African Business 2021

AFRICA OVERVIEW De

AFRICA OVERVIEW De Beers’ Jwaneng mine in Botswana produces a quarter of the world’s annual diamond supply by value . Credit: De Beers no tariffs, there is great symbolic importance in the implementation of the agreement. Problems remain with the movement of people and certificates of origin, and the more likely trend will be for regional economic communities (RECs) and large countries within RECs to accelerate steps towards integration. Large infrastructure projects such as rail and energy corridors that traverse the continent could be game-changers. Regional corridors are intended to boost intra-African trade. The North-South Corridor in the Southern African region runs through 26 countries and ends at the Port of Durban. Ten corridors are being developed across the continent to make the movement of goods easier and to improve access to ports. Central to future of the AfCFTA is the degree to which African states and regions can integrate. A first Africa Regional Integration Index was published in 2016 and a second (ARII 2019) was published by the Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC). The report’s conclusion is that a great deal still needs to be done to integrate regional economies, with the average country score being recorded as 0.327 out of 1. Even the most integrated country, South Africa, scored just 0.625 out of 1. Scores are allocated across five areas: trade, productive capacity, macroeconomic policy, infrastructure, and free movement of people. The index also covers intellectual property, competition policy, investment and digital trade which are critical to the successful negotiations of Phase II and III of AfCFTA. By allocating scores, the index allows progress to be plotted. In early 2020, the Development Bank of Central African States (BDEAC) made progress on integration by signing off on projects worth 3-million for Cameroon, Congo, Gabon and Equatorial Guinea. The linking of the electrical grids of Equatorial Guinea and Gabon are the two most obvious integration-themed projects but others in the fields of agro-industry and microfinance are also relevant. Tanzania Zambia Railway Authority, popularly known as TAZARA, is a bi-national railway linking the Southern Africa Regional transport network to Eastern Africa. The Southern African AFRICAN BUSINESS 2021 8

AFRICA OVERVIEW Development Community (SADC) has been active with multimodal projects such as the development corridors of Nacala, Maputo and Lobito (Zambia to Angola). There are many infrastructure investment opportunities that can boost trade. Among the initiatives of the Programme for Infrastructure Development in Africa (PIDA) is the West Africa Hub Port and Rail Programme, a regional hubport, rail-linkage and port-expansion plan. Kenya’s -million Naivasha Dry Port project supports this plan. Investing in infrastructure The African Union’s Agenda 2063 lays out ambitious goals for the continent. The flagship projects designed to achieve these goals cover infrastructure, education, freedom of trade and movement of people, arts, culture and technology. The projects are: • Integrated high-speed train network. • Formulation of an African commodities strategy. • Establishment of the African continental free trade area (AfCFTA). • The African passport and free movement of people. • Silencing the guns by 2020. • Implementation of the Grand Inga Dam (hydropower) Project. • Establishment of a single African air-transport market (SAATM). • Establishment of an annual African economic forum. • Establishment of African financial institutions. • The pan-African e-network. • Africa outer space strategy. • An African virtual and e-university. • Cybersecurity. • An African virtual and e-university. • Great African museum. • Encyclopaedia Africana. The African Development Bank Group comprises the African Development Bank, the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). The AfDB is a key funder of infrastructure projects and has set itself a set of goals known as the High Five: light up and power Africa; feed Africa; industrialise Africa; integrate Africa; and improve the quality of life for the people of Africa. The bank’s African Economic Outlook 2019 highlights energy and infrastructure as key areas for investment. If Africa is to prosper, infrastructure has to be improved and built. The Emerging Africa Infrastructure Fund (EAIF), which forms part of the Private Infrastructure Development Group (PIDG) and is managed by Ninety One, encourages and mobilises private investment in infrastructure. PIDG is funded by donors from seven countries (UK, Switzerland, Australia, Norway, Sweden, Netherlands, Germany) and the World Bank Group. Power plants in Togo, Ivory Coast and Uganda are typical examples of the types of projects supported by the EAIF. Having been involved in the establishment of a first fertiliser plant for Indorama Eleme at Port Harcourt in Nigeria, the fund is now also a participant in a .1-billion expansion project which will double the company’s annual output to 2.8-million tons. South African firm Futuregrowth Asset Management manages the largest debt fund of its kind in Sub-Saharan Africa, the Futuregrowth Infrastructure and Development Bond Fund, which has a market value of more than R15-billion. On the energy front, one of the AfDB’s projects, the Desert to Power Initiative in the Sahel region, will bring power to 250-million people who were previously unconnected. One way of fast-tracking the provision of energy to remote regions is through minigrids. Recognising that raising funds for minigrids can be tricky, the AfDB has approved a -million grant from the Sustainable Energy Fund for Africa (SEFA) to create a funding infrastructure for a sector that is in growing despite the challenges. The Africa Minigrid Developers Association (AMDA) comprises 29 private companies that are active in rolling out minigrids in 12 countries. ■ 9 AFRICAN BUSINESS 2021