Author: Uzoma Oguh

Africa Climate Summit 2023: Achieving Sustainable Climate Change Action

  • 15th September, 2023
  • 3 min reading

The inaugural Africa Climate Summit in Nairobi held from the 4th to 6th of September, 2023, has concluded leaving behind a trail of promises and commitments from both government and private sector stakeholders. In a world grappling with the dire consequences of climate change, African leaders gathered at the Kenyatta International Convention Centre in Nairobi, Kenya, for a three-day dialogue aimed at addressing critical climate change issues specific to Africa.

The Summit, which featured discussions on evaluations, funding mechanisms, partnerships, commitments, and pledges to combat climate change, had a twofold purpose. Firstly, it aimed to establish forward-thinking initiatives and sustainable plans essential for meeting international climate finance and adaptation targets. Secondly, it aimed to reshape Africa’s image from that of a continent vulnerable to climate crises to that of a hub of potential climate solutions.

KEY HIGHLIGHTS FROM THE SUMMIT

The Nairobi Declaration

While a lot has been said and written about the three-day event, one standout moment was the adoption of the Nairobi Declaration. This landmark document serves as a blueprint for Africa’s future negotiations with Western countries on international platforms.

Despite contributing the least to global climate change issues, Africa bears the brunt of its impact, as reported by the World Meteorological Organization. Yet, the continent receives only a fraction of global climate change financing. The devastating effects of climate change in Africa, including food shortages, displacement, and migration, result in over $8.5 billion in economic damages annually.

The Summit’s declaration was rooted in Africa’s inability to adapt to climate crises. A key element of this declaration was the establishment of a target of 300 GW for renewable energy generation capacity in Africa by 2030, up from the current 56 GW. Achieving this target requires a tenfold increase in current levels of climate investment in Africa.
According to the African Development Bank (AfDB), Africa will need to mobilise approximately $213.4 billion annually to close the climate financing gap by 2030. The Summit provided a platform for African leaders to emphasize the urgency of increased financial flows from developed countries to mitigate the impacts of climate change on the continent.

The declaration also highlighted the importance of developed countries honouring their commitment to provide $100 billion in annual climate financing, as promised 14 years ago at the Copenhagen conference. It emphasised the importance of decarbonising the global economy for the sake of equality and shared prosperity.

Climate Finance and Investments

Climate investment was a central theme of the Summit, with stakeholders and financiers making substantial commitments to climate financing. African leaders called for a reassessment of what they deemed unfair climate change financing practices.

A pivotal moment at the Summit was the announcement of a remarkable $23 billion commitment from various stakeholders, including governments, the private sector, multilateral banks, and philanthropists, for green growth, mitigation, and adaptation efforts related to climate change across Africa. This landmark announcement signaled African countries’ commitment to reposition the continent as a destination for climate investment rather than a hotbed of floods and droughts.

Notable investment pledges included $161 million from the United States government, £34 million from the UK government, and a $4.5 billion pledge from the United Arab Emirates to finance climate projects in Africa. The final communiqué from the Summit’s organisers revealed that the total capital commitments made during the week amounted to $26 billion, representing contributions from public, private, and multilateral development banks, foundations, and partners in the development finance community.

The African Carbon Market

One crucial discussion at the climate conference revolved around attracting investments to Africa’s carbon market through carbon credits, with the aim of bolstering incentives and enhancing climate action financing across the continent. The Summit provided African leaders with a platform to advocate for market-based financing instruments, such as carbon credits, and garnered substantial support for scaling up the Africa Carbon Markets Initiative.

This initiative, launched in 2022, enables companies operating in Africa to offset carbon dioxide emissions they cannot reduce from their own operations to help meet climate targets. The Summit’s first day witnessed significant investments in the African Carbon Credit Initiative, including a $450 million commitment from the United Arab Emirates (UAE) to purchase carbon credits from the Africa Carbon Markets Initiative (ACMI). While many applauded this initiative as a step towards making polluters accountable, critics and environmental analysts viewed it as an inadequate and unrealistic solution.

The three-day climate summit, along with the African Climate Week 2023, undoubtedly provided a platform for Africa to unite and demonstrate that, with the right investments and commitments, it can play a central role in a renewable future. We hope that these commitments will yield effective solutions to Africa’s climate challenges.

What if Nigeria’s Oil Reserves Run Dry?

  • 30th August, 2023
  • 2 min reading

 

It’s a question that’s been circulating, and last Friday, we found ourselves at the heart of this conversation at the ProvidusBank Non-oil Export Summit in Lagos, Nigeria. This event was a true gem—a gathering of minds, a network of opportunities, and a hub of discussions on how Nigeria’s non-oil sector can take the reins in steering the nation’s economic growth.

Stakeholders from the Central Bank of Nigeria, the Nigerian Customs, and other key players graced the event, each bringing expert perspectives on the untapped potential of Nigeria’s non-oil industries. From the engaging keynotes to the thought-provoking panel discussions, a unanimous consensus emerged: Nigeria must urgently harness the vast potential of its non-oil sectors.

For decades, Nigeria has relied on oil exports as its economic backbone. However, with recent oil price fluctuations and the global shift towards renewable energy, countries blessed with resources like Algeria, Angola, and Saudi Arabia are reassessing their oil-centric strategies. It’s a wake-up call for Nigeria to diversify its revenue streams, secure sustainable growth, boost government income, and generate job opportunities.

📌 Insights from the Summit’s Experts

📍 Embracing Diversification: Walter Akpani of Providus Bank stressed the paramount importance of diversification. He pointed out how fellow oil-producing nations are pivoting towards non-oil industries to brace themselves for a post-oil era. Highlighting the soaring global demand for products like vegetable oil, he urged investments in Nigeria’s rich resources, from oil seeds to fruits and spices, to drive non-oil exports.

📍 Sustainability for Export Success: Entrepreneurs eyeing the non-oil sector must prioritize sustainability in production and packaging. This mindful approach ensures lasting success in the export game.

📍 Nigeria’s textile and garment industries offer huge opportunities for export: Olori Ronke Ademiluyi-Ogunwusi’s eloquent presentation celebrated Nigeria’s textile and garment industry. In the 80s and 90s, it was a major player in Africa, employing masses. Today, with the world’s growing appetite for African textiles, Nigeria’s fashion industry holds immense export potential.

📍 Nigeria has a comparative export advantage: Uade Ahime from Nairametrics underscored Nigeria’s export edge. With its young population and fertile lands, Nigeria is primed for agriculture-led exports. A key takeaway: a shift from raw material exports to finished goods.

📍 Structured Financing is Key: Finance will no doubt play a pivotal role in harnessing the huge benefits of the Nigerian export sector. Export finance experts at the event made a strong case for thorough follow-up on export financing from bean to bag to adopt best practices in non-oil export processes. Daniella Jarikre of NEXIM Bank outlined efforts to smooth the financing journey for exporters, a move welcomed by all.

📍 Regulatory reforms are crucial: The panellists—Olasunkanmi Awoyemi, Ikenna Egbukole, Bamidele Ayemibo, and Ajibade Ogunniyi—dissected strategies for the agribusiness and mining sectors. They all agreed that for Nigeria’s non-oil sector to reach its potential, regulatory reforms are essential. A business-friendly regulatory environment is a prerequisite to attracting more investors in the non-oil sector.

Mariam Musa and Aminu Murtala Nyako further enlightened us on agribusiness hurdles and export opportunities in Nigeria’s fashion sector.

Congratulations to ProvidusBank for organizing such an impactful stakeholder dialogue and reinforcing itself as a progressive partner for international trade and export.

At ETK Nigeria and ETK Group, our unwavering commitment to international trade and exports resonates deeply with this event.

Imagine the possibilities for your business! 🌟 Our services and solutions have a proven track record of helping over 200 African businesses transcend geographical borders 📈✈️, foster growth, and create connections on a global scale.

Africa’s Potential as a Key Manufacturing Hub for Technology-Intensive Sectors and Global Supply Chains.

  • 24th August, 2023
  • 2 min reading

In a world marked by constant change and evolution, the African continent stands on the brink of an exciting opportunity.

With its vast potential, #Africa has the capacity to emerge as a pivotal hub for high-tech manufacturing across various industries, including #automobiles, #smartphones, green energy, and #healthcare says UNCTAD’s Economic Development in Africa Report 2023.

The shifting tides of geopolitics and economics have prompted a re-evaluation of global manufacturing and supply chains. Today, stakeholders are driven to fortify and diversify these chains, seeking resilience in the face of #disruptions.

Africa’s rich natural resources, such as aluminum, cobalt, copper, lithium, and manganese, hold the key to unlocking a prominent role in the global supply chain. These essential materials are crucial for the production of high-tech and green products like smartphones and #solar panels.

Remarkably, the Democratic Republic of the #Congo alone boasts an astounding 46% of the world’s cobalt reserves, a vital ingredient in battery manufacturing. To put things into perspective, UNCTAD estimates that the production of an electric car demands approximately six times more #minerals than a conventional vehicle, underscoring the significance of these resources.

As the global drive towards clean and sustainable energy gains momentum, the demand for critical metals is poised to surge. This presents an exceptional opportunity for Africa to position itself as a major exporter of high-value goods. The ripple effects are profound: #economic growth, #job creation, heightened productivity, and improved wages.

However, seizing this momentous potential requires strategic action. African nations must enhance productivity by embracing #technology, securing favourable mining contracts, and obtaining exploration licenses. By doing so, local industries can flourish, empowering domestic firms to not only design, procure, and manufacture but also supply the essential components for technology-intensive products.

In this era of transformation, Africa stands ready to play a pivotal role in reshaping #global supply chains and high-tech manufacturing. The journey ahead promises growth, innovation, and prosperity.

Join us on this transformative expedition.

Your support drives our shared success.

#TradeInAfrica #TradeWithAfrica #ETKGroup #AfricaMarketEntry #AfricaMarketExpansion  #Africadevelopment #investinafrica #AfricaEconomicGrowth #GlobalSupplyChains

Zimbabwe Elections: Assessing Key Economic Issues at Stake

  • 21st August, 2023
  • 3 min reading

As Zimbabweans prepare to cast their votes this Wednesday, the nation stands at a critical crossroads. The upcoming elections promise a tight contest as citizens choose their next president, members of parliament, and councilors. With 11 candidates vying for leadership, the race appears to be a rematch between incumbent President Emmerson Mnangagwa and the main opposition candidate, Nelson Chamisa.

Focus on Policies: A Glimpse into the Economic Landscape

While President Mnangagwa pledges to steer the country towards economic recovery, stimulate investments, bolster infrastructure development, and eradicate corruption, Chamisa promises Zimbabweans a future marked by increased employment opportunities, social justice, and democratic governance.

As the election draws near, let’s delve into the pressing economic challenges that voters fervently hope the next president will address.

Reviving GDP Growth

Presently, Zimbabwe’s GDP stands at $20.68 billion, a mere fraction of the global economy at 0.01 percent, as per the World Bank. The projections foresee a 3.2% growth rebound in 2023 and 2024, with agriculture, mining, and services serving as pivotal sectors. The incoming government faces the pivotal task of amplifying GDP by implementing rigorous monetary and fiscal policies to energize macroeconomic activities.

Recent policy moves, such as local currency-based corporate tax settlements and relaxed foreign exchange controls by the Reserve Bank of Zimbabwe, underscore commendable efforts to control escalating costs. Furthermore, a 10 percentage point rise in the key lending rate and measures to stabilize currency volatility reflect steps in the right direction. However, Zimbabweans yearn for more robust economic stimulation to invigorate growth and alleviate the prevailing economic challenges.

TACKLING PERSISTENT HIGH INFLATION

Zimbabwe grapples with the highest inflation rates in Africa. Although annual consumer inflation eased to 101.3% in July 2023 from a peak of 175.8%, the challenge remains significant. This, according to analysts, was aided by a 53% appreciation of the Zimbabwean currency against the US dollar. The African Development Bank predicted further ease of inflation in Zimbabwe to 36.1% in 2024, supported by economic stability and subject to evolving global dynamics.

The most important categories in Zimbabwe’s Consumer Price Index are: food and non-alcoholic beverages (31%), housing and utilities (28%), and transport (8%), while miscellaneous goods and services account for 7%, followed by furniture, household equipment, and maintenance (5%), and alcoholic beverages and tobacco (5%). Others, such as clothing and footwear, accounted for (4%), education (4%), communication (3%), recreation and culture (2%), and health (1%), while restaurants and hotels accounted for (1%) of the CPI.

The drop in the inflation figure may be good news for the ruling party ahead of the election; however, Zimbabweans would be more than happy to see stimulation of the economy, a reduction in inflation, and real economic growth post-election.

PLUMMETING ZIMBABWE DOLLAR

May witnessed a steep 26% decline in the Zimbabwean dollar, prompting the central bank’s intervention to stabilise the official exchange rate and align it with the parallel market. The current exchange rate stands at 1 ZWD to 1.089790 USD. This crisis underscores the urgency for the incoming administration to address the economic turmoil that prevails.

Transparency-focused reforms, along with efforts to rejuvenate investor confidence and foster economic growth, stand as pressing tasks. By pursuing these objectives, the new government can work towards stabilizing the plummeting Zimbabwean dollar.

ADDRESSING ELEVATED INTEREST RATES,

Monetary policy-driven spikes in interest rates have inflated borrowing costs for Zimbabwean businesses. The high increase in the cost of borrowing, which led to the tightening of corporate credit conditions, increased costs of production, and strained investment in the country, according to the World Bank, is another area of concern for voters. Borrowing costs pushed spending low, leading to a reduction in living standards. Less speeding for households is impacting companies’ revenue and leading to a greater crush on the labour market.

INCREASING COST OF LIVING FOR HOUSEHOLDS

According to the World Bank, Zimbabwe’s extreme poverty situation was exacerbated due to the COVID-19 pandemic and geopolitical events such as the Russia-Ukraine conflict. Stubbornly high inflation continues to exert pressure on the cost of essential goods and services, driving economic instability. The nation’s inflation rate of 101.3% has led to significant increases in food and household item prices, compelling the need for effective economic solutions.

CONFRONTING ECONOMIC CHALLENGES AHEAD

Political analysts and economists have undoubtedly rated the post-Mugabe government as being more fiscally responsible. However, the various reforms by the government to fix the economy of the southern African country have come at a huge cost to the Zimbabweans, as the country’s economy has not overcome difficult times.

The World Bank noted that “trade integration has declined, and foreign direct investment (FDI) remains low, limiting the transfer of new technologies and investment in modernizing the economy”. The incoming president must confront these deep-seated issues head-on to pave the way for economic stability. As Zimbabweans head to the polls, they look to their future leader to forge a path towards sustainable growth, job creation, and a prosperous nation that thrives in the global arena.

Niger’s Coup: Assessing the Impact on Regional Trade

  • 10th August, 2023
  • 2 min reading

On July 26, Nigériens and the rest of the world woke up to a shocking announcement of the overthrow of 63-year-old President Mohamed Bazoum by top military leaders in the country. This marked the fifth coup experienced by the resource-rich African nation since gaining independence in 1960. The outcome of this upheaval resulted in the ascent of General Abdourahamane Tiani, the leader of the presidential guard, to the helm of a newly formed military government.

While the military Juntas have refused to relinquish power, regional and Western partners of Niger have announced a series of sanctions against the country.

Sanctions on Niger

The first in the series of sanctions was the announcement of the closure of all borders with Niger, the banning of commercial flights, the suspension of all commercial transactions, the freezing of the country’s assets and accounts in the regional central bank, and the suspension of all financial assistance by the 15-nation ECOWAS bloc. Nigeria, a neighboring country and close partner, further escalated by cutting power supply to Niger, all in a concerted effort to wrestle control from the military leadership and reinstate democratic governance.

The most recent blow to Niger’s economic growth and trade has come in the form of the World Bank’s decision to suspend a significant $4.5 billion portfolio investment and recent direct budget support of $600 million to the country. Following suit, the European Union and France, both major contributors to Niger’s economic progress, have declared a suspension of financial support and collaboration with the nation.

Undeterred by these sanctions, General Abdourahamane Tiani exhibited defiance, asserting, “We reject these sanctions altogether and refuse to give in to any threats, wherever they come from”. Such a stance has raised numerous concerns regarding the implications of the sustained military rule on trade, investments, transactions, and businesses within and beyond the challenged African nation.

Impact on Trade and #AfCFTA.

As more countries and international bodies impose stringent sanctions on Niger following the coup, the nation’s economy and investment prospects are poised to suffer significantly. The weight of international sanctions will inevitably hinder Niger’s ability to engage in cross-border trade and further erode its economic stability.

According to the 2023 economic outlook presented by the World Bank, Niger’s real GDP growth is forecasted at 6.9% for the year, with an anticipated upswing to 12.5% in 2024, attributed to economic activities, exports, and sustained donor support. Key trade partners for Niger include Nigeria, France, and China. Beyond the African Union, Niger holds membership in regional blocs such as the Conseil de l’Entente and ECOWAS. The country encourages economic links between African countries, having signed and rectified all three separate agreements of the African Continental Free Trade Area (AfCFTA).

Since the principal beneficiaries of the AfCFTA agreement are SMEs, these series of imposed sanctions on Niger will not only impact trade, foreign investments, and business activities in the country. The consequences are likely to resonate profoundly, impacting the stability of SMEs, hindering their reliable operation, and ultimately impeding the economic strides the country and the AfCTA agreement has made thus far.

Political instability like the Niger coup brings political risk, which could act as a deterrent to investors. Consequently, international businesses are likely to depart Niger, leading to a potential loss of jobs due to reduced economic activity. This exodus could result in diminished access to foreign investment, a decline in foreign currency reserves, and the vulnerability of the nation to exclusion from promising trade opportunities and overall economic growth.