Trends in Africa: 2016

2016 has been a year of turmoil for some African countries, while others experienced stability and good economic growth. One reason for the downside phenomenon is the slowdown of China’s economic growth due to its rebalancing of its economy. A second reason, which is linked to the first, is the end of the commodity price super cycle. In Africa, we saw a continuation of several of the trends observed in 2015, such as urbanisation, the growth in the middle class, the continued need for infrastructure development, the prominence of fintech, and political volatility and stability, to name but a few.

The NTU-SBF Centre for African Studies publishes a weekly newsletter. These were studied to pick up on the trends prominent in 2016. Some of these trends are more elaborate than others.

Trend 1: On the political scene, Africa saw a number of elections in 2016. It mostly experienced peaceful political transitions and elections were deemed to be relatively free and fair. This was the case in Ghana (the incumbent, John Mahama lost to the challenger, Akufo-Addo), Zambia (the incumbent, Edgar Lungu, won) and Uganda (the incumbent, Yoheri Museveni, won). Gabon’s elections were won by the incumbent, President Ali Bongo Ondimba, but were disputed by the challenger, Jean Ping. The difference in the number of votes was just 6 000. This led to a short period of violence before law and order was restored. This trend of political transition or relative peaceful continuation, is contrasted by the situation in Gambia, where the incumbent president, Jammeh, refused to vacate his office after losing to the challenger. President-elect Adama Barrow stayed in Senegal where he was inaugurated and a military force from ECOWAS convinced Jammeh to give up the presidency. In the DRC, Joseph Kabila now gets to rule until elections will be held in 2018. The elections were supposed to be held before late December 2016, but apparently, the DRC was not ready for the election, and would only be able to do so in 2018.

It is interesting to note that the Ibrahim Prize for Achievement in African Leadership has again not been awarded in 2016. As a matter of fact, it has not been awarded in 5 of the 10 years since it was launched in 2006. But as Mo Ibrahim points out, any African leader bent on wealth accumulation can do much better than what the prize provides.

Trend 2: With new president John Magufuli, we are seeing Tanzania taking on Kenya to become the powerhouse of East Africa. This has created growing diplomatic tension between Kenya and Tanzania. Magufuli has also been accused of pushing Tanzania’s priorities at the expense of the EAC. First, Magufuli declared that Tanzanian companies should not import from Kenya anything that can be bought in Tanzania. He also tightened the stringent work permit requirements for foreigners working in Tanzania. In May, Tanzania announced that it would reduce the amount of electricity it buys from Kenya by 67%. Magufuli also convinced Uganda to build its oil pipeline through Tanzania instead of through Kenya. Rwanda then announced that it was going to develop its railway line through Tanzania, as this was cheaper and shorter than the route through Kenya. Tanzania is also building a big port to rival Mombasa. In addition, Tanzania pulled out of a trade deal that the EAC was negotiating with the EU, where after Uganda and Rwanda also pulled out of the deal. This has left Kenya on its own.

One could also see Magufuli’s actions as an attempt to wrest away regional leadership away from Kenya. This kind of “destabilisation” activity might be good for Tanzania in the short run, but it could be seen as a “beggar thy neighbour” approach. If it leads to retaliation by Kenya, it will destabilise the whole region. Kenya’s President Kenyatta cannot be seen to be weak in the face of such “aggression” by Magufuli.

Magufuli’s first visit to Kenya late October 2016 can therefore be interpreted as an attempt to smooth relations between Kenya and Tanzania. Hopefully the leadership aspirations of these two countries will not be to the detriment of the region. It is not inconceivable that Tanzania could indeed take over as the regional leader and become the gateway into East Africa. The exploitation of Tanzania’s gas reserves has not fully kicked in at all, and could bring about a major turnaround in its economy. The same goes for the exploitation of its newly developed uranium mine. The future looks bright for Tanzania!

Trend 3: The Nigerian economy is struggling after being hit by the global crash in oil prices. Although President Buhari has done well in his strategic foreign affairs approach, it is the economy that struggled in 2016. The currency is quite volatile, inflation is problematic, and foreign currency (US$) is unavailable. SMEs and entrepreneurs are struggling, and unemployment is increasing. Nigeria’s economy sunk deeper into recession towards the end of 2016 as inflation hit an 11-year high of 18.3%, driven by a dollar shortage that has drastically hit Nigeria’s capacity to import. Crude oil exports also fell to an average production of 1.63 million bpd, a 0.87% dip from 1.69 million bpd in the second quarter.

President Buhari has tried various strategies to restore the Nigerian economy to health, such as identifying 5 key sectors Nigeria must focus on to revive the economy, i.e. agriculture, power, manufacturing, housing and the health care sectors. He has also developed a “Made in Nigeria” approach. While Nigeria has traditionally had a strong slant towards the West, Buhari has turned towards China for financial support.

The ongoing rebel attacks on oil infrastructure in the Niger Delta have done Nigeria no favour. Two major militant groups, the Niger Delta Avengers and Niger Delta Greenland Justice Mandate, blew up gas plants and oil pipelines in efforts to gain independence for the region, pushing the country’s oil production to the lowest in 20 years.

Nigeria’s response to the naira’s slump has contributed to a bad situation. To protect its foreign reserves, Nigeria banned the importation of many goods. It initially tried to prop up the naira by fixing it against the US$, but was forced to abandon the peg in June 2016. It is still struggling to overcome the currency scarcity. A wave of multinational firms, e.g. Sun International and various airlines, have left Nigeria, citing forex concerns. It is this situation that will eventually define the presidency of Buhari, and history will not be kind to him. It is a pity as he started off quite well at a macro and strategic level, with his foreign policy initiatives promising so much.

Trend 4: South Africa’s political scene in 2016 reminds one of a soap opera. This has spilled over into the economic field, with various ratings agencies seriously contemplating downgrading South Africa’s debt to junk status. Jacob Zuma seems to be the archetype of Gloria Gaynor’s song, “I will survive”. He entered the presidency with close to 800 charges of corruption against him, and had the charges dropped. He did this be “capturing” the National Prosecution Authority. Granted, these charges have to be reinstated, given a recent high court verdict. The upgrade of his homestead at Nkhandla created another uproar. As did his firing of the Minister of Finance, Nene, in December 2015, and replacing him with an unknown backbencher, David van Rooyen. He was within days forced to replace van Rooyen with Pravin Gordhan, the man he replaced with Nene.

The Constitutional Court in 2016 ruled that he had not executed his constitutional duties in the saga around the Public Protector’s ruling on his Nkhandla homestead. The latest report was on the extent of “state capture” and the Gupta family. Various ministers were said to have been appointed on the recommendation of the Guptas. A lot of this led to a serious drop in support for the ANC in the local elections of 2015. Will the support of the National Executive Committee of the ANC backfire against the ANC at the 2019 national elections? Zuma has blamed the situation on foreign entities that wanted to destabilize South Africa. He is portraying himself as a victim. While the middle class in South Africa will not buy this, unfortunately a large number at the bottom end and in the rural areas, will. It will also be interesting to see whether Zuma will shuffle his cabinet to get rid of those ministers that supported the notion for him to step down.

It was under Zuma’s term of office that the UN ranked South Africa as the most corrupt country in the world – not a badge South Africa and the ANC can be proud of!

Trend 5: Africa seems to be ramping up its activities in the motor vehicle manufacturing sector. Countries involved include Ghana, Nigeria, Uganda, Kenya and Ethiopia. Uganda, Ghana and Nigeria have all developed home-grown transport solutions, frequently quite sophisticated. It shows upon the need for the development of the required professionals in the sector. Uganda’s Kiira Motors has produced eco-friendly vehicles, including a two-seater electric car, a five-seater sedan hybrid that uses both lithium batteries and gas, and a 35-seater solar-powered bus.

Ethiopia’s vehicle sector also got a boost when South Korea’s Kia Motors signed a deal with a local company, Belayab Motors Plc, in 2016 to start assembling cars in Ethiopia. It is important for Kia to penetrate the African market, and they are also looking at the prospects of opening similar plants in Algeria and other countries.

Trend 6: Africa saw major developments in the field of technology. The growth of mobile phones and services across Africa has brought many Africans into the digital age and connected them to the Internet. With one of the world’s fastest growing middle classes, Africa has seen multiple opportunities emerge for both local and global retailers from this digital growth.

Tanzania and Togo both built 3D printers from e-waste. In February 2016, Tanzania’s Buni Hub created Africa’s first-ever 3D printer from e-waste. WoeLab in Togo also announced an e-waste-based 3D printer of its own.

Fintech continues to grow and develop, with M-Pesa still dominating the sector. Banks are becoming involved, as they run the danger of being disintermediated should they not. There appears to be an app for almost everything: herding cattle in Kenya (i-Cow), private security in Ghana (Hei Julor!), remotely monitoring patients in Zimbabwe (Econet) and in Uganda, an Uber-like service (Yoza) connecting dirty laundry to mobile washerwomen. Others include MFarm, MHealth, and various financial applications that use M-Pesa as base platform (M-Akiba, M-Kopa, M-Shwari), etc.

Countries such as Rwanda have taken active steps to ensure their citizens have access to the Internet at an affordable rate to transform their agrarian, lower-income economies into one that is both knowledge-based and middle-income. Rwanda has also acknowledged they need to build the capacity to promote, develop and host content locally, and that in addition to establishing infrastructure, they must also foster learning and education, addressing the necessary skills for internet adoption to encourage uptake and ultimately closing the digital divide.

The rapid change in mobile technology and Internet availability, has ushered in a fresh debate around “Smart Cities”, focusing on the kinds of connectivity that will unify the entire ecosystem and improve how Africa lives. Rwanda, Kenya, South Africa, Nigeria and Ghana are countries where the “Smart City” concept has taken root.

E-commerce represents a small, but rapidly growing segment of the African retail market. The growing popularity of online shopping is driven by increasing internet access and smartphone ownership, busy lifestyles, a preference for convenience, nightmare traffic jams, bad roads, and a lack of parking. Digital marketing and social media is also growing strongly in Africa, supporting the e-commerce trend.

Barclays Africa recently completed the world’s first trade finance transaction (between Ireland and the Seychelles) using blockchain technology. Bitcoins are being used innovatively, e.g. SA’s “The Sun Exchange” launched a P2P lending platform that taps into the bitcoin community and helps them fund solar energy projects in Africa. Given the high costs associated with the massive African remittance market, bitcoin is also seen as a credible alternative to the conventional financial institutions.

Trend 7: Energy in Africa is a scarce commodity, representing only 3% of global electricity consumption. More than 620 million people have no access to electricity. This undermines the economic and social development of Africa, fuels political instability and can even have an influence on the creation of failed states. Given the importance of energy to Africa, the president of the AfDB has identified electrifying Africa as one of his “High 5” priorities.

Renewable energy in Africa has become quite prominent and is growing strongly, with costs reducing significantly. Ethiopia is actively pursuing hydro and wind energy, while Morocco has recently commissioned the world’s largest solar plant. Tanzania has agreed to purchase 400MW of Ethiopia’s hydro-power processed electricity. This deal will boost economic integration and strengthen multilateral ties between the two countries, and create more economic integration with Kenya. Ethiopia is building several hydro-electric power plants, including the GERD (Grand Ethiopia Renaissance Dam).

Kenya is the scene of solar PV mini-grids. It has also opened the world’s largest geothermal plant last year, and is building another plant which is expected to come online in two years. Kenya is also building Africa’s biggest wind energy farm to generate a fifth of its power.

Other countries that are tapping into renewable energy in a major way, include South Africa, Zambia, and Rwanda, to name but a few.

Generation sources include solar power, hydro-power, thermal power, wind power, biogas, and methane gas.

Trend 8: It seems that economic power and investment opportunities in Africa has moved from West Africa to East Africa in 2016. Some authors commented that “Africa Rising” is being replaced by “Africa Tilting”. East Africa is increasingly driving growth in Africa as they benefit from cheap oil, slowing inflation and lower interest rates. The economies of Kenya, Rwanda, Tanzania and Uganda were all set to expand more than 5% in 2016. Nigeria, struggling with weak crude prices, power outages and currency mismanagement, faced a 1.8% contraction. South Africa is set to stagnate due to political and labour turmoil and weak demand for its minerals.

East Africa is also reaping the benefits of an improved regulatory regime and increased investment in transport links and telecommunications.

Ethiopia, amongst others, presents a big opportunity for pharmaceutical manufacturing as nearly 85% of the Ethiopian demand is covered by imports. Other consumer-focused companies are also establishing manufacturing facilities for products currently being imported. The Ethiopian government is promoting industrial parks throughout the country. Positives for Ethiopia include relatively cheap energy and an upgraded transport infrastructure.

Trend 9: In Africa in 2016 we saw a continued growth of urbanisation and a growing middle class, with a continued trend in economic growth in some areas. These all present a good reason for retail and consumer companies to continue to expand and look for opportunities in SSA. This will stimulate the growth in the number of malls. Given the increase in business executives visiting Africa, we also see a growth in the number of hotels.

This pace of urbanisation (4% per annum) and a high incidence of poverty pose a serious challenge for East African policymakers. Inadequate urban infrastructure is facing further stress from rapid population and economic growth, resulting in the rapid growth of informal settlements on the edge of cities. The settlements are under-serviced, lacking basics like clean water, adequate sanitation and modern energy. Rapid urbanisation across Africa presents an opportunity for increased industrialisation and development, but governments will need plans and integrated strategies if they want urbanisation to lead to growth.

High population growth in urban centres in Uganda, for example, has put pressure on providers of electricity, water and telecom services, even as costs of land put off local investors. This growth is attributed to massive rural-urban migration by the youth, driven by the search for jobs and more comfortable lifestyles. This has created challenges for different sectors. Telecommunication firms have had to increase investments in new capacity sites, but many consumers still suffer problems of poor network quality, dominated by frequent dropped calls. Mobile money transfer services are focused on expanding their footprint in urban areas because they offer higher revenues than rural areas. Strong urban population growth has equally exerted pressure on utility companies to increase new connections, minimise loadshedding and cut power losses.

Urbanisation can spur development, but it is more likely to compound Africa’s structural challenges. Making cities inclusive, safe, resilient and sustainable, is going to be no easy task.

Trend 10: Given the problems associated with the end of the commodity price super cycle, Africa’s economies have started to industrialise and diversify their economies away from a preponderance on oil. Amongst others, they are looking at stimulating tourism.

Ethiopia’s tourism revenue jumped 20.7% in 2015 to a record high of $3.5 billion from $2.9 billion in the previous year, lifted by an increased number of foreign tourists. This was more than what its more tourist-established neighbours, Kenya and Tanzania, earned last year combined ($2.77 billion). The number of visitors to Ethiopia increased by 136,000 to 910,000 in 2015, as the country hosted several high profile international business conferences and exhibitions.

The hotel industry will enjoy a boom in SSA in the next 3 years, with East Africa leading. Tourism, diplomatic and non-governmental activities in Kenya, Rwanda and Ethiopia are leading the growth. Marriott International opened an outlet in Kigali, Rwanda in 2016, its first hotel in SSA and the first international hotel to set base in Rwanda. Other leading hotel chains that have targeted Africa, include the Hilton, Starwood, Carlson Rezidor and Accor. The industry’s estimated growth is 30% for 2016, making it one of Africa’s best performers. Africa’s fast-growing middle-class is pulling investors to tailor-make midscale hotels to accommodate them.

Trend 11: Regionalisation is a continuing trend in Africa. 2015 saw the signing of the Tripartite Free Trade Area (TFTA). The TFTA will bring together 3 major regional entities, i.e. COMESA, EAC and ECOWAS. Excluded are major West African countries such as Nigeria, Ghana, Senegal, as well as North African countries not included in COMESA. In total, the TFTA will consist of 26 countries, represent close to 60% of Africa’s GDP, and provide a market of more than 600 million consumers. It is foreseen that the TFTA will boost intra-African trade from 12% to 30%.

The CFTA, which is expected to be in place by October 2017, will bring together all 54 African countries with a combined population of more than one billion people and a combined GDP of more than US $3.4 trillion. With the CFTA, African leaders aim to create a single continental market for goods and services, free movement of business people and investments and expand intra-African trade. The CFTA is also expected to enhance competitiveness at the industry and enterprise levels in Africa. The CFTA has the potential to boost intra-African trade by 52.3% between 2010 and 2022, which is crucial to accelerating structural transformation in Africa.

From a macro perspective, the AfDB’s President, Akinwumi Adesina, has identified regional integration as one of his “High 5” priorities. Various challenges mean that the chances that the CFTA will start delivering on its potential by the end of 2017, are slim. The principles underlying regional integration, however, are laudable and both the TFTA (as the precursor to the CFTA) and the CFTA itself needs all the support they can get.

Trend 12: Infrastructure development in Africa remains a serious focus area. Africa needs US$93 billion annually to meet its needs. This includes roads, rail, ports, airports, housing, energy, water, offices and retail outlets. Both the actual development and financing remains a challenge.

We have seen local and international OEMs and leasing companies investing billions in African rail infrastructure to increase their presence in Africa and benefit from the huge growth potential in Africa’s rail sector. All studies conclude that if Africa had an integrated rail network system, the cost of doing business would be reduced substantially since distribution hubs would be linked to production centres.

Transporting goods from main centres to distribution points has led to a number of problems: traffic congestion and fatal road accidents, deterioration of road infrastructure, time lost to slow pace of transport, and higher costs. Transporting refrigerated goods and people is also problematic and costly. Rail would greatly reduce the effects of these problems. In Tanzania, Rwanda, Kenya, and Ethiopia, to name but a few, extensive projects are underway to improve the rail systems.

According to Deloitte, there has been a dramatic fall in infrastructure spending in Africa of $51bn from 2015 to 2016. Global economic headwinds, low growth and lower commodity prices have all contributed to this. Projects included human settlements and associated water, sewerage, roads, electricity, schools and health infrastructure, and not just large construction works such as energy, dams, mines, ports and oil and gas facilities. Several large mining projects have also been suspended. Underinvestment in water infrastructure in Africa is a growing cause for concern, given the growth of megacities in Africa and the political and social pressure this will eventually place on governments

Trend 13: One of the strategies Africa’s economies have latched on to, given the slowing down of their economies, is that of supporting locally made products – “Made at Home.” Buying imported products rather than local products has been quite popular, especially as far as global brands are concerned. In Ghana, they are now looking at manufacturing the Ghanaian car. In Nigeria, you have the ban list – if you can manufacture it in Nigeria, you cannot import it (or get foreign exchange approval for it, at least). Buhari is also punting his “Made in Nigeria” strategy. Targeting consumers and producers to buy the locally manufactured product is long overdue. SA’s deputy president Cyril Ramaphosa also punted the localisation of goods and services as a solution to the triple challenges of unemployment, inequality and poverty, saying it was integral to growing and sustaining South Africa’s economy.

Trend 14: Many retailers and wholesalers are targeting Africa. One lesson they have learnt is that they need to find a source of local supply as soon as possible. Various commentators have made the point that although the “Africa Rising” paradigm was under pressure, it by no means meant that the opportunities had dried up. Given the state of the road and rail infrastructure, as well as problems at some of the ports (all which are business opportunities in their own right), it makes sense to plan for a more efficient supply side. Shoprite, a South Africa food retailer, has been quite successful in its expansion drive into Africa as they try to obtain local suppliers as soon as possible. There is a caveat in dealing with Africa: do your homework, understand the market, and get your supply chains up and running in as an efficient way as possible. And do it right the first time. Distribution is the name of the game!

In addition to countries such as Nigeria, Ghana has also become a focus point of African retailers such as Shoprite, Massmart, Woolworths and Edcon. Reasons include its rapid economic growth, its rising disposable income and the growth of the middle class. Other international fashion brands such as Bata, Nike, Puma and Mango have also entered the market to serve Ghana’s middle class and its affluent elite. Yet, the market share of the formal sector remains small. Deloitte indicated that 96% of all retail transactions in Ghana are carried out in the informal sector.

Trend 15: We are increasingly seeing African governments boosting entrepreneurs in their countries. Entrepreneurship in Africa is seen as a key to stimulate economic growth. It has yielded huge returns, and represents great untapped potential to drive Africa to its next phase of development. A large youth population and a lack of comprehensive employment plans in many African countries precipitate the high rates of unemployment.

Various examples confirm this trend. In Tanzania, small and medium entrepreneurs have been urged to grab opportunities offered by the fish sector to boost their incomes. There was a shortage of over 400,000 tonnes of fish in Tanzania, a gap that the private sector could use as an opportunity to increase their incomes.

Ethiopia saw the launch of a fish farming project in 2016, aimed at improving the food diversity at a cost of US$400,000. A self-sufficient food system is being established to withstand the burdens of drought, and the project is one such an intervention. After the completion of the project, the residents and unemployed youth will acquire skills on how to fish for commercial and consumption purposes and benefit from jobs created for the business.

In addition to entrepreneurial support in Ethiopia, there are also several projects in Somalia, Uganda, and Zimbabwe, to name but a few.

Trend 16: Agriculture is still a major sector for employment and industrialisation. It employs most of the labour force and contributes to 25% of GDP, with smallholder farmers producing up to 80% of the food in SSA. Sustained agricultural productivity growth since 2005 has helped push down poverty in places like Ghana, Rwanda and Ethiopia. It is also clear that those countries that have clear and unambiguous business-enabling policy frameworks that provide for diversification and industrialisation, are much better off than those that have depended on commodity exports. The whole value chain of the agricultural sector must be addressed as it provides many opportunities for value-adding.

However, the sector’s potential remains mostly unrealised, largely due to a lack of access to financing. Commercial bank debt is available, but microfinancing remains vital. However, they are still unable to fund the larger and long-term loans required for effective agricultural value chain development, and their interest rates are unaffordable to farmers. Other platforms, such as Kenya’s M-Changa and SA’s Thundafund, have also popped up.

Aeroponics and aquaponics are emerging as new technologies to bring food to urban environments. The advantages of aquaponics over traditional farming methods, for instance, include the efficient use of resources – water, fertiliser, infrastructure and land. Growing food in urban environments, close to where people live, reduce the need for infrastructure and reduce the carbon footprint of the produce. Reliable energy sources and skills remain challenges, however.

Trend 17: Informal cross-border trade constitutes the majority of informal activity in most African countries. In the SADC, informal cross-border trade makes up between 30 to 40% of total intra-SADC trade, with an estimated value of $17.6 billion. Around 75% of people trading across African borders are women, who are vulnerable to abuse. 43% of Africans in COMESA are involved in this form of commercial activity. It contributes to economic growth, job creation and food security for the majority of the region’s population. Informal trade is essential for poverty reduction. It creates jobs and contribute to food security. Intra-African trade costs around 50% more than trade across borders in East Asia, and is the highest of intra-regional costs of any developing region. Africa has therefore integrated with the rest of the world faster than with itself.

Trend 18: Africa remains one of the world’s most attractive growth opportunities for PE investors. Since the early 1990s, the number of PE funds active in Africa has swelled from 12 to more than 200, while funds under management have risen from US$1bn to upwards of $30bn. Most PE funds and principal investors tend to invest only in minority stakes, and they mainly focus on a limited pool of profitable companies with annual revenue of more than $100m and proven track records.

In addition to the lack of financing for companies in Africa, only about 0.11% of registered companies in Africa are listed. PE investors are known to have said they are faced with a lack of bankable projects. Others again have said that there are enough candidates for those with the right risk profile. This provision is probably the differentiating factor between the 2 schools of thought. One problem, however, is that PE investors look for exit opportunities after about 5 to 7 years. This is problematic for those who require longer-term capital. The lack of bourses on the continent complicates matters for the SMEs. This does create a situation that benefits PE investors, as they can pick and choose. In Africa, it seems they prefer to not get involved in projects where African governments are involved, for the simple reason that many governments do not inspire trust.

Trend 19: Africa has the potential of becoming the world’s factory. Labour in China has become expensive. The USA’s Phillips-Van Heusen Corporation, which owns the Tommy Hilfiger and Calvin Klein brands, believe they can increase their global production in Africa due to the partnership between the industry, government and the donor base to invest in the training of workers and to ensure the facilities are set up appropriately. Companies such as H&M and Tesco are sourcing garments there as well. Labour is abundant, well educated, and cheap, while work-permit visas for foreigners are relatively cheap, and electricity prices are low. The governments are willing to make investments in infrastructure, and boost the development of industry-oriented educational institutions.

Trend 20: Terror groupings in Africa remain a source of concern. Boko Haram in Nigeria and Al Shabaab in Somalia are still active, although their activities have been more subdued than in 2015. In the case of Boko Haram, the concerted activities of the governments of Nigeria and Cameroon have reduced the number and scope of their atrocities. Nigeria, however, has seen a new player becoming very prominent. The Niger Delta Avengers (NDA), a splinter group of MEND (Movement for the Emancipation of the Niger Delta), has been attacking the oil pipelines of the oil companies operating in Nigeria, putting the production of oil in Nigeria under pressure. The latest development towards the end of 2016 was a threat from the NDA to the oil companies to leave destroyed oil infrastructure until such time the Nigerian government meets its demands.

Trend 21: Africa is increasingly moving towards China. This is not a new trend. Western governments and multinationals have played a significant role in Africa’s growth in the past with the EU being Africa’s biggest trading partner. However, Africa is looking increasingly to the East for investment and expertise. Asia-Africa trade has been growing exponentially in the past decade. Alongside China’s ‘One Belt One Road’ initiative, more Asian economies are now showing interest in boosting their African investments, attracted by rising urbanisation and consumerism across Africa. Trade between Asia and Africa is not without its challenges. However, Africa is demonstrating resilience – its key drivers for growth remain intact, i.e. attractive demographics, urbanisation and a rise in consumerism. Côte d’Ivoire, Tanzania, Kenya, Senegal, Rwanda and Ethiopia are just some of the African economies currently performing well. Given uncertainties in Europe’s posture towards Africa in the wake of Brexit, and uncertainties of the Trump administration following his election as the US president, Africa’s relationship with Asia is expected to evolve. Asia has awakened to Africa’s potential and a number of countries are tapping into the opportunities. These include China, Japan, India, South Korea, and Malaysia, to name but a few. Their support also comes without strings attached, making them more attractive than support from the West.

The author, Johan Burger, is the director of the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. Johan can be reached at johan.burger@ntu.edu.sg.

Sources:

From the weekly newsletter, Friday@Noon, published on the website of the NTU-SBF Centre for African Studies. Sources are as indicated in these newsletters.

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