President Ellen Johnson Sirleaf confirmed to deliver keynote speech at the 2017 Tana Forum
January 26, 2017 | 0 Comments
Held every year in the northern Ethiopian city of Bahir Dar, the Tana High-Level Forum is an informal gathering of heads of state and government; leaders of regional organisations; civil society; the private sector; and eminent scholars and practitioners.
The Tana High-Level Forum on Security in Africa Secretariat has today announced that the President of the Republic of Liberia, H.E. President Ellen Johnson Sirleaf, will be the keynote speaker at the sixth Tana Forum to be held on 22-23 April 2017.
H.E. President Ellen Johnson Sirleaf is the 24th and current President of Liberia. She won the 2005 presidential election taking office on 16 January 2006, and was re-elected in 2011. She is the first elected female head of state in Africa. In June 2016, she was elected as the Chair of the Economic Community of West African States (ECOWAS), making her the first woman to occupy the position.
President Sirleaf was jointly awarded the 2011 Nobel Peace Prize with Leymah Gbowee of Liberia and Tawakkol Karman of Yemen. The women were recognized “for their non-violent struggle for the safety of women and for women’s rights to full participation in peace-building work.”
“Having H.E. President Ellen Johnson Sirleaf as the keynote speaker is a great success for the Forum” said Michelle Ndiaye, Tana Forum Secretariat Head. “She can use her leadership to highlight on the role of the state in natural resource governance and to call for a proper inclusion of women in all debates that focus on the utilisation of natural resources in Africa”.
Held every year in the northern Ethiopian city of Bahir Dar, the Tana High-Level Forum is an informal gathering of heads of state and government; leaders of regional organisations; civil society; the private sector; and eminent scholars and practitioners. This year’s theme, “Natural Resource Governance in Africa” , aims to reflect on the centrality of natural resources, both in historical as well as in contemporary times, in understanding the far-reaching implications on state-society relations within the continent, and Africa’s disadvantageous position in global production and exchange.
The Tana Forum is an annual meeting that brings together African leaders and stakeholders to engage and explore African-led security solutions. The 6th Tana Forum will take place on 22-23 April 2017 in Bahir Dar, Ethiopia.
New African Railways Ride on Chinese Loans
January 26, 2017 | 0 Comments
Earlier this month, the first train rumbled down the tracks of a $3.4 billion electric railway connecting landlocked Ethiopia with Djibouti and its access to the Red Sea. The 750-kilometer (466 miles) line, expected to carry up to five million tons of goods per year, promises to have a massive impact on the economies of both countries and the region at large.
At the official launch of the project, Ethiopian Prime Minister Hailemariam Desalegn said its importance cannot be overstated.
“This project is like our blood vessels,” he told a VOA Somali service reporter who was riding on the inaugural train. “The reason is because Ethiopia’s outlet is through Djibouti. Therefore, this project determines if we can live or not live.”
The project was 70 percent funded by a loan from China’s state-run EXIM Bank and built by China Railway Group and Chinese engineers.
Kenya railway line almost done
It is the latest in China’s massive infrastructure investment in Africa. A $13-billion railroad in Kenya, financed by the Export-Import Bank of China and built by the state-owned China Road and Bridge Corporation, is nearly complete. Other railway lines are planned to stretch into East African countries including South Sudan, Uganda, Rwanda and Burundi.
Between 2000 and 2014, China made $24.2 billion in loans to finance transportation projects on the African continent, according to researchers at the China-Africa Research Initiative, a group at the Johns Hopkins School of Advanced International Studies focusing on China-Africa relations. Eighty percent of those loans were for roads and railways.
China eyes African ports
Experts say Chinese infrastructure investment in Africa is not about altruism. Funding railways benefits China by connecting ports and facilitating the movement of raw commodities that are badly needed to fuel China’s development.
“East Africa, particularly the ports in Kenya, ports in Tanzania and especially ports in Djibouti, these are very important for the Chinese just for the exports,” said Jyhjong Hwang, a senior research assistant at Johns Hopkins’ China-Africa Research Initiative.
Hwang says that for China, these projects will take a long time to pay dividends.
By contrast she said African economies are likely to see an immediate impact.
“These are big transportation projects that will stimulate local economies, these are good for basic infrastructure,” she said. “This is good for local, loan recipient countries just because these projects have a lot of costs and not a lot of immediate financial return.
“These are the projects that need a lot of financial infusion to begin with and obviously the financier has to be willing to want to take on a lot of risk, but willing to recuperate over a longer horizon,” said Hwang.
Not a ‘clear pattern’
In 2016, the China-Africa Research Initiative published its database of all known loans made by China to Africa between 2000 and 2014. The countries that received these loans were not all resource-rich countries, researchers found.
“When we talk about China and Africa and interests, people talk about natural resources, but one of our findings was that actually there isn’t a clear pattern in terms of the amounts of loans to countries and how well endowed they are with natural resources,” said Janet Eom, a research manager at the China-Africa Research Initiative.
Oil-rich Angola received the largest amount of funding, Eom says. But resource-poor Ethiopia came in second.
‘One Belt, One Road’ policy in Africa
China views its investment abroad as part of its “One Belt, One Road” policy. Spearheaded by Beijing, this effort is a Chinese public-private partnership, Hwang says, “even though technically no company is truly private in China.”
It aims to develop a modern “silk road” where goods and commodities can be easily transported between China and its surrounding region. Eventually, China says, it would like to shift labor-intensive industrial work to places like Africa.
Local governments are aware a lack of infrastructure is a roadblock to international investment, Hwang says, and are eager to partner with China.
“On the Chinese side, they want to have better investment opportunities in Africa, so if they don’t have a railroad, they will help them build it themselves,” she said.
China also has a large number of infrastructure contractors who need work, many of whom have close links to the ruling party or are state owned.
The quality of the work has come under scrutiny, says Hwang. But, she added, “they are capable of doing [the work] very fast and very cheap, and they are able to find the financing for it …”
Most laborers are African
The Johns Hopkins researchers also found Chinese projects benefit African workers, the foremen and technicians tend to be Chinese while the manual laborers are generally African.
There are concerns about the ability of African nations to pay back these loans, researchers found. This is particularly true in countries heavily reliant on oil revenue, which have seen the price per barrel slump in recent years.
There are also concerns China may pull back its investment on the continent as it experiences an economic slowdown.
But the recipient countries of this investment believe it is a win-win.
Development experts debate Trump’s likely impact on Africa
January 26, 2017 | 2 Comments
By Christin Roby*
Development experts at the annual Foresight Africa panel hosted by the Brookings Institution believe development and business opportunities for President Trump’s administration in Africa are vast, ranging from technology and infrastructure to road creation and renewable energy.
But they also said it is too early to know exactly what the Trump administration’s priorities are regarding the continent.
Angelle Kwemo said that domestic priorities for Trump and his team will likely take precedence over international ones. “Today we are all speculating,” said the director of Washington Media Group’s Africa practice.
“He [Trump] has not promised anything to the African constituency because we did not support him, so we can’t hold him accountable for anything because he hasn’t given any signals as to what he will do,” Kwemo continued.
But other experts pointed to one prime area of opportunity being mobile telecommunications and the rapid spread of internet connectivity. With an estimated 1 billion cellphone users in Africa, increasing access to 3G/4G networks and stronger internet services, senior international advisor for Africa at Covington & Burling LLP. Dr. Witney Schneidman called the continent an ideal atmosphere for technology adaptation in major African cities.
“There is a tremendous potential to use technology, not only to capture value for filmmakers, designers and other innovators, but in doing so, Africa gets to tell its own story … gets control of the narrative,” Schneidman said.
According to a 2016 smartphone ownership survey conducted by Pew Research Center, Kenya, Ghana and Senegal ranked among emerging countries with the steepest smartphone ownership growth, with Nigeria leading the continent with a 9 percent increase in smartphone ownership since 2013.
Other resources — such as iROKOtv, a Netflix-like service in Nigeria — provide examples of internet capabilities in parts of Africa, Schneidman said. Entrepreneurs across the continent seem to be catching on and have found ways to monopolize on mobile technology with the appearance of Uber in 14 African cities across Egypt, Kenya, Ghana and South Africa and Uber-like taxi hailing mobile apps such as TaxiJet and Africab in French-speaking Ivory Coast.
“Technology can be used as an economic developer and bring people into the mainstream of African economic progress,” Schneidman suggested.
However, the legacies left in Africa by prior administrations gives some experts hope that Trump will support initiatives that are already in place.
The 2000 passing of the African Growth and Opportunity Act by former U.S. President Bill Clinton — which added 300,000 jobs in Africa — forged a bipartisan consensus that the U.S. has interest in Africa worth investing in, explained Schneidman.
George W. Bush’s 2003 President’s Emergency Plan for Aids Relief that has helped lower HIV/AIDS rates across sub-Saharan Africa to their lowest levels, and the bipartisan creation and recent extension of the 2004 Millennium Challenge Corporation, which has applied a revised selection process to dispersing foreign aid, are other examples of bilateral U.S. agreements that have demonstrated U.S. support in Africa.
“We don’t see a lot of controversy when it comes to engaging,” Kwemo said. “The question is what he [Trump] will do and how far he [Trump] will go.”
Schneidman said it’s natural to be concerned about the future of Africa-focused programs during administration changes when the new president has the power to cut budgets and funding to programs such as the Young African Leaders Initiative and PEPFAR.
Fears around Trump’s plans in Africa increased drastically with the recent publication in the New York Times of a four-page questionnaire from his transition team to the State Department that posed questions such as, “Is PEPFAR worth the massive investment when there are so many security concerns in Africa? Is PEPFAR becoming a massive, international entitlement program?”
Some of the questions clearly had a critical and abrasive tone, including “With so much corruption in Africa, how much of our money is stolen? Why should we spend these funds on Africa when we are suffering here in the U.S.?” This has left some observers wondering if Trump will radically reduce American engagement with Africa.
But others struck a less alarmist note, speculating that Trump’s involvement in Africa could take time to develop, just as it took President Barack Obama an entire term before making a visit to Africa and launching the Power Africa Initiative, which happened in 2013.
Dr. Ken Opalo, assistant professor in the School of Foreign Service at Georgetown University, suggested that the president’s background in business might be good for Africa.
“Business and jobs are what end poverty,” Opalo said. “And if he [Trump] sticks to a pro-business agenda that might be good, especially to the extent that he brings American companies onto the continent.”
But the overall message emerging from the forum was clear: Don’t get too carried away with asking if Africa is a priority for Trump or not because it’s just too early to know for sure.
Kwemo said that, though a continuity in policy would be ideal, she also urged African leaders to “stop waiting for heaven to come from somewhere else” and instead “take responsibility and think about their own strategies.”
Obama’s Legacy to Africa: Electricity
January 21, 2017 | 0 Comments
By Salem Solomon*
Recent U.S. presidents have tried to leave a legacy in Africa in the form of a signature policy achievement.
For Bill Clinton it was the Africa Growth and Opportunity Act (AGOA) that opened U.S. markets to certain African exports. For George W. Bush it was the President’s Emergency Plan for AIDS Relief (PEPFAR) that poured billions of dollars into AIDS research and treatment.
Barack Obama decided the thing most holding back African development was access to electricity.
“Access to electricity is fundamental to opportunity in this age,” he said in a speech in Cape Town in 2013. “It’s the light that children study by, the energy that allows an idea to be transformed into a real business. It’s the lifeline for families to meet their most basic needs, and it’s the connection that’s needed to plug Africa into the grid of the global economy.”
Fueled by a $7 billion U.S. investment, the Power Africa initiative aims to add more than 30,000 megawatts of electricity generation capacity and 60 million new electric connections for the continent’s homes and businesses.
The project, which relies heavily on the private sector, is one of several reasons observers believe Obama has helped change the narrative on Africa.
From aid to trade
“His biggest single legacy has been, I think, to move the debate and focus on Africa away from aid to more about trade. That has been particularly his focus during the second term,” said Alex Vines, head of the Africa Program at London-based Chatham House. “Looking at the continent of Africa more as a continent of opportunities rather than of humanitarianism, terrorism and disaster.”
The Obama administration also sought to build relationships with the next generation of African leaders through the Young African Leaders Initiative and with current heads of state by holding the U.S.-Africa Leaders Summit in 2014, a first of its kind event that drew 50 African leaders to Washington.
The United States continues to far outpace the rest of the world in terms of traditional aid to Africa. It pays nearly $9 billion per year in development aid to the continent. Britain, the next biggest donor, pays just more than $3 billion per year.
But even in the arena of traditional aid, Obama took an approach that offered a hand up instead of a hand out. For example, the Feed the Future initiative launched in 2010 veers away from traditional food aid by assisting farmers with locally adapted technologies and helping to avoid price shocks.
“This is a really important dynamic and finally it takes the U.S. away from the more traditional donor-recipient relationship that really defined the post-Cold War era to one where the U.S. is seeking mutual benefit with African governments and others on the continent,” said Witney Schneidman, senior international adviser for Africa at Covington & Burling LLP and nonresident fellow at the Brookings Institution.
Future under Trump
As with many things, President-elect Donald Trump’s views on aid to Africa are complicated. As a candidate in the Republican primaries, one of Trump’s applause lines was a pledge to “stop sending aid money to countries that hate us.”
But during an April 2016 speech on foreign policy he appeared to embrace the U.S. role as a donor saying, “We are a humanitarian nation.”
Observers have speculated that, because of the isolationist thrust of his worldview, Trump is likely to be less interested in aiding Africa than his predecessors.
But others feel that there will not be a major break with Obama’s policies there.
“Some [programs] will fall away, I suppose, under the new incoming Trump administration when it’s in place, others will continue,” Vines said. “My own reading is I don’t think there would be a massive difference between an Obama administration in how it looks at particularly sub-Saharan Africa and the Trump administration and how it looks at sub-Saharan Africa.”
Finally, don’t rule out a major shift in Trump’s perception of Africa. Schneidman pointed out that presidents Clinton and Bush came to the Oval Office with virtually no experience in Africa, but left positive legacies.
“We just don’t know what a president Trump will do on the continent,” Schneidman said. “I think we have to approach it with an open mind, and I think we have to put forward a number of ideas where he could carve out his own legacy.”
The University of Gondar and Queen’s University Join The MasterCard Foundation Scholars Program
January 18, 2017 | 1 Comments
Hailemariam Dessalegn, Prime Minister of Ethiopia, guest of honor at the AFRICA CEO FORUM 2017
January 18, 2017 | 1 Comments
Hailemariam Dessalegn, Prime Minister of the Federal Democratic Republic of Ethiopia will participate in the 5th edition of the AFRICA CEO FORUM, alongside 1000 international and African economic decision-makers, including 300 top investors.
As the second largest African market, Ethiopia is one of the most robust and best performing economies on the continent, with a two-digit growth rate over the past 10 years (a 10,8% annual average since 2005).
Accompanied by a delegation of Ethiopian CEOs, the Prime Minister will present the strategic orientations of his economic policy as well as several concrete investment projects in high potential sectors. The Ethiopian Government has launched significant programmes in sectors such as transport, telecommunications, energy and industry, especially textile industry, to accelerate the structural transformation of the country’s economy.
|Press contact :
Tel. +33 1 44 30 18 18
Washington DC To Host EnergyNet’s 3rd Powering Africa Summit In March
January 18, 2017 | 0 Comments
|Amidst the wait for US foreign policy decisions, proactive energy sector leaders from Africa get set to return to Washington DC for EnergyNet’s 3rd Powering Africa Summit this March|
|The Summit is supported again by Power Africa, the U.S. government interagency created to establish 60 million new household and business connections by 2030
The annual Powering Africa Summit returns to Washington DC this March providing a platform for Africa’s energy sector stakeholders and developers to engage multilaterals, global investors and technology providers. The meeting will present backbone energy and infrastructure projects to the most proactive partners.
The Summit in 2016 welcomed 620 attendees from 18 countries and whilst 65% of delegates originated from North America, investors from Europe and Asia also participated, seeking partnerships with leading technology companies, governmental agencies, the World Bank, IFC and others to drive forward their African projects already under development.
The Summit is supported again by Power Africa, the U.S. government interagency created to establish 60 million new household and business connections by 2030, aiding the potential to double the size of some African economies and the spending power of the projected 1.5bln people.
Also supporting the meeting is the Overseas Private Investment Corporation (OPIC), US Africa Development Foundation and the US Africa Business Center (USABC). EnergyNet’s Managing Director, Simon Gosling, commented; “It’s exciting to be working with the USABC this year. Their members are hugely significant along the energy value chain and clearly doubling efforts to get projects moving, bringing with them much needed bankability for the capitalisation of projects.
Equally exciting is the presence and potential of African gas to power projects. This year those attending will be exposed to crucial Gas-to-Power updates including South Africa’s gas procurement programme, which will create massive opportunities for the winning bidders and their technology partners. Additionally, as some countries struggle to stabilise investor confidence [including South Africa itself], their IPP procurement programme in partnership with the Department of Trade and Industry could lead to some 50% of international capital flowing through the country in the coming years. Therefore taking this programme to the home of the World Bank only stresses further the confidence of the Minister, DOE and the procurement team itself – so personally I’m very excited.”
For more information about this meeting:
Africa and the Energy Sector: Perspectives from Simon Gosling
January 16, 2017 | 0 Comments
Simon Gosling is the Managing Director of EnergyNet Ltd, a company which has been producing investment forums and executive dialogues for Africa’s power sector for the last 23 years. EnergyNet’s meetings take place across the African continent and in Europe, the USA, China and North America.
What significant developments have you witnessed in the industry over the last few years?
That’s an interesting question because I’ve probably got to look at this from two different industries; conferences and energy. I’ll start briefly with the conference perspective as I’m far more in control of this. Firstly, I am exceptionally proud of what the EnergyNet team has achieved over the last five years, which includes investing a percentage of our net profits in African students, off grid energy projects, our ‘Arts:Energy Partnership’ which is set for great things in 2017 and also championing our #responsibleconferencing agenda. I firmly believe that all conference organisers should behave responsibly, giving back to the communities and leading an agenda which draws on our partners experiences as well as our own. Therefore from a conference perspective, I think the significant change I personally have witnessed (because we have led it), is that the companies we work with are starting to engage with us and our network in more productive and meaningful way where we can directly link the success of our conferences to our work in the communities with which we serve.
With regards to the energy sector itself I’m not sure how relevant my opinion is, however I think there have been some very positive movements overall especially from technologies being utilised across the continent. The surge in interest in gas to power is clearly the biggest change from five years ago, and again we see South Africa leading the field here. However, Morocco and Egypt are making huge strides with their gas IPPs and with such emphasis from both HRH King Mohamed 6 and President El-Sisi to succeed with gas, we may well find that the winners benefit significantly from a lower gas price than those that come in further down the field.
Most exciting for me however is the potential of an ECOWAS-owned regional gas IPP procurement programme. Being an eternal optimist I firmly believe that a regionally owned and centrally operated programme is a possibility for West African states and the potential of a cross border procurement programme would be game changing. Early feedback suggests that if ECOWAS could secure the remit for such a programme, the private sector would be eager to engage, bringing billions of dollars of multilateral backed investment. In the long term this could create a circular economy where West African gas feeds into the gas infrastructure for the whole region.
Other areas of note are obviously the renewables and off grid sectors. In the last 18 months off-grid companies have started to attract significant interest with some traditional energy players finally seeing ‘scalability’ in off grid. Companies like Solektra and Powerhive are changing how we think about unconnected communities and data-tapping into the allusive 600 million people that live without access to basic energy.
However the slowdown of renewable energy IPPs in South Africa, the only country possibly on the continent seeing a slowdown in renewable energy development, is concerning for investors considering how many projects are on hold presently. Albeit, the uptake of renewables in Nigeria, Morocco, Kenya, Ethiopia, Senegal and others mean that investors’ appetite for the continent is far from waning.
What was your industry highlight of 2016?
There have been two highlights for me; one was our South Africa: Gas Options conference in October and the other was the Africa Renewable Energy Forum in Morocco. Both these meetings have proved to add real value to investors and the public sector alike. What’s so exciting for me here is that we’re working closely with both countries and that both are meeting and learning from each other about challenges and opportunities which politically for these countries could be game changing for the whole continent.
What projects are you most excited about in 2017?
These are tough questions to respond to briefly – there is so much happening in the energy sector around the world right now that pinpointing one or two projects is impossible. I think one of the more exciting projects is the China State Grid developed Pakistan transmission network. What’s exciting is that this project reflects conversations I had in Beijing three years ago at our Africa Infrastructure & Power Forum where senior Chinese officials talked about the objectives to develop a high voltage transmission network, crossing borders and linking regions. This recent announcement is a stepping stone towards a broader vision to link Africa to Europe and a more connected world. It’s this interconnectivity which will enable fast growing economies to surpass economic expectations.
The other [projects] are the Gas IPP programmes in South Africa and Morocco and the reason I’m excited about these programmes is because of the scale of the projects and how the success of them will draw heavily on many international partnerships and interlinked services such as shipping, FSRU, trading, planning and power generation to name a few. Most excitingly though is the peripheral gas utilisation programmes that are being developed around the core projects – for example in South Africa, the Gas IPP anchor programme could transform the county’s economy creating gas based industries that will create hundreds of thousands of jobs and lead to a surge in wealth across the nation. Adding to that the potential for Mozambique, Namibia, Tanzania and other neighbouring countries that will directly benefit from partnering with the larger economies, this deep-impact level of thinking is, for me, mind-blowing!
What country or region will be the ‘one to watch’ in 2017?
As you know, last year EnergyNet started working closely with the governments of Colombia, Mexico, Argentina, Chile and Peru in LATAM as well as Pakistan, Indonesia and Myanmar in Asia. The reasons for this is that I believe the companies we see being successful in Africa should be able to replicate that success in these other ‘growing economies’ and therefore EnergyNet has a responsibility to connect these governments with the world’s best developers. I’m therefore more excited about the sector as a global industry driving poverty alleviation through commercial projects than one country or region.
What new perspectives and discussions will come out of bringing AEF to Denmark, do you think?
It’s funny, when I think back to over the last four years of AEF, 50% of the destinations we took the meeting to were not considered relevant or appealing when we made the announcements. All destinations ended up being huge successes for the governments and private sector organisations which attended, adding significant perspective and building new relationships which we see moving forward at our subsequent meetings. As an organiser that wants to contribute to the furtherment of the sector it’s important that we listen to our partners and learn from them so we can take investors and public sector stakeholders on a journey that opens their eyes to new ideas, technology and investors, and Denmark is by all means one of those destinations that has it all, not because Denmark is doing more than other countries necessarily, but because the Nordic countries as a group are more than likely doing far more projects than governments and investors across Africa probably realise. You only have to research briefly online to get an idea how advanced and efficient Denmark’s own energy mix is want to learn more about how they ‘did it’ and in addition, cooperation across the Nordic states is well crafted and the ‘gold standard’ for regional diplomacy.
Whilst I fully expect AEF:2017 in Denmark to be a much more exclusive, high level forum by comparison to the hugeness of London which saw record breaking levels of attendance, I already know that Copenhagen, specifically for the aforementioned reasons, will be one of the most impactful, exciting and important forums African stakeholders are ever likely to attend.
What role will LNG-to-power play in driving the growth of the power sector?
I hear all the time that gas is the enabler of renewables, that coal is bad, that nuclear is the answer and that renewables are too cheap or too expensive; well I agree with a some of these statements and disagree with others. What I do believe however is that the sector must be commercial and that gas-to-power has the potential to trigger a wave of investment downstream that will dwarf anything we’ve seen to date in Africa; greater than the telecoms and the power sector itself. The speed of population growth, the changing mix of [low:medium;high] income families, increasing consumer spending power and the ability of manufactures to move goods around the continent will be the enabling factor for real growth and the liberalisation of the energy sector – however, gas-to-power will be the innovation that starts it all.
More information about EnergyNet’s upcoming meetings in 2017 can be found at www.energynet.co.uk
Idris Elba sells Valentine date for charity
January 13, 2017 | 0 Comments
Luther actor Idris Elba has put himself up for auction as a Valentine’s date to raise money for charity.
In an online video, he offers bidders a “romantic evening” involving cocktails, food and “whatever your heart desires”.
“I’ll let you pound my yams,” the 44-year-old star continues before downing a glass of champagne.
Proceeds will go to WE (Women Everywhere) Can Lead, a charity organisation “working to empower and educate girls throughout Africa”.
The winner will join Elba for “a candlelit meal at one of his favourite restaurants”.
Flights and accommodation at a four-star hotel are included, according to the actor’s page on the Omaze website.
Interested parties have until 14 February to make a bid.
Elba also voiced Shere Khan in last year’s hugely successful Jungle Book film as well as producing and starring in Beasts of No Nation (2015).
He is also set to star in The Dark Tower later this year, a fantasy western horror film based on a series of Stephen King novels.
Growth, Trump, and debt in Africa: Key economic trends to watch in 2017
January 9, 2017 | 0 Comments
After a challenging 2016, will African economies fare any better in the coming year?
In 2016, real GDP growth in sub-Saharan Africa is estimated to have been the weakest since the 2008-09 global financial crisis. This was largely because of the weak performance in its two largest economies, South Africa and Nigeria, which together make up about half of sub-Saharan Africa’s GDP.
Although oil and mining economies were hurt by the commodity slowdown, much of East Africa as well as oil-importing Francophone economies such as Côte d’Ivoire and Senegal managed robust rates of growth of above 6%. The slowdown in Africa was not uniform.
But what are the prospects for African economies in 2017?
How will Africa’s two leading economies fare?
Hopes for faster growth rest on prospects in the region’s two largest economies.
In South Africa, recovery after a severe drought in 2016 and improved electricity generation should provide a modest lift. But private sector confidence remains weak, and rising debt levels mean that South Africa remains at risk of losing its investment grade credit rating. With little room to scale up public investment, a tepid recovery is likely, at best. Faster growth will be needed to contain rising public debt. South Africa faces its next round of rating reviews in June, but it will be difficult to achieve anything meaningful by then.
In Nigeria, following a probable contraction of GDP in 2016, it will not take much to drive growth to positive levels in 2017. But higher oil prices alone – we forecast an average of $66/barrel in 2017 – are no panacea. Oil output and Nigeria’s ability to curb militancy in the Niger Delta will also matter.
Even more important are prospects in the non-oil economy, which makes up 92% of Nigeria’s GDP. Activity in the non-oil sector has been sluggish, hampered by poor policy choices, in particular a poorly functioning foreign exchange market. Despite several flawed attempts at currency flexibility, Nigeria has never fully embraced a liberalised foreign exchange regime. The authorities are uncomfortable with allowing demand and supply to determine the value of the Nigerian naira. Because Nigeria has low levels of accumulated oil savings and its foreign exchange reserves have come under pressure, it has had to resort to curbing import demand in order to maintain a steady foreign exchange rate. However, squeezing import demand has meant maintaining a severe squeeze on the real economy. Growth prospects will depend on how quickly unsustainable foreign exchange bottlenecks are resolved.
2017 is likely to bring a cyclical recovery to sub-Saharan African economies. But this will not mean a restoration of previously robust growth rates.
How will Trumponomics affect the continent?
Much uncertainty surrounds the likely economic impact of a Donald Trump presidency in the US. In recent weeks, global equity and commodity markets have rallied in anticipation of more expansionary fiscal policy and the possibility of faster US economic growth. The US dollar has strengthened against other currencies, especially those of emerging markets, which are seen as especially vulnerable to a potential trade war.
Many worry about how the US will afford more infrastructure spending; bond markets have sold off (with prices falling and bond yields rising), reflecting the concern that larger fiscal deficits may be needed to enable any spending stimulus. Each of these factors will have implications for sub-Saharan African economies in 2017.Africa is unlikely to be the direct target of any Trump-induced trade protectionism. But if trade tensions escalate, potentially weakening confidence in emerging market prospects, sub-Saharan African economies are likely to be affected. Over the last two decades, Africa’s trade with emerging markets has grown rapidly, at the expense of its trade with more developed partners. A slowdown in global trade would be a negative for trade-dependent emerging markets and could hurt their demand for Africa’s export commodities.
To counter this, African economies will have to redouble efforts to boost intraregional trade. While unlikely to compensate for a global trade slowdown, this might mitigate some of its more negative effects. Plans for an African Tripartite Free-Trade Area (TFTA) − encompassing 26 economies from the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) − should get underway in 2017. The challenge will be how to make the new trade partnership meaningful. Poor infrastructure links and weak trade complementarities hampered earlier trade initiatives. However, faced with the threat of new disruptions to existing trade patterns and supply-chain integration, it is even more important that African economies start trading more among themselves.
Will Africa be able to borrow?
In the years following the 2008-09 global financial crisis, African economies took advantage of cheaper financing to issue record amounts of traded external debt. Many of these countries are now only five or six years away from a large amount of this Eurobond debt maturing. Ordinarily, borrowing countries would be looking to refinance their existing debt, issuing more long-term debt some time before their existing debt is due to mature. But rising US interest rates and higher bond yields may complicate this process as global investors will likely demand even higher returns for investing in sub-Saharan African debt, which is perceived to be more risky.
For African governments, borrowing internationally to invest in infrastructure is likely to become more expensive. They will have to do more to reassure lenders that they can repay existing debt. Those countries that are able to boost confidence by signing up for IMF and World Bank reforms will likely be rewarded with access to cheaper financing. Those that fail to adopt reforms could find their access to international capital markets more constrained.
Will African companies be able to borrow?
Weak growth in recent years has impacted the health of the banking sector in different sub-Saharan African economies. Weaker commodity prices and sluggish fiscal revenue resulted in many governments falling behind on payments to suppliers and contractors. The prevalence of fiscal arrears (late payment by government) has often been closely linked to the problem of non-performing loans in different banking systems. As banks face mounting losses, they become more reluctant to lend. Economic momentum slows further.
Often the problems are country-specific. Prior to the collapse in the oil price in late-2014, Nigerian banks were used to lending in foreign exchange. But currency depreciation since then has made foreign exchange loan repayment more difficult. It has also called into question capital adequacy, the buffer (measured in local currency) through which banks are able to absorb losses. Until these issues are resolved comprehensively, it is difficult to see the return of new lending appetite on a sustained basis.
Populist policies have also played a role in weakening the performance of the financial sector. In Kenya, the full impact of the adoption of loan rate caps and regulated loan-deposit spreads, introduced in 2016, will only be seen in 2017 or beyond. Banks now face a maximum rate at which they are able to lend to clients. Wherever loan rate caps have been introduced in the past, the effect has been the same. If banks cannot price adequately for risk, they withdraw their lending, choosing to lend only to the safest and most established borrowers. Small and medium enterprises as well as new start-ups with no established credit histories will likely face the brunt of this, meaning several growth and employment opportunities will be forgone somewhat needlessly.
While Africa’s economies face more difficult external conditions in 2017, many of the policies that have contributed to weaker economic growth are home-grown. The good news is that average regional growth should recover in 2017. But greater reform and deeper debate on the domestic policy choices that have constrained growth are required for more meaningful transformation.
*African Arguments.Razia Khan is Regional Head of Economics, Africa, at Standard Chartered Bank.Razia Khan will be speaking at Africa in 2017: Prospects and Forecasts in London on 11th January. Book tickets here.
The 5th edition of ‘Africa Business Forum to take place in Addis Ababa, Ethiopia
January 9, 2017 | 0 Comments
-A global community of 10,000 professionals, 20,000 registered international companies, 60,000 social media followers. 10 million views join Africa’s largest network of CEO’s
-The panel topics at the 5th Africa Business Forum represent the areas of Finance & Capital Investment, ICT, Agriculture & Mining, Power & Energy, Consumer Goods & General Trade, Logistics & Aviation, Infrastructure, Tourism, Hospitality & Real Estate, Manufacturing and all related industries
ADDIS ABABA, Ethiopia, January 9, 2017/ — The 5th edition of the Africa Business Forum in Addis Ababa, Ethiopia will be held for the Second time in Ethiopia on the 1st of March 2017 in the 5 star Sheraton Hotel, under the Patronage of Sheikh Mohammed Al Amoudi, one of the largest investors in Africa, Forbes ranked billionaire and Ethiopia’s biggest employer. Prior to the conference, the AfricaBusinessForum(dot)com (www.AfricaBusinessForum.com) B2B Investment Meeting will be held on the 25th January 2017 at the Dubai World Trade Center Tower, to welcome potential investors to Africa.
Since its creation in 2014, The Africa Business Forum has become one of the most important bi-annual gatherings in Africa and the Middle East. Africa Business Forum presents an invaluable opportunity for investors to connect with clients from across industries and from around the world. An opportunity to maximize market share by building connections with African customers and partners. The conference will host distinguished panelists and speakers, including ambassadors, high government officials, business leaders, investors and CEOs. Keynote speakers and conference panelists include:
Fitsum Arega – Director General of the Ethiopian Investment Commission – Ethiopia Government.
Belachew Fikre, PhD – Deputy Commissioner – Ethiopian Investment Commission – Ethiopia Government.
Yohannes Tilahun – Former CEO to General Electric (Ethiopia) and Adviser to the commissioner at Ethiopian Investment Commission.
Zemedeneh Negatu Country Managing Partner for EY (Ernest & Young) Ethiopia, and among “The Top 15 CEOs of Africa to watch in 2015ˮ by the London-based African Business magazine.
Johnny Muteba – CEO, Pan African Chamber of Commerce.
Craig Bridgman – Former Global Head of Investment Banking for Clarkson Capital Markets, currently Executive Chairman of East Africa Oil Field Services and Founder of Adamantine Energy and who sits on a number of advisory boards.
Seyoum Bereded – CEO Consopia Consulting Services and President of the ICT Association of Ethiopia.
And many others, check AfricaBusinessForum(dot)com for details.
“We are very excited about the level of enthusiasm we have received from speakers, sponsors and attendees for this unique conference,” said Rashed Ahmed, founder and Chairman of Africa Business Forum. “We look forward to bringing together the many business leaders and offering international companies considerable opportunities to enter and become successful in one of the fastest growing economies in the world. The 5th Africa Business Forum in Addis Ababa, Ethiopia is an incredible convening center for global stakeholders and an opportunity to share perspectives on the issues facing global business and beyond.” said Rashed Ahmed.
The panel topics at the 5th Africa Business Forum represent the areas of Finance & Capital Investment, ICT, Agriculture & Mining, Power & Energy, Consumer Goods & General Trade, Logistics & Aviation, Infrastructure, Tourism, Hospitality & Real Estate, Manufacturing and all related industries.
Please go to the AfricaBusinessForum(dot)com website (www.AfricaBusinessForum.com) and view the program from the main menu.
AfricaBusinessForum and sister website AfricaGlobalTrade were founded in 2014. An African led organization, by Africans promoting Africa. Our aim is to strengthen ties between the business world and one of the world’s most dynamic and fastest-growing regions. Creating partnerships that will promote trade, accelerate job growth, and encourage investment. Africa Business Forum is home to a global community of 10,000+ professionals, 20,000+ international companies, 60,000+ social media followers and 10 million website visitors. With 3 offices: London, Dubai and Addis Ababa. Representative partners in Kenya, Uganda, Ethiopia, Tanzania, Somalia, Angola, South Africa and Nigeria.
UAE research programme for rain enhancement science to award grants for research proposals
January 7, 2017 | 0 Comments
By Wallace Mawire
The United Arab Emirates (UAE) Research programme for rain enhancement science is to award the most innovative research proposals for rain enhancement science during the Abu Dhabi Sustainability week at a ceremony to be held at the Abu Dhabi national exhibition centre on 17 January, 2017, according to a team spokesperson.
It is reported that the programme is one of the world’s forefront leaders in finding solutions and innovations for water security challenges.
Organisers of the event say that with a projected total global population increase of three billion over the next three decades which will severely pressure the limited supplies of fresh water, countries are leading research to find technologies that will offer a viable, cost-effective supplement to existing water supplies.
“The programme is the first of its kind that aims to build feasible alternatives in arid and semi-arid regions that will serve future generations through international cooperation in science and technology,” according to organisers.
The UAE Research Program for Rain Enhancement Science, an initiative of the UAE Ministry of Presidential Affairs and overseen by the National Center of Meteorology and Seismology (NCMS), offers a grant of 5 million US dollars over a three-year period to be shared by up to five winning research proposals. The programme was launched with the aims of addressing water security challenges and placing the UAE at the international forefront of scientific research into rain enhancement.