The End of an Era 😏

3rd largest economy in sub-Saharan Africa

Hello,

Welcome to a new month, although we met on Wednesday morning - thank you for all the feedback gotten so far. Expect a weekly email from us on Wednesday Mornings.

This week started on a gloomy note and still hasn’t recovered from it with the fight against racial injustice and rapists being rekindled.

The motion to castrate rapists didn’t make it past the first mention in the Nigerian House of reps, with the counter-response being, “What would happen to an older female who rapes a younger male?” It’s unlikely there'd be any immediate changes in the law but there are still many other things men can do to discourage the act of rape. 

And as more economies open, the next question on many people’s mind is what next? 

This advice applies to people seeking advice:

@Tunjiandrews

Now to the stories of the week 😊


The End of an Era

Countries around the world have been making major decisions as regards dealing with the economic implications of the pandemic. We have seen loans and grants being given to struggling businesses, relief payments for laid-off workers and others. In Algeria, the government has drafted a finance bill to increase foreign investment by changing its previous law.

What law?

Back in 2009, Algeria enacted a law to limit foreign ownership of a company incorporated under Algerian law to 49%, thereby requiring the foreign investor to form a joint venture with an Algerian company which would have a stake of 51%. This was done to protect the financial interests of the Algerian population and maintain control over its resources.

So what happened?

Basically, lack of results. The number of investment projects declined drastically from almost 90 before 2009 to about 10 within a year of its enactment, stunting economic growth.  Fast forward to now, the COVID-19 pandemic negatively affecting oil prices has caused further damage to its struggling oil-dependent economy.

Details of the new deal

While the new law fundamentally removes the previous limits for foreign investment, its government has listed some sectors exempt from this rule. These include resale activities, mining operations, sections of energy and transportation and the pharmaceutical industry.

For Renewables

In the past, the growth of important players in the energy production sector such as the Independent Power Producers (IPPs) has been limited. This is about to change as its government announced a plan to install 4 gigawatts (GW) of Solar tenders by 2025 and its vision to deploy 22 GW in clean energy by 2030. It is expected that the new law will play a pivotal role in meeting these goals.

Conclusion

Being a linking state between sub-Saharan Africa and Europe, Algeria could be setting itself up as a rival to Morocco’s economic ambition of becoming “the gateway to Africa” for investors. But for now, we wait to see if amendments will be made to the draft before it is formally enacted into law.


3rd largest economy in Sub-Saharan Africa

The dividends of Kenya’s Vision 2023 is paying off big as Kenya replaced Angola as Sub-Saharan Africa’s 3rd biggest economy, behind Nigeria (1st) and South Africa (2nd).

What’s Vision 2030: A development programme aimed at achieving a 10% growth in its Gross Domestic Product over a period of 10 years amidst other socio-political reforms.

Now, if Angola were the child of an African Parent it’d have to answer the proverbial question, “Does Kenya have two heads?”

First, what happened to Angola: Angola, the second-largest oil producer in sub-Saharan Africa, has seen it’s major source of revenue (Oil) decline, also with the 2019 devaluation of the Angolan Kwanza (Kz). 

Unlike Angola, Kenya's major exports are horticultural products and tea. It’s services sector, which contributes about 63% of GDP, is dominated by tourism.

Now let’s compare the 4 largest Sub-saharan economies

Ease of doing business: In 2020, Kenya ranked 56th in the World Bank ease of doing business rating, up from 61st in 2019 (of 190 countries). It’s 3rd in Africa behind Rwanda 38th & Morocco 53rd. While South Africa is 84th,  Nigeria 131th & Angola is way behind at 177th.

Corruption: In the 2019 report put out by transparency Index, Kenya is plagued with a high level of corruption ranking 137 out of 198 surveyed, it’s up 7 places from 2018. Compared to the other countries, it’s after South Africa 70th,  with Nigeria 131st, Angola 146th behind it.

Quality of life: Out of 177 countries surveyed, coming first place amongst the 4 countries is South Africa 98th, next Kenya in 142nd, Angola 169th and Nigeria 170th.

Competitiveness:  Similar to the Ease of doing business rating, this also looks at how well-positioned a country is for economic prosperity, out of 141 countries ranked:  South Africa (60), Kenya (95), Nigeria (116) and Angola (136).

Growth has a cost

In 2019, Kenya's debt was US$50B against a GDP of US$98B. Its public debt level was 51% of GDP as of 2019. What this means is, if Kenya were to decide to pay off all its debts it’d cost it half the total value goods and services produced in a year. 

Compared to other large sub-Saharan economies:  Angola 111%, South Africa  62.2%,  Nigeria ~30 %.

Even Superman has kryptonite.

Kenya’s economy is heavily dependent on rain-fed agriculture and the tourism sector leaves it vulnerable to seasonal boom and bust. Its agricultural sector employs nearly 75% of the country's 38 million people.

Big Picture: With Corruption in check and the absence of any natural disaster that’d affect its agriculture and tourism sector, Kenya’s economic growth should continue. However, life is always full of surprises, so we’d just have to wait and see. 


New Governments in Burundi And Guinea

Just as other African countries including Togo, Sudan, Seychelles, Tanzania, Gabon, Niger, Ivory Coast and Ghana will head to the polls later in the year for a change of government, Burundi and Guinea are already vanguards. 

 In Burundi, Ndayishimiye has swept 68% vote to become president

Out of 90% turnout for the general elections in Burundi, Evariste Ndayishimiye has 68% of votes, leaving the opposition at 24%.  Talk about a clean sweep.

Before now: The Central African nation has suffered 15 years of neglect from President Pierre Nkurunziza, a former rebel leader who had eluded all efforts to be called out for his bad leadership. The recent election was in search of his successor.

The electoral process: Nkurunziza had backed another candidate as a predecessor but it didn't turn out in their favour. However, Ndayishimiye owes a lot of favours to the military strongmen that backed his candidacy and the party that facilitated his supposedly fraudulent electoral victory.

Now that he has won: the question is what's next for Burundi?. Due to a 2018 constitutional amendment, Ndayishimiye will be the first president to serve for seven years and this is considered enough time to turn things around, starting with restoring the freedom of the press, which his predecessor repressed.

Meanwhile President Conde in line for a third tenure in Guinea

For presidential and parliamentary elections, Alpha Condé and his party swept 91.6% votes and won 79 out of the 114 seats in the National Assembly respectively. This has now extended his chances to run for the third time since 2010 as president and given him a two-third majority in the parliament.

It wasn't easy getting here: Before his victory, Guinea saw a battle against Conde’s third mandate after he ordered an adjustment in the constitution via a referendum, which will ultimately allow him to run for the third time. This, however, didn’t sit well with the people who protested strongly before the elections in March. 

A fall from democracy?

Despite strategies to boycott and protest by the opposition, the elections were done with less participation from people who resisted the movement. It was an unrest situation across the country, with a lot of violence and killings, which ultimately attracted international criticism.  

Failed opposition movement: A major setback for those who opposed Alpha Conde’s constitutional coup is their battle against the president instead of fighting to save their democracy. They failed to provide a concrete political vision beyond their hatred for the president.  

Bottom line: Ten years after Alpha Conde won the general elections, a victory well celebrated and foreseen as an escape from an autocratic government, nothing has changed so much. His current third term mandate has now been perceived as a threat to Guinean democracy.


Worth reading 📚

What to do if you can’t protest on the streets for Black Lives Matter

What should we do with videos of police brutality?

When and what to re-open in Nigeria

A guide to safer hugging: How to Hug During a Pandemic

Quote 💭

“If solutions within the system are so impossible to find, then maybe we should change the system itself.”

Greta Thunberg (a Swedish environmental activist)

Thank you for reading this week’s edition 💙

Written by Daniel AdeyemiDamilola Amusan Bright Azuh