A weekly electronic news briefing on African issues for the Southeast Asian community
Editor: Johan Burger
Issue 143 27 April 2018
- East Africa: IGAD has 8 members and aims to facilitate the free movement of persons in the IGAD region to enhance regional economic integration and development and facilitate the regularisation of the high volume of informal movement that currently takes place in the region.
IGAD has 8 members, i.e. Uganda, Kenya, Sudan, South Sudan, Djibouti, Ethiopia, Somalia and Eritrea. It aims to facilitate the free movement of persons in the IGAD region in order to enhance regional economic integration and development and facilitate the regularisation of the high volume of informal movement that currently takes place in the IGAD region, to increase the opportunities for safe, regular and beneficial mobility. The aim of a high-level meeting recently held in Uganda, was to deliberate on the provisions of the proposed “IGAD Protocol on Free Movement of Persons.” The right of residence in any IGAD member state, free movement of vehicles, transportation of goods and people, harmonisation of labour laws, policies and the provision of a safe environment for refugees, asylum seekers and pastoralists are the other key issues that IGAD must implement. The protocol on the free movement of people is enshrined in the 1986 agreement that established IGAD. However, member states Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Sudan and Uganda have been reluctant to endorse it, much to the chagrin of South Sudan. For more information, read.
- CAS Analysis: IGAD has the potential to contribute towards integration in East Africa, supporting the objectives of the AfDB’s “High 5 Priorities” – integrate Africa. Africa needs the integration to improve its inter-African trade, which currently is at a low 15%. However, while South Sudan is enthusiastic about the mechanism, its IGAD partners appear to be less so. This is typical of the situation within Africa when it comes to integration mechanisms/initiatives such as the TFTA and the CFTA – countries tend to be on the lookout and protection of national interests and are weary of subordinating them to regional interests. If Africa is serious about its integration and of obtaining the benefits thereof, it will need to take the abolishment of constraints more seriously.
- Kenya: The Kenyan government is still fleshing out the details of how to fund and implement its “Big 4” economic agenda.
The Kenyan government is still fleshing out the details of how to fund and implement its “Big 4” economic agenda. President Kenyatta recently identified manufacturing, enhancing food security, universal health care and ensuring affordable housing for all as the key focus areas for Kenya’s economic policies. The plan focuses on, among other things, meeting the demand for over 2 million low cost houses. Local banks have limited access to long-term funding. Kenya – with a population of over 40 million – has less than 25,000 mortgages. To turn these plans into reality, skills development and technology transfers are vital, and China has been identified as a valuable partner in this quest. China will provide a fund to set up the China-Africa teachers college of vocational education for many professions, including tour machines, manufacturing, joint research, and crop molecular laboratories. For more information, read.
- CAS Analysis: Kenya meeting its “Big 4” objectives will improve the wealth and heath of Kenyans dramatically. Boosting manufacturing sector will boost export revenues, import substitution and job creation. As it is, the contribution of the manufacturing sector to Kenya’s GDP is quite low at approximately 9%. Affordable housing is a challenge throughout Africa, with many Kenyans (and Africans) not being able to afford the available housing. Having only 25,000 mortgages with a population of over 40 million is an indictment against the system. Finding clever mechanisms to enable Kenyans and Kenyan financial institutions to finance housing purchases, will therefore boost the lives of millions of poor Kenyans. Food security and affordable health care are obvious goals worth striving for. The million-dollar question is always one of who will be paying for all of this! As is frequently the case, China seems to be stepping up as Africa’s partner, increasing Africa’s dependence on this economic super power and its vulnerability to whatever happens to China.
- Kenya: The value of horticulture production rose 41% last year compared with 2016 on account of good prices. The domestic market has never been well coordinated, which offers the capacity to engage with more stakeholders, and to extend the membership and grow the sector.
The value of horticulture production rose 41% last year compared with 2016 on account of good prices. Overall sales rose from Sh216 billion (~US$2.1 billion) in 2016 to Sh305 billion (~US$3 billion) last year. The total value of horticultural produce exported in 2017 increased from Sh101.5 billion (~US$1 billion) in 2016 to Sh115 billion (~US1.15 billion) last year. The marked increase in exports was attributed to compliance with the export market requirements by the majority of exporters, especially to the EU. In 2016, the value of flowers, fruits and vegetables increased by 13%, 12% and 12% respectively as compared to 2015. The fresh produce sector was seen as being resilient to the economic storm witnessed in 2017 as a result of the prolonged election. The cut-flower export still remains the largest earner, contributing over 70% of the total fresh produce annual earnings. Flower exports contributed Sh82.24 billion (~US$821 million), up from Sh70.83 billion (~US$707 million) earned in 2016, representing 11.6% growth, on export volume of 159,961 tonnes. The domestic market has never been well coordinated, which offers the capacity to engage with more stakeholders, and to extend the membership and grow the sector. For more information, read.
- CAS Analysis: Horticulture in Kenya makes a significant contribution to Kenya’s GDP. Other counties in the region have also turned towards horticulture as an export product. Rwanda adopted strategies to boost its horticulture sector already in 2015. The Rwanda Horticulture Working Group (RHWG) was launched to boost the country’s horticulture production, quality and exports. The initiative also seeks to attract more private investments into the horticulture industry, as well as to stimulate dialogue among stakeholders. The RHWG will provide a platform to promote more public-private sector partnerships to help expand the country’s horticultural sector. Ethiopia over the past decade has managed to transform its horticulture sector from scratch to about a US$270 million export business. The sector has managed to attract more than 100 companies, but has so far relied on farmlands scattered in various areas with potential for the sector. The Ethiopian government is considering organizing the sector into clusters and gathering farms in parks. It seems the East African region has a lot of potential for the horticulture sector. Some of the producers have not only targeted the European market, but are looking further afield to the USA and elsewhere.
Cote d’Ivoire: Cote d’Ivoire is now looking to diversify away from cocoa and to turn itself into a start-up hub. If Côte d’Ivoire is going to increase its diversification, its system of education and learning will have to be reformed.
Cocoa is a double-edged sword of a crop. Confectioners turn it into delicious treats or use it for antioxidants for health improvement purposes. However, it also guzzles water, demands shade and is responsible for large-scale deforestation. Cote d’Ivoire is now looking to diversify away from cocoa and to turn itself into a start-up hub. If Côte d’Ivoire is going to increase its diversification, its system of education and learning will have to be reformed. Its national distance learning centre has joined with Orange to increase access to vocational education and mid-career training. Some companies (Bel) are working with Orange to track the informal distribution routes of street traders and farmers so that customers come to them. Because poor farmers are vulnerable to pressure from traders, the government, industry and other social organizations are lobbied to increase the profits Ivorian farmers receive. For more information, read.
- CAS Analysis: After the oil price slump of a few years ago, the economies of oil exporters such as Nigeria and Angola took a beating. This was aggravated by the end of the commodity price super cycle. Commodity exporters (minerals especially) all got hurt. Cote d’Ivoire was one of the economies that smiled broadly, due to the benefits they enjoyed from a high cocoa price. However, over the last 2 years we have seen an increase in the number of articles addressing the topic of the need for Cote d’Ivoire and Ghana to gain control over the pricing of cocoa. The portion of revenue of the global value chain of cocoa that comes back to Africa, is embarrassingly small (as low as 4%). The diversification of its economy has become a prominent theme. This will always be an important strategy for Africa, as a dependence on a single crop or 2 is never healthy. Promoting start-ups is equally a generic important strategy, as is supporting farmers. Agriculture must be seen as a lucrative sector, otherwise it will not attract the youth who currently see it as part of the poverty trap.
- Cote d’Ivoire: MainOne, a connectivity and data centre solutions operator that is expanding its services across West Africa, has secured a license to expand national and international connectivity services in Cote d’Ivoire.
MainOne, a connectivity and data centre solutions operator that is expanding its services across West Africa, has secured a license to expand national and international connectivity services in Cote d’Ivoire. The license will enable MainOne to land its submarine cable and build transmission infrastructure in Cote d’Ivoire, to strengthen connectivity, reduce international capacity costs and support wholesale customers, major operators and Internet Service Providers. The dynamism of the national economy and accelerated development of the digital economy in Cote d’Ivoire, as well as its regional leadership, makes it a natural hub for the West African region and guided MainOne’s decision to invest in Cote d’Ivoire. MainOne will commence the construction of its digital transmission cable in June 2018, to be concluded in the second half of 2019. Its cable landing will provide open-access infrastructure within Cote d’Ivoire and other WAEMU countries to expand internet access for all, support rapid development, and facilitate increased non-resources trade and improve public services to aid the evolution of regional businesses. For more information, read.
- CAS Analysis: Commentators have identified 4 so-called technology super powers, i.e. mobile technology, the cloud, artificial intelligence (AI) and the internet of things (IoT). Mobile technology provides unprecedented reach, connecting people everywhere in the world. The cloud delivers capacity on a gigantic scale, enabling organisations to add or remove various components to their infrastructure quickly and as needed. Deep-learning AI enables us to mine massive amounts of data in real-time and to use those insights to accelerate academic discovery and create entirely new business models. The IoT connects the physical and digital worlds, bringing technology into every dimension of human progress. These forces are having a profound effect in Africa already, relative to the previous status quo where Africa was bypassed as a dark and dangerous continent. Much still needs to be done. What is required is the infrastructure and connectivity to enable these super powers. This is what we are seeing happening now with MainOne in Cote d’Ivoire. Without it, these forces will bypass Africa, keeping it isolated. Without it, Africa will not see the entrenchment of e-government, of e-commerce to its fullest extent. Without it, Africa will remain the dark continent…
- Nigeria: The Emir of Kano and former governor of the Central Bank of Nigeria (CBN), has said that foreign companies were looking to make investments in other sectors of the Nigerian economy apart from oil.
The Emir of Kano and former governor of the Central Bank of Nigeria (CBN), has said that foreign companies were looking to make investments in other sectors of the Nigerian economy apart from oil. He remarked that investors were keen to do business in Nigeria's agricultural, power, technology and other sectors and said that what was needed was the right policies and attitude to attract them. He added that Nigeria had the potential to grow if the government could fix its electricity issues. Many opportunities are not explored, for example, trade across the South and North Africa. The Emir stressed the need for the country's leaders to project the things that attract investors at investment forums. He was not kind to ministers and state governors who were billed for the investment summit in the USA, but were absent. He noted that some African countries were working hard to attract investors. For more information, read.
- CAS Analysis: It is good seeing Nigeria punting the non-oil sectors of its economy. Oil is still the dominant product in the export revenue portfolio of the country. While earning revenue from oil is great, being dependent to the extent it currently is, leaves Nigeria vulnerable. The sectors identified above are sectors with a lot of potential. Given the size of the population, investments in the agriculture value chain is a sound investment, irrespective of where you participate in this value chain. Linking the national value chain to the both the regional and global value chains will unlock further value, as Tolaram has indicated. Countries such as Rwanda, Ethiopia, Botswana and Mauritius, to name but a few, are actively reforming their economies to create a business environment that is both more competitive and easier to do business in. Investors do pay attention to these parameters when deciding where to do business in Africa. Nigeria is currently only ranked at 145 out of 190 on the Ease of Doing Business 2018 (24th in Africa). At Number 145, much needs to be done. To be fair to Nigeria, it has been noted as one of the 10 economies improving the most across three or more areas measured by Doing Business in 2016/17. On the WEF’s Global Competitiveness Rankings, Nigeria ranks at 125 globally and 23rd in Sub-Saharan Africa. Given the potential of the country, it needs to do much better. This is more so when one sees who is higher up on the list than the continent’s largest economy! The Emir’s criticism towards his countrymen rings true. If you are not excited and passionate about your country at a foreign investment forum, or even present, the chances are zero your hosts will be.
- Sudan: Sudan has invited Russian companies to take part in the development of its oil industry by offering them several oil sites, including both producing and untapped ones, and fields that are currently being developed by other foreign companies, whom the Russian players would help to increase production.
Sudan has invited Russian companies to take part in the development of its oil industry by offering them several oil sites, including both producing and untapped ones, and fields that are currently being developed by other foreign companies, whom the Russian players would help to increase production. Sudan has been eager to build an oil industry after the split with South Sudan when it seceded in 2011. After the secession, South Sudan owned 75% of the oil reserves, while Sudan owns the only current transport route to get oil to international markets. In 2012, South Sudan and Sudan reached an agreement that allowed South Sudan to resume its oil exports via Sudan. Sudan is currently mostly a pipeline provider for its neighbour—and possibly Uganda and Kenya in the future—rather than an oil producer. Yet the country is hopeful about its oil reserves. Sudan eyes initial production of 10,000 bpd from the field, with
the reserves in the field recently upgraded to 165 million barrels from 19 million barrels. For this production to begin, however, investments of around US$200 million are necessary. For more information, read.
- CAS Analysis: It seems that Sudan will soon have its own oil reserves to pump, instead of just being part of the supply chain for its southern neighbour. With a GDP of US$96 billion (according to Trading Economics), the 6th highest in Africa, this will set up some nice growth opportunities for this country after being the target of sanctions and embargoes for a decade or 2. What is equally interesting about this article, is the increasingly prominent role Russia is starting to play in Africa. Russia is apparently attempting to expand its influence in Africa and restore is prominence on the continent to its glory days in the preglasnost and perestroika days of the former Soviet Union. The Russian Minister of Foreign Affairs, Sergey Lavrov, visited a number of countries in Africa in March 2018, i.e. Zimbabwe, Namibia, Angola, Mozambique and Ethiopia. It seems both resources and manufacturing (arms included) were on the agenda. In addition to expanding its influence in Africa in general, Russia also has some strong visibility in Egypt’s Suez Canal expansion, and it is also reportedly looking at building a military base in Somaliland as a back-entry into Ethiopia. With a growing presence in Sudan, and with an invitation to not only pump oil, but also to train Sudan’s military and use Sudan as a gateway into Africa, Russia is setting itself up nicely. Africa seems to be becoming the playing ground of the big boys in global politics. Should it not be able to dictate and enforce the rules of the games, I am not sure it is in Africa’s best interest.