African Union Summit Concludes with Pledge to Work for Welfare of African People

Egyptian President Abdel-Fattah al-Sisi on Monday wrapped up the 32nd African Union (AU) summit of heads of state and government at the AU headquarters in Ethiopia’s capital, Addis Ababa, with a pledge to work for the welfare of African people.

Al-Sisi, who took over the rotating one-year-term AU chairmanship from Rwandan President Paul Kagame, said that over the next one year he would energetically work toward achieving the goals set by the AU during the summit. These include putting into force the Africa Continental Free Trade Area (AfCFTA), efforts to reform the UN Security Council, rehabilitation of refugees and Internally Displaced Persons (IDPs) and providing employment to the continent’s large young population.

The AU revealed on Friday that various conflicts across the African continent have left 20.8 million people displaced.

“The 32nd AU summit theme on refugees and IDPs showed how the displacement of people can create social, security, political and economic challenges in the continent, hence this will be my focus in the next one year,” said al-Sisi.

The Egyptian president outlined a vision of economic integration in Africa that he said can be a solution to the multifaceted problems facing the continent.

On top of his list of African economic integration schemes is the AfCFTA, which is expected to formally start operations during the next AU summit in Niamey, capital of Niger, in July.

“Many African countries are already grouped under Regional Economic Communities (RECs), my chairmanship will focus on how RECs can be a vehicle to achieve wider continental economic integration,” said al-Sisi.

“The start of operation of AfCFTA will not just ease movement of goods across African borders, but also facilitate the movement of African brainpower across the borders of African countries, adding social importance on top of political and economic benefits,” he added.

Al-Sisi said he will also focus on relatively new challenges the continent is grappling with including climate change and terrorism.

“We need to have plans that match with the scope of challenges terrorism and climate change pose to the continent. As such, during my period I will focus on mechanisms to fight climate change and ways to achieve AU’s silencing the guns by 2020 initiative,” said the Egyptian president.

“I will in particular vigorously fight the terrorism threat in the continent, that have left large areas of Africa suffering from political, social, economic and security problems,” he further said.

Al-Sisi also said the 32nd AU summit had established an agency for medicine, a center for women’s and girls’ education and other instruments intended to achieve a holistic approach to Africa’s numerous challenges.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Africa in 2019 Outlook Conference Highlights: Part 2

This is a continuation of the highlights from Deloitte’s Africa in 2019 Outlook Conference that recently took place in Johannesburg, South Africa. To read our first article on the conference, click here.

Free trade in Africa – How will the AfCFTA play out?

As one of the flagship projects of the African Union’s Agenda 2063, the African Continental Free Trade Area (AfCFTA) aims to create a single market economy to enable the free movement of goods, which may see over one billion people benefit from a combined GDP of almost US$3.3trn. Yet, with 49 countries having signed the consolidated AfCFTA agreement and only 18 out of the required 22 countries having ratified the agreement, Africa’s development impasse may be the result of a number of factors.

Political will

Political will is fundamental to achieving free trade across the African continent, as there needs to be a concerted effort from governments and politicians to drive regional free trade. If AfCFTA follows through with its mandate, it could have the potential to unlock value for companies such as the Mr Price Group, whose operations in 13 African countries may benefit from the logistical and manufacturing capabilities that a unified region would expose the South African-based retailer to. However, engagements between corporates and government are largely characterised by bureaucratic inertia, making it difficult to enable integration. In order to drive substantive outcomes, AfCFTA will require stakeholders to facilitate and stabilise economic growth across the continent.

Infrastructure and logistics

Africa’s infrastructure deficit remains a primary constraint to growth, and so too the resultant high costs of logistics. Although logistics is paramount to AfCFTA, its scale requires significant infrastructure investment and development across the continent, in order to drive structural reform. Infrastructure upgrades will facilitate more efficient trade between countries and across regions. The improvements will also provide an opportunity for countries to leapfrog to new efficient technologies, for investors to expand and diversify their customer base. Engagements with policy-makers and stakeholders will thus be fundamental to ensure infrastructure development across these markets.

Cost of doing business

The cost of doing business across African markets can be as high as 25% to 60% for certain products or services, as the costs associated with logistics, duties and permits tend to be much higher than those in developed economies. Investments in commodity dependent countries such as Nigeria are often characterised by high costs such as logistics, duties, electricity and dollar-funded property developments, which continue to stunt development prospects. With the grander political project of AfCFTA being the African monetary project, achieving regional financial integration and a regional monetary union will strengthen the continent’s bargaining power with global investors.

China in Africa

The presence of Chinese investment in Africa has driven infrastructure development, paving the way for new investments across the continent. Initiatives such as the Belt and Road Initiative (BRI) – a global infrastructure development and integration project spearheaded by China – has had notable influence on the role of trade and development finance across the continent. The Chinese currency, the renminbi, has the potential to challenge the US dollar when it comes to the terms of payments for projects or business across the continent. The People’s Bank of China, is expected to facilitate further engagements with African central banks in this regard; but whether the Chinese currency will supplement the US dollar on the continent any time soon, remains to be seen.

Free movement of labour

Trading talent and skills is the low hanging fruit of the broader AfCFTA project, and companies will need to be ambitious in order to drive this growth forward. The skills-export economy will remain fundamental to gearing African economies for growth, as migration will have a significant bearing on boosting the economic integration of Africa. AfCFTA has the potential to unlock value on the continent, contributing to the broader African economy. However, gauging the appetite from African governments, more so those in the economic nodes of the continent, including Nigeria, South Africa, Kenya and Ethiopia, will determine the success of the project in the long term.

A view on Africa’s economic and fiscal outlook in 2019

Political tensions continue to plague African economies in 2019, fuelling further speculation their economic prospects. According to the AfDB, GDP growth on the continent is projected to be 4% in 2019 and 4.1% by 2020. Key elements affecting Africa’s economic and fiscal outlook include the following:

Global economic growth

Global economic growth will underpin the development prospects of countries in Africa, however, the slowdown in China, which was supported by the announcement of a fiscal stimulus, is expected to have undue repercussions on the global economy. Moreover, the consequences of political uncertainty in the US will filter through to emerging markets. Similarly, the impact of Brexit as well as the European sovereign debt crisis are expected to underpin the demand and supply prospects from global markets in Africa.

Banking and financial inclusion

Over the past few years, banks have built up their capital buffers to maintain a solid funding base. In East Africa, this has deepened financial inclusion. However, banks in the region will have to align with international best practises and adopt provisions to support the rise of mobile banking. The increase of remittances has had a significant impact on financial stability within SSA banking systems, and in 2019 remittance growth is expected to continue. However, given that the region is affected by contrasting dynamics such as geopolitical risks and trade tensions, these will need to be addressed to determine the financial conditions of these states. Together with rising government debt, these factors will continue to put pressure on banking systems. Banking penetration in the rest of Africa remains low. As it stands, the ratio of banking assets to GDP is under 70%, while in South Africa it is 117%. Although the potential exists to grow this base, there are a number of constraints.

Size: The SSA banking sector is dominated by smaller banks, but in order to achieve scale and drive financial investments, larger banks will need to participate in stimulating financial inclusion. The influx of global players investing in micro enterprises will scale up inclusion in the banking sector.

Access to funding: When it comes to banks, size matters; and the bigger the bank, the more capacity they have to support consumers that do not have access to formal markets. PanAfrican banks have the capacity and strategies to tap into these markets and create new opportunities to promote inclusive growth. Private equity funds will continue to back financial inclusion initiatives across the continent.

Fiscal consolidation

Government finances have been affected by low commodity prices, and for commodity-dependent economies, this has seen the escalation of government debt. However, government guarantees to ailing state-owned enterprises need to be stabilised in order to close fiscal deficits.

South African elections

As South Africans approach the general elections in May, investors will be looking to the president to affirm the South African Reserve Bank’s (SARB) mandate. While investors have regained confidence in the South African economy, the consolidation of cabinet to reduce the expense of civil service and government finances is being scrutinised by credit rating agencies. However, a 2019 Investec GDP growth forecast of 1.9% anticipates that better governance will continue to pull through to aid domestic policies. While 2019 is expected to be a better year for South Africa, with minimal concerns of a further ratings downgrade, there needs to be an improvement on the country’s fiscal outlook to mitigate risks such as unforeseen increases in expenditure to fund infrastructure projects, rising government debt and political uncertainties.

To read the conference report, click here.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Africa in 2019 Outlook Conference Highlights: Part 1

Deloitte recently hosted the 2019 Africa in 2019 Outlook Conference in Johannesburg, South Africa. A focus area was how Africa can improve on its ability to execute economic growth. Our Director, Rene Stegmann, attended on behalf of Relocation Africa. Below are some highlights from the conference.

US-Africa strategy countering China

At the end of 2018, United States (US) National Security Advisor John Bolton unveiled the Trump administration’s new Africa strategy. Known as the Better Utilization of Investment Leading to Development (BUILD) Act, the policy move aims to ensure US competitiveness on the continent where extensive engagement has already been made by China. How this geostrategic competition between two great powers plays out for the continent is a key question.

Growing debt in Africa

African economies have witnessed rising debt levels as the continent continues to make use of borrowed funds to finance infrastructural development. With a significant sum of financing flowing from China, the average debt-to-GDP ratio on the African continent has risen to 57%. What is important, however, is not the amount, but the serviceability of the debt in question. African economies need to ensure that acquired infrastructure is used productively to create returns that can service the debt from which such infrastructure originated.

The year of politics

In 2019, 24 countries across the continent will hold a major election (presidential, general, legislative), which is significant given that the economies of frontier markets tend to be influenced by domestic politics. The outcomes of these elections will shape the future for many economies on the continent.

Nigeria and South Africa – will 2019 be a year of structural reform?

Nigeria and South Africa, two of Africa’s largest economies currently experiencing “structural limbo”, are in need of renewed growth drivers. It remains to be seen whether or not the requisite political will exists to reinvigorate growth in both economies.

Ethiopia

Referred to as the “African miracle” Ethiopia’s leadership has undergone significant restructuring to ensure that the economic changes currently taking place are supported by new political thought and leadership. Growth in Ethiopia has been driven by investment in fixed capital, giving rise to powerful domestic industries responsible for job creation. The future development of Ethiopia poses an interesting case study for the continent. Looking forward, 2019 is set to be the year of uncertain sentiment, most notably due to global trade tensions and protectionist strategies and their potential effect on the global economy. However, not all global crises are felt equally across geographic regions, as was the case with the 2008 global financial crisis.

Private capital as a force for development in Africa

Productive infrastructure is vital for development to take place in Africa, however, access to funding continues to be a significant issue facing multiple economies across the continent. According to figures published by the African Development Bank (AfDB), infrastructure needs across the continent amount to US$130bnUS$170bn a year, with a corresponding funding gap in the region of US$67.6bn-US$107.5bn. Furthermore, tightening fiscal conditions across the continent mean that the existing funding gaps will not be covered by government expenditure, placing infrastructure investment under stress. The introduction of private players in the infrastructure funding space, however, has been a significant development, particularly where infrastructure is concerned in countries in need of growth.

Intra-African trade – trade between African countries – currently accounts for 18% of overall trade on the continent, indicating the high degree of opportunity that still exists for the further integration of African economies. To this end, it is paramount that the necessary funding is available to develop African economies as well as support their ability to trade with each other. While private capital can be key enablers of such development, countries hoping to attract more private capital need to focus on developing growth incentives and an industrial base to drive investment.

To view the conference report, click here.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

From The Hippo’s Ears: Algeria

Facts you may not have know about Algeria:

Algeria, officially the People’s Democratic Republic of Algeria, is a country in the Maghreb region of North and West Africa. The capital and most populous city is Algiers, located in the far north of the country on the Mediterranean coast.

Algeria has a population of approximately 42 million, is a Unitary, semi-presidential people’s republic, and gained independence from the France in 1962.

1.  When you first meet someone, how do you greet them?

Greeting in Algeria can be lengthy. In addition to shaking hands, it is common to ask someone about their family and work. Family and friends may exchange kisses on the cheek. Some resident in Algeria who are devout may not be comfortable shaking hands.

2. What languages are spoken in the country?

Arabic and Berber are the two official languages of Algeria. French is used for administration, business, and education, and the lingua franca is Algerian Arabic (Darja). Colloquial Darja is heavily infused with borrowings from French and Berber.

3. Do you use a twelve hour clock, or a twenty-four hour clock?

We use a 24-hour system.

4. What side of the road do people drive on? What do we need to know about driving in the country?

We drive on the right side of road. The Algerian road network is the densest in Africa, and is 85% paved.

5. How important is punctuality?

Punctuality is not of the utmost importance and you should be prepared to wait at meetings.

6. Which types of music are popular? Who are some of the most popular musicians?

Music in Algeria offers a rich diversity of genre: popular music (Chaabi), various genres of Andalusian classical music such as Sana’a, Gharnati music, Ma’luf, as well as classical Arabic, Bedouin and Berber music. Raï is a creative outlet to express love and romance. This music is a mix between Western music and Bedouin music. Ma’luf is the Andalusian classical music music of Constantine and is also well known in Tunisia and Libya.

For a taste of Zimbabwean music, listen to Khaled’s Didi, and Idir’s Porquoi Cette Pluie.

Rock towers in Tamanrasset, in the Algerian Sahara.

7. Are there any Traditional Dances?

Ouled Nail dances are traditional in Algeria. They are a tribal confederation living in the Ouled Naïl Range, Algeria. The Ouled Naïl tribe originated a style of music, sometimes known as Bou Saâda music after the town near their homeland. In belly dancing, the term refers to a style of dance originated by the Ouled Naïl, noted for their way of dancing.

Watch an example of Ouled Nail dance here.

8.  What traditional Festivals are celebrated in the country?

Timgad Festival
The International Music Festival of Timgad takes place every July and lasts for a week with world-famous musicians. You will hear all kinds of genres, from rock to rai.

European Cultural Festival
Concerts, art and photography exhibitions, theater, dance performances and movie screenings take place every year in a feast of multiculturalism and diversification. This two-week event attracts artists from various countries, while activities are held all over the country from Alger to Constantine and from Tlemcen to Oran.

DimaJazz
Dimajazzis a festival of jazz music held every year in Constantine in Algeria.

Festival of du Rai d’Oran
Rai d’Oran is an yearly event held every August aiming to celebrate the popular Algerian genre of rai music. This music genre that appeared in the 30s is a type of folk music that was born in the cities, Oran and Aïn Témouchent, from Bedouin shepherds, mixed with Spanish, French and Arabic sounds.

Sahara International Film Festival
Each summer for the past 13 years, in the heart of the burning desert of Algeria, the Sahara International Film Festival has taken place.

9. What are the seasons like?

Northern Algeria is in the temperate zone and enjoys a mild, Mediterranean climate. This area, the most inhabited in Algeria, is commonly referred to as the Tell. In the Tell, temperatures in summer average between 21 and 42 °C and in winter drop to 10 to 12 °C. Winters are not cold, but the humidity is high and houses are seldom adequately heated. In eastern Algeria, the average temperatures are somewhat lower, and on the steppes of the High Plateaus winter temperatures hover only a few degrees above freezing. Rainfall is fairly abundant along the coastal part of the Tell, ranging from 400 to 670 mm annually, the amount of precipitation increasing from west to east.

10. What are some interesting facts about the President?

President Abdelaziz Bouteflika has been the fifth President of Algeria since 1999. He was Minister of Foreign Affairs from 1963 to 1979. As President, he presided over the end of the Algerian Civil War in 2002, and he ended emergency rule in February 2011 amidst regional unrest. He is former president of the United Nations General Assembly in 1974. The President was born in Oujda, Morocco, and moved to Algeria after joining the Algerian Liberation Army (ALN). In November 2012, he surpassed Houari Boumédiène as the longest-serving head of state of Algeria.

11. What are the country’s major industries?

Oil and gas exports form a large majority of total exports in Algeria. Main industries include agriculture, construction, mining, food processing, pharmaceutical, and government. Major export partners include the United States, Spain, and Italy.

12. How do people spend their free time?

Locals spend their free time socializing with friends and family – family is a very important part of Algerian culture. The Botanical Garden of Algiers (Jardin d’Essai du Hamma) is a popular scenic place to visit.

View of Algiers, Algeria.

13. What is a popular local drink?

Popular drinks include mint tea (drunk frequently throughout North Africa and the Middle East); strong, sweet coffee (sometimes called Turkish coffee); and Medea, Mansourah, and Mascara red wines.

14. What is a popular local dish?

Algerian cuisine is typically a mix of Berber, Arabic, Andalusian, and Mediterranean cuisines. Most of the Algerian dishes are centered around bread, lamb, beef or poultry, olive oil, fresh vegetables and fresh herbs. Traditionally, no Algerian meal is complete without bread. Traditional bread is almost always made with semolina, and French bread is also common. Mediterranean seafood and fish are also eaten frequently. Seasonal fruits are typically served at the end of meals.

15. What do you pay, on average, for the following? (1 USD = approx. ZAR 118)

In place of the Zimbabwean dollar, which was demonetized in 2015, currencies including the South African rand, Botswana pula, pound sterling, Indian rupee, euro, Japanese yen, Australian dollar, Chinese yuan, and the United States dollar are now regularly used.

3 Course meal: DZD 750
Domestic beer (500ml): DZD 150
Cup of coffee: DZD 78
Coca cola (330ml): DZD 62
Milk (1l): DZD 55
Loaf of white bread: DZD 17
Apples (1 kg): DZD 250
Water (1.5l): DZD 31

16. Any general safety tips?

Algeria has improved in safety immensely in recent years and for much of the country there are no significant safety issues. However, the lack of foreign visitors means that you will stand out in a crowd and so it still pays to exercise caution. Check the current local advisories when travelling to the northwest Kabylie region, a short way east of Algiers. Many governments warn again anything outside of essential travel to this region. It’s illegal to visit the Saharan regions without an officially accredited guide. Carry your passport/ID at all times, and try to avoid driving after dark. Outside major towns, small protests or strikes can affect transport. Observe instructions given by the local security authorities.

17. In conclusion, famous (and sometimes infamous) people from the country include:

  • Taoufik Makhloufi, an Algerian track and field athlete who specializes in middle-distance running. He became the 1500 meters Olympic champion at the 2012 Summer Olympics. In 2016, Makhloufi took the silver medal in the 800 m and 1500 m at the Summer Olympics in Rio, Brazil.
  • Assia Djebar, an Algerian novelist, translator and filmmaker. Most of her works deal with obstacles faced by women, and she is noted for her feminist stance.
  • Souad Massi, an Algerian Berber singer, songwriter and guitarist.
  • Merzak Allouache, an Algerian film director and screenwriter. He has directed 18 films since 1976.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, and Remuneration needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2], [3], [4]. Image sources:  [1], [2], [3].

International Tourist Arrivals to Africa Grew 7% Above the World Average in 2018: Report

Africa and Middle East Middle East grew above the world average while Asia and the Pacific and Europe grew at 6%; 2018 totaled 1.4 billion international tourist arrivals, consolidating 2017 strong results and proving to be the second strongest year since 2010; for 2019, UNWTO forecasts a 3-4% increase, in line with the historical growth trend.

International tourist arrivals grew 6% in 2018, totaling 1.4 billion according to the latest UNWTO World Tourism Barometer. UNWTO’s long term forecast issued in 2010 indicated the 1.4 billion mark would be reached in 2020, yet the remarkable growth of international arrivals in recent years has brought it two years ahead.

UNWTO estimates that worldwide international tourist arrivals (overnight visitors) increased 6% to 1.4 billion in 2018, clearly above the 3.7% growth registered in the global economy.

In relative terms, the Middle East (+10%), Africa (+7%), Asia and the Pacific and Europe (both at +6%) led growth in 2018. Arrivals to the Americas were below the world average (+3%).

“The growth of tourism in recent years confirms that the sector is today one of the most powerful drivers of economic growth and development. It is our responsibility to manage it in a sustainable manner and translate this expansion into real benefits for all countries, and particularly, to all local communities, creating opportunities for jobs and entrepreneurship and leaving no one behind” said UNWTO Secretary-General Zurab Pololikashvili. “This is why UNWTO is focussing 2019 on education, skills and job creation.”, he added.

UNWTO’s long-term forecast published in 2010 predicted the 1.4 billion mark of international tourist arrivals for 2020. Yet stronger economic growth, more affordable air travel, technological changes, new businesses models and greater visa facilitation around the word have accelerated growth in recent years.

International tourist arrivals in Europe reached 713 million in 2018, a notable 6% increase over an exceptionally strong 2017. Growth was driven by Southern and Mediterranean Europe (+7%), Central and Eastern Europe (+6%) and Western Europe (+6%). Results in Northern Europe were flat due to the weakness of arrivals to the United Kingdom.

Asia and the Pacific (+6%) recorded 343 million international tourist arrivals in 2018. Arrivals in South-East Asia grew 7%, followed by North-East Asia (+6%) and South Asia (+5%). Oceania showed more moderate growth at +3%.

The Americas (+3%) welcomed 217 million international arrivals in 2018, with mixed results across destinations. Growth was led by North America (+4%), and followed by South America (+3%), while Central America and the Caribbean (both -2%) reached very mixed results, the latter reflecting the impact of the September 2017 hurricanes Irma and Maria.

Data from Africa points to a 7% increase in 2018 (North Africa at +10% and Sub-Saharan +6%), reaching an estimated 67 million arrivals. The Middle East (+10%) showed solid results last year consolidating its 2017 recovery, with international tourist arrivals reaching 64 million.

Based on current trends, economic prospects and the UNWTO Confidence Index, UNWTO forecasts international arrivals to grow 3% to 4% next year, more in line with historic growth trends.

As a general backdrop, the stability of fuel prices tends to translate into affordable air travel while air connectivity continues to improve in many destinations, facilitating the diversification of source markets.

Trends also show strong outbound travel from emerging markets, especially India and Russia but also from smaller Asian and Arab source markets.
At the same time, the global economic slowdown, the uncertainty related to the Brexit, as well as geopolitical and trade tensions may prompt a “wait and see” attitude among investors and travellers.

Overall, 2019 is expected to see the consolidation among consumers of emerging trends such as the quest for ‘travel to change and to show’, ‘the pursuit of healthy options’ such as walking, wellness and sports tourism, ‘multigenerational travel’ as a result of demographic changes and more responsible travel.
“Digitalisation, new business models, more affordable travel and societal changes are expected to continue shaping our sector, so both destination and companies need to adapt if they want to remain competitive”, added Pololikashvili.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].