By Kester Kenn Klomegah
United States investors are looking to explore the several opportunities in the African Continental Free Trade Area (AfCFTA), a policy signed by African countries to make the continent a single market.
Speaking at the 13th US-Africa Business Summit organised by the Corporate Council on Africa (CCA), a leading reputable American business association, the investors said there are ways the continent can benefit from them, including in sectors like pharmaceuticals, automobiles, agro-processing and financial technology.
The US government and private sector leaders, together with African political and corporate business leaders, have been working consistently over these years to share insights on critical issues and policies influencing the US-Africa economic partnership.
The three-day summit held virtually included five plenaries and 12-panel sessions highlighting key economic recovery strategies and focused on a range of sectors and issues, including health and vaccine access, trade, digital transformation, infrastructure, financing, small and medium scale enterprises, tourism, women’s leadership and investment opportunities in various African countries.
The high-level dialogue set the scene for reviewing the opportunities for the United States and African public and private sector leaders, how to strengthen the economic partnership between the United States and Africa. Prosper Africa, investments in key sectors such as gas, exploration of possible new bilateral trade agreements, extension of the African Growth and Opportunity Act (AGOA).
Driving Inclusive Recovery
The United States said it will drive a pandemic recovery and put women at the forefront. It has contributed 25 million vaccines for Africa. It implies making sure to incorporate women’s perspectives in their efforts. “When women are empowered, they empower their families, they empower their communities and they empower their countries.”
Thokozile Ruzvidzo, Director of the Gender, Poverty and Social Policy Division, United Nations Economic Commission for Africa (UNECA) said that there are six critical things for women to benefit from AfCFTA.
These include: closing the gender gap as it relates to access to finance, empowering women in the export sector, regional value chains and procurement and ensuring that we include the voice of women in the AfCFTA implementation efforts.
Strong US-Africa Trade Relationship
The US investors hope to focus on a range of issues, from implementing the AfCFTA, boosting Africa’s trade with the US including through AGOA, pursuing agreements that go beyond AGOA, such as the US-Kenya FTA. It will be pursuing public-private partnerships that support the US and African businesses, including women-owned and led SMEs.
The US Trade Representative, Katherine Tai, noted that this is among the top priorities for the Biden-Harris Administration the defeat of COVID and helping facilitate a robust global economic recovery.
She pointed to trade as a key part of that effort and the determination to implement policies that benefit not only those at the top but foster inclusive and sustainable development, supports regional integration, and ensure that all citizens benefit from the global economy.
At the event, Wamkele Mene, Secretary-General of the AfCFTA Secretariat, highlighted the significant progress that has been made in advancing the AfCFTA — with 40 countries that have now ratified the agreement, Phase 1 covering trade in goods and services concluded, and 86% of the rules of origin completed.
He noted that “AfCFTA has unlocked value chains for investors – especially US investors – in key sectors such as pharmaceuticals, automobiles, agro-processing, and financial technology.”
On his part, the Ethiopian Airlines CEO, Mr Tewolde GebreMariam, noted that as the largest air cargo carrier in Africa with hubs in countries across the continent and the airline is successfully connecting Africa with the rest of the world – both for cargo and for passengers and tourism. He urged, though, that more be done to facilitate increased investment, trade and tourism in Africa and to support the AfCFTA vision and goals.
The Assistant US Trade Representative, Ms Constance Hamilton, noted that the US trade policy now transforms beyond AGOA, noting that under the Biden-Harris Administration, they will be ramping up engagement with the AfCFTA Secretariat to support African regional integration, while looking to build stronger relationships with willing African nations through bilateral engagement.
She noted the plans to hold a Trade Ministerial conference in 2021 and to engage with a range of stakeholders to explore ways to enhance the US-Africa trade relationship.
At the event, participants highlighted the growing financing gap in Africa and the importance of renewed public-private partnerships in the development of infrastructure projects.
Minister de Lille of South Africa and Serge Ekue of the West African Development Bank and other panellists suggested that a way to address those flaws is to “implement rigorous master planning that will first help identify bankable projects and then prepare them efficiently while raising local capacity.”
“Infrastructure is not just about the value of the money. It is about the value of the social impact on our communities. These indicated that countries pursue ways to bridge financing infrastructure in Africa,” they submitted.
Stakeholders at the seminal agreed that it was important to invest in sustainable approaches that bring services close to the patients. These include strong primary healthcare (PHC) as the foundation for strengthening health systems, including the integration of services with a multi-disciplinary team.
Looking forward, it was said that there are opportunities for impact investing in health in Africa by deploying financial resources that can have financial returns/commercial opportunities while improving health outcomes.
Closing Trade Finance Gap
The event gap participants the avenue to discuss the trade finance gap with African, Diaspora, SMEs and women-owned businesses and how organizations can contribute to reduce (or eliminate) the gap.
Participants discussed the impact of the pandemic on their organizations and initiatives contributing to economic activity recovery, as well as improving business operations. Panellists also highlighted the importance of diversifying both suppliers and clients, in addition to looking beyond the immediate market to new partnerships.
The diverse panel emphasized the growing trend of digitalization of SMEs and African business operations. Moving to digital and connected operations will help businesses not only simplify operations but also allow them to reach customers in places they were not able to operate before. This also will positively impact the relationship between Diaspora businesses and businesses on the continent.
They concluded that implementing strategies that will enable African SMEs to grow, build capacity, find new U.S. partners, and access cheap and easily available capital will be crucial to close the trade finance gap.
Sustainable Agribusiness Ecosystem
Participants at this meeting agreed that diversification was the way to improve the agribusiness sector. Collaboration between US and African companies will help achieve sustainable development through increased access to investment financing and access to global markets for African companies, they opined.
However, it was stressed that achieving diversification will require producing more value-added products, which will be achieved through investment in industrialization, R&D, and technology.
Public-Private Partnerships (PPP) and favourable government policies will be key to funding these efforts, they further stated, noting that investing in SMEs will be vital to improving agribusiness value chains since SMEs are deeply integrated at every level from retailers to crop transporters while helping scale up these SME’s make the value-chains more productive and improve the sector’s output.
Speaking at the programme, the South African Minister of Trade, Industry, and Competition, Ebrahim Patel, noted that digital technology remains a critical tool and a critical enabler to build economic growth and economic opportunities.
The Minister said digital technologies will help create new products and new markets for millions of Africans. Policymakers, corporations, and entrepreneurs have a unique partnership opportunity to develop digital infrastructure, skills, and ecosystems.
Minister Patel invited the private sector to share ideas and suggestions to make the AfCFTA e-commerce protocol fit for its purpose.
It was agreed that the COVID-19 pandemic has transformed the digitalization of life and work. As a result, technology companies are developing lifesaving products and services.
For example, Google and Apple developed exposure notification technology, which helps slow the spread of COVID-19. Google also developed a range of products for remote education.
As African businesses and consumers have shifted towards e-commerce and digital payments, companies like Visa have accelerated the rollout of payment infrastructure.
For digital trade and the digital economy to work effectively, panellists recommended that the AfCFTA be implemented to establish a continent-wide harmonization of business-friendly rules and regulations.
Future of Energy in Africa
During the summit, high-level participants from the US government, African countries and the private sector discussed the need for public-private sector collaboration on energy transition in Africa and innovative thinking on the critical need to address energy poverty and access to electricity in Africa while advancing the urgent fight against global warming.
Joining US Special Presidential Envoy for Climate, John Kerry, from the USG were senior US government officials from the Departments of Energy and State, and the US Development Finance Corporation (DFC).
Also participating in the dialogue were Ministers of Energy and senior African officials from Angola, Egypt, Ghana, Mozambique, Nigeria, and Senegal, as well as CEOs and other top executives from a range of U.S. and African oil, gas, and power companies and major investors in the sector.
In his presentation, Mr Kerry stated that tackling climate change is a top priority for the United States and reiterated the US government commitment to encouraging other countries to achieve their respective climate and clean energy goals.
It was noted that more African countries need to sign on to the Paris Agreement to tackle climate change as it is important that all countries work together to address global climate change.
Other US government officials acknowledged energy poverty in Africa and noted that improving energy access in Africa is paramount to the US government as it continues to invest in electricity systems in Africa through initiatives like Power Africa.
They also noted that even while the United States is pushing for a strong political commitment from African to prioritizing and meeting climate change goals, the US government will continue to support and finance energy projects (including some in gas) in Africa, particularly where renewable energy options may not be viable.
African Ministers and government officials shared the strategies they have adopted in their respective countries to both adopt clean energy technologies in oil and gas, while also investing in renewable energy options.
In Senegal, Egypt and Angola, renewable energy is at the forefront of energy transition strategies and initiatives, and it was noted that collaborations with international partners are essential to achieving long term energy and climate change goals in Africa.
CEOs and senior executives of companies with operations in Africa who participated in the session highlighted that they are actively working on energy access in Africa, see gas (particularly abated gas) as a medium-term, low-cost transition option to address climate change, while some are also investing in and financing renewable energy projects in Africa.
There were calls for fair treatment of Africa, in terms of climate change, as well as for the US government to prioritize development over climate change when it comes to Africa, and to continue financing gas projects in Africa for the next 5-7 years, which some thought could actually help meet climate goals faster as Africans (especially those in rural areas) shift from wood burning to use of gas to cook.
Noting the complexity of these energy issues, many agreed that public-private partnerships are crucial to renewable energy transitions, and thought that further dialogues like this one leading up to the COP 26 talks scheduled to take place in Glasgow in November 2021 would be crucial in the US and Africans reaching a common understanding about the way forward on the future of energy and climate in Africa.
The US government said the Biden-Harris Administration was prioritizing economic relationships with Africa.
Dana Banks, White House Senior Director for Africa, announced the White House Administration made a request for $80 million in additional funding to push for the Prosper Africa Build Together Campaign that will drive billions of dollars of investment in Africa, build new markets for American products and create thousands of jobs for African and American workers.
St. Petersburg to Hosts Second African Leaders Summit
By Kester Kenn Klomegah
With high optimism and a desire to strengthen its geopolitical influence, Russian authorities are gearing up to hold the second African leaders summit in St. Petersburg scheduled for early November 2022.
The gathering, as expected, will focus on enhancing further constructive cooperation and advancing integration processes within the framework of the African Union and a number of sub-regional structures.
In their first joint declaration, emerging from the Russia-Africa summit at the initiative of African participants a new dialogue mechanism—the Russia-Africa Partnership Forum—was created.
The declaration stipulated that all top-level meetings take place within its framework once every three years, alternately in Russia and in an African state. It says further that the foreign ministers of Russia and three African countries—the current, future and previous chairpersons of the African Union—will meet for annual consultations.
Understandably, St. Petersburg, the preferred venue, was chosen primarily due to the continuous political instability in Addis Ababa, Ethiopia. Initially, Moscow bagged hopes on using the Chinese financed and newly constructed African Union headquarters which has modern facilities for large-scale international conferences and the city itself easily accessible with effectively built first-class Ethiopian Airlines network to and from many African countries. An additional advantage is that African government representatives and heads of many international organizations work in this city.
South Africa and Egypt, as possible alternatives, were thoroughly discussed as South Africa and Russia are members of BRICS, and Egypt has excellent post-Soviet relations. Reminding that the first summit held in Sochi was co-chaired by President Vladimir Putin and Egyptian President Abdel Fattah el-Sisi, who also rotationally during that year headed the African Union.
The large-scale Russia-Africa summit, held in Sochi in October 2019 and described as the first of its kind in the history of Moscow’s relations with Africa, attracted more than 40 African presidents, as well as the heads of major regional associations and organizations.
According to official documents, there were a total of 569 working meetings that resulted in 92 agreements and contracts, and memoranda of understanding signed as part of the summit.
The first summit opened a new page in the history of Russia’s relations with African countries. Sochi witnessed a historic final communiqué and impressive pledges and promises were made in various speeches and discussions.
Last November, a group of 25 leading experts headed by Sergei A. Karaganov, the Honorary Chairman of the Presidium of the Council on Foreign and Defence Policy, released a report that vividly highlighted some spectacular pitfalls and shortcomings in Russia’s approach towards Africa.
It pointed to Russia’s consistent failure in honouring its several agreements and pledges over the years. It decried the increased number of bilateral and high-level meetings that yield little or bring to the fore no definitive results. In addition, insufficient and disorganized Russian African lobbying combined with a lack of “information hygiene” at all levels of public speaking, says the policy report.
Writing early January on the policy outlook and forecast for 2022, Andrey Kortunov, Director General of the Russian International Affairs Council (RIAC), acknowledged the absolute necessity for consolidating Russia’s positions in Africa.
“A second Russia-Africa summit is planned for the fall of 2022. Its first edition, held in Sochi in October 2019, raised many hopes for the prospects of an expanded Russian presence in Africa. Obviously, the COVID-19 pandemic has made some adjustments to these plans, preventing the parties from reaching the expected levels of trade and investment.
“Nevertheless, Africa still retains a considerable interest in interaction with Russia, which could act as an important balancer of the prevailing influence of the West and China in the countries of the continent,” he opined.
Kortunov suggested, therefore, that 2022 could become a “Year of Africa” for Moscow, a year of converting common political agreements into new practical projects in energy, transport, urban infrastructure, communications, education, public health, and regional security.
Some policy experts expect high symbolism at the 2022 Russia-Africa summit. For example, Andrey Maslov, Head of the Centre for African Studies at Moscow’s Higher School of Economics, said that preparations for the second summit would shape the Russia-African agenda; visits would become more frequent and Africa would receive greater coverage in Russian media.
Instead of measuring the success of the summit by how many African leaders attended, as happened in 2019, the parties will finally give greater attention to the substance of the agenda, which is already under development. Russia should try to increase its presence in Africa while avoiding direct confrontation with other non-regional and foreign players, he underlined.
According to him, the volume of Russian-African trade increased, for the first time since 2018, diversifying both geographically and in the range of goods traded. Shipments of railway equipment, fertilizers, pipes, high-tech equipment and aluminium are growing and work continues on institutionalizing the interaction between Russia and the African Union.
“A number of conflicts are also causing alarm, primarily those in Ethiopia, Libya, Guinea, Sudan and especially the Republic of Mali where France and the EU are withdrawing their troops. In 2022, Russia will try in various ways to play a stabilizing role for Africa and assist in confronting the main challenges it faces – epidemics, the spread of extremism and conflicts, and hunger,” Maslov told The Moscow Times.
A dialogue would begin on Africa formulating its own climate agenda, he said and added: “Africa is beginning to understand that it does not need a European-style green agenda and will demand compensation from the main polluting countries for the damage the climatic changes have caused to the ecosystems of African countries. Russia is likely to support these demands.”
In an emailed interview, Steven Gruzd, Head of the African Governance and Diplomacy Programme at the South African Institute of International Affairs (SAIIA), said Russia needs to upgrade or scale up its collaborative engagement with Africa. It has to consider seriously launching more public outreach programmes, especially working with civil society to change public perceptions and the private sector to strengthen its partnership with Africa. In order to achieve this, it has to surmount the challenges, take up the courage and work consistently with both private and public sectors and with an effective Action Plan.
He told IDN: “I would largely agree that there is a divide between what has been pledged and promised at high-level meetings and summits, compared to what has actually materialized on the ground. There is more talk than action, and in most cases, down the years intentions and ideas have been presented as initiatives already in progress. It will be interesting to see what has been concretely achieved in reports at the forthcoming second Russia-Africa summit scheduled for late 2022.”
Despite the challenges, Moscow plans to boost Russia’s presence in Africa noted Gruzd who also heads the Russia-Africa Research Programme initiated last year at SAIIA, South Africa’s premier research institute on international issues. It is an independent, non-government think tank, with a long and proud history of providing thought leadership in Africa.
Without doubts, Russia and African leaders will draw a comprehensive working map based on the discussions in St. Petersburg. The summit achievements will help to consolidate the aspirations of the African continent and African nations as fully as possible, and chart ways for materializing common priorities of Russia and the African countries within the framework of the African Union’s Agenda 2063 and the 2030 Agenda for Sustainable Development.
Kenya Records $55.1bn Mobile Money Transactions in 11 Months
By Adedapo Adesanya
Kenya has continued to maintain its position as Africa’s most remarkable mobile money market as the use of the service hit a historic high in 2021 after users transacted 6.24 trillion shillings (equivalent to $55.1 billion) on phones between January and November in 2021.
This indicated a 20 per cent increase from the previous year, surpassing the $45.9 billion transacted in the entire 2020, the Central Bank of Kenya (CBK) said in a new data released on Monday.
The surge in transactions came despite the government removing COVID-19 subsidies at the start of 2021.
The Kenyan government at the onset of the pandemic in the nation in March 2020 made all mobile money transactions worth $8.83 and below free as well as bank and mobile transactions.
This boosted usage and saw eight million subscribers join the service as cashless transactions increased, according to the CBK.
Upon removal of the subsidies, usage of the service was expected to decline or slow down but the opposite has happened, according to the East African country’s top lender.
It was observed that the highest ever mobile money transaction in a month was recorded in November at $5.5 billion as the number of agents hit a high of 299,053 and subscriptions at 67 million, said the CBK.
Kenya is regarded as the frontier of mobile money, starting the service as early as 2007 and this has transformed the everyday lives of most Kenyans, disrupting the traditional banking system and capturing the previously unbanked market and driving financial exclusion.
With ease brought about by the service, it allows for deposits and withdrawals of cash, bank account transfers, the payment of bills from electricity to school fees, loan and savings transactions, and the receipt of salaries.
A large proportion of the population is employed in cities, sending money home to families in rural areas. As a result, mobile money agents in cities mostly receive deposits of cash, whilst agents in rural areas mostly pay out withdrawals.
The reliability of the system rests heavily on active liquidity management; rural agents have an efficient system of replenishing their cash resources once these have been swapped out for mobile money via customer withdrawals.
Kenya Slashes Power Costs of Consumers by 15%
By Adedapo Adesanya
Kenya has announced a 15 per cent reduction in power costs, handing relief to thousands of homes and industries burdened by the high cost of living and production.
The East African country’s Ministry of Energy in a statement released in the capital Nairobi said the reduction takes effect immediately and would cover the entire 2022 period.
“The tariff reduction is a fulfilment of a commitment made by President Uhuru Kenyatta to the nation, that the first tranche of reduction, 15 per cent, will be reflected in the bills covering the end of the year in 2021,” said the ministry.
The government institution observed that the reduction will boost livelihoods and economic growth by reducing the cost of living, putting more money in Kenyans’ pockets and reducing the cost of doing business.
The ministry said it is working to see the second 15 per cent reduction is affected in the first quarter of the year, bringing the total cut to 30 per cent.
The 30 per cent cut will see consumer costs drop from an average of 24 shillings (about 0.21 U.S. dollars) per kilowatt-hour to 16 shillings (about 0.14 US Dollars).
Kenya’s demand for electricity has sustained an upward trend, growing at an average rate of 4.5 per cent year-on-year driven by rising economic activities.
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