News type: Africa Bulletin

As part of the UN’s sustainable development goals, greening the world economy has become central to any development agenda. There is a growing need for global collaboration to achieve a green transition globally. Despite having the least carbon emissions, climate change significantly impacts Africa. Therefore, it is crucial for African countries to join the discussion as early as possible by being proactive on legislation, especially regarding the adoption of renewable energy. Africa needs to ride these virtuous circles by ensuring that policymakers tap into the growing market for green, social, and sustainable (GSS) bonds to finance the green economy transition. The GSS bond market is estimated to have grown by over 300 percent in 2020, reaching a record high of USD 425 billion (Moody’s) to USD 500 billion (S&P) by the end of 2020.

Africa
Africa Investment Forum 2022 Draws USD 31 Billion in Investor Interest
The recently-concluded Africa Investment Forum Market Days – the continent’s premier investment platform – has drawn USD 31 billion in investment interest from African and global investors. Combined with USD 32.8 billion from the rescheduled 2021 Africa Investment Forum Market Days – which took place as virtual boardrooms in March this year – the forum has mobilised a total of USD 63.8 billion of investment interest. The three-day event, held in the Ivorian commercial capital, Abidjan, attracted the participation of several African heads of state and government. The leaders chaired boardrooms and led transactions with potential investors. This year’s Market Days event – the third since 2018 – took place under the theme of Building Economic Resilience through Sustainable Investments. It was held amid global economic challenges compounded by climate change’s impacts, the COVID-19 pandemic, and the Russia-Ukraine war. The event showcased the Africa Investment Forum’s founding partners’ joint resolve to help unleash Africa’s investment potential in such critical sectors as infrastructure, agriculture, energy, education, the creative industries, sports, and transactions that champion women entrepreneurs.

Source: African Development Bank

Africa
OPEC Fund and AfDB Group Increase Cooperation to Promote Sustainable Development in Africa
The Organisation of the Petroleum Exporting Countries (OPEC) Fund for International Development and the African Development Bank (AfDB) Group have signed a memorandum of understanding (MoU) to expand their partnership to support sustainable economic and social development in Africa. The agreement, signed at the 27th United Nations Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt, on 8 November, sets the scope for further strategic and operational cooperation through co-financing of public and private sector projects, joint diagnostic and analytical work, and sharing of knowledge and best practices. The OPEC Fund and the AfDB Group have been partners since 1976. They have co-financed nearly 90 projects in the energy, transport and water sectors, with more than USD 1 billion of OPEC Fund contribution for over USD 15 billion of the total project value. AfDB president Dr Akinwumi Adesina said, “we are pleased to re-dynamise the partnership between the AfDB and the OPEC Fund for International Development. Our two institutions focus on improving people’s lives, and there is a strong alignment between our approaches. The signing of this MoU will strengthen and deepen our cooperation even further.”

Source: African Development Bank

Ethiopia
Addis Ababa Ranks Second as World’s Best Location to Set up Data Center
The latest fDi Benchmark study puts Addis Ababa second only to Beijing as the world’s most attractive location to set up data centres. The study benchmarks the 100 cities based on fDi Intelligence proprietary data and models to find those with the best cost/quality profile. The model allocated 75 percent weight to quality factors and the remaining 25 percent to cost factors to rank 100 cities that have received the highest number of FDI projects between January 2003 and June 2022. Beijing is the world’s best location to set up a data centre, followed by Addis Ababa and London, the fDi Benchmark study reveals. Unlike Beijing, second-placed Addis Ababa has capitalised on its excellent cost/quality profile to attract FDI in data centres. The government’s move to liberalise the telecommunications sector spurred the FDI flow. Last January, Safaricom, which won a newly issued mobile telecom license in 2021, announced plans to invest USD 100 million to establish its first data centre in Addis Ababa to cater to its growing operations.

Source: Ethiopia Monitor

Morocco
Morocco Exceeds Expectations in Renewables Market Attractiveness Index
Despite being a traditional energy import market, Morocco has worked on building competitive renewable energy infrastructure, which contributed to boosting the attractiveness of the domestic market among foreign investors. This year, consulting firm EY ranked Morocco 19th globally in its renewable energy country attractiveness index (RECAI), behind larger economies such as the US, China, Germany, the UK, France, Australia, India, and Spain. Despite Morocco’s relatively low GDP, estimated at USD 133 billion in 2021, according to the World Bank, the country has exceeded expectations by developing large-scale renewables pipelines to serve domestic and foreign demand for clean energy. According to EY, Morocco ranked first in the world in the normalised RECAI ranking, which assesses markets’ performance by their economic size (GDP). Morocco outperformed Greece, Denmark, Jordan, Chile, Ireland, and Australia in the ranking in addition to the world’s most attractive market for renewable investments, the United States, which placed 31st behind Brazil and China.

Source: Morocco World News

Mozambique
Mozambique Starts to Export Liquefied Natural Gas through Its FLNG Project
The Mozambican government recently announced the start of the export of Liquefied Natural Gas (LNG) from Mozambique. Recently, the oil tanker British Sponsor left Mozambican territorial waters carrying the first LNG cargo produced by the Coral South Floating Liquefied Natural Gas (FLNG) project in the country’s north. This FLNG project is Africa’s largest and the second-largest in the world. Coral South FLNG is the pioneering part of Mozambique’s Area 4 mega gas project, a joint venture bringing together the Italian ENI, ExxonMobil of the U.S., China’s CNPC, Mozambican ENH, the Galp from Portugal and the Korean KOGAS. Integrating the world’s most cutting-edge deep-sea LNG technology, Coral South FLNG contains a floating production platform installed 80 kilometres offshore Mozambique in the southern part of Area 4 of the Rovuma Basin. It has a production capacity of 3.4 million tonnes of LNG per year from wells located in 2,000-meter water depth with a design life of 25 years.

Source: Xinhua

Nigeria
Mobile Services Add USD 140 Billion to Nigeria, other SSA Economies
In 2021, mobile technologies and services generated around eight percent of the Gross Domestic Product (GDP) in Nigeria and other sub-Saharan Africa (SSA) countries, a contribution that amounted to almost USD 140 billion of economic value added in 2021. The mobile ecosystem also supported more than 3.2 million jobs (directly and indirectly). It made a substantial contribution to the funding of the public sector, with USD 16 billion raised through taxes on the sector. The Mobile Economy sub-Saharan Africa report 2022, a report by the Global System for Mobile telecommunications Association (GSMA), disclosed that by 2025 mobile services contribution will grow by USD 65 billion to almost USD 155 billion. It will be as a result of the countries in the region increasingly benefiting from the improvements in productivity and efficiency brought about by the increased take-up of mobile services.

Source: The Guardian

Tanzania
Tanzania to Sign HGA for USD 30 Billion LPG Project in December
Tanzania is expected to sign a host government agreement (HGA) for the USD 30 billion Liquefied Natural Gas (LNG) project with investors in December this year, the Minister for Energy, January Makamba, has said. According to Thomson Reuters, HGA is an agreement between a foreign investor and a local or host government governing the rights and obligations of the foreign investor and the host government concerning the development, construction, and operation of a project by the foreign investor. Mr Makamba revealed recently at a launching ceremony of the macroeconomic report of the LNG in Dar es Salaam and added that negotiations with investors are going on well. Stanbic Bank has prepared the report. “We’re getting there. We have tremendous confidence we will sign in December,” said the Minister at the report’s launch, which shows the LNG project will have enormous financial and economic benefits to the nation.

Source: Egypt Today

South Africa
South Africa Sets Sights on USD 250 Billion Investment in Hydrogen Sector
South Africa set its sights on attracting as much as ZAR 4.33 trillion (approx. USD 250 billion) into its nascent green hydrogen industry by 2050 to take advantage of abundant solar and wind energy sources. The industry could create 1.4 million jobs and generate as much as USD 30 billion in annual revenue by that year, according to Masopha Moshoeshoe, a green economy specialist in the presidency’s investment and infrastructure office. Green hydrogen, made by splitting water using renewable energy, is one of three ways SA aims to shift its economy away from relying on coal, which accounts for more than 80 percent of its electricity. The other ways are developing an electric vehicle industry and shifting power production to wind and solar power. The plan, included in a presentation by Moshoeshoe at the COP27 international climate conference in Egypt, would involve SA exporting as much as 8 million tonnes of the clean-burning fuel and its derivatives by 2050 and satisfying local demand of 2 million to 5 million tonnes, he said.

Source: Bloomberg

 

Reports

World Bank Annual Report
The World Bank is acting quickly to help countries adapt to a changing world as they address crises. It provides comprehensive support through data and analysis, policy advice, responsive financing, and convening power. This effort is helping countries expand access to COVID-19 vaccines; strengthen health systems; enhance social protection; address the learning crisis; work toward debt sustainability; build greener and more resilient infrastructure; invest in cleaner and more diverse energy sources; reduce gender gaps; combat fragility, conflict, and violence; and mitigate and adapt to climate change. These efforts are strengthened by a wide range of partnerships: with other multilateral institutions, UN agencies, nongovernmental organisations, civil society, academia, and the private sector. Through these engagements, countries can leverage World Bank’s comparative advantages, exchange knowledge and best practices, scale up financing, and expand their reach in the most fragile and inaccessible areas. World Bank’s partnerships have played a crucial role in combating the pandemic and are helping countries address the far-reaching impacts of the Russian invasion of Ukraine, including greater food insecurity.

Click here to download the report

McKinsey & Company | Reshaping Retail Banks: Enhancing Banking for the Next Digital Age
Retail banks have experienced respectable growth as the pandemic has abated, and it is tempting to declare that global retail banking is healthy. However, a disaggregated view reveals the unsustainable economics of the universal banking model, in which an institution offers a full range of financial services, from daily banking (deposit accounts, payments, and credit cards) to more complex lending, wealth management, and even insurance. To supercharge their financial performance and defend market share, banks will need to target profit pools in specific businesses where they can define and deliver a value proposition that can win in our new digital age. While much is said of the threat from fintech and Big Tech, incumbent banks will continue to lead in retail banking. However, banks running the old playbook will not survive; the new winners will operate like tech companies with advanced data capabilities, a cutting-edge tech stack, and an agile operating model.

Click here to download the report.

IRENA | Energy Transition Support to Strengthen Climate Action 2022
The overall trend in countries’ climate ambitions is positive, indicating that energy transition plays a key role in accelerating climate action. Full implementation of the latest climate commitments would bring the world closer to achieving the Paris Agreement’s goal of keeping the average global temperature rise below 1.5 degrees Celsius (°C). However, there is still a pressing need to raise the ambition of climate action and accelerate the global energy transition to achieve net zero greenhouse gas emissions by 2050. IRENA’s World Energy Transitions Outlook (WETO) 2022 underscores the urgency of accelerating the global energy transition towards cleaner and more sustainable options for energy generation (IRENA, 2022a). The emissions gap between countries’ climate commitments – such as the NDCs and net-zero emission targets – and the efforts necessary to achieve the 1.5°C climate goal by 2050 is estimated to be 20 gigatonnes. Scaling up renewables and end-use electrification, together with accelerated energy efficiency measures, are essential to reduce emissions. Successful medium- and long-term energy transition plans and strategies should be supported by short-term interventions.

Click here to download the report.

Oxford Economics Africa | Africa Risk-Reward Index 2022
Control Risks and Oxford Economics Africa seventh edition of the Africa Risk-Reward Index illustrates the evolution of the investment landscape in major African markets and provides a grounded, longer-term outlook of key trends shaping investment in these economies. It also offers a comparative snapshot of market opportunities and risks across the continent, which will allows different organisations to develop an informed strategy for growing their business or investing in Africa. The impacts of a global economic crisis triggered by the pandemic, climate change, and conflict in Ukraine have without doubt exacerbated global uncertainty regarding growth opportunities and political stability across Africa. But in the long term, these geopolitical shocks may turn out to be the very factors that redefine Africa’s relationship with the rest of the world and its role in the world economy. In this year’s edition, Control Risks and Oxford Economics highlight the three main themes that will likely shape this transition period for the continent, as well as the business opportunities and risks that this will present.

Click here to download the report.

Over the years, Africa has progressively sought to enhance access to justice through each state’s national courts, regional courts, and the African Union (AU). In furtherance of shared objectives, African states have united and formed regional blocs based on their geographical and strategic locations. Each of these regional blocs, through their respective founding treaties, established a judicial arm mandated with adjudication of disputes between member states or any dispute referred to the court by a resident of a member state.

World

Climate Finance to Low- and Middle-Income Countries Hits USD 51 Billion in 2021
Climate finance committed by major multilateral development banks (MDBs) rose in 2021 with over USD 19 billion committed to climate change adaptation finance, according to the Joint Report on Multilateral Development Banks’ Climate Finance, published recently. The report tracks the progress of MDBs in relation to their climate finance targets such as those announced at COP21 and the greater ambition pledged for the post-2020 period. The report finds that total financing commitment by MDBs to low-income and middle-income economies in 2021 of USD 51 billion, surpassed the annual expectations of USD 50 billion set in 2019 at the United Nations (UN) Secretary General’s Climate Action Summit in New York. Of the USD 51 billion of climate finance committed to low-income and middle-income economies, USD 47 billion was from the MDBs’ own account and USD 3 billion from external resources that were channelled through the banks. Mitigation finance committed to low- and middle-income economies totalled USD 33 billion, or 65 percent, while adaptation finance totalled USD 18 billion, or 35 percent.

Source: African Development Bank

Africa

Private Wealth in Africa Set for USD 798 Billion Jump to USD 3 Trillion
Africa’s stock of private wealth is forecast to jump 38 percent to nearly USD 3 trillion over the next decade, with Mauritius and Rwanda witnessing the strongest growth. Smaller, better-organised economies in Africa are fast turning into wealth hubs, home to more and more of the continent’s dollar millionaires. According to the latest Africa Wealth Report 2022 by Henley Global, the tide is swinging in the direction of smaller emerging economies thanks to their growing exchequer hygiene. “Key drivers of this trend are the recognition by these economies that they can attract substantial capital if they have the right regulatory framework,” notes Vusi Thembekwayo, venture capitalist and MyGrowthFund Venture Partner. “This regulatory regime includes preferential terms for capital gains tax and inheritance tax and an environment that allows for ease of doing business.” In the period under review, Africa’s total private wealth – currently worth USD 2.1 trillion – will swell 38 percent by 2031, representing a USD 798 billion jump.

Source: The Independent

Africa

World Bank to include Africa in USD 127 Billion Solar Power Mini-Grid
The World Bank Group will be raising USD 127 billion for mini-grid power funding by 2030. The bank said it will be leveraging development partner funding and government investment to “crowd in” private-sector finance for the project. It explained that solar mini-grids could provide high-quality uninterrupted electricity to nearly half a billion people in unpowered or under-served communities and be a least-cost solution to close the energy access gap by 2030. “But to realise the full potential of solar mini-grids, governments and industry must work together to systemically identify mini- grid opportunities, continue to drive costs down, and overcome barriers to financing. “Around 733 million people – mostly in Sub-Saharan Africa – still lack access to electricity. The pace of electrification has slowed down in recent years, due to the difficulties in reaching the remotest and most vulnerable populations, as well as the devastating effects of the COVID-19 pandemic. At the rate of progress, 670 million people will remain without electricity by 2030″, the bank said.

Source: The Nation Nigeria

East Africa

East African States Lead in Domestication of AfCFTA Trade Requirements
East African member states have dominated the list of countries that have domesticated the African Continental Free Trade Area (AfCFTA) adequately to facilitate the commencement of trade under the trading bloc’s framework. Speaking during the launch of the Guided Trading Initiative in Accra, Ghana, AfCFTA secretary general Wamkele Mene said that so far three out of the eight countries that have set the stage for trading under AfCFTA are from East Africa. The Guided Trade Initiative facilitates trade under the AfCFTA through matchmaking businesses and products for export and import between interested state parties. “I want to thank those countries that have expressed readiness to start trading under the AfCFTA. Those countries are Ghana, Kenya, Rwanda, Tanzania, Egypt, Mauritius, Cameroon and Tunisia. More and more state parties are expressing interest as they conclude the process of domesticating the AfCFTA in their law,” Mene said. Kenya and Uganda have already undertaken trade under the AfCFTA Guided Trade Initiative with Kenya having exported Exide batteries worth USD 77,000 to Ghana following importation by Yesudem Company. Kenya made its second export under the AfCFTA Guided Trade Initiative which consisted of tea exports to Ghana.

Source: The EastAfrican

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. Ben Abdel Rahman said foreign exchange reserves “recorded a significant increase in the recent period, exceeding the percentages that were predicted,” without giving details of their current value.

Source: Middle East Monitor

Morocco

IFC Allocates USD 3.5 billion for Private Sector Development in Morocco
Morocco celebrated its 60-year partnership with the International Finance Corporation (IFC) which has so far mobilised more than USD 3.5 billion for local projects and businesses. Since 1962, the IFC has worked with over 100 Moroccan small businesses, manufacturers, agribusinesses, and financial institutions to support the country’s development plans, including its New Development Model that aims to support public-private partnerships for inclusive socioeconomic growth. To commemorate the financial institute’s long-standing relationship with Morocco, IFC Vice President for Africa Sergio Pimenta visited the country earlier this week. He held meetings with Minister of Economy and Finance Nadia Fettah Alaoui, Minister for Energy Transition Leila Banalia, and Governor of the Central Bank Abdellatif Jouahri. Speaking on the role of the IFC in advancing the development of Morocco’s private sector, Pimenta said his institute is “proud to be a strong and trusted partner of the Kingdom of Morocco, helping build the private sector into a powerful engine of economic and social development.” The official further noted the IFC’s plans to “continue working with partners in Morocco to create more impact and opportunity.”

Source: Morocco World News

Nigeria/ Morocco

Nigeria-Morocco Gas Pipeline to Receive USD 25 Billion in Investment in 2023
The Nigeria-Morocco Gas Pipeline is set to receive a total investment of USD 25 billion next year, according to the head of the West African nation’s state oil company. Discussions for the financing of the energy megaproject are still ongoing, with the Nigerian National Petroleum Company (NNPC) Chief Executive Officer Mele Kyari saying that a final investment decision will be made next year, according to a report from the American business-focused magazine Bloomberg. The NNPC CEO did not disclose however the entity behind the investment in the 5,600-kilometer-long offshore pipeline that would travel across 11 African countries and ultimately reach Europe. The investment would cover the overall expenses related to the construction of the pipeline with a cost estimated at USD 20-25 billion, Kyari said in an interview quoted by Bloomberg. Construction would be broken down into phases, the first would take three years, while the other stages would take five years to reach completion. Earlier estimates indicate that that pipeline could take up to 25 years to become operational.

Source: Morocco World News

Tanzania

State Saves USD 52 Billion after Embarking on Natural Gas
The government has saved USD 52 billion (approximately 121trl/- in 18 years) since the country embarked on natural gas to boost its energy mix plan, Director General of Petroleum Upstream Regulatory Authority (PURA) Engineer Charles Sangweni has said. He made the revelation that before 2004 when the country started using natural gas for power generation, the government spent a lot of money on the importation of fuel for power generation. He also said that natural gas accounts for 70 percent of electricity produced in the country. Eng Sangweni was speaking during a tour by the PURA Board of Directors at Ntorya, a conventional gas development area located onshore of the Mtwara Region. He said the government would save more only if it invests in natural gas infrastructures which are critical in supplying gas services to large and enough markets in and outside the country. “For the gas services to reach a majority in and outside the country, infrastructure services are very critical,” he said adding that generation of electricity using gas would help save much money usually spent on the importation of fuel which is costly. The country has 57.54 trillion cubic feet of commercially viable natural gas reserves which PURA believes could put the economy on the right trajectory if put to effective use.

Source: Daily News

Reports

Environmental Law Book

Environmental Law and Diplomacy is a collection of writings by Donald Kaniaru, which reflects on Africa’s pivotal role in the development of international environmental law over the last half-century. Regarded as renowned as “an admired pillar of the international environmental law community”, Mr Kaniaru reflects on the past and potential future of the “brilliantly vague” concept of sustainable development and the development and evolution of diverse tools of environmental governance to address urgent global priorities in the environmental arena. These writings cover a career spanning nearly five decades, and are the author’s compilation and distillation of the wisdom that helped to make the United Nations Environmental Programme (UNEP) what it is today.

For more information about this book contact ALN Communications.

 

World Economic Forum | ESG Pulse Check: Getting the Basics Right for Start-ups and Venture Capital Firms
While venture capital firms are a critical force in shaping the future as they invest in the leading start-ups and disruptive technologies, the start-ups themselves have largely been left out of the conversation when it comes to ESG. Through this insight report, the World Economic Forum aims to highlight what start-up and scale-up companies are thinking and doing on the ESG front, and the assistance they are seeking to ensure that they can avoid greenwashing and implement standards and strategies early on. Key findings from the report include: ESG should not be approached as a stand-alone topic but be embedded into key corporate strategies and decision-making, ideally from the beginning so that it scales with a company. Having a practical and start-up friendly ESG framework or toolkit would be highly useful for companies and investors alike. Support from the entire start-up ecosystem, especially investors, is helpful for start-ups as they plan, execute and measure their ESG strategies.

Click here to download the report.

 

World Economic Forum | Sustainable Development Investment Partnership Report
The COVID-19 pandemic has cast a long shadow over economic and social development and, as underscored in the Sustainable Development Investment Partnership (SDIP) Annual Report 2020/21, the reality is that although the challenges are global in their reach, they are not uniform in their impact on livelihoods. While the global socio-political and economic landscape has altered in many ways over the last 12 months, developing countries continue their struggle to adapt to ongoing global disruption and the lingering and far-reaching effects of the pandemic. From this context emerges a pressing question: what are the continuing hindrances to sustainable finance? The work of SDIP brings to light the fact that many of the solutions proposed to address the barriers restricting finance in developing countries often remain two-dimensional and do not address the root causes. To advance progress, SDIP emphasizes complex nuances and specificities in the national context, government contributions, innovative market mechanisms and target initiatives, among a host of other factors discussed in this report.

Click here to download the report.

 

World Bank | Africa’s Pulse: Food System Opportunities in a Turbulent Time
African economies are facing a series of challenges to their post-pandemic recovery. Economic activity in the region is slowing to 3.3 percent amid global headwinds, including weak global growth and tightening global financial conditions. Elevated inflation rates and resulting policy tightening, as well as the rising risk of debt distress, are also impacting economic activity. While food insecurity in Sub-Saharan Africa was increasing before the onset of COVID-19, the pandemic and the food and energy crisis have contributed to the recent steep increase in food insecurity and malnutrition. Climate shocks, low productivity in agriculture, lack of infrastructure also contribute to rising food insecurity in the region. The economic fallout from the multiple crises affecting the region has lowered household incomes, increased poverty, widen inequality and heightened food insecurity. This report discusses short-term measures combined with medium- to long-term policy actions that can strengthen African countries’ capacity to build resilience and seize opportunities to unlock productivity-enhancing growth while protecting the poor and vulnerable.

Click here to download the report.

In matters of safeguarding, the old adage ‘prevention is the best cure’ applies in full. Rules of procedure and codes of conduct penned in organisational policies play a significant role in putting the organisation in a defendable position before and during a crisis. However, operating guidelines cannot work in isolation, they are only as effective as the people responsible for implementing them. The essence of safeguarding is to protect the well-being of individuals. Where protective mechanisms are weak, sexual exploitation, abuse and harassment (SEAH) risks are likely to occur in varying scales. At this point, the focus on safeguarding shifts from prevention to incident management.

There has been a surge of interest in the use of artificial intelligence (AI) in healthcare in recent years. Artificial intelligence (AI) has the potential to transform the field of medicine. To be specific, AI will most likely improve access to healthcare and how patients are treated, but it will also optimise resource allocation, allowing health systems to function more effectively and efficiently. The potential for AI to reshape the field of healthcare, to aid in diagnosis and enable a more personalised precision approach to medicine is limitless.

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.

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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.