Africa’s Top 10 Stories – November 2020

The month of October saw noteworthy water and sanitation upgrades in Kenya and Ghana. In Kisumu, Kenya’s third largest city, US$82 million has been secured from the Agence Francaise de Development and the European Investment Bank to fund the Lake Victoria Water and Sanitation project. The project’s aim is to expand local water distribution networks, including to informal settlements and the towns of Ahero and Maseno. Over 50 000 households will benefit from these upgrades. Concurrently, in Ghana US$125 million has been secured from the World Bank for the Greater Accra Metropolitan Area Sanitation and Water Project (GAMA SWP). The initiative will benefit 550 000 low income urban communities by providing improved water and sanitation services. The GAMA SWP will also provide hygiene facilities to schools and healthcare centres, and promote handwashing practices.

Several African trade developments have taken prominence recently. To address the effects of non-tariff barriers (NTBs), the African Union (AU) has launched a new campaign, dealing with NTBs in intra-continental trade. The #TradeEasier campaign aims to promote the use of the AU’s NTBs reporting mechanism tool. The tool is designed to make trade easier and less costly by helping businesses report and remove NTBs. In parallel to this, South Africa is in the process of agreeing to the Treaty of Amity (TAC) of the Association Southeast Asian Nations (ASEAN). This will lead to the potential for future trade, investment and other cooperation agreements. Elsewhere, the UK Minister for Africa visited Zambia to discuss plans to support cross-border trade in and between  Southern and East Africa, by supplying training and advice to ensure border posts are kept open.

The growth of fintech continues to positively affect financial inclusion in Kenya. The Kenya Bankers Association (KBA) recently partnered with Huawei Kenya in strengthening financial inclusion in the country through the further deployment of technology and the building of fintech capacity. The partnership is set to lead industry-wide capacity building initiatives aimed at promoting knowledge-sharing on fintech innovation. It will also promote financial inclusion activities in line with KBA’s Strategic Plan 2020-2023, by bolstering access to affordable financial services. Simultaneously, Digiduka, a Kenyan start-up, has launched its own niche service fintech app aimed at informal retailers, assisting them to phase into the digital economy by selling their products online. The platform will provide informal retailers with eWallets which will enable digital cash collection, bypassing the high mobile money transaction fees, while encouraging cashless transactions. The app will also simplify the process of creating an online storefront for informal retailers.

The airline industries in Liberia and South Africa have received a welcome boost with the announcement of new partnerships. In Liberia, Goldstar Air, a wholly owned Ghanaian Airline, has partnered with the government to establish Liberia’s new national carrier. Lone Star Air is initially flying to 11 West African destinations including Accra, Abuja and Lagos. The new airline will be used as a driver of social economic transformation, creating more jobs for the youth, as well as attracting visitors to Liberia. In South Africa, Airlink, a regional airline based in Johannesburg, has partnered with Qatar and Emirates airlines. Travellers flying with Airlink now have access to the global networks of both airlines, increasing connectivity and convenience. The interline agreements also signal the intent by the Middle Eastern air carriers to expand further into Southern Africa. The agreements strengthen their presence and give customers greater choice, flexibility and enhanced connections in Southern Africa.

October heralded the announcement that Kenya has finalised the construction of a new US$108 million geothermal plant at Menengai in the country’s southwest, adding an additional 105MW of geothermal production capacity to the national electricity grid. The opening marks Kenya’s ascension as the continental leader in geothermal power, which now allows for the electrification of 500 000 households, 70 000 of which are in rural areas. This is the latest success in Kenya’s Low Cost Electricity Development Plan, launched in 2011 to increase electricity generation capacity to 5,521MW by the end of 2021. Across the border in Ethiopia the US International Development Finance Corporation (DFC) has invested US$1.55 million in technical development for the Tulu Moye geothermal power project. The DFC’s grant will accelerate the schedule to design the 50MW plant. Once complete the plant will be the country’s first independent power project and one of the largest geothermal plants in Ethiopia.

Progress on Mozambique’s liquefied natural gas (LNG) projects continued over the course of October. The country has recently proposed a working model for a sovereign wealth fund as it prepares to secure around US$96 billion from its forthcoming LNG projects. The sum will accumulate over the lifetime of the projects, with the proposed fund building up savings as well as contributing to fiscal stability as prices fluctuate. A key point from the proposed model is that during the first two decades of LNG production, 50% of the state’s revenue is set to go towards the fund and the remainder to the state’s budget, thereafter 80% should go into the fund. Should the proposed fund come to full fruition, the country’s economy will become more stable as well as generate wealth for future generations. The fund could also be an important breakthrough to further develop Mozambique into a prosperous nation.

Mid-October saw the announcement that Olam Palm, a Singaporean-based firm, would start development of a biofuel production centre in Gabon. This forms part of the Gabonese government’s export diversification programme to lessen its dependence on crude oil exports, which account for over 80% of the country’s total exports. Meanwhile, in Zimbabwe, Green Fuel is expanding its mill operations at its bioethanol plant in the town of Chisumbanje, located in the country’s eastern region near the Mozambican border, with the installation of a new planetary gearbox supplied by Zest WEG and which includes a WEG variable speed drive and a WEG electric motor to assist in sugar cane processing. This will allow for the increased production of electricity using excess bioethanol. The plant has operated since 2011 and has played a key role in helping alleviate the country’s energy crisis. The erratic commodity prices of recent years have incentivised divestment away from fossil fuels and will likely continue to spur the development of alternatives like ethanol and others.

Digital payment apps have enjoyed another capstone period over the course of the last month. South African based Paia Pay, which specialises in remittance payments to other nearby countries, has unveiled its latest offering to the mobile money market – an app called Hello Paisa. The innovative product offers customers the ability to remotely purchase consumer goods for their dependents in Malawi, after which these goods can then be collected at any one of 10 depots throughout the country. Meanwhile, African mobile money giant M-Pesa has added extra functionality to its product offering in Tanzania, a key East African market. Through a partnership with local fuel provider Oryx, it has now allowed customers to use its service for the purchase of fuel across all 52 of its service stations. This is a key step towards streamlining the integration of mobile money into the local market where M-Pesa already claims 10 million customers.

The war-ravaged state of South Sudan is at an important threshold as it announces plans for a dramatic expansion of its oil refining capacity. This month the government announced a partnership with Trinity Energy, an independent energy company, for the development of a US$500 million plant in Paloch state which, upon completion, could provide the entire East African region with refined oil products. This is in addition to a state-led initiative where NilePet, the national oil producer, will construct four separate refineries in different regions of the country with the aim of supplying all major towns with locally produced hydrocarbons by 2022. If successful, these efforts could potentially chart an economic and political course of stability for the country, which has experienced persistent armed conflict for decades and has only recently recovered from a civil war that followed shortly after obtaining independence from Sudan in 2011.

October has proven to be an important month for road and rail infrastructure in Southern Africa. In South Africa, two of the country’s main road arteries, the N2 and N3 are set to receive US$1.5 billion-worth of upgrades. Meanwhile, South Africa’s Transnet Freight Rail and Eswatini’s state-owned rail company have announced that the planned railway merger between the two countries is progressing well. Slightly further north, on 10 October it was announced that the Kazungula Bridge over the Zambezi River had been completed, hailing  a key milestone in the North-South Corridor project aimed to better integrate the road systems of Southern and Central Africa and encourage regional trade. Once completed, these projects will greatly enhance the economic competitiveness of the Southern African region, which has suffered in recent years compared to other markets such as Ethiopia and Kenya, which are closer to economic hubs in Eurasia.

AU and ECOWAS lift Mali sanctions
The African Union (AU) and the Economic Community of West African States (ECOWAS) have lifted post-coup sanctions imposed on Mali. This comes after the nomination of a transitional government, the publication of a ‘transitional charter’ and the military agreement to release their grasp on power. Both institutions have become increasingly confident that Mali will return to civilian rule with democracy at the forefront.

The US Secretary of Defence visits North Africa to boost security ties
US Secretary of Defence, Mark Esper, visited Algeria in October to deepen cooperation on key regional security issues, becoming the first US Defence Secretary to visit the North African country in 15 years. Esper also signed a 10-year military cooperation deal with Morocco, days after signing a similar deal with Tunisia. The key focus of these deals is counterterrorism and strengthening the fight against extremists in Libya and the Sahel region.

Coega Development Corporation extends reach to Zimbabwe
The Coega Development Corporation (CDC), which operates the Coega Special Economic Zone (SEZ) in South Africa, is expanding its market offering to Zimbabwe and the Central African Republic (CAR) under the Coega Africa Programme (CAP). In Zimbabwe, advisory services will be offered for a water treatment plant in Harare, a SEZ and a dry port, to the value of US$336 million. The CDC will also develop a dry port in CAR for the storage of goods, costing US$30 million.