Economic review: 2024 and its key challenges [Business Africa]

After a tumultuous 2023 for African economies, 2024 is shaping up to be equally challenging.

2024: New Year, New Economic Challenges

The economic pace in Africa, slowed by the Covid-19 crisis and impacted by the consequences of the Ukrainian conflict, has been tested throughout 2023. As the new year approaches, the almost endemic inflation raises questions about its sustainability, prompting reflection on sectors deserving investment priority.

Rabah Arezki, economic expert and former vice president of the African Development Bank, sheds light on the challenges of 2024 in an Exclusive Interview with Business Africa.

Record US-Africa Trade in 2023

A review of US-Africa collaboration in 2023: a memorable chapter with the ratification of over 550 trade and investment agreements.

As the African population continues to grow, and its economic potential expands, the United States has shown a strong willingness to strengthen ties with the continent last year. More details with American analyst Calvin Dark.

In Search of Energy Self-Sufficiency: Challenges in Rural Communities in Congo

In the Republic of Congo, despite the proximity of pipelines, power plants, and high-tension lines, the electricity deficit persists in villages in the oil-rich region of Pointe-Noire, resulting in losses for local businesses. A report by our correspondent Cédric Lyonnel Sehossolo.

Source:  Africanews, 4th January 2024

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Ambiguous Ethiopia port deal fuels uncertainty over Somaliland statehood

The agreement accentuates historical ties between Ethiopia and Somaliland – and historical hostility with Somalia.

 

Somaliland President Muse Bihi Abdi, right, and Ethiopian Prime Minister Abiy Ahmed attend the signing of an agreement in Addis Ababa, Ethiopia, on January 1, 2024, that allows Ethiopia to use a Somaliland port [Tiksa Negeri/Reuters]

On Monday, an agreement signed in the Ethiopian capital, Addis Ababa, between Prime Minister Abiy Ahmed and President Muse Bihi Abdi of the breakaway republic of Somaliland preceded a shocking announcement that has already set the tone for interstate relations in the Horn of Africa this year.

The memorandum of understanding was for the leasing of 20km (12 miles) of Somaliland’s sea coast to landlocked Ethiopia. In exchange, Somaliland will receive shares in its neighbour’s flagship carrier, Ethiopian Airlines – and receive formal recognition as a sovereign state.

International recognition has been a long-sought goal for Somaliland, a region in northern Somalia that has enjoyed de facto independence since 1991. But the groundbreaking agreement has created shockwaves in the region and fury in Somalia, which views it as a hostile violation of Somalia’s sovereignty.

“As a government, we have condemned and rejected the illegal infringement of Ethiopia into our national sovereignty and territorial integrity yesterday,” Somali President Hassan Sheikh Mohamud said in a statement on X shortly after convening an emergency cabinet session on Tuesday. “Not an inch of Somalia can or will be signed away by anybody.”

In Ethiopia, where for much of 2023 the government stressed the economic need for a seaport and even subtly hinted at possibly invading Eritrea for access to the Red Sea, the deal is being portrayed as a victory.

But the terms of that victory differ for Ethiopia and Somaliland, and that could further complicate the situation in the coming days.

While Somaliland insists that recognition has already been agreed upon and settled, Addis Ababa has been reluctant to firmly address the matter of statehood. In a published communique, the government said it had yet to formally recognise Somaliland. But social media posts by Ethiopian Ministry of Foreign Affairs official Mesganu Arga this week appear to support Somaliland’s interpretation of the deal.

The ambiguity of the messaging continues to fuel speculation. A draft of the agreement has yet to be published, but all indications suggest that it would all but nullify a 2018 tripartite treaty cementing ties between Ethiopia, Somalia and Eritrea, details of which were similarly never made public.

Pressure or patriotism?

Ethiopian officials have been far more eager to speak of the benefits the agreement is said to have secured.

“The agreement is mutually beneficial, and Ethiopia will share military and intelligence experience with Somaliland, so the two states can collaborate on protecting joint interests,” Redwan Hussein, Abiy’s national security adviser, said at the event announcing the agreement. “To facilitate this, Ethiopia will establish a military base in Somaliland as well as a commercial maritime zone.”

Abiy hopes the agreement can help kick-start Ethiopia’s revival after a year of worsening economic woes, internal conflicts and a breakdown in relations with Eritrea. Since the signing of the two countries’ widely heralded peace treaty in 2018, which helped Abiy land the Nobel Peace Prize a year later, Ethiopia has been keen to redirect its imports to Eritrean ports.

But this has never materialised.

Source: Al Jazeera, 4th January 2024

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TotalEnergies to Review Land Buyouts in Contested Africa Projects

This photograph shows a general view of TotalEnergies’ well pad under construction inside Murchison Falls National Park in western Uganda on February 22, 2023.

PARIS — French energy giant TotalEnergies on Thursday said it had launched a review of its land acquisition practices for controversial $10-billion projects in Uganda and Tanzania slammed by environmentalists.

TotalEnergies is pushing ahead with its Tilenga drilling project in Uganda and the 1,443-kilometer (897-mile) East African Crude Oil Pipeline (EACOP) to transport it to the coast in Tanzania in the face of opposition from activists and environmentalists.

“This mission will evaluate the land acquisition procedures implemented, the conditions for consultation, compensation and relocation of the populations concerned, and the grievance handling mechanism,” the statement said, adding that it would submit its report by April.

Tilenga targets oil under the rich Murchison Falls nature reserve in western Uganda with a planned 419 wells, triggering fears for the region’s fragile ecosystem among the people who live there and environmentalists.

Drilling began in mid-2023 and production is slated to begin in 2025.

TotalEnergies, which is working with Chinese oil company CNOOC on the project, says that its 6,400-hectare acquisition plan affects “19,140 households and communities owning or using plots of land and includes the relocation of 775 primary residences.”

“To date, 98% of the households concerned have signed compensation agreements, 97% have received their compensation, and 98% of households to be relocated have taken possession of their new homes,” the company added.

Resistance to the project has rallied opponents of fossil fuel development as well as conservationists and those fearing the effect on local populations.

Human Rights Watch called in July for the plans to be halted, saying in a report that it had already “devastated thousands of people’s livelihoods in Uganda.”

The oilfield would “ultimately displace over 100,000 people,” it charged.

Four environmental groups — Darwin Climax Coalitions, Sea Shepherd France, Wild Legal and Stop EACOP-Stop Total in Uganda — filed a criminal complaint in France in September accusing TotalEnergies of “ecocide.”

A first case filed in 2019 was thrown out last year by a Paris court, while TotalEnergies says the Tanzania-based East African Court of Justice has also rejected a complaint.

Other aid groups and 26 individual Ugandans filed a further French civil case in June calling for “reparations.”

TotalEnergies said Thursday it had named Benin’s former Prime Minister Lionel Zinsou to lead its land acquisition assessment, calling him a “recognized expert in African economic development.”

Zinsou has worked with TotalEnergies in the past through his consulting company.

Source: VOA, 4th January 2024

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Oil prices edge lower with investors cautious ahead of U.S. data

Jan 3 (Reuters) – Oil prices dipped slightly on Wednesday after sharp moves earlier in the week, with investors cautious about the U.S. economy amid supply disruptions from persistent tensions in the Red Sea.

Brent crude fell 39 cents to $75.50 a barrel by 1056 GMT, while U.S. West Texas Intermediate crude futures slipped 51 cents to $69.87 a barrel.

Prices had climbed around $2 earlier in the week following attacks on vessels in the Red Sea by Houthi rebels. On Tuesday they fired two anti-ship ballistic missiles into the Southern Red Sea, though no damage was reported.

A wider conflict could close crucial waterways for oil transportation and disrupt trade flows.
“Although the supply of oil has not been affected, as reflected in yesterday’s oil price sell-off, the nervousness is conspicuous,” said Tamas Varga of oil broker PVM.

Both benchmarks ended Tuesday more than 1% down, with optimism about early and aggressive U.S. interest rate cuts also ebbing ahead of the release of Federal Reserve meeting minutes and jobs data on Wednesday.

“The market bade farewell to 2023 with a considerable liquidation of length and persisting anxiety about the geopolitical outlook failed to draw buyers back to the fore as the new year has kicked off,” added Varga.

Israeli forces intensified their bombing of the Gaza Strip on Wednesday, after the war stretched into Lebanon with the killing in Beirut of Hamas’ deputy leader.

Meanwhile, expectations of ample oil supply in the first half of 2024 have kept a lid on prices ahead of OPEC+ plans to hold a meeting of its Joint Ministerial Monitoring Committee (JMMC) in early February.

An exact date has not been decided, three sources from the alliance told Reuters.

The decision to hold the meeting in early February suggests OPEC+ is possibly growing uneasy over currently weak oil market conditions, despite voluntary cuts of 2.2 million barrels a day for the first quarter agreed in November, OANDA’s senior market analyst Kevin Wong said.

“WTI oil is likely to trade sideways in the short term between $68.90 and $72.30 a barrel (close to the downward-sloping 20-day moving average),” he added.

Ahead of weekly U.S. crude and product inventory reports, analysts polled by Reuters expected crude stockpiles fell last week, while distillate and gasoline stocks likely rose.

Reporting by Natalie Grover, Trixie Yap and Laura Sanicola; editing by Jamie Freed and Jason Neely.

Source: Reuters, 3rd Januar 2024

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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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