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Russia’s Promise of Building Nuclear Plants in Africa

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Nuclear Plants in Africa

By Kester Kenn Klomegah

For more than two decades, Russia has been struggling to help Africa overcome its energy deficit, with little success.

But now, with financial support from the European Union (EU), two international organizations have been chosen as modelling partners for the development of the African Continental Power Systems Master Plan (CMP).

The two organizations will lead the development of an electricity master plan that promotes access to affordable, reliable and sustainable electricity supplies across the continent.

As expected, African stakeholders will play roles in identifying surplus and deficit regions/countries, in terms of electricity generation and demand, as well as the most cost-effective ways of expanding clean electricity generation and transmission infrastructure across Africa.

African energy ministers tasked the African Union Development Agency (AUDA-NEPAD) to lead the development of the master plan. Following a two-year consultation process coordinated by the EU Technical Assistance Facility (TAF) for Sustainable Energy.

Eastern and Southern Africa are vast, geographically diverse regions with rapidly growing populations and rising demands for energy, according to the master plan, there are two regional power pools.

A new study entitled Planning and Prospects for Renewable Power: Eastern and Southern Africa assesses the long-term energy plans for the two regional power pools (known as the Eastern and Southern African Power Pools), and finds the region well-endowed with high quality, cost-effective, but under-utilized wind and solar resources.

In practical terms, Africans are looking for energy alternatives to embark on the next round of industrialization. Russia’s nuclear energy diplomacy in Africa has been at the crossroad over the past two decades since the collapse of Soviet-era.

In order to find long-shelf solutions to chronic power shortages, African leaders and Governments, that have shown interest in adopting Russian nuclear energy, signed necessary legal documents but lacked the needed funds for prompt implementation and final realization.

Russia and Africa’s aspirations in this sphere of nuclear cooperation come with many challenges. In Rwanda and many other African countries, the first question is finance. “Rwanda’s annual budget stands at US$3 billion while the construction of the nuclear power plant would cost not less than US$9 billion which is equivalent to Rwanda’s entire gross domestic product,” David Himbara, Rwandan-Canadian Professor of International Development at Canada’s Centennial College, wrote in an emailed interview.

He said that Rwandan President Paul Kagame always believed that he must validate his supposedly visionary and innovative leadership by pronouncing grand projects that rarely materialized.

Currently, all African countries have a serious energy crisis. Over 620 million in Sub-Saharan Africa out of 1.3 billion people do not have electricity. It is in this context that several African countries are exploring nuclear energy as part of the solution.

There is only one nuclear power plant on the entire African continent, namely, Koeberg nuclear power station in South Africa. Commissioned in 1984, Koeberg provides nearly 2,000 megawatts, which is about 5% of installed electricity generation in South Africa.

According to Himbara, “Of all African countries that have shown interest in nuclear energy, none have so far gone beyond the stage of conducting a preliminary feasibility study, project costing and financing models, except South Africa.”

But, the South Africa US$76 billion deal with the Russians to build a nuclear power plant collapsed along with the Government of Jacob Zuma that negotiated the deal in secrecy, in fact when such corporate projects have to be discussed and approved by the parliament and necessarily have to pass through an international tendering process.

Russia and South Africa concluded an intergovernmental agreement on strategic partnership in the nuclear sphere in 2014. The agreement provided, in particular, for the construction of up to eight NPP power units.

“Nuclear waste will pile up, and where are they going to put it? The Sahara? The US is always trying to force nuclear waste repository on some poor or indigenous community and when that fails, the waste keeps piling up at the reactor sites, creating greater and greater environmental risks,” according to Himbara.

He underscored the fact that “managing nuclear waste and its safety is universally complex and dangerous. The Chernobyl disaster in Ukraine and Fukushima in Japan, remind the world of the human and environmental costs of nuclear power accidents. Millions of people are still suffering from radiation and radiation-related diseases till today.”

Foreign Minister Sergey Lavrov, in an interview with the Hommes d’Afrique magazine in March 2018, described Africa as rich in raw material resources, including those that are required for high technology and for moving to a new technological pattern. Apart from mining, Russia and African countries are cooperating on high technology.

What was more important for Africa’s energy sector when he informed that Rosatom has been considering a number of projects that are of interest to Africans, for instance, the creation of a nuclear research and technology centre in Zambia. Nigeria has a similar project. There are good prospects for cooperation with Ghana, Tanzania and Ethiopia. Talks are still continuing on the construction of nuclear power plants in South Africa.

Shadreck Luwita, Zambian Ambassador to the Russian Federation, informed that the processes of design, feasibility study and approvals regarding the project have been concluded, in the case of Zambia. The site of the project designated and it is envisaged that construction should commence, in earnest, not later than the second half of 2018. That construction remains a monumental dream, though.

In addition, he affirmed that the Russians envisaged technology transfer in the development of this massive project by way of manpower development capacity. For now, there are a few Zambian nationals, who are studying nuclear science in Russia.

The Zambian Government ultimately profitable hopes are that upon commissioning of this project, excess power generated from this plant could be made available for export to neighbouring countries under the Southern African Development Community Power Pool framework arrangement.

Zambians are still worried about Russia’s promise of nuclear plants estimated at US$10 billion. In February 2020, Chairperson of the Federation Council (the Upper House or the Senate), Valentina Matviyenko, headed a Russian delegation on a three-day reciprocal visit aimed at strengthening parliamentary diplomacy with Namibia and Zambia.

While in Zambia meeting with the president and other high-ranking legislators, she expressed regret at the suspension of the construction of a centre for nuclear science and technology due to financial issues. The request submitted to the Russian president needed careful consideration by the relevant ministries and departments. She hoped Russia and Zambia would jointly find options to promote funding to roll out the construction of a centre for nuclear science and technology.

This is not an isolated case. From all indications, Russia wants to turn nuclear energy into a major export industry. It has signed agreements with African countries, many with no nuclear tradition, including Rwanda and Zambia. In addition, Russia is set to build large nuclear plants in Egypt that could serve the Maghreb region.

Interestingly, Egypt’s dreams of building nuclear plants have spanned with the agreement that was signed (as far back in March 2008) during an official visit to the Kremlin by the ousted President Hosni Mubarak, and then again with former Egyptian leader Mohammed Morsi who discussed the same nuclear project with Vladimir Putin in April 2013 in Sochi, southern Russia.

During the dawn of a new era at the Sochi summit, Vladimir Putin and Abdel Fattah Al Sisi signed an agreement to set up four nuclear plants in El Dabaa, on the Mediterranean coast west of the port city of Alexandria, where a research reactor has stood for years.

The deal was signed on the heels of talks held between Putin and Al Sisi, where both expressed high hopes that Russia would help construct the country’s first nuclear facility. Egypt began its nuclear program in 1954 and in 1961, acquired a 2-megawatt research reactor, built by the Soviet Union.

However, plans to expand the site have been decades in the making that Rosatom will provide its fuel, personnel training, and build the necessary infrastructure. The four blocks of the nuclear power plant will cost about US$20 billion. Director Anton Khlopkov and Research Associate Dmitry Konukhov at the Center for Energy and Security Studies, co-authored a report to Valdai Discussion Club, that the success of Egypt’s nuclear project depends on three key factors.

These are the political stability and security situation in Egypt, a viable financing mechanism that reflects the country’s economic situation, and the government’s ability to secure support for the project among the local residents of El Dabaa, the site chosen for Egypt’s first nuclear plant back in the 1980s.

In reality, Ghana has similar never-ending dreams and fairy tales of owning nuclear plants. The agreement was re-signed on June 2, 2015. The Russian reactor, a 1000 MW plant, will cost a minimum of $4.2 billion. The financing scheme has not been finalized by the parliament. And it will take about eight to ten years from site feasibility studies to commissioning of the first unit, according to the Ghana Atomic Energy Commission.

As local media reported, Ghana’s quest to industrialize for economic growth and development has fast-tracked plans to establish nuclear power in the country within the next decade, which means by 2029 and export excess power to other countries in the West African sub-region.

With “One District, One Factory” – Ghana’s industrialization agenda might not be realized under Nana Addo Dankwa Akufo-Addo’s administration based on the roadmap of the nuclear power programme to commence construction by 2023 and inject nuclear energy into the grip by 2030.

The African countries’ MoUs and Agreements with Rosatom including South Africa, Nigeria, Ghana, Kenya, Rwanda, Tanzania, Zambia and the rest are, most probably, stacked. Nearly three decades after the Soviet collapse, not a single plant has been completed in Africa.

Some still advocate for alternative energy supply. Gabby Asare Otchere-Darko, Founder and Executive Director of Danquah Institute, a non-profit organization that promotes policy initiatives and advocates for Africa’s development, wrote in an email that “Africa needs expertise, knowledge transfer and the kind of capital imports that can assist Africa to develop its physical infrastructure, add value to two of its key resources: natural resources and human capital.”

Russia has respectable expertise in one key area for Africa: energy development. “But, has Russia the courage, for instance, to take on the stalled $8-$10 billion Inga 3 hydropower project on the Congo river? This is the kind of development project that can vividly send out a clear signal to African leaders and governments that Russia is, indeed, ready for business,” he said.

The renewable energy potential is enormous in Africa, citing the Grand Inga Dam in the Democratic Republic of Congo. Grand Inga is the world’s largest proposed hydropower scheme. It is a grand vision to develop a continent-wide power system. Grand Inga 3, expected to have an electricity-generating capacity of about 40,000 megawatts – which is nearly twice as much as the 20 largest nuclear power stations.

Ryan Collyer, the Regional Representative of Rosatom for Sub-Saharan Africa, told me in an interview in April 2021, that apart from energy poverty, nuclear can solve other continent problems, from low industrialization to advances in science, healthcare, and agriculture, thus propelling the continent towards the master plan of African Union’s Agenda 2063.

“It envisions Africa’s transformation into the global powerhouse of the future, so we are advocating a diverse energy mix that utilizes all available resources, including renewables and nuclear, to ensure climate resilience and environmental safety, social equity, and supply security,” Collyer said.

Some researchers and experts strongly believe and further estimate that the cost of building nuclear power, especially its associated high risks, does not make any sense when compared to the cost of building renewables or other sources of energy to solve energy shortages in Africa.

According to the company profile, Rosatom offers a complete range of nuclear power products and services from nuclear fuel supply, technical services and modernization to personnel training and establishing nuclear infrastructure. With 70 years of experience, the company is the world leader in high-performance solutions for all kinds of nuclear power plants. Rosatom has built more than 120 research reactors in Russia and abroad.

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China’s Trade With Africa Reaches Record Highs

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China's Trade With Africa

By Virusha Subban

According to China’s Ministry of Commerce, trade between China and Africa increased by 40.5 per cent year-on-year in the first seven months of 2021 and was valued at a record high of $139.1 billion.

The Ministry noted that African products were increasingly being recognised in the Chinese market and that imports from Africa into China increased by 46.3 per cent between January and July 2021.

Further, the import of agricultural products, such as rubber, cotton and coffee from Africa into China doubled when compared to the first seven months of 2020.

Data from the Ministry further revealed that over the last 20 years, China’s trade with Africa has risen 20-fold, showing that China is Africa’s biggest bilateral trading partner.

A recent report by Economist Corporate Network, supported by Baker McKenzie and Silk Road Associates, BRI Beyond 2020 (Economist report), showed how these strengthening trade links are, in part, a result of favourable financial incentives offered to African jurisdictions by China. According to the Economist report, 33 of the poorest jurisdictions in Africa export 97 per cent of their exports to China with no tariffs and no customs duties.

This report noted that bilateral trade was still heavily centred on China’s import of Africa’s natural resources. However, in recent years China had increased its import of manufacturing products from more diversified economies such as South Africa.

A Baker McKenzie report with Oxford Economics – AfCFTA: A Three Trillion Dollar Opportunity (AfCFTA report) – revealed that over three-quarters of African exports to the rest of the world were still heavily focused on natural resources, but that on the import side, manufactured goods accounted for more than half the total volume of imports into African jurisdictions.

Africa’s most important suppliers of manufactured goods were listed as Europe (35 per cent) China (16 per cent) and the rest of Asia, including India (14 per cent).

Africa’s strong reliance on foreign jurisdictions for its manufactured goods shows that for intra-regional trade under the African Continental Free Trade Area (AfCFTA) to fully succeed, more jurisdictions in the region must develop their manufacturing bases and reduce their reliance on natural resources.

As such, reliable transport infrastructure is vital for businesses in Africa to be able to scale up production for regional export. The continent also needs to redouble efforts to ensure that an adequate supply of water and electricity is available.

Additional investments in utility infrastructure will have the added benefit of incentivising foreign companies to set up production facilities on the continent.

To aid Africa with these massive infrastructure needs, China has provided significant capital for key infrastructure projects in Africa in the last few years.

A further Baker McKenzie’s report – New Dynamics: Shifting Patterns in Africa’s Infrastructure Funding (infrastructure report) – showed that lending by Chinese banks into energy and infrastructure projects in Sub-Saharan Africa saw a small uplift in 2020, despite the pandemic, although deal values were well below their 2017 peak.

In 2017, Chinese banks lent $11 billion to African infrastructure projects, which decreased to $4.5 billion in 2018, $2.8 billion in 2019 and $3.3 billion in 2020.

Overall, the numbers show that there has been a slowdown in the number of infrastructure deals from China, although they are by far still the biggest investors in the region. In the short term, the report noted that more targeted lending from China is expected.

Further, the Economist report pointed out that political and policy commitments between China and Africa have strengthened and expanded in their scope in recent years.

During the 2018 Forum on China Africa Cooperation, an official forum between China and all states in Africa, Chinese President Xi proposed eight major areas for nations to collaborate on: industrial promotion, facility connectivity, trade facilitation, green development, capacity building, health and hygiene, humanities exchanges, and peace and security.

Chinese companies recently supported the construction of three major economic zones in sub-Saharan Africa, including the Zambia-China Economic and Trade Cooperation Zone, the Eastern Industrial Zone in Ethiopia and the China-Nigeria free trade zone. Such investments have been helping to create jobs, develop local industries and facilitate trade.

However, as Africa reduces its over-dependence on natural resources and increases its manufacturing capacity, it must also ensure it develops other industries in a sustainable way.

To this end, the Economist report outlined how China and Africa have agreed to work together on improving Africa’s capacity for green, low-carbon and sustainable development, and to roll out more than 50 projects on clean energy, wildlife protection, environment-friendly agriculture and low-carbon development. The trade in sustainable goods and services is also expected to reap benefits for the African continent in future years.

Successful regional trade under AfCFTA will connect the region’s wealthier and poorer nations, promote the growth of value chains and lay the foundations for increased international trade in the process. As free trade under AfCFTA takes hold, the existing strong trade ties that African jurisdictions already enjoy with China and the continent’s other major trading partners, are expected to be further boosted.

Virusha Subban is a Partner and Head of Indirect Tax at Baker McKenzie in Johannesburg

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Why World Bank Stopped Ease of Doing Business Report

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Ease of Doing Business Report

By Adedapo Adesanya

The World Bank Group has discontinued the publishing of its Ease of Doing Business report after 18 years. The report measures regulations directly affecting the ease of doing business in 190 countries.

The Bretton Wood institution said it reached the decision to discontinue the report after “internal reports raised ethical matters, including the conduct of former board officials as well as current and/or former bank staff.”

It was reported that an independent investigation document found that Ms Kristalina Georgieva, who served as the bank’s chief executive officer from 2017 to 2019 and is now the managing director of the International Monetary Fund (IMF), applied “pressure” to have China ranked more favourably.

Ms Georgieva, however, disagreed with the findings, noting in a statement that, “I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018.”

The global lender noted that “trust in the research of the World Bank Group is vital” in continuing the issuance of the report.

“After reviewing all the information available to date on Doing Business, including the findings of past reviews, audits, and the report the Bank released today on behalf of the Board of Executive Directors, World Bank Group management has taken the decision to discontinue the Doing Business report,” World Bank Group said in a statement.

The World Bank Group, however, said it remains firmly committed to advancing the role of the private sector in development and providing support to governments to design the regulatory environment that supports this.

World Bank Group said it is aware that the research informs the actions of policymakers, helps countries make better-informed decisions, and allows countries and private stakeholders – civil society, academia, journalists, and others to measure economic and social improvements more accurately.

However, the bank said it discovered some “data irregularities on Doing Business 2018 and 2020 were reported internally in June 2020, World Bank management paused the next Doing Business report and initiated a series of reviews and audits of the report and its methodology.”

Going forward, the World Bank Group said it will be working on a new approach to assessing the business and investment climate.

The ease of doing business index was, above all, a benchmark study of regulation in 190 countries. The survey consisted of a questionnaire designed by the Doing Business team with the assistance of academic advisers. The questionnaire centred on a simple business case that ensures comparability across economies and over time.

As the Ease of Doing Business wraps up, the World Bank Group said it is deeply grateful to everyone that worked diligently to advance the business climate agenda” and it looks “forward to harnessing their energies and abilities in new ways.”

The report is influential in many countries with it being a primary index used by investors seeking to invest in any country.

In Nigeria’s case, the country was last ranked 131 on the 2020 Ease of Doing Business ranking with a general score of 56.9. The highest scores were obtained in the fields of starting a business, dealing with construction permits, and getting credits.

On the other hand, Nigeria’s performance in other fields was low, for instance in registering properties, trading across borders, and resolving insolvencies.

The Nigerian government has always said its economic policies were aimed at helping it improve on the Ease of Doing Business index.

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Shortage of Foreign Workers Rattles Russia

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Shortage of Foreign Workers

By Kester Kenn Klomegah

Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Vladimir Efimov, in an interview published this mid-September in the newspaper Izvestia, widely circulated and reputable Russian media, lamented that Moscow is still experiencing a shortage of foreign workers at construction sites, now there is a shortage of about 200,000 people.

“This problem remains today Moscow lacks about 200,000 migrants. And we hope that in the near future, the restrictions on their entry into the country will be softened,” Yefimov said, answering the question of the publication whether the issue of the shortage of migrant workers for construction sites in Moscow.

According to him, “the lack of labour resources leads to the fact that employers, primarily developers, outbid employees from each other, which increases the cost of their services.

“If we talk about the period before the pandemic, for several years, housing prices in Moscow have hardly grown. Against the background of the pandemic, the cost of housing has increased, actually catching up with inflation in previous years,” said the Vice Mayor of Moscow.

The announcement simply highlighted the inconsistency dealing with migrant policy and the complete lack of foresight, especially what to do with migrants from the former Soviet republics. Thanks to these migrants, mostly employed in the construction fields and (cleaning, sewage disposal or removal services) in various neighbourhoods or districts, Moscow has won awards for being a modern and clean smart city in Europe. These migrants continuously play an important role, most often underestimated, in building infrastructure and in the general development of society.

According to a survey of Promsvyazbank (PSB), Opora Rossii and Magram Market Research conducted in June 2021 found out that 45 per cent of small and medium-sized businesses in Russia need new employees.

Entrepreneurs still consider the unfavourable economic conditions caused by the pandemic to be the main obstacle to business expansion, and employing new staff requires extra cost for training in the social services sector.

Opora Rossii, an organization bringing together Russian small and medium-sized enterprises (SMEs), and the Institute for Social Analysis and Forecasting of the Russian Presidential Academy of National Economy and Public Administration (RANEPA), among other business organizations and institutions, have been very instrumental on the significant role by working force, its combined objective and beneficial impact on the economy of Russia.

Several experts, in addition, have explained that migrants from the former Soviet republics could be useful or resourceful for developing the economy, especially on various infrastructure projects planned for the country. This huge human resource could be used in the vast agricultural fields to boost domestic agricultural production. On the contrary, the Federal Migration Service indiscriminately deports them from Russia.

Within the long-term sustainable development program, Russia has multibillion-dollar plans to address its infrastructure deficit especially in the provinces, and undertake mega projects across its vast territory, and migrant labour could be useful here.

The government can ensure that steady improvements are consistently made with the strategy of legalizing (or appropriately regulating their legal status) and redeploying the available foreign labour, the majority from the former Soviet republics, rather than deporting back to their countries of origin.

Moscow Mayor Sergei Sobyanin has been credited for transforming the city into a very neat and smart modern one, thanks partly to foreign labour – invaluable reliable asset – performing excellently in maintaining cleanliness and on the large-scale construction sites, and in various micro-regions on the edge or outskirts of Moscow.

With its accumulated experience, the Moscow City Hall has now started hosting the Smart Cities Moscow, an international forum dedicated to the development of smart cities and for discussing changes in development strategies, infrastructure challenges and adaptation of the urban environment to the realities of the new normal society.

Kremlin Spokesman Dmitry Peskov has acknowledged that Russia lacks a sufficient number of migrants to fulfil its ambitious development plans. He further underscored the fact that the number of migrants in Russia has declined significantly, and now their numbers are not sufficient to implement ambitious infrastructure projects in the country.

“I can only speak about the real state of affairs, which suggests that, in fact, we have very few migrants remaining over the past year. Actually, we have a severe dearth of these migrants to implement our ambitious plans,” the Kremlin spokesman pointed out.

In particular, it concerns projects in the agricultural and construction sectors. “We need to build more than we are building now. It should be more tangible, and this requires working hands. There is certainly a shortage of migrants. Now there are few of them due to the pandemic,” Peskov said.

The labour shortage is not only related to Moscow but it applies to many regions including the Far East. During the 6th edition of the Eastern Economic Forum (EEF) held in Vladivostok, the demography decline and labour shortage have been identified as factors affecting the development of the vast region. With plans to build residential blocks, establish industrial hubs and fix businesses, these depend largely on the working labour force.

The Russian government continues discussing a wide range of re-population programs, hoping to attract in particular Russians there, even with the promise of incentives such as double income, the mortgage system, early retirement and free plots of land, but few results have been achieved. According to official sources, Russia’s population is noticeably falling and now stands at 146 million.

The Far East is almost the size of Canada with its current population (a mixture of natives plus legalized immigrants) more than 38 million. That compared, the Far East which is estimated at 40% of Russia’s territory and with an estimated 6.3 million is one of the most sparsely populated areas in the world.

Kremlin has made this its absolute long-term priority, and the challenging task is to create an environment for investment and attract people. President Vladimir Putin acknowledged, at a meeting on the socio-economic development of the Far East, that the speedy outflow of the population from the Far East suggests that the region has not yet received enough support measures.

“A lot is being done, but it is still not enough if we observe an outflow of the population,” the Russian leader emphasized at the September forum in Vladivostok.

President Vladimir Putin has already approved a list of instructions aimed at reforming the migration requirements and the institution of citizenship in Russia, based on the proposals drafted by the working group for implementation of the State Migration Policy Concept of the Russian Federation for 2019-2025.

“Within the framework of the working group for implementation of the State Migration Policy Concept of the Russian Federation for 2019-2025, the Presidential Executive Office of the Russian Federation shall organize work aimed at reforming the migration requirements and the institution of citizenship of the Russian Federation,” an official statement posted to Kremlin website.

In addition, the President ordered the Government, the Interior and Foreign Ministries, the Federal Security Service (FSB), and the Justice Ministry alongside the Presidential Executive Office to make amendments to the plan of action for 2019-2021, aimed at implementing the State Migration Policy Concept of the Russian Federation for 2019-2025.

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