UN Global Compact Launches New Hub for Africa
The Africa Regional Hub will mobilise, accelerate and scale up the impact of responsible business across Africa and drive forward the Africa Strategy 2021-2023 of the United Nations (UN) Global Compact. With 1.3 billion people and a combined GDP of USD 3.5 trillion dollars, Africa is the world’s biggest growth market. African businesses are primed to play a pivotal role in the corporate sustainability movement. The UN Global Compact’s Africa Strategy 2021-2023 provides a roadmap to galvanise large and small businesses across Africa to uphold the Ten Principles. The UN Global Compact’s principles-based approach means that businesses operate in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment, and anti-corruption. During the launch event, the UN Global Compact also announced a call to action for 100 African companies who are current signatories of the Women’s Empowerment Principles (WEPs) to partner with the UN Global Compact to advance gender equality. Source: UN
Investment Flows to Africa Reached a Record USD 83 Billion in 2021
Foreign direct investment (FDI) to African countries hit a record USD 83 billion in 2021, according to United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2022 published on 9 June. This was more than double the amount reported in 2020 when the COVID-19 pandemic weighed heavily on investment flows to the continent. Despite the strong growth, investment flows to Africa accounted for only 5.2% of global FDI, up from 4.1% in 2020. While most African countries saw a moderate rise in FDI in 2021, around 45% of the total was due to an intrafirm financial transaction in South Africa. “If we exclude this transaction, the increase in FDI flows to Africa, while still positive, would be more in line with what we observed in other developing regions,” said James Zhan, director of UNCTAD’s Investment and Enterprise division. In terms of subregions, Southern Africa, East Africa and West Africa saw their investment flows rise while those to Central Africa remained flat and North Africa registered a decline. The largest holders of foreign assets in Africa remained European, led by investors in the United Kingdom (USD 65 billion) and France (USD 60 billion). Source: UNCTAD
Commonwealth Seeks to Grow Trade by USD 6.5 Trillion in Five Years
Intra-Commonwealth trade is expected to expand by USD 6.5 trillion in the next five years from the current USD 13 trillion, as the group seeks to strengthen both trade and investment ties between the 54 member countries. Figures by the Commonwealth Secretariat show that trade costs within the Commonwealth are on average 21 percent lower, while investment flows are 27 percent higher than those between other country pairs. The combined GDP of Commonwealth countries is now around USD 13 trillion and is estimated to reach USD 19.5 trillion in 2027. The population of the Commonwealth is over 2.4 billion. Source: Business Daily
Morocco Invested USD 5.8 Billion in Renewables in 2021
Morocco invested USD 5.8 billion in renewables in 2021, the equivalent of Togo’s GDP for 2020, said REN21 in its latest report on the Renewables 2022 Global Status. Morocco is widely known for its ambitious yet achievable renewable energy goals that seek to increase the share of renewable energy in power generation to 52% by 2030 and 100% by 2050. Moroccan targets extend to the other economic activities, with set goals for economic-wide renewable energy contribution to reach 52% by 2025 and 64% by 2030. The North African country also seeks to reduce greenhouse gas emissions by 2030 to reach net-zero goals in Rabat, Benslimane, and Chefchaouen. Morocco is notably a leading country in the MENA region along with Jordan and Israel in terms of renewable share in total final energy consumption, said the report. It is also a regional leader, along with Iran and Egypt, in renewable installed capacity. In 2021, the Kingdom increased its installed capacity by 0.6 GW to reach 4 GW “enough to power Zambia,” according to the report. This made Morocco the 57th country with the largest installed capacity for renewable energy in the world, the report added. The North African country is competing in this category with global leaders including China which topped the list ahead of the US, Brazil, India, and Germany. Source: Morocco World News
Lagos Technology Startup Ecosystem Valued at USD 9 Billion, Ahead of Four Others
Though the average global technology startup ecosystem is valued at USD 28.6 billion, Lagos, which represents Nigeria, is valued at USD 9 billion and far ahead of cities, including Cape Town (South Africa) at USD 2.8 billion; Nairobi (Kenya) at USD 2 billion; Johannesburg (South Africa) USD 962 million and Accra (Ghana) USD 259 million. This was contained in the 382 page Global Startup Ecosystem Report 2022, which also disclosed that the early-stage funding seen by Lagos from 2019 to 2021 was USD 529 million against the global average of USD 687 million. The state also earned USD 1.8 billion in venture capital funding between 2017 and 2021. It takes between 6.3 years for a startup to exit the stage as a startup as against 9.4 years global average. The report claimed that the young, tech savvy market and dedicated startup support were major strengths of the Lagos ecosystem, with leading players, including Flutterwave, and Opay, among others.” Source: The Guardian
South Africa’s USD 8.5 Billion Climate Pact May Draw New Partners
Alok Sharma, the president of the COP26 climate talks, said other nations and philanthropic organisations want to join the USD 8.5 billion climate finance deal offered to South Africa by the UK, US, Germany, France and the European Union. That could increase the amount of money South Africa will get to help the nation transition away from coal, he said at a press conference in Johannesburg on Tuesday. The fuel accounts for more than 80% of the country’s power generation. The Just Energy Transition Partnership was announced at the COP26 talks in Glasgow in November and the terms are being negotiated by South Africa and partner nations. The deal has been touted as a blueprint for future agreements with other coal-dependent developing nations. “This JETP is about kick starting further support that will come,” said Sharma, who is also a UK cabinet minister. “We know, for instance, that there are other developed economies that have an interest in supporting South Africa.” Source: Financial Post
Tanzania Sign USD 40 Billion LNG Project to be Seen by 2025
Tanzania is edging closer to its dream of developing a USD 40 billion liquefied natural gas project after the government and companies, including Equinor ASA and Shell Plc, signed initial agreements. The latest signing precedes a Host Government Agreement which is expected by the end of this year, according to President Samia Suluhu Hassan. The so-called HGA sets out the technical, commercial and legal terms of the project. Developing the LNG-export project could start soon after a final investment decision within three years and would come after about a decade of prolonged negotiations. Other companies involved include ExxonMobil, Pavilion Energy and Medco Energi. Source: Bloomberg
Uganda says Exploration Results Show it has 31 million Tonnes of Gold Ore
Uganda said recent exploration surveys have shown it has gold ore deposits of about 31 million tonnes and it wants to attract big investors to develop the sector hitherto dominated by small wildcat miners. Over the last two years, aerial exploration was done across the country followed by geophysical and geochemical surveys and analyses, Solomon Muyita, Spokesperson for the Ministry of Energy and Mineral Development, told Reuters. Muyita said an estimated 320 158 tonnes of refined gold could be extracted from the 31 million tonnes of ore. Most of the deposits were discovered in Karamoja, a parched sprawling area in the country’s northeastern corner on the border with Kenya. Large reserves were also found in eastern, central and western areas of the East African country. Muyita said Wagagai, a Chinese company, had set up a mine in Busia in eastern Uganda and was expected to start production this year. Wagagai had invested USD 200 million, he said, and its mine will have a refining unit. Source: The Mining Weekly
Africa Economic Outlook
The release of the 2022 African Economic Outlook comes against a backdrop of two major global crises: the lingering COVID- 19 pandemic and the Russia–Ukraine conflict. The latter erupted as Africa’s economy was on a path of recovery from the ravaging impact of the pandemic, and it threatens to set back the continent’s promising economic prospects. The continent risks sliding into stagflation— a combination of slow growth and high inflation. Real GDP is projected to grow by 4.1 percent in 2022, markedly lower than the near 7 percent in 2021. The deceleration in growth highlights the severity of the impact of the Russia–Ukraine conflict on Africa’s economy.
This growth will be driven largely by private consumption and investment on the demand side and by continued expansion in the services sector on the supply side. The services sector, especially tourism, has shown strong post-pandemic recovery and is likely to remain buoyant in the medium term, supported by industry, especially in mining, underpinned by soaring metal prices. Africa’s low COVID-19 vaccination roll out, persistent sovereign debt vulnerabilities, high debt levels, and climate and environmental concerns remain the main threats to medium- and long-term growth trajectories.
Global Plastics Outlook
Plastic pollution is one of the great environmental challenges of the 21st century, causing wide-ranging damage to ecosystems and human health, while the fossil-fuel origins of most of the plastics produced have implications for climate change. Yet plastics have become an integral part of the global economy, being used in almost all economic sectors. The OECD’s Global Plastics Outlook: Policy Scenarios to 2060 first provides an overview of plastics use, waste and environmental impacts with current policies until 2060 and then compares two scenarios to understand the policies needed for, and economic implications of, drastically reducing the environmental impacts of plastics. An additional scenario, which has climate mitigation as its primary objective, examines the cross implications of policies aimed at climate mitigation and plastics leakage reduction.
A companion volume to the Global Plastics Outlook: Economic Drivers, Environmental Impacts and Policy Options released earlier, this report, together with its predecessor, provides a comprehensive roadmap for a more circular plastics lifecycle.
Growing Intra-African Trade through Digital Transformation of Border and Customs Services Regional Action Group for Africa
The interdependent nature of supply networks in today’s global economy means that disruptions in one region can have a global impact. We have seen black swan events such as the COVID-19 pandemic, social unrest, cybersecurity breaches and even wars completely disrupt regional and global supply chains. In many instances these supply chains have not recovered from the setbacks. Organisations today rely heavily on supply chains that have historically been built on the basis of cost minimisation. These principles have been stress-tested under disruptive conditions and have been found wanting. Building for efficiency has often come at the cost of redundancy and resilience.
Moreover, it has become apparent that supply chains’ end-to-end visibility and capacity to react to changes in the value chain fall short of the level required for resilience and agility. As a result, fundamental shifts are starting to emerge across global supply chains. As business interests come together to create additional visibility, global supply chains often hit a wall in customs control. Days, if not weeks, are added to transportation times due to delays in processing at customs checkpoints. This – combined with the lack of visibility, onerous legislation and manual processes – injures an already fragile supply chain.
A Fundamental Change in Funding Beckons in Africa
The ground has shifted and cheap budget funding in frontier markets is a thing of the past. In the current climate, African nations will struggle with a narrowing investor pool amid escalating inflation and FX risks. While forced consolidation due to a funding shortfall is a viable risk, a number of funding avenues can still be explored. We believe that these encompass a greater embracing of concessional funding options, preferably underpinned by an IMF or World Bank initiative. Environmental, social & governance (ESG) bonds also offer competitive pricing while supporting governance and accountability.