South Africa has failed dismally to exploit the competitive edge that is commensurate with the country’s industrial and intellectual capacity relative to its propitious position on the continent – and not being involved enough in West Africa is just one of the glaring omissions coming out of South Africa’s seeming disinterest in Africa. That’s the view of Duncan Bonnett, trade analyst and director at Africa House, who says too many people sitting in South Africa talk about Africa as if it’s somewhere else. “People ask me how often do you travel in Africa and I tell them, ‘every day’, because that’s the reality. The fact of the matter is, we’re part of this place.” So when it comes to thinking that we may be able to trade ourselves out of economic stagnation, there's all the more reason to take a look at our continental peers. Here’s a summary of Bonnett’s thorough exposition on Africa delivered at a Johannesburg Chamber of Commerce and Industry business breakfast recently. About $200 billion will be spent around oil and gas developments on the eastern seaboard of Africa in the next decade, driven for the most part by liquid natural gas exploration in the Rovuma Basin on Mozambique’s border with Tanzania. It is furthermore anticipated that ancillary spin-offs from the energy play out east will generate an additional $200 billion. Primed as the world’s power lifeline for the future, oil and gas developments in Mozambique, Uganda and surrounding areas are also not the only good news African story. With sharply spiking population figures driving unprecedented urbanisation, major multi- and bilateral development finance institutions are focusing on the delivery of power into communities and cities. It’s giving rise to the development of off-grid rural solutions and payas-you-go energy options meant to meet growing demand, not just for fastsprawling metropoles but also for secondary cities. At the moment there are 2000 mini-grids across Africa. By 2023 the call for more energy for more people is expected to have resulted in 16 000 mini-grids across the continent. As for meeting growing energy demand through hydro-power and coal-fired facilities, it will give infrastructural impetus to building power lines, roads, railways and other big-spend projects. Either way, regardless of how people receive their electricity feed, it creates consumers who in turn create the need for producers. Earnings from expats working in countries across Europe and Northern America, generate up to $120 billion annually which is sent back home. It means that rural communities are increasingly participating in growth through money earned abroad and transferred to the continent. Innovative solutions for unbanked people and the related rise of mobile money is also contributing to expanded consumerism as people who previously didn’t have access to disposable income are increasingly included in wider currency distribution. Whether it’s from Nairobi into Kenya’s peri-urban sprawl and more remote rural areas, or from Kampala to places like Hoima where oil exploration is transforming Uganda’s energy sector, mobile money is giving Africa a much greater spending spread, in turn necessitating expanded production. Africa: A bird’s eye view of the buzz THE POWER PICTURE CURRENCY REPATRIATION Changes in the ICT sector probably remain the most underrated development in Africa. In Lusaka, for example, there used to be a time when business was conducted from door to door. Landlines didn’t work and business representatives had to constantly check in with their hotels to see whether they had received any faxes so they could set up appointments – if you were lucky enough to have a hotel with a fax machine. These days business communication is all internet driven. Whatsapp on its own has revolutionised the way business is conducted. The Federation of East and Southern African Road Transport Associations (Fesarta ), for example, has launched a transit assist service, Transist, which is operated across its sphere of influence, warning transporters about roadside issues for the entire region. As a result freight can be rerouted or re-planned in the event of stoppages along the supply chain. TELECOMS Undoubtedly Africa’s biggest investment ticket at the moment, Mozambique’s contribution towards regional growth, mainly related to gas exploration in the Rovuma Basin, amounts to 18% of the continent’s current growth. Gas exploration alone will generate an anticipated $128 billion dollars by 2030, and that is just the first two phases of the extractive project currently under way in northern Mozambique. Look at it this way – the only investment exercise that has surpassed Mozambique’s gas story in terms of value is Nasa’s International Space Station, and that’s not even on this planet, so you can make your own deductions. Simply put, if you’re into extractive enterprises and downstream spinoffs, you need to urgently ask yourself what your part is in the gas play in Cabo Delgado province. Previously regarded as a sunny place for shady people, industrial development across Mozambique’s jungle wastes to the extreme north east has taken off so fast it’s putting a hard squeeze on smuggling interests in that area. That’s why increasing sentiment is leaning to the argument that conflict on Tanzania’s border with Mozambique is not so much Islamist-fuelled as a kickback reaction by organised crime, feeling increasingly unwelcome in a backwater area that used to suit them. MOZAMBIQUE November 2019 Africa Outlook 3 T he mushrooming of cities across Africa is very much a numbers game. By the turn of the century there were 40 cities across the continent with a million or more people. However, at the current rate with which existing mega-cities are ballooning, with secondary cities fast catching up, Africa is expected to have 145 cities by 2035 with a million or more people. Feeling a little suffocated? Don’t! It’s your trader’s ticket to opportunity. One of the continent’s new cities is already in an advanced planning stage and will be purpose-built in Mozambique’s Cabo Delgado province where gas extraction is set to quadruple that country’s GDP in the next ten years. Once established as a young city, it will cater for at least 200 000 people, serving as a metaphor for all that’s required to enable rapid urban development: water, waste management, electricity, production, education, health, and more. Where currently there’s only jungle, the city is expected to completely transform one of Mozambique’s remotest regions. Some 20 years ago, further north in Dar es Salaam, the changing of property laws triggered a transformation of what was previously just a dusty littleused port city. Reforms like sub-division meant property owners developed highrises that in turn resulted in industrialisation. Of course it created inner-city congestion but it also unlocked opportunity by way of cement plants and steel production facilities, to name but a few spinoff developments. The aspirational living resulting from urbanised wealth creation across the continent can also be seen in the demand for cosmetics, said to be fastestgrowing consumer market in Africa’s cities. As Africa’s resources and its corridors start aligning through logistics linkages, supply chain efficiencies are expected to drive commerce on the continent where, if the African Continental Free Trade Area (AfCFTA) takes off, a common market of 1.2 billion people is expected to generate combined GDP of $3.8 billion. Previously one of Africa’s sleeper countries, Tanzania is rapidly awaking to its own potential. Together with its southern neighbour, Mozambique, the mining of jumbo-flake graphite is of such high quality and the extractive cost so low it’s leading to the closure of graphite mines in China. Unfortunately it remains dogged by disastrous policy decisions taken by the government of John Magufuli. One of these decisions was fining one mining company more than the total mineral value of the entire country, allegedly because of unpaid taxes. Another faux pas was forcing Vodacom to list more stock on the local exchange than the population of Tanzania could possibly invest in. But heading into an election in 2020, Magufuli, desperate to score some wins, is easing off on industry in a bid to appease public sentiment and trigger growth – an interest both he and investors share. URBANISATION TANZANIA Not only has Ghana become Africa’s largest gold producer, toppling South Africa from its primary perch, but it’s looking at becoming the regional hub for supplying minerals technology to neighbouring extractive exercises. An immediate client would be Burkina Faso, immediately to the north, where five gold mines are already in production, with another ten on the way. Even Côte d’Ivoire is fast emerging as a burgeoning gold producer. Countries like Gabon and Cameroon, the latter unfortunately saddled with a long-running conflict up north that the world seems to have forgotten about, also merit strong consideration from private-sector participants interested in unlocking the potential of Africa’s troubled central core. And whereas gold production is establishing a very strong foothold in Ghana and its immediate neighbours, further west and north-west in the Sahel, bauxite and iron ore are driving growth in countries like Mauritania and Senegal. It creates a distinctive picture of the whole West African area emerging as a mining jurisdiction. The fact that South Africa’s department of trade and industry recently led a delegation to Côte d’Ivoire is encouraging, and yet much more needs to be done to foster stronger business relations between Africa’s former minerals giant and potential trade partners from the Economic Community of West African States (Ecowas). Speaking of South Africa, almost all of the mining activity across Ecowas has been sparked by regulatory reform. It goes to show what can be accomplished when transparent policy decisions favour private-sector engagement. GHANA DRC Historical blockages, where industrial infrastructure is required to unlock dormant capacity and potential, are perhaps nowhere more evident than in the Democratic Republic of the Congo (DRC). Africa House looked into the potential for exporting bananas from the eastern DRC and neighbouring countries like Rwanda and Burundi. What they found was that it took at least 13 days by truck from the region south east of Kisangani to reach the port of Dar es Salaam, by which stage most of the bananas had been spoiled because of insufficient cold-chain facilities or a complete lack thereof. In comparison, from an export point of view, bananas from Guatemala and El Salvador took ten days from being picked to being placed on European shelves. Food waste in Africa also contrasts sharply with the world figure of 40-45% that is wasted by consumers. In Africa around 50% of food doesn’t even get to consumers. It just goes to show how great the continent’s need is for road infrastructure, irrigation, dams, cold-chain and other facilities to unlock supply chain potential With a single-minded goal clearly defined, using its geo-strategic location to become a logistics hub for southern Africa, and increased public-sector leeway for private sector efforts to forge ahead, Namibia is edging out South Africa as the so-called gateway into the SADC region. One of the areas where publicprivate participation became clear was in the some 200 kilometres of road in Zambia that was rehabilitated by a Namibian company – all for the sake of the nation’s cargo network. Succinctly stated, the refurb work in Zambia has cut the transport time by two days for freight flowing from the copper belt west through Zambezia (formerly the Caprivi strip). It’s an absolute dream for Namibia. And the harbour South Africa fought so hard to retain when its former protectorate became independent, Walvis Bay – rising like some Phoenix from the surrounding desert – is where the freight is flowing in ever-increasing volumes. Copper and cobalt from Zambia and the DRC is making its way to Walvis, and mining-related inputs are being back-hauled to landlocked areas of extraction. And with transporters working out of Gauteng getting increasingly fed up with congestion issues at the Port of Durban, Walvis Bay Corridor Group is pulling out all the stops to push volume as high as they can. Although the new container terminal at Walvis Bay only came online in August, the heat generated from its much-expanded capacity is expected to be felt from Durban to ports all the way north to Djibouti.Oil exploration around the Lake Albert region has turned Uganda, much like Mozambique to the south-east, into a regional game changer for east and central Africa. But it’s not just oil exploration around Lake Albert that is driving Ugandan growth. Perennially covered by a misty blanket from its mountainous terrain, Uganda has figured out what role its fertile soil can play in answering Africa’s growing call for nutrition, with the continent’s agriculture market set to become a trillion dollar industry by 2030. Through agri-industrial development and import bans on basic food stuffs, Uganda today is benefiting from the value additions of import replacement. Some 10 to 15 years ago it had two mills producing 100-odd tons of flowers a week. Today there are 14 mills producing twoand-a-half tons a week. It begs the question how flower exporters into Uganda have absorbed this shift in selfsufficiency. Thing is, providers of technology and services for Uganda’s growing agriindependence are finding themselves in the pound seats. Uganda also sits in a critical space in relation to China’s Belt and Road initiative, and how this 21st century Silk Road will serve to tap into Central Africa’s agricultural potential. For what it’s worth, the continent’s agricultural sector remains the mainstay of income for most people, generating a livelihood for some 70% of Africa’s people. – Courtesy, Africa House.