Pulse #24 - Pause for reflection: Nigeria on a knife edge, a reminder Africa’s economic success is rooted in good policy and governance
The Data Room
After Nigeria was in the news last week for an economic success story with the acquisition of fintech startup Paystack, this week reminded us that business means nothing without good policy and governance. A 2016 Nigerian National Bureau of Statistics report showed that on average, Nigerians paid six bribes per year, amounting to $4.6bn in purchasing power parity terms (at the time); and that of all adult Nigerians who had direct contact with a police officer in the 12 months prior to the survey, 46% paid that officer at least one bribe. Nigeria’s police force was also ranked the worst of 127 countries in the 2016 World Internal Security and Police Index.
Numbers in the Spotlight
($53.6mn) is how much Uganda plans to spend towards the construction of three roads in DRC, in an attempt to build relations
of COVID-19 confirmed in Africa (as of last week)
(1.3mn) who were previously unbanked have reportedly been given bank accounts in Ethiopia in the last month, following its demonetisation process
100,000 women and children
in Zambia have allegedly suffered lead poisoning as a result of pollution caused by Anglo America, according to a new class action lawsuit
of China’s chrome ore imports (a key ingredient in stainless steel) was supplied by South Africa last year
56 protestors (at least)
were killed by armed forces during a peaceful #EndSARS protest, at the Lekki toll gate, in Nigeria
Effective internal and regional security, and foreign policy
The cosmopolitan, urban, young origins of the #EndSARS protests and its spread to wider society, with other African nations expressing similar disillusion with authorities and government, bears hallmarks of the ‘Arab Spring’. As Nigeria and Africa consider how to move forward, this is perhaps a time for pause and reflection on how hope that the 2011 uprising across North Africa & Middle East would deliver political reform and social justice, resulted in millions killed, displaced or in need of humanitarian assistance. Well considered and deliberate decision-making is needed for a better Nigeria.
Cameroon has been forced to suspend a phone tax that would have seen device owners pay a 33% levy on the phones or tablets they purchase from October 2020 as import duties, following widespread outrage online. SSA’s mobile phone industry accounted for 9% of GDP in 2019 - making it a prime target for cash-strapped governments. As mobile phone and internet penetration rates continue to increase, expected to reach 50% and 39% respectively by 2025, the sector is likely to be an increasingly attractive tax source. However, with internet connectivity largely achieved via mobile phone in Africa, continued attempts to raise taxes from mobile use will likely be viewed as an attack on digital rights, and lead to increased push back. #EndPhoneTax
Ethiopia has seen a 1.3mn increase in the number of banked adults in just 1 month, following its demonetisation process (where it introduced a new currency, forcing those holding cash to use banks to swap old notes for new). This is one of many reforms Ethiopia has taken recently to boost cashless payments, leading to a 31% increase in the number of accounts to 51mn over the past year alone. Other measures include preparing to open up banking to local phone companies by allowing locally-owned non-financial institutions to offer mobile money services. With South Sudan now contemplating following in Ethiopia and Kenya’s footsteps, we could see increased financial inclusion across the Horn of Africa.
South Africa has proposed an export tax on chrome ore - hoping to incentivise producers to transform the raw material into ferrochrome inside the country. Roughly half of its chrome ore is exported for smelting into ferrochrome, which is then processed into stainless steel. South Africa is the world leader in chrome production (>40% of global production), and last year supplied 83% of China’s chrome imports. Its neighbour, Zimbabwe, was forced to lift a similar ban in 2015, as stockpiles grew due to lack of smelting capacity, high production costs and power shortages. Given South Africa’s unreliable electricity supply, the Government will also need to tackle energy efficiency to make this a success.
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