All posts by Michael Patotschka

Kenya

Weak Kenya shilling boon for neighbour economies

Potato traders wait for traders for the valuable commodity outside Mwariro Market located along Ring Road in Nairobi, Kenya on April 11, 2023. PHOTO | FRANCIS NDERITU | NMG

As Kenyans continue to struggle with high unemployment levels, rising cost of living and faltering businesses, traders importing good from their market were all smiles as the falling shilling assured them better deals.

The Kenya shilling lost roughly 16.7 percent against the Uganda shilling since June 2023, driven by surging appreciation of the US dollar against it, and a wave of market correction among financial traders concerned about the latter’s overvalued position in the forex market.

The dollar has strongly rallied against the Kenya shilling for nearly six months —a development that saw the greenback rise from an average exchange rate of Ksh125 against in the first quarter of 2023 to a record high of Ksh155 posted in November.

On the other hand, the Uganda shilling has held steady against the Kenya currency, posting an average sell rate of Ush25 since July, compared with Ush30 recorded in January 2023. This trend has translated into notable currency gains for local importers but also raised questions about spill-over benefits for Ugandan customers.

“Some products in the Kenyan market have been discounted as well, because of low consumer demand. Though we have realised strong financial savings from this situation, I’ve told my fellow traders to put those savings aside for a rainy day instead of passing them on to customers straight away. It is always easy to cut product prices during good times, but it is very difficult raising prices in a tough economic situation.”

Buying dollars in Uganda

Mr Wadada said businesspeople from Kenya, Tanzania and Rwanda are expected to flock to Uganda to buy dollars in January because of the scarcity in the region, and this may cause fresh depreciation pressures against the Uganda shilling and potentially wipe out the savings realised by local importers.

“Nonetheless, stable fuel supply patterns between Uganda and Kenya of late have helped maximise some of the currency savings enjoyed by Ugandan importers who buy goods regularly from Kenya,” Wadada added.

Read: Ugandans flock to Kenya for holiday shopping

The high taxation and living costs experienced in Kenya have also impacted Kenyan citizens living in neighbouring countries.

30pc drop

“Anyone who lives in Uganda and is paid in Kenya shillings is losing about 30 percent of their pay in currency depreciation-related costs. But those of us that earn in either Uganda shillings or US dollars and live in Uganda are fairly shielded from that problem,” said John Chihi, a Kenyan professional working in Kampala.

“Those selling real estate in Kenya but live in Uganda are also likely to lose about 30 percent of their money through currency depreciation costs if they choose to value their property in Kenya shillings.”

“The combination of big price increases on various items sold in Kenya and currency depreciation have raised the cost of living for everyone. I used to spend about Ksh5,000 ($32) on my son’s upkeep per week, but I now spend Ksh12, 000 ($77.8) per week, because of various product increases and tax increments applied on many goods and services in Kenya today,” Mr Chihi added.

In Tanzania, cross-border traders in fresh food, especially in the north, say the weakening of the Kenyan currency has impacted their business.

The Bank of Tanzania (BoT) foreign exchange rates published on December 14, 2023 showed the Kenyan shilling exchanging at 16.2 to the Tanzania shilling, from the previous Tsh22 earlier in the year.

Economics lecturer at the University of Dar es Salaam Prof Humphrey Moshi said the supply and demand chains between Kenya and Tanzania would be affected by the weakening Kenyan currency. Shared essential services such as education and health have also become expensive for both Kenyans and Tanzanians.

Zanzibar President Dr Hussein Mwinyi was quoted in an officla statement saying the value of trade between the two nations in 2022 had reached $800 million.

“Due to the good relationship and co-operation that exists, our two countries have also been able to benefit economically, especially in the fields of trade and investment,” he said.

Source: The East African, 31st December 2023

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General

Policy Insights: How African-European Partnerships are Shaping Oil & Gas Regulations

The Invest in African Energy 2024 forum will explore the role of Europe’s leading IOCs in strengthening Africa’s oil and gas regulatory frameworks

ARIS, France, December 28, 2023/APO Group/ —

Growing partnerships between European and African companies are playing a pivotal role in shaping Africa’s oil and gas regulatory frameworks. Through cooperative efforts and shared mandates, these partnerships aim to drive energy security, industrialization and environmental sustainability through advancing mutually beneficial projects across the continent.

The upcoming Invest in African Energy (IAE) 2024 forum – scheduled for May 14-15 in Paris – will explore how European investors and African energy markets are working together to revamp oil and gas regulations and foster sustainable development, while still attracting oil and gas investment. Renewed collaboration with European international oil companies (IOCs) like Equinor, Shell, TotalEnergies, bp and Technip Energies is serving to strengthen African energy policies and fiscal terms, with tangible results.

These partnerships aim to drive energy security, industrialization and environmental sustainability through advancing mutually beneficial projects across the continent

In Senegal, bp’s partnership with national oil company Petrosen resulted in the flagship discovery and development of the Greater Tortue Ahmeyim LNG project, and prompted Senegal to revise its existing oil and gas code. The revision resulted in the introduction of a new Petroleum Code in 2019 that targets improved revenue collection for the West African country, while attracting further investments into upstream exploration.

In Angola, the government’s longstanding partnerships with operators like Eni, TotalEnergies and bp have not only boosted exploration and production activities, but also directly shaped the fiscal and regulatory framework. A Presidential Task Force established in 2019 engaged the country’s leading IOCs to assist with the amendment of three presidential decrees and enactment of two new laws. Focus areas included simplifying the oil concessions management process and implementing incentives for investment in marginal fields, with the task force serving as a model for successful public-private sector engagement.

In Nigeria, European IOCs – which also represent the top hydrocarbon producers in the country – have played a significant role in shaping the development and enactment of the Petroleum Industry Act of 2021. The long-awaited piece of legislation serves to facilitate a just energy transition, revamp upstream, midstream and downstream operations, and enhance the country’s competitiveness on a global scale. As a result, it is considered one of the biggest achievements in Nigeria’s energy sector to date.

European-African partnerships also extend to local content development, with a focus on capacity building and knowledge and technology exchange. Namibia has implemented the National Upstream Local Content Policy of 2021 to stimulate the participation of local entities in the country’s burgeoning oil and gas sector. The policy comes in response to growing cooperation between Namibia and European firms including Shell and TotalEnergies in the exploration of the offshore Orange Basin, which has led to five large-scale oil discoveries in the past 24 months.

Finally, Europe is playing a key role in helping Africa to define its policy towards environmental stewardship and sustainability, leading to initiatives like Nigeria’s Methane Emissions Reduction Guidelines and Gas Flare Commercialization Program, which target the reduction of carbon emissions and minimize the ecological impact of oil and gas projects. Partnership initiatives like the Global Gateway Investment Package and the Just Energy Transition Partnerships have sought to foster cooperation between Africa and Europe, focusing on the development, utilization and monetization of gas resources to enhance energy security and facilitate an equitable energy transition. Recognizing the crucial role of natural gas in bolstering energy supplies, several African countries – such as those with integrated gas policies like Ghana’s Gas Master Plan and Mauritania’s Energy Vision 2030 – are actively implementing strategies to maximize sector expansion, in collaboration with European partners.

Source: Energy Capital & Power | Dec 28, 2023

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Burkina Faso

Russia reopens embassy in Burkina Faso

Burkina Faso’s military ruler Capt Ibrahim Traoré attended a Russia-Africa summit in July

Russia has reopened its embassy in Burkina Faso after it was shut more than 30 years ago, officials have said.

Burkina Faso was a close ally of former colonial power France, but has pivoted towards Russia since the military seized power in a coup in 2022.

The junta has expelled French diplomats and has shut France’s military base in the country.

At the same time, it has been strengthening military and diplomatic ties with Russia.

France had condemned the coup in Burkina Faso, as well as in neighbouring Mali and Niger.

Russian President Vladimir Putin announced plans to reopen the embassy during the Russia-Africa summit in St Petersburg in July.

The embassy was closed in 1992 as Moscow reduced its involvement in Africa following the end of the Cold War and the collapse of the Soviet Union.

The embassy was reopened at a ceremony in Burkina Faso’s capital, Ouagadougou, Russia’s state-owned news agency Tass reported.

Russia has not yet named the head of the mission.

Russia’s ambassador to Ivory Coast, Alexei Saltykov, said he would head it until Mr Putin made an appointment, AFP news agency reports.

He described the West African state as “an old partner with whom we have solid and friendly ties”.

Under Mr Putin, Russia has made a huge push in recent years to regain influence in Africa.

Burkina Faso’s Defence Minister, Col Kassoum Coulibaly, held talks with his Russian counterpart Sergei Shoigu in Moscow last month, in the latest meeting between military officials from the two countries.

Col Coulibaly said the talks had reached a “practical phase” as Burkina Faso’s army tried to strengthen its capabilities.

Along with Mali and Niger, Burkina Faso has been battling an Islamist insurgency.

Mali’s junta has called in Russia’s Wagner mercenary group to help fight the militants while expelling French troops.

Burkina Faso’s junta has denied allegations, made last year by Ghana’s President Nana Akufo-Addo, that it too has brought in Wagner.

In other areas of co-operation, Burkina Faso signed a deal with Russia in July for the construction of a nuclear power plant to increase its energy supply.

Less than a quarter of the country’s population has access to electricity.

Last month, Russia also sent a team of doctors to help Burkina Faso deal with deadly outbreaks of dengue fever and chikungunya.

Source: BBC, 29th December 2023

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Algeria, Morocco, Tunisia

Russia’s foreign minister tours North Africa as anger toward the West swells across the region

This photo provided by the Tunisia presidency shows Tunisian President Kais Saied, right, shaking hands with Russian Foreign Minister Sergey Lavrov, Thursday Dec. 21, 2023 in Tunis. Russia is working to deepen political and economic ties and spread its narrative about wars in Ukraine and Gaza. (Slim Abid/Tunisian Presidency via AP)

TUNIS, Tunisia (AP) — Not far from where Russia’s Foreign Minister is holding meetings in Tunisia on Thursday, large green billboards advertising Russia Today, a Kremlin-backed media outlet, have been recently erected.

The ads are yet another indicator that Russia continues to expand its presence in North Africa as support for western powers across the Arab World fades amid the Israel-Hamas war in Gaza.

With deep trade ties and large diaspora populations in western Europe, North African countries have long maintained close, albeit complicated, relations with the European Union.

Morocco, Algeria and Tunisia also enjoy close relations with the United States.

But since October the region has been convulsed by protests about Israel’s latest war with Hamas, including in Tunis, where demonstrators have rallied in front of the United States and French embassies, chanting for a free Palestine.

Arab Barometer, a non-partisan research firm, published data last week that suggested the United States’ popularity fell 30 percentage points in the weeks after the Israel-Hamas war began. It found France’s image also suffered.

“Tunisians’ views on the world shifted in ways that rarely happen even over the course of a few years. There is no other issue across the Arab world to which people feel so individually and emotionally connected,” Arab Barometer researchers concluded, based on 2,406 interviews.

In the vacuum created by western powers’ diminishing popularity, Moscow has doubled down on efforts to strengthen its ties to North Africa and spread its narrative about issues including Ukraine and Gaza. Russian officials are exchanging visits with North African leaders, seeking new trade agreements and signing joint memorandums that cover issues ranging from Ukraine to Syria.

“It has become obvious that some external forces are not averse to using the next escalation of the Palestinian-Israeli conflict in their own interest, to ignite the fire of a regional war,” Russian Foreign Minister Sergey Lavrov said at this week’s Arab-Russian Cooperation Forum in Marrakech, alluding to the United States.

Marrakech was the first destination on Lavrov’s tour through North Africa. He arrived in Tunis on Wednesday evening to meet with President Kais Saied and Tunisia’s foreign minister, who visited Moscow in September, when the two countries announced a new grain deal.

Before Russia’s invasion of Ukraine, Tunisia received roughly half of its total wheat imports from Ukraine.

While lamenting pressure from countries that isolate Russia, Lavrov announced new efforts to expand energy and agriculture trade with North Africa.

He also contrasted Russia’s positions with those of the United States in the Middle East.

Source: AP, 21st December 2023

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