UK Scales up Humanitarian Relief Efforts in Somalia
By Dipo Olowookere
Millions of people are living in desperate conditions in Somalia as extreme drought is threatening the lives and stability of a country vital to regional and UK security.
Ms Patel led a roundtable with humanitarian partners during her visit, to hear about the drought situation on the ground, how they are responding to it, and to discuss how the UK and international community can work together to save lives and prevent a catastrophic famine.
The 2015/16 El Nino is one of the strongest on record and has severely impacted Africa. In Somalia, conditions are worsening with daily reports of rivers drying up, crops failing, and people and livestock dying. As many as 3.9 million people need urgent assistance and 320,000 children are severely malnourished.
In the face of these famine-like conditions Ms Patel announced a UK package of support, which will provide food for 60,000 people, provide urgent nutrition support for 240,000 children and pregnant women, give safe water for 180,000 people, create access to health service for 75,000 people; and help with vaccinations for 3 million animals.
Ms Priti Patel said: Millions of people are living in desperate conditions as extreme drought threatens the lives and stability of a country vital to regional and UK security. I urge our international partners to join forces with Global Britain and provide immediate support for the relief effort.
“Building a secure, stable and prosperous Somalia is a top priority for the UK and while great progress has been made, significant challenges remain. Together in partnership we can meet those challenges.”
Ms Patel also sought the humanitarian partners’ commitment to the London Somalia Conference objectives and to agree to work together to ensure it will address the drought response and deliver the international support needed to resolve Somalia’s protracted crises.
The UK is playing a leading role in the wider international response to the ongoing drought in East Africa – where people desperately need the UK’s support.
After visiting Somalia, Ms Patel attended a humanitarian panel discussion in Ethiopia with the UN Secretary General, Antonio Guterres, and the Ethiopian Deputy Prime Minister, Demeke Mekonnen.
Ms Patel highlighted that humanitarian reform is one of the top priorities for the UK and that she is committed to making the international system more effective at responding to global challenges that pose risks to both Africa and the UK. This is to ensure support is maximised to those affected by crisis and guaranteeing value for money.
The International Development Secretary also emphasised her concerns for people suffering from the Horn of Africa drought in Somalia, Ethiopia and Kenya and urged humanitarian partners to accelerate joint efforts for an early response that will save lives.
Ms Patel outlined that increased UK support is helping 800,000 people in Ethiopia including emergency nutrition treatment for 25,000 malnourished children; clean water for 100,000 people; and vaccination and treatment for 600,000 cattle.
IFC, World Bank Charge Benin to Drive Growth with Agribusiness, Tourism
By Adedapo Adesanya
The Republic of Benin can create quality jobs, grow its economy, and reduce poverty by enabling private sector–led expansion in its agribusiness and tourism sectors and by better leveraging its strategic location as a transit point into West Africa, according to a report published by the International Finance Corporation (IFC) and the World Bank.
The Benin Country Private Sector Diagnostic (CPSD) explores the challenges and opportunities for Benin’s private sector, suggests areas for reform, and highlights sectors with the greatest potential to drive sustainable, inclusive growth in line with Benin’s Government Action Program (Programme d’Actions du Gouvernement, 2021-2026).
Benin enjoyed growth rates in the 2010s of about 5 per cent annually, well above the average across sub-Saharan Africa, where poverty rates remained high, measured at almost 40 per cent in 2019.
The CPSD is geared towards maximizing the job-creation potential of the private sector and making Benin’s economy more resilient to external shocks such as the recent COVID-19 crisis and new headwinds, including inflation.
In agribusiness, increased private sector participation in crop production, including pineapples and soybeans, improving access to markets, and enabling solutions to channel more financing to agribusiness firms and farmers, would support growth in the sector, which accounts for 40 per cent of employment in Benin.
The CPSD specifically highlights Benin’s Glo-Djigbé Special Economic Zone, which was established in 2021, as a positive platform to support increased agro-processing and exports.
Regarding tourism, the report points to neighbouring Nigeria—Africa’s largest economy and most populous country—as a huge but largely untapped source of visitors. Benin is home to international heritage sites, including the historic city of Ouidah and spectacular scenery, yet tourist visits have stagnated because of inadequate market development.
Speaking on this, Mr Kyle Kelhofer, IFC Senior Country Manager for Benin, Ghana, Guinea, and Togo, said, “The CPSD recognizes Benin’s progress in developing a business-friendly environment and recommends further reforms to exploit Benin’s competitive advantages in agribusiness, tourism, and regional integration.
“IFC has ramped up its presence in Benin to provide support to improve the investment climate and help Benin attract more investment.”
“The CPSD advances Benin’s Government Action Program by identifying specific sectors with the highest potential for growth, job creation, and poverty reduction,” said Mr Atou Seck, World Bank Country Manager for Benin. “Additionally, the CPSD informs the framework for the World Bank Group’s partnership with Benin in achieving higher rates of economic and social well-being in 2023 and beyond.”
The CPSD also highlights Benin’s strategic location at the crossing of the Abidjan-Lagos and Cotonou-Niamey regional corridors, giving it an advantage as a transit point for regional trade. Benin could seek to turn its transit corridors into economic corridors.
To unlock the opportunities in tourism and regional trade, and in other sectors, Benin could accelerate its digitization agenda, including by outlining clearer regulations and allowing for more competition in its telecoms sector, according to the report. Other urgent reforms include promoting a sustainable supply of energy and increasing the resilience of the electricity network to climatic shocks.
The private sector would also benefit from greater access to finance, including through digital finance solutions and strengthening the credit infrastructure.
In line with the CPSD’s findings, the World Bank Group’s strategy for Benin focuses on transformative sectors such as agribusiness, financial markets, and tourism, leveraging digitization and public-private partnerships.
Africa’s Impact: United States Vice President Kamala Harris Visits Ghana, Tanzania and Zambia
By Virusha Subban
This week, the United States (US) Vice President Kamala Harris is visiting Ghana, Tanzania and Zambia to discuss, among other things, increasing investment between the US and African countries, the economic empowerment of women, girls and young businesspeople, digital inclusion and food security. On her arrival in Ghana earlier this week, Vice President Harris noted that she was “very excited about the impact of the future of Africa on the rest of the world”.
For some time, the United States (US) and countries in Africa have been focused on building strong partnerships that boost sustainability, empower local communities with a focus on opportunities for women and youth, and provide benefits for both African and US citizens.
In August 2022, a fact sheet issued by the US White House noted that sub-Saharan Africa (SSA) played “a critical role in advancing global priorities to the benefit of Africans and Americans. It has one of the world’s fastest-growing populations, largest free trade areas, most diverse ecosystems, and one of the largest regional voting groups in the United Nations. It is impossible to meet today’s defining challenges without African contributions and leadership”.
The White House further noted that its Africa strategy articulated the new US vision for a 21st-century US-African Partnership and the “tremendous, positive opportunities that exist to advance shared interests alongside our African partners.”
To further cement this partnership between the US and African countries, a memorandum of understanding (MoU) was signed between the US Trade Representative and the African Continental Free Trade Area (AfCFTA) Secretariat at the US-Africa Leaders’ Summit (Summit) in December 2022.
The MoU outlined expanded engagement and the promotion of equitable, sustainable and inclusive trade, the boosting of competitiveness and attracting investment to the continent. It was also announced that the US intended to invest USD 55 billion in Africa over the next three years and that USD 15 billion would be deployed in “two-way trade and investment commitments, deals, and partnerships that advance key priorities, including sustainable energy, health systems, agribusiness, digital connectivity, infrastructure, and finance.”
Under the Biden Administration, US engagement with African countries has focused on strengthening these trade and investment relationships in a strategic, cooperative and reciprocal way, under the vision of shared prosperity between Africa and the US.
In July 2021, the Biden Administration announced that it would renew the US Prosper Africa initiative, which started in 2019, with a focus on increasing reciprocal trade and investment between the US and African countries. At the time, the US said that the initiative would focus on sectors such as infrastructure, energy and climate solutions, healthcare and technology.
Seventeen US government agencies working as part of this initiative were given a mandate to, among other things, empower African businesses, offer deal support and connect investors from the US with those in Africa.
At the renewed Prosper Africa launch in 2021, it was noted was the intention was to focus on projects that supported women and small and medium enterprises in Africa.
At the December 2022 Summit, Prosper Africa announced plans to boost African exports to the United States by USD 1 billion through investments and partnerships and to mobilize an additional USD 1 billion in US investment in Africa.
In December 2022, the Biden Administration also noted that since 2021, the US Government has assisted in closing more than 800 two-way trade and investment deals worth around USD 18 billion across 47 African countries. In addition, the value of private investment deals from the US into Africa since 2021 was USD 8.6 billion.
According to the United States Census Bureau, the value of goods exported by the US into Africa in 2022 totalled USD 30.7 billion in 2022. The US imported goods worth USD 41.9 billion from African countries in 2022. This was an increase from 2021, which saw USD 26.7 billion worth of goods exported from the US into Africa and goods valued at USD 37.6 imported from Africa into the US.
The US has often expressed its support for AfCFTA, the Africa-wide free trade zone, stating that it wants to see the growth of Africa’s economic power in the world. All future trade agreements signed between the US and African countries are likely to align with AfCFTA’s trade stipulations, and, considering the Biden Administration’s environmental stance, new agreements will likely also include climate change provisions and tariffs on high-carbon imports.
The numerous reciprocal US-Africa initiatives and partnerships recently announced as part of the US’s renewed, sustainable and reciprocal approach to Africa are leading to a plethora of opportunities for both regions. This strong partnership will assist in ensuring that Africa’s future impact will indeed shape the world.
Virusha Subban is the Partner specialising in Customs and Trade, and Head of Tax at Baker McKenzie Johannesburg
Can Russia Increase Trade With Africa Beyond Rhetoric
By Kestér Kenn Klomegâh
Russian President Vladimir Putin spoke at the International Parliamentary Conference Russia – Africa in a Multipolar World held in Moscow under the auspices of the State Duma of the Russian Federal Assembly on March 20.
The partnership between Russia and African countries has gained additional momentum and is reaching a whole new level, he noted in his speech, and along the line, adding that additional opportunities are opening up by the process of establishing the African Continental Free Trade Area (AfCFTA), which began in 2021, which in the future will become a continental market which favours developing ties both through the Eurasian Economic Union and bilaterally.
“Mutual trade is growing every year, which reached almost $18 billion last year. It is unlikely that such a figure can fully suit us, but we know that this is far from the limit. The development of counter-commodity exchanges will undoubtedly be facilitated by a more energetic transition in financial settlements to national currencies and the establishment of new transport and logistics chains,” he added.
During the African leaders’ summit at the Black Sea city of Sochi in 2019, Putin rolled out a comprehensive roadmap, particularly questions relating to the development and consolidation of beneficial partnerships with Africa and that Russia would strengthen overall ties in line with the 2063 concept (agenda) developed by the African Union. In his speech, Putin
Putin based his arguments on the fact that Africa is increasingly becoming a continent of opportunities. It possesses vast resources and potential economic attractiveness; Putin further noted that interest in developing relations with African countries is currently visible not only on the part of Western Europe, the United States and the People’s Republic of China but also on the part of India, Turkey, the Gulf states, Japan, the Republic of Korea, Israel, and Brazil.
With a view to expanding trade and cooperation, a memorandum of understanding has been signed between the Eurasian Economic Commission and the African Union Commission at the Sochi Summit. In 2018, Putin’s assessment was that Russia’s trade with African countries grew more than 17 per cent and exceeded $20 billion. Putin would like to bring it (the trade figure) to at least $40 billion over the next few years.
Admittedly Russia’s trade is consistently straddling since 2019 after Sochi, a position which officials seem to accept. “Despite illegal sanctions imposed by Washington, Russia and African states are developing trade and economic cooperation. The trade turnover is increasing: at the end of 2022, it reached $17.9 billion,” according to Chairman of the State Duma Vyacheslav Volodin, addressing African parliamentarians at the plenary session Russia-Africa in a Multipolar World.
Russia, of course, has its approach towards Africa. It pressurizes no foreign countries, neither it has to compete with them, as it has its own pace for working with Africa. With the same optimism towards taking emerging challenges and opportunities in Africa, Russia still has to show, in practical terms, commitment, especially with its policy initiatives.
On 29 April 2021, the Russian International Affairs Council (RIAC), a Russian NGO that focuses on foreign policy, held an online conference with the participation of experts on Africa. Chairing the online discussion, Professor Igor Ivanov, former Foreign Affairs Minister and now RIAC President, made an opening speech, pointing out that Russia’s task in Africa is to present a strategy and define priorities with the countries of the continent, build on the decisions of the first Russia-Africa Summit.
“Russia’s task is to prevent a rollback in relations with African countries. Russia must define its priorities explicitly: why are we returning to Africa? Some general statements of a fundamental nature were made at the first Summit; now it is necessary to move from general statements to specificity,” he suggested.
During his address at the opening of the special panel session on Africa at the St. Petersburg International Forum held in June 2021, Rwandan Prime Minister Edouard Ngirente called upon Russians to consider increasing investment in Africa. That Africa has great opportunities that investors from Russia can take advantage of; among these are the continent’s young population and workforce, the fast rate at which urbanization is taking place, and the huge potential that has been demonstrated in technological progress in areas like telecommunications and digitization of the society.
“Therefore, advancing our common prosperity agenda would translate the existing business opportunities into reality. And this calls for important flows of investments in priority areas,” he said. In addition, Prime Minister Edouard Ngirente pointed at the African Continental Free Trade Area (AfCFTA) and regional integrations of economic communities as another priority to advance Africa’s growth agenda quickly and position the continent as an investment destination.
“This could be an opportunity for Russian businesses to invest in infrastructures such as roads, railways, ports, hydropower plants, and internet connectivity that facilitate trade on the continent of 1.3 billion consumers. The investment required is estimated at $130 billion to $170 billion per year,” explained Prime Minister Edouard Ngirente.
South African business tycoon, Sello Rasethaba, questioned how Russia would establish a thriving trade relationship with Africa for the benefit of all. In reality and effective practical terms, how does Russia want to reposition itself in relation to Africa? With business relationships, Russia has to consider practical strategies in consultation with African countries. The fact that the middle class is growing in leaps and bounds in Africa makes this market even more attractive and opens more opportunities for Russian businesses.
“The current investment and business engagement by foreign players with Africa is increasing. There are so many unknowns up there in Russia; it’s crucial that Russia has a clear vision of the relationship it wants with Africa. Russia and African countries, must set up sovereign wealth funds using the resources and power of those countries,” he said.
In an interview with Steven Gruzd, Head of the African Governance and Diplomacy Programme at the South African Institute of International Affairs (SAIIA), explained that Africa is a busy geopolitical arena, with many players, both old and new, operating, apart from EU countries, China and the US. There are players such as Iran, Turkey, Israel, the UAE, Japan and others. Russia has to compete against them and distinctively focus on its efforts with strategies.
On the other side, Russia uses the rhetoric of anti-colonialism in its engagement with Africa, and it is fighting neo-colonialism from the West, especially in relations with its former colonies. It sees France as a threat to its interests, especially in Francophone West Africa, the Maghreb and the Sahel. It, therefore, focuses on anti-western slogans as its main trading commodity across Africa. The African Continental Free Trade Area (AfCFTA) could be the strongest dimension of Russia’s dealings in Africa.
Many other factors, including the geo-political changes, are influencing the United States, European and Asian investors to intensify exploring several opportunities in the African Continental Free Trade Area (AfCFTA), a policy signed by African countries to make the continent a single market. As monitored, foreigners are looking at the market for new partnerships. The AfCFTA has unlocked value chains for – especially US investors – in key sectors such as pharmaceuticals, automobiles, agro-processing, and financial technology.
Unlike Russian ministries, institutions and organizations, the Corporate Council on Africa (CCA), for instance, shares insights on critical issues and policies influencing the US-Africa economic partnership. It facilitates trade and investment issues for potential investors interested in pursuing public-private partnerships that support the United States and African businesses, including women-owned and led Small and Medium-Scale Enterprises. The U.S. Agency for International Development is working closely with African institutions and organizations. According to documents, there are an estimated 1,200 U.S. companies operating in Africa.
The Bill & Melinda Gates Foundation has made a resonating announcement that the foundation will spend $7 billion over the next four years to improve health, gender equality and agriculture across Africa. Strengthening and supporting these sectors have become necessary due to increasing complaints about lack of funds and, worse, due to the negative impact of geopolitical changes. It will further continue to invest in researchers, entrepreneurs, innovators and healthcare workers who are working to unlock the tremendous human potential that exists across the continent.
In another related development, U.S. Trade Representative Katherine Tai has signed a memorandum of understanding with the African Continental Free Trade Area that aims at exploring work on the next phases of the U.S.-African trade relationship. United States sees enormous opportunities to improve the longstanding African Growth and Opportunity Act (AGOA) system of trade preferences, which is due to expire in 2025.
“The world that we’re living in today certainly has been transformed by significant events that we have experienced since 2015, the last time the program was reauthorized,” Tai noted during a meeting of trade ministers from Sub-Saharan Africa to discuss AGOA as part of a U.S.-Africa summit in Washington. “We’ve consistently seen that there are opportunities for the program to be better; there could be much better uptake and utilization of the program.”
In fact, AGOA offers an irreversible solid ground as a “stepping stone to address regional and global challenges,” especially with Africa’s young and entrepreneurial population, she said, before concluding that “the future is Africa, and engaging with this continent is the key to prosperity for all of us.”
Similarly, at least, after its historic UK-Africa Investment Summit held in January 2020, the UK has increased its support for business on the continent, a step that aims at strengthening aspects of the planned economic cooperation with Africa. In our random research after the summit, we have noticed different priorities – all of which are supporting and strengthening economic partnerships in a number of countries on the continent. The significance of these is to help unlock opportunity, spread prosperity and thus transform lives in Africa.
The Department for International Trade said in a media release that it would cut import taxes on hundreds more products from some of the world’s developing countries to boost trade links. It explained further that the measure was part of a wider push by the UK to use trade to “drive prosperity and help eradicate poverty” as well as reduce dependency on aid. The scheme covers developing countries and will affect around 99% of goods imported from Africa.
South Africa and Nigeria, the continent’s two largest economies, make up 60% of the entire UK-Africa trade relationship. Only eight nations from sub-Saharan Africa, mostly former colonies, count the UK in their top 10 export destinations, including Rwanda, Mauritius, Seychelles, Sierra Leone, Ghana, Mozambique, Kenya and South Africa.
Our monitoring shows that American, Asian, and European Union members, particularly British investors, are strategically leveraging into trade platforms, working to support the creation of an African Continental Free Trade Area (AfCFTA) because trade integration is such a powerful tool to accelerate economic growth, create employment and alleviate or reduce poverty.
The AfCFTA provides a unique and valuable platform for businesses to access an integrated African market of over 1.3 billion people. The growing middle class, among other factors, constitutes a huge market potential in Africa. Quite challenging, though, but there are new legislations that stipulate localizing production and distribution inside Africa.
Under the current circumstances, what has Russia done to help Africa? It only contributes to deepening social dissatisfaction, increases the fear of vulnerable groups among the population, to rising the prices of commodities and consumables throughout Africa. Nevertheless, it is so common to reiterate that Russia has always been on Africa’s side in the fight against colonialism. The frequency of reminding again and again about Soviet assistance, which was offered more than 60 years ago, will definitely not facilitate the expected beneficial trade and investment ties under these new conditions.
Afreximbank President and Chairman of the Board of Directors, Dr Benedict Okey Oramah, says Russian officials “keep reminding us about Soviet-era,” but the emotional link has simply not been used in transforming relations. Oramah said one of Russia’s major advantages was goodwill. He remarked that even young people in Africa knew how Russia helped African people fight for independence. “So an emotional link is there,” he told Inter-Tass News Agency.
The biggest thing that happened in Africa was the establishment of the African Continental Free Trade Area (AfCFTA). That is a huge game-changer, and steps have been made lately in African countries to create better conditions for business development and shaping an attractive investment climate. “Sometimes, it is difficult to understand why the Russians are not taking advantage of it. We have the Chinese; we have the Americans, we have the Germans who are operating projects…That is a very, very promising area,” Oramah said in his interview in 2021.
Secretary-General of the African Continental Free Trade Area Secretariat, Wamkele Mene, has several times highlighted the underlying fact of developing intra-African trade, and even with external players that “the next wave of investment in African markets must focus on productive sectors of Africa’s economy in order to drive the continent’s industrial development in the decades to come. For foreign investors and traders, it is necessary to support local entrepreneurs to build scale, and therefore improve productivity.”
For example, the total United States (US) two-way trade in Africa has actually fallen in recent years to about $60 billion, far eclipsed by the European Union (EU) with over $200 billion and China with more than $200 billion, as stated by the Brookings Institution in Africa in Focus post. According to the African Development Bank (AfDB), Africa’s economies are growing faster than those of any other region. Nearly half of Africa’s countries are now classified as middle-income countries – the number of Africans living below the poverty line fell to 39 per cent as compared to 51 per cent in 2021, and around 350 million of Africa’s one billion people are now earning good incomes – rising consumerism – that makes trade profitable.
As official Russia Ministry of Foreign Affairs website indicated – it is evident that the significant potential of the economic cooperation is far from being exhausted, much remains to be done in creating conditions necessary for interaction between Russia and Africa. At a meeting of the Ministry’s Collegium, Lavrov unreservedly suggested taking a chapter on the approach and methods adopted by China in Africa.
Lavrov said: “It is in the interests of our peoples to work together to preserve and expand mutually beneficial trade and investment ties under these new conditions. It is important to facilitate the mutual access of Russian and African economic operators to each other’s markets and encourage their participation in large-scale infrastructure projects. The signed agreements and the results will be consolidated at the forthcoming second Russia-Africa summit.”
After the first Russia-Africa summit held in 2019, expectations are high as it offers the impetus to substantially increase investment in the economy, industry, transport, telecommunications and tourist infrastructures, as well as in high technology, healthcare, urban development, and other fields that are vital to the quality of life. On the contrary, Russians are consistently trading anti-Western slogans and engaged in geo-political rhetoric instead of investment and business.
Is Russian torn between the challenges of its own assumptions and understandings about forging trade cooperation with Africa? Are pragmatic measures not necessary for promoting trade between the two regions? Is Russia only paying lip service to the summit promise of doubling trade with Africa?
Now at the crossroad, it could be meandering and longer than expected to make the mark. Russia’s return journey could take another generation to reach the destination in Africa. With the current changing geopolitical world, Russia has been stripped of as a member of many international organizations. As a direct result of Russia’s “special military operation” aims at “demilitarization and denazification” since late February 2022, Russia has come under a raft of stringent sanctions imposed by the United States and Canada, the European Union, Japan, Australia, New Zealand and a host of other countries.
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