All posts by Michael Patotschka

Senegal

What’s in store for China-Africa relations in 2024?

With the ninth Forum on China–Africa Cooperation due to take place in Beijing and many opportunities for Chinese venture capital to invest in the continent, 2024 is likely to be a busy year in China-Africa relations.

 

November 27th, 2023 – Opinion by Hannah Ryder

Just over two years ago in Dakar, Senegal, I and a few of my team organised a dinner for a few of the African ambassadors to China, who had been deployed to Dakar to join delegations for the eighth Forum of China Africa Cooperation (FOCAC). While the mood was celebratory – the diplomatic corps and their heads of state and government had secured many hard-won new commitments from China to the Africa partnership – in many areas from trade to foreign direct investment and lending, there was also an undercurrent of significant uncertainty. We were still in the midst of the pandemic and none of us could, for instance, have predicted that China’s quarantine measures for inbound travel would last until the end of 2022.

But it was this hard-to-predict shift, as well as the existence of the 2021 commitments, that set the stage for 2023 being a very interesting and extremely busy year in Africa-China relations. 2024 is likely to be even more so.

My team maintains a database on public AfricaChina announcements made in Chinese, English and other languages – and we categorise them by sector or issue, type of activity, financier, and other variables.

During 2023, the predominant coverage of China in African and international news sources was of course about China as a lender, due to prevailing narratives that China has “turned the tap off” on global lending. There was also significant reporting of the ongoing debt relief negotiations with Zambia and a few other low and middle-income countries. Certainly, China’s opening up after Covid-19 made a difference to these negotiations, enabling delegations from those countries and China to travel back and forth to come closer to clear understandings.

There are many things besides debt

But the fact is, even when Zambia’s president visited China in 2023, debt hardly featured in his itinerary. The visit, and visits by over 20 other African heads of state and foreign ministers this year – well above average from 2010, when our records begin – were focused on re-engaging China on economic growth on the continent – from pitching for more concessional lending in energy and transport to pitching for investments in value addition and manufacturing, and finalising new export agreements for African products to China.

Around these visits of African leaders to China, which we have previously found are correlated with positive trade and investment flows, were numerous other forums – from the biennial China-Africa Economic and Trade Expo to the China-Africa agricultural forum, which had been committed to at FOCAC 2021 but which Africans were unable to travel to China to attend until this year. That said, it was activity on the continent with Chinese stakeholders that we found featured the most in our database in 2023, and certainly more so than in 2022. We saw agreements for investments in road upgrades in Zambia, a new industrial park in Mozambique, a digitally networked cement factory in Uganda, and much more.

We saw trade and tourism promotion conferences, Chinese medical teams, agreements on broadcasting and new agricultural ventures. And we saw financial transactions inked that we knew would be coming due to commitments at FOCAC 2021 – investments into Afreximbank and Africa Finance Corporation, and Egypt’s issuance of a “panda bond”, to name a few, while African governments continued to use Chinese contractors on their new construction projects.

Each month over the past year we have recorded at least 50 Africa-China activities, in some cases over 100. This might seem like an overly positive picture of 2023. The questions are: what was missing from 2023? And what might be rectified in 2024? While 2023 was certainly very busy, there were some notable gaps, which may set the tone for 2024.

A gap in connectivity

Commitments to financing ten regional connectivity projects have not yet been met, and while lending from China Development Bank and China Exim Bank is increasing once again after the pandemic hiatus, it is not yet at the level in ticket size, volume, or even concessionality terms that would really make a significant difference to African governments’ need to plug infrastructure gaps on the continent.

And, while exports from the continent to China are growing and diversifying, especially into agricultural products, investment in the opposite direction into manufacturing of value-added goods in all sectors – from textiles to solar panels to batteries for export

to China as well as globally – is still lagging behind its potential. In my view, there is also significantly more potential for exposure of African entrepreneurs to Chinese venture capital and equity investment, which has yet to really be seen.

Can these gaps be plugged?

In 2024, the ninth FOCAC will be held – this time returning to Beijing, after the eighth in Dakar. It’s too early to tell now what can be expected from the Beijing session, during or beyond the dinners we will have with African delegations there afterwards.

However, based on the 2021 conference, plus three new initiatives on industrialisation, agricultural modernisation and talent that were announced at the China-Africa conference in South Africa on the sidelines of BRICS, plus our experience of a very busy “catching up” year in 2023, I and my team are poised for an extremely busy 2024 when it comes to Africa-China. I hope you will be too. ■

We saw agreements for investments in road upgrades in Zambia, a new industrial park in Mozambique, a digitally networked cement factory in Uganda, and much more.

Source: AfricanBusiness,

 

 

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Zambia

China announces plans to boost renminbi use in Southern Africa

In a visit to Zambia, the vice-president of the Bank of China, Lin Jingzhen, announced plans to boost the use of the renminbi in Southern Africa as Beijing seeks to extend the influence of its currency and counter the dominance of the US dollar.

December 8th, 2023 – By Harry Clynch

In a meeting with Zambian President Hakainde Hichilema in Lusaka earlier this week, Lin said that the Bank will promote the use of renminbi across the region from its office in the country’s capital.

“We will earnestly act upon our responsibility and leverage our role in Zambia to provide holistic services and products related to RMB and to promote the use of RMB in bilateral trade and economic activities,” he said.

M’khuzo Mwachande, an investment banker in South Africa, tells African Business that the move makes economic sense for both parties.

“China remains Africa’s largest trading partner, and it’s already the fourth largest provider of investment capital, having made around $300bn worth of investments as of 2022.

“In relation to Zambia, China has invested more than $3bn in the country, with more than 500,000 jobs having been created by Chinese investments.

“Just last week, the Tanzania-Zambia Railway Authority announced that a firm from China has been shortlisted to submit a proposal to operate the Tanzania-Zambia transnational rail for $1bn.

“The recent announcement that China will promote the use of its currency in Zambia and the region could therefore be deemed as a practical illustration of the close economic relationship that already exists. It’s natural that partners who conduct so much trade together will seek to use their own currencies.”

Positive news for Zambia

Mwachande is also optimistic that the move shows Zambia remains an attractive trading partner for China, despite the problems Lusaka has faced in trying to pay back the debt issued by China and other international creditors. Zambia is the world’s second-largest exporter of copper, a metal that is deemed critical to the world’s green transition. China accounts for approximately half of global consumption for the commodity, making Zambia an important partner in southern Africa.

“This is positive news in the sense that it reflects that China still wants to do business with Zambia despite the $70m worth of debt that Zambia still owes to them, and the recent stall in the debt restructuring negotiations, which China co-chairs,” Mwachande says.

China and several African countries have also expressed the ambition to reduce the power of Western-dominated financial institutions and the prevalence of the dollar in international trade, which critics argue gives the United States outsized influence on a global level.

Mwachande believes that de-dollarisation is necessary for African countries including Zambia but rejects the idea that the continent should be caught up in a wider geopolitical battle.

“The renminbi is a good option for now simply because there isn’t yet any other viable alternative to the dollar,” Mwachande tells African Business.

“We’ve seen in the last couple of years how vulnerable Africa is to higher interest rates in the United States and how that has caused debt problems or massive currency devaluations – whether that is in Nigeria, Ghana, or indeed Zambia. To return to pre-Covid levels of economic growth, Africa needs other currency options, and one option is the renminbi.”

However, he notes that it doesn’t need to be a case of “either/or”.

“It’s a matter of African countries making sound economic decisions based on which international partners are best placed to help deliver higher growth,” he says.

Harry Clynch

Harry is Finance Reporter at African Business.

Source:  AfricanBusiness, 8th December 2024

 

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Nigeria

NIS: Over 3.6m Nigerians Migrated in Two Years to Other Countries in Search of Better Opportunities Business

NIS: Over 3.6m Nigerians Migrated in Two Years to Other Countries in Search of Better Opportunities

Chinedu Eze

The Nigeria Immigration Service (NIS) has disclosed that over 3.6 million Nigerians migrated to other countries within a space of two years.

The Controller, Murtala Muhammed International Airport Command, Mrs. Adeola Adesola Adesokan, disclosed this in a speech during the facility tour of the remodeled ‘E Wing Arrival’ at the airport.

She said data from NIS’s Migration Information Data Analysis System (MIDAS), showed that about 2, 115, 139 persons emigrated from Nigeria in 2022, while 1, 574, 357 left the country from January to September 31,2023, making it a total of 3,679, 496 that have left Nigeria in the last two years.

It was learnt most of the migrants left for greater opportunities overseas due to economic hardship, while some secured admission for further studies.

Adesokan also disclosed that since the Tinubu administration, more investors have been coming into the country adding that about 700 foreign investors apply for visa on arrival every day, a figure she described as encouraging, and higher than what used to be previously obtained.

She disclosed that visa on arrival of the Nigeria Immigration Service has been upgraded and made easier for those who intend to invest in Nigeria.

“In terms of visa on arrival, if you are coming into Nigeria, you have to apply first, and somebody has to recognise and acknowledge you in Nigeria. Sometime ago, we shut down the service in order to upgrade it. We carried out maintenance that will allow you to upload within the comfort of your house, your pictures, put all your documents in the system, pay online and when you pay online, we will be able to see it before you arrive here. And that makes the system seamless. But you know, most times, people want to come and start the process here, which is cumbersome and it will waste your quality time. So, with this visa on arrival, the systems are already waiting and also being in use. It will ease the problem of people coming, particularly the investors don’t want to stay for so long on the queue standing and waiting. The ambience of the place will also enable them to feel comfortable, and they will be processed faster,” Adesokan said.

She further explained that visa on arrival applicants go through serious screening by immigration officials and if the applicants meet the criteria, they are given visa on arrival and because of the new system at the E Arrival, MMIA, the applicants would spend less than 20 minutes before the would receive their visa because the process has been completed before their arrival.

She said that visa on arrival is strictly for businessmen who wish to invest in the country and also for expatriate with special skills who are needed by organisations in Nigeria.

“If you apply for a visa on arrival, we will check whether you have local objections, if there is no local objection, you are permitted. Not everybody is qualified for it. It is meant for investors, special professionals and others who meet similar criteria. We have categories whereby the Nigerian Immigration Service has spelt out conditions for visa on arrival. The first one is for business travellers who are moving and investors who want to come and invest in this nation. So if you don’t fall into these categories and you apply for it, you will be rejected and even if you are coming as a businessman, there are procedures, you have to upload your business CAC (Corporate Affairs Commission) form, the company you want to meet here. That is, the company inviting you, If they do not have that, you are not expected to be granted approval,” she explained.

“Another category of those that could be given visa on arrival are citizens from some countries in Africa. These countries also give Nigeria visa on arrival and Nigeria reciprocates the gesture. Besides, there is a growing disposition to give Africans visa on arrival, those who meet other conditions in terms of security, good citizen record and others.

“The fourth category is the African nationals. Because we have an agreement under the previous administration that Africans who come to Nigeria can receive a visa on arrival. Those are the people who are qualified. They are on this automatic approval in the principle of reciprocity. Of course, those that belong to Economic Community of West Africa (ECOWAS) can come to Nigeria without visa. Those are the people that qualify and they do that for us, too,” Adesokan said.

She insisted that there is upsurge of investors coming into Nigeria since the Tinubu administration, “because many foreigners are interested in investing in Nigeria because of the campaign the President has been mounting to canvass for more investment in Nigeria, which has taken him out of the country many times since he was sworn in.

“This year, since the advent of this new administration we have seen an upsurge of visa on arrival. We record an average of like 700 requests in a day. People have been coming in. We have seen people coming in; I think the president has been going to many nations, asking people to come and they have been responding.”

“So we saw that people are coming to explore; for example the German people they came. We have been receiving people coming into the country and I’m sure they are here for business purposes. That’s the surge we realized,” she said.

On the remodeled the ‘E Arrival ‘of the airport, Adesokan said it had the biggest capacity, more than the ‘D Arrival ‘and disclosed that the Nigeria Immigration Service initiated the plan to remodel the facility and collaborated with NNPC Limited and Shell Nigeria Exploration and Production Company (SNEPCO).

“This project was initiated by the Nigerian Immigration Service in collaboration with NNPC/ SNEPCO. They were there for us. We are partnering with them. Government cannot build a nation all by itself. So, collaborating in terms of CSR (Corporate Social Responsibility) with corporate bodies and organizations will be so helpful to build this nation. This nation is all ours and we need to do it rightly,” she added.

Source: ThisDay, 8th December 2024

 

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General

AfDB: EU’s carbon tax could cost Africa $25bn a year

The EU’s Carbon Border Adjustment Mechanism will penalise Africa’s value-added products and force it to remain an exporter of raw materials to Europe, warned AfDB president Akinwumi Adesina at COP28.

December 7th, 2023

By

David Thomas

Image : AfDB

Africa could lose up to $25bn per annum as a direct result of the European Union’s Carbon Border Adjustment Mechanism (CBAM), the president of the African Development Bank has warned.

Speaking at the Sustainable Trade Africa Conference on the sidelines of Cop28 in Dubai, Akinwumi Adesina argued that the mechanism could significantly constrain Africa’s trade and industrialisation progress by penalising value-added exports including steel, cement, iron, aluminium and fertilisers.

“With Africa’s energy deficit and reliance mainly on fossil fuels, especially diesel, the implication is that Africa will be forced to export raw commodities again into Europe, which will further cause de-industrialisation of Africa. Africa has been short-changed by climate change; now it will be short-changed in global trade,” he said.

Why is Europe introducing the CBAM?

The European Commission describes the CBAM, which entered its transitional phase on 1 October, as its “landmark tool to fight carbon leakage”.  Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place.

It is intended to equalise the price of carbon between domestic products and imports, “ensuring that the EU’s climate policies are not undermined by production relocating to countries with less ambitious green standards or by the replacement of EU products by more carbon-intensive imports.”

The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage – cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. When fully phased in it will capture more than 50% of the emissions in sectors covered by the EU’s Emissions Trading System.

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Speaking at the time of its introduction, Valdis Dombrovskis, the European Commission’s executive vice-president for an economy that works for people, said that the mechanism was compliant with World Trade Organisation rules.

“The EU needs the Carbon Border Adjustment Mechanism to achieve its ambitious emission reduction targets and achieve climate neutrality by 2050. The CBAM will tackle the risk of carbon leakage in a non-discriminatory way and in full compliance with WTO rules. The EU will be leading by example and encouraging global industry to embrace greener and more sustainable technologies.”

CBAM undermines Africa’s competitiveness

Citing data from the International Renewable Energy Agency, Adesina said that Africa is already being overlooked in the global energy transition and the legislation will only serve to drive inequalities between the regions.

“Africa received just $60bn or 2% of the $3 trillion of global investments in renewable energy in the past two decades, a trend that will now impact negatively on its ability to export competitively into Europe.”

In response, Adesina called for “Just Trade-for-Energy Transition partnerships,” which he said would enable Africa’s renewable ambitions without restricting its trade prospects.

“This system does not take into consideration the principle of common but differentiated responsibility as per the Paris Accord, which requires developed countries to peak on carbon emissions and achieve net-zero in the first half of the century, while developing countries peak and achieve net-zero in the second half of the century,” he underlined.

Benedict Oramah, president of Afreximbank, also warned of the danger that Africa must manage its pace of decarbonisation given the financial costs.

“Preliminary results of a study recently commissioned by Afreximbank reveal that rapid decarbonisation by fossil fuel-exporting countries in Africa could cut merchandise exports by $150bn,” he warned.

Source. AfricanBusiness, 7th December 2023

 

 

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