Pulse #44 - Racial (in)justice: Tokyo Olympics ban taking a knee, racism in war commemoration, setback in African decolonisation, & Amazon enters Africa
The Data Room
As millions of people remain unemployed and socio-economic restrictions persist, Sub-Saharan Africa’s per capita output is not expected to return to 2019 levels until after 2022. The outlook is even gloomier for oil exporters and resource-intensive economies, whose per capita incomes are not expected to return to pre-Covid levels before the end of 2025. But non-resource-intensive countries are expected to make the fastest recovery, achieving pre-crisis per capita output before the end of 2021 - reminding us of the need for economic diversification across the Continent.
Numbers in the Spotlight
($7.1bn) is the estimated annual size of Africa’s legal cannabis sector by 2023 (if new laws allow)
(USD4bn) in reparations sought from Uganda by DRC for role in conflict, 1998-2003
(USD240mn) construction of Amazon’s African HQ okayed in Cape Town
What does Amazon’s Africa e-commerce entry mean? Cape Town has granted development permission for the construction of a $240mn shopping complex that will house Amazon’s Africa headquarters. Amazon’s entry into the African market provides access to global markets for local retailers, who will now be able to list and sell their products to Amazon’s 150mn customers. Amazon enters Africa at a time when digital trade on the Continent is growing at a phenomenal pace. Currently having 280mn online shoppers, Africa’s e-Commerce market revenue is projected to reach $24.8bn in 2021, rising to $40.8bn by 2025 (at 13.27% annual growth rate). But its entry also threatens the growth of home-grown e-commerce platforms - such as Jumia, Takealot, Kilimall, Konga and Bidorbuy - that may not have the reach and resources to compete with the American tech giant.
Effective internal and regional security, and foreign policy
Instability concerns after Chad President dies. Chad's President Idriss Déby, who was in power for 30 years, has died following clashes with rebels. The army has since seized power, naming his 37-year-old son Mahamat Déby as his successor, despite constitutional experts saying the speaker of parliament should have taken over instead. This transfer of power has raised questions about the circumstances surrounding President Deby's death, with some arguing an institutional and dynastic coup, not a rebel attack, ended his life. Rifts among key players and within the military are being sown, weakening the government's ability to fight the rebels who have vowed to take the capital. The uncertainty in Chad could escalate instability in the Sahel, given the huge role Idriss Déby and the country played in fighting Jihadists in the region.
Access to trade finance from banks is limiting intra-continental trade. A new report by the AfDB reveals that African trade amounts to $1,077bn, with banks intermediating just 40%, compared to the global average of 80%. This highlights the inadequacy of formal trade finance, exposing traders to exploitative alternative intermediaries such as loan sharks. Of note, despite SMEs accounting for four-fifths of all private sector firms and 80% of the employment in Africa, they take just over a quarter of banks’ trade financing. This was attributed to weak client creditworthiness and insufficient collateral. Of concern to the implementation of AfCFTA is the finding that just one-fifth of bank-intermediated trade finances is devoted to intra-African trade. For Africa to reap the full benefits of AfCFTA (which brought together Africa’s combined GDP of $3.4trn), banking reform is required to enable greater access to trade finance for intra-Africa trade.
Can solar solve Southern Africa’s energy deficit? Namibia and Botswana have signed an agreement to construct a 5,000MWp solar complex - which will be the largest in Africa on completion. The facility could solve power deficits in Southern Africa (which currently stands at 2,154MW), and has the capacity to power 3.7mn households (based on Namibia’s current consumption rate of 5MW per 3,700 homes). Generally, solar energy has limitless potential to address Africa's energy shortages, with the Continent getting 117% more sunshine than Germany, which has the highest installed solar power capacity. Tapping into the potential of Africa’s solar energy, whose installed capacity is projected to reach 70GW in 2030, could help bring electricity to 600mn people who still lack access. But with 6.6GW at the end of 2019, the Continent still represents only 1% of the world’s installed solar capacity.
Cape Town fire threatens decolonisation archives.Wildfire on the slopes of South Africa’s Table Mountain gutted the Jagger Library at the University of Cape Town (UCT), destroying rare and specialist collections. Amongst the items destroyed were alternative African histories bucking dominant colonial narratives. For example, the ‘African Studies Collection’ consisted of a large collection of works related to Africa dating back to the 1500s. It contained work in multiple indigenous and non-indigenous languages in multiple formats, including ~65,000 volumes, 26,000 pamphlets, 3,000 African films, and 20,000 further items in the audio-visual archive. While many of the works are also stored in digital format, some are not. The importance of libraries as allies in the decolonisation of our history emphasises the need for us to digitise and archive our history, and ensure works are securely protected against natural and man-made disasters.
Essential infrastructure, personal living-space & utilities
Oligopoly in Nigeria’s cement industry hampering growth. Lawmakers have criticised the dominance of Nigeria’s cement market by 3 companies for stifling competition, leading to higher prices and increasing the cost of construction. The three companies are Dangote Cement - owned by Africa's richest man, Aliko Dangote (60.6% market share), Lafarge Africa (21.8%), and BUA Cement (17.6%). Despite enjoying a +100% domestic surplus, cement prices in Nigeria are some 240% above the global average, impeding efforts of Africa’s largest economy to build its way out of its worst economic recession in more than four decades. Nigeria has a huge infrastructure deficit with total infrastructure stock in the country amounting to 30% of GDP, far below the international benchmark of 70% of GDP set by the World Bank. Africa’s most populous country also has a housing deficit of 17mn units. To trigger increased competition and lower cement prices, a loosening of licensing rules may be required.
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