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issue 505 | 16 Jul 2023

World

Critical minerals market sees unprecedented growth as clean energy demand drives strong increase in investment

The market for minerals that help power electric vehicles, wind turbines, solar panels and other technologies key to the clean energy transition has doubled in size over the past five years, according to a new report by the International Energy Agency (IEA). The first annual IEA Critical Minerals Market Review, released on Tuesday, 11 July, along with a new online data explorer, shows that record deployment of clean energy technologies is propelling huge demand for minerals such as lithium, cobalt, nickel and copper. From 2017 to 2022, the energy sector was the main factor behind a tripling in overall demand for lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel. The market for energy transition minerals reached USD320-billion in 2022 and is set for continued rapid growth, moving it increasingly to centre stage for the global mining industry. In response, investment in critical mineral development rose 30% last year, following a 20% increase in 2021. The strong growth in spending by companies on developing mineral supplies supports the affordability and speed of clean energy transitions, which will be heavily influenced by the availability of critical minerals.

Source: IEA

Africa

Afreximbank launches the African Trade Report 2023

The African Export-Import Bank’s (Afreximbank) 2023 edition of the African Trade Report (ATR2023) was launched at the bank’s Annual Meeting – AAM2023 and 30th Anniversary celebrations in Accra, Ghana. Launching the ATR2023 along with Ambassador Albert Muchanga, the African Union commissioner for Economic Development, Trade, Industry and Mining, Professor Benedict Oramah, the president and chairman of the Board of Directors of Afreximbank, said that Africa showed growth resilience amid a synchronised global deceleration under the confluence of overlapping crises, including lingering effects of the COVID-19 pandemic, record-high inflation, heightening geopolitical tensions and intensification of trade wars. Indeed, amid these global headwinds Africa remained on a growth trajectory, with its GDP growth increasing by 3.9% and its merchandise trade expanding by 20.9% in 2022, above the world’s average of 12%, according to the report. Dr Hippolyte Fofack, Afreximbank’s chief economist, noted that the stronger trade performance of the region was largely supported by favourable commodity terms of trade, with rising commodity prices compensating for the lackluster growth in the volume of global trade which increased by 2.7%.

Source: Afreximbank

Africa

FDI into Africa down in 2022, renewable energy investment lags

Foreign direct investment (FDI) into Africa for 2022 was down by nearly half from the previous year, a new report shows. The United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2023 shows that FDI flows to the continent declined to USD45-billion in 2022 from the record USD80-billion set in 2021. They accounted for 3.5% of global FDI, which fell 12% in 2022. The report said developing countries need renewable energy investments of about USD1.7-trillion each year, but attracted only USD544-billion in clean energy FDI in 2022. Although investments in renewables have nearly tripled since 2015, most of the money has gone to developed countries, it said. But there are some bright spots, in the form of greenfield projects in Africa. “The number of greenfield project announcements rose by 39% to 766. Six of the top 15 greenfield investment mega projects (those worth more than USD10-billion) announced in 2022 were in Africa.” Announced greenfield projects more than doubled in number, to 161. International project finance deals rose in value by two thirds, to USD24-billion. The report points out that over the past five years, FDI inflows have risen in four of the regional economic groupings on the continent. 

Source: ESI Africa

Africa

Mobilising capital for Africa’s prosperity: Second Annual Meeting of ASIF highlights importance of strategic partnerships

African Development Bank (AfDB) vice president for Private Sector, Infrastructure, and Industrialisation Solomon Quaynor has called for unity to unlock the potential of African sovereign wealth funds, strategic investment funds, pensions, and life insurance assets, estimated at USD2.3-trillion. Speaking at the Second Annual Meeting of the Africa Sovereign Investors Forum (ASIF) in Kigali, Quaynor said the AfDB was committed to supporting the establishment and operations of the African Sovereign Wealth Funds secretariat, while working with ASIF members to develop and finance transformative strategic projects across the continent. He said that with a determined focus on Africa’s development needs, the AfDB would mobilise billions to trillions of dollars, cementing its role as a key catalyst for economic growth and prosperity in Africa. The meeting ran from 6-7 July under the theme, Strategic Partnerships: driving Africa’s resilience and sustainable development. ASIF was launched in the Moroccan capital Rabat in June 2022 by a group of 10 African sovereign wealth funds. Its goal is to facilitate the mobilisation of long-term capital to develop Africa. 

Source: AfDB

Africa

SEFA elevates hydropower modernisation as an accelerator of Africa's energy transition

The African Development Bank (AfDB)-managed Sustainable Energy Fund for Africa (SEFA) has showcased hydropower as a key element of meeting the accelerating demand for renewable energy at the Africa Energy Forum held in the Kenyan capital. The Africa Energy Forum took place in Nairobi from 20-23 June, organised by Energy Net with support from the Government of Kenya, the AfDB, International Finance Corporation (IFC) and other partners. A session titled Hydropower Modernisation to Accelerate Africa's Energy Transition posited that renovating existing hydropower infrastructure represents a compelling opportunity. This is because greenfield hydropower projects have high upfront costs, and significant environmental and social impacts, leading to long lead times before they come onstream. The event also marked the launch of a flagship report entitled Africa Hydropower Modernisation Programme: Continent-wide Mapping of Hydropower Rehabilitation Candidates. The report was produced by the AfDB under SEFA’s Africa Hydropower Modernisation Programme (AHMP) in collaboration with the International Hydropower Association (IHA).

Source: AfDB

East Africa

EAC unveils an online tool to measure performance of one stop border posts

The East African Community (EAC) has unveiled an online tool to measure the performance of the 22 one stop border posts (OSBPs) across the region. The EAC secretary general in charge of Customs, Trade and Monetary Affairs, Ms Annette Ssemuwumba, unveiled the One Stop Border Post Performance Measurement Tool on behalf of the EAC Secretary General, Dr Peter Mathuki, during the opening session of the 14th African Union High Level Private Sector Forum in Nairobi, Kenya. Ms Ssemuwemba announced that the tool is now ready for use and that partner states and stakeholders will embark on data collection, sensitisation on use and full rollout. OSPBs are an important infrastructure at border crossing points and contribute to spur intra-regional trade by reducing the costs of doing business through reduction of time and costs taken to cross borders. Further, OSBPs eliminate multiplicity of documentation associated with two-stop border posts’ bureaucracies. Lack of data to inform decision making on major aspects such as OSBP performance, human resources and state of the physical and digital infrastructure have often slowed down collective action for optimal performance of existing OSBPs.

Source: EAC

Chad

Flooding and an unstable security environment have hampered Chad's expected economic recovery, according to the World Bank

Chad experienced a modest GDP growth in 2022, as floods and an unstable security environment hampered the expected recovery, according to a World Bank report released on the third edition of the Knowledge Week, a workshop for the dissemination of reports that tackle key growth and development issues in Chad. After contracting by 1.2% in 2021 (-4.3% per capita), the Chadian economy was expected to recover in 2022 thanks to high oil prices, an increased oil production and the depreciation of the FCFA/USD exchange rate. However, the recovery has hindered by floods and a volatile security environment, with GDP growth estimated at 2.2% (-0.9% per capita), and non-oil GDP growth at 1.3%, compared with 0.4% in 2021. Industry (mainly the oil sector) was the main contributor to growth (4.1 percentage points), followed by agriculture with a contribution of 0.6 percentage points, due to inadequate rainfall distribution and severe flooding. The knowledge Week, titled Helping Chad become resilient to climate shocks, aims to fuel public debate on recent economic developments and prospects for macroeconomic and social policies to promote growth and reduce poverty.

Source: World Bank

Côte d'Ivoire

AfDB extends EUR400-million in partial credit guarantees to mobilise funds for ESG projects

The Board of Directors of the African Development Bank (AfDB) Group has approved a EUR400-million partial credit guarantee for Côte d'Ivoire, to support the mobilisation on international financial markets of financing for strategic environmental, social and governance (ESG) projects. The approval came on 12 July 2023. The partial credit guarantee will enable Côte d'Ivoire to raise long-term financing from commercial banks, in line with its ESG Framework. Côte d'Ivoire has developed an ESG Framework Document that sets out the government's commitment to ESG, and strengthens governance, including for project selection, fund management, evaluation and monitoring. The funds will support projects across a range of sectors, including sustainable agriculture and agro-industry, water and sanitation, renewable energy, health, affordable housing, education and vocational training, financial inclusion and entrepreneurship. Financing will also drive job creation for youth and women in rural areas of the country. The country’s National Development Plan 2021-2025 sets out strong social and environmental ambitions in the form of a series of investment projects and priority programmes.

Source: AfDB

Kenya / Iran

Kenya, Iran ink 22 MoUs to grow bilateral trade after President Raisi visits

Kenya and Iran are charting a new path to increase trade between the countries following the Nairobi visit of President Ebrahim Raisi. President Raisi and President William Ruto have signed 22 memorandums of understanding (MoUs) and agreements with the view to lift bilateral trade. The MoUs cover sectors such as agriculture, livestock, culture and heritage, information, information and communications technology (ICT), fisheries, housing, and urban and metropolitan development. Iran is expected to set up a centre for innovation and technology in Nairobi to be known as the Iran House of Innovation and Technology to house the two countries’ businesses. “This is an innovative way of enabling enterprises to access Iranian technologies, skills and information. We seek to capitalise on this unique advantage for our prosperity,” President Ruto said. President Raisi noted that more Iranian firms will set up in Kenya to take advantage of the country’s position as a gateway to other regional markets including the East African Community (EAC), Common Market for Eastern and Southern Africa (COMESA) and the African Continental Free Trade Area (AfCFTA). 

Source: Africa Business Daily

Mozambique

IMF Executive Board completes the second review under the ECF arrangement for Mozambique

The Executive Board of the International Monetary Fund (IMF) completed the second review under the three-year Extended Credit Facility (ECF) arrangement for Mozambique. This allows for the immediate disbursement of SDR45.44-million (about USD60.6-million), usable for budget support, bringing Mozambique’s total disbursements under the ECF arrangement to SDR159.04-million (about USD212.09-million). By completing the review, the executive board approved waivers of nonobservance for two performance criteria: (i) the end-December 2022 performance criterion on domestic primary budget balance was missed due to overruns in the implementation of the wage bill reform and revenue shortfalls; and (ii) the continuous performance criterion on non-accumulation of public and publicly-guaranteed external arrears was missed due to delays in debt service repayment by a state-owned enterprise (SOE). Both waivers of nonobservance were approved based on remedial actions taken by the authorities. The monetary policy consultation clause (MPCC) band was breached at the lower bound, as inflation decelerated faster than expected. The monetary policy consultation with the executive board was completed. 

Source: IMF

Namibia

Understanding the significance of ESG for corporate directors in Namibia

Corporate entities in Namibia are progressively adopting policies that address environmental, social and governance (ESG) factors affecting their corporate operations. These may involve their ESG objectives or ESG sustainability and integrated reporting obligations. Historically, ESG risks, or non-financial risks, were not always considered alongside financial risks, and the impact they may have on a company's ongoing financial success has oftentimes been overlooked. Notwithstanding the growing awareness of these factors, some corporate leaders remain sceptical, deterred by the additional expense associated with ESG reporting and concerns that these developments represent a passing fad. Whatever your view of the recent hype around ESG, it is worth recognising that, unknown perhaps to most, ESG principles have long been entrenched in the Corporate Governance Code for Namibia (NamCode) and serves as a recognition of the long-term benefits for corporates in addressing these factors. The NamCode is founded on international best practices and the King Code of Governance in South Africa, 2009 (King III). 

Source: ENSafrica

Rwanda

Rwanda maintains strong growth momentum in early 2023

Rwanda’s economy grew by 9.2% in the first quarter of 2023, following 8.2% growth in 2022. But recent floods, resulting in the loss of life and destruction of infrastructure, are expected to moderate this momentum to 5.8% in 2023 against a pre-disaster forecast of 6.2%. The 21st edition of the World Bank’s Rwanda Economic Update (REU) highlights positive developments in the country’s economic landscape. Momentum in growth was supported by private consumption and the services sector, accompanied by improvements in the labour market. Inflation has eased, although it remained above the target range set by the National Bank of Rwanda during the first half of 2023. The REU says Rwanda's current account deficit improved in 2022, driven primarily by higher export revenues and remittances, which outweighed rising import prices. The fiscal deficit also narrowed in the first half of financial year 2022/23, due to a drop in public spending. “A narrowing fiscal deficit, coupled with strong economic growth, has contributed to a reduction in Rwanda's debt as a percentage of GDP for the first time since 2013,” said Peace Aimee Niyibizi, World Bank country economist for Rwanda and author of the REU. 

Source: World Bank

Senegal

Senegal's growth prospects are strong

After slowing to 4.7% in 2022, growth in Senegal is projected to rebound to over 5.3% this year, due in part to an emerging oil and gas industry. This makes Senegal one of the strongest growing economies in sub-Saharan Africa. The country is facing some challenges, however, including spillovers from the war in Ukraine, tighter financing conditions, and increased political instability in the region. A widening fiscal deficit and increasing government debt are two major concerns. Senegal’s strong post-COVID-19 pandemic recovery has been hindered by overlapping external shocks. As a result, growth forecasts have been revised down, inflation has soared, and the fiscal and current account deficits have widened. Public debt has also increased to over 76% of GDP. The country has strong prospects however, reinforced by the production of oil and gas, which will give the economy a boost for the next few years. Growth is projected to accelerate to 10.6% in 2024 and 7.4% in 2025, with non-hydrocarbon growth expected to reach around 6%, assuming prudent macroeconomic policies and steadfast structural reforms are implemented under the International Monetary Fund (IMF) supported programmes.

Source: IMF

Seychelles

Seychelles considers joining Single African Air Transport Market

Seychelles is still evaluating whether or not to sign an agreement to be part of the Single African Air Transport Market (SAATM), an initiative of the African Union (AU). The SAATM seeks to promote connectivity, boost intra-African trade and tourism, and enhance economic integration among African countries. "One of the reservations we have is that we are protecting our aviation industry, including Air Seychelles. We want to ensure that when we do sign this agreement, we will protect Air Seychelles, and at the same time we will do all that is necessary to expand as a regional airline," said the Minister for Transport, Anthony Derjacques, at the opening of a two-day workshop. The workshop which took place in Seychelles, was organised by the Department of Civil Aviation, Ports and Marine in collaboration with the Common Market for Eastern and Southern Africa (COMESA). More than 30 African nations have formally endorsed the SAATM as the knowledge cut-off in September 2021, while the full implementation and realisation of its advantages are continuing activities. The AU's Agenda 2063, which envisions a wealthy and interconnected Africa, includes SAATM, which was introduced in January 2018.

Source: Seychelles News Agency

Seychelles

Seychelles National Assembly calls for government ministries, departments and agencies to go fully cashless by January 2025

The Seychelles National Assembly has asked the government with all its strategic partners to consider putting in place all necessary mechanisms for the public sector and parastatal services to go cashless as of 1 January 2025. The motion was recently brought forth by the elected member of the central district of Mont Buxton, Gervais Henrie, who is also the Deputy Speaker of the National Assembly. Henrie said that the motion is simple and that "it is asking that once and for all, all cash transactions stop in public and parastatal services. The motion is proposing a time frame of 18 months from now." He said that before coming into power, it was a dream of the Linyon Demokratik Seselwa (LDS) party to transform the Seychelles' economy into a digital economy where financial services become a new frontier for business. Henrie said that in his first budget address in February 2021, the Minister for Finance, National Planning and Trade, said that the world has already entered the digital era and Seychelles cannot be left behind.

Source: Seychelles News Agency

Uganda

Informal businesses key in achieving cashless economy, experts say

Financial Technology (Fintech) stakeholders have said onboarding small businesses, especially in the informal sector, on the digital payments ecosystem will be key in attainment of a cashless economy. Speaking at the 2023 Fintech Landscape Exhibition, stakeholders noted that while first and middle-class citizens have largely embraced the digital economy, millions at the bottom of the pyramid have been left behind due to various barriers. Ms Damali Ssali, the Private Sector Foundation Uganda chief of programmes and project officer, said several things must be done differently for Uganda to realise a cashless economy. For instance, she said, lowering the cost of digital payments must be achieved by eliminating multiple deductions that make them less attractive. “Players in this space ought not to focus on transaction charges but look for innovative ways of earning,” she said. Information and Communications Technology (ICT) State Minister, Joyce Nabbosa Ssebugwawo, who was the chief guest, said digital payments will benefit from accessible and affordable internet, noting that as Ministry of ICT, they were working with other government agencies, donors, private investors and innovators to make the internet cheap and available.

Source: Monitor

Uganda

Uganda imposes levy on foreign digital companies' income

Uganda's Parliament has passed a new tax law that imposes a 5% levy on income earned in the country by foreign providers of digital communications services such as Twitter and Meta's (META.O) Facebook. Authorities in the East African country have been exploring ways of tapping into the fast-expanding digital economy to help boost revenue needed to pay off mounting public debt. The Ugandan Parliament said in a Twitter post that lawmakers had passed a new tax law called "The Income Tax (Amendment) Bill, 2023" containing the new levy. The new law "will also tax non-resident providers of digital services in Uganda such as Facebook, Twitter, Amazon and Netflix," the Parliament said. The Bill has prompted alarm in some quarters, with critics, including opposition lawmakers and rights advocates, warning it could see social media firms seek ways to charge Ugandans for services that are currently free. 

Source: Reuters

Zimbabwe

Zimbabwe hosts fifth structured dialogue on debt with creditors

Since late 2022, the government of Zimbabwe has been engaged in a concerted process to resolve its official debt and clear its arrears with international creditors, including the African Development Bank (AfDB). On Thursday, 29 June, the Zimbabwean government held the fifth in a series of structured dialogue meetings with development partners and creditors. The Zimbabwean Finance and Economic Development Ministry organised the meeting to review three draft policy reform matrices on economics, governance and land tenure and compensation to former farmers under the terms of what are known as the Bilateral Investment Promotion and Protection Agreements. Zimbabwe has been a regional member of the AfDB since 1980, and the bank has played a substantial role in its development over the years. This is why President Emmerson Mnangagwa invited its current president, Dr Akinwumi Adesina – widely recognised as one of Africa’s most ardent growth proponents – to champion the debt and arrears clearance process. Zimbabwe’s total consolidated debt amounts to USD17.5-billion. 

Source: AfDB