The South African Department of Energy has announced the government’s intention to end its reliance on coal after it reached a consensus with donors at the COP26 talks in Glasgow in November. South Africa depends on coal for 80% of its energy mix and is the world’s 12th largest carbon emitter, rendering it a key target country in the global renewables transition. Initiatives by the state utility Eskom to diversify its energy supply have taken a backseat to endless cycles of borrowing and emergency maintenance as the cash-strapped utility struggles to keep its ageing plants online. The US$8 billion in concessional funding promised by the European Union, France, the UK and US for South Africa to jettison coal is a lifeline for the government and one that will need to be managed carefully going forward. A major hurdle to overcome is the economic impact on local communities, particularly in the Mpumalanga province, where the coal mining sector is the largest employer.
Africa’s Top 10 Stories | December 2021
Sources: BBC, South African Department of Energy; 2021
Botswana has confirmed that work will begin on its second coal mine in the first quarter of 2022, forming part of Gaborone’s ambition to exploit coal reserves, which are estimated at 200 billion tonnes. The move is controversial in the current climate, owing to the recent agreements at COP26 and neighbouring South Africa’s announcement that it will seek to shift away from coal in the coming years. Botswana has, however, taken steps to mitigate environmental concerns, stating that it will seek to employ renewable energy in the process where possible. The motions made are vital for the economy, which has suffered from flagging growth in recent years due to the fall in mineral prices and depleting diamond reserves. Though coal is becoming less preferred internationally, it still has utility as a local export, particularly for use by manufacturers and boiler operators in the Democratic Republic of Congo, South Africa and Zambia.
November’s Dubai Airshow saw an attempt to reinvigorate Africa’s air travel market as airlines from across the continent placed significant orders for Boeing aircraft and noted new partnerships. Air Tanzania announced that it had approached Boeing for the sale of four aircraft including the new 737 Max and a freighter aircraft for expanding its new routes into Asia and Europe. Boeing also signed a partnership with neighbouring Kenya Airways to develop the Fahari Innovation Hub to foster innovation and entrepreneurship within the African aviation sector. The Dubai Airshow additionally saw attention garnered for Boeing’s arch-rival Airbus, which sold 10 of its aircraft to Nigerian carrier Ibom Air. Though passenger numbers remain low, the growth outlook is strong with Boeing stating during November that it expects the African market for its aircraft to be worth US$400 billion within the next 20 years.
Sources: International Air Traffic Association, The East African, Global Risk Insights, Hermes; 2019-2021
South Africa has joined the growing list of African countries with a blockchain product linked to their real-world currency. In late November, the Ovex exchange hosted the launch of ZARP, a new currency tied to the value of the South African Rand. ZARP is effectively a stablecoin or cryptocurrency linked to the value of an existing asset. The aim of the launch by Curve and the Keep3r Network is to make the South African Rand compliant with Decentralised Finance (DeFi) protocols, enabling local investors to trade more freely in crypto markets. The move is the brainchild of local blockchain entrepreneur Andre Cronje, who is also responsible for launching Yearn Finance, the world’s 11th largest DeFi Protocol company, with an estimated value of US$6.24 billion. Cronje hopes to build off ZARP’s eventual success by further expanding the forex trading options available to crypto users, an area where DeFi still lags behind the conventional finance industry.
MTN finalised the sale of its South African tower unit in November to IHS Towers, a partly MTN-owned entity that could soon list on the NYSE and earn its former owner as much as US$1.7 billion. The move forms part of a broader regional strategy by the telecoms giant to pivot away from an exclusive focus on mobile services and place greater emphasis on its infrastructure offerings, including fintech, application programming interface and business services, with the aim of securing third-party funding and partnerships. The overall plan, better-known as Agenda 2025, came after the group’s positive 2020 financial results, which were mostly spurred on by mobile wallets and other digital offerings. The plan also calls for the same approach towards MTN’s operating markets, retreating from troubled locations like Iran, Syria and Yemen to focus on strengthening the company’s position in Africa.
Sources: GSMA, MTN Group; 2021
A man passes a destroyed tank in Tigray, Northern Ethiopia. What has become known as the ‘Tigray War’ is merely the latest in a series of conflicts in the country stretching back to the 1980s. Image courtesy: Yan Boechat/VOA/WikiCommons
Political stability in Ethiopia, the economic powerhouse of northeast Africa, has been threatened by the fight between a rebel coalition and the current government, near the nation’s capital, Addis Ababa. In recent weeks, foreign embassies have called on their citizens to evacuate the country and foreign companies, including Safaricom, have withdrawn their staff. The cause of the conflict dates to 2019 when the then newly elected Prime Minister Abiyi Ahmed sought to eradicate federal politics and regional nationalism by centralising government authority and incorporating opposition parties into a ruling coalition. The Tigray People’s Liberation Front (TPLF), which holds the northern Tigray region, resisted the changes, and when the government suspended the 2020 general elections ostensibly due to Covid-19 it declared war. Ethiopia’s initially successful offensives have now suffered setbacks and as a growing number of regional factions declare their support for TPLF goals it remains to be seen what the future will hold for the region.
The multilateral African Export Import Bank (Afrexim) has signed an agreement with the Nigerian National Petroleum Corporation (NNPC), which will see an additional US$1 billion worth of investment enter the local oil and gas sector. The deal will take the shape of a forward sale agreement, (FSA) with the NNCP agreeing to provide 35 000 b/pd of crude oil. Afrexim Bank has stated that it hopes the investment will have a knock-on effect along the entire value chain, creating thousands of additional jobs and ultimately earning the country twice the initial invested amount. The signing of the agreement is somewhat at odds with prevailing international sentiment regarding fossil fuel divestment, but the board president for the bank, Professor Benedict Oramah, has stated that the agreement signifies a compromise between environmental concerns and developmental needs, and Africa’s small role in global emissions grants the continent more leeway with hydrocarbon developments.
African Export Import Bank President Benedict Oramah at a World Economic Forum discussion panel in 2017. Headquartered in Cairo, the bank has a mandate to increase African trade through financing, credit insurance and advisory services. Image courtesy: World Economic Forum/Jakob Polacsek/Flickr
Ghana begins hearings on anti LGBTQ+law
The West African nation held its first public hearings for the Proper Human Sexual Rights and Ghanaian Family Values Bill 2021. The bill has caused much controversy as it seeks to outlaw gay advocacy groups, impose state-run ‘conversion centres’ and raise the jailtime for those found guilty of same sex acts. Meanwhile, a Botswana court has overturned the government’s attempt to recriminalise homosexuality in the same period.
Namibia joins southern Africa’s push for hydrogen
At the COP26 talks, Namibia announced that it had selected HYPHEN Hydrogen Energy as the preferred bidder for a US$9.4 billion green hydrogen project near the coastal town of Lüderitz. This is a major development for the country, which is expected to increase its GDP and overall importance in the regional Southern African Power Pool.
US ends duty-free access to Ethiopia, Guinea and Mali over human rights abuses
In early November, the Biden administration announced that it would be suspending duty-free access to its market for three African countries – Ethiopia, Guinea and Mali. The African Trade and Opportunity Act, signed into law in 2000, grants duty-free access to US markets to Sub-Saharan states provided they adhere to certain legal, human rights and labour standards.