52 million people. There are
11 official languages i.e. English, isiZulu, isiXhosa, Afrikaans, Sepedi,
Sesotho, Swazi, Ndebele, tshiVenda, Setswana and xiTsonga. English is the
preferred language of commerce.
South Africa has three capital cities: Cape Town, as the seat of Parliament, is
the legislative capital; Pretoria, as the seat of the President and Cabinet, is
the administrative capital; and Bloemfontein, as the seat of the Supreme
Court of Appeal, is the judicial capital.
The country is one of the founding members of the African Union (AU), and
has the largest economy of all the members. It is also a founding member of
the AU's New Partnership for Africa's Development (NEPAD). South Africa
has played a key role as a mediator in African conflicts over the last decade,
such as in Burundi, the Democratic Republic of Congo, the Comoros, and
Zimbabwe. After apartheid ended, South Africa was readmitted to the
Commonwealth of Nations. The country is a member of the Group of 77 and
chaired the organisation in 2006. South Africa is also a member of the
Southern African Development Community, South Atlantic Peace and
Cooperation Zone, Southern African Customs Union, Antarctic Treaty
System, World Trade Organization, International Monetary Fund, G20 and
G8+5. South African President Jacob Zuma and Chinese President Hu Jintao
upgraded bilateral ties between the two countries on 24 August 2010, when
they signed the Beijing Agreement. This elevated South Africa's earlier
Audit Tax Advisory
Feedback from our
Readers!
Should you wish a specific topic to
be covered in our next issue,
please let us know by emailing
your request to our editor
kent.karro@crowehorwath.co.za
Crowe Horwath
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"strategic partnership" with China to the higher level of "comprehensive strategic partnership" in both economic and
political affairs, including the strengthening of exchanges between their respective ruling parties and legislatures. In April
2011, South Africa formally joined the Brazil-Russia-India-China (BRICS) grouping of countries, identified by President
Zuma as the country's largest trading partners, and also the largest trading partners with Africa as a whole. Zuma
asserted that BRICS member countries would also work with each other through the UN, the Group of Twenty (G20) and
the India, Brazil, South Africa (IBSA) forum.
South Africa occupies the southernmost part of the African
continent, stretching latitudinally from 22° to 35° S and
longitudinally from 17° to 33° E.
Its surface area is 1 219 090 km2. The country has common
boundaries with Namibia, Botswana and Zimbabwe, while
Mozambique and Swaziland lie to the north-east. Completely
enclosed by South African territory in the south-east is the
mountain kingdom of Lesotho.
To the west, south and east, South Africa borders on the Atlantic
and Indian oceans. Isolated, some 1 920 km south-east of Cape
Town in the Atlantic, lie the Prince Edward and Marion islands,
annexed by South Africa in 1947.
The ocean surrounds South Africa on three sides and has a
coastline of about 3 000 km. Two major ocean currents sweep the
coastline – the warm south-flowing Mozambique-Agulhas and the cold Benguela.
The Mozambique-Agulhas skirts the east and south coasts as far as Cape Agulhas, while the Benguela current flows
northwards along the west coast as far as southern Angola.
The contrast in temperature between these two currents partly accounts for important differences in climate and
vegetation between the east and west coasts of South Africa.
It also accounts for the differences in marine life. The cold waters of the west coast are much richer in oxygen, nitrates,
phosphates and plankton than those of the east coast. Consequently, the South African fishing industry is centred on the
west coast.
South Africa has nine provinces, each with its own legislature, premier and executive councils. The provinces, with their
own distinctive landscapes, vegetation and climate, are: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo,
Mpumalanga, Northern Cape, North West and Western Cape.
South Africa's currency is the Rand (ZAR) and 100 cents equals one Rand. Value-added tax is levied at 14%.
The attractions of the country, which include the abundant natural resources, diverse flora and fauna, magnificent
scenery, teeming wildlife and relatively cheap cost structure has made it an increasingly popular tourist destination.
Cape Town boasts the magnificent Table Mountain, pristine beaches, breathtaking drives and famous winelands. Last
year Table Mountain was named a New 7 Wonder of Nature and Cape Town was named World Design Capital 2014.
Cape Town has been named second-best city in the world and best city in Africa by readers of US-based travel resource
Condé Nast Traveller.
There are 21 national parks in South Africa including the
world famous Kruger National Park.
The premier professional accountancy body is the South
African Institute of Chartered Accountants (SAICA) and the
profession is regulated by a statutory body known as the
Independent Regulatory Board for Auditors (IRBA).
Kent Karro
Horwath Zeller Karro
Cape Town, South Africa
Mark Watson
Horwath Leveton Boner
Johannesburg, South Africa
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The Tax System and Incentives for Foreign Investment in Algeria
Investment in Algeria is governed by the investment law. This law introduced new flexibilities to encourage more investors
using the revised tax on reinvested benefits with a fair corporate taxation: (tax on corporate profits (IBS): 25 % for
services and trade activities. Tax on professional activity (TAP): 2% on turnover, Value Added Tax (VAT): 7% and
Employer costs: 17% (making a total of 26%). There is also the possibility of exemption from tax on profits, reduction of
customs duties and payroll taxes.
This flexible and operational law is based on the following principles:
?
Non-discrimination between domestic and foreign investors,
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Entrepreneurial freedom: no prior authorization is required.
whether resident or not; person or entity;
Some of the guarantees for investors include:
?
The guarantee
of currency transfers: Foreign investors are guaranteed the repatriation of income derived from their
investment;
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Dispute resolution: the use of international arbitration is guaranteed by the investment law;
?
The provision of legal stabilization: the investor is protected against the risk involved in changes and the evolution of
the law.
The Algerian tax system continues to grow thanks to the economic and trade relations that Algeria has with several
countries. Algeria has therefore signed tax treaties with South Africa, Germany, Austria, Belgium, Bulgaria, Canada, South
Korea, Egypt, United Arab Emirates, Spain, France, Italy, Morocco, Portugal, Oman, Romania , Syria, Turkey, Tunisia and
Yemen. This results in the reduction of double taxation problems and the phenomena of fraud and the global tax evasion.
It has also signed trade agreements with the European Community, Greater Arab Free Trade Area (GAFTA) (the
countries of the Arab League: Tunisia, Morocco, Libya, Mauritania, Egypt, Jordan, Qatar, Bahrain, Djibouti, Sudan, Syria,
Somalia, Oman, Palestine, Kuwait, Lebanon, Yemen, Iraq, United Arab Emirates) and the Arab Maghreb Union (UMA)
(Libya, Tunisia, Morocco and Mauritania). These agreements have many implications: the exemption of customs duty for
several industrial products (raw or semi-finished products, agricultural and fishery products), elimination of non-fee
restrictions: quantitative restrictions, administrative and monetary and also the gradual reduction of custom duties and
similar taxes on Arab imported goods, and development of procedures and checklists adopted by the Council of the Arab
League.
Bilateral agreements signed with Tunisian Republic, the Hashemite Kingdom of Jordan Republic and the Islamic Republic
of Mauritania enable products, from the customs territory of each country, to be exchanged directly between them with the
benefit of preferential fee treatment, or an exemption from custom duties, according to the laws and regulations of foreign
trade in force in each country. Many products are exempt from fees such as those used to safeguard morality, public
order and safety, human health or protection of flora, the environment and national heritage, historical, archaeological and
artistic development.
There are specific laws within the scope of tax management which apply to particular sectors such as hydrocarbon,
energy and mines, and the incentive plan to encourage investment is regulated by the National Agency for Investment
Development (ANDI). The latter body was created in 1993 to manage the granting of benefits to investors. The mission of
ANDI is to welcome, inform and advise potential investors. It is responsible for the strategy adopted by the National
Investment Council (CNI). In consultation with relevant institutions (e.g. taxes and customs), it ensures the proper
implementation of incentives and advantages to encourage investment. On a practical level, various benefits reserved for
investment projects fall under three investment regimes. Each one of them offers a range of important services:
?
The general incentive for Routine Projects
?
Support for projects located in areas where development has been identified as a priority and requires a special
contribution from the State
?
The system of investment agreements for 'strategic' projects.
These benefits are the exemption from customs duties and recovery of VAT on imported goods for direct investment,
exemption from transfer tax for all real estate acquisitions, exemption from the tax on corporate profits (IBS) and the tax
on professional activity (TAP).
Tarek Hamza
Hamza & Associés
Algeria
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Spotlight on the East African Tourism Environment
Whilst the East African [Economic] Community (EAC) is comprised of
the Republics of Burundi, Kenya, Rwanda, Tanzania, and Uganda,
according to the World Tourism Organisation (UNWTO), the East Africa
sub-region includes, in addition to the aforementioned EAC member
countries Comoros, Djibouti, Eritrea, Ethiopia, Madagascar, Malawi,
Mauritius, Mozambique, Reunion, Seychelles, Somalia, Zambia, and
Zimbabwe.
In 1990, the sub-region recorded an estimated 2,9 million international
tourist arrivals. By 2010, the latest available data in respect of those
countries included in the sub-region, the number of international tourist
arrivals in the sub-region had increased to an estimated 11,7 million
corresponding to an annual growth rate of approximately 7 percent.
Over the past several years, international tourist arrivals to the subregion have increased consistently with the sub region's share of
international tourist arrivals in Africa growing from approximately
19 percent in 1990 to approximately 24 percent in 2010.
14.0
12.0
(millions)
10.0
Of the eighteen countries included in the East Africa sub-region,
international tourist arrivals in Kenya represent approximately twenty
percent of the total number of international arrivals in the sub-region.
The combined number of international tourist arrivals in Burundi,
Comoros, Djibouti, Eritrea, Madagascar, and Seychelles [2010 data was
not available for Somalia and Zimbabwe and these two countries have
therefore been excluded for this analysis], account for approximately six
percent of the overall international tourist arrivals recorded in the subregion in 2010.
6.0
4.0
2.0
0.0
With almost one million international tourist arrivals registered in 2010,
Mauritius is the second largest receiving country in the sub-region with a
market share of approximately 10 percent of the total number of
international arrivals recorded in the sub-region.
1990
1995
2000
2005
2010
10 000
(in thousands)
Tourist arrivals in Ethiopia and Mozambique have gained momentum in
recent years. Ethiopia has established itself as an aviation hub
supported by Ethiopia Air whereas mining-related activities have spurred
interest in and travel to Mozambique.
8.0
8 000
6 000
4 000
2 000
0
Burundi
Ethiopia
Mauritius
Seychelles
1995
2000
Comoros
Kenya
Mozambique
Tanzania
2005
Dijbouti
Madagascar
Reunion
Uganda
2010
Eritrea
Malawi
Rwanda
Zambia
Historically, the majority of international tourist arrivals in the East Africa sub-region travelled for leisure,
recreation and holiday purposes. Travel for business purposes is the second most popular reason offered by
international tourists for travel to the sub-region.
International tourism receipts recorded in the East Africa sub-region have grown from an estimated
US$2 068 million in 1995 to an estimated US$6 193 million in 2010 corresponding to an annual growth rate
of approximately 8 percent. Mauritius, Tanzania, and Kenya, in that order, registered the highest proportion of
international tourism receipts recorded in the sub-region in 2010.
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(USD - in millions)
Throughout 2012, international hotel management
companies confirmed twenty-seven hotel
$1 400
developments under construction in the sub-region
$1 200
representing an estimated 3 150 guest rooms.
$1 000
According to the international hotel management
$800
company announcements, approximately one third
$600
of the proposed new hotel developments are under
$400
construction in Kenya [approximately 771
$200
additional guest rooms]. Zimbabwe [4 hotels;
$0
approx. 1 008 guest rooms] and Ethiopia [3 hotels;
1995
2000
approx. 432 guest rooms] were also identified as
Burundi
Comoros
Ethiopia
Kenya
popular destinations for proposed new hotel
Mauritius
Mozambique
developments whereas the international
Seychelles
Tanzania
management company announcements identified
only one or two proposed hotel developments in
Djibouti, Comoros, Madagascar, Rwanda, Seychelles, Tanzania, Uganda, and Zambia.
2005
Dijbouti
Madagascar
Reunion
Uganda
2010
Eritrea
Malawi
Rwanda
Zambia
In the following edition of the African Footprint we will share insights into the tourism environment in the
Central Africa sub-region.
Michelè De Witt
Horwath HTL
Cape Town
South Africa
The Indian General Anti-Avoidance Rules (GAAR)
Internationally, tax avoidance has been recognized as an area of concern and several countries have
expressed concern over both tax evasion and tax avoidance.
The Indian General Anti-Avoidance Rules (GAAR) legislation, first mooted in 2009, codified in 2012 and
intended to be effective from 2013, are now proposed to be applicable from 2015.
In a bid to lure foreign investors back into the Indian market, government has deferred the implementation of
controversial tax-avoidance rules General Anti-Avoidance Rules (GAAR) for two years.
While Foreign Institutional Investments (FIIs) and private equity players are unlikely to be affected, foreign
direct investment (FDI) may continue to face scrutiny, which is a cause for concern for offshore centres.
According to the Mauritian Minister of Foreign Affairs Minister,
''There is definite interest in the opportunity for India to utilise Mauritius as a gateway for channeling
investments into Africa. Mauritius is already a location of choice to establish private equity and other
investment structures to direct capital into African markets. The competitive advantage of Mauritius rests on the
quality of financial services, the membership in African regional economic communities such as the Southern
African Development Community and the Common Market for Eastern and Southern Africa (which provide a
combined market of about 600 million people on a duty- and quota-free basis) and the availability of tax treaties
and investment-protection agreements with a number of African countries.
Suresh Sewraz
Crowe Horwath (Mur) Co
Mauritius
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Horwath Zeller Karro, Cape Town celebrates 75 years!
75
1937 Celebrating 75 Years of
2012 Exceptional Client Service
Isaac Karro never worked on Wednesday afternoons, instead, Isaac Karro was to be found playing sport.
Isaac Karro didn't retire when he turned eighty, instead, Isaac Karro came into the office regularly.
Isaac Karro never stopped travelling, instead, Isaac Karro travelled the world, picking up inspiration wherever
he went.
Isaac Karro was the kind of man who lived his philosophy being that of a life and work balance. Isaac Karro
was the founder of Horwath Zeller Karro (HZK) and his passion for life and work has been passed down to us
and the way we work with our clients. The quality as always remains in the detail.
It all began in 1937 when the entrepreneurial spirit of Isaac Karro saw the establishment of Isaac Karro &
Company.
He was involved from the inception of the firm in many successful business start ups. Over the years with the
trusted advice and service excellence provided by the firm, these businesses have grown and developed into
multi-generational family owned businesses.
Fast forward to 2012 and Horwath Zeller Karro continues to provide a personal hands-on brand of service
delivery, while driving business solutions through proactive and insightful business advice. Today we continue
to carry the legacy of strategic mergers in our name, giving due regard to the nine firm names that make up
our identity. We thrive on a culture where service excellence is delivered, no matter the size of the client. Our
entire team commits to our core values: integrity, transparency, teamwork, professional excellence and
personal growth.
Not only does this allow us to achieve Isaac Karro's legacy of a healthy work and life balance, but it also leads
to partners and staff being devoted to lifelong learning, resulting in dedicated, committed staff. Our global
association provides international training development and access to best practice and specialisations,
resulting in passionate professionals with life experience that offer key insights into growing our business as
well as that of our clients. Our passion doesn't end there. We are proud of our success at facilitating the
training of C.A. (S.A.)'s. Education is key to South Africa's continued development and the C.A.(S.A.) training
is crucial in developing the critical skills we require to grow our economy.
We are a Level 1 Black Economically Empowered (BEE) organisation and we are dedicated to the
transformation process.
Horwath Zeller Karro is the audit, tax and advisory firm Cape Town's businesses come to when they want
long-term results - and a firm who cares as much as they do about getting them!
We work with our clients to find value, develop insights and cement our clients' foundation towards
sustainable growth. We service a diversity of clients which range from professional entities, owner-managed
businesses, large corporations, non-governmental organisations (NGOs) and public benefit organisations. Our
service offering is broad which integrates our specialisations and relationships with fellow professionals
thereby enabling resourceful solutions appropriate to our clients businesses. The success of our client's
business IS our business. Our team consists of exceptionally bright, dedicated individuals who support the
specialisations of our Partners and enable us to serve as members of professional bodies.
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Our skills and expertise include – external audit, accounting, tax consulting and compliance, management
accounting, assurance and advisory, forensics, alternative dispute resolution and mediation, BEE, risk
consulting, exchange control and emigration, information technology and estate planning.
Our partners are currently serving and have served as:
?
President and past-president of the southern region of the South African Institute of Chartered Accountants
(SAICA);
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Chairman and past chairman of the national tax committee of the South African Institute of Chartered
Acccountants (SA);
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Chairman of an editorial panel which produces a monthly tax newsletter for SAICA known as Integritax;
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Member on the accounting disclosure panel of Independent Mediation and Arbitration Services SA;
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Member of SAICA and southern region committees - Accounting, Tax, Transformation, Marketing and Small
and Medium Practices;
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Board member of SAICA;
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Member of the Independent Regulatory Board of Auditors Inspections Committee;
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Member of the Independent Regulatory Board of Auditors Committee for Auditor Ethics;
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Member of the SAICA Joint Attorneys and Accountants, and Ethics Committees member;
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Accountant Member of the Western Cape Special Court for tax.
A key component of our philosophy is that of us “giving back” to the profession and community while remaining
relevant:
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We are active in contributing to community outreach initiatives that address broader societal needs.
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Each of our partners has a portfolio of community based organisations which is serviced on a pro bono
basis.
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A number of us serve on community and public benefit organisations in an honorary capacity.
We are a firm with a definitive online presence. We utilise social media to educate our clients/followers about
the local/international tax, audit and finance news, and we strive to provide solid financial advice via our
website and social media channels.
Kent Karro
Horwath Zeller Karro
Cape Town, South Africa
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Transfer Pricing - Law and Practice in Kenya
Introduction
Businesses in Kenya which transact with non-resident related parties are required by law to comply with
Transfer Pricing law. The compliance is monitored by the Kenya Revenue Authority (KRA). In the past three
years KRA has been aggressively pursuing compliance though the request for submission of Transfer Pricing
policies and documentation and transfer pricing audits.
KRA has set up a specialized unit that handles transfer pricing compliance. The aim of the transfer pricing law
is to ensure that Kenya does not lose taxable revenue to other countries. KRA aims not to lose revenue
through related party transactions. They also aim to raise additional revenue to meet high tax collection
targets set by the Government.
The law on transfer pricing was formally brought about in 2006 when the government published the Income
Tax (Transfer Pricing) Rules 2006 (herein 'the Rules'). However, the requirement that cross-border related
party transactions be at arm's length has always existed under the Kenyan Income Tax Act.
Legal Requirements
Three documents direct transfer pricing law in Kenya: the Income Tax Act, the Transfer Pricing Rules and the
OECD Guidelines. There are also court rulings that guide the interpretation and implementation of transfer
pricing law.
Section 18 (3) of the Income Tax Act empowers KRA to adjust the pricing of transactions with non-resident
related parties if such transactions are not at arm's length. When such adjustments are made, additional tax
assessments may be raised. Section 18(8) of the Act empowers the Minister of Finance to issue guidelines for
the determination of the arm's length value of related party transactions with non-residents.
In 2006, the Minister of Finance used his powers under Section 18(8) to publish the Income Tax (Transfer
Pricing) Rules 2006 which came into effect on 1 July 2006. The Rules have elaborated on the requirements
for transfer pricing.
The Rules apply to transactions between local companies and their related non-resident parties. Such
relationship may be by common control, common ownership, related management, consanguinity (blood and
marriage) or affinity. They also apply to transactions between a permanent establishment and its head office.
The transactions that are required to adhere to the arm's length principle in line with the Rules include the
following:
Sale and purchase or lease of goods, tangible assets or inventory;
?
Provision or receipt of services;
?
Lending or borrowing of money or provision of other financial services like guarantees and letters of credit;
?
Transfer of intangibles such as patents, trademarks, brands or trade secrets; and
?
Other transactions that may have an impact on the profit or loss of a business;
?
The Rules provide for the records to be kept in regard to transfer pricing.
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In practice, the OECD Guidelines remain the bread and butter of the implementation of transfer pricing laws. The
High Court, in the case of Unilever vs. Kenya Revenue Authority, has previously ruled that the Guidelines are valid
in Kenya in the absence of comprehensive rules on transfer pricing .
The Transfer Pricing Rules provide for the methods of transfer pricing that may be adopted by companies to
include:
?
Comparable Uncontrolled Price (CUP);
?
Transactional Nett Margin Method (TNMM);
?
Cost Plus Method (CPLM);
?
Profit Split Method (PSM);
?
Resale Price Method (RPM) and
?
Any other method prescribed by the commissioner;
The Rules have not elaborated as to how the methods may be applied so reliance is put on the OECD
Guidelines.
Compliance
Enterprises with related party transactions are required to prepare and maintain a Transfer Pricing Policy.
KRA may request that such a policy be submitted to them. The documentation to be kept should include the
following:
?
Group structure;
?
Details of cross-border related party transactions;
?
The selection of a transfer pricing method and the reasons, assumptions and polices applied in
selecting that method;
?
The application of the selected methods, including the calculations made to determine the arm's
length price;
?
Books of account; and
?
Other relevant information.
Conclusion
Businesses in Kenya need to prepare elaborate Transfer Pricing Policy documents in line with the Transfer
Pricing Rules and the OECD Guidelines. Failure to comply with transfer pricing requirements may put an
enterprise at risk in case a revenue audit is conducted into their affairs.
Stephen Okoth
Horwath Erastus & Co
Nairobi
Kenya
Stephen Okoth - LLB, ACCA - Senior Tax Analyst
Horwath Erastus & Co, Nairobi, Kenya
Stephen has five years professional tax experience. He is a qualified
lawyer, trained at the University of Nairobi. He is a member of ACCA
Students' Association. He has experience in several sectors of the
economy including the banking, oil and gas, manufacturing, agriculture,
construction and engineering and financial services sectors.
His experience has covered tax compliance, tax consultancy, tax health
checks, resolution of tax matters with Kenya Revenue Authority (KRA),
managing KRA audits, transfer pricing, tax due diligence, transaction
advisory, tax refunds, tax planning and investor advisory.
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Sub-Saharan Africa “On the Growth Path”
Sub-Saharan African economies have enjoyed the second-fastest
growth rate in the world for the past decade, and the trend looks
set to continue, according to the Institute of International Finance (IIF).
The global association of financial institutions last week released its
first regional report on Sub-Saharan Africa, covering seven
countries - Cote d'Ivoire, Ghana, Kenya, Nigeria, South Africa,
Tanzania and Zambia - that together account for 65% of the
region's economy.
The release was timed to coincide with the IIF's inaugural Africa Financial Summit, which took place in Cape
Town in November 2012 and brought together more than 100 financial sector leaders from across the world to
deliberate on the progress and prospects for African economies and financial markets.
The seven countries surveyed have, the report states, achieved an average annual 4.7% rate of economic
growth since 2007, despite the global financial crisis of 2008-09. "Many countries on the African continent
have achieved great progress in stabilising their economies and consolidating their rates of growth," George
Abed, director of the IIF's Africa and Middle East department, said in a statement.
"What is remarkable about this outcome is that it has been achieved during a period of unprecedented global
financial turbulence. There are challenges ahead for Africa, but the trend of solid growth of the past decade
looks sustainable over the medium term."
Foreign direct investment
The region's strong economic performance, the report states, has been underpinned by more democratic
political processes and better macroeconomic management. At the same time, capital flows into Sub-Saharan
Africa have shifted from the public to the private sector over the past decade.
These have remained focused on foreign direct investment (FDI), primarily in oil, gas, mining and chemicals,
but more recently in the telecoms and retail sectors. Between 2000 and 2011, FDI in the seven countries
surveyed rose more than five-fold, from under US$3-billion to $15.5-billion.
Portfolio investments
However, attractive yields have also drawn in portfolio investors, especially in Ghana, Kenya, Nigeria and
South Africa. In 2011 for example, the report estimates that inward portfolio investments totalled around
$12.5-billion, more than half of which was directed towards South Africa.
"Capital accounts and markets have become more open and, together with better governance, this has
facilitated a rise in portfolio investment in the past few years," the report states. "The stock of portfolio
liabilities in the seven countries covered in the report rose from $21-billion in 2001 to $167-billion in 2010."
According to the report, foreign investors in the region have tended to focus more on bonds than equities in
the past few years, particularly in South Africa, due partly to the large yield differential between the country's
government bonds and US and European treasuries.
"Fixed income activity has in addition been particularly strong this year, as foreign funds positioned
themselves ahead of South Africa's inclusion in Citigroup's World Government Bond Index (WGBI), and
Nigeria's entry into the JP Morgan GBI-EM bond index."
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Challenges
Previewing the challenges facing Sub-Saharan Africa, Abed cautioned that the region's recent strong
performance had been helped by massive debt relief and a sustained commodity boom, but that "the future
global environment may not be so accommodating. The prospects for continued growth in Sub-Saharan Africa
remain contingent on greater economic diversification and on reducing dependence on commodity exports,"
Abed said. "Progress on political stability remains fragile, and this needs to be reinforced by building strong
institutions, cementing further the rule of law, and improving public accountability.”
Michelè De Witt
Horwath HTL
Cape Town
South Africa
Source: South Africa Info. published 12 November 2012
Case Study - Hotel Park Inn Dakar
This case study serves to demonstrate the overlapping business opportunities for Horwath HTL and Crowe
Horwath member firms on one hand, and to provide a broader understanding of the Horwath HTL business
and services on the other hand.
The Park Inn Dakar project is an (almost) perfect example of the one-stop-shop approach applied by the
Swiss Horwath HTL office. One of the non-managing partners was approached by a long-time client
requesting assistance with the idea of building a hotel in his home country Senegal. Horwath HTL offered and received the assignment for - performing the Feasibility Study and Concept Development of the project.
Unfortunately there is no Crowe Horwath member office in Dakar who could have assisted in the study;
however, the Liaison partner office was very helpful with data and local knowledge.
The study was able to prove the economic viability of the project. As a result, Horwath HTL was assigned with
the Search & Selection of the Hotel Operator. The project was tendered on a global scale, responses were
collected, offers evaluated, and recommendations given. Horwath HTL prepared a ranking of all interested
operating companies and their Heads of Terms. Subsequently, negotiations were conducted with the three
short-listed candidates.
A long story cut short, an agreement was finally reached with Rezidor who will operate the hotel under the
Park Inn brand. The investor incorporated a local company for the operation of the hotel and in order to sign
the Management Contract with Rezidor. Finally, Horwath HTL provided assistance in financing the project –
although, both these tasks could easily have been undertaken by a local Crowe Horwath member firm.
Horwath HTL's involvement will not stop there. Once the hotel opens its doors to welcome guests we will take
over the regular Performance Monitoring on behalf of the investor,
who is not hotel-savvy. In addition to looking at the performance
data we will attend meetings on site on a regular basis, conduct
quality checks, and provide owner representation and generally
understandable reports to the owner.
We strongly feel that it's to the advantage of all parties
involved – Crowe Horwath, Horwath HTL and the client – if we
can offer one-stop-shop solutions and co-operate closely in
order to identify potential business opportunities.
Michaela Wehrle
Horwath HTL
Zug, Switzerland
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Crowe Horwath
Our African Network
Contact Information
Algeria
Hamza & Associés
Tele: +213 20 508188
Email: h.tarek@hamza-dz.com
Angola
Horwath Angola - Auditores e Consultores, Lda
Tele: +244 925 289207
Email: carlos.florencio@crowehorwath.ao
Cote d’Ivoire
Uniconseil
Tele: +225 08212520
Email: soraya_toure@yahoo.fr
Egypt
Crowe Dr A M Hegazy & Co
Tele: +202 376 00516
Email: mahegaz@link.net
Ghana
SCG Audit
Tele: +233 21 251497
Email: george.katako@scg.com.gh
Kenya
Crowe Horwath EA
Tele: +254 20 2329542
Email: coutts.otolo@crowehorwathea.co.ke
Kenya
Erastus & Co
Tele: +254 20 3860513
Email: erastuscpa@kenyaweb.com
Madagascar
Cabinet Genevieve Rabenjamina
Tele: +261 202 221121
Email: cce@moov.mg
Mali
Inter Africaine d’Audit et d’Expertise (IAE-SARL)
Tele: +223 20 286675
Email: iaecpt@orangemali.net
TM
Mauritius
Crowe Horwath (Mur) Co
Tele: +230 208 8684
Email: contactus@crowehorwath.mu
Morocco
Horwath Maroc Audit
Tele: +212 37 77 46 70
Email: benkirane@horwath.ma
Nigeria
Horwath Dafinone
Tele: +234 1 545 1863
Email: duvie@dafinone.com
Reunion
Fiduciaire des Mascareignes
Tele: +262 2 6290 8900
Email: a.lala@fdm.re
Senegal
FIDECA
Tele: +221 33 821 6387
Email: fideca@arc.sn
South Africa
- Cape Town
Horwath Zeller Karro
Tele: +27 21 481 7000
Email: contactus@crowehorwath.co.za
Horwath HTL (South Africa)
Tele: +27 21 527 2100
Email: capetown@horwathhtl.co.za
- Johannesburg
Horwath Leveton Boner
Tele: +27 11 217 8000
Email: info@crowehorwath.co.za
Tanzania
Horwath Tanzania
Tele: +255 22 2115251
Email: chris.msuya@crowehorwath.co.tz
Tunisia
Horwath ACF
Tele: +216 71 236000
Email: noureddine.benarbia@crowehorwath.com.tn
Crowe Horwath EA, Crowe Horwath (Mur) Co, Crowe Dr A M Hegazy & Co, Horwath Zeller Karro, SCG Audit, Horwath Leveton Boner, Horwath Maroc Audit, Horwath Dafinone, FIDECA, Hamza & Associés, Horwath Angola, Uniconseil, Cabinet
Genevieve Rabenjamina, Inter Africaine d’Audit et d’Expertise (IAE-SARL), Horwath ACF, Fiduciaire des Mascareignes, Erastus & Co and Horwath Tanzania are separate and independent members of Crowe Horwath International, a Swiss verein
(Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity and is not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any
and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member.
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