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The Internet Economy in Africa – Key takeaways of a $180 Billion Industry

13 January 2021 Comments (0) Africa, Business, Featured

The e-Conomy Africa 2020 report, a unique collaboration between the IFC and Google, sheds light on the great potential of Africa’s Internet economy, the promising tech entrepreneurs driving innovation, and the growing tech talent across the continent.

The e-Conomy Africa 2020 report, a unique collaboration between the IFC and Google, sheds light on the great potential of Africa’s Internet economy, the promising tech entrepreneurs driving innovation, and the growing tech talent across the continent. Of the top 20 fastest-growing countries in the world, nineteen are located in Africa. Driven by greater access to the internet as well as having an increasingly young and well-educated workforce, the IFC and Google predict an internet economy on the African continent worth $180 billion by the year 2025. This could reach $712 billion by 2050 and despite the impact of Covid-19, this ‘e-conomy’ is expected to be more resilient to the pandemic. This offers several promising avenues for investment on the continent.

Sectors Driving the Growth of the Internet Economy in Africa

Thanks in large part to easier access to mobile internet, several key sectors have been able to flourish in recent years:

  • Fintech, or financial technology, enjoys an average of 120% growth in funding year-on-year, and is the most heavily funded sector in Africa. With large amounts of the population unbanked, startups allow people to leapfrog from physical retail banking to online banking by offering services like payment processing, personal finance, insurance and microloans. Companies like M-PESA in Kenya, Fawry in Egypt and Paystack-62 in Nigeria lead the way in, with some companies growing at more than 100% annually.
  • Healthtech received $189 million in 2019, and the healthcare market in Africa is expected to reach over $100 billion by 2030. Companies like Zipline have been operating medical supply drone deliveries to rural areas, while Helium Health has been providing technological solutions for healthcare providers.
  • Media and Entertainment has seen a rapid increase in demand, thanks in part due to lockdowns and social distancing measures put in place to prevent the spread of Covid-19. Content specifically created in Africa can be found on globally-available streaming platforms, such as Netflix’s “Made in Africa” collection, and African-made content is expected to expand quickly.
  • E-Mobility and Food Delivery has been hard hit by the pandemic, as ride-hailing saw a decrease in demand due to work-from-home and lockdown measures. It is expected to rebound quickly however, as Africa has one of the lowest car to person ratios in the world. In some areas taxis and moto-taxis make up nearly 80% of motorized trips. Global ride-hailing companies like Uber and Bolt have entered the market in the past seven years, in addition to local startups, such as Little, Gokada, Gozem, MaxNG, Safeboda and Yassir. Startups within the e-mobility sector in Africa raised $62 million in 2019. Many of these startups have branched into food and grocery delivery to alleviate the impact of Covid-19.
  • E-Logistics platforms are helping informal retailers with companies such as Kobo360, Lori Systems, Sendy, and Truckr reducing the cost of cargo and local transportation.

Young Tech Talent in Africa Drives the Growth and Consumption of Online Services

Africa has the world’s youngest and fastest-growing workforce, one that is increasingly urbanized. Tech talent in Africa is at a historical high with nearly 700,000 professional developers across Africa, a number that is still rising. Women comprise one in five of the total developer population in Africa, higher than the United States, creating new opportunities for women, especially in Egypt, Morocco and South Africa. A skills gap still exists, with self-taught developers making up the same number of as those that are university-trained. Helping to bridge this gap will help encourage the growth of the internet economy in Africa.

With support and regulation from regional governments, the internet economy in Africa looks set to boom in the coming years, thanks to the hard work and entrepreneurship of local startups on the continent.

Photos : ifc.org – bp.blogspot.com – miro.medium.com

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Shaking up the African mobility arena

20 December 2020 Comments (0) Africa, Business

The micromobility tale

In order to adequately assess the micromobility situation in African countries, we have to note that transport alternatives vary tremendously depending on cultural beliefs, social status, geographic hindrances, availability, needs, demand as well as pricing. Most African households cannot afford to buy a car, or even rent one. But the government is yet to invest in bike-friendly infrastructures leaving people with no other choice than being heavily reliant on motorized vehicles to reach their destination. 

With a population of over 1 billion people and almost 75% of motorized trips, sustainable options should be provided to alleviate the demand of a growing population for a flexible, fast and clean microtransport system to commute in traffic-congested communities.

Bringing micromobility to Africa 

Bike sharing has started spreading like wildfire across the world. Unfortunately, this unique technology has known rather slow beginnings in most African cities and is yet to be embraced by the users at large due to the cultural misconception that a bike is a ‘poor man’s means of transportation’. Additionally, an evident lack of bike-specific infrastructure like dedicated cycling lanes, causes companies’ launch to lag behind. 

A fleet of electric scooters or bikes will drastically reduce long queues at bus stops due to an insufficient supply of public buses and will see a drop in household expenses as bikesharing is offered at a minimal fee compared to the high cost of taxis. Micromobility can also bargain on reduced gas-powered emissions, as there will be fewer cars on the streets and solve problems of dangerously high levels of pollution. Moreover, electric scooters are more likely to be a more viable mode of transport. According to “Wired”, a gasoline-powered car can travel 0.8 miles whereas an electric scooter covers 82.3 miles on an equivalent one-kilowatt hour of energy. It is also extremely convenient that electric bikes and scooters take up less space in a parking lot.

The Big Players

Micromobility solutions have been embraced by few operators such as Cycles (Nigeria), Baddel (Egypt), Guraride (Rwanda), Smoove (Morocco), Asambe (Zimbabwe), Lime (Cape Town), 

So far, the leading players in deploying microbility programs are Egypt and Morocco. In 2016, Marrakech (Morocco), was the very first to establish a bike-sharing startup across the city. Smoove, a French company, supplied the 300+ bikes available for public use through the Medinabike program run by the Ministry of Environment. 

Baddel, headquarted in Cairo, Egypt, was the first to set up such a venture in North Africa with 101 electric and 15 dock stations. A partnership with the UN Human Settlements program has also launched hundreds more vehicles throughout the capital since 2018.

Launched in 2017, Guraride, a Rwanda-based green e-mobility company, enables customers to choose their favourite ride by combining in an app the accessibility to electric scooters, bikesharing, and smart bikes. The charging stations are solar-powered and a bike can go up to 70km in a single charge. The government has supported the improvement of infrastructure to accommodate more cycling lanes in Kigali’s centre. Compared to other African countries, Rwanda has more easily implemented the concept of public bike share as cycling is a national pride. 

In 2018, the UN Environment Program partnered with Mobike to begin bike-sharing operations for the UN’s Nairobi compound and featured during the Africa Clean mobility Week, in an attempt to showcase the positive impact of such shifts on the environment. Nairobi has also seen an overhaul in its CBD setting in view of its vision for a green e-mobility by 2030.

Pan-African company Asambe offer for e-biking perfectly fits the demand for a fun, affordable mode of transport given the fact that Zimbabwe has the highest fuel cost and is very often afflicted by petrol shortages.

In communities where all the odds are against the startups, companies like Cycles are sometimes left with no choice than to cater for Universities and residential estates where appropriate framework already exists. Smoove also launched an armada of shared bicycles in Lagos, Nigeria in 2018 but it has not seen any surge in development due to a ban on bike-hailing services imposed by the government

What Lies Ahead

There has been a renewed focus on micromobility, especially following the Covid-19 pandemic need for social distancing, solo rides rather than sharing buses, taxis or trains. This will have in prospect more single riders, fewer points of shared contacts and open-air transit options as we transition out of lockdowns.

Micromobility obviously seems as the best way to reduce congestion and pollution but it is often not considered as a political priority. We can only hope for a switch in both users and the government and that hurdles such as theft, city bans and limited infrastructure will be resolved to ensure complete adoption and that mobility-as-a-service will become the future mode of transport. 

Forecast 

Based on market research insights, the micromobility market is reported to grow at a rate of 13.20% over the period of 2020 to 2027 given the factors anticipated to be prevalent in the coming years.

Photos : shared-micromobility.com and cbinsights.com

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Legal Scandal in the Dem. Rep. of the Congo Surrounding Businessman-Politician Moïse Katumbi

28 September 2020 Comments (0) Africa

While several French court rulings have dismissed all of his claims, Moïse Katumbi persists in his attempts to seize assets that he sold several years ago, citing local court decisions. Interventions by armed forces in the Katanga region on behalf of Moïse Katumbi may constitute a threat to the rule of law in the country.

Lubumbashi, Katanga region, DRC: On Friday morning, 25 September 2020, at 7:30 am, dozens of armed police officers entered the premises of the company NB Mining Africa by force, accompanied by members of the Public Prosecutor’s Office, expelling the company’s staff. Minutes later, Katumbi’s men posted videos on Twitter strutting through the company’s corridors in scenes akin to a war grab. How did it come to this?

“The itinerary of a spoiled child”

Born to a Greek Jewish entrepreneur and a Congolese woman of Zambian origin, Moïse Katumbi is one of the richest men in Africa today. But success as a businessman was not enough for him: he was eager to get into politics and, as a young man in his forties, he was elected as a member of parliament before becoming governor of Katanga, the country’s richest region, from 2007 to 2015. 2015 is also the year when he ran the presidential race and decided to sell his company MCK to Necotrans, a company under French law, to allegedly finance his electoral campaign. The beneficiary of the transaction was Katumbi’s wife through her company Astalia—based not in the DRC but in Mauritius, for obvious tax reasons.

The story goes as follows: Necotrans went bankrupt and, during the judicial liquidation, the company NB Mining (formerly MCK) was bought, via its company Octavia, by the Frenchman of Corsican origin Pascal Beveraggi who developed it, employing over 2,000 people. Katumbi failed to get elected and returned to his first love: business.

Feeling that he had not been paid in full, the multi-millionaire took recourse to the French courts—the only competent courts in the case—where his claims were rejected definitively.

In an abnormal turn of events, the former governor may have used his networks to seize the Kolwezi court, which reinterprets the decisions of the highest French courts—the only relevant jurisdictions in the case. Pascal Beveraggi’s company must simply now revert to Moïse Katumbi, without further discussion.

The affair is extraordinary for its disregard for the rule of law: from the rights of the defendant and the principle of adversarial proceedings, without any convocation, to unfounded judgments that are not even made public.

Spoliation?

According to Edouard Tricaud, the lawyer representing Pascal Beveraggi and his company Octavia, all this is nothing but a scandalous and parodic decision (Radio France International). “These actions are machinations, a real judicial manipulation, my client has never been able to assert his rights. As a result, the judgment by the Kolwezi court is based solely on the fallacious arguments developed by Astalia”. Tricaud also deplores the fact that the courts did not respect Pascal Beveraggi’s appeal. According to RFI, these all are arguments that are being swept aside by Astalia’s lawyers, not wishing to express themselves publicly.

Bank accounts, premises and rolling stock: all seized. All apparently handed over to Moïse Katumbi who, nonetheless, tweets about his recent chat with the Canadian ambassador to the DRC, declaring that “in all sectors of national life, the end of impunity & a merciless fight against corruption are the best guarantees of the country’s recovery!”

In a press release, Pascal Beveraggi criticized the scandal and the mockery of justice: “From someone who has run for the highest position in the country, it is unworthy to use force in this way, using the judicial authorities of a region he once governed. No elementary principle of law has been respected. French justice has ruled on what was only a matter for French justice: Moïse Katumbi sold his company, wanting to reappropriate it is pure and simple theft.”

Photo :  Taylor Weidman © 2018 Bloomberg Finance LP

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Nkwashi: An African educational hub of the future?

18 March 2020 Comments (0) Africa, Politics

As we move further into the 21st century, urban planners and developers customize many of their ideas to suit not only the changing needs of their demographic targets, but also the changing demands of society. One great example of this changing focus is Nkwashi, a satellite town being built 36 kilometers east of the City of Lusaka in Zambia.

Zambia is one of the fastest growing economies in Africa and is the continent’s second-largest copper producer. The country reached middle-income status in 2011 amid a decade of strong economic growth. However, these economic strengths only reached a small percentage of the population and Zambia remains one of the countries with the highest economic inequality in the world with 58% of Zambians earning less than the international poverty line figure of $1.90 per day (World Bank figures as of 2015). 

While many identify an emerging middle class in Zambia with higher levels of disposable income, accurately defining this group is problematic, especially given the wide range of inequality in the country. However, Nkwashi is definitely a city aimed at this group as well as the industrialists and entrepreneurs who have capitalised on the country’s growing economy. 

The beauty of developing a new satellite city from scratch is that you can combine the practical with the idealistic. With a set number of residential units (initially at least), you can plan for the exact services such as power, water, sewage, etc., that you are going to need (while allowing for a future increase in capacity for all). Almost 9500 residential plots will be made available, with sizes ranging from 360 to 1300 square metres. The houses themselves are being designed by the architects behind South Africa’s V&A Waterfront and Green Point football stadium, so will be of the highest standards. 

Nkwashi: An Incredible Opportunities Land Ownership

What makes Nkwashi extremely attractive for families and couples is the incredible opportunities land ownership. Prospective owners apply for a particular size and location and, once approved, they can decide on their payment plan. They can choose from making a whole payment, or monthly payment plans over 2, 5, 10, or 20 years. There are no interest charges on these payment plans and prices on a 5-year flexi plan start as low as 400 Kwacha (25 Euros) per month. Once 48 months of payments have been received, owners can then move to constructing a home, choosing between self-build or construction by a professional builder. 

Zambia’s new satellite city offers exciting opportunities to live, work, learn, and play.

The town has been designed on four main “foundations”: Live, Work, Learn, Play. The Live part is covered by the affordable housing options available spread over 12 districts and with all the amenities one would expect from a modern town. The work part is covered by a well-planned commercial area (and Lusaka is only a 30-minute commute for those who want to keep work and home separate). Play involves a 40,000 square metre mall – with pubs, cinemas, shops, etc.) – as well as 40 acres of parks, over one hundred acres of green spaces, and two lakes for relaxation and watersports.

But it is perhaps the Learn aspect that will most attract young families who identify good education as essential to Zambia’s continuing development. Nine primary and secondary schools are planned, including the flagship Thebe International School offering world-class education to day students and boarders and which is planned to be the best school in Zambia. 

The planned American University will have a 10,000 student capacity and is aimed at both Zambian and international students. The university, situated on a 130-acre campus, will have research as its primary focus and hopes to attract a high standard of international teaching staff. The university’s sports facilities will also be available to the city’s residents and it is hoped this will create an encompassing sense of community. 

An Ambitious Project and an Opportunity to Live In a Self-Contained and Self-Sustaining Community

The company behind Nkwashi, Thebe Investment Management, is run by Mwiya Musokotwane, son of the country’s former finance minister. He sees Nkwashi – and other satellite cities like it – as the perfect answer to the problems of urban expansion in Africa where even affluent neighborhoods can lack total access to required amenities. With a forecast total population of between 60,000 and 100,000, one third of the plots have already been purchased. How successful this new city will be is going to depend not only on plots of land being purchased but on those plots being developed into homes. 

It is an ambitious project that offers the opportunity to live in a self-contained and self-sustaining community that still allows easy access to Lusaka. Satellite cities are also in development in other parts of Africa. Kenya’s government hopes that Konza City will become Africa’s Silicon Valley, an ambitious idea whose success remains to be seen. But the concept of satellite cities certainly offers an attractive option to the congestion of the urban metropolises, and make planning for services and amenities far easier. Could Nkwashi become an educational hub? Only time will tell. 

Photos : nkwashi.com /

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Transmashholding’s African Adventure

23 December 2019 Comments (0) Africa, Business, Transport

Andrey Bokarev’s railway machine manufacturing company, Transmashholding, acquires its First Factory in Africa as the Continent Seeks to Revitalise its Railway Systems and Trains

With Africa, the second-fastest-growing continent from an economic perspective, development of efficient and cost-effective transport and logistics infrastructure are of paramount importance. The continent is not only rich in resources but is also fast developing as a robust manufacturing centre. The challenge for these economies is to ensure swift transport of containers and goods to the various African ports and onto global markets. 

Rail transport is at the forefront of any logistics development and recent years have seen increased investment and new initiatives. And with the planned Africa Integrated High-Speed Network – part of the Agenda 2063 Continent Development Plan – gathering steam, almost every African country is now looking to invest, or seek investment, in improving their railway infrastructure and stock.

The Real Way Forward is the Railway

The main hurdle facing these plans is that existing railways systems, mainly dating from the colonial era, are often in poor states of repair or the routes are unsuitable for future plans. The latter of these factors is mainly due to colonial planners usually using the shortest or quickest routes rather than ones which brought benefits to the country as a whole. Another long-range hurdle to continental integration is the fact that there are at least six different gauges in use. 

The inauguration of Transmashholding’s (as TMH Africa here) first African factory in April of 2019 illustrates the Russia-based conglomerates’ commitment to expansion and investment across Africa and Company’s president Andrey Bokarev business talent (a few months after a €1bn five-year contract between Egyptian National Railways and Transmashholding-Hungary  were signed in 2018.) The 45,000m² plant, situated in Boksburg, Gauteng, has been producing rolling stock since 1911, thus allowing TMH Africa to hit the ground running with an existing facility and workforce. 

The South African factory marks stage one of TMH International’s planned investment in Africa of over $32 million, and initial plans at Boksburg include the upgrading of the factory and machinery as well as retraining and upskilling of current employees.

TMH Enters the South African Train Market

It is also worth noting that Gauteng Province is the location of the Tambo Springs Project, a greenfield transport hub comprising road, air, and rail, and valued at $15 billion. There is also the planned container terminal at Ekurhuleni, some 20km from the new TMH International facility. 

South Africa is now the leading country in Africa for rail freight – at 99.5Mt a kilometre – and the map below shows not only how intensive the African Union’s plans for developing transport infrastructure is, but also how central to that plan South Africa is. 

Jerome Boyet, CEO of TMH Africa, sees the company’s role in Africa as being a local partner with local and global manufacturing companies seeking to fulfil orders across Africa as well as producing their own rolling stock. As Boyet pointed out, a large part of their decision to choose this location was based on: “…our understanding that South Africa’s real potential to become a leader in rolling stock manufacturing for Africa remains untapped.”

With continued economic growth and inward investment to transport systems across the continent, most observers would agree that TMH Africa’s investment is one with long term promise.

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Dr. Bouamatou: breaking down the gender barriers in banking

29 November 2019 Comments (0) Africa, Leaders

While it would be fair to say that actual talent in the world of finance is distributed equally by gender, it would also be fair to note that this talent is not equally distributed among the top tiers of management. In fact, it was only in October 2019 when the Royal Bank of Scotland announced that Alison Rose would be its next chief executive that a woman finally reached the top position in a global bank. The same month, Citigroup named Jane Fraser as President, a move many commentators see as preparing her for the CEO position. IMF figures show that only 2% of banking CEOs globally are women. 

There is plenty of female talent within the finance industry, but generally, the glass ceiling tends to hold them back from the top positions. That glass ceiling often means salary disparity too. In January 2019, Citigroup revealed that its female employees receive on average 71% of their male counterparts. Given that they have over 200,000 employees, with more than half of them women, hopefully, this honesty will see the pay gap closing. 

In emerging economies, the appointment of women to top positions is doubly important. Not only does it address gender disparity, a major issue in many African and Latin American countries, but it also helps the institutions connect more readily with the 1.8 million unbanked women that the World Bank is targeting in Africa and Latin America as part of their 2020 financial inclusion goals. 

Dr. Leila Bouamatou : An Impressive Credentials 

One such woman who currently stands out is 35-year-old Dr. Leila Bouamatou, who is currently Managing Director and Board Member at Générale de Banque de Mauritanie (General Bank of Mauritania). Dr. Bouamatou holds a Master’s Degree in Finance from Barcelona’s EADA Business School, an Executive MBA in Business Administration from South Mediterranean University, and a Doctorate in Business Administration from Fox School of Business & Management. Impressive credentials quickly silenced any critics who say she gained her position through her father, Mohamed Ould Bouamatou, who founded GBM in 1995 as the first private bank in Mauritania. 

Dr. Bouamatou trained in Tunisia with Deloitte’s, with MediCapital Bank in London, and then with BMCE Bank International Plc – who specialize in African investments – also in London. She had just been offered a lucrative contract in London when her father asked her to return home and join the treasury department of GMB. She served as Head of the Treasury Department for 10 years, before being promoted to managing director and board member.

While Mauritania is one of the poorer African countries at the moment, economic development looks good, thanks mainly to a program of reforms which will hopefully be continued by the new president, Ould Ghazouani, who won the election of June 2019, taking over from retiring president, Mohamed Ould Abdel Aziz. On an optimistic note, it is worth remembering that this was the first peaceful change of ruler since the country gained independence from France in 1960. Those reforms have meant that Mauritania is ranked in the top 10 of global reformers. But it is also worth noting that the country continues to have a large foreign trade imbalance though GDP is forecast to rise by 5.2% in 2019 after two years’ steady at 3.5%.

To Break Down the Disparity Barriers in Africa

Dr. Bouamatou is a huge supporter, not only of financial inclusion for women but also of empowerment and breaking down the disparity barriers across the continent. Speaking to her alma mater, Fox School of Business & Management, she said:

“Women are getting more and more educated and becoming more and more ambitious. Fathers are more and more supportive of their daughters and more open-minded, compared to previous generations.”

Dr. Bouamatou is married to Tah Meouloud, a fellow graduate of Fox School of Business & Management, and an economist who was head of human resources at BSA subsidiary BSA Technologies. They have two children.

A Statement against Discrimination against African Women 

Dr. Bouamatou always wears an El-melhfa, a traditional piece of cloth which covers her from ankles to face. While many see El-melhfa as a Muslim tradition, it is more a Saharawi tradition, one which is worn by all religious and ethnic groups of the Saharawi. It is a symbol of Saharawi pride and resistance, especially in what these people view as ‘occupied territories’. Because of its visibility, wearing it can often lead to discrimination against women. By choosing to always wear it, Dr. Bouamatou not only acknowledges her heritage, but she also makes a statement against discrimination against women throughout Africa.

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7th Single Window Conference Looks to Boost Trade Links

25 November 2019 Comments (0) Africa, Business

Between the 17th and 19th of September 2019, the 7th annual International Conference on Single Window of the African Alliance for Electronic Commerce (AACE) was held in Yaoundé, the capital of Cameroon. Present were leading players in logistics and supply chains, and over 40 delegations for foreign countries including 18 African countries. 

The idea behind a single-window system is to improve the efficiency of international trade, in this case particularly the concept of intra-African trade across the region. In order to work properly, this would require a single entity or location where companies would submit all their documents such as customs declarations or permits for import and export. So, if a company in Kenya wished to export its goods to 12 other African countries, rather than going through 12 separate sets of regulations and multiple submission of documents, they would instead do it all through one single entity. 

A single market with a billion consumers

Africa has seen a lot of rapid economic development in recent years, much of that down to cooperation across the continent. Recent developments have included the African Continental Free Trade Area Agreement (AfCFTA) in March of 2018, which has committed to removing intra-regional tariffs on some 90% of goods. If this agreement is successful it will create a single market with in excess of a billion consumers and a total GDP of over US$3 trillion. It was an agreement that the continent needed badly; in 2017, African intra-region trade only accounted for 17% of exports. When compared to Asia (59%) and Europe (69%), it is clear that as a potential trade bloc, Africa was lagging behind and missing out on the many benefits that come with such high rates of ‘local’ trade. 

The September conference focused on two main aims; the growing potential of e-commerce across the continent, and optimizing the supply chains of landlocked countries with no port access. The latter of these is something that will need massive investment in infrastructure, particularly railways and roads. And we are seeing that investment already happening across Africa.

450 million African mobile users and 300 million more expected

But it is the e-commerce factor which is perhaps the most exciting as it needs a lot less in terms of total investment. In some ways, Africa has been able to leapfrog many developed nations in terms of developing e-commerce. With lower rates of banking and credit card use, there has been a need to develop innovative payment methods such as e-wallets which people can top up at local agents, giving them a balance on their mobile with which to purchase goods. And with generally widespread internet penetration across much of Africa, there are large numbers of new consumers coming online. With around 450 million mobile users currently and another 300 million expected to have access in the next 3 years or so, companies are recognizing the potential of this reservoir of consumers with disposable income. 

The concept of the single window is a natural step in the development of AfCFTA. These annual conferences aim to develop the single window concept following the guidelines already established by the World Trade Organisation (WTO) and the World Customs Organisation (WCO). While a continent-wide single window may be some years off, The African Alliance for e-Commerce hopes to establish national and regional ones as a stepping stone to a continental one. Many African countries are already cooperating on cross border trade already, with several trade zones already in operation. Of particular note is the East African Community (EAC) which comprises Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. It has shown the best progress as far as moving towards a common trade area is concerned and could serve as a template for the continent as a whole. 

A single window to reduce tax and to optimize the African potential

Developing single window systems will reduce tax and tariff burdens and make the movement of goods across borders far easier than the present. But there are still many barriers to successful implementation. The continuing conflict in some areas, low-level corruption at borders and customs points, and even the motives of individual countries may hamper a quick solution. But with the massive potential for businesses, there will be a continued push to establish an Africa-wide single window in the near future.

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Can Russia be a major player in Africa? Outcomes from Sochi.

19 November 2019 Comments (0) Africa, Economy, Politics

With the ongoing competition between Russia and China trying to take the lead on African investment and partnerships and the United State’s revived interest over the continent, Russian President Vladimir Putin hosted a Russia-Africa summit in Sochi from the 23rd to the 24th of October.

National belts are tightening globally, and FDI (foreign direct investment) has been decreasing worldwide, yet Africa has been the one region to see the opposite, with FDI to the continent rising in 2018 to US$46 billion, a year on year rise of 11% from 2017. Yet while we may see China and Russia as the ‘main players’ in Africa, the two superpowers remain behind other nations in terms of total investment, with France leading the way followed by The Netherlands and the UK. In terms of development aid, the show continues to be run by the U.S., China, and Japan, with little in the way of ‘no strings’ aid coming from Russia.

Many considered investment in Africa to be like a modern second wave of colonialism, where nations and multinationals sought to reap the benefits of expanding economies and massive amounts of untapped resources. But this time, the African nations have a lot more power when it comes to accepting investment, and the huge amounts of money flowing inwards are being channelled into infrastructure, transport systems, and bringing some of the lagging economies into the 21st Century.

This summit was meant to be a rallying call, an announcement to the world that Russia was back in Africa, a statement of intent that Russia’s decreased influence in Africa was about to reverse. So, did anything actually happen at Sochi?

54 countries, US$12.5 billion in deals signed

All 54 countries in Africa responded favourably to Vladimir Putin’s invitation. And 43 of these nations were directly represented by their respective heads of state like the President of Congo, Denis Sassou-Nguesso, or the Egyptian President, Abdel Fattah al-Sissi, who co-chaired the Sochi summit alongside Putin,

“US$12.5 billion in deals signed” claimed the banner headlines out of Moscow. But it is worth taking a step back and realising that most of these deals were memorandums of understanding, and these MOUs do not always come to fruition, so it is far too early to declare Sochi a success or a failure.

Russia has been the main military partners of some African countries for many years and has consistently been the main source of African arms over the last decade. So during this summit, Russia has confirmed it is multiplying military cooperation and defence agreements with several African countries like Mali.

Other areas where Russia is already doing very well in Africa are in the energy and transport sectors:

The Russian state corporation specialised in nuclear energy, Rosatom, has signed an agreement with Rwanda for the upcoming construction of a Nuclear Science and Technology Centre. This Centre plans to organize the production of radioisotopes that could be used in industry, agriculture and medicine. It will also be equipped with a nuclear facility powered by a 10 MW pressurized water reactor.The Russian railway equipment manufacturer, Transmashholding, has signed a €1 billion with Egyptian National Railways for the delivery of 1300 passenger cars. The company chaired by Andrey Bokarev has also signed a memorandum of understanding with Nigeria for the delivery of rolling stock for the Nasarawa-Abuja railway section construction project.

Andrey Bokarev, President of Transmashholding

Africa determines the future of the world’s agenda

If Russia is to continue competing in Africa, it must play to its existing strengths. While Russia may not be able to compete with the U.S. and China in terms of consumer goods and electronics, it should value its expertise in heavy industry and energy. If they fall behind too much in this game, then their own economy may stagnate, something the country wants to avoid. Thanks to this kind of summit, investment from Russia may increase in the years to come.

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Is The 4IR the Way Forward for Africa?

7 November 2019 Comments (0) Africa, Economy

To be able to look at Africa’s place in the fourth industrial revolution (4IR) we need to first consider what 4IR actually means. The third industrial revolution, or digital revolution, was the development of computers and information technology. 4IR, while seen by some as merely an extension of 3IR, is better separated into its own cycle, mainly because of the rapidity of progress in some areas and the wider repercussions and effects resulting from these new developments and technologies. 

A simple definition of 4IR would be: “The fourth industrial revolution is the current and developing environment in which disruptive technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR) and artificial intelligence (AI) are changing the way we live and work.” (1) 

Is Africa ready to accept and embrace 4IR? Or is it, as some have suggested, even ready to lead it? Africa has almost half of the world’s fastest-growing and developing nations. It also has the youngest population of any continent. But the other side of that coin is the fact that 27 of the world’s 28 poorest countries are in sub-Saharan Africa and the average poverty rate is just over 40%. The World Bank also estimates that if current patterns continue, then by 2030, 87% of the planet’s extreme poor will be in Africa. 

“To provide digital skills to those that do not have them”

Could 4IR play a major role in reducing those figures? South Africa certainly thinks so. While many think that 4IR could take jobs away from people, South Africa sees it as an opportunity to revolutionize the jobs sector across the continent and to train a new generation in the necessary skills to boost African economies. 

South Africa’s Communications and Digital Technologies Minister, Stella Ndabeni-Abrahams, said: “We have to provide digital skills to those that do not have them. We have to make sure that we invest in different resources that we are going to need but most important is to identify what must be Africa’s niche in the fourth industrial revolution.”

A lack of internet penetration across Africa

One major barrier to Africa’s participation in 4IR is the fact that the majority of their available workforce is low-skilled or unskilled. Another, and perhaps more crucial, barrier is the current lack of internet penetration across the continent. Estimates from 2001 state that less than 14% of the population have access to the internet. For access to broadband services, that drops to 1% or lower. In 2015, the number of Africans using the internet varies greatly, from 1% in Eritrea to 57$ in Morocco. 

A declaration of willingness to fully participate in 4IR is not enough. And the idea of being the leader of 4IR will require more than optimistic words at a conference. There is a real need for urgent action, development, and investment in the following areas: heavy infrastructure such as railways, roads, energy supplies, light infrastructure such as ISPs and internet connections, training and education to transform that low-skilled/unskilled workforce into a computer literate, digital-savvy one. 

A monumental investment to create a 4IR economy in Africa

The investment to achieve all of this and to create a foundation on which Africa can create a 4IR economy of any type is monumental. Governmental funds could not hope to cover the amounts needed, so governments need to also create an atmosphere and conditions which will attract inward investment. There is also the option of loans, a very real possibility given the ongoing economic war of attrition in Africa between the three global superpowers. Going the loan route could be a double-edged sword though. On one hand, the current competitiveness between the superpowers means that for once, the country seeking the loan has some advantage in negotiating terms. But as with any loan, the downside is the repercussions should the country default on loans, repercussions which could be dire for decades after. 

To achieve any progress in this area, the lead has to be taken by the African Economic Community (AEC). A major part of even beginning on that path to progress is the African Continental Free Trade Area which fully came into force earlier in 2019. But with so much economic disparity across the continent, can the AEC or the Free Trade Area manage to achieve the balance between the nations or will the economic powerhouses such as South Africa be the only countries who can really take their place in the 4IR marketplace?

(1) https://whatis.techtarget.com/definition/fourth-industrial-revolution

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Russia and Uganda Sign Major Nuclear Energy Deal

17 October 2019 Comments (0) Africa

For several years now, Africa has been the new battleground of the world’s superpowers. But this has not been a war fought with guns, tanks, or fighter jets, but rather one fought with loans, supply contracts, and doing anything to be one up on your competitors. 

The latest salvo in this ongoing economic war has been fired by Russia, or to be more exact by Rosatom, the Russian state corporation founded by Vladimir Putin in 2007 and which specialises in nuclear energy. A quick look at some of their statistics show just how big a player this corporation has become in 12 short years: largest electricity generator in Russia, producing almost 20% of the country’s electricity in 2017, ranks first in regards to foreign projects; 33 nuclear plants in 12 countries, leading provider of global uranium enrichment services with 1/3 of the world market, $300 billion of portfolio orders as of January 2017.

Energy and mining are the two sectors where Russia is particularly active in Africa, with Rosatom, Alrosa (mining), and Gazprom (natural gas extraction) leading the way. 

3 African countries in the top 10 list of global uranium producers

With the formal signing of an agreement on September 18th of this year for Rosatom to build a nuclear reactor in Uganda (the Memorandum of Understanding having been signed in 2017), Russia and Rosatom have cemented their position on energy production even further. 

It’s no surprise that nuclear energy is spreading across Africa. Three African countries (Namibia, South Africa, and Niger) are in the top 10 list of global uranium producers. Surveys by the Ugandan Ministry of Energy and Mineral Development estimate some 52,000 square kilometres of deposits across the country. 

Rosatom are slowly spreading their reach across the continent. They are currently building a $29 billion nuclear reactor in Egypt, though 85% of that cost is covered by loans from Russia, a fact that has some commentators worried about what possible defaults could mean. Rosatom have also signed a deal to build a reactor in Nigeria, as well as signing MOUs with Republic of the Congo, Sudan, and Ethiopia. As well as infrastructure and supply contracts, Russia and Rosatom are also investing in human resources. They already have a scholarship programme running in Kenya and are training locals to work in the nuclear industry in several African countries with a view to establishing close and long term relationships. 

With only one nuclear reactor, in South Africa, currently operating on the continent, it is still early days for the industry. And while Russia and China may be the current leaders in signing nuclear deals, don’t count out the USA just yet. While their once mighty 90% share of the global market has dramatically shrunk to around 20%, there is a renewed interest from the US State, Energy, and Commerce departments who are seeking to establish early relationships with countries who have long term plans to build a nuclear reactor in the future. 

Nuclear the best option for Africa?

But for now, it is Russia and China leading the way, with Russia looking to have the edge across Africa. This new deal, while it may take many years to come to fruition, illustrates future paths for other African countries. And though there are currently no financial details available for the Ugandan deal, it would be no surprise if there were loans in place similar to the deal with Egypt. And with constant developments in the field of nuclear energy, deals and MOUs agreed now may see different technology being applied when the reactor plants actually come to be constructed. Rosatom has the RITM-200 series reactor, a small modular reactor which is currently installed on some ice-breaking ships and which are expected to be installed in land-based plants around 2027, the same approximate timeframe as when there will be a proper framework, both infrastructure and regulatory, in the sub-Saharan region. 

Russia and Rosatom are playing a long game here, but with an eye of the growth of Africa’s population and industry which will demand cheap energy sources. If any regulatory framework can guarantee safety levels, then nuclear seems the best option for the rapidly growing continent.

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