TAR115 – Q2 2021 – Main sections Transport - Assurance

EXCLUSIVE INTERVIEW IMF boss Kristalina Georgieva: “Vaccine policy is economic policy”

SOCIAL MEDIA Will Facebook upend African democracy?

OBIAGELI EZEKWESILI “Take an interest in politics, or be ruled by idiots”

THE AFRICA REPORT

N° 115 • APRIL - MAY - JUNE 2021

www.theafricareport.com

QUARTERLY EDITION • N°115 • APRIL - MAY - JUNE 2021

THE SUCCESS ISSUE

T E C H - H E A LT H - I N D U S T R Y - R E N E W A B L E S - Y O U T H - L E A D E R S H I P …

Stories of African Excellence for the Post-Covid Rebuild JEUNE AFRIQUE MEDIA GROUP INTERNATIONAL EDITION Belgium €7.90 • Canada CA$12 • Denmark DK80 • D.R.C. US$10 • France €7.90 • Germany €7.90 • Ghana GH¢35 • Kenya KES1000 • Morocco DH45 Netherlands €7.90 • Nigeria NGN2000 • Rwanda RWF7,500 • South Africa R75 (tax incl.) • Switzerland FS10.90 • Tanzania TZS20,000 • Tunisia DT15 Uganda UGX40,000 • UK £7.20 • United States US$15.99 • Zambia ZMW80 • CFA Countries F.CFA3,900 • Euro Zone €7.90

EDITORIAL

AN IMF TILT TO AFRICA

No one is rushing to reclaim the term, but the signs are that there is a new ‘Washington consensus’. Member states of the IMF are set to approve a $650bn issue of its Special Drawing Rights reserve currency. That alone will strengthen African treasuries far more than the combined weight of the G20’s over-cautious debt-relief plan and emergency funding from the international system. IMF management is prioritising the fight against inequality and the climate crisis, advocating carbon taxes and a massive social investment programme in health and education.

That policy agenda is mirrored in US President Joe Biden’s new deal, his plan to remake US capitalism over the next decade: a $1.9trn pandemic relief bill, a $2trn plan investing in power, roads, railways and bridges, greening the economy and cutting social inequities. It comes with a price tag in higher taxes of some $2.5trn.

Developing-country finance ministers are struggling to fund these same policies. The world’s richest economies have spent as much as 20% of national income on Covid-19 fiscal and monetary stimulus responses while the poorest economies managed 2% at most.

The first era of the Washington consensus was forged in the 1980s, in the time of

Ronald Reagan and Margaret Thatcher. Their advocacy for lower taxes and government borrowing, deregulation, privatising and shrinking the state, ending capital controls, liberalising trade and exchange rates was heartily shared by the leaders of the IMF and the World Bank. By the end of the 1990s, the economic certainties were fraying and geopolitics were changing fast.

That took a succession of crises: Asia’s 1997 financial crisis, then the West’s financial crisis in 2008, with the coronavirus economic free-fall of 2020 completing the trilogy.

Now, the arguments are less about what and more about how. If it takes $4trn to pull the US’s 320 million people out of the pandemic recession, how much will it take for Africa’s 1.3 billion?

IMF managing director Kristalina Georgieva is emblematic of the new era. She argues that emerging and developing economies would need trillions of dollars to remake themselves.

Growing up in Bulgaria, and with a ringside seat at Russia’s transition from state socialism to crony capitalism, Georgieva speaks with passion about the long-term human costs of bad policies. She spent much of 2020 working with Africa’s policy-makers at the national and regional level. The pandemic has driven the IMF and African governments into a new embrace.

Important policy differences persist between Washington and Africa, but the IMF is seen more as an ally than an adversary in the region’s negotiations over debt relief and infrastructure finance.

When the IMF calculates that the global economy would get a $9trn boost from a comprehensive international vaccination programme, it puts into perspective Africa’s struggle to raise $100bn for its continental vaccination programme.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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#115 / April, May, June 2021 THE AFRICA REPORT 57‑BIS, RUE D’AUTEUIL 75016 PARIS – FRANCE TEL: (33) 1 44 30 19 60 FAX: (33) 1 44 30 19 30 www.theafricareport.com

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EZEKWESILI

12 OPINION / AMAN GEBRU 15 Q2 / April, May, June

43 UK/KIGALI FOCUS The Commonwealth summit in Rwanda in June will show how the UK intends to handle Africa relations now it has left the European Union.

50 AFRICAN EXCELLENCE The Africa Report’s exclusive guide to progress and innovation on the continent, celebrating breakthrough leaders, spritely start-ups, green revolutionaries, neversay-die industrialists and those standing up in defence of the public good.

FEATURES The International Monetary Fund managing director discusses the global response to Covid-19 and the challenges that African countries face in raising money for infrastructure and fighting climate change.

36 WIDE ANGLE / Fighting fakes In a world where truth is under siege from all sides, Africa is not spared the onslaught: travel inside the world of troll farms and fact miners.

President Talon’s much-vaunted reforms have boosted the economy but reduced political freedom.

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72 TRANSPORT DOSSIER

80 LUSOPHONE AFRICA INSIGHT

Nigeria’s rail plans, the airlines surviving a Covid crunch and Maersk’s Africa activity.

After scandals, Portugal and Brazil have the chance to refocus their African ties.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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South Africa’s Sanlam plans to be an ‘African champion’ in financial services and Nigeria’s insurance innovators seizing the opportunities for acceleration.

98 LAST WORD A call from economist Kasirim Nwuke for African parents to keep their kids closer to home for their studies.

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BOTHERSOME BORDERS ZIMBABWE Team Mnangagwa circles the wagons

GOLD BOOM How smugglers rip off Africa

FINANCE AFRICA’S TOP 200 BANKS face the Covid slump

www.theafricareport.com

INTERNATIONAL EDITION

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JEUNE AFRIQUE MEDIA GROUP

QUARTERLY EDITION • N° 113 • OCTOBER - NOVEMBER - DECEMBER 2020

NIGERIA 500 million people and a trillion-dollar economy, or things fall apart NIGERIA AT 60

– 35-page special inside –

Contributions by

Atiku Abubakar Aliko Dangote Emmanuel Macron Yemi Osinbajo Abdul Samad Rabiu Bola Tinubu

NO LECTURES NEEDED Generational power and authority change is not bad. The only challenge is that those who are supposed to benefit from change end up being its victims instead.

Africans should not be lectured on the change they want, rather they should be the agents of change by fully comprehending and owning the change they need, responsibly. Change of leadership should never

MIRRORING MUGABE

Thank you for your intriguing report on the trials and very few tribulations of Zimbabwe’s so-called ‘second republic’, led (if that is the word) by the ‘Mnangagwa squad’ (TAR113, October-December 2020). Perhaps your article’s most interesting attribute is that it follows much of the same legacy as left by the late Robert Mugabe. Rumours of coups, innuendo and WHERE IS conspiracies abound. It reminds me of the many coup-hints in various press and media forums (REALLY) HEADING? throughout most of the 2000s. The difference between then and now could be that Mugabe was very good at juggling the factions, but the incumbent now is not as adept. He will never come close to matching Mugabe’s discursive deceit. One thing is relatively certain: it’s unlikely anyone will be fooled by a ‘popular’ coup again.

David Moore, Professor, South Africa

N° 113 • OCTOBER-NOVEMBER-DECEMBER 2020 THE AFRICA REPORT

Before the African continent achieves prosperity by creating the single largest trade bloc in the world, it must first be a borderless continent so that citizens can freely access markets with neighbouring countries or regions. If restrictions on the movement of people are not liberalised, this will translate into curtailing the free flow of money and negatively impact cross-border economic activities.

Kokil H Shah

be precipitous. Indeed, most of the countries where the so-called dictator was slaughtered and dethroned have instead slid back and more people are dying.

My humble suggestion to African leaders and readers is that there is a need to establish working government institutions rather than governments that hinge on individuals.

This takes time.

Joel Uwizeye

IN OSINBAJO’S DEFENCE In the article published on 19 January 2021 with the headline ‘Nigeria: Lookback at Buhari’s legacy, as potential successors crop up’, it is worrying that the bias of a writer is allowed to colour what would have been a balanced analysis. For instance, The Africa Report stated that vice-president Yemi Osinbajo is also a

contender ‘but may have to mend some fences in the party and with Buhari if he is to consolidate his claim’. Pray, tell, on what basis or fact does the magazine make these spurious claims?

The insinuation that President Buhari does not trust Osinbajo or that the VP has any fences to mend with the President or the party is false and inaccurate.

Fejiro Johnson

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THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

Experience the Progress.

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OBIAGELI EZEKWESILI

ENDING THE IDIOCRACY Transparency and justice have been her banners over a long and varied career. Now Obiageli Ezekwesili has founded a school for the political leaders of tomorrow

By NICHOLAS NORBROOK A coffee is balanced precariously near the keyboard as our Covid-era Zoom meeting pings into life. Obiageli (Oby) Ezekwesili is running late and has a good excuse: her newest venture, the School of Politics, Policy and Governance, is launching operations in a few days’ time.

While there is no straight line from her childhood to the new venture, there is an upright character who appears as a leitmotif in Ezekwesili’s CV: co-­ founding Transparency International, cleaning up the budget process in the Obasanjo government – earning her the sobriquet ‘Madam Due Process’ – bringing Nigeria into the Extractive Industries Transparency Initiative and, more recently, spearheading the Bring Back Our Girls campaign.

“I had a very active family but not noisy,” says Ezekwesili. “We were raised to believe in diligence.”

She remembers an early occasion: “We had a certain Captain Obimbe in our school, who took a delight in caning just anyone.” One day, Ezekwesili stood up and protested that the child

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about to be struck was innocent. “And everyone was stupefied, saying ‘Kid get real, what are you doing?’.” But she caused the tryannical teacher to lower his cane.

Ezekwesili, like so many Nigerians, is preoccupied with the path the country is on. The mass kidnapping of schoolgirls is now a near weekly event in the impoverished northern part of the country – a region that has endured centuries of violence and poverty.

For Ezekwesili, the problem is not an African one. “[Many countries in] Europe have had violent paths; some have made improvements and left their past behind,” she says. “But the real challenge in the case of Nigeria

‘We are without that clear sense of a core of Nigerians that is holding up the nation’

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

is that, whereas we became a country, we have not become a nation.”

For her, a key ingredient in that process is the formation of an elite class with vision beyond self-­enrichment.

“We are now 21, going on 22, years of unbroken democracy,” she says, but what prevents the move from country to nation “is this matter of the subordination of the common good for narrow and private interests.”

Fixing it will require “the coming of age of the Nigerian citizen – this is the biggest transformation that can happen”. She predicts a bumpy path ahead, even if there is a gathering mood of ‘change must come’ seen in the #EndSARS protests against police brutality. In fact, Ezekwesili points out, this civilian-­led movement was derailed “when #EndSARS was made out to be a southern affair”. She sees this as a case of manipulation by the state, which “used all kinds to tactics to destroy what was a golden moment to support the process of that conversation. That conversation would have led to the emergence of a new social contract.”

Given that “every ethnic group is hurting”, Ezekwesili is dismayed by the electioneering already under way ahead of the 2023 national elections, which she says is aggravating the underlying wounds where Nigeria was poorly stitched together by the British. And she is worried: “We are without that clear sense of a core of Nigerians that is holding up the nation. […] Don’t let this collapse, don’t let this house collapse.”

So how to gather that coalition of the willing in Nigeria: patriots who want reform, who can heal the country and help Nigeria move from country to nation? Who will stand up to the next Captain Obimbe?

Ezekwesili is certainly not looking for help from the top. “I mean, we got unfortunate with a president whose stock in trade is to sharpen the divisions amongst his own people.” More likely to help are Nigerians born in

business class, especially young entrepreneurs: “They understand that ‘Okay, we cannot compartmentalise.

We cannot do this silo approach where we’re only interested in building companies that do great things.’ […] They are more socially conscious.”

Religion – her husband, like VicePresident Yemi Osinbajo, is a pastor with the Redeemed Christian Church of God – also has a part to play. “We can’t turn the church into a place to have the conversation about issues of the state,” she says, but she does think it can encourage good citizenship and public leadership.

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Her key insight from her own experience: get your hands dirty. “Politics was always something I looked at from a distance,” she says. “[But] I have discovered Plato was right. If you are not interested in the politics of the society you live in, you will ultimately be governed by idiots.”

JE AN

the past 30 to 40 years – those who formed the backbone of the #EndSARS protests. “I actually admire the irreverence that they have for these organised systems – because the organised systems in our country are really not organised, they are appropriated systems,” Ezekwesili says.

The good news is that we may be at a tipping point. Part of that is visible in the changing opinions of Nigeria’s

‘Our curriculum is everything in the knowledge gap of the political class today’

The straw that broke the camel’s back was the abduction of the Chibok schoolgirls by Boko Haram in April 2014. “Two consecutive administrations failed to give justice to children who were abducted […]. I said: ‘You know what? These politicians act in this manner because nobody has challenged this mindset where it is perfectly okay to be a politician and not really care about producing the results that matter to your people.’”

Hence her school. With the low-­ income majority class in Nigeria seeing election day as a transaction and the middle classes uninterested in politics because they think the process is stitched up in advance, the ‘demand’ side of politics is “hopeless”, and, on the ‘supply’ side, the political class needs to be rebuilt. “A key solution is actually to build a system of public-­ leadership development.”

Some 300 students are in the first cohort. The majority of them already hold PhDs and master’s degrees. The classes are delivered by lecturers with a vast experience on the ground. “We have courses in economics, in trade policy, in technology, in education, in climate change. Our curriculum is everything in the knowledge gap that we see amongst our political class today,” says Ezekwesili. “So when you’ve been through our school, I want to vote for you.”

The end game? Improving Nigeria’s political class to the point where Nigerian citizens start being lured back to the political process – an ambitious but commendable solution to avoiding the idiocracy.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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OPINION

COVID-19: ARE WE REALLY IN THIS TOGETHER? DUQUESNE UNIVERSITY

AMAN GEBRU Assistant professor of law at Duquesne University School of Law, Pittsburgh, US, specialising in property and intellectual property law. Aman Gebru tweets @aman_gebru

A storm is brewing in Geneva. In March 2021, several wealthy member states of the World Trade Organisation (WTO) rejected a request from more than 80 developing countries to waive patents for Covid-19 vaccines in order to increase access for some of the world’s poorest.

India and South Africa first made similar requests back in October 2020.

The US, the UK and Switzerland – countries that have significant pharmaceutical industries – argue that waiving patents will discourage companies from investing in vaccine research and development.

The WTO works on the basis of consensus. Even if the majority want a waiver, the wealthy minority have stalled their request. On present form, most people in developing economies are unlikely to be vaccinated this year.

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Substantial numbers will have to wait until next year or even later.

With the pandemic still raging and waves of new variants mutating, the stalling of the requested waiver will almost certainly delay achieving global herd immunity. As the virus spreads rapidly, there is a clear lesson: without global vaccine coverage there will be no international herd immunity.

The Covax initiative of the World Health Organisation (WHO) aims for equitable vaccine distribution, on the principle that ‘with a fast-moving pandemic, no one is safe until everyone is safe’. Stalling a global vaccine roll-out will also slow plans for an economic turnaround: widespread vaccination is the best hope for a quick return to normality.

Most developing countries cannot afford vaccines at the selling price in the US: the cost is $25-$37 per dose for the Moderna and $19 for the Pfizer. Even for wealthier developing countries, there is a chronic shortage of supply – at any price.

The UK and the European Union have been embroiled in a stand-off

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

over supplies. Despite this, the UK has vaccinated more than 46% of its population with one shot, while across the EU it varies between 46% (Malta) and 6% (Bulgaria). The US, which started vaccinations late last year, had more than 25% of the population vaccinated with at least one shot by late March. President Joe Biden promises 200 million people will have been vaccinated in the US by the end of June.

Covax has struggled to provide even small consignments of vaccines to a few countries in Africa. Ghana and Rwanda leading the pack of the recipients. Vaccination rates in Africa remain troublingly low. Experts reckon that developing countries will have to wait until 2023 or even 2024 to receive enough vaccines to reach herd immunity. That will be too late. In the meantime, many will lose their lives.

It was against this background that India and South Africa asked the WTO to waive patent protection of Covid-19 vaccines. Their request, backed by two-thirds of the WTO member countries, was designed to ensure that patent rights ‘do not create barriers to the timely access to affordable medical products including vaccines and medicines’. The proposed waiver would be time-bound, and in force until ‘widespread vaccination is in place globally, and the majority of the world’s population has developed immunity’.

Some myths about the role of patents in encouraging innovation have surfaced in the ensuing debate. The first is that patent rights are needed to create vaccines. There is some evidence that patents encourage limited investment in the pharmaceutical industry. However, this evidence is weak and does not support unqualified protection for inventions.

Despite this, pharmaceutical executives and politicians claim that, without strong patent protection, pharmaceutical companies would not have developed vaccines.

ADRIA FRUITOS FOR TAR

In fact, the Moderna vaccine was developed with a $2.5bn US government grant covering most of the cost.

BioNTech, key to the development of the Pfizer-BioNTech vaccine, received more than $445m from the German government. Pfizer also benefited from a US government promise to purchase $2bn worth of vaccines.

One lesson from the Covid pandemic is that governments are willing to heavily subsidise vaccine development during such emergencies, making investments in vaccine development very lucrative. The billions of dollars that developed countries have committed to vaccine purchase exceed the costs of production. Patent-holders will still be able to recoup their investments in vaccine development with significant profit. The waiver would give developing countries vaccines they would otherwise have been unable to buy.

Waiving patent rights in emergencies is not a new idea. In April 2020, the US government invoked the Defense Production Act (1950) to force manufacturing giant 3M to prioritise the production of N95 masks. The WTO’s compulsory licensing rules were used

Moderna’s decision not enforce its vaccine patents is a hopeful start

by a number of its members, including Rwanda and Zimbabwe, to tackle the HIV/AIDS pandemic.Some might ask: why suspend patent protection rather than use compulsory licensing?

Compulsory licensing procedures have been part of the Trade-Related Aspects of Intellectual Property Rights agreement since the WTO’s inception, but they have rarely been used.

Compulsory licensing takes time, as there are several processes that the beneficiary country has to complete. Ideally, licensing authorities need to negotiate first with the ­patent rights-holders. Furthermore, rights-holders are entitled to royalty

payments even if their invention is used under compulsory licensing.

Compulsory licences are also non-­ assignable and would be subject to judicial review in the licensing country.

Time is of the essence with the Covid emergency. The tortuous process of compulsory licensing isn’t the best solution. Fair access to vaccines requires more radical action.

Moderna’s announcement that it will not enforce its vaccine patents during the pandemic is a hopeful start. If enough pressure is put on the other pharmaceutical companies, they could share their know-how to allow a faster roll-out.

A phrase used repeatedly during the pandemic is ‘we are in this together’. It reminds us of the late song-writer John Lennon’s plea to “Imagine there’s no countries” – a world without borders.

The pandemic has shaken the world.

No nation, rich or poor, has been spared: we are indeed in this together.

For a few wealthy nations to reject a request for a patent-protection waiver suggests that not all agree. If we are truly to be in this together, and if the world is to prevent millions of avoidable deaths, a radical change from this brand of economic nationalism is urgently needed.

This is one of a series of African Trade Conversations curated by Petina Gappah. She is the author of Out of Darkness, Shining Light and The Book of Memory. She worked in Geneva as an international trade lawyer in the UN system.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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LE CHANT DU COLIBRI BY JEMS KOKO

Quarter

The Africa Report’s exclusive guide to the quarter ahead features key events from the worlds of politics, business and culture. Find out more about how to plan your April, May & June, Perhaps you might make a cheeky bid for an Ethiopian telecoms licence? Or vote in elections in Chad. Financiers will hop over to Accra for the annual meetings of the African Development Bank, while artists will head to London’s Design Biennale, where Africa is in the spotlight.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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Publired

MESSAGE In the midst of the search for solutions that show

if they perceive the 2021 Food Systems Summit

potential to transform the future of food security

as yet another perpetuation of global food

and nutrition, one voice risks getting lost among

inequalities?

louder voices: the voice of smallholder farmers still struggling to consistently produce adequate and

nutritious

already

taken

the high road, pledging to boycott the 2021

require are many: access to knowledge about

domination

sustainable food production practices, through

accomplish anything for smallholder farmers is

programs such as farmer field schools, high-

still a mystery. As the world brainstorms its way

quality extension and digital advisory services;

out of future food crises, now is not the time to

affordable inputs, including appropriate seeds,

leave the conversation.

technologies, facing

available

precision from

families

have

Summit due to what they see as corporate

and

their

groups(10)

and

nutrients

for

farmer

communities. The solutions smallholder farmers

plant

food

Some

of

its

agenda.

How that

would

agriculture

nearby

businesses; tools for financial

farmer-

Yes, African farmers must have a seat at the table

literacy

in this year’s Food Systems Summit. As a “People’s

and financial products that are extended to

Summit”,

smallholder farmers. Enhancing the productivity

designed

of these farmers would dramatically transform

scientific,

the

UN

for

must

incorporate

smallholder

advocacy

and

solutions

farmers

in

leadership

its

agenda.

local food systems, making more food locally

Here is the good news: Africa’s smallholder

available and strengthening farmer livelihoods

farmers

to build vibrant rural economies. At the market

advocacy platform, but they have a voice. Their

level,

governments

African

farmers

need

value-chain

may are

necessarily

eager

to

represent

them.

ensure higher yields, translating to improved

groundbreaking research rooted in their needs.

incomes

The public is massively advocating on their behalf

The overwhelming majority of these smallholder

are

an

Local

livelihoods.

institutions

have

partnershipsand robust cooperative models that and

academic

not

producing

on digital media platforms. Isn’t time we listen?

farmers are in Africa. Can we then blame Africans

Dr. Ghani Chehbouni Professor at Mohammed VI Polytechnic University (UM6P) ; Lead of the International Water Research Institute (IWRI) ; The prime concern of Africa’s smallholder farmers is how to be more productive. Source: West Africa Trade & Investment Forum

(10)

Research Director at the Institute of Research for Development (IRD).

https://www.theguardian.com/global-development/2021/mar/04/farmers-and-rights-groups-boycott-food-summit-over-big-business-links

Publiredac_OPED TAR_L 19cm x H 27cm_25032021_vUK.indd 2

25/03/2021 12:45

MESSAGE

The Whitaker Group

Ghana: 1 Dulles Court, Joggis Street - Accra US: 1818 Library Street, Suite 500, Reston, VA 20190 Email: twg@thewhitakergroup.us www.thewhitakergroup.us

EXPERT ADVICE

Accelerating Africa’s Post-COVID Recovery Should be a US Imperative The African Growth and Oppor-

firms -- building African value

tunity Act, which I was privile-

chains to serve the single African

ged to help shepherd into law as

market -- 1.3 billion consumers

the first-ever Assistant US Trade

and a combined GDP of $2.6 tril-

Representative, expires in just

lion – envisaged by the African

four years. Adopted in 2000, it

Continental Free Trade Agreement.

marked a historic paradigm shift in US Africa policy and has been the cornerstone of US economic relations with the Continent ever since. However, as a hopefully wiser world recovers from the ravages of a borderless pandemic, it is time to pivot again, and no less boldly.

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African exports by offering non-reciprocal access to the world’s largest market. BMW and Mercedes started assembling cars for the US in South Africa with inputs from the wider region. Chinese apparel firms moved their sewing machines to Lesotho, Kenya and other African countries.

This is the thinking behind the US-Africa Accelerated Growth Initiative (AGI) that The Whitaker Group proposes to the Biden Administration. It includes mechanisms

network with viewers in 48 African countries 24/7 on the Continent’s largest satellite platform and, via streaming, around the world.

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UK/KIGALI /

ISAAC KASAMANI/AFP

Boris Johnson (seen here with Ugandan foreign minister Sam Kutesa) was already wooing Africa in 2017

UK/ KIGALI Life after Brexit The Commonwealth summit in Rwanda in June will show how the UK intends to handle Africa relations now it has left the European Union THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

43

UK/KIGALI / Life after Brexit Royals and republicans at the UK-Africa Investment Summit in January 2020

Brexit marks a set of major re-alignments for UK foreign policy. So what does this spell for the country’s relationships in Africa? “One thing that absolutely has not changed is my ambition for the UK to be Africa’s investment partner of choice,” said Prime Minister Boris Johnson during a virus-quietened second edition of the UK-Africa Investment Summit in January 2021.

This is echoed by the UK’s senior trade-focused diplomat, Emma Wade-Smith. Based in South Africa, she says her teams have been doubled in the past 18 months as the government ramps up plans for its post-European future: “Every day I see the importance of Africa in global trade and investment in general, and the in UK in particular,” says Wade-Smith. “And we are not alone, of course, in our interest in Africa’s vast prospects.”

Given the scramble by China, India, Japan, Turkey, Russia, the US and a multitude of European countries to tap into expanding African consumer and governmental spending, the UK’s strategy has been to lean on its history – the constellation of former colonies now banded into a club known as the Commonwealth. That club will next assemble – pandemic permitting – at the Commonwealth Heads of Government Meeting in Kigali, Rwanda, on 21 June.

Beyond old allegiances “The Commonwealth remains an extraordinary network of developed and developing countries working together on the common goals of prosperity, democracy and peace,” says Wade-Smith. “It comprises more than a quarter of the world’s population, and its diversity allows us to benefit from different approaches to addressing

44

REX/SIPA

By NICHOLAS NORBROOK and OLIVIER CASLIN

major international issues.” Indeed, most of the post-Brexit bilateral trade deals that the UK has signed worldwide are with Commonwealth countries. This applies to 10 of the 16 deals signed so far in Africa.

But a big post-Brexit idea – that the Commonwealth and its 19 African countries could compensate for the European market – has died in London. “The [institution] should be reorganised to take greater account of the economic weight of India and other countries like Nigeria,” says a source familiar with the organisation’s operations.

This transformation does not appear to be on the agenda of the June summit.

Even within the Anglophone ‘family’, there are dissenters. While traditional partners South Africa and Mauritius have been able to draw their neighbours into the fold on post-Brexit trade deals, Ghana was late to sign up and Nigeria is still refusing to do so. Kenya was rebuked by its East African Community counterparts for its eagerness to agree with London.

Beyond the Commonwealth countries lie opportunities for new

The concept of ‘Global Britain’ is at best theoretical, especially beyond its shores

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

relationships on the continent.

Morocco’s financial sector, for example, has attracted interest from the London Stock Exchange, which partnered with the Casablanca bourse in 2016.

Politically and economically, the concept of “Global Britain” – a Britain freed from its European chains to sail before the wind of globalisation – remains at best theor­etical, especially on the international scene. “It is too nationalistic a vision to be shared outside the UK,” says one London columnist.

Juggling priorities It is also unclear what ground the UK wishes to put its stake in. Pushing back from China on Huawei’s 5G technology for mobile networks, for example, would put UK companies in a difficult pass on the continent, which has largely accepted Chinese technology in their telecoms backbone infrastructure.

Likewise, the City of London, a clear asset to those marketing Britain’s assets abroad, does not yet have a clear post-Brexit path: rulesnatcher from the EU? Singaporeon-Thames? A recent decision by the UK government to take a hardline stance on fishing quotas with the EU appeared to have been made at the expense of a clearer role for British finance within Europe.

This will not matter as much if, as Wade-Smith puts it, demand from African buyers for UK goods

and services remains strong. But she also admits that the UK has lost some market share in recent years, particularly in the face of the arrival of new countries attracted by African economic opportunities.

Idle hands…

Richard Ottaway, chair of the UK’s parliament’s foreign affairs select committee from 2010 to 2015, agrees that Africa has not been a major focus of UK activity. ‘Africa accounts for just 2.5% of the UK’s trade. South Africa and Nigeria, the continent’s two largest economies, make up 60% of the entire UK-Africa trade relationship. Our investments lag well behind those of France and the United States,’ he wrote in The Africa Report in

March. ‘It is true that where Britain has idled, other less than democratic powers have stepped in.’

With this far from subtle reference to China, Ottaway gets closer to a real problem that UK companies face in making deals in Africa: some countries can offer a level of economic diplomacy – such as infrastructure financed upfront – that the UK cannot match.

Institutions like the UK development financier CDC can help. For

60%

of the UK’s trade with the continent currently is with the two largest economies – South Africa and Nigeria

its CEO, Nick O’Donohoe, the UK has a special skill set for helping Africa’s private sector to develop, in particular through injections of equity. “Many mistakes have been made in Africa because too many [development finance institutions] are too focused on debt […] and that’s not a good thing from a capital-structure perspective.”

But post-Brexit and post-Covid diplomacy in Africa does not all look rosy. The announcement by UK chancellor of the exchequer (finance minister) Rishi Sunak of a reduction in the UK aid budget from 0.7% of GDP to 0.5% is a big blow for African recipients – especially as an independent watchdog rated the UK’s aid as “increasingly effective” since 2013.

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UK/KIGALI /

INTERVIEW

James Duddridge ‘It’s business as usual and Brexit makes no difference’ The UK minister for Africa talks to The Africa Report about how Brexit and the Covid crisis are changing the country’s priorities on the continent and beyond Interview by NICHOLAS NORBROOK The UK is in global diplomatic realignment, and not just in Europe.

While it was close to the Chinese under David Cameron’s prime ministership, the current executive under Boris Johnson is far nearer to the US position: speaking up on human rights violations against the Uyghur ethnic group and repression in Hong Kong, and backing away from including Chinese technology companies in core communications networks. Will this realignment be visible in Africa?

There is now a strong press of foreign powers seeking advantage on the continent, each bringing their own strengths, from Japanese technology, the project

46

financing of Chinese infrastructure providers, to the price points of Turkish goods and the agribusiness competence of Brazil.

Working in consortiums “We are motoring”, says UK minister for Africa James Duddridge. He points to post-Brexit trade agreements signed with 15 African countries and the advantages that the UK can depend on, such as use of English, the attractiveness of the City of London and the long history of UK corporate engagement on the continent.

“Yes, there are a lot of players, but more and more we’ll be working in consortiums across countries,” says Duddridge, “and that de-risks some of the purchasing decisions

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

for African countries, [creating] internal checks and balances between countries and companies.”

Critics point to the decision to slash the aid budget from 0.7% to 0.5% of GDP as a hindrance to post-Brexit diplomacy. “Our ambitions are greater, not less.

We spend £10bn ($13.8bn) a year on overseas development assistance,” says Duddridge. “Every partner I have spoken to sees us as a long-term partner. We have to cut our cloth accordingly during Covid-19. Everyone recognises that, but what is important is staying in there and growing with them.”

Much UK aid has shifted to Covid-related spending, such as the £584m contribution to the Covax initiative to purchase vaccines for the least-developed countries.

More private conversations will be continuing with France, despite concerns that Brexit might lead to the end of a quid pro quo between the two countries over security and intelligence assistance in Africa.

“I don't think that will have any direct impact. We work with the French in the Sahel as part of a coalition. We have got 300 troops in Minusma [the UN peacekeeping mission in Mali] and support the French with heavy-lift Chinook helicopters as part of Operation Barkhane,” says Duddridge.

In a nod to the global strategic realignment of the UK, he adds: “But of course the principal intelligence relationship is that of the Five Eyes [Australia, Canada, New Zealand, the UK and the US], rather than the EU, which has never been quite as focused on these issues.

Duddridge concludes: “We will work with all our partners.

I have spoken to [France’s foreign minister] Jean-Yves Le Drian, and I have met with Franck Paris, the Africa adviser to President Emmanuel Macron. It is business as usual and Brexit makes no difference to that relationship.”

UK/KIGALI /

INTERVIEW

Uzziel Ndagijimana

Rwanda’s finance minister outlines the government’s rescue plans for the tourism and transport sectors and support for a population hard hit by Covid lockdowns Interview by NICHOLAS NORBROOK While the impact of the Covid-19 pandemic has been felt in all sectors in Rwanda, tourism, in particular, has been knocked sideways, says the minister of finance and economic planning, Uzziel Ndagijimana. The government bet big on the sector over the past few years – including underwriting the Kigali Convention Centre – and the collapse of tourist numbers has been tough.

As part of its Covid response, the government is pumping $100m into the private sector over the next two years. “And we plan to double this,” says Ndagijimana. At least $50m will go on financial aid to hotels.

“We gave permission to the banks to restructure loans, to extend their maturity to 15 years, provide three years of grace period and reduce the interest rate,” he says.

The government is also upping its support for the national carrier, RwandAir, with 145bn Rwandan francs ($145m) in the 2020/2021 budget, up from 122bn francs in the previous year. Ndagijimana says

48

that, while RwandAir “is not profitable, it has played a catalytic role in our development”. The tourism industry was booming before the epidemic, “but [RwandAir] also helps trade, helps export some light manufactured items and took horticulture products to Europe.”

Doha to the rescue A potential shelter for RwandAir from the kind of problems faced

by Kenya Airways or South African Airways is its potential partnership with Qatar Airways.

“We are in final negotiations.

The company will be stronger, with a larger fleet and more resources,” says Ndagijimana, who declines to give a date on when it may be signed and confirms the government will remain the majority shareholder.

Qatar Air is also investing in the new Kigali International Airport.

The construction project has kept going despite the pandemic, in part to be able to meet the logistics requirements of the Commonwealth Heads of Government Meeting scheduled for June 2021.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

RWANDA GOVERNMENT

‘We plan to double aid to the private sector’ RwandAir, meanwhile, continues its expansion, and recently became the first African airline to trial the International Air Transport Association (IATA) vaccine travel pass, part of a scheme airlines hope will convince governments to open up borders.

An economic recovery does not just depend on tourism, however, says Ndagijimana. In the second quarter of 2020, when Rwanda locked down the country from March, GDP growth was as low as -12.4%. “We have never had that except during the genocide,” he says. “We don’t have figures for the final quarter, but we expect another improvement.”

One immediate priority is to ensure food security by putting more money into agricultural production. The government has bolstered the social-security net “to help people falling into poverty after the sudden close of activity, providing for basic needs, foods and so on,” says Ndagijimana. The national budget also has extra funds for the health sector.

All this requires extra cash: Ndagijimana has asked parliament to increase the budget by nearly 7% to 3.4trn francs. Having tapped $28m in debt-service relief from the IMF in 2020, Rwanda is targeting a rebound to 5.6% growth in 2021.

RWANDA

The government wants to strengthen the financial sector and attract more investors through the launch of an international financial centre in Kigali

the KIFC with expertise in shaping its legal and regulatory frameworks. On 6 October 2020, RFL signed a deal with French public investment bank Bpifrance, which will provide technical assistance to help financial services structure their transactions through the KIFC.

By ’TOFE AYENI and AURÉLIE M’BIDA

Not a tax haven

KIFC preparing for lift-off RFL wants to learn from its African counterparts and Western financiers. In May 2020, it entered a partnership agreement with Morocco’s Casablanca Finance City, with the goal of promoting economic cooperation between the two countries.

The following month, a partnership was announced with the UK’s development finance institution, the CDC group, which will provide

In a bid to further diversify the economy, the Rwandan government wants to attract more activity in the banking, financial services and outsourcing sectors.

Key to this strategy will be the Kigali International Finance Centre (KIFC), which is set to be launched in June 2021 during the 26th Commonwealth Heads of Government Meeting to be held in Rwanda’s capital.

The development of the KIFC will be handled by Rwanda Finance Limited (RFL), a new government company created as an offshoot of the Rwanda Development Board (RDB) – the public agency in charge of attracting foreign investment to the country.

Tidjane Thiam, chairman of the board at Rwanda Finance Limited

Franco-Ivorian banker and former head of Credit Suisse Tidjane Thiam was appointed chairman of the board of directors of RFL in November 2020. Thiam’s deputy chair is finance expert Diko Jacob Mukete, the former country representative of the African Development Bank in Rwanda. The RFL board held its first meeting in March to discuss plans for the KIFC launch.

Their goal is to make the KIFC into a worldclass financial centre that will promote foreign investment and bring highly skilled jobs in finance to the capital.

KEYSTONE/MAXPPP

The Thiam touch

The government is keen to stress that it does not intend to compete with tax havens by turning a blind eye to compliance concerns or by slashing tax rates. It is signing double-­taxation avoidance agreements with African and other countries to encourage investors.

To ensure that the KIFC attracts companies committed to making an economic impact in Rwanda, the government has set out regulations for companies investing within the KIFC framework. They include provisions that all board meetings must be held in Rwanda and at least 30% of professional posts must be held by Rwandans.

Building up an international financial centre takes years. The analysts at PwC warn that the launch of the KIFC is unlikely to be a big bang: ‘Some of the sectors that Rwanda Finance intends to attract, such as business process outsourcing and fintech, will require time to develop, which is why KIFC has a long-term, evolving approach to the kinds of regulations and incentives that will support the development of [these] sectors.’

Rwanda has a stable and resilient economy with a 10-year average growth rate of 8.6%. It was ranked first in Africa for government transparency according to Transparency International’s 2019 report.

APRIL-MAY-JUNE 2021

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BIG TOPIC /

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THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

SUCCESS

African excellence The Africa Report’s exclusive guide to progress and innovation on the continent, celebrating thoughtful leaders, spritely start-ups, green revolutionaries and those standing up in defence of the public good By 'TOFE AYENI, EL MEHDI BERRADA, NICHOLAS NORBROOK, PATRICK SMITH and DAVID WHITEHOUSE

With a once-in-a-lifetime pandemic breaking over the bows of the good ship Africa, it has been hard not to get swept overboard. Many countries were already listing under the heavy drag of debt before the crisis hit.

Urgent challenges – security, climate, employment – have not disappeared.

Rather than submit to the sirens of pessimism, come with us on a journey through African excellence.

From the diplomatic victories that will allow Africa to face the 21st century as a unified bloc, to the South African and Nigerian entrepreneurs unwilling to accept that manufacturing

on the continent is dead, to the young people plotting the end game for the gerontocrats, join the Africans who are part of the solution and those to whom rebuilding the continent will fall. Success cannot be copy-pasted across; but for those in search of smiles and inspiration, read on.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

51

BENIN FOCUS /

BENIN FOCUS Growth and pains President Patrice Talon’s much-vaunted reforms have boosted the economy of the West African state but reduced political freedom. As he sought his second term in April, he was leaving nothing to chance

President Talon at the Palais des Congrès in December

66

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

PRESIDENCY OF THE REPUBLIC OF BENIN

By MATTHIEU MILLECAMPS in Cotonou and Honoré Banda Despite his prior promises to govern for only a single term, Benin’s President Patrice Talon was standing for re-election on 11 April and looked to be heading for victory as The Africa Report went to press. Talon’s economic record is strong and he has sidelined the opposition.

Striding across the stage of the Palais des Congrès, dressed in a safari suit, in December, Talon had all the nonchalance of a Silicon Valley CEO. What he is most proud of, he claims, is “creating a dynamic”: “In reality, this is our greatest achievement – our reforms. Building kilometres of road is not much; bringing water to people – of course it’s vital; but what is most important is to ensure the survival and development of our eternal nation forever.”

His supporters in the Union Progressiste (UP) and Bloc Républicain (BP) alliance, which holds all seats in the national assembly, point to the levels of infrastructure and confidence building with international lenders.

“Just look at the good results we have with the International Monetary Fund [IMF] or the rating agencies: his mandate has paid off in all aspects, economic and political,” says Gérard Gbénonchi, a member of parliament for the UP.

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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TRANSPORTATION DOSSIER

Fighting gridlock with rails The Covid-19 crisis and the crash in oil prices are pushing Nigeria to accelerate its plans to strengthen the non-oil sectors of the economy with investments in transport and other infrastructure

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THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

By RUTH OLUROUNBI in Abuja When Lagos-based Miftah Adediran broke ground on his cashew and other cash-crop ­businesses in Ibadan about five years ago, he banked on the government’s promise of a railway that would help haul his crops to Lagos, whence they could make their way

in trucks to the congested Apapa port for export. Next year, Adediran might finally get to export his crops from Ibadan, via a railway that goes all the way to the port.

On 25 January, China Civil Engineering Construction Corp­ oration, the contractor handling the $1.6bn Lagos-Ibadan railway project, announced that it had

linked the Lagos-Ibadan rail tracks to the Apapa port. The link ‘has become an important transporta­ tion passage for the import and export of goods, and now serves as a significant guarantee with regard to the comprehensive operational efficiency of the railway,’ the Chinese construction company said in its statement.

Extending a new standard-gauge railway line to Apapa to ease the maddening gridlock around the port sounds like a smart business idea, says Adediran. “I’m very optimistic with this level of devel­ opment, because the business community will be one of the biggest beneficiaries. It means that our export commodities no longer

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

73

PIUS UTOMI EKPEI/AFP

Trains are already running on the new Lagos-Ibadan standard-gauge railway

TRANSPORTATION DOSSIER / Fighting gridlock with rails

Congestion-beater Fidet Okhiria, managing director of the Nigerian Railway Corporation, says the Lagos-Ibadan railway project will “bring a great boost to our economy in the sense that it is linked to the port. The value of commercial activities in Apapa has basically gone down because of the traffic problem.”

$2.6bn

Initial capital raised by the InfraCo public-private partnership fund for road and rail investments

74

RAILWAY DEVELOPMENT IN NIGERIA

CHAD NIGER

Kaura Namoda

BENIN

Nguru Kano

Maiduguri

Kaduna

Baro

Abuja CAMEROON

Ajaokuta

Lagos

Benin City Onitsha

Gulf of Guinea

Warri

Calabar Port Harcourt

He continues: “Let’s say just three trains from Apapa in a day, and we are talking about [removing] close to a hundred trucks [from the congestion in] Apapa. While trucks will still be busy, they will be going to the train station in Ibadan or Kano, and still get their work done. So the train will be a great relief to the road users, and in terms of timely delivery of either finished products or raw materials to industry.”

Similar rail projects in the works, including Ibadan-Kano, Port Harcourt-Maiduguri and Port Harcourt-Calabar standard-­gauge lines (see map), should deliver significant growth to the struggling economy. Work on a $2bn rail line to link the country to Maradi, in northern neighbour Niger, was launched in February. The $3bn Port-Harcourt-Maiduguri line will connect the oil-rich southern city to one of the regions worst-affected by the Boko Haram insurgency.

These projects are part of the government’s attempts to “grow all the sectors of the economy that would improve and increase production,” according to

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

Existing narrow-gauge railway Standard-gauge railway Proposed coastal railway (standard-gauge)

Nigeria’s transportation minister, Rotimi Amaechi.

The Ibadan-Lagos trail line will benefit both freight and passengers, says Tola Adenubi, a transportation analyst. According to him, “rail movement of cargoes will change business dynamics in so many ways. First, it will crash the cost of haulage. As of today, truck movement of cargoes is a major factor behind the very high cost of cargo clearance from Nigeria’s ports of Apapa and Tin Can.

Bandits beware “With so many artificial bottlenecks [security checkpoints] littering our highways and the ports’ access roads, the cost of moving cargoes has quadrupled in recent years, making Nigeria’s ports some of the most expensive in the world to do business in,” Adenubi continues.

“With rail, all this will disappear.

The over-reliance on road haulage has also led to our roads becoming dilapidated. With rail, the pressure on the roads will reduce.”

For passengers, rail travel offers

greater security, Adenubi

SOURCE: USIP.ORG

have to go by road, so commodities will get to the ports in record time for their outward journey overseas,” Adediran said from Ibadan, the capital city of Oyo State.

Through its National Integrated Infrastructure Master Plan (NIIMP), the Nigerian government is stepping up investments in infrastructure development. Transport and other infrastructure is needed to help Africa’s second-biggest economy move away from its oil dependence. Although Nigeria has one of the most extensive national rail networks in Africa, second only to South Africa in length, it has fallen into disrepair.

While the NIIMP estimates that Nigeria will need to invest $2.9trn over the course of 30 years to develop the necessary infrastructure, a series of billion-dollar projects in the transportation sector are already set to boost the economy in the short and long term. The government launched a new public-private partnership fund called InfraCo in February with N1trn ($2.6bn) in initial capital from the Africa Finance Corporation, the Central Bank of Nigeria and the Nigeria Sovereign Investment Authority to get more money going into road and rail investments.

TRANSPORTATION DOSSIER / Fighting gridlock with rails

says: “With banditry and kidnapping plaguing our highways, rail movement of passengers will address this because it will be extremely suicidal for anybody to mount checkpoints for a train moving at over 120km per hour.”

Ibadan on the rise For Ola Alabi, a real-estate investor who moved to Nigeria from London a few years ago, the railway line promises a “tremendous” opportunity in terms of demand for property. “A functional interstate rail system will encourage developers to invest in other states aside from Lagos. It will also encourage new developers and local distributors,” he said from Ibadan, where the promise of the Lagos-Ibadan

expressway, as well as the rail line, have guided his investments.

“We have started working on projects in Badagry and Ibadan.

Access to these locations will be a lot easier in the next three-to-five years. The construction of the rail network will allow more people to invest in Ibadan and we are definitely going to be a beneficiary of the growth,” Alabi says.

He adds: “Ibadan is peaceful and developing very fast. More people

N40m

Average cost of a 3-5-bedroom house in the upmarket Akobo-Ojurin area of Ibadan, compared to N308m in Lagos

will decide to live in Ibadan and do business in Lagos. You can travel to Lagos in the morning and return home to Ibadan in the evening.

Trust me, you will even get home quicker than someone who lives in Lagos because of the traffic.”

Adenubi, the analyst, says Lagos road congestion could be eased if the Lagos Red and Blue metro lines were completed. In addition, “a rail line should be considered for the Lekki port. Another Apapa gridlock looms in Lekki if the port commences operations, as expected, next year and there is no rail connection to the port. But so far there is nothing on the ground.

[On his last] visit to the Lekki port, Amaechi said: ‘Maybe after 2023.’

This is a calamity in the offing.”

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TRANSPORTATION DOSSIER

AIRLINES

Ethiopian and Airlink may be post-pandemic winners Some of the continent’s airlines were already in trouble before Covid-19 struck; only the strongest ones will make it through to the other side

By DAVID WHITEHOUSE

director of African aviation at Netherlands Airport Consultants in Johannesburg. Ethiopian may be content with its new partnership with smaller South African player CemAir rather than riding to the rescue of SAA, but it is still in the running for a takeover of Air Mauritius, Ellis says.

In South Africa, Langeslag says that Airlink will perform well from its code-sharing agreements. In January, it partnered with Lufthansa and Swiss International Air Lines on domestic South African routes.

Ethiopian Airlines and South Africa’s Airlink are well-­positioned to emerge as African industry winners after the Covid-19 pandemic, analysts say. The outlook for South African Airways (SAA) and Air Mauritius, meanwhile, is bleak.

No African airline will emerge from the pandemic unscathed, says Indigo Ellis, associate director at Africa Matters consultants in London. Passenger numbers are less than half their pre-2020 levels, and industry losses up to January 2021 are estimated at more than $10.5bn. Travel restrictions to the UK and the US for most arrivals from Southern Africa mean the picture is “bleak” for many carriers, with limited prospects for government bailouts.

Industry losses up to January 2021 are estimated at more than $10.5bn

Cargo bolsters Ethiopian

Harmonisation of health and safety measures is crucial

KOLA SULAIMON/AFP

Neither SAA nor Air Mauritius have enough cash to stay afloat, Ellis says: “Governments are simply not able to offer the kind of liquidity that the aviation sector requires.” It is unlikely that some of the smaller pan-continental carriers like Kenya Airways or RwandAir will resume the volume of flights to Europe they had before, she adds.

Airlines with diverse revenue streams are in a stronger position.

Ethiopian Airways is strengthened by the fact that it capital­ ised on cargo opportunities early on, says Marcel Langeslag,

One point in favour of African airlines are the distances to be covered and the lack of infrastructure for alternatives such as train and car, says Andrea Baroni, an aviation consultant in Switzerland: “This fact will probably save many of the small airlines from extinction,” she says.

The political dangers of letting airlines go to the wall have been demonstrated in Namibia, where protesters in February took to the streets after the liquidation of state-owned Air Namibia. The airline received an estimated N$11bn ($740m) in bailouts over two decades. The loss of direct air routes to destinations in Africa and Europe will probably be taken up by other operators, including Airlink and Lufthansa, say analysts at NKC African Economics.

Ellis argues that the most far-reaching impact of Covid-19 on the industry has yet to become apparent. “Governments must be willing to liberalise their traditionally protectionist aviation markets and lower the barriers to entry for private and foreign ownership,” she says. Given the likely resistance to such a shift, it is far from clear if African governments are ready to make the leap

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TRANSPORTATION DOSSIER

INTERVIEW

David Williams

Maersk’s managing director for Africa talks to The Africa Report about the impact of Covid-19, the threat of piracy and the promise of the AfCFTA

By XOLISA PHILLIP in Johanesburg The global logistics giant Maersk navigated the rough supply-­chain shocks delivered by Covid-19 to post a profit of $2.9bn for 2020 and generated almost $40bn in revenue.

In Africa, it experienced volume contractions. “As the pandemic spread, it had an impact on volumes being shipped in the second quarter,” says David Williams, the company’s managing director for the continent. But “things bounced back a lot faster than we expected.”

Headquartered in Denmark, Maersk deals in shipping, terminals and towage, logistics and services, supply-chain management and air freight. Maersk’s footprint encompasses five continents, and its African subsidiaries are in South Africa, Angola and Nigeria.

In Africa, with lockdowns curtailing the movement of goods, the ocean container market contracted by 5%. Meanwhile, the movement of goods from Asia surged, boosted by the massive stimulus packages in Europe and the US.

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The African Continental Free Trade Area agreement (AfCFTA) is promising, Williams says: “We are excited about what it means in the longer term. I think it is going to take some time before we see it gaining traction and growing. We need to be patient before we will see real benefits and value from it.”

Charting an integrated course In addition to Covid-19 disruptions on global supply chains, Maersk underwent its own organisational transformation. This saw the integration of Damco and Safmarine into the Maersk brand.

As it happens, South Africabased shipper Safmarine is where Williams cut his teeth and spent 35 years of his career. The Danish group bought Safmarine in the 1990s and retained the name and branding. But times have changed.

Operating in 50 ports on the continent also comes with its own challenges. “It’s always variable and uncertain,” says Williams. In South Africa, there are a number of structural issues with the ports.

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MAERSK

‘Things bounced back faster than we expected’ “We continue to work closely with Transnet to try and address some of those,” Williams says. “We saw one of our best reefer [refrigerated container] seasons out of South Africa. That was enabled through the use of FPT in Cape Town.”

The partnership with FPT, which owns three terminals in South Africa, was one of the successes of 2020, according to Williams: “We were able to serve our fruit export customers and make sure we kept their supply chain going. It is an industry we are focused on.”

In Mombasa (Kenya) and Apapa (Nigeria) “we are constantly working closely with the terminals and the port authorities to make sure we are able to serve our customers’ supply chains and keep them moving,” Williams says. But there are often bottlenecks.

Although the threat of piracy in East Africa has dropped, it is rising on the Gulf of Guinea and off the coast of Nigeria. “We have seen a spike in piracy attacks, and we’ve had a number of vessels hijacked,” Williams tells The Africa Report.

“We continue to work with international and local authorities to address this,” he says, “because, in almost all cases, piracy is landbased and you need to have as much security as possible on land.”

Africa, covered.

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AFRICA I

A reset opportunity 80

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After a series of scandals, and with other countries upping their games in Africa, both Portugal and Brazil have the chance to refocus their ties with partners on the continent

INSIGHT

Angola’s President Lourenço and Portugal’s Prime Minister Costa usher in a new era for relations between their countries

ESTELA SILVA/EPA/MAXPPP

By MARIA MUSSOLOVELA in Luanda When Isabel dos Santos, daughter of Angola’s former president José Eduardo dos Santos, was in charge of the state oil company Sonangol, Agostinho Pereira de Miranda, CEO of Portugal’s top law firm in the oil and gas sector, refused to do business with her. In 2015, more than 20 of Miranda’s top lawyers decided they wanted in on the Sonangol deals, so they defected a kilometre across central Lisbon to rival firm Vieria de Almeida.

But Pereira de Miranda was prescient. Six years on, with Isabel dos Santos under investigation for corruption following her exposure in the ‘Luanda leaks’ documents, and her stakes in Portugal’s top telecom firm, NOS, and energy utility Galp, among other companies, now claimed by the Angolan state, the Angola-born lawyer has been vindicated.

Portugal is not the only country having to reckon with corruption revelations connected with Africa.

In 2016 Brazilian firm Odebrecht admitted to paying $50m in bribes

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INSURANCE DOSSIER

Paul

Hanratty

DR

‘We’re an industry that powers up economic growth’

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Sanlam CEO Paul Hanratty has weathered the Covid storm

The CEO of South African financial services company Sanlam talks to The Africa Report about the group’s expansion plans and how to target all segments of the insurance market

Interview by XOLISA PHILLIP in Johannesburg

INSURING SUCCESS 1984 Graduated with a bachelor’s degree in actuarial sciences from the University of Cape Town 1984 Started his career in insurance with a first job at Old Mutual SA 2006 Became CEO of Old Mutual SA and served until 2008 2016 Named director on the board of telecoms giant MTN 01 July 2020 Appointed group CEO at Sanlam

Diversified financial services group Sanlam, one of the largest on the continent by market capitalisation, remains focused on entrenching its dominance in Africa while keeping an eye on prospects in developed markets.

Sanlam CEO Paul Hanratty tells The Africa Report that the decision to focus on the continent was rather an easy one to make: “We’ve got a billion people living in Africa. Very few of them have financial services – that’s a reality. If you want the economy to grow, you need financial services. Financial services is like the railroad, you need to put in the railroad.”

Building that railroad will entail targeted attempts to “engage as many of those billion people as we can. Okay, many of them are children, but maybe 500 million adults,” he says. “We are bullish in the long run about Africa.

The demographics are fantastic. It’s got a young population. By the end of this century, Africa is going to have the biggest workforce – bigger than China, bigger than India. Isn’t that a fantastic opportunity for all of us?”

The African Continental Free Trade Area (AfCFTA) agreement gets an honourable mention. Because “trade is tricky”, notes Hanratty, “as [the AfCFTA] gets going it really is going to help [growth]. We know, historically, that trade is an absolutely key driver of the economy and an enabler of growth.”

One of Sanlam’s strategic pillars is becoming “an African champion”.

Overall, the group spans 32 countries in Africa directly, while its indirect presence in developing and developed markets – through joint ventures and partnerships – raises that figure to 44.

Sanlam considers general insurance one of the biggest prospects for growth in Africa because of the relatively low levels of penetration. This was a major aspect informing its decision to buy the remaining stake in Moroccan insurer Saham for $1.1bn in 2018.

A face-to-face hiatus “Saham was strong in general insurance.

One of the big plans when Sanlam acquired Saham was to try to roll out life insurance across Saham. [Life insurance] is the strength of Sanlam. [But] life insurance is heavily dependent on faceto-face advice,” says Hanratty.

The spread of Covid-19, with its associated lockdowns and restrictions on contact and movement, slowed down some of these plans. “Covid-19 […] made it difficult,” concedes Hanratty. “So the expansion of the life insurance business had a bit of a setback. It restricted us in terms of servicing clients. This was a huge, huge issue. Every time there was a lockdown, it was difficult for us to engage wherever we have face-to-face advice with customers.”

He maintains the company is “still positive about the future. In fact, the life insurance business has been doing nicely, [and] growing strongly as an add-on to the Saham proposition.”

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INSURANCE DOSSIER / Paul Hanratty

This partly explains why Sanlam’s Saham strategy will be ‘phased in over time,’ according to the group, which cites the ‘current market values and economic climate’.

Ethiopia, which is in the process of opening up to private capital, is nowhere near being on Sanlam’s horizon – yet. When the company will venture there is a question that many have asked. Hanratty’s response is emphatic: “We’ve made it clear that we want to strengthen where we are. It doesn’t mean we’ll never go to new places. Ethiopia is a populous country. It’s got a great long-run potential. But it’s a little early for us to be talking about Ethiopia,” he says.

When it comes to Nigeria, Hanratty strikes a more enthusiastic note. In the year ending 31 December 2020, Sanlam acquired the remaining 65% interest in the Nigerian insurance operations of First Bank of Nigeria for R1.2bn ($80.3m), financed through debt. ‘The intention remains to introduce a new partner into the business,’ according to the group’s communications.

“Nigeria is one of the giants on the continent. If you want to be an African champion, you’re going to have to participate there,” says Hanratty. “It’s a big country. It’s a wealthy country. It’s a complex country. It’s a very entrepreneurial and dynamic country. It’s very fragmented in insurance. In fact, it’s fragmented in banking as well. We see it as a long-term build. We want to step up our involvement in that economy over time,” he says.

A cornerstone of the “stepping up” will be involving local partners.

“We’re an industry that powers up economic growth in countries.

Sharing that with local partners is fundamental, particularly in developing economies. We don’t think sucking the life out of economies

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DR

Nigeria: a long-term build

is a good idea. We’d rather invest alongside locals and let everybody benefit,” says the Sanlam CEO. Also, “there’s no way we would tackle a country like [Nigeria] without local expertise.”

The Saham acquisition is a good reference point for the group. “One thing I’ve been impressed about from the Saham transaction is the

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25%

Increase in Sanlam’s new busines earnings in 2020, despite the challenges of the pandemic.

quality of the management. Local management in each country is good. We’ve been able to attract great people [in Morocco]. And we’ll need the same in Nigeria.”

Back home in South Africa, where Sanlam’s operations originally began, Hanratty took over in early 2020, at the height of the Covid-19 crisis. “I knew the company well. I knew the industry well. And I knew the South African context well, so that made it a bit easier,” he says. He had spent a considerable period on the Sanlam board as a non-executive director.

However, Covid-19 loomed large in South Africa. This gave rise

Sanlam’s mothership in Cape Town

‘We’d rather invest alongside local partners and let everybody benefit’ Africa, there are no tangible lessons in terms of products Sanlam wants to replicate on the continent.

However, Malaysia is different.

“We’ve had more learnings out of our Malaysian business for Africa than we have out of India, particularly on the digital front.”

Accessibility matters

to “a massive challenge that we faced as an industry with business continuity insurance”. The issue was at the centre of court proceedings instituted against several general insurers, including Sanlam ­subsidiary Santam.

Repayment holidays “That impacted our South African results. We didn’t get a dividend out of Santam as a result of that,” admits Hanratty. “Barring that, we would have seen strong numbers out of South Africa.”

In addition to the challenges surrounding the business continuity insurance, Covid-19 mortalities

meant a rapid rise in death claims, and lockdowns were accompanied by repayment holidays in some jurisdictions.

In India, the retail credit business was subjected to a six-month repayment holiday. But India remains a good business for Sanlam. There is a thriving ecosystem, wherein credit and insurance are interlinked, as well as the fact that the brand is strong among the customer base, says Hanratty. That ecosystem is built on a partnership model with Indian insurer Shriram.

Interestingly, given India’s size and similar market dynamics to

The Malaysian business has been innovative around digital insurance and digital technology: “A lot of those ideas have now found their way into our business on the African continent. Of course, the big opportunity for us is to leapfrog obstacles.”

The most important thing for Hanratty, though, is accessibility. “That’s the problem with most financial services. It’s quite inaccessible, either physically or psychologically. You don’t really understand something, so you’re a bit embarrassed to approach someone to ask them about it.

We’ve got to get over that issue of accessibility.”

In South Africa, this inaccessibility has shown up for Sanlam in the retail mass market. In response, the company has restructured Sanlam Personal Finance and replaced it with SA Retail Mass and SA Retail Affluent. “We haven’t managed to penetrate [the] retail mass market with either savings products or general insurance products because we haven’t designed products specifically for those markets. We’re missing the opportunities,” he observes. The solution, Hanratty says, is “to be much more in tune with our market needs. That’s why we’ve restructured the way we have.”

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INSURANCE DOSSIER

MIKE HUTCHINGS/REUTERS

MTN’s aYo joint venture has been a success

NIGERIA

Innovation acceleration The Covid-19 crisis and other factors are pushing insurers to digitalise their activities and develop products and operating procedures to adapt to local markets

By RUTH OLUROUNBI in Abuja Covid-19 has slowed the Nigerian government’s plan to have insurers raise their capital, but it is pushing the sluggish sector towards adopting more technology and innovation. Industry players say they are already seeing changes, such as claims turnover time reduced by as much as a day.

Jide Taiwo, an insurance broker by day and an Uber driver by night, says that when the global pandemic forced businesses to shut down for months his company had to strategise and innovate. “It will surprise you how much growth we saw during the pandemic. I think our success is due to our offerings via tech, and also because people were worried and wanted to provide for their loved ones,” he told The Africa Report during a ride in Lagos, Nigeria’s biggest tech hub.

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Zaka Khalid, an analyst in Lagos, says: “Covid-19 has made insurers rethink how to drive their operations through information technology [IT]. They have spent so much in procuring IT software to make insurance subscriptions seamless. This has reduced claims turnover time as claims are now being paid within 24 to 72 hours.”

According to him, “this is a revolution on its own. About three insurance firms have shut down all their offices and are still doing business virtually. Apart from the convenience that comes with it, it will cut down operating costs, thus

At least 32.1 million adults in Nigeria are interested in using microinsurance

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

allowing companies to accrue more profit. While some of the firms are struggling with this reality, the long term effects will revolutionise the industry for the better.” He qualifies this: “The negative side is that more insurance agents, staff and brokers will begin to lose jobs in the long run as IT takes over the functions that were previously being handled by humans.”

Real-time operations Nigeria’s insurance industry regulator, The National Insurance Commission (Naicom), wants operators to invest in technology to drive growth and help take advantage of opportunities in the aviation and oil sectors. “The industry has to invest handsomely in technology, which is one of the key drivers for developing the market. Institutions should prepare to digitalise their processes, procedures and systems to make their operation seamless and real-time,” Sunday Thomas, Naicom’s CEO, told media in Lagos in March.

Paul Donnelly, executive vice-­ president for Europe, the Middle East and Africa at Munich Re Automation Solutions, says that the German insurer, too, is rolling out new technology in the Nigerian market. He says that this year it plans to use artificial intelligence to help it make underwriting decisions. The system requires good data on the market, which is a challenge, but “the technology can do some of the heavy work” to enable employees to make decisions efficiently.

Analysts at PwC wrote in a recent report that insurers ‘will need to innovate and use new distribution methods in order to target the un(der)insured. They will also need to do so at reduced distribution costs, to attract customers with drastically different expectations.’ While the rate of insurance uptake is low in Nigeria, a study

Digital wallets Other players are active on the mobile-phone scene, using the near-­ubiquitous technology to expand access to insurance.

Nigerian payments provider CoralPay is in talks with mobile operators about offering payments for health insurance via mobile phones, using a digital wallet. Clients will also be able to pay in cash at a banking agent’s by using their phone numbers to identify payments.

Additional reporting by David Whitehouse.

ADEBOWALE BANJO CEO, Venia Group DR

by the development organisation Enhancing Financial Innovation and Access (EFInA) showed that at least 32.1 million adults are interested in using microinsurance, presenting a ‘significant opportunity for microinsurance operators to develop products’.

This might be why Africa’s biggest telephone company, South Africa’s MTN, partnered with Momentum Metropolitan Holdings to found the aYo joint venture and grab a share of the insurance market nearly four years ago. Nigeria and Côte d’Ivoire are aYo’s next targets.

MTN says it has signed up more than 10 million customers since launching the parternship.

‘We are still light years behind’ TAR: Since you launched AutoGenius back in 2014, have Nigerians embraced digital innovation within the insurance industry?

Nigerians are open to innovation and, yes, they are embracing the digital switch; however, the industry hasn’t offered enough to Nigerians and that is where the problem truly lies. There has been some growth in the past year, in areas like telemedicine and digital access to products, but, overall, we are still light years behind. Wearable devices, the internet of things, blockchain and artificial intelligence are not fully integrated into our insurance offerings yet, and those are the things pushing the frontiers of insurance globally.

AutoGenius was Nigeria’s first online auto insurer. Has it recently introduced anything new?

Last year we launched Nigeria’s first fully integrated WhatsApp insurance bot, and we piloted FlexiCare, our retail health-insurance product. Nigerians love to talk and share information and a lot of that communication happens on WhatsApp; so, we decided to make buying insurance as simple as sending a message. Today, Nigerians can buy and renew their health insurance policies via WhatsApp and receive their HMO cards as a WhatsApp image. They can also speak with doctors or our customer care representatives via the platform.

Which digital technologies will continue to disrupt the insurance market in Nigeria in the coming years?

I believe that telemedicine will continue to grow, more players will come in, service quality will improve and, eventually, it will be more affordable. With telemedicine, people even in remote parts of the country can get consultative access to doctors and this will ensure proper diagnosis and reduce exposure to the risks of self-medication. Furthermore, I look forward to the deployment of blockchain solutions, particularly with smart contracts; these will provide more transparency, reduce administrative costs and consequently premiums, and also speed up the claims process. Finally, machine learning and AI will help with post-loss assessment, fraud detection and predicting customer behaviour.

Interview by R.O.

LAST WORD

PARENTS: KEEP OUR TALENTS IN AFRICA KASIRIM NWUKE Economist

GETTY IMAGES

If you are an African of means, or of moderate wealth, please stop accepting the illusory idea that educating your children in the West, namely Europe and North America, will be good for the inter-generational transfer of the fruits of your labour. Experience strongly suggests otherwise.

Many businesses in Africa do not outlive their founders. Many families of wealth in Africa soon descend into poverty or average living following the death of the patriarch.

There are too many shuttered big mansions in disrepair across the continent because the said patriarch has died and his sons and daughters are somewhere in Europe and North America enjoying the easy life, but in dead-end jobs, for the most part.

After more than half a century of moderately wealthy Africans sending their children to the West to study, it is becoming clear that most of these children are unlikely to return to Africa to take their parents’ businesses and wealth to another level.

These children are more likely to use your money to create a life for themselves in the US and the UK and leave you still struggling at your business until you are practically at heaven’s gate. Your life’s work will either

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be inherited by relatives or just ‘evaporate’.

Imagine worrying from your grave about that abominable cousin now living in your mansion! Assuming, of course that your doors are not shuttered forever, and everything lost.

Clearly, you did not build your beautiful mansion for roaches, rodents, bats and a lone security guard. There are way too many estates and businesses across Africa that have died because children were sent overseas to study with the hope that they would return to continue their parents’ work. Instead, they fly in for your funeral, sell off what they can, and zoom off on the next flight. Is that all your life was for?

Let civil servants, NGO employees, teachers and soldiers educate their children in the West.

They will send remittances back home to their retired parents on government pensions and to help siblings and relatives. Their remittances could even seed dynasties of wealth if properly invested. And the children of politicians and the rentier class? Most will return to continue the political dynasty. Unless their parents used their overseas studies as a conduit to siphon off their loot to corrupt western banks or to launder money in real estate.

Don’t get me wrong! Society still loses when the children of university professors, NGO workers and customs officials choose to remain in the West after completing their studies. But, it is easier for Africa to replace Cheikh Anta Diop and Kofi Annan than it is to replace Strive Masiyiwa and Aliko Dangote.

No wealth painfully created should needlessly evaporate into the ether. Your children don’t need a foreign MBA to run your business. Africa’s entrepreneurs, if they must, should send their children to study in African countries, from which they can easily “recover” them and bring them home to carry on the task of building dynasties of wealth.

YEARS ANS

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