Stories that Matter | February 2023

Africa

Development Partners to Commit USD 30 Billion to Boost Food Production in Africa
The second Africa food summit in Senegal ended with development partners agreeing to commit USD 30 billion to back the continent’s resolve to boost agricultural productivity and become a breadbasket for the world. Among the development partners are the African Development Bank which plans to contribute USD 10 billion over five years, and the Islamic Development Bank, which intends to provide USD 5 billion. The Dakar 2 Summit—under the theme ‘Feed Africa: Food Sovereignty and Resilience’—adopted a Declaration on the implementation of the Summit’s resolution, to be submitted to the African Union, including 34 heads of state and government, 70 government ministers, and development partners, to work tirelessly on compacts that would transform agriculture across Africa. African Development Bank Group President Akinwumi Adesina said the continent and its partners are determined to see results and that implementation is critical to boosting food production and feeding Africa.

Source: Daily News Egypt

Africa

African Startups Raised Record-Breaking USD 4.8 Billion in 2022
African startups have broken records in terms of the value of funding, raising at least USD 4.8 billion in 2022, a recent report by Max Cuvellier and Maxime Bayen indicated. The report titled “Africa: The Big Deal” added that the continent’s startups also broke records in terms of the number of deals and investors. The African startup ecosystem attracted more than 1,000 unique investors last year, representing a 15 percent increase compared to 2021. Meanwhile, over 1,000 deals worth USD 100,000 or more were announced in 2022, up by 11 percent compared to the year prior. “What a year it’s been! While in H1 [January to June], the African rocket seemed unstoppable. Many held their breath in H2 [July to December] as it lost steam. It never crashed, though, and the whole ecosystem had a pretty solid year,” indicated the report. The report suggested that African startups may have raised over USD 5 billion in 2022, noting that several investors refrain from sharing deals confidentially with them, while some startups do not update their financing rounds.

Source: Morocco World News

Africa

Africa’s Share of Global Gas Supply to Double by 2050
Africa’s gas share in the global market will increase to over 11 percent of all gas supplies by 2050, according to a report by Gas Exporting Countries Forum (GECF), from 6 percent in 2021. Production is projected to increase from 260 billion cubic meters in 2021, to 585 billion cubic meters in 2050, on the back of the maximal government exploitation of local energy resources. This will make Africa responsible for the second-largest growth in gas supply by volume, globally, after the Middle East during the period. GECF is an intergovernmental organisation that provides a framework for exchanging experience and information among its 12 member countries and seven observer countries. From Africa, the report features Algeria, Egypt, Equatorial Guinea, Libya, Nigeria, Angola and Mozambique. According to the report, the demand for natural gas in the continent will rise by 82 percent by 2050, and gas will account for 30 percent of Africa’s energy mix. With renewables, gas will be crucial in driving energy access across the continent. Besides Africa using natural gas to alleviate energy poverty in the continent, it will also be key to economic growth.

Source: The Independent

East Africa

EABC Plans to Reach USD 15 Billion in Intra-EAC Trade in 2023
The East African Business Council (EABC) chairperson, Ms Angelina Ngalula, is optimistic that the intra-regional trade could hit USD 15 billion in 2023, thanks to the prevailing political goodwill. In her New Year’s message, Ms Ngalula stated that the political goodwill shown by the EAC partner nations’ leaders was why EAC intra-trade increased to over USD 10 billion in 2022, up from USD 9.5 billion in 2021, despite the COVID-19 outbreak. “Last year, we saw greater political will on the part of the leaders of the EAC Partner States in promoting the expansion of intra-EAC commerce,” she said, adding that in 2023 business community is buoyant to achieve the USD 15 billion mark. The political goodwill saw the elimination of Non-Tariff Barriers (NTBs) impeding intra-regional trade, such as the relaxation of COVID-19 restrictions and admission of the DRC Congo into the EAC, driving the intra-regional-trade surge.

Source: The Citizen

Egypt

Egypt is Third in the World in Gold Strategic Reserves
Egypt has become the third in the world in terms of increasing the strategic reserves of gold, exceeding 125 tons, up from 75 tons, according to the advisor to the Minister of Supply for gold industry affairs, Nagy Farag. “The hike in the gold reserves is a supportive force for the Central Bank of Egypt (CBE) and the Egyptian currency, which is beneficial to the national economy,” Farag elaborated. Farag attributed the increase in gold reserves to the Central Bank’s purchase of the bullion production of Egyptian mines. He pointed out that the last mine opened and put into operation was the “Iqat” mine in the middle of the eastern desert, with a strategic reserve of more than one million ounces. “There are approximately 7 or 8 regions in Egypt rich in gold, among them: the Golden Triangle and Sukkari, which will strongly support the strategic reserves of gold,” he added. He also confirmed the existence of stability and constancy in the price of gold, indicating that there has been no fundamental change in its prices since 20 days, as the cost of 21 carats is currently LE 1,720 (approx. USD 56.23). Despite that, there is a great demand from Egyptians to buy it as a kind of investment.

Source: Egypt Today

Kenya

State Sets Sights on USD 22.3 Billion Taxes from Small Businesses
The government is eying a record KES 2.8 trillion (approx. USD 22.3 billion) from the Micro, Small and Medium Enterprises (MSMEs), raising fears that President William Ruto might deviate from his pro-small business campaign promise. In the 2023 Draft Budget Policy Statement (BPS), the National Treasury noted plans for tax base expansion in the hard-to-tax informal sector, focusing on MSMEs. “The potential taxable base of the informal sector is KES 2,800 billion (approx. USD 22.3 billion) as per the MSME survey,” said Treasury in the report. KRA has been given a tax collection budget of KES 2.56 trillion (approx. 20.4 billion) in the Financial Year 2023/24, a target set to be raised to KES 4 trillion (approx. USD 32 billion) in the medium. President Ruto has already directed KRA to ensure that every Kenyan adult is registered as a taxpayer, reflecting his intention to go after the ubiquitous informal sector, where earnings are largely erratic. However, during the KRA’s Taxpayers event in October last year, Dr Ruto regretted that there are only seven million people with KRA pin numbers, while Safaricom’s M-Pesa has 30 million registered customers, transacting billions daily.

Source: Business Daily

Morocco

Morocco Referred to as the ‘Future Source of Cheap, Sustainable Energy’
Europe is eyeing Africa as a future “source of cheap and sustainable energy,” as studies increasingly point out Morocco as “the nearest” and “cheapest” source of green hydrogen. This green fuel has the potential to replace oil. According to a report from the European Conservatives, Europe is planning massive investments into green hydrogen and solar panels that involve mostly Morocco, Egypt, and southern Africa. The report recalls the pact between the EU Commission and Morocco for a multi-million investment deal that covers green fuel production for export to Europe. The deal reflects Europe’s strategy to draw on Africa’s proximity and potential in green energy production to cover its domestic energy needs. Data from the European Conservatives indicates that the European Investment Bank already maintains that Africa’s green hydrogen production capacity is valued at EUR 1 trillion. “The new study combines analysis of investment opportunities, focusing on four hubs: Mauritania, Morocco, southern Africa and Egypt with a roadmap of technical, economic, environmental and financial solutions to unlock commercial development,” a press release indicated. The study further argues that Africa’s large capacity in green hydrogen could support the continent to become the world’s new energy “powerhouse.”

Source: Morocco World News

Reports

Bain & Company | Global M&A Report 2023
In 2023, savvy executives will keep their feet on their mergers & acquisitions accelerators, even as competitors slam on the brakes in the face of turbulence. Experienced dealmakers are familiar with the cyclical nature of the M&A market. Deal values and deal multiples decline as sellers hold back and acquirers lose conviction. As uncertainty impacts both the base business of acquirers and targets, it becomes more challenging to make decisions about deals. It’s no wonder why many executives lose their appetite for the deal process during turbulent times. Yet history tells us that winners don’t pause M&A during downturns. Instead, they take advantage of opportunities to reshape their industries. Companies that move quickly when others hesitate are rewarded. Bain research on M&A in times of turbulence validates how M&A was part of the winning response in previous down cycles. Bain examined the acquisition activity of 2,845 companies worldwide during the global financial crisis and economic downturn of 2008–2009. They found that in the long run, companies that executed at least one deal per year during the economic downturn earned 120 basis points more in total shareholder returns than those inactive in M&A.

Click here to read and download the report.

China – Africa Business Council |Chinese Investment in Africa Report 2022
Supply chains—the activities required by governments, organisations and businesses to deliver goods or services to consumers are crucial to Africa’s development plans, particularly the African Union’s Agenda 2063. Most recently, the operationalisation of the Africa Continental Free Trade Area (AfCFTA) and the ongoing COVID-19 pandemic has prompted a discussion on the importance of supply chain development on the continent and the role of development partners in enhancing the supply chain across Africa. However, even before COVID-19, there was substantial evidence that Africa’s supply chains were already under stress due to inadequate infrastructure, security issues, poor trade logistics, overreliance on imports, onerous regulatory requirements and complex customs procedures. In particular, the ongoing Ukraine crisis and the ensuing global supply challenges are putting greater pressure on Africa’s supply chains. Yet Africa provides vast opportunities for businesses hoping to invest in supply chain development. This is underlined by Africa’s fast-growing population and markets, which present important business opportunities, and the vast resources that make the continent a fertile ground for manufacturing industries.

Click here to read and download the report.

United Nations Development Programme | Cryptocurrency in Africa, Alternative Opportunities for Advancing the Sustainable Development Goals?
The compounding crises of the COVID-19 pandemic, unchecked climate change and the war in Ukraine have caused severe negative economic, social and environmental consequences across the globe. Africa is facing a risk of a sharply diverging world with inequalities widening between developed and developing countries and within developing countries themselves, between urban and rural areas, rich and poor, men and women. This is especially true for the African continent, which has already suffered a loss of almost a decade of development gains. But, consistent with the findings of the UN Secretary-General’s Task Force on Digital Financing ‘People’s Money: Harnessing Digitalisation to Finance a Sustainable Future’, the pandemic has put a spotlight on the role of digital finance and its accelerated applications in response to the crisis. A key question in this regard is how to use digital finance to improve economic participation, agency and resilience of people, facilitate cross-border trade and support sustainable development while addressing the risks of the widening digital divide. This paper will present the emerging applications of cryptocurrency in Africa, examine the evolving regulatory landscape and key accompanying risks and suggest potential policy considerations for leveraging this nascent, innovative instrument towards the advancement of sustainable development goals (SDGs) in the continent.

Click here to read and download the report.

IRENA | Scenarios for the Energy Transition: Experience and Good Practices in Africa
African nations use long-term scenarios and energy planning tools to inform national planning. When the proper institutional framework is in place, countries can assess alternative pathways to ensure energy access, mainstream the use of large-and small-scale renewables, and advance toward a just and sustainable energy system while building consensus on the desired energy future. This report summarises the presentations and discussions held at the webinar series entitled: Long-Term Energy Scenarios (LTES) for Developing National Energy Transition Plans in Africa. It presents key findings and recommendations broadly relevant to African countries and stakeholders attempting to improve their planning processes worldwide. Good practices include implementing innovative approaches for developing and using long-term energy scenarios, diversifying methods of communicating procedures with the public, and progress in building and maintaining local energy planning units.

Click here to read and download the report.