South Africa’s construction industry has been ailing for a number of years, weighed down by weak economic growth and a sharp decline in government contracts driven by a shrinking budget. In 2019, no less than three of South Africa’s major construction companies filed for bankruptcy leaving the market cornered by more expensive foreign alternatives. During October the government sought to address this issue by announcing a ban on imported cement for use in government projects. Officials are seeking to expand this localisation scheme to other aspects of the industry and have initiated research projects on the matter. The process of localisation in the construction industry has been intensified since 2014, with over 42 products and sub-sectors under the sway of already existing localisation guidelines. These policies are expected to accelerate in the post Covid-19 period, as the government seeks to shore up budgetary shortfalls.
Africa’s Top 10 Stories | November 2021
South African government puts brakes on international cement for use in state projects
Data sources: Mail & Guardian, Concrete Trends, News24, National Treasury; 2020-2021
DRC continues with mining contracts reviews, expands the same to forestry industry
The Democratic Republic of Congo (DRC) has maintained course in its efforts to clean up corruption in its natural resources sector. The move began last month with a strong focus on the mining sector, however, the Congolese government has since broadened this strategy to the country’s logging industry. The process is expected to proceed in a similar fashion to the ongoing review of mining contracts, with questionable contracts to be done away with after an auditing process – one of the yet to be specified contracts was granted over 1.5 million hectares of rainforest in September 2020. The forests of the DRC are not only a vital resource for the country but a key ecological asset for the global biosphere as the second largest intact block of tropical rainforest in existence anywhere in the world. Across the southern border, the Zambian government is also planning mining policy reviews aimed at improving the investment environment.
A sapele tree being cut near Imbolo, DRC. The country has some of the largest rainforests in the world, but poor oversight has meant that logging companies often clear well in excess of their legal limits. Image courtesy: CIFOR/Flickr
Coca-Cola accelerates forward thrust into Africa with US$1 billion Nigeria investment pledge, plans for Coca-Cola Africa IPO
The year 2021 has proved to be an important one for the Coca-Cola company in Africa, with October in particular setting the stage for a number of new announcements. Coca-Cola recently celebrated its 70th anniversary in Nigeria, one of its oldest African markets. The beverage company made the promise to invest over US$1.1 billion into the Nigerian economy over the next five years, assisting local communities and making its operations more ecologically efficient. Outside Nigeria, the company also has much bigger plans in the pipeline as it announced it is in discussion to secure the listing of Coca-Cola Africa in South Africa and the Netherlands, overseen by major banks Morgan Stanley and Standard Bank amongst others. This could secure the local affiliate branch as much as US$80 billion in value and further solidify the continent’s reputation as one of the last great frontier markets in the beverages industry.
Helium discovery in South Africa has the potential to be worth billions of US dollars
South Africa could soon play host to one of the continent’s least expected new commodity success stories. The country’s only operational onshore natural gas producer, Renergen, has recently discovered one of the Earth’s largest and purest deposits of helium at its Virginia gas field in the rural Free State province. During testing, the 9.74 billion cubic metre deposit has revealed concentrations of between 4% and12%, compared to the average of 0.3% which is most common for the United States (US), the world’s top supplier. The company plans to have 19 wells installed by early 2022 and estimates that it could eventually produce roughly 7% of the world’s current helium supply. Though viewed by the average consumer as something recreational, helium is essential for a variety of industries, including medical equipment and electronics manufacturing. The discovery places South Africa in a favourable position going forward as supplies in the US dwindle and demand for alternative sources increases.
DP World and CDC to invest close to US$2 billion into African port infrastructure
UAE-based DP World, one of the largest port infrastructure developers in Africa, has, along with the UK-based development finance company CDC Group, announced plans to invest US$1.7 billion into port infrastructure development across the continent, including in Egypt, Senegal and Somaliland. CDC Group will initially contribute over US$300 million to the developments, with a further US$400 million to come over the next few years. The locations for investment reflect some of the general sentiments on where the continent’s shipping trade is likely to grow fastest in the future – Senegal, for example, is expected to see a significant boost in port traffic in the coming decade as local offshore liquified natural gas fields are developed. The ports of Ain Sokhna in Egypt and Berbera in Somaliland are also key stops in the broader link between the East African coast, the Mediterranean Sea and the Indian Ocean.
Data sources: UNCTAD, UNCTAD Stats, Engineering News; 2021
Africell expands mobile operations in Central Africa
An Africell mobile advertisement in Kinshasa, DRC during Christmas 2019. Africell has managed to secure a foothold in Central Africa by providing services in regions traditionally underserved by broadband and enterprise data solutions. Image courtesy: Titlutin/WikiCommons
UK-based Africell has been making significant strides to grow its reach in the central African region during October. In the DRC, the company is seeking to secure additional market share by expanding into the country’s eastern regions, which have historically been too politically hazardous for such a presence – when complete the expansion would double Africell’s size in the local market. In a parallel move across the border to the west, the company is aiming to cement its place in Angola as the country’s fifth mobile operator. Over the course of October, Africell laid the groundwork for its service offering by launching a data centre in the Angolan capital of Luanda. Though the primary aim is to enable the use of mobile devices throughout the country, the company also seeks to attract SMEs and large enterprises that can utilise its digital ecosystem and cloud services as a way to compete against other telecommunications service providers.
Google to invest US$1 billion in Africa to boost internet access and local start-ups
The US tech giant announced in October that it intends to expand its footprint across Africa through a US$1 billion investment into local economies. This comes as Google officially launches the Equiano pipeline, which connects South Africa, Namibia, Nigeria and the Atlantic island of St Helena with the European mainland and enables Google to better meet its goals of promoting affordable high-speed internet access. Beyond improvements in infrastructure, the company also hopes to support local start-ups through a regionally based Africa investment fund – additional loan support for small businesses and non-profits has also been indicated. Large US-based tech giants – including Facebook and Twitter – have increasingly invested in the African continent in more recent years in the hope of benefitting from its flourishing start-up market and as of yet untapped young user base.
Moderna announces plans to construct a US$500 million vaccine plant in South Africa
Africa’s reliance on Covid-19 vaccine imports has been laid bare during the recent vaccination drive, with crises of equal magnitude in the western world and India resulting in the continent receiving a lower priority for shipments. Efforts to address this through local manufacturing capacity are accelerating with the October announcement that Moderna would be spending US$500 million toward the construction of a mRNA carrier vaccine plant in South Africa. The development forms part of a broader project that will see Moderna collaborate with Pfizer and locally owned Biovac to construct a separate plant in Cape Town, which will primarily be responsible for packaging vaccines manufactured elsewhere – through the new venture, Moderna hopes to produce half a billion vaccines annually. The new projects are also part of a broader regional trend and follows on last month’s announcement of a similarly sized Sinovac plant in Egypt.
Data sources: The Standard UK, Nature; 2021
South Africa continues hydrogen economy advances through feasibility study on development corridor and a SEZ
South Africa’s forward motions for a hydrogen transition remained strong following the announcements over September. A feasibility study was conducted in early October into the potential for a ‘hydrogen corridor’ from the Gauteng province to the Limpopo province in the northern part of the country. Considering existing infrastructure and potential future industrial demand, the study estimates that the project could add US$3.9 billion to local GDP by 2025 under a medium-case scenario, and US$8.8 billion in a best-case scenario – it will also add between 14 000 and 32 000 new jobs and US$900 million in annual revenue. In tandem, the government is looking to promote the Special Economic Zone (SEZ) at Boegoebaai in the Northern Cape province and potentially partner with Namibia, which is expanding its green hydrogen initiatives. French-based HDF Energy has meanwhile announced that it was ready to expand its hydrogen operations in South Africa to other markets in southern and eastern Africa.
African airlines re-emerge with post-Covid growth strategies
Other notable stories
Sudan struck by coup
The fragile post-Bashir consensus in Sudan was shattered in late October as the military staged a coup, deposing and detaining the civilian president and causing elections to be delayed. The new regime has received pushback in the form of civilian protests and strike action, with the United Nations Security Council anticipated to hold an emergency meeting to deliberate on the situation. Tension between the military and the new civilian leadership has been high since the 2019 ousting of Omar Al-Bashir who ruled Sudan’s military government for decades.
Mauritania receives new ISP Sahel Telecom
Mauritania will soon play host to a new telecoms provider in the form of Sahel Telecom, which is launching its service offering in a number of neighbourhoods of Nouakchott, the country’s capital. Expansion to other nearby cities are planned in the coming months. This is a notable development for Mauritania, whose broadband industry is still dominated by state-owned Mauritel.
West African cultural artefacts taken during colonial era to be returned
Africa’s long-standing efforts to see its historical artefacts from the former colonial era returned made significant headway during October. Some 26 artefacts in the Quai Branly museum in Paris have been promised to make their way back to Africa, while Jesus College at Cambridge University is to return its respective West African artefacts, which include among others Benin bronze cockerels that have been housed at the college since 1905. The announcement has set a precedent that could see calls for many more artefacts to be returned. By some estimates the ex-colonial powers still possess more than 70 000 artefacts taken from Africa during colonial rule.
