News type: Africa Bulletin

Africa

Africa to Get USD 30 Billion Over the Next 3 Years
During the eighth Tokyo International Conference on African Development (TICAD8), Japanese Prime Minister, Fumio Kishida, said that his country is pledging USD 30 billion of investment in Africa over the next three years. Speaking virtually at the TICAD8 summit, Kishida said that Japan’s plan to strengthen economic ties with African countries comes amid “complex” geopolitical conditions that are causing significant disruptions and price shocks that are especially hard-felt in Africa. “Japan will invest both public and private funds worth USD 30 billion over the next three years” across the continent, Kishida said. Tokyo’s investment pledge includes up to “USD 1 billion in a new special quota to be established by Japan to promote debt consolidation reforms”  he added. In addition, Japan has committed to finance up to USD 5 billion to support the African Development Bank’s operations across the continent. Japan would also allocate approximately USD 300 million of said funds to co-finance, with the African Development Bank, food production projects in a bid to increase food production in the continent.

Source: Morocco World News

Africa

AfCFTA to Supervise First Trading Activity
Without any unexpected hitches, the Ghana National Coordinating Office (NCO) of the African Continental Free Trade Area (AfCFTA) will from October this year pilot a guided trading activity with six countries within the bloc, under supervision of the AfCFTA Secretariat, coordinator of the NCO, Dr Fareed Arthur, has confirmed. This pilot trade, according to Dr Arthur, is expected to test documentation and processes of the AfCFTA and open the gate for other countries to start trading in earnest. “Ghana will pilot a commercially meaningful trade from next month with Kenya, Mauritius, Tanzania, Rwanda, Cameroon and Egypt for the first time, using the AfCFTA documentation. This will help answer the question that has been on the minds of many people: when are we going to start trading?” he stated. Dr Arthur was speaking at the three-day 7th African Tax Research Network (ATRN) Annual Congress in Accra on the theme The Tax and Revenue Implications of the AfCFTA and said though the trade agreement seeks to boost intra-African trade by progressively removing tariff and non-tariff barriers, it also comes with certain challenges.

Source: The Business & Financial Times

East Africa

EAC Services Exports Hit USD 12.9 Billion
The East African Community (EAC) exported services worth USD 12.9 billion in 2019 against USD 933.6 billion worth of imports. The outbreak of COVID-19 and its resultant impact on trade, notwithstanding, trade in services has contributed immensely to the region’s recovery. This was revealed by the East African Business Council (EABC) executive director John Bosco Kalisa during a high-level business dinner. During the event, he briefed the business leaders in Arusha on the recently launched study on trade in services in the region. The Barometer on East African Trade in Services was intended to gauge the growth of the service sector in the EAC economies. It was developed by the EABC, an apex body of private sector associations in the region based here, with the support of German aid agency, GIZ. Trade in services manifest in the sale and delivery of an intangible product called a service between a producer and consumer. Services account for 54 percent of Africa’s Gross Domestic Product (GDP) and slightly below half of the GDP in East Africa.

Source: The Citizen

Algeria

Algeria Expects its Foreign Trade Surplus to Exceed USD 17 Billion
Algeria expects its foreign trade surplus to exceed USD 17 billion by the end of the year and for exports of non-oil products to reach USD 7 billion. Prime Minister Ayman Ben Abdel Rahman said yesterday that “the trade balance obtained a surplus estimated at USD 14 billion at the end of August, and we expect it to exceed USD 17 billion by the end of 2022,” according to the official news agency.

He explained that “the currently adopted foreign trade policy aims to control and streamline imports, not curb them, as some malicious parties are trying to claim.” He pointed out that the value of non-oil exports amounted to USD 4.4 billion at the end of August, adding that he expects them to reach USD 7 billion by the end of the year. In 2021, Algeria’s non-oil exports reached USD 5 billion, the highest rate in the country’s history since its independence from France in 1962.

Source: Middle East Monitor

Ethiopia

Ethiopia Certified with 7 Trillion Cubic Feet of Gas
An American-based petroleum property analysis and consulting firm, Netherland, Swell & Associates, verified the existence of 7 trillion cubic feet of natural gas in the Ogaden area of Ethiopia. The firm conducted a four-month study to issue the finding and hand over the first gas reserves certificate to the Ministry of Mines and Petroleum. According to Takele Uma, the Minister of Mines and Petroleum, efforts are underway to implement the finding. He stated that the study was an assurance of the availability and commerciality of natural gas and crude oil in Ethiopia. Exploration in the Ogaden Basin which covers an area of 350 thousand square kilometres began in the 1920s.

The Calub gas field in the Ogaden region was discovered in 1973 which made it one of the earliest finds in the area. Two recent discoveries were also made in Dohar and El Kuran, areas in the Ogaden Basin, in addition to the Netherland, Swell & Associates’ finding. The El Kuran discovery was made by a UK company called New Age Mining while Poly-GCL, a Chinese company, made the discovery in Dohar. The petroleum reserve at Dohar which is located between Calub and Hilala is estimated at 3 TCF. Ethiopia announced in 2019 that it would build a 767 km natural gas pipeline from Calub and Hilala to the port of Djibouti. The construction of the pipeline is expected to begin in the near future.

Source: CNBC Africa

Morocco

Morocco is Among Key African Markets for Fintech Growth
Morocco is on a list of 11 African countries with significant potential to become future fintech hubs, according to the American consultancy group Mckinsey & Company.  A document published by Mckinsey explained that they anticipate growth opportunities in fintech to be largely concentrated in 11 key markets in Africa.

The list includes Morocco, Cameroon, Côte d’Ivoire, Egypt, Ghana, Kenya, Nigeria, Senegal, South Africa, Tanzania, and Uganda. The 11 countries account for 70 percent of the continent’s Gross Domestic Product (GDP) and account for half of Africa’s population, the report pointed out. Among other arguments underlying the selection of the 11 countries is that close to 50 percent of Africa’s software developers, a key profession in the fintech enterprise, can be found in only five of the countries, including Morocco, South Africa, Nigeria, Kenya, and Egypt, the report noted.

Source: Morocco World News

Nigeria

Banks Attract USD 15.8 Billion Foreign Capital Flow in Five Years
From 2017 till the end of last year, Nigeria’s banking sector received a total of USD 15.83 billion in foreign capital, a telling reflection of the sector’s attraction to the international market. The figure represents 23 per cent of the total capital importation into the country in the five-year period. The analysis is, however, based on sectoral disintegration, implying that the amount cuts across both portfolio and direct investments. From data obtained from the National Bureau of Statistics (NBS), the country pooled USD 69.39 billion in both foreign portfolio and foreign direct investments (FDIs) in the period. Besides shares, banking was the most favoured sector by foreign investors, having secured almost one-fourth of the country’s foreign capital inflow. Foreign portfolio investment (FPI) is often considered as hot or fair-weathered money. Hence, it is considered a sustainable source of funding growth. Both FPI and FDI, however, are critical injections in determining the health of a country’s balance of payment position.

Source: The Guardian

Nigeria

Nigeria to Benefit from USD 12 Billion Fund
The United States of America, USA and Nigeria have agreed to work together to develop the Federal Government programme of using gas as a transitional fuel in the push to reduce carbon emission. With the agreement, Nigeria is expected to benefit from the USD 12 billion Emergency Programme for Adaptation and Resilience put in place by President Joe Biden to help countries to reduce the obvious impacts of the climate crisis.

Speaking to journalists after a meeting of delegations of both countries led by Nigeria’s Minister of State Petroleum Resources, Chief Timipre Sylva and US Envoy, Sen. John Kerry in Abuja, the US Government said it would also assist Nigeria in developing technologies for wind and solar energy. Sen. Kerry, US Special Envoy on Climate Change, also stated that his country would also provide technical support to Nigeria on its decarbonisation programme for its crude oil resources.

Source: The Punch

South Africa

African Development Bank Offers South Africa Financing Deal to Raise USD 41 billion
The African Development Bank has suggested a plan to South Africa that will help the nation use the USD 8.5 billion in climate financing pledged by some of the world’s richest nations to raise even more funds for its green transition inattentive. The AfDB has recommended that South Africa should park the funds in a special purpose vehicle, said the bank’s President Akinwumi Adesina. The SPV, which can seek a credit rating, can sell zero-coupon bonds to raise as much as USD 41 billion, Adesina said in an interview with Bloomberg.

The US, UK, Germany, France and European Union plan to provide USD 8.5 billion to South Africa to help the country cut its use of coal, which is used to generate more than 80 percent of its electricity. The world’s 13th-biggest producer of greenhouse gases will need to spend USD 250 billion over the next three decades to fund the closing down of coal-fired power plants, develop green energy sources and an expanded electricity grid, according to a study released in May.

Source: Business Tech

 

Reports

Bain & Company: Technology Report 2022
In the last decade, technology companies like Airbnb, Snowflake, Stripe, and Crowdstrike led a wave of disruption that reordered established industries and invented whole new ones. Along the way, they created astonishing value. In June, the number of private billion-dollar start-ups exceeded 1,100, according to data from CB Insights, a more than tripling in five years of these once-rare unicorns. As a group, they reached a value of roughly USD 4 trillion to USD 5 trillion before the recent market correction, according to CB Insights and Crunchbase. This explosion has been backed by a new wave of growth equity investors. While many traditional venture capitalists narrowed their focus to early-stage companies that have not yet achieved product market fit, the funding of a new class of investors pioneering a different model of investment grew significantly.

Click here to download the report.

World Investment Report
Global flows of foreign direct investment recovered to pre-pandemic levels last year, reaching USD 1.6 trillion. Cross-border deals and international project finance were particularly strong, encouraged by loose financing conditions and infrastructure stimulus. However, the recovery of greenfield investment in industry remains fragile, especially in developing countries. This fragile growth of real productive investment is likely to persist in 2022. The fallout of the war in Ukraine with the triple food, fuel and finance crises, along with the ongoing COVID-19 pandemic and climate disruption, are adding stresses,
particularly in developing countries.

Global growth estimates for the year are already down by a full percentage point. There is significant risk that the momentum for recovery in international investment will stall prematurely, hampering efforts to boost finance for sustainable development.

Click here to download the report.

Economic Development in Africa Report 2022
The diversification of African economies is the most viable means by which these countries can prosper in the global economy and address vulnerabilities and economic uncertainties. For Africa to realise the promise of the African Continental Free Trade Area, though, economic diversification and structural transformation must pass through strong headwinds. Africa has the highest concentration of exports, compared with other world regions, and the second lowest number of exported products after Oceania.

At the same time, trade in services on the continent is both low and heavily dominated by traditional services, whereas high knowledge-intensive services and technology-enabling services have the potential to boost innovation and drive diversification. In Economic Development in Africa Report 2022: Rethinking the Foundations of Export Diversification in Africa – The Catalytic Role of Business and Financial Services, policy-oriented actions are proposed to help Africa leverage trade in services to diversify economic activities into new and potentially transformative sectors.

Click here to download the report.

FinTechs are increasingly offering new value propositions and services in previously neglected sectors. As this push occurs, fintechs and aspiring founders are seeking specific legal guidance on how to navigate the various regulations (which usually have insufficient precedent for their application) that would enable their businesses to scale.

The Stories that Matter consists of the most significant stories across Africa that impact countries on a regional and a global level. Below are August’s most impactful stories across Africa.

Africa
Islamic Banking to Offer Alternative Financial Solutions in Africa
Africa is emerging for Islamic finance and a new destination for Islamic financial institutions, something that analysts say will open up a new avenue for foreign direct investment. AlHuda Centre of Islamic Banking and Economics (CIBE), CEO Muhammad Mughal was speaking at the inaugural ceremony of the African Islamic Banking and Takaful Summit saying that Tanzania’s Islamic banking and Takaful market is promising. He said that Islamic banking and finance are the ultimate financial solution due to its viability and sustainability. The system, he said, has multi-fold benefits which concentrate on balanced wealth distribution. He also shed light on the need for Islamic banking and financial services. “Several new Islamic financial institutions are ready to start their operations in the market. Various Islamic window operations are also going to start their operations for the development of the economy to strengthen the growth of the market and to uplift the living standards of the public in the region,” he said. According to him, a number of banks are also coming into the markets with stand-alone branches for Islamic banking operation. Source: The Citizen

Africa
IFC Provided a Record USD 9.4 Billion Financing in Africa in the 2022 Fiscal Year
The International Finance Corporation (IFC) provided record financing in Africa over the 2022 fiscal year, making USD 9.4 billion in investments between 1 July 2021 and 30 June 2022 across 36 countries, the largest ever annual commitment for the continent. The funding helped to develop regional pharmaceutical manufacturing, increase intra-Africa trade, expand access to climate financing and strengthen food security among many other pressing development needs. The investments include USD 3 billion in trade financing unlocking intra-Africa trade for thousands of small businesses, USD 2.1 billion supporting the continent’s green transition – from increasing access to climate finance to funding renewable energy projects – and USD 861.7 million that is supporting increased digital connectivity. The IFC also provided USD 603 million in agriculture financing, helping to strengthen food security during a turbulent global economic period. “While the effects of the COVID-19 crisis persist, new challenges are also looming, including from rising global inflation,” said Sérgio Pimenta, IFC vice president for Africa. Source: ESI Africa

Africa
China to Eliminate Customs Duties on Imports from African Countries
China’s Ministry of Finance has announced the elimination of customs duties for 98 percent of products imported from 16 developing countries, including Mozambique, from the start of September. According to a statement, the Customs Tariff Commission of the State Council has decided to “grant zero-tariff treatment on 98 percent of taxable items originating in 16 least-developed countries”. Most of the countries covered are located on the African continent. They include Togo, Eritrea, Central African Republic, Guinea, Rwanda, Sudan, Chad and Djibouti, where in 2017 China opened their first military base abroad. In Asia, the list includes Cambodia and Bangladesh, as well as Laos and Nepal, two countries with which China borders. The order, signed on 22 July, underlines that the ‘zero tariff’ statute covers 8,786 imported products. Effective from 1 September, the policy will help share market opportunities with those countries, push for common development, and promote the building of a community with a shared future for mankind, the statement said. Source: Club of Mozambique

East Africa
EAC, Equity Bank USD 13 Billion Deal to Promote Trade, Integration
Regional lender Equity Bank is seeking to piggyback on the protocols of the East African Community (EAC) to implement its ambitious Africa Resilience and Recovery Plan which targets small businesses in East Africa. The bank has signed a memorandum of understanding (MoU) with the EAC, on the sidelines of the 21st Ordinary Heads of State Summit, to help fast-track the plan. Equity Group CEO James Mwangi and EAC secretary general Peter Mathuki said the MoU is a vehicle for financial support and development financing using the infrastructure of the Common Market. It targets farmers, manufacturers, energy and social services providers and aims to stimulate intra-continental trade, something the bloc says is pursuing. Equity Bank is making available a part of its USD13-billion balance sheet for the region’s entrepreneurs while development financiers International Finance Corporation, African Development Bank and European lenders are to bring in more for lending. Mr Mwangi said at the signing ceremony in Arusha that the USD 2 billion is already available for borrowers. Of the money available for lending, food and agriculture will take 30 percent and manufacturing 15 percent. Source: The Standard

Algeria
Eni, Sonatrach Unveil Several Discoveries in Algeria Desert

Italian major Eni and Algerian state oil company Sonatrach have announced the discovery of significant oil and gas reserves in the Sif Fatima II concession, located in the Berkine North Basin in the Algerian desert. The Rhourde Oulad Djemaa Ouest-1 (RODW-1) exploration well – the third of five wells set to be drilled by Eni and Sonatrach in the concession – is part of a wider campaign aimed at accelerating upstream activities in the north African country to meet growing demand both domestically and in Europe. The well produced 1,300 barrels of oil per day (bpd) and two million standard cubic feet of associated gas per day during the production test. The proximity of the RODW-1 discovery to previous discoveries and existing facilities in the basin, including the Zemlet el Arbi, which was made by Eni and Sonatrach in March 2022, will enable Eni and Sonatrach to fast-track development whilst reducing associated expenses. Source: Energy, Capital & Power

Ghana
PPA Renegotiations Could Eventually Save Ghana more than USD 13 Billion
The government in Ghana is currently renegotiating some of its power purchase agreements (PPAs) and if successful, will save the country upwards of USD 13 billion. The government says the savings would accrue over the lifespan of the renegotiated agreements, the Minister of Finance, Ken Ofori-Atta, told parliament. The Minister of Finance was delivering the mid-year budget review recently and indicated that the affected projects were Karpower, Cenpower, Early Power, Twin City Energy (formerly Amandi), AKSA Energy and Cenit. Ofori-Atta said the renegotiations and the savings were some of the strategies adopted by the government to reduce costs and improve the energy situation of the country. “The raft of sanctions imposed on Russia are tightening supply conditions for energy products. In response, the government is closely monitoring the stock of products at all depots. The timely intervention of the Bank of Ghana, through the Special Forex Auction mechanism, is also expected to sustain the continuous supply of petroleum products in Ghana,” he said. Source: ESI Africa

Morocco
UNDP Allocates USD 1 Billion To African Startup Hubs
The Regional Bureau for Africa of the United Nations Development Program (UNDP) recently launched its Timbuktoo initiative that aims to boost African entrepreneurship and startup ecosystems for regional development. The USD 1 billion initiative was launched in Lagos, Nigeria on August 17, and will be funded by public and private capital over ten years. UNDP Africa noted earlier in a statement that the organisation is engaging with a network of private and public actors to establish eight Timbuktoo hubs in Casablanca, Cairo, Accra Nairobi, Cape Town, Lagos, Dakar, and Kigali. The hubs are set to become operational in 2023. Quoting the organisers, South African newspaper Business Day wrote that each hub is set to focus on a priority sector such as agritech, fintech, healthtech, tradetech, and tourism-related tech. Meanwhile, each hub is expected to host both a “venture builder” and a venture fund. Source: Morocco World News

Kenya/ Ethiopia
Ethiopia to Become Kenya Power’s Second Biggest Source of Electricity
Ethiopia will become Kenya’s second biggest source of hydropower from November under a deal by Kenya Power to buy 600 megawatts (MW) from East Africa’s most populous nation. This follows a recently-signed 27-year power purchase agreement, that will run until 2047 as Kenya turns towards cheaper sources of electricity. The new deal which is expected to edge out the expensive power from the national grid promises to increase the capacity charges – the money paid to thermal power generators when Kenya Power does not buy power from them. But the lower tariffs will help the state-owned utility further lower bills on households and businesses, helping ease the pain on the cost of living and boost Kenya’s attractiveness to manufacturers. “The agreed tariff is competitive and will see Kenyans enjoy power at a lower cost. [The] EEP will be the second largest power supplier to KPLC aside from the KenGen Hydros Eastern Cascade at 600 MW,” Kenya Power acting managing director Geoffrey Muli said. Source: Business Daily

Nigeria
Federal Government Woos Investors to Developing 42 Billion Barrels Bitumen Reserves
With a global market estimated at USD 110 billion, the Federal Government has called on investors to explore the development of the nation’s 42 billion barrels of bitumen reserves. Speaking at a virtual clarification session, organised by the Ministry of Mines and Steel Development in collaboration with PwC Nigeria, the Director-General of the Nigerian Geological Survey Agency, Dr. Abdulrasaq Garbar, who provided geoscientific data and other information to guide potential investors, said the country holds the sixth largest reserves of bitumen in the world. He said the mineral remained unexploited for years, thereby creating massive opportunity for domestic production of Bitumen in lieu of the country’s Bitumen importation. Source: The Guardian.

 

Reports

Financing for Sustainable Development Report 2022
Developing countries still have to regain lost ground from the COVID-19 pandemic. The pandemic has put more countries at risk of debt distress, constrained their fiscal space and hampered economic growth. The war in Ukraine has exacerbated all these challenges. In this context, the 2022 Financing for Sustainable Development Report identifies a “great finance divide” – the inability of poorer countries to raise sufficient resources and borrow affordably for investment.

Click here to download the report.

African Continental Free Trade Area: Leveraging Trade and Foreign Direct Investment to Boost Growth and Reduce Poverty
The establishment of the African Continental Free Trade Area promises to turn Africa into a modern, industrialised, cohesive, and influential player on the global stage. A modern Africa one that is no longer depleting her mineral wealth to export to foreign markets, but instead industrialising her economies, incubating the entrepreneurial zeal of her burgeoning youth population, and giving her people a chance to live a better life.

Click here to download the report.

Railways in Developing Countries: A Global Review
As a green mode of transportation, railways have an important role to play in decarbonising transport through shifting transport from more polluting modes of transport such as road and air. Railways can enable economic growth, which in turn generates increasing transport demand, while keeping greenhouse gas (GHG) emissions low. However, in many parts of the world, railways have lost traffic and market share to air and road transport modes.

Click here to download the report.

Venture Capital in Africa Report
2021 was a great year to be a founder in Africa’s innovation ecosystem. A record-breaking year by volume and value, venture capitalists put more money to work in Africa in 2021 than the preceding seven years combined. USD 5.2 billion was raised from 604 unique companies in 2021, and the data shows an industry that has achieved, and is poised for, tremendous growth. Progressive legislation remains paramount to cradle and incentivise entrepreneurship in Africa.

Click here to download the report.

The most important sector of the African Economy is Agriculture. It contributes 15 percent to the Gross Domestic Product (GDP) in sub-Saharan Africa and employs more than 60 percent of the labour force continent-wide. Agriculture accounts for 75 percent of Africa’s domestic trade. To date, 43 out of 54 African Countries (80 percent) have deposited their instruments of the African Continental Free Trade Area (AfCFTA) ratification, and 88 percent of the negotiations on Rules of Origin have been agreed upon. The AfCFTA intends to promote agricultural growth and transformation in Africa, contributing to food security, and boosting competitiveness through regional agricultural value chain development and incentivising critical investments in production and marketing infrastructure.

According to the World Economic Forum (WEF), African countries will need to work together with the rest of the world towards actualising key priority areas essential to the continent’s economic development. Africa has some progress but there is still a long way to go, especially following the impact of the COVID-19 pandemic and the Ukraine-Russia conflict which have brought to light the unpreparedness of the African countries.

Focus on the below would be instrumental in helping alleviate Africa’s challenges:

On 24 February 2022, Russia invaded Ukraine, and from a global perspective, this has been viewed as an act of aggression against a sovereign state.

According to Reuters the conflict has left damage of approximately USD 570 billion and displacement of approximately 11 million people. The effects of this conflict have had a lasting effect on global business, especially in Africa which relies on both states regarding economic relations such as tourism, employment, education, and trade relations. A new report by the United Nations report has found that more than 70 percent of Africa’s economies are at severe risk from Russia’s war in Ukraine. The report found that 41 African countries face maximum exposure to at least one emergency caused by the war.

The various sanctions and embargoes issued to Russia have left a gap in several areas, especially in the supply of various resources such as gas and oil. This gap has been created but also the impacts are being felt across the African continent in various ways as seen below:

1. Agriculture and Food Security
The uncertainty over the availability of farm inputs such as fertiliser has been the most outstanding regarding food security. Fertiliser is a major import from Ukraine and it is vital in food production in Africa. The costs of urea and phosphate—two major components of fertiliser—had already risen by 30 and 4 percent, respectively, by the end of 2021. These increases, plus fertiliser export bans by China and Russia through at least June 2022, are expected to cause the cost of fertiliser to rise much more. The disruptions in imports as a result of the conflict have also resulted in a surge in food prices on the continent, further intensifying uncertainty over food security. Importantly, during the 2020-2021 agricultural season, Africa represented 36 percent of Ukraine’s total wheat exports and was by far the largest regional destination. Nigerian business mogul, Aliko Dangote has taken advantage of the shortfall in Russian fertilizer exports by opening a USD 2.5 billion fertilizer plant with the intent of selling fertilizer to the continent as well as to the United States, Brazil and India.

2. Natural Resource Exports
With oil price volatility, compounded by fears of fuel scarcity and the European Union’s consideration to phase out the EU’s dependency on Russian oil, Africa is looking for new energy sector investors in Europe who will soon no longer depend on Russian natural gas. The price hike in these natural resources has opened a window of opportunity for African countries which are reported to have approximately 630 trillion cubic feet of natural gas reserves with Nigeria, Algeria and Mozambique averaging 200, 159 and 100 trillion cubic feet respectively. These reserves are being considered by European member states as they intend to integrate them into their energy supply. Other countries like Tanzania, with an estimated 57 trillion cubic feet of gas reserves, could end up attracting approximately USD 30 Billion in foreign investment regarding gas supplies as they continue to negotiate with energy companies.

3. Regional Solidarity
The solidarity of regional blocs such as ECOWAS, SADC and EAC will be tested during this conflict. Most of these blocs were formed from an economic perspective and due to differences in the political opinion some African countries have not agreed with Russia’s invasion of Ukraine, but some have agreed with this move made by Russia. This will bring to a test the solidarity of African countries and it will affect business between these countries regarding ease of doing business and ease of movement of goods and people across borders. It has become increasingly difficult for African countries as Russia has been able to establish itself in the continent both for security and economic purposes. This has seen a significant reduction of conflict in the Sahel region in countries such as Mali, Niger, Burkina Faso and the Central African Republic which will inevitably boost trade.

4. Debt Burden
The crisis in Ukraine could bear another crisis in debt as countries try to come up from the ravages of the COVID-19 pandemic. Many African countries are at risk of having an increased debt burden due to the crisis which will lead to any additional government revenues being channelled towards the high costs of other goods including food, fuel, and household goods. According to the Brookings Institute, more than 20 countries are at risk of debt distress in Africa. And as debt service costs continue to rise to approximately USD 70 Billion, African countries will persist in borrowing to offset gaps in revenue. This will have significant impacts on investment in infrastructure and funding of social amenities such as schools and hospitals and people who work in these sectors. The debt burden experienced by many states, especially in Africa will be a major blow as many countries had agreed on terms on debt restructuring with the IMF, World Bank and other financial institutions to be able to recover from the COVID19 crisis.

Whether the war ends soon or becomes a prolonged battle, Russia, the US, and the UK can be expected to continue cultivating economic, political and security relationships with countries across Africa to address the myriad challenges facing many African countries to exert influence. The African Continental Free Trade Agreement further provides a unique opportunity to strengthen intra-Africa trade as well as for foreign investors to strengthen strategic partnerships with African countries by driving growth, especially with small-to-medium-sized investments.

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Sources

Brookings | Reliefweb | United State Institute of Peace | African Business | How We Made it in Africa