All posts by Michael Patotschka

BRICS expansion: five countries join ranks

Saudia Arabia, Egypt, the United Arab Emirates, Iran and Ethiopia joined the ranks of the BRICS group on Monday, January 1.

The five countries were to join the group in August 2023 at the 15th BRICS summit in Johannesburg, South Africa. Argentina was also invited but backed out at the end of December.

The BRICS group of emerging countries was formed in 2006 by Brazil, Russia, India and China, with South Africa joining in 2010.

It has since become an important platform for cooperation among emerging markets and developing countries. The doubling of its members on Monday is aimed at increasing the group’s clout on the global stage.

Global expansion

The newly expanded BRICS has a combined population of about 3.5 billion people, with a combined economy worth over $28.5tn or about 28% of the global economy

The group’s growth could mark a shift in the geopolitical landscape, although analysts remain uncertain as to whether the expansion will be a help or a hindrance to BRICS members.

Some experts say that differences within the group could weaken decision-making and BRICS’ power overall.

However, BRICS countries are hoping that the expansion will lead to greater representation for emerging economies and a chance to move away from reliance on the US dollar.

In August last year, Brazil’s president called for BRICS nations to adopt a common currency for trade and investment between each other.

Russia’s presidency

Russia took over the BRICS presidency on Monday, following on from South Africa’s chairmanship in 2023.

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Under the motto “Strengthening Multilateralism for Equitable Global Development and Security”, Russia will hold the chair for one year and will host the BRICS annual summit in Kazan in October.

Russian president Vladimir Putin has said he plans to increase BRICS’ role in the international financial system and will “spare no effort to ensure that […] we facilitate the harmonious integration of new participants” in activities.

Source, Africanews, 2nd January 2024

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Félix Tshisekedi: DR Congo’s re-elected president

At the beginning of his first term in office in 2019, Congolese President Félix Tshisekedi vowed to make his country “the Germany of Africa”.

He promised to grow the economy and create jobs for the people, in a country with massive resources but whose population was living in poverty.

In his first four years in power, he did not achieve his ambitious goal of transforming such a vast country, but now he has a second chance after he was declared the winner of a chaotic election. He is due to be sworn in for a second term on 20 January.

Mr Tshisekedi first came into power in unusual circumstances.

He was declared the surprise winner of a disputed presidential election, which some, including the influential Catholic Church, had challenged.

His main rival Martin Fayulu alleged that outgoing President Joseph Kabila had engineered a secret deal for Mr Tshisekedi to succeed him – charges that were strongly denied.

Mr Fayulu and other opposition candidates have also said the 2023 election was marred by fraud and demanded a rerun. The electoral commission has dismissed such claims as sour grapes.

Until a few years before the 2018 election, Mr Tshisekedi was largely untested in high-level DR Congo politics.

He was more known for who he was related to – he is the son of the veteran late opposition leader Étienne Tshisekedi.

He however did not simply cash in on his father’s name and was immersed in politics from a very young age, and worked his way up through the party ranks.

He also had to suffer the consequences of his father’s political activism.

When Tshisekedi senior founded the Union for Democracy and Social Progress party (known by its French initials UDPS) in 1982, the family was forced into internal exile in their home town in the central Kasai province.
ETIENNE TSHISEKEDI, LEADER OF THE U.D.P.S. IN PARIS

Étienne Tshisekedi founded the UDPS in 1982, turning it into the country’s largest opposition party

They stayed there until 1985, when Étienne Tshisekedi’s long-time rival, autocratic leader Mobutu Sese Seko, allowed the mother and children to leave.

Félix Tshisekedi then moved to the Belgian capital, Brussels. After completing his studies there he took up politics, working his way through his father’s party to become national secretary for external affairs for the UDPS.

His father’s former chief of staff, Albert Moleka, told the BBC in 2019 that Mr Tshisekedi “made powerful friends and allies among the diaspora there, but he was sometimes overlooked – and so it wasn’t easy for him”.

Mr Tshisekedi’s inauguration in 2019 inspired some hope, as it was the first peaceful transition of power in the country since independence in 1960.

At his swearing-in ceremony, he told the crowds that he wanted to “build a strong Congo, turned toward development in peace and security – a Congo for all in which everyone has a place”.

Mr Tshisekedi said he would make the fight against poverty a “great national cause”, reduce unemployment and tackle corruption.

In his first term, President Tshisekedi introduced free primary schooling, with enrolment increasing by more than five million students.

The programme has however been criticised for the overcrowding of classrooms in some areas, while teachers remain poorly paid.

The president also introduced free health services for mothers giving birth in preselected heath centres and hospitals in the capital, Kinshasa, which he has promised to extend to the rest of the country if he is re-elected.

He has pushed for a review of the country’s mining contracts with China so it can keep a larger share of its vast mineral wealth.

In a state of the nation address last month, he said the economy had improved, with the national budget having grown nearly three-fold from $6bn (£4.7bn) at the beginning of his tenure to $16bn this year.

We have come a remarkable way since 2020, overcoming the challenges posed by the pandemic to achieve rates of economic growth that inspire confidence in the future,” he said.

In spite of the growth, many Congolese have been complaining about the depreciation of the Congolese franc which is having a serious impact on their daily lives.

Despite its vast mineral wealth and huge population, life has not improved for most people, with conflict, corruption and poor governance persisting.

In his re-election campaign, he made some of the same promises he made five years ago, such as creating more jobs, making the economy more resilient and promising to tackle the insecurity that has wracked the east of the country for three decades, leading to the deaths of millions of people.

Supporters of the incumbent president President Felix Tshisekedi gesture in the rain prior to his arrival for a campaign rally in Goma, capital of North Kivu province, eastern Democratic Republic of Congo, on December 10, 2023.

Mr Tshisekedi’s supporters point to his investment in schools and healthcare

Much of the country’s natural resources lie in the east where violence still rages despite Mr Tshisekedi’s attempts to deal with the situation by imposing a state of siege, ceasefire deals and bringing in regional troops.

These included a force from the East African Community, which DR Congo joined last year, hoping to improve trade and political ties with its eastern neighbours.

However things have not worked out as planned and Mr Tshisekedi has ordered them to leave, saying they had been ineffective. He has said he wants to replace them with troops from a different trade bloc of which DR Congo is also a member – the Southern African Development Community (Sadc).

But there is little sign of them coming any time soon.

Mr Tshisekedi has also demanded the end of the UN peacekeeping mission in DR Congo. After more than two decades, it will take some time for the thousands of troops to leave, but it has raised fears of a security vacuum as the army is in no position to take on the numerous rebel groups which operate across eastern DR Congo on its own.

DR Congo’s membership of the EAC is complicated by the fact that Mr Tshisekedi, as well as UN experts, say fellow member Rwanda is backing one of the most active rebel groups in eastern DR Congo, the M23.
Rwanda’s government has strongly denied this but it has led to a souring of relations between Mr Tshisekedi and his Rwandan counterpart, Paul Kagame, that has defined the end of his first term.

It was not always that way. At the beginning of his term, Mr Tshisekedi initially tried to mend relations with neighbouring countries including Rwanda.

In a surprise gesture, he invited President Kagame to the funeral of his father in May 2019.

In the latter years of his presidency, however, the relationship has become so frosty that Mr Tshisekedi recently compared Mr Kagame to Germany’s World War Two dictator.

While addressing a campaign rally in Bukavu, close to the Rwandan border, Mr Tshisekedi last week said of Mr Kagame: “I promise he will end up like Adolf Hitler.”

Hitler, responsible for the deaths of millions, including six million Jewish people in the Holocaust, ended up taking his own life in a bunker in the German capital, Berlin, in 1945.

The Rwanda’s government described the Congolese president’s comments as “a loud and clear threat”.

In his final rally before the election, he even vowed to declare war on Rwanda if he was re-elected. While he was hoping to whip up nationalist sentiment, most Congolese will be hoping he does not follow through on this pledge.

They would prefer him to stick to his previous goal of creating jobs and transforming the economy, even if turning the country into the “Germany of Africa” remains a distant dream.

Source: BBC, 31st December 2023

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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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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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