All posts by Michael Patotschka

General

World Bank President Outlines Ambitious Vision For A Poverty-Free Globe At IDA Midterm Review

Dignitaries and leaders from around the globe convened in Zanzibar, Tanzania, today for the International Development Association (IDA) Midterm Review. This landmark event unveiled an extraordinary call to action and a visionary plan to eradicate global poverty while fostering sustainable development.

Two leaders, President Samia Suluhu Hassan of Tanzania and President Hussein Ali Mwinyi of Zanzibar, extended a welcome to attendees and expressed their heartfelt gratitude for the support provided during recent natural disasters in the region.

Addressing the audience, the President of the World Bank, whose identity remains undisclosed in the provided text, conveyed sincere condolences to the flood-affected communities. The President assured them of the World Bank’s steadfast commitment to assisting in the region’s recovery and reconstruction efforts.

Established with the mission of enhancing living standards and stimulating growth in developing nations, the International Development Association now confronts an intricate landscape marked by multifaceted poverty challenges, climate crises, food insecurity, fragility, ongoing pandemic recovery, and global conflicts.

In a compelling address, the President underscored the imperative of addressing these interconnected issues, emphasizing the unacceptable cost of inaction. With an estimated 1.1 billion young people in the Global South poised to enter the workforce within the next decade, the gap between job creation and demand looms large.

One conspicuous impediment to progress is the pervasive lack of reliable electricity access, affecting approximately 600 million people in Africa, with 36 million residing in Tanzania alone. The President firmly asserted that this glaring disparity cannot be allowed to persist.

The President articulated an ambitious vision for the World Bank: to create a world free of poverty while safeguarding the environment. This vision necessitates an expansion of the World Bank’s role and the scope of IDA itself.

A call to action resounded throughout the conference, with an impassioned plea to transition from projects to platforms, replicate successful initiatives, and foster seamless collaboration. A case in point was shared about a Nigerian town where IDA funding had facilitated a mini-grid system, bringing electricity to the community and resulting in a cascade of benefits, from heightened productivity for farmers to improved healthcare access.

The President’s announcement of a $5 billion commitment from IDA to provide reliable, affordable, and renewable electricity to 100 million Africans by 2030 underscores the magnitude of ambition required to confront these challenges head-on.

Nonetheless, the President candidly acknowledged that such aspirations come at a price. The current limits of concessional resources necessitate a substantial increase in funding. A plea was made for donors, shareholders, and philanthropies to unite in this fight and ensure that the next replenishment of IDA becomes the most substantial in history.

Reforms are imperative for enhanced efficiency and impact. The President called for simplifying processes, standardizing application procedures, and alleviating the bureaucratic burden on governments.

Furthermore, there was a push to shift the focus from measuring inputs to measuring outcomes. The President stressed the importance of concentrating on the tangible impact of development initiatives, such as girls’ education, job creation, and environmental conservation.

The President’s stirring address concluded with a poignant reminder of the World Bank’s origins and the collective goodwill, wisdom, and sincerity required to address today’s global challenges. Over the next two days, attendees will reflect on IDA’s journey and renew their commitment to its founding principles.

The IDA Midterm Review sets the stage for a future where poverty is not an insurmountable barrier but a challenge met with unwavering determination. The world eagerly anticipates the transformative results that this visionary leadership promises to deliver.

Source:  Today News Africa, 6th December 2023

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Angola

Angola to leave OPEC over disagreement on oil production quotas

Oil minister says the country ‘gains nothing’ from remaining in the group after disagreements emerge over production cuts.

OPEC has agreed to production cuts as it seeks to boost the price of oil, a move Angola had objected to [File: Dado Ruvic/Reuters]

Angola says it will leave the Organization of the Petroleum Exporting Countries (OPEC) over a disagreement regarding production quotas, a move that will bring the group down to 12 members.

Speaking on public television on Thursday, Diamantino Azevedo, minister for mineral resources, petroleum and gas, said Angola, which produces about 1.1 million barrels of oil a day, is leaving OPEC because it was not serving the country’s interests.

“We feel that … Angola currently gains nothing by remaining in the organisation and, in defence of its interests, decided to leave,” Azevedo was quoted as saying in a statement issued by the president’s office.

Angola, which first joined OPEC in 2007, has struggled to meet production quotas over the past several years. The country is joining others, such as Qatar and Ecuador, that have left OPEC in the past decade.

Questions about potential production cuts sought by leading oil producers such as Saudi Arabia have been a source of recent debate within the group.

Without Angola, OPEC countries will produce about 27 million barrels of oil per day, about 27 percent of the global supply.

But while Angola was a relatively small player in OPEC, the country’s departure has raised larger questions about the future of the organisation.

Crude prices dropped by more than 1.5 percent after the announcement.

“From an oil market supply perspective, the impact is minimal as oil production in Angola was on a downward trend and higher production would first require higher investments,” said Giovanni Staunovo, a commodity analyst with UBS.

“However, prices still fell on concern of the unity of OPEC+ as a group, but there is no indication that more heavyweights within the alliance intend to follow the path of Angola.”

Oil and gas make up about 90 percent of Angola’s exports and are a crucial economic lifeline for the country.

Last month, Azevedo’s office protested against an OPEC decision to reduce its production quota for 2024, concerned that it would damage Angola’s ability to increase its output capacity.

OPEC and its allies in OPEC+ have agreed to cut production to prop up oil prices.

Angola’s production capacity peaked in 2008 at 2 million barrels per day but has dropped since due to ageing infrastructure.

SOURCE: AL JAZEERA AND NEWS AGENCIES, 21st December 2023
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General

AIF 2023 builds formidable powerhouse around investments in Africa

This year’s Africa Investment Forum attracted significantly  increased investment to the continent.

November 28th, 2023 By Dianna Games

The Africa Investment Forum (AIF) 2023 has lived up to its name, with investment promises amounting to $34.82bn made over the three-day Market Days event held in Marrakech, Morocco, in November. It was attended by financiers, investors, pension funds, policy makers, private equity firms and governments.

The pledged investments are across several sectors of the continent’s economy. As always, infrastructure was a main feature of discussions.

Kenya secured $300m for building new power lines, for example. Tanzania secured a $5.9bn investment in the country’s new Mtwara-Mbamba Bay standard-gauge railway project. It also received funding for the Mangapwani II Integrated Hub Port project in Zanzibar, which forms part of the government’s drive to develop its blue economy.

Power was also a top draw, with a focus on green energy projects. Huge power deficits across many countries and the drive for net zero carbon emissions have lent momentum to renewable energy rollout in Africa, including in the continent’s two biggest economies – Nigeria and South Africa.

Also on the table were deals in health and creative industries and agriculture. Side events included regional transport corridors and a Mayors’ Forum on leveraging cities and municipalities to unleash growth and development. This included mayors and governors from Lagos, Nairobi, Addis Ababa, Abidjan and ministerial representation from Rwanda.

The event hosted the launch of the private sector-focused Alliance for Special Agro-Industrial Processing Zones. This drew a commitment of $3bn towards development of these zones across the continent made by the AfDB, Afreximbank, the Islamic Development Bank and other partners.

The Forum also included some non-traditional discussions. One was about the role of sport in boosting economic development. The newly elected President of Rugby Africa, Ghana’s Herbert Mensah, highlighted the opportunity. “To invest in rugby across Africa is to invest in a continent of 1.3bn people, utilising the sport as a catalyst for both economic development and empowerment of the youth.”

‘Speed dating’ for investors

Organised by the African Development Bank (AfDB), the Africa Investment Forum, held under the theme “Unlocking African value chains”, is now in its fifth year. It was launched in South Africa in 2018 as an innovative marketplace. It was hosted this year in Marrakech, under the high patronage of King Mohammed VI.

Dedicated to advancing projects to bankable stages, raising capital, and accelerating the financial closure of deals, it has sometimes been described as “speed dating” for investors. The three-day global event drew over 1,000 delegates from more than 60 countries.

AfDB Group President and Chairperson of the AIF, Dr Akinwumi Adesina, said “We are building a formidable powerhouse around investments in Africa that will have transformative impacts on the lives of people. That is the bottom line of the Africa Investment Forum: investing to improve lives.”

Adesina highlighted the success of the AIF which, since 2018, has drawn 16,500 participants and generated nearly $143bn in investment interest, including securing $15.5bn for the Abidjan-Lagos highway corridor and $3.6bn for the East Africa railway corridor.

Its founding partners are the AfDB Group, Africa50, Afreximbank, the Africa Finance Corporation, the Development Bank of Southern Africa, the European Investment Bank, the Islamic Development Bank and the Trade and Development Bank.

Among delegates were several African heads of state and government, including Comoros President Azali Assoumani, President Samia Suluhu Hassan of Tanzania; President Julius Maada Bio of Sierra Leone; and Rwanda’s Prime Minister Eduoard Ngirente, also joined by the Prime Minister of Barbados, Mia Mottley.

Adesina observed that despite insalubrious global economic conditions, African countries had exhibited resilience, even growing faster than the global average.

“African economies witnessed a real GDP growth of 3.8% in 2022, higher than the world average of 3.5%. Five of the six pre-pandemic top-performing African countries are projected to be back in the league of the world’s 10 fastest-growing economies for 2023-2024.”

He said his optimism is based on the data. Africa, he noted, is expected to have a population of 2.5bn by 2050, accounting for 25% of the global labour force, making it a key player in the global economy.

The continent is expected to grow to $3.4 trillion as a result of the African Continental Free Trade Area, with the agricultural market worth $1 trillion by 2030.

He pointed out that the continent is critical to the green energy transition, being home to many of the minerals needed for the production of electric vehicles. “Africa accounts for the largest source of the ‘green metals’ for the development of electric vehicles, including platinum (70%), cobalt (52%), manganese (46%), bauxite (25%), and graphite (21%).”

The King calls on the private sector

In opening remarks read on his behalf by Omar Kabbaj, an advisor to the king and president emeritus of the AfDB, King Mohammed VI noted that the complex economic issues facing the continent, exacerbated by geopolitical tensions and climate change, had been further complicated by challenging fiscal conditions.

He urged greater private sector investment and participation in African countries. “State budgets alone cannot cover all the investment needed, especially in high-potential, job-intensive sectors.”

The King observed that while infrastructure development is a barrier to development in Africa, he emphasised what can be done, using the example of Morocco.

The Kingdom of Morocco now has 4.1 GW of installed renewable electricity generating capacity, and is continuing to roll out its strategy to increase the share of renewable energy to over 52% of its national electricity mix by 2030. The Tanger Med port complex has helped position the kingdom as one of the top 20 logistics hubs in the world.

The importance of being derisked

Speakers raised the issue of the unrealistically high perceptions of risk in Africa, which affects the flow of capital into the continent and pushes up costs of finance. It has also deterred the deployment of assets under management from pension funds and other institutions for infrastructure and other investments.

Investors and institutions based in Africa or already doing business here believe the risk is overstated and does not match the reality on the ground. The AfDB aims to change this by derisking investment, improving information about opportunities in Africa and pushing for, and supporting, more bankable projects. The founding members of the AIF weighed in with some of their views.

The CEO of the Islamic Trade Finance Corporation, Eng. Hani Salem Sonbol, said that Africa was a land of boundless possibilities and a dynamic engine of growth.

Admassu Tadesse, Trade and Development Bank group president emeritus and group MD, said the TDB Group was pleased to see the AIF continuing to attract diverse financiers and institutional investors for greater engagements on investments and co-financing opportunities.

European Investment Bank vice-president Ambroise Fayolle restated the importance of a strong, innovative and resilient private sector and added, “We are happy to see how the creativity and vision of African innovators is making an impact, particularly in the area of technology.”

Africa Finance Corporation president and CEO Samaila Zubairu said collaboration through strategic partnerships such as the AIF was critical to unlocking opportunities in Africa’s rich and diverse value chains. The CEO of the Development Bank of Southern Africa, Boitumelo Mosako, praised the utility of the event in providing a platform for engagement with partners on transactions.

Alain Ebobissé, Africa50 CEO, said: “Once again, this year, the Africa Investment Forum has been a testament to the founding partners’ dedication to initiating projects that tap into Africa’s rich potential across diverse sectors.”

Source:  African Business, 9th November 2023

 

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General

Reimagining economic growth in Africa: Turning diversity into opportunity

By Mayowa Kuyoro, Acha Leke, Olivia White, Jonathan Woetzel, Kartik Jayaram, and Kendyll Hicks
Africa’s economy downshifted over the last decade, yet half of its people live in countries that have thrived on the continent. Africa has the human capital and natural resources to accelerate productivity and reimagine its economic growth, which is, more than ever, vital for the welfare of the world.

Africa is home to the world’s youngest and fastest-growing population, burgeoning cities, and bold innovations in everything from fintech to clean energy. With its population expected to nearly double to 2.5 billion people by 2050, the continent presents myriad opportunities for robust, inclusive growth that harness its rich natural resources and abundant human potential to increase prosperity not only in Africa but around the world.

These strengths and assets present a chance for the continent to vastly improve its productivity and reverse the economic deceleration it endured from 2010 to 2019. GDP growth fell 35 percent over that period—and then the COVID-19 pandemic took hold, followed by the Russian invasion of Ukraine. Those events set off shifts that are still working their way through the global economy. Today, 60 percent of Africa’s population lives in poverty, the result of per capita income growth that has averaged just 1.1 percent a year for the past several decades.

Yet the continent-wide statistics obscure successes in many of its constituent countries that can serve as models to establish productivity as the foundation of Africa’s economic growth. Over the past decade, certain countries, cities, sectors, and companies have been beacons of innovation, productivity, and growth—there is no “one Africa.” In those beacons lie lessons and innovations that can reinvigorate the African economy. Our new research indicates that abundant growth and development are still possible in Africa, still happening—and, more than ever, vital for the welfare of the world.

Africa’s real GDP per capita has grown only 1.1% annually since 1990.
Real GDP per capita

Africa’s growth has downshifted since 2010 after a promising opening to the millennium

Africa entered the 21st century with a promising burst of economic growth that persisted for a decade before returning to the slow pace it experienced in the 1990s. From 2000 to 2010, real GDP grew at an average rate of 5.1 percent annually, up from an annual average of only 2.5 percent in the previous decade. Growth slowed to 3.3 percent per year between 2010 and 2019.

While the continent’s GDP did increase faster than its population, the absolute number of Africans living in poverty went up by 30 million. That population growth helps explain the contrast between average annual GDP per capita growth of 5 percent and 8 percent, respectively, in India and China but only 1 percent in Africa over the 30-year period from 1990 through 2019.

There is no ‘one Africa’—the continent’s recent slowdown masks divergence across countries

Almost half of Africa’s people live in countries where GDP growth between 2010 and 2019 exceeded the continent’s average growth rate of 4.2 percent since 2000. These countries, which fall into clusters we call “consistent growers” and “recent accelerators,” were largely midsize economies that benefited from higher-than-average increases in investment, exports, and urbanization, which increased productivity. These countries offer valuable models for the continent to emulate.

The other half of the African population lives in countries that grew more slowly over the past decade, including the continent’s three largest economies—Egypt, Nigeria, and South Africa—as well as ten of the smallest countries on the continent.

Together, those countries, which fall into our “recent slowdown” and “slow growers” clusters, accounted for almost 75 percent of the continent’s GDP in 2019. Increasing their productivity is imperative to restoring Africa’s economic vitality.

Africa’s economies are shifting rapidly from agriculture and extraction to services, but productivity still lags

The African economy has undergone a profound structural shift to services over the past 20 years, as people left work in the fields to take jobs in trade and other services in cities. Reflecting that shift, employment in services increased from 30 percent to 39 percent over that period, although in 2019, half the African workforce remained in agriculture. Going forward, the continent has the human capital and resources it needs to propel growth and increase productivity across all sectors, starting with the services sector. Services have secured their place as the major driver of the continent’s economic output, contributing 56 percent in 2019 compared to 50 percent in 2000. The sector presents significant opportunities for African countries to boost economic output and job creation—but only if productivity improves. The real productivity of Africa’s services sector, at $7,200 in 2019 compared to $8,900 in India, $17,700 in Latin America, and $20,900 in China, is the lowest of any region in the world. It is critical that Africa improve the productivity not only of its services sector but also of its industrial sector. And with half of Africa’s workforce still employed in farming, boosting agricultural productivity and farmer incomes remains critical.

Africa is undergoing a fundamental structural shift to services.

Image description:

A sequence of stacked bar charts plots Africa’s distribution of employment over time across four sectors. Agriculture leads but shrinks from 58% in 2000 to 49% in 2019. The services sector gains the most, rising from 30% to 39% over the same period. The other two sectors, extraction and industrial, hold steady. A second sequence of stacked bar charts plot those same sectors’ gross value added. Services again gains, rising from 50% to 56%, almost entirely at the expense of the extraction sector’s share.

End of image description.

Improved productivity will create the jobs needed to sustain Africa’s burgeoning population

Africa will be home to the world’s largest working-age population by 2040, and smart deployment of its labor force in highly productive jobs will spur economic growth. By 2030, the services sector on its current trajectory will create at least 85 million net new jobs across the continent, enough to absorb half of new labor market entrants in highly productivity work. The number of new services jobs would almost triple if Africa matched the productivity of Asia’s strongest services hub, which would add $1.4 trillion to the continent’s economy. Additionally, agriculture remains the backbone of many African economies, accounting for 49 percent of the continent’s total employment. The agricultural sector’s productivity and output have improved steadily over the past two decades. As more people move out of agriculture and into services, Africa has opportunities to increase yields and add value to agricultural output to match the standards of global peers. Across all sectors, the trick will be to develop the skills and increase the digital tools and technologies that enable Africa’s rich pool of talent to spark and sustain productivity-led growth across the continent.

Imagining a more interconnected Africa

Africa trades much more with economies beyond the continent than within. Only 10 percent of its imports and 17 percent of its exports are intraregional. By contrast, in the Association of Southeast Asian Nations, or ASEAN, 21 percent of imports and 22 percent of exports are intraregional, while in Latin America, intraregional trade accounts for 19 percent of imports and 20 percent of exports. African public- and private-sector leaders can find ways to realize the potential of the African Continental Free Trade Agreement, which aims to reduce border constraints that inhibit intracontinental trade and to enhance economies of scale, competitiveness, and flows of technology and talent across borders. Agro-processing, pharmaceuticals, automotive, and logistics could deliver substantial value, but bold interventions and investment are needed to realize their potential. For example, improving transportation and logistics would require adding and improving infrastructure, reducing customers delays at borders, increasing the quantity and availability of quality trucks through financing, and scaling cold chain storage and transportation, all steps that lead to higher productivity.

Africa trades more with other world regions than itself.

Image description:

Two sets of stacked bar charts show the sources of Africa’s imports and the destinations of African imports across 13 trade sectors, specially highlighting how much trade stays within Africa. Only 10% of African countries’ imports come from another African country. Top sectors for intra-Africa imports are mining, food and beverages, wood and paper products, and oil and gas. Only 17% of African countries’ exports go to another African country. Top sectors for intra-Africa exports include food and beverages, machinery, wood and paper products, and medical supplies and pharmaceuticals.

End of image description.

Africa is the world’s fastest urbanizing region, but depends too heavily on its primary cities

The future of Africa lies in its vibrant cities. Although 57 percent of the population lived in rural areas in 2019, the continent is urbanizing faster than any other place on the planet. Since 2000, Africa’s urban population has grown 3.7 percent, outpacing overall population growth on the continent of 2.5 percent. Over the next two decades, Africa will become majority urban as more than 500 million people migrate to its cities and create the largest total number of urban dwellers in the world. By 2040, Africa will be home to 12 cities of more than ten million people each as ten more cities join Cairo and Lagos, and 19 “second” cities will have populations between five million and ten million, up from ten today.

Nonetheless, Africa has fewer and often smaller second cities than other regions of the world; among the largest cities on the continent, only four of 14 have a second city bigger than half the size of their primary cities. African primary and second cities need infrastructure investment to support businesses and workers so they can deliver the high productivity needed to increase the pace of economic growth on the continent.

African second cities are undersized compared with primary cities.

Image description:

A dot plot shows a population comparison of the largest and second-largest cities in 14 African countries. The countries are shown in rows, with two circles representing the cities and a line connecting them. Cameroon is at the top with primary city Yaounde connected by a short line to second city Douala, whose population is about 90% of the size. The next closest pairs of cities are in Malawi, Ghana, Republic of Congo, and South Africa. The circle pairs get farther apart as you go downward. Adjacent is a similarly formatted chart of select non-African countries whose second cities are about 75% of the size of their primary cities: China, India, the United States, and Brazil.

End of image description.

Africa’s many large companies have been resilient—and have considerable unmet potential for growth

Large private-sector firms have an important role to play in rekindling economic progress in Africa because they contribute disproportionately to growth, innovation, employment, exports, productivity, and taxes. In Africa today, at least 345 companies have annual revenues of $1 billion or more. Collectively, they produce revenues of more than $1 trillion. The performance of large companies in Africa varied dramatically between 2015 and 2021, a period that included a global commodities downturn and the onset of the COVID-19 pandemic.

While the number of large corporations overall on the continent shrank compared to other regions and countries, Africa has nonetheless had some extremely high-performing companies across all sectors. As GDP growth recovers in many parts of the continent, large companies have considerable potential to create value by increasing their productivity. We estimate that large companies in Africa could increase their revenues collectively by more than $550 billion by 2030 with ambitious strategies to access new markets, strengthen productivity, increase operational efficiency, and play a role in society.

Africa has potential to unlock more than $3 trillion in consumer spending—but this will take more than a growing population

Over the past decade, certain African countries, cities, and companies have been beacons of innovation, productivity, and growth. Their successes offer models for countries on the continent where growth has been less robust. Growth can help move one billion Africans across the empowerment line, defined as the means needed to achieve self-sufficiency in basic needs such as nutrition, energy, housing, healthcare, education, and other essentials.

This would swell the ranks of the 250 million Africans who are expected to join the consuming class by 2030, unlocking $3 trillion in consumer spending. Such spending creates an opportunity for businesses to offer affordable prices at scale, target expansion in growth hot spots, and innovate in local value chains. As continent-wide growth stalled between 2010 and 2019, rising incomes accounted for only 24 percent of the increase in African consumption, while population growth drove the lion’s share, a reminder of the potential embedded in Africa’s future consumption, especially if rising income levels accompany population growth.

Improving and increasing the productivity of all sectors must power Africa’s economic growth going forward. The continent is blessed with a young and vibrant population, rich natural resources, thriving cities, and emerging innovations, all assets that can be enlisted to enhance output and add value. Successes achieved at granular levels in countries, cities, and sectors offer models to reaccelerate growth. Increasing digitization, developing talent, collaborating more regionally, supporting more business champions, and building green businesses are just some of the ways Africa can increase productivity. The world needs a thriving Africa to make the transition to net zero, lessen the emerging impact of demographic decline, and give the continent its rightful place in global commerce and trade. Achieving sustainable growth from a foundation of strong productivity will increase African resilience and spread well-being and prosperity across the continent.

Source: McKinsey, June 2023

 

 

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Congo

Congo’s presidential vote is extended as delays and smudged ballots lead to fears about credibility

Voters look for their names outside a polling station in Goma, eastern Democratic Republic of the Congo, Wednesday, Dec. 20, 2023. Congo headed to the polls Wednesday to vote for president as authorities scrambled to finalise preparations in an election facing steep logistical and security challenges. (AP Photo/Moses Sawasawa)

By SAM MEDNICK and RUTH ALONGA
Updated 11:47 PM MEZ, December 20, 2023

KINSHASA, Congo (AP) — Lengthy delays at the polls forced officials on Wednesday to extend voting in Congo’s presidential election as many residents in the mineral-rich West African nation struggled to cast ballots because of steep logistical and security challenges, raising concerns about the integrity of the process.

Polling stations that never opened on Wednesday will conduct voting on Thursday, Denis Kadima, chair of the electoral commission, said on local radio.

Some 44 million people — almost half the population — were expected to vote, but many, including several million displaced by conflict in the vast country’s east, found it difficult to do so. The fighting prevented 1.5 million people from registering to vote.

At stake is the future of one of Africa’s largest nations and one whose mineral resources are increasingly crucial to the global economy. Congo has a history of disputed elections that can turn violent, and there’s little confidence among many Congolese in the country’s institutions.

Source: AP 17 December 2023

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