03 Jul

Solar power strategy to fix Togo’s electricity problem might just work

In Togo, the electricity access rate is 28% , far below the West African average of 40%. Both rural and urban households struggle not only with access but with low voltage when it is available. It has to rely on Ghana, its neighbor to the west, to supply some of its power.

However, the Togolese government hopes an ambitious “electrification strategy” will bring millions of its citizens out of the dark. Its target is for electricity to reach 50% of Togo’s 7.5 million-population by 2020, 75% by 2025 and achieve universal access by 2030.

The crux of the strategy is for solar power to serve three million people in communities where the grid would not reach—even after it’s been extended to another 800,000 households.

To achieve this, the government would partner with private investors to build 300 mini solar plants across the country and distribute solar kits to 500,000 households.

The government has also scrapped the 30% tariff on solar kits. This is in keeping with the World Bank’s recommendations on how to extend electricity to millions of Africans and forms part of Togo’s own ambitions to make renewable energy 50% of the energy mix by 2030.

Despite successes at extending electricity to many, sub-Saharan Africa remains the region with the lowest household electrification rate in the world (at 42%) and 600 million people live without it.

Collectively, the region has even less installed capacity when compared with India and China. According to the World Bank, sub-Saharan Africa needs $50 billion of investment every year to get close to achieving universal access by 2030 as envisioned by the UN’s SDG Goal 7.

There’s long been an expectation and hope that renewable energy—solar power in particular—will play a vital role in filling the huge deficit in Africa’s power generation capacity.

One challenge has been how to deliver a consumer proposition that would be affordable for some of the poorest people in developing countries, particularly in rural areas—though there are now more startups that specialize in delivering power at affordable prices.

To read the full article, click here.

 

08 Jun

A new investigation shows the scale of illicit financial flows out of West Africa

A questionable web of shell companies and tax-evasion schemes have cost West African countries millions of dollars in revenue, a new investigation shows.

West Africa Leaks, an investigative project by the International Consortium of Investigative Journalists (ICIJ) in collaboration with West African journalists, has uncovered how these practices take money out the region. ICIJ says its findings were drawn from a pool of 30 million documents, including leaked financial records.

But with Mauritius’ notoriety as a tax haven, SNC-Lavalin managed to avoid $8.9 million in taxes altogether. It set up a shell company in Mauritius “for the specific purpose of helping the engineering giant avoid tax payments,” ICIJ reports.

Documents also showed Marcel Tchifteyan, a businessman with close ties to the government in Benin Republic, has routed some earnings for his Erevan superstore in Cotonoucommissioned by then president Thomas Boni Yayi in 2009through a company in Panama to a Monaco bank account for years, avoiding possible taxes.

In Niger Republic, a $31.8-million contract to build a refrigerated slaughterhouse was signed by a “little-known” operator two months after he set up offshore companies in the British Virgin Islands in 2009. A coup d’etat in 2010 halted operations but ICIJ says it’s unclear “whether any of the earnings were ever taxed.”

Aside from the revelations from the ICIJ investigation, other high-profile incidents of illicit financial flows have come to light in recent months. Last July, a lawsuit by the US Justice Department sought to recover $144 million in assets, including a $50-million New York condo and an $80-million yacht believed to have been procured with proceeds from bribes paid for lucrative Nigerian oil contracts.

For countries typically dealing with plugging wide gaps in funding for infrastructure and capital projects, illicit flows due to corruption and tax evasion schemes have a significant effect. And it’s not just a regional problem: Last year, a report by Global Financial Integrity showed Sub-Saharan Africa remains the most vulnerable region, losing up to $69 billion in 2014 alone.

To read the full article, click here.

05 Feb

Star of Africa in 2018 Lenders’ Economic Forecasts Is Ghana

Africa’s likely star economic performer this year isn’t in much doubt, according to all three of the international lenders focusing on the continent.

Ghana’s post-election upswing now is looking so strong that the country is poised to take the lead as Africa’s fastest-growing economy this year — for the first time in at least three decades.

Expansion in West Africa’s second-biggest economy in 2018 should surpass that of recent champions Ethiopia and Ivory Coast, according to forecasts from the World Bank, the African Development Bank — both released in the past month — and the International Monetary Fund.

Commodities including oil, gold and cocoa are the mainstay of the $43 billion economy and rising crude output is boosting the nation’s finances. But a year after the government of President Nana Akufo-Addo took power, fiscal credibility, a recovery in credit growth and expansion outside the resources industry mean that the country’s standing isn’t just the result of growth slowing in Ivory Coast and Ethiopia.

“Ghana has a more diversified economy than a lot of its African peers,” Capital Economics Ltd. economist John Ashbourne said by email. “Ghana is doing very well — this isn’t just a matter of being the last man standing.”

Oil Booms

Ghana’s growth booms and busts have been closely linked to crude since it became an oil producer in 2010, when Tullow Plc started the Jubilee field. Economic growth surged to 14.4 percent the following year, and slumped to less than 4 percent from 2014 to 2016 as oil prices dropped.

What Our Economists Say

“Ghana clearly is having an oil-fueled boom at the moment but non-oil growth is yet to pick up markedly. Its high debt-servicing cost will make it challenging to lift public capital investment despite a large infrastructure deficit compared to many peers.

Ghana is the world second-largest cocoa producer, lagging behind Ivory Coast, and produces the most gold on the continent after South Africa. The government is investing in agriculture and Akufo-Addo has pledged to set up factories in each of the nation’s 216 districts to diversify the economy.

To read the full article, click here.

26 Jan

Central Bank in Africa’s Top Bitcoin Market Warns of ‘Gamble’

The central-bank governor of Nigeria, where bitcoin trading grew the most in Africa last year, said investing in the cryptocurrency is a “gamble” and hinted it may have to be regulated.

“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” Central Bank of Nigeria Governor Godwin Emefiele said in an interview on Wednesday at his office in the capital, Abuja. “We cannot as a central bank give support to situations” where people risk savings to “gamble,” he said.

Emefiele is the latest among regulators globally to express concern about bitcoin, one of the most popular cryptocurrencies, because of high volatility and a perception that it facilitates crime.

In January 2017, the central bank released a circular to lenders asking them not to use, hold, or trade virtual currencies pending “substantive regulation and or decision by the CBN.”

Still, demand for the digital currency is surging in West Africa’s biggest economy, with peer-to-peer transactions rising almost 1,500 percent this year, second only to China, according to data from LocalBitcoins.

A bitcoin wipe-out would generate the biggest losses in Russia, followed by New Zealand and Nigeria, according to a report published by Citigroup Inc. in December.

Bitcoin was little changed at $11,254 by 7:12 a.m in London compared with an intraday high of $19,511 on December 18, according to a composite of prices compiled by Bloomberg.

U.K. Prime Minister Theresa May on Thursday promised to consider clamping down on the cryptocurrency. Central banks in China and Russia have stopped local-exchange trading of bitcoin.

“I have asked my colleagues in the research and monetary-policy department to study the market and get to know what the issues are,” Emefiele said. The central bank may in future “make some very concrete pronouncements as to the direction,” he said, without giving details.

03 Jan

Top five trends that will drive Africa’s private equity market in 2018

While the rest of the world battles a series of economic and political difficulties, Africa is looking forward to a year of growth and increased private equity investment.

For a general view on the likely global trends in the private equity market in 2018, we need look no further than the developments of the past few years. As growth rates around the world declined, Africa and other emerging markets took on ever-greater significance, and are now pivotal in global private equity activity.

According to Quantum Global’s Africa Investment Index, in 2015, the top five African investment destinations – including Botswana, Morocco, South Africa and Zambia – collectively attracted foreign direct investment of $13.6bn. This was a testament to international players’ growing interest in the continent.

It is true that some of the world’s developed markets will return to growth in 2018, and private equity investors will turn their attention towards them once more. However, Africa’s long-term growth and increasingly transparent and stable geopolitical and economic landscape will continue to support the expansion of private equity across the region.

Private equity has also taken on a greater share of public sector financing in developing markets. Some of Africa’s largest economies have ventured into their first ever public-private partnerships (PPPs), and interest from limited partners and general partners has grown significantly over recent years.

However, the importance of private equity in Africa’s economic development is underpinned by an annual funding gap of around $100bn in the region, along with a soaring youth population. Private equity has also helped to drive much-needed development of the region’s capital markets, which are slowly maturing.

1 – Increased deal flow

Despite political uncertainty in countries such as Zimbabwe and South Africa, there is significant deal appetite and interest in quality assets in Africa. Further north and west, democratic elections have passed in multiple countries, including Angola, which saw its first transfer of power to the opposition party since peacetime in 2002. This should provide investors in those countries with much greater confidence than in previous years.

Deal flow remains high and, given the region’s economic growth, is likely to remain so in 2018. The challenge is one of quality and bankability: management in Africa remains complex for financial, structural and political reasons. These complexities are inherent in all developing markets and will continue in 2018 and beyond. Growth trends in 2018 will demand that general partners deploy highly specialised teams with expertise in specific sectors, in addition to a deep understanding of African markets.

2 – Economic recovery in West Africa

Improvements in commodity prices combined with the region’s expected economic recovery will drive further investment in West Africa. Nigeria and Angola will benefit from analysts’ forecasts that oil prices will rise to around $58 per barrel in 2018, easing public expenditure pressures. Private equity investors and other state players, such as China, will also benefit from a potential uptick in public sector spending on important infrastructure works, and we may see greater appetite for PPPs and general private capital in government-led projects.

GDP figures also recovered across most of West Africa in 2017, and in some cases are forecast to surge in 2018. The IMF’s most recent World Economic Outlook (released in Q3 2017) has projected growth of almost 9% for Ghana in 2018, with an overall rise of around 3.4% for sub-Saharan Africa.

3 – Improved global liquidity conditions

With projected higher oil production and oil prices predicted to rise throughout 2018, foreign exchange liquidity rates are also expected to grow globally. Private equity in Africa will therefore offer a much higher rate of return compared with cash and fixed income assets.

Around the world, borrowing rates and inflation remained stable throughout 2017. This was also the case in many parts of Africa – even in countries that struggled with low forex reserves and the slump in oil prices. Some of the region’s biggest economies, such as Angola and Nigeria, have reined in spending and demonstrated fiscal restraint, including introducing currency controls. These measures have contributed to greater liquidity.

4 – Nigeria attracting more investments

With the value of Nigeria’s economy projected to grow to $650bn by 2022,medium to long-term prospects look optimistic, with solid fundamentals underpinning growth expectations, particularly in the non-oil sectors of the economy. However, the country also faces an $878bn infrastructure investment gap between now and 2040. This figure (which pertains only to infrastructure) is based on forecasts of an annual GDP rise of 4.1% and a population that is rising by 2.4% per year at current trends.

5 – Chinese asset diversification

The slowdown in China’s economy is likely to lead to Chinese investors further exploring opportunities in emerging markets like Africa. Such investors are also likely to pursue increased collaboration with credible private companies and institutions. China has a track record of investing across diverse asset classes in Africa, particularly in infrastructure: as far back as the 1970s, China helped to build one of Africa’s longest railways, the 1,860km TAZARA Railway from Tanzania to Zambia. China is already investing heavily in diverse asset classes across the continent, including Angola’s first ever PPP. The inherent Chinese appetite for diverse assets in Africa spells good news for African governments, many of which have redoubled their efforts towards major infrastructure works over recent years.

As we look ahead to 2018, there is clear evidence that the global economy is improving, even though there are new geopolitical issues on the horizon: namely Brexit, the Chinese slowdown and Middle Eastern security concerns. Despite these issues, Africa faces a year of growth, and will continue to act as a promising destination for private equity investors.

Source: How We Made It in Africa

14 Dec

Arab States Commit to Backing West African Anti-Terror Force

Arab countries pledged more money and five West African countries said they’d accelerate efforts to get a joint anti-guerrilla military force up and running as they met Wednesday near Paris at the invitation of French President Emmanuel Macron.

Saudi Arabia will contribute 100 million euros ($118 million) and the United Arab Emirates 30 million euros to the so-called “G5 Sahel” force, Macron said. The U.S. confirmed its commitment to spend $60 million on the force being put together by Niger, Chad, Mali, Burkina Faso, and Mauritania to combat Islamic militants across the southern rim of the Sahara.

“We must win this battle against terrorism in the Sahel,” Macron said at a press conference after the meeting, held in the Paris suburb of Celles-Saint-Cloud. “There are attacks every day and states are under threat. We must intensify efforts.”

The talks, which were also attended by German Chancellor Angela Merkel and Italian Prime Minister Paolo Gentiloni, as well as by representatives from Belgium, Spain, and the U.S., were described by French officials as a “give-give’ meeting where outside countries would show more support and the Africans would accelerate efforts to have the force operational by mid-2018. The project was originally intended to have 5,000 men, but Niger today committed another two battalions, or roughly 1,600 men.

Defending Bamako

France intervened in Mali in early 2013 to successfully push back Islamic militants who were marching on the capital Bamako. But the defeated forces spread across the region, where desert borders are often porous and have continued to carry out deadly attacks.

France has 4,000 special forces in the region as part of its “Barkhane” mission, and six months ago pushed for the creation of the G5 force to lighten its load. While the missions will be kept separate, the French say they will provide support and air cover for the Africans. The Sahel force will also be able to rely on logistical support from the United Nation’s 12,000-strong Minusma peacekeeping operation in Mali.

To read the full article, click here.

22 Aug

West Africa: Morocco’s Controversial Plan to Strengthen Ties With West Africa

ECOWAS

Morocco is launching a charm offensive as the kingdom seeks to expand its influence in West Africa by joining the economic union ECOWAS. But Nigeria is reluctant to see Morocco join as it stands to lose power.

Morocco’s King Mohammed VI is making his country’s membership application to the Economic Community of West African States (ECOWAS) a top priority. Earlier this year, he visited Ghana, Ivory Coast, Guinea and Mali to promote his cause.

At its June summit in Monrovia, ECOWAS confirmed that Morocco’s membership was possible, at least in principle.

Back in January, Morocco had rejoined the African Union after 33 years. Since then, the king has been busy signing dozens of bilateral trade agreements with other African countries.

In recent years, at least 85 percent of Morocco’s direct foreign investment went to African countries. In 2016, it was the largest African investor on the continent, to the tune of $8 billion (6.8 billion euros). Of this, $2.7 million went to Ivory Coast alone.

However, trade with Africa overall is stagnating: In 2015, just 1.4 percent of Morocco’s imports and 7 percent of its exports were traded with sub-Saharan Africa. If Morocco were to join ECOWAS as a full member, it would have access to the 15-member free market.

A ‘win-win’ situation

From an economic standpoint, there is nothing preventing Morocco from achieving ECOWAS membership – the country is far better off than most other members in this regard. According to the economic community’s constitution, geography is also not a criterion to exclude the North African country.

Christoph Kannengießer, the chief executive officer of the German-African Business Association, says it’s a win-win situation: “ECOWAS will not be weakened by an economically strong country such as Morocco, and as an ECOWAS member, Morocco would be better able to fulfill its desired role as a bridge between Africa and Europe.”

However, before Morocco can formally join ECOWAS, the organization says the political, economic and social implications should be thoroughly considered. Although it is primarily considered an economic-based group, members of ECOWAS also aim for political integration. Morocco and ECOWAS already have opposing views on important issues: ECOWAS recognizes Western Sahara as an autonomous state, while Morocco believes the annexed region is a legitimate province of its kingdom. Although the June summit openly discussed the possible membership of Morocco, King Mohammed VI did not attend due to the presence of Israel’s Prime Minister, Benjamin Netanyahu. The Moroccan government explained the monarch’s absence by saying that Morocco had no official diplomatic relations with Israel.

Searching for new allies

Morocco is currently a member of the Arab Maghreb Union (AMU). However, economic and political disagreements – especially between Morocco and Algeria – have prevented the group from making any real progress. No major meetings have taken place since 2008.

In addition, the economy of Morocco’s most important trading partner, the European Union (EU), is faltering. New allies and new markets for Moroccan products are needed – and with a combined population of 350 million, ECOWAS could turn out to be the perfect partner.

“The Moroccans are pursuing a double-edged political strategy,” Kannengießer told DW. On the one hand, the country is seeking a privileged relationship with Europe. On the other hand, it is also trying to strengthen its integration with other countries on the African continent.

“The Moroccans know that the African continent, especially West Africa, is an important region of growth, not only from an economic perspective, but in terms of political influence as well,” he says. He says it is necessary to discuss whether economic intergration necessarily leads to political integration.

‘An attack on Nigeria’

However Nigeria, the strongest economic player in ECOWAS, is reluctant to see Morocco receive membership. A number of interest groups have already lobbied the government in Abuja, calling on it to try and stop the North African country’s admission.

Nigeria currently makes up more than two-thirds of ECOWAS’ economic power. If Morocco were to join, it would become the second-strongest member, with more economic clout than Ghana, Ivory Coast, Senegal and Mali combined.

“Morocco’s accession to ECOWAS is clearly an attack on Nigeria and its strategic position in West Africa,” says former Nigerian Foreign Minister Bolaji Akinyemi. He argues that supporters of Morocco’s candidacy want to weaken Nigeria’s influence in the region and that in the event of its accession, Nigeria should leave ECOWAS.

“I don’t think ECOWAS would survive that,” says Akinyemi. In order not to jeopardize economic cooperation, he instead recommends the development of bilateral agreements between Nigeria and Morocco.

“I think that economic pragmatism will play an important role in Nigeria as well,” says Kannengießer.

He says he can imagine several possible outcomes of Morocco’s application to ECOWAS, including full membership, privileged integration status or even simply observer status as an interim solution.

“But perhaps the whole thing could fail in the event of Nigeria’s veto,” he added.

Source from allAfrica

26 Jan

Loopholes in Mali’s Export Tax Regime make it a Magnet for the Illicit Trade of Gold in West Africa

Mali’s taxation practices applicable to gold exports have turned the country into West Africa’s illicit gold trading hub, Partnership Africa Canada (www.PACweb.org) said in a report published today.

The report, The West African El Dorado: Mapping the Illicit Trade of Gold in Côte d’Ivoire, Mali and Burkina Faso, investigates challenges in the governance of artisanal gold mining in the three countries—and the vulnerabilities posed by the illicit trade of gold on the region.

The investigation finds that all countries have taken important steps towards encouraging legal trade of artisanal gold—a sector which employs an estimated three million miners in Côte d’Ivoire, Mali and Burkina Faso—such as the harmonization of export taxes at 3%. Yet, Partnership Africa Canada found that Mali’s application of export taxes to only the first 50kg of gold per month is promoting smuggling, as traders bring gold over the border into Mali to get a large tax break.

“Mali’s harmful implementation of tax laws is cause for concern in the region, as it actively drives the illicit trade of gold. Mali’s neighbours are missing out on important revenue from taxes as traders smuggle gold over borders to take advantage of the tax break,” said Joanne Lebert, Partnership Africa Canada’s Executive Director.

“Importantly, export statistics from Mali are painting a worrying trend and it is up to international refiners and buyers to exercise additional due diligence on gold exported from the country to ensure the gold is clean,” added Lebert.

An analysis of gold production and trade statistics in Mali, as well as declared imports from the United Arab Emirates of Malian gold spotlighted major inconsistencies in the declared data. Over a four year period, UAE imports of Malian gold successively exceeded Mali’s entire gold production. Mali declared 40 tonnes of gold produced in 2013—while UAE declared 49.6 tonnes imported. In 2014, the figure rose with Mali declaring production at 45.8 and UAE declaring 59.9 in Malian gold imports.

Since much of Mali’s industrial production is exported to Swiss and South African refiners, Partnership Africa Canada found little explanation for the discrepancy. The extent of the illicit gold trade in Mali raises concerns about regional peace and stability and highlights the need for refining centres to exercise additional due diligence on imports.

Partnership Africa Canada calls on Mali to undertake a comprehensive review of its tax regime to address the loopholes that make it magnet for gold produced in West Africa. Additionally, the report calls on the Dubai Multi-Commodities Centre in the UAE to ban hand-carried imports of gold and demonstrate greater oversight over gold imports.

The report also calls on gold producing countries in West Africa to harmonize policies and practices in the gold sector through a Regional Approach, similar to that currently being implemented in the Mano River Union on diamond governance.

Distributed by APO on behalf of Partnership Africa Canada (PAC).