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].
President Ramaphosa: South Africans Must Take Climate Change Seriously
It is time for South Africans to take climate change seriously, said President Cyril Ramaphosa on Thursday in his response to the debate on his State of the Nation Address.
He said if South Africa is a country that prioritises the interests of the poor and the vulnerable, then we need to act with greater urgency to respond to the effects of climate change and make our contribution to preventing it.
“The rural poor are most affected by the droughts that have become more frequent and which last longer,” he said.
“The urban poor is most affected by the impact this has on food prices and the availability of water.
“It is people who live in informal settlements who are most affected by the flooding that accompanies the increasingly extreme weather conditions.”
He said we are all affected in different ways by the environmental changes taking place on land, in our oceans and in the air.
“Unless we tackle climate change, we will not be able to meet our developmental objectives.”
He said South Africa ratified the Paris Agreement to Combat Climate Change as part of the global effort to dramatically reduce the rate of global warming.
Ramaphosa said as part of the country’s efforts to build a sustainable low carbon economy, we are taking steps to finalise the national Climate Change Bill, which will provide a regulatory framework for the management of climate change and its impacts.
“We are making a fair contribution to the global effort to stabilise greenhouse gases through our Nationally Determined Contribution to the UN Framework Convention on Climate Change.”
He said South Africa is due to be the next coordinator of the Committee of African Heads of State and Government on Climate Change, which is vital in ensuring that Africa remains united and speaks with one voice on the key climate change issues facing the Continent.
He also paid homage to the role Edna Molewa, who passed away last year, played in these efforts as Minister of Environmental Affairs.
“The progress we have made in responding to the various environmental challenges that confront our people is in no small measure thanks to the leadership and dedication of the late Minister of Environmental Affairs, Edna Molewa,” he said.
“She worked to ensure that the conservation of the environment became a catalyst to advance the objectives of the National Development Plan.”
“Taking our lead from her vision, we continue to encourage investment in cleaner energy through the renewable energy independent power producers programme.”
Ramaphosa said South Africa benefitted through the competitive bidding process from rapid, global technology developments and price trends, buying clean energy at lower and lower rates with every bid cycle.
“As a result, South Africa is now getting renewable energy at some of the lowest tariffs in the world.
“Under the renewable energy, a total number of 112 projects have been procured and it is envisaged that these projects will create 114,266 job years over the construction and 20 year operations period.”
A job year is equivalent to a full time employment opportunity for one person for one year.
Ramaphosa said government will work with all stakeholders to ensure that the gradual transition towards new forms of electricity generation creates jobs, develops new capabilities and does not negatively affect the livelihoods of communities.
While congresswomen Alexandria Ocasio-Cortez is agitating for a Green New Deal in the United States, South Africans will have to do with the Good Green Deeds programme.
Ramaphosa announced that on March 8, this “landmark campaign” will be launched to “mobilise all South Africans to become environmentally conscious”.
“The Good Green Deeds programme is aimed at changing behaviour towards littering, towards illegal dumping, and towards waste in general,” Ramaphosa said.
He said it is part of government’s call and commitment “to clean South Africa, to make our cities, towns and rural areas places where it is safe and healthy for all to live”.
“Because of environmentally insensitive human action, the forces of nature conspired to set in motion the dramatic process of climate change,” Ramaphosa said.
“It is by conscious human action that its effects can and will be mitigated and ultimately reversed.”
South Africa’s current minister of environmental affairs is Nomvula Mokoyane. Several opposition speakers called for her head after she was mentioned by whistleblower Angelo Agrizzi in his explosive testimony at the Zondo Commission about the Bosasa-scandal. Allegations of corruption and mismanagement plagued her term as minister of water affairs and sanitation. Ramaphosa didn’t address these issues in his reply.
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: Tim Johnson [1], [2].
Rare African Black Leopard Photographed in Kenya
Images of a rare African black leopard have been captured in Kenya.
British wildlife photographer Will Burrard-Lucas set up motion-sensitive cameras to capture the largely nocturnal cat in Laikipia Wilderness Camp in January.
“I’m able to set up a kind of studio-like lighting and just leave my cameras set up for weeks or months,” he told Reuters.
Black leopards – or panthers – carry a gene mutation for “melanism” that makes their coats black, but the night-time infrared cameras used by Burrard-Lucas can reveal their spots.
While he was capturing stills, researchers from San Diego Zoo Global studying leopards in the area set up remote video cameras nearby, publishing their findings in the African Journal of Ecology.
Burrard-Lucas heard from a friend that a black leopard had been spotted in the area and, after contacting the landowners, headed off to set out his cameras near the animal’s tracks.
“It’s very dusty, so you can pick up tracks especially early in the morning after the night,” he said. “You can see everything that’s passed.”
Scientists had assumed that a black coat was an evolutionary response to leopards moving out of the dense forests where their spots camouflage them, San Diego Zoo said in its statement.
The discovery of a black leopard in a open, arid habitat in Kenya raises questions about that theory, however.
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].
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].