DRC advances infrastructure developments, inaugurates new road and energy projects
June has proven to be a key month for infrastructure developments in Africa’s largest country. The lead development for the month involved three of the country’s northern cities – Gemena, Bumba, and Isiro – which will be benefitting from solar hybrid power plants to the tune of US$100 million. This will be made possible by a 22-year concession agreement between the local government and a consortium composed of the UK’s Gridworks and Spain’s AEE Power. At the same time, the Tshisekedi administration has signed a deal with its neighbouring country Uganda on road projects to enhance the interconnectivity of the two economies and assist regional trade. Altogether the road projects will amount to US$334 million and span a cumulative distance of 293km. Informal trade between the two countries stands in the tens of billions each year but travel has been difficult for decades due to a lack of political integration and armed conflict, which still impedes travel to this day.
Sources: World Bank, United Nations, IEEFA; 2019-2020
Boon for East African hydrocarbons as gas developments steam ahead
June bought significant developments in the fledgling East African gas industry. Early in the month Tanzania announced that it would begin the construction of a US$30 billion Liquefied Natural Gas (LNG) facility by 2023 in partnership with Norway’s Equinor and others. The project, which is years in the making, has been brought back to life following the change in political administration earlier this year. Tanzania will soon see additional gas developments, including a second pair of LNG export trains at another facility, which will go in tandem with the construction of a pipeline system, to service local residential areas and industries. Meanwhile, Kenya has also made progress on its gas developments in June by securing US$13 million in funding for the construction of a Liquefied Petroleum Gas (LPG) terminal in Mombasa. This follows the construction of an LPG plant in the country two years ago and furthers the government’s agenda to provide modern cooking solutions for local consumers.
Somaliland election and port upgrades signal further stabilisation in the Horn of Africa
The Berbera Port. There is considerablepotential to develop the port into a key logistics and transportation trade node from inland African countries to the Middle East region, provided there is stability. Image courtesy: Mark Woodman/Flickr
Contrary to the mainstream rhetoric, some positive developments have taken place in Somaliland in June as authorities celebrated their first successful parliamentary election since 2005. The breakaway region has faced an uphill battle for international recognition since it split from Somalia during the 1991 civil war. The successful conclusion of the parliamentary polls will further its aims to differentiate the region from the comparatively more fragile Somalia, which has recently undergone a constitutional crisis. Somaliland’s claim to political and economic independence has been further underwritten after a parallel announcement that its port at Berbera would receive US$1 billion in upgrades over the next decade. This will be made possible through a partnership with neighbouring Ethiopia, which hopes to secure easier access to vital Red Sea trade routes. These events are likely to intensify the rift between Somaliland and the federal government in Mogadishu, which still wishes to assert full political control over its former territory and which hopes to capitalise on nearby offshore oil reserves.
Sugar production set to rise as Ethiopia, Tanzania edge forward with new factories
A couple of notable developments took place in Africa’s sugar manufacturing industry over the last month. In Tanzania, local Said Salem Bakhresa – the flagship company of the Bakhresa Group – announced that it is close to finalising the first phase of a US$300 million sugar plant, which will eventually have a capacity of over 100 000 tonnes. The project is the latest in a series of investments supporting the government’s drive to become self-sufficient in the production of sugar by 2025. This comes hot on the heels of the Illovo Group’s announcement that it is undertaking a US$285 million expansion plan into Tanzania, with further investment by the Kilombero Sugar Company also on the cards. Nearby Ethiopia is making similar strides and has finally launched the Tana Beles Sugar Factory One after an eight-year delay. The country is also moving toward privatising two state sugar manufacturers through support from international auditing firm Ernst & Young.
Sources: S&P Global, COMESA, Statista; 2019-2021
Eskom continues drive to end rolling blackouts through private power procurement
South African authorities have made progress during June in rolling out the country’s emergency power procurement programme. The City of Johannesburg (CoJ) has announced that it seeks to spend US$268 million on procuring a 150MW solar plant, 50MW of rooftop solar, the refurbishment of a gas-to-energy plant, and the installation of 100MW-worth of battery storage. The CoJ hopes to source 35% of its power from renewables before the decade is out. On a national scale, the government hopes to secure an additional 2,000MW from private power producers by the end of 2022. Some of this will be non-renewable and will include modular offshore power generation services such as those currently supplied by Turkish company Karpowership through its floating diesel generating units. Most of this new power, however, will come in renewable form through solar installations by preferred bidders, such as Scatec, which will be supplying the national grid with 150MW of solar by 2022.
A vessel owned by Karpowership. The company’s diesel-powered systems will serve as an important source of baseline power for the national grid under the South African government’s new emergency procurement plan. Image courtesy: Sumbbekos/Wikimedia
Nigeria suspends Twitter, demands that social media companies get local license
West Africa’s largest economy locked horns with social media companies during June in an altercation that could have wide-ranging effects on the relationships between tech companies and governments. Early in June, President Muhammadu Buhari addressed provocateurs of civil disturbance in the country’s south-east in a tweet that threatened to punish such regional secessionists. Twitter subsequently deleted the tweet on the grounds that it violated its code, prompting the Nigerian Presidency to respond with a ban on the platform. Local authorities followed this up with the announcement that social media companies would now need to secure a license and register as local entities before being able to operate in the country. Twitter and the Nigerian government have had a strained relationship after the social media giant decided to establish its first offices in nearby Ghana earlier this year, citing the Nigerian government’s harsh censorious attitude to tech start-ups as the key motivating factor.
East Africa explores potential of common digital cash amid regional integration drive
The East African Community (EAC) has made considerable efforts this month to enhance regional integration across multiple areas. The long awaited one-stop border post between Ethiopia and Kenya has opened, which will allow for smoother transport of goods and people between the two countries. More notable, however, was the announcement on 2 June that local governments would consider the possibility of a central bank digital currency to be shared amongst nations in an attempt to circumvent the regional hesitation to trade in multiple state currencies. This would serve to accelerate the region’s Monetary Union protocol substantially and pave the way for a universal local currency by 2024. East Africa’s integration has traditionally lagged behind that of other regions, but with the enactment of the African Continental Free Trade Area and the expansion of local cross border oil and gas projects, local governments have an increased incentive to enhance the ease of regional trade.
South African Airways embarks on privatisation scheme in an effort to restart airline
South Africa’s national carrier could soon return to operation as a mostly privatised enterprise. According to reports, the reconstituted South African Airways would be 51% owned by a private consortium made up of Johannesburg-based Global Airlines – owner and operator of the recently launched Lift Airline – and private equity firm Harith General Partners, which has an important stake in infrastructure investments across the continent, including Johannesburg’s Lanseria Airport. The most important outcome of the arrangement for the government is that the new airline will not owe any liabilities to international investors, relieving considerable pressure on the state’s coffers to continue with recurrent debt servicing. This progress has, however, come at the cost of an 80% reduction in staff numbers. Subsidiaries such as low-cost domestic freighter Mango Airlines and the technical services division also remain uncapitalised with their own fate hanging in the balance.
Sources: Harith Global Partners, PIC, Business Tech, IOL, News24; 2021
Cote d’Ivoire forges ahead with renewable energy plans through launch of biomass plant
Late June brought positive news for West Africa’s renewable energy aspirations as Cote d’Ivoire announced the finalisation of a deal, which will see the development of a US$194 million biomass plant. The plant will be constructed and operated by Dutch Company, Biovea Energie, as part of a 25-year concession. Since 2014, the country has been engaged in the rollout of the National Renewable Energy Action Plan, which aims to produce 42% of the country’s energy from renewable sources by 2030. It is hoped that the plant will generate 336 GW of renewable energy per annum, supplying 1.7 million people with electricity and reducing carbon emissions locally by 4.5 million tonnes. The biomass plant will be powered with agricultural waste, particularly palm tree leaves from Plants, a local agricultural operator. The remainder of the needed waste supply will be covered by outgrowers, serving as a boost to the local agriculture sector.
South Sudan hopes to attract investors in its first ever oil bidding round
The Sahelian state of South Sudan hopes to attract new investors to its upstream oil and gas sector with the announcement in June that it would be launching its first-ever bidding round for local upstream oil developments. Following a protracted period of civil war, coupled with the more recent economic recession caused by Covid-19, the country, which is almost wholly dependent on oil revenues, is anxiously looking to increase its revenue stream and plug fiscal deficits. There is merit to the motions made by the government as South Sudan is still a largely unexplored market. Despite the age of the local industry, barely 30% of the country’s acreage has been surveyed, leaving open the door for exploration and production activity. Whether or not companies will be sufficiently motivated to invest despite the associated risks remains to be seen, but the oil price will likely play a significant contributing factor.
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