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Africa: A Rising Star in the New Economic Order

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The African continent has been on top of the agenda of the policymakers in all periods. From the historical aspect, the conflict of interests was emerged in the era of colonization, when the global powers did not hesitate to conquer various parts of Africa for valuable resources such as gold, ivory, salt, and more. They all wanted these resources because they needed them for manufacturing. As time went on, Africans wanted to design their destiny by themselves, so today’s 54 African states emerged mainly starting from the middle of the 20th century. In modern times, however, with the sovereignty of African countries, the rules have changed so that familiar and new powers came not to conquer their lands but to invest in their markets.

Why is Africa so important?

In the global dimension, the resource-rich African continent is one of the fastest-growing consumer markets since household consumption has risen even faster than its GDP in the past years. Furthermore, the average annual gross domestic product growth has consistently surpassed the world average. Numerically, on the potential market of 1.35 billion people, since 2010, at a compound rate, consumer expenditure has increased 3.9 % annually and reached US$1.4 trillion in 2015. This figure’s expected level is US$2.1 trillion by 2025 and US$2.5 trillion by the end of 2030.

On the other hand, a massive increase in the continent’s youthful age segment in a rapidly growing population creates a suitable environment for industrial development. The median age on the continent is 19.7, while this number is 37.4 in China, 38.1 in the U.S., 42.9 in the EU, and 30.6 globally. Moreover, the significant youth factor enables the faster spread of access to the internet and mobile phones. Besides the traditional spheres, apparently, the digital industry’s future is bright as well in Africa. 

Africa’s significance partly lies in its geographical position, and thus the potentials it creates. The African ports are the vital gateways for domestic and worldwide export and import operations. Albeit currently, the African economies’ exports are mainly commodity-based; in the long run, monoculture economies will diversify as they will grow. So, the ports will play an essential role in ensuring the sustainability of the more robust, resilient, and diverse economic dynamics in the continent’s economies through the exports and imports of industrial products and other manufactured goods. Additionally, these ports will not solely serve African economies; it will substantially contribute to the global supply chain systems as modern transportation facilities.

The traditional and new players in Africa

Africa is very attractive for investors with respect to the positive trends and opportunities in economic growth. The EY’s 9th edition of the Africa Attractiveness report published in September 2019, denotes the African continent in the first place in the world according to the 2018 FDI (Foreign Direct Investment) to GDP data. 

According to UNCTAD’s World Investment Report 2020, the top 5 investors in the African continent are respectively the Netherlands (US$79 billion), France (US$53 billion), the United Kingdom (US$49 billion), the United States (US$48 billion) and China (US$46 billion). Interestingly, while other countries in the list lessened their direct investments between 2014 and 2018, only the Netherlands (US$20 billion) and China (US$14 billion) have increased their investments in Africa. 

The flow of investments is engrossingly intricate. The US has been warning countries that some security risks might accompany technology developed by Chinese firms like Huawei and ZTE. Nonetheless, Huawei and ZTE built and laid fiber-optic and submarine cables off Africa’s coasts. In this context, Chinese technological infrastructure constitutes the high-tech network’s backbone in some states on the continent within the “Digital Silk Road.” For instance, in Ethiopia, the direct investment in the tech sector was US$2.4 billion, while this figure was US$1.8 billion both in Niger and Zimbabwe. It seems China is in an advantageous position in Africa since it forms the “infrastructure of the future” by helping drive the growth of mobile phone and internet penetration, in contradistinction to the US.

Apart from the conventional forces, some new countries, such as Turkey and Russia, are eager to penetrate the African markets. Turkey’s Africa initiative started in 2003. In 15 years, the number of Turkish embassies in Africa has significantly risen from 12 to 44, direct Turkish investments have skyrocketed from 100 million to US$6,5 billion, and Turkey’s trade volume with the continental countries increased by six-fold, reaching US$17.5 billion. In addition, Turkey is the second-largest investor in Ethiopia with US$2.5 billion, and in recent years had increased its political influence on Northeastern Africa. 

Russia has a deep cooperation experience with the African states from the Soviet era. After the collapse of the USSR, successor Russia strived to perpetuate the relations but mostly failed due to a focus shift to its domestic affairs. Still, in this period, it preserved its political influence area to some extent in the specific regions of the African continent. However, bilateral relations were exposed to a radical renewal from the first Russia-Africa Summit in Sochi on October 23-24 in 2019.

In 2018, Russia’s trade with African countries increased by more than 17% and exceeded US$20 billion. At the Sochi summit, Russian President Vladimir Putin stated his expectation for at least double the volume of trade in the next 4-5 years, which means a jump from US$20 billion to US$40 billion. Recently, on November 23, at an interactive webinar organized by the Federation Council of Russia, Chamber of Commerce and Industry of Russia, and Business Russia Association, Russian officials have once again demonstrated their intention to restore the historic relationships through cooperation in numerous spheres. 

The obstacles and constraints

Albeit Africa provides innumerable opportunities, it has some structural problems accompanied by some inter-state and intra-state conflicts and disputes. Terrorism and disintegration are still the foremost challenges for the continent. The Armed Conflict Location & Event Data Project, which monitors incidents of conflict around the world, found that there had been 21.600 incidents of armed conflict in Africa till November 2019. For the same period in 2018, that number was just 15.874. That represents a 36% increase.

Many nations on the African continent have performed poorly in maintaining stable economic growth rates and achieving appreciable economic development levels. This might be linked to a list of factors, political instability in the first instance since it dramatically diminishes the economy’s productive and transactional capacities. It is estimated that there have been at least 100 successful coups in Africa in the past four decades, with more than twice the number of coup attempts. Consequently, there is an apparent correlation between the destabilization in the political theater and economic disbalance. 

Most of Africa lags the rest of the world in coverage of crucial infrastructure classes, including energy, road and rail transportation, and water infrastructure. For instance, nearly 600 million people in sub-Saharan Africa lack access to grid electricity, accounting for over two-thirds of the global population without power. Additionally, the infrastructure notion plays an essential role in the region in terms of efficiency. For example, agriculture is Africa’s largest economic sector, representing 15% of the continent’s total GDP, or more than $100 billion annually. Experts estimate that sub-Saharan Africa alone requires additional annual investments of as much as $50 billion to make the agricultural system work better. It can be clearly seen that from the economic development aspect, closing this infrastructure gap is vital for the continent as it would raise the quality of life and stimulate the growth of the business sector.

What to expect?

In light of numerous indicators, the future of the African continent seems to be quite complicated. According to recent UN forecasts, the continent is expected to double its population by 2050. If the investment inflow would not go up, Africa will face a major demographical challenge. Otherwise, the intellectual capital and human resources will contribute to a tiger economy supported by continuous investments, and this factor will be a path to prosperity.

A major step was taken towards integration-related hurdles in March 2018 with the signing of The African Continental Free Trade Area (AfCFTA) agreement by 54 African states. Namely, it presents a tremendous opportunity for African states by bringing 30 million people out of extreme poverty and to raise the incomes of 68 million others who live on less than $5.50 per day. The agreement also comprises the simplification of the customs procedures that would drive $292 billion of the $450 billion in potential income gains. Also, customs procedures simplifications imply the development of the supply chain systems in the continent. The agreement’s implementation can be an usher in the integrated development to enhance long-term sustainability in African countries.

It will undoubtedly be a long journey for the Africans to overcome all the issues. However, the emergence of a new generation with progressive thoughts might condition a different environment on the continent. The most crucial factors within the process will be innovation, discipline, and, foremost, patience. In that case, the sustainable and dynamic African economy will play an essential role in the global system. On the whole, still there are some positive signs to be optimistic about the future of Africa; as it says in the famous African proverb, “However long the night, the dawn will break.”

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Africa

The Transitioning Democracy of Sudan

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Sudan has been the focus of conflict for much of its six decades as an independent nation. Despite being an anomaly in a region crippled with totalitarian populism and escalating violence, the country hasn’t witnessed much economic or political stability in years. While the civic-military coalition, leading a democratic transition towards elections, has managed to subside the fragments of civil war, growing hostility in the peripheries has begun threatening the modest reforms made in the past two years. The recent coup attempt is a befitting example of the plans that are budding within the echelons of the Sudanese military to drag the country back into the closet. And while the attempt got thwarted, it is not a success to boast. But it is a warning that the transition would not be as smooth a ride as one might have hoped.

The problems today are only a reflection of Sudan’s issues in the past: especially which led to the revolution. The civil unrest began in Sudan back in December 2018. Sudan’s long-serving ruler, Omer al-Bashir, had turned Sudan into an international outcast during his 30-year rule of tyranny and economic isolation. Naturally, Sudan perished as an economic pariah: especially after the independence of South Sudan. With the loss of oil revenues and almost 95% of its exports, Sudan inched on the brink of collapse. In response, Bashir’s regime resorted to impose draconian austerity measures instead of reforming the economy and inviting investment. The cuts in domestic subsidies over fuel and food items led to steep price hikes: eventually sparking protests across the east and spreading like wildfire to the capital, Khartoum.

In April 2019, after months of persistent protests, the army ousted Bashir’s government; established a council of generals, also known as the ‘Transitional Military Council.’ The power-sharing agreement between the civilian and military forces established an interim government for a period of 39 months. Subsequently, the pro-democracy movement nominated Mr. Abdalla Hamdok as the Prime Minister: responsible for orchestrating the general elections at the end of the transitional period. The agreement coalesced the civilian and military powers to expunge rebellious factions from society and establish a stable economy for the successive government. However, the aspirations overlooked ground realities.

Sudan currently stands in the third year of the transitional arrangement that hailed as a victory. However, the regime is now most vulnerable when the defiance is stronger than ever. Despite achieving respite through peace agreements with the rebels in Sudan, the proliferation of arms and artillery never abated. In reality, the armed attacks have spiraled over the past two years after a brief hiatus achieved by the peace accords. The conflict stems from the share of resources between different societal fractions around Darfur, Kordofan, and the Blue Nile. According to UN estimates, the surging violence has displaced more than 410,000 people across Sub-Saharan Africa in 2021. The expulsion is six times the rate of displacement recorded last year. According to the retreating UN peacekeeping mission, the authorities have all but failed to calm the rampant banditry and violence: partially manifested by the coup attempt that managed to breach the government’s order.

The regional instability is only half the story. Since the displacement of Bashir’s regime, Sudan has rarely witnessed stability, let alone surplus dividends to celebrate. Despite thawing relations with Israel and joining the IMF program, Sudan has felt little relief in return. The sharp price hikes and gripping unemployment which triggered the coup back in 2019 never receded: galloped instead. Currently, inflation runs rampant above 400%, while the Sudanese Pound has massively devalued under conditions dictated by the IMF. And despite bagging some success in negotiating International debt relief, the Hamdok regime has struggled to invite foreign investment and create jobs: majorly due to endemic conflicts that still run skin-deep in the fabric of the Sudanese society.

While the coup attempt failed, it is still not a sigh of relief for the fragile government. The deep-rooted analysis of the coup attempt reveals a stark reality: the military factions – at least some – are no longer sated in being equal-footed with a civilian regime. Moreover, the perpetrators tried to leverage the widening disquiet within the country by blocking roads and attempting to sabotage state-run media: hoping to gain public support. The population is indeed frustrated by the economic desperation; the failure of the coup attempt means that people have still not given up hope in a democratic government and a free-and-fair election. Nonetheless, it is not the first tranche of the army to rebel, and it certainly won’t be the last. The only way to salvage democracy is to stabilize Sudan’s economy and resolve inter-communal violence before leading the county towards elections. Otherwise, it is apparent that Bashir’s political apparatus is so deeply entrenched in Sudan’s ruling network that even if the transitional government survives multiple coups, an elected government would ultimately wither.

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Money seized from Equatorial Guinea VP Goes into Vaccine

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As a classic precedence, the Justice Department of the United States has decided that $26.6m (£20m) seized from Equatorial Guinea’s Vice-President Teodorin Nguema Obiang Mangue be used on purchasing COVID-19 vaccines and other essential medical programmes in Equitorial Guinea, located on the west coast of central Africa.

“Wherever possible, kleptocrats will not be allowed to retain the benefits of corruption,” an official said in a statement, and reported by British Broadcasting Corporation.

Obiang was forced to sell a mansion in Malibu, California, a Ferrari and various Michael Jackson memorabilia as part of a settlement he reached with the US authorities in 2014 after being accused of corruption and money-laundering. He denied the charges.

The agreement stated that $10.3m of the money from the sale would be forfeited to the US and the rest would be distributed to a charity or other organisation for the benefit of the people of Equatorial Guinea, the Justice Department said.

The UN is to receive $19.25m to purchase and administer COVID-19 vaccines to at least 600,000 people in Equatorial Guinea, while a US-based charity is to get $6.35m for other medical programmes in Equatorial Guinea.

Teodorin Nguema has been working in position as Vice-President since 2012, before that he held numerous government positions, including Minister of Agriculture and Forestry. Known for his unquestionable lavish lifestyle, he has been the subject of a number of international criminal charges and sanctions for alleged embezzlement and corruption. He has a fleet of branded cars and a number of houses, and two houses alone in South Africa,

Teodorin Nguema has often drawn criticisms in the international media for lavish spending, while majority of the estimated 1.5 million population wallows in abject poverty. Subsistence farming predominates, with shabby infrastructure in the country. Equatorial Guinea consists of two parts, an insular and a mainland region. Equatorial Guinea is the third-largest oil producer in sub-Saharan Africa.

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African Union’s Inaction on Ethiopia Deplorable – Open Letter

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The crisis in northern Ethiopia has resulted in millions of people in need of emergency assistance and protection. © UNICEF/Christine Nesbitt

A group of African intellectuals says in an open letter that it is appalled and dismayed by the steadily deteriorating situation in Ethiopia. The letter, signed by 58 people, says the African Union’s lack of effective engagement in the crisis is deplorable. The letter calls on regional bloc IGAD and the AU to “proactively take up their mandates with respect to providing mediation for the protagonists to this conflict”.

The letter also asks for “all possible political support” for the AU’s Special Envoy for the Horn of Africa, Olusegun Obasanjo, whose appointment was announced on August 26, 2021. A United Nations Security Council meeting on the same day welcomed the former Nigerian president’s appointment.

Earlier in August 2021, UN  chief Antonio Guterres appealed for a ceasefire, unrestricted aid access and an Ethiopian-led political dialogue. He told the council these steps were essential to preserve Ethiopia’s unity and the stability of the region and to ease the humanitarian crisis. He said that he had been in close contact with Ethiopian Prime Minister Abiy Ahmed and had received a letter from the leader of the Tigray region in response to his appeal. “The UN is ready to work together with the African Union and other key partners to support such a dialogue,” he said.

August 26, 2021 was only the second time during the conflict that the council held a public meeting to discuss the situation. Britain, Estonia, France, Ireland, Norway and the United States requested the session.

Fighting between the national government and the Tigray People’s Liberation Front broke out in November 2020, leaving millions facing emergency or crisis levels of food insecurity, according to the United Nations. Both sides have been accused of atrocities.

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