The African Continental Free Trade Agreement (AfCFTA) made headlines in January with the continental launch of the Pan-African Payment and Settlement System (PAPSS) mid-month by Ghanaian Vice-President Dr Mahamudu Bawumia in Accra. Having been successfully trialled in the West African Monetary Union in 2021, the PAPSS will tie together all local financial service providers into a single, seamless, pan-African payments system as a way of streamlining transactions across the continent. The implementation of the PAPSS is expected to save around US$50 billion in annual cross-border payments costs and solve the problem of 80% of African payments transactions having to be transferred through foreign financial services. This is an essential step to implement the AfCFTA, which aims to unite all of Africa into a common market and add US$450 billion to the continental economy.
Africa’s Top 10 Stories | February 2022
Sources: WEF, Reuters, Ernst & Young, Business Insider; 2021-2022
The torrent of investment pouring into the East African transport and logistics market continues unabated at the start of 2022. Of note is the US$1 billion investment deal between Kenya and the United Kingdom, which has been in the making as part of a spate of post-Brexit trade deals. British engineering firm Atkins Global is responsible for the project, which will feature a modern, eight-platform centralised rail station and a public space with associated residential and commercial areas in Nairobi. In parallel, Tanzania announced a US$900 million network development deal with Burundi that will see the expansion of the regional-wide single gauge railway network to include a connector line between the two countries. This will act as a significant boost for the export of rare earth elements, which will be able to find their way to Tanzania’s ports faster and with less risk.
Rig 810 at the El Merk oilfield in Algeria. Despite systemic challenges, the country still remains one of the most established and most promising hydrocarbon exporter markets and the largest gas producers in the MENA region outside of the Arabian Peninsula. Image courtesy: WikiCommons
State-owned petroleum company Sonatrach appears to be on the rebound following the announcement that it would be embarking on a US$40 billion development project. Spokespeople for the company have confirmed that the initiatives will be primarily based around increased exploration and production, including a return to the Libyan market, which Sonatrach exited in 2014. The ambitious programme of revitalisation was made possible thanks to much needed investment capital from global oil majors during 2021, under the condition that the Algerian government rescind its long-held policy of keeping the oil industry under state control and closed to foreign investment. However, with plummeting state revenues and a brewing political crisis, authorities now find themselves far more willing to compromise, paving the way for Algeria’s return to its preeminent place in the global market.
Sources: ITWeb, African Business, Engineering News, Times LIVE; 2021-2022
The West African country has battled for years against the issue of fake medicine within the pharmaceutical supply chain. Particularly prevalent in essential categories like anti-malaria, pain relief and antibiotics, counterfeits have been responsible for numerous deaths and by some accounts amount to at least 10% of medicines sold on shelves across the country. During January, the Nigerian government announced a partnership with local start-up Chekkit Technologies, an app developer, to enable consumers to digitally assess the authenticity of pharmaceutical products. Manufacturers will now have to apply stickers to their products which customers can then scan using their mobile phones, to check the authenticity of the pharmaceuticals. Another local company Sproxil Africa, a mobile authentication firm which has begun to make use of the system, has noted that the technology could be applied to other industries, including the FMCG market where counterfeit goods are also often prevalent.
Global dairy giant Danone inaugurated a new Nigerian facility owned by its local subsidiary Fan Milk as it celebrates its 60th year in the country. The new frozen dairy plant in Ibadan, Oyo state, will produce yoghurt products amongst others, with an initial processing capacity of 1.8 million litres of milk and producing 18 million yoghurt pouches annually. The expansion of cold chain infrastructure across Africa is an essential step to unlocking the full potential of the region’s agricultural value chains, which are directly hampered by the inability to freeze goods for transport regionally and internationally. In Nigeria, 60% of consumed dairy is imported despite significant local production capacity. The frozen dairy line is set for completion by mid-2022 and is the latest in a sustained wave of manufacturing developments in Africa’s most populous country, which also includes a US$100 million investment in agro-processing capacity.
The ITU 5G summit 2018. According to the GSMA, Africa will have 45 million 5G connections by 2025 with a number of African states already making headway through pilot tests and trial rollouts. Image courtesy: ITU/Flickr
Africa’s first wave of 5G trials continued unabated in January as two new markets, Kenya and Zambia, saw their first limited scale 5G rollouts. Following successful initial trials in March 2021, Kenyan telecoms operator Safaricom confirmed its intent to have 200 5G sites in place locally by the end of 2022. Slightly further south, MTN Zambia and Chinese telecoms giant Huawei are making similar strides to launch the first local 5G service in a repeat partnership of similar 3G and 4G services rollouts in previous years. Though the consumer appetite exists, local budgets are unlikely to allow as fast an uptake on the continent as is expected in some other markets. Industry estimates note that there will be 1.5 billion 5G users by 2025, but on average only a 3% adoption in Africa, largely due to infrastructure and finance constraints.
In early January, Senegalese President Macky Sall symbolically laid the foundation stone for the new port of Ndayane 50 kilometres south of the capital, Dakar. The construction project, valued at US$1.1 billion, represents a big step forward for stakeholders involved. For DP World, the UAE-based construction firm tasked with realising the project, it represents a key opportunity to further enhance its reputation in Africa after having established itself as a key service provider for ports on Africa’s eastern coastline. For the Senegalese government, Ndayane will play a critical role as a logistics hub for both oil and gas and other trade goods along Africa’s north-eastern seaboard. By enabling the handling of some of the world’s largest cargo ships, Senegal hopes to ensure the competitiveness of its gas exports, enhance its reputation as an important global cargo hub, and attract foreign investment for future projects.
Africa’s importance in the global logistics market was reiterated at the start of 2022 with the revelation that Mediterranean Shipping Company (MSC), one of the world’s largest freight cargo carriers, would be acquiring Bollore Africa for US$6.4 billion. The Bollore Group has been present in Africa for almost a century and is currently operating in some 47 African markets, specialising in both marine and dryland ports with international offices for clients in Europe, the Middle East and East Asia. MSC, on the other hand, was recently declared the largest shipping company in the world by Alphaliner, edging just over its competitor Maersk Logistics in terms of 20-foot-equivalent cargo capacity. With demand for Africa’s resource exports projected to remain high and regional cross-border trade likely to pick up with the implementation of the AfCFTA, the acquisition by MSC will close on the world’s last remaining frontier market for logistics services.
Sources: News24, Engineering News, Knight Frank, World Bank; 2021-2022
South Africa receives World Bank loan to help tackle COVID relief
The South African government has received a US$750 million loan from the World Bank to help tackle the economic challenges caused by the COVID-19 pandemic. The country was one of the hardest hit in Africa, having thus far recorded over 94 000 deaths and 3.5 million infections. The economic fallout of lockdown regulations worsened what was already one of the highest youth unemployment rates in the world, prompting a dramatic increase in welfare spending.
Anti-terror mission under threat in Sahel region with second coup
The efforts by France and its allies to uproot militant activity in the Sahel region are on the brink of collapse at the start of 2022 as anti-government forces launched a coup in Burkina Faso and suspended the constitution in late January. This follows a similar attempt in Mali during December 2021 and throws the foreign mission into disarray as the new governments seek assistance from Russia and other powers.
Nigeria ends Twitter ban
The Nigerian government’s dispute with social media giant Twitter has come to an amicable resolution after a seven-month long services blackout. The altercation began in mid-2021 when President Muhammadu Buhari’s account was suspended for what Twitter deemed to be a violation of its policy on advocating violence. It will likely remain an important case study of the power of social media in a period of increasing concern about the ability of global firms to influence local politics.