The state oil company Sonatrach and Royal Dutch Shell announced that they had signed a preliminary agreement on the trading of crude oil, natural gas, and oil products. This is a big win for Sonatrach which has had to shoulder the burden of reversing the country’s declining economic fortunes over the last few years in its role as the biggest oil company in an energy-dependent economy. Since the heralding of the country’s new oil law in 2019, Sonatrach has signed numerous such deals, most of these have been in upstream cooperation. This makes this new agreement a unique achievement given that Shell is particularly well established as a downstream provider owing to its robust transport fleet and its extensive experience as a transporter of oil products. Notably, Shell has also stated that it will work together with Sonatrach to minimise emissions for the extent of the deal.
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The month of April was a watershed moment for the broader East African region as reports confirmed that Uganda had signed off on the Final Investment Decision with oil companies Total and CNOOC. This investment will see billions in foreign investments flood into the country’s promising oil and gas sector. Most importantly, it will finally allow for the construction of the long awaited East African Crude Oil Pipeline, a 1440km construction that will stretch from Western Uganda to Tanzania’s Indian Ocean Port of Tanga. The development of the pipeline will allow Uganda to begin unlocking its vast energy potential and exporting to international markets. Once complete, the pipeline will provide opportunity to develop supporting sectors, particularly the transport, infrastructure and logistics sectors, where inefficiencies have long hampered export growth.
Sources: Africa Oil & Gas, The Monitor, Yale University; 2019-2021
April was a key month for acquisitions and deal closures for foreign investors looking to re-enter the Angolan energy market. Early in the month Angolan authorities announced a series of moves that would see investments flow into and across its energy value chain. The most notable announcement was the decision to allow for the exploitation of marginal fields to facilitate the inflow of some US$64 billion in foreign investment over the next five years. In parallel to this, development Italian energy giant Eni announced that it would be investing US$7 billion in the country over the next four years in exploration, refining and notably, solar energy, which is still fairly undeveloped in the country despite its vast potential. Surveys this month also revealed new oil deposits that dramatically enhanced Angola’s long-term outlook.
An oil tanker moored at the Port of Namibe in Southern Angola. Nearby offshore fields account for most of the country’s oil production with government looking to attract additional investors in developing unexplored blocks. Image courtesy: WikiCommons
The South African-based telecoms giant announced this month that its initial 2020 agreement to collaborate with Alibaba on the creation of a local African “super app” has begun to bear fruit. Planned features include the ability to pay bills and utilities, transfer money and contact online merchants and service providers. This move is a major step not only for South African telecoms, but for the global industry. So-called “super apps” are widely considered the next big step in the mobile money space. The basic concept is to unite all disparate financial services a customer might seek and distil them onto a single touchpoint, from which users can do everything from access their bank account, order food, contact emergency services, apply for loans, book transport etc.
Sources: DataStock, Agile Tech, KPMG; 2019-2021
Twitter announced this month that it had chosen Ghana as the landfall for its Africa presence starting with 11 local staff members working from home. The announcement took analysts by surprise as the general consensus was that the social media giant was far more likely to pick a country with a more developed tech and start-up space like Kenya, Nigeria, or South Africa. In parallel news, Amazon announced this month that it is looking to establish a larger physical location in South Africa to help expand its cloud computing and customer service offerings to its growing African customer base. The R4.5 billion River Club Development has been listed as the location. The company has been operating in South Africa since 2004 but has only recently opened its first physical office through Amazon Web Services back in 2015.
Global investment giant Meridian has made waves this month with its announced decision to invest in the construction of data centres in Africa. The firm will start by funding the US-based Roxio Group with US$48 million to help expand its data centres footprint across the continent. Roxio has garnered a reputation in recent years with a committed expansion into previously untapped central and east African markets. In March this year, the company broke ground with the announcement that it would be beginning construction of a data centre at one of Ethiopia’s many new ICT parks. The company has indicated additional data centre developments in forthcoming years in Uganda’s capital Kampala, and the same for the Democratic Republic of Congo’s capital Kinshasa.
A man pours fermented palm wine in Abidjan, Nigeria. This tradition dates back centuries but has only recently gained mass appeal in the global spirits market, providing a springboard for local brewers. Image courtesy: Hansteky/Pixabay
A small Nigerian business that has utilized a local brewing tradition, is tapping into the global market for premium spirits. Nigeria has a tradition of brewing palm wine that dates back centuries, but it has only been in recent years that a local entrepreneur in the country has taken the so-called “guru” brew to commercial level. Part of the company’s appeal, according to one of its founders, is that it utilises an almost even-split between traditional harvesting and brewing methods and modern distillation, providing a unique taste unlike anything else. The global market for premium spirits has been growing sharply in recent years, particularly among wealthier young people, and the Guru brand already exports to several countries including Ghana, Kenya, and the United Kingdom.
Global coffee producers and enthusiasts breathed a sigh of relief in April with the discovery of wild Stenophylla plants in rural Sierra Leone which holds much promise for the future of the industry. With global temperatures set to rise due to climate change, the world’s major coffee producers, who are all located in the tropics and subtropics, will encounter more extreme weather events, which has up until recently caused many to speculate that coffee would eventually go extinct as a viable cash crop. Stenophylla is far more drought resistant however and has virtually the same taste as Arabica coffee, making it the perfect substitute for the present crops expected to fail in the coming decades.
Sources: International Coffee Organisation, American University, Pebble and Pine, PBFY; 2019-2021
OTHER NOTABLE STORIES
Violence and disorder beset Chad amid contested elections
Uncertainty was at the order of the day in the North African country over April following an acrimonious response to recently deceased ex-president Deby’s decision to run for his sixth presidential term. The month began with a crackdown of a suspected bomb plot, followed by chaos and fear as anti-government rebels crossed the northern border and began battling their way towards the nation’s capital. Deby was killed in the fighting and has been unconstitutionally succeeded by his son, but it remains to be seen how the situation will unfold. Developments are likely to be watched closely in Paris and Washington, where strategists have long counted on the country as an ally against regional terrorist groups.
Media conglomerate Naspers undergoes reorganisation
South African-based media and telecoms giant Naspers has undergone a shift in focus during April with the sale key assets and an announcement that it would be getting outside specialists on board to help it venture into new revenue streams. Naspers will be selling sizeable portions of its stocks in Tencent, the Chinese media giant which went on to form Alibaba and thereby propelling Naspers to new heights as one of the world’s top media companies. This share buyback has coincided with Naspers announcement that it would court ex-employees of prominent social media companies to assist the company in its goal of penetrating the African classifieds market.
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