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Category: Opinion Piece

  • The IMF is failing countries like Kenya: why, and what can be done about it

    The IMF is failing countries like Kenya: why, and what can be done about it

    Author: Danny Bradlow

    Professor/Senior Research Fellow, Centre for Advancement of Scholarship, University of Pretoria

    First Published,July,2,2024 

    The recent Kenyan protests are a warning that the International Monetary Fund (IMF) is failing. The public does not think it is helping its member countries manage their economic and financial problems, which are being exacerbated by a rapidly changing global political economy.

    To be sure, the IMF is not the only cause of Kenya’s problems with raising the funds to meet its substantial debt obligations and deal with its budget deficit. Other causes include the failure of the governing class to deal with corruption, to spend public finances responsibly and to manage an economy that produces jobs and improves the living standards of Kenya’s young population.

    The country has also been hammered by drought, floods and locust infestations in recent years. In addition, its creditors are demanding that it continue servicing its large external debts despite its domestic challenges and a difficult international financial and economic environment.

    The IMF has provided financial support to Kenya. But the financing is subject to tough conditions which suggest that debt obligations matter more than the needs of long-suffering citizens. This is despite the IMF claiming that its mandate now includes helping states deal with issues like climate, digitalisation, gender, governance and inequality.

    Unfortunately, Kenya is not an isolated case. Twenty-one African countries are receiving IMF support.

    In Africa, debt service, on average, exceeds the combined amounts governments are spending on health, education, climate and social services.

    The tough conditions attached to IMF financing have led the citizens of Kenya and other African countries to conclude that a too powerful IMF is the cause of their problems. However, my research into the law, politics and history of the international financial institutions suggests the opposite: the real problem is the IMF’s decline in authority and efficacy.

    Some history will help explain this and indicate a partial solution.

    The history

    When the treaty establishing the IMF was negotiated 80 years ago, it was expected to have resources equal to roughly 3% of global GDP. This was to help deal with the monetary and balance of payments problems of 44 countries. Today, the IMF is expected to help its 191 member countries deal with fiscal, monetary, financial and foreign exchange problems and with “new” issues like climate, gender and inequality.

    To fulfil these responsibilities, its member states have provided the IMF with resources equal to only about 1% of global GDP.

    The decline in its resources relative to the size of the global economy and of its membership has at least two pernicious effects.

    The first is that it is providing its member states with less financial support than they require if they are to meet the needs of their citizens and comply with their legal commitments to creditors and citizens. The result is that the IMF remains a purveyor of austerity policies. It requires a country to make deeper spending cuts than would be needed if the IMF had adequate resources.

    The second effect of declining resources is that it weakens the IMF’s bargaining position in managing sovereign debt crises. This is important because the IMF plays a critical role in such crises. It helps determine when a country needs debt relief or forgiveness, how big the gap between the country’s financial obligations and available resources is, how much the IMF will contribute to filling this gap and how much its other creditors must contribute.

    When Mexico announced that it could not meet its debt obligations in 1982, the IMF stated that it would provide about a third of the money that Mexico needed to meet its obligations, provided its commercial creditors contributed the remaining funds. It was able to push the creditors to reach agreement with Mexico within months. It had sufficient resources to repeat the exercise in other developing countries in Latin America and eastern Europe.

    The conditions that the IMF imposed on Mexico and the other debtor countries in return for this financial support created serious problems for these countries. Still, the IMF was an effective actor in the 1980s debt crisis.

    Today, the IMF is unable to play such a decisive role. For example, it has provided Zambia with less than 10% of its financing needs. It has been four years since Zambia defaulted on its debt and, even with IMF support, it has not yet concluded restructuring agreements with all its creditors.

    What is to be done?

    The solution to this problem requires the rich countries to provide sufficient finances for the IMF to carry out its mandate. They must also surrender some control and make the organisation more democratic and accountable.

    In the short term, the IMF can take two actions.

    First, it must set out detailed policies and procedures that explain to its own staff, to its member states and to the inhabitants of these states what it can and will do. These policies should clarify the criteria that the IMF will use to determine when and how to incorporate climate, gender, inequality and other social issues into IMF operations.

    They should also describe with whom it will consult, how external actors can engage with the IMF and the process it will follow in designing and implementing its operations. In fact, there are international norms and standards that the IMF can use to develop policies and procedures that are principled and transparent.

    Second, the IMF must acknowledge that the issues raised by its expanded mandate are complex and that the risk of mistakes is high.

    Consequently, the IMF needs a mechanism that can help it identify its mistakes, address their adverse impacts in a timely manner and avoid repeating them.

    In short, the IMF must create an independent accountability mechanism such as an external ombudsman who can receive complaints.

    Currently, the IMF is the only multilateral financial institution without such a mechanism. It therefore lacks the means for identifying unanticipated problems in its operations when they can still be corrected and for learning about the impact of its operations on the communities and people it is supposed to be helping.

    SOURCE

    THE CONVERSATION

    PHOTO: CREDIT NDTV

     

     

  • Boko Haram and western education: the surprising views of some Nigerians who left the insurgency group

    Boko Haram and western education: the surprising views of some Nigerians who left the insurgency group

    Co-Authors,Associate Professor Hannah Hoechner & Professor Yagana Bukar

    Universities of East Anglia and  Maiduguri respectively

    First Published,1 July,2024

    The world has come to associate the insurgency in north-east Nigeria with the slogan “western education is forbidden”. This is how “Boko Haram” – the name given to the insurgents – is commonly translated from the Hausa language into English.

    But “Boko Haram” is not what the insurgents call themselves or would like to be called. Different factions operate under different names. None of them use “Boko Haram”.

    One faction calls itself Jama’at Ahl al-Sunna li-Da’wa wa-l-Jihad or “People Committed to the Propagation of the Prophet’s Teachings and Jihad”. Another faction uses the name Wilayat Garb Ifriqiya or Islamic State West Africa Province.

    The preachings of the late insurgency leader Mohammed Yusuf (1970-2009) against western education earned his movement the nickname Boko Haram, which gained traction from 2009 onwards.

    High-profile attacks on western schools, including the abduction of 276 schoolgirls from Chibok in April 2014, fed perceptions of the insurgency as opposing western education.

    Western education was introduced in north-east Nigeria under British colonial rule, displacing the Islamic education system that produced the elite in pre-colonial times. Today, most formal sector jobs and government positions in Nigeria require western education.

    Because of the destruction, bloodshed and mass displacement that the insurgency has caused in Nigeria, we wanted to know more about the role education plays as a grievance and as a way to build peace.

    Our research aimed to explore what motivated ordinary members of the insurgency group, popularly called Boko Haram, to fight. Was opposition to western education a reason? We also wanted to know how being part of the insurgency had influenced their views on this education system.

    By speaking to the rank and file, we sought to go beyond the rhetoric of the insurgency leadership.

    Most of the respondents said that hatred of western education was not what motivated them to join the insurgency. They had other reasons. And their experiences as insurgents reinforced the value of a western education.

    We argue that these results show how important it is to make western education accessible to all who want it.

    Views on western education

    We conducted 13 in-depth interviews and five group conversations with former insurgents in Bama and Maiduguri, Borno State, in 2021 and 2024. This was part of a larger research project on education and violent conflict in north-east Nigeria.

    Our conversations focused on former members’ reasons for joining, their experiences of education inside the insurgency, and their perspectives on education after leaving. The majority of respondents were Kanuri men in their twenties and thirties with mostly Qur’anic education.

    Some acknowledged that Yusuf’s preaching had resonated with them at the time of their recruitment. But they didn’t join out of hatred of western education.

    Instead, they discussed other reasons for joining:

    • material incentives
    • perceptions of the insurgents as doing “God’s work” (aikin Allah)
    • the pull of family members and peers
    • fear of retaliation.

    Most of our respondents did not object to western education. To the contrary, they considered it desirable. Many had enrolled themselves or their children in western schools.

    Not everyone agreed to everything happening within western schools. Some respondents expressed reservations against co-education and some curriculum contents, especially in biology and geography, such as evolution, the rain cycle, and earth’s rotation around the sun.

    Overall, the views were positive. The respondents considered western education important to find employment, to handle everyday life situations and to achieve societal progress, for example regarding healthcare.

    To understand why former members view western education in such a positive light, it is helpful to take a closer look at their experiences inside the insurgency.

    Ideology vs tactical needs

    Despite what leaders of Boko Haram said about ideology, our research respondents found that they valued western knowledge for the tactical advantages it offered.

    It was the western-educated who operated the laptops, repaired the phones and the cars, shot and shared the video footage, dispensed the medicines and treated the wounded.

    The members we spoke to said they saw what a difference western education made. Those with only limited Qur’anic education or no education at all occupied lower ranks within the insurgency. They were more likely to be sent into combat, at great risk of being wounded or killed.

    Respondents concluded that the insurgency leaders’ proclaimed views on western education could not be trusted.

    What they could trust was what they saw with their own eyes. For instance, some western-educated defectors got recruited to work for the NGOs responding to the humanitarian crisis in north-east Nigeria.

    Some of their western-educated peers who had not joined the insurgency had found decently paid employment with the police or army, or as teachers.

    Most argued that being well educated could protect people against indoctrination and manipulation. This included having western education. One respondent said:

    They came and misled us [in the area of] Islamic [studies]; maybe next time they will use western education to mislead us. If I have knowledge, no one can do that.

    They were not blind to the shortcomings of the western education system as it currently operates in north-east Nigeria, though. They were aware of how difficult it can be to get education and work without financial backing or the right connections.

    As one respondent put it:

    You cannot seek for knowledge without a penny in your hands.

    What next?

    On the basis of our findings, we recommend that policy makers:

    • ensure western education is genuinely free and accessible – including exams, uniforms and books
    • make sure that skills can be translated into meaningful job opportunities
    • facilitate exchange between people of different educational backgrounds.

    SOURCE

    THE CONVERSATION

  • Faced with the threat of regional disintegration in West Africa, resignation is not an option (By Dr Olakounlé Gilles Yabi)

    Faced with the threat of regional disintegration in West Africa, resignation is not an option (By Dr Olakounlé Gilles Yabi)

    DAKAR, Senegal, June 13, 2024/ —  Dr Olakounlé Gilles Yabi, Founder and CEO of the citizen think tank WATHI (www.WATHI.org).

    In 2014, when I was working to launch the citizen think tank WATHI, I wrote the following in the concept note I proposed to dozens of friends interested in the present and future of West Africa:

    ‘West Africa is a very young region. The proportion of the population aged under 25 in each country of the region exceeds 60%. Demographic growth in West Africa will remain strong in the medium term. The prospects outlined by the region demographic projections entail daunting security, economic and social challenges for countries whose states and economies are mostly weak. These demographic trends, together with the region’s abundant natural resources and the weakness of local production systems, are some of the reasons behind the renewed interest in African economies shown by old and new dominant players in the global economy. However, if the enthusiasm regarding West Africa’s economic promise is not tempered by an overall acknowledgment of the security and political threats the region is facing, the result will likely be further disillusionment’.

    One of the worst scenarios we could have imagined ten years ago

    Ten years after this diagnosis of the state of the region, the situation in West Africa in 2024 looks grimly like one of the worst-case scenarios we could have imagined back then. I’m among those who believe that we need to change the narrative about our part of the world, about Africa in general.

    However, the desire to highlight the positive developments in many areas, the extraordinary potential of our young people, should not distract us from a dispassionate observation of the reality of the moment. The only way we will be able to bring about the much-needed changes in political practices in the region is through a candid observation of the state of affairs in the region.

    West Africa is currently facing unprecedented level of security and political uncertainty. Burkina Faso, Mali, Niger and Nigeria are among the 10 countries most affected by terrorism in the world. This however is only a partial reflection of the spread of insecurity, the rivialization of violence and the overall worrisome consequences on social cohesion and the physical and mental health of millions of children who are growing up in a context of violence and without any educational or emotional support from their families.

    In four countries undergoing transition following coups d’état (Mali, Burkina Faso, Guinea and Niger), there is no regional institutional framework to set limits on military rulers who have no internal checks and balances. However, the restrictions on political freedoms and freedom of expression by those regimes, against a backdrop of growing economic difficulties for the population, are beginning to provoke protests and strikes, despite the high risks of repression and threat of imprisonment.

    In some other West African countries that are formally democratic and run by civilians, checks and balances exist only in theory, and in reality, there is little possibility of political alternation. In many countries presidents have taken the initiative to revise or change the constitution to evade term limit and remain in power indefinitely.

    The recent constitutional reform in Togo, a country that has not had a democratic transition for 57 years, provided another shocking example of a parody of democracy in West Africa. The content of the country’s supreme law, which abolishes presidential elections by universal suffrage, was not made public until after its enactment.

    And even in the few countries that are often held up as examples of political alternation through credible elections, with the possible exception of Cabo Verde, the general perception held by citizens is that resources and economic opportunities are monopolised by small circles of relatives, friends and political allies. Democracy and elections continue to unbearably accommodate high levels of corruption, mismanagement and embezzlement.

    An unprecedented crisis in regional integration

    The simultaneous announcement on 28 January 2024 by the governments in power in Bamako, Ouagadougou and Niamey to leave ECOWAS opened up an unprecedented crisis in the process of regional integration in West Africa. We have all become witness to the continued strained relationship between neighboring countries such as Benin and Niger, a distressing waste of time and energy at a moment when communities continue to be impoverished by restrictions on cross-border economic activities.

    The next few months will be decisive for the regional integration process. The decision of Burkina, Mali and Niger to leave ECOWAS enable military leaders in those three countries to free themselves from ECOWAS supervision of transition and related constraints.

    They were also able to make this announcement because they knew that the short-term political and economic cost would be limited. As a matter of fact, they did not withdraw from the West African Economic and Monetary Union (WAEMU), which brings together eight countries that share a common currency, the CFA franc (seven countries that were once colonies of France and have been joined by Guinea Bissau in 1997).

    Membership of WAEMU allows these countries to retain most of the benefits of regional integration within this sub-area of ECOWAS. In addition, leaving WAEMU is more difficult and requires prior preparations than exiting ECOWAS.

    The political cost of leaving ECOWAS was also limited because the military leaders were aware of the degraded image of the regional organisation among a large part of West African population, not only in the Sahel. ECOWAS’ management of the coup d’état in Niger dealt a blow to the regional organization’s perception among West African public opinion.

    The political and symbolic impact offered an unhoped-for opportunity for the military leaders to portray themselves as the victims of a plot by their own regional organisation to launch a military intervention in one of its own member states.

    A regional organisation always reflects the political will, capacities and dynamics of its member states

    Many West Africans reduce ECOWAS to the Conference of Heads of State and Government, which takes decisions on political and security issues at ordinary and extraordinary summits. All the other dimensions of integration that are the subject of the daily work of the Commission, other bodies and specialised agencies, are simply not known or poorly known.

    The vast majority of young people in urban and rural areas have no precise knowledge of the history of regional integration, of the major stages in the construction of ECOWAS since 1975, of the benefits of regional integration for the people, of ECOWAS’s decisive diplomatic and military interventions in countries in armed conflict in the 1990s and 2000s.

    Few citizens of West African countries can mention the names and missions of ECOWAS’s two specialised agencies. Few are aware of the existence and crucial role of the Court of Justice, which can be seized by any citizen of a member country even before domestic remedies have been exhausted.

    This court is a great tool for the promotion and protection of human rights in West Africa. However, it has consistently been undermined by the same member states which created it and who often do not abide by its rulings. The region is therefore paying the price for what has not been done in terms of education, the inclusion of regional integration issues in curricula and overall communication on regional integration.

    There is a great deal of confusion between what is the responsibility of the Member States and what is that of ECOWAS. Many people are fiercely critical of ECOWAS because they expect it to be a substitute for states, a means of freeing themselves from their weaknesses, their dysfunctions and sometimes the lack of legitimacy of their leaders.

    It is not ECOWAS that chooses the Heads of State of the member countries, but the latter then form the college of ultimate political decision-makers of the organisation.

    This is true of all regional organisations worldwide. Regional organisations cannot work miracles in the absence of impetus, strong will and capacity for action on the part of the member countries, or at least a core group of influential countries among them.

    A regional organisation always depends on its member states, which can give or refrain from giving the organisation the means to act and the freedom it needs to implement its integration agenda.

    It must be acknowledged that some very unfortunate decisions have been taken by the ECOWAS Conference of Heads of State and Government in recent years. It is also necessary to recognise the structural shortcomings, while welcoming the many achievements of ECOWAS over the past 49 years and the immensity of the ground covered.

    If the record had been better in terms of regional infrastructure, for example if ECOWAS had been able to lead and ensure the effective implementation of a regional rail network programme, if the record had been better in terms of the harmonisation of sectoral policies and the promotion of regional integration in education systems, the political cost to each Member State of leaving the Community would have been much higher. And that rubicon would have been much harder to cross even for authorities who have seized power by force.

    What is at stake is the West Africa we want for our children

    Alongside discreet diplomatic efforts, a public campaign is needed to explain why ECOWAS is an essential, crucial institution for the future of West Africa. The ECOWAS Commission must speak directly to the people. The organisation should explain the raison d’être of the additional protocol on democracy and good governance. It should also explain the reasoning behind the broadening over the years of its missions and objectives, beyond economic integration.

    Those who criticise ECOWAS for straying from its original economic mission, for violating the sovereignty of states by interfering in internal political issues, are either ignoring the rational evolution of the organisation’s rules and regulations in responding to armed conflicts and violent political crises, or are acting in bad faith.

    We must, however, accept a debate with all these voices acting in good faith or not. We need to explain how the promotion of the rule of law in the region is not just a dream of westernised elites who are out of touch with reality, and how it is the only way to protect all citizens of West African countries from arbitrariness.

    More than ever, West Africa needs a strong ECOWAS that focuses on clear priorities. We need an ECOWAS that develops its capacity for strategic thinking by capitalising on the region’s human resources, including the diaspora.

    We need an ECOWAS that helps to protect the region from the potentially devastating consequences of battles for influence between powers on West African soil. As we all know, without perhaps realising the magnitude of the threat, this battle is also being waged in cyberspace, where opinions and certainties are spouted all day long via social media, in order to suppress any hindsight, critical thinking or attachment to facts in people’s minds.

    We need an ECOWAS that gives young people reasons to dream. We need to create and maintain a desire for integration. We also need the demographic, economic and military powerhouse of the region to act as a driving force.

    We need a committed Nigeria and a core of personalities in each of the countries in the region who are genuinely committed to the integration project. Let me reiterate: no regional organisation exists without its member countries and without the social, political, economic and cultural forces that shape the development of each of these countries.

    What will be at stake in the coming months is the shape and the type of West African region we want for our youth, our children for decades to come. The choice before us is that of continuing belief in the possibility of making West Africa a region of collective progress and freedom, where fundamental rights are protected or resignation.

    The latter is undesirable because it implies accepting that our region is deeply fragmented, that each country becomes inward looking and focuses on what it perceives as its strictly national interests. It would mean accepting the real and very high risk of a return, almost everywhere, to autocratic regimes where leaders are accountable to no one.

    We have already experienced this in the past in a majority of countries in the region and on the African continent. It was not a resounding success. Resignation is therefore not an option.

    This article is a modified and expanded version of Gilles Yabi’s speech at a public event organised by the ECOWAS observation mission at the United Nations to mark the regional organisation’s 49th anniversary, New York, 7 June 2024.

    Distributed by APO Group on behalf of West Africa Think Tank (WATHI).

    For media enquiries:
    Please contact:
    Ms Hadidjette Kangouline
    Communication Officer
    hadji.kangouline@wathi.org

  • Real Estate Investment Opportunities in Africa: A Systematic Data-driven Series-Part-2. (By Daniel Kontie)

    Real Estate Investment Opportunities in Africa: A Systematic Data-driven Series-Part-2. (By Daniel Kontie)

    Last week we published part one (1) of this series and we are indeed thrilled with the positive feedback that came from our readers across the globe. It will interest you to know that over one hundred (100) people read the article within the first week of its publication according to our reading tracker.

    This is good news and an encouragement for us to work harder in disseminating the information on the prospects of real estate investment in Africa to all prospective investors across the world; brought to you by the Africa Continental Engineering & Construction Network, a Ghana based Pan African Sustainable Built Environment Consultancy Firm (www.acecnltd.com).

    In this second edition, we shall be examining the last three (3) indices which again like the first edition, is a comparative data-driven analysis that points to the fact that Ghana remains the most lucrative real estate investment destination in Africa.

    But before we go into the intricacies of the data, we would like to have a recap of the first edition for the benefit of readers who may not have the opportunity to read the first edition. In the previous edition, we examined five (5) fundamental indices, and the data available for all five points to the fact that Ghana stood tall among its peers as the most lucrative real estate investment destination in Africa.

    We looked at the current housing deficit which stood at 1.8 million and is projected to hit 4.2 million by 2030 if there are no conscious actions to bridge the gap as against the projected population growth of 39 million by the same year, that is one side and the other is the low supply side where it was observed that, the combined effect of the works of the state, individuals as well as the private institutional developers, was not significant enough to bridge the gap.

    We also examined the Ghanaian political environment, known to be one of the most democratic and peaceful across the globe with the Global Peace Index (2022) ranking as the 2nd most peaceful country in sub-Saharan Africa among 46 countries, top six (6) most peaceful countries in Africa and 40th most peaceful country in the world.

    This presents a positive signal while guaranteeing the security of investments at all levels in Ghana including real estate. Urbanization was another index we examined, and it was found that among the thirty-three (33) African states purposively selected for our analysis, Ghana tops the urbanization rate with a staggering rate of 58.62%.

    This we presume could be a significant contributory factor to the persistently high demand for housing and general infrastructure around the urban centers across the country thereby, increasing the real estate investment prospects.

    The growing middle class which was found to be rising speedily hitting a height of about 46% as was reported by the African Development Bank in 2013, has also impacted the real estate investment prospects of Ghana significantly, despite the gains that have been eroded by the Covid-19 pandemic in recent past and finally, we also examined the rapid population growth which is said to have stood at 35 million currently and is projected to reach 39 million by 2030. In a nutshell, all the aforementioned indices explored are real estate demand-driven factors, and interestingly, all point to the fact that Ghana remains the most preferred destination for real estate investment in Africa.

    Today, we shall be looking at the last three (3) indices and this will draw the curtains on the subject under discussion. Now, stay tuned, get a glass of fruit juice, and grab your reading lenses as we run you down yet another data-driven analysis of the real estate investment prospects in Africa using the final three (3) indices, crime rate, foreign direct investment and government policy.

    1.Crime Ratings

    To begin with, economic theory suggests that, crime rate has an inverse relationship with investment, particularly foreign direct investment, and what this means essentially is that, a higher crime rate threatens both human and property security.

    This security threat leads to low foreign direct investment, holding other variables constant. On the other hand, low crime rates boost investor confidence, and the higher the level of investment, the bigger the expansionary growth of the economy.

    The ripple effect most often under such circumstances, is higher demand for housing as it is the case in Ghana currently. During our analysis of global crime ranking, Ghana ranked 84 with a crime index of 43.9 among 146 countries according to Numbeo (2024), and 17 in Africa among 52 states (Africa Organized Crime Index, 2024).

    The crime index of 43.9 is classified as moderate according to the Numbeo scale of measurement which grades crime levels between 41 to 60 as moderate. This gives confidence to the general investor community that, Ghana is comparatively one of the most conducive destinations to invest, of which real estate investment is not an exception.

    2.FDI Record

    Also, sight is not lost on the fact that foreign direct investment (FDI) is another driver of investment globally. Just like all other sectors of the economy, foreign direct investment has a direct relationship with demand for real estate.

    Interestingly, our exploration found that Ghana is among the top ten (10) countries in Africa with high levels of foreign direct investment with a total FDI value of US$1.5 billion according to Business Insider Africa (2023). Below is a diagram that depicts the top ten (10) African countries with the highest foreign direct investment.

    Naturally, one would have expected that Zambia, Egypt, South Africa etc would have been projected as the most promising real estate investment destinations in this analysis, taking into consideration their volumes of FDI compared to others such as Ghana.

    However, the broader scope of analysis taking into cognizance the eight indices examined so far, Ghana still appears to have a competitive advantage even though Zambia, Egypt South Africa have higher FDIs. This has had a direct impact on the Ghanaian economy and we presume it is one of the contributory factors that kept the demand for housing skyrocketing persistently till now.

    3.Government Policy/Incentives

    Finally, government policy and incentives are crucial to the real estate sector, unlike in the past when there were little or no incentives for the sector, today there are many more than we ever need to bridge the housing deficit of the continent.

    Our exploration found that most African states use a combination of taxation, legal and regulatory regimes as incentives to boost private investment in the housing sector, for instance in Nigeria real estate investment companies approved by the Securities Exchange Commission are tax-exempted from rental and dividend income depending on some conditions (PwC 2024). Zero corporate income tax is declared for companies including real estate developers planning to relocate to Rwanda (Rwanda Development Board, 2024), whilst Kenya on the other hand offers a corporate tax exemption of 25% per annum for developers (Business Daily, 2024).

    Tax Exemption Act of Ghana

    Similarly, the tax exemptions Act, 2022 (Act, 1088) of the Republic of Ghana has several tax benefits and exemptions for developers, particularly, those within the affordable housing brackets. The purpose is to attract both local and foreign direct investments into the real estate and housing sector aimed at bridging the housing gap. Taxation shall be treated as a whole topic compared to other African states in subsequent series. Time will fail us to give the tax incentive accounts for all African countries, however, one observation that made Ghana different beyond the tax incentives is that, Ghana has consciously made available funds for developers interested in investing in the housing sector.

    Funds for Developers-AfDB Loan Facility

    Key among these is the US$75 million commercial loan facility secured from the African Development Bank for the Ghana Infrastructure Investment Fund (GIIF) to improve the financing and development of green and affordable housing units (African Development Bank, Oct. 27, 2022).

    There are currently opportunities for private investors to leverage these public resources for housing delivery through the ongoing public-private partnership approach instituted by the government of Ghana.

    DBG-Long Term Facility

    Besides, the Development Bank of Ghana (DBG), established in June 2022, provides long-term financing at competitive rates for private sector developments, including the housing sector. Moreover, the Central Bank has committed an initial US$200 million to capitalize DBG for this purpose.

    Gov’t/Develop’t Partners/DBG Support for Investors

    The government has also leveraged another US$550 million from Development Partners to support the DBG to attract private sector investors and other international financiers. The housing sector stands to benefit from these measures as it takes advantage of guaranteed loans that will be provided by DBG.

    Public Policy/Invectives-Funds

    Last but not least on the public policy and incentives, is the Ghana National Home Ownership Fund, the Home Ownership Fund in partnership with the banking sector was also created in 2022.

    This includes the Rent-to-Own Scheme of the Affordable Real Estate Investment Trust, as well as the affordable housing supported by Ghana Commercial Bank (GCB Capital). The funds mobilised will function as a mortgage refinancing mechanism for Private Financial Institutions (PFIs) to draw from in the form of mortgages to consumers or mortgage-backed securities for investors.

    This in effect will improve the mortgage market and make it more fluid, hence reducing interest rates on mortgage facilities for prospective homeowners while improving housing delivery in Ghana. In conclusion, we call on all investors across the globe who are interested in investing in the African real estate sector to do so in Ghana. Subscribe to the Eco-environews magazine for subsequent series.

    Author: Daniel Kontie

    Email: d.kontie@acecnltd.com,

    Contact: +233209032280)

    Real Estate and Sustainable Construction Consultant, Ghana

    CEO, Africa Continental Engineering & Construction Network Ltd (ACECN LTD)

    National President, World Sustainable Built Environment and Generative Artificial Intelligence Forum (WSBE-GenAIF)

    National president, Ghana Institution of Sustainable and Generative Artificial Intelligence (GhISBE-GenAIF)

    Cover Photo

    Credit Devtraco Ltd(Overview of Real Estate in Ghana)

     

  • Reestablishing Nutritional Balance after Ramadan: Tips and Practices for a Balanced Diet and Smooth Transition(Dr. CISSOKO,Nutritionist at Nestlé)

    Reestablishing Nutritional Balance after Ramadan: Tips and Practices for a Balanced Diet and Smooth Transition(Dr. CISSOKO,Nutritionist at Nestlé)

    From sunrise to sunset, no water or food for long hours. Then, breaking the fast at sunset, followed by one to two more meals before dawn. Meals during Ramadan are often more abundant and richer than usual, consumed at unusual hours of the night.

    As the sacred month of Ramadan comes to an end with Eid al-Fitr, the celebration marking the end of the fasting period, many people wonder how to smoothly return to their daily eating habits. How can one make this transition without any hiccups and adopt behaviors that promote a healthy diet while avoiding post-Ramadan nutritional pitfalls?

    To guide you in this process, Dr. CISSOKO, Nutritionist at Nestlé, provides some insights for a harmonious transition to a balanced diet after Ramadan.

    Readjusting Your Digestive System without Rushing:

    To avoid potential stomach discomfort, bloating, constipation, or diarrhea, it is recommended to opt for easily digestible foods. Fish is preferable to meat as it is lighter and easier to digest. Cooked vegetables with low fat content are also gentler on the digestive system compared to raw vegetables. Whole or semi-whole grains are rich in fiber and promote a healthy intestinal transit. Fully ripe fruits are also easier to digest than unripe ones.

    Water, on the other hand, is your best ally for a smooth transition before returning to a normal diet. In addition to maintaining the body’s water balance, it plays an essential role in digestion by facilitating the process and helping eliminate toxins. Water remains the best beverage.

    Lastly, prioritize small portions and take the time to chew your food well, which allows for better digestion and optimal nutrient absorption.

    Opt for Gradual Changes, the Key to Dietary Rebalancing:

    For a smooth transition after Ramadan, it is recommended to adopt a measured and thoughtful approach, whether in introducing different food groups or in the frequency and intensity of physical activities.

    Take the time to gradually introduce foods in a balanced manner, ensuring to include all necessary food groups for a healthy diet. It is important to note that physical exercise is of paramount importance in the context of a balanced diet.

    Light activities such as walking are particularly recommended at the beginning. They stimulate the body without subjecting it to excessive efforts. Over time, you can gradually increase the intensity of these physical activities according to your abilities. This gradual approach is the key to regaining dietary balance after Ramadan.

    Avoiding Post-Ramadan Nutritional Pitfalls:

    It is important to remain aware of potential nutritional pitfalls that could hinder a balanced diet.

    1. Excessive Sugar Intake: After a period of fasting, it can be tempting to indulge in excessive sweets and desserts. It is essential to limit the consumption of added sugar and prioritize natural sources of sugar, such as fruits.
    2. Excessive Portions: After fasting, it is common to want to compensate by eating larger portions. However, this can lead to overeating and calorie imbalance. It is important to maintain moderate portions and eat slowly to better feel satiety.
    3. Ensuring a Good Variety of Foods: After Ramadan, it is essential to maintain a balanced diet by ensuring the inclusion of a variety of foods to guarantee an adequate intake of essential nutrients. Make sure to include a wide range of fruits, vegetables, lean proteins, whole grains, and sources of healthy fats in your meals.
    4. Maintaining Proper Hydration: After a period of fasting, it is important to ensure adequate hydration. Make sure to drink enough water throughout the day to maintain good hydration. It is recommended to consume at least 2 liters of water per day.
    5. Being Mindful of Snacking: Prioritizing structured meals over snacking helps maintain a healthy weight and avoid unnecessary calorie intake.
    6. Listening to Your Body: Relearning to listen to hunger and satiety signals is a valuable skill to adjust your diet to your true needs.
    7. Planning to Avoid Slip-Ups: Anticipating and preparing meals is an effective strategy to stick to a balanced diet and avoid impulsive food choices.

    The period following Ramadan is an opportune time to establish or reinforce healthy and sustainable eating habits. By taking conscious steps, each individual can make the most of this transition to nourish their body and mind. At Nestlé, we encourage and support this journey by offering a variety of products and tips to accompany you in your quest for a balanced diet.

    Distributed by APO Group on behalf of Nestlé.

    SOURCE
    Nestlé

  • Real Estate Investment Opportunities in Africa:A Systematic Series on the Ghanaian Sector-PART-1(By Daniel Kontie)

    Real Estate Investment Opportunities in Africa:A Systematic Series on the Ghanaian Sector-PART-1(By Daniel Kontie)

     

    Real estate investment in Ghana has become an increasingly attractive option for investors looking to diversify their portfolios and tap into the country’s promising real estate industry, the country with a stable political environment, a young and rapidly urbanizing population, and rising incomes, Ghana’s real estate sector presents exciting opportunities in all categories of real estate, the residential, commercial, and industrial properties. This is a series brought to you by the Africa Continental Engineering & Construction Network Ltd (www.acecnltd.com)  that seeks to provide asystematic exposition on the real estate investment opportunities in Africa. Today’s article is part one (1) and we shall be examining five (5) fundamental factors (indices) that positions Ghana strategically, as the most preferred destination for real estate investment in Africa. The Ghanaian political environment, rate of urbanization, middle class growth, Ghana as the African hub for tertiary education and most importantly, Ghana’s housing deficit.

    Purpose

    The purpose is to help potential investors make informed decisions in the event they so wish to venture into the African real estate market, for that matter the Ghanaian market. Now, take a seat, grab a glass of chilled drinks and come along with us as we run you down a data driven analysis on the prospects of real estate investment in Ghana.

    1.Ghana’s Political Environment

    First and foremost is the Ghanaian political environment, since the adoption of the 1992 constitution, Ghana have enjoyed political stability and have become a global center of attraction and a case study for many African nations and beyond. It is therefore not by chance that the Global Peace Index (2022) ranked Ghana as the 2nd most peaceful country in Sub-Saharan Africa among 46 others, top six (6) most peaceful countries in Africa and the 40th most peaceful country in the world out of 163. This guarantees security at all levels and gives confidence to the investor community that every dollar worth of investment within the shores of Ghana is secured regardless of which political party is in government. The supremacy of the constitution and the rule of law ensured the checks and balances among the arms of government. The Police Service, the Army, the National Security and all other state institutions mandated to keep democratic balance and political stability have always worked in synchrony, thereby placing Ghana ahead of its peers in Africa to emerge as the most preferred African state for both local and foreign direct investment, of which real estate investment is not an exception.

    2.Ghana’s Housing Deficit

    In addition to the stable political environment, the Ghana Housing Deficit presents a profound real estate investment opportunity. According to the Ghana Statistical Service (2022), Ghana’s housing deficit stood at a staggering rate of 1.8 million. This has made the provision of more affordable housing options for urban dwellers a big challenge for the Ghanaian government.

    State Intervention

    The state has over the years undertaken a few housing projects and policy interventions in attempt to bridge the gap, however, this was quite unsuccessful as the deficit continue to grow with time.  Efforts have been made by private individuals which contributes but little to closing the gap, leaving the few private institutional developers a huge housing supply gap to meet.

    Private Developer’s Input

    GREDA (Ghana Real Estate Developers Association) appears to be the only beacon of hope if the housing supply will ever meet the demand. But for potential investors to appreciate where the investment jackpot lies within the property supply landscape in Ghana, we would like to run you through a brief but empirical analysis.

    Property Development Mix

    There are currently about one hundred and forty (140) private real estate developers in good standing in Ghana according to GREDA real estate journal (2023). The 140 have various specialties within the sector, that is to say it is not all of them that are into residential property development.

    Analysis

    However, for the purpose of this analysis, we shall assume that all of them develop residential properties.

     What this implies essentially is that, each developer will have to develop approximately thirteen thousand (13,000) housing units, though not feasible, within the year to be able to bridge the 1.8million gap. This shows how huge the real estate investment opportunity is, in Ghana that cannot be compared to any other destination in Africa.

    3.Increasing Urbanization Rate

    Moreover, another index worth mentioning is Ghana’s increasing rate of urbanization, according to Urban Land Institute, London (2018), urbanization leads to high demand for housing in urban centers thereby putting pressure on residential properties and consequentially leading to high rates of rent in the urban centers across the world.

    It was against this backdrop that we decided to explore the rate of urbanization in Ghana and its impact on real estate investment opportunities. Ghana’s increasing rate of urbanization is another index that gives prospects to real estate investment particularly in Ghana’s urban centers across the country

    A recent observation made by our outfit, the Africa Continental Engineering & Construction Network (ACECN) on some selected African countries points to the fact that Ghana has the highest rate of urbanization, (ACECN, 2024).

    This again positions Ghana as the most preferred destination for real estate investment in Africa. The figure below is the graphical representation of the rates of urbanization with Ghana topping the list with 58.62% in 2022.

    4.Growing Middle Class

    Also, the ever-growing middle class is another crucial index worth considering, Africa is developing faster than it was in the 20th century, it is therefore not a surprise to see many economic indicators assuming positive resilience across the African continent.

    Ghana have had its share of this rapid development over the years. In 2013, the African Development Bank (AfDB) published that about 46% of Ghanaians are now classified as middle class compared to a continent-wide average of 34.3%.

    Eleven years down the line, this may have grown above 50% except the gains eroded by the two-year COVID-19 pandemic. It is also interesting to know that majority of these middle class live and work in the cities particularly the national capital, Accra.

    This has put a lot of pressure on residential facilities in Accra leading to the prohibitive rental prices recorded consistently over the period. This again demonstrates how huge and promising the prospects of real estate investment are, in Ghana using the capital city in particular as a destination

    Besides, Ghana’s sudden transformation into Africa’s Hub for Tertiary Education also contributes significantly to the sector investment opportunities. According to the National Council for Tertiary Education (2016) Ghana has positioned itself as one of the major providers of quality higher education in Sub-Saharan Africa.

    For the past decade, Ghana has enacted policies, which have indicated to the global community, the strong intention to enhance the competitiveness of our tertiary education system. For this reason, the quota-based admission policy for foreign students was lifted in both private and public institutions.

    This opened the floodgate to students and faculty of countries within Sub-Saharan Africa including Nigeria, Cameroon, Guinea, Gabon, Liberia, Sierra Leone, Congo Brazzaville, Equatorial Guinea, Togo, Ivory Coast, Cameroon, Zambia, Gambia, Rwanda and some East and southern African Countries.

    This trend has skyrocketed the housing demand in the cities making property investment in Ghana exceptionally profitable. The trend gave birth to AirBnB which has gained its popularity in recent times, a term given to short term rentals for private residential facilities often targeted at consultants, business men, students, diplomats’ expatriates et cetera. AirBnB within the city of Accra is one of the rewarding property investment portfolios currently.

    5.Rapid Population Growth

    Last but not least, Ghana’s rapid population growth is another index that drives housing demand significantly.

    The current population in 2024 stood at 35million approximately and is projected to reach 39million by 2030 as against a projected housing deficit of 4.2million by same year. Mention is not made yet of the black race around the world who are tracing their root back home and many settlings in and naturalizing in Ghana because of the political stability the country has enjoyed since independence.

    This exodus of the black race to Ghana as their home was motivated by a conscious state policy dubbed, “the year of return” in 2019. Ever since, many interventions such as “beyond the return” and some other state programs aimed at supporting these diasporas assimilate into the Ghanaian system seamlessly.

    That notwithstanding, several measures have also been put in place as an incentive to enable more returnees including citizens of fellow African countries migrating to Ghana to naturalize. Taking Nigeria for instance, about 77,000 Nigerians live and work in Ghana as reported by Statista (2021) and all these needs descent accommodation around the cities making property investment in Ghana more profitable than ever.

    In conclusion, all indices points to the fact that Ghana tops the list and remains the most profitable destination for real estate investment in Africa. Subscribe and follow the Global African Times Magazine for part two (2) and subsequent articles in the series.

    Author: Daniel Kontie (Email: d.kontie@acecnltd.com, Contact: +233209032280)

    • Real Estate and Construction Consultant, Ghana
    • CEO, Africa Continental Engineering & Construction Network Ltd (ACECN LTD)
    • National President, World Sustainable Built Environment and Generative Artificial Intelligence Forum (WSBE-GenAIF)
    • National president, Ghana Institution of Sustainable and Generative Artificial Intelligence (GhISBE-GenAI)
  • West Africa’s franc: is time up for the colonial currency?

    West Africa’s franc: is time up for the colonial currency?

    By: Kai Koddenbrock, Bard College Berlin

    First Published,April 8,Africa Edition/The Conversation

    At no point in history has the CFA franc – the name of a colonial currency used in west and central African countries belonging to the franc zone – been closer to its demise.

    Senegal has overwhelmingly voted for leftwing Pastef candidate Bassirou Diomaye Faye (and his former party leader Ousmane Sonko) while the coup governments in Mali, Burkina Faso and Niger have been talking about leaving the CFA franc for some time.

    Senegal under outgoing president Macky Sall was a pillar of the longstanding French attempt to remain influential among its former colonies, often named “Francafrique”. Now newly elected Faye, under the moniker of “Left Panafricanism”, has vowed to make his country more sovereign in food, energy and finance.

    Never before have four west African governments, including one of the regional leaders, Senegal, been simultaneously eager and ready to get out of the neo-colonial stranglehold of the CFA franc.

    The CFA franc zone was founded by then colonial power France after the second world war. Its aim was to ensure a continuously cheap influx of resources into France.

    The zone is divided into two. The west African CFA franc zone has eight members: Mali, Niger, Burkina Faso, Senegal, Côte d’Ivoire, Benin, Togo and Guinea-Bissau. The central African zone has six: Cameroon, Gabon, Republic of Congo, Central African Republic, Chad and Equatorial Guinea.

    Popular mobilisation against the currency has been intense in recent years in west Africa.

    This led to cosmetic changes to the currency arrangements. For example in 2019, French president Emmanuel Macron and the sitting president of Côte d’Ivoire, Alassane Ouattara, announced the withdrawal of French staff from some of the regional central bank’s decision-making bodies. They also waived the requirement – much maligned on the continent – to store 50% of all reserves in Paris as a guarantee to the former colonial power that they wouldn’t be wasted on irresponsible fiscal expansion.

    Overall, however, the CFA franc has remained more or less the same and France has not been willing to leave the arrangement of its own accord. The old colonial attachment and supposed developmental benevolence has carried the day.

    But the conditions for major change are in place. The Alliance of Sahel States between the junta-led governments of Mali, Burkina Faso and Niger has stated its intention to introduce the “Sahel” as a new regional currency. Whether this initiative – and the Senegalese plan for a national currency – will amount to a full break-up of the CFA franc zone and its terminal decline will depend on how well they plan and execute the transition to several new currencies or a new one without any French involvement.

    A hard road ahead

    Historically, as shown by Fanny Pigeaud and Ndongo Sylla in their book Africa’s Last Colonial Currency: The CFA Franc Story, serious attempts at leaving the CFA franc since its inception in 1948 have been sabotaged by France.

    For example, Guinea was flooded by counterfeit banknotes when it left the CFA franc in the 1960s.

    Mali was put under pressure to rejoin the CFA franc after its departure in 1967. It returned into the fold in 1984. In 2011, Ivorian president Laurent Gbagbo, who had been considering pulling out of the CFA franc, was made to step down after controversial elections with the help of a military intervention force. He was then sent to the International Criminal Court before being acquitted 10 years later.

    France went further in 2011 – a case countries wanting to make the next attempt at leaving the CFA franc should be cognisant of. It used its seat on the Central Bank of West African States decision-making bodies to block Côte d’Ivoire from being refinanced by the bank.

    It also induced the subsidiaries of BNP Paribas and Societe Generale to temporarily close their branches.

    Leaving the CFA franc has thus historically come with a high risk of French sabotage.

    But the constellation of forces has shifted and west African governments can better prepare this time. If they join forces – and Côte d’Ivoire votes for a less France-dependent president in the presidential elections in 2025 – the end of the west African CFA franc may indeed be near.

    The trust factor

    The stability and legitimacy of a currency depend primarily on trust. The users of a currency (people and corporations) need to trust that its price is more or less stable. This includes a reasonably low rate of inflation, and engagement in growth-inducing economic activity. Periods of high inflation and hyper inflation have always been the result of a serious economic crisis in which trust was absent.

    Monetary stability thus depends on social and macroeconomic stability. This, in turn, is the result of how well governmental policies and domestic and world market processes align. A government that is seen to have a plan and is able to adapt to and steer economic pressure goes a long way in creating trust. And, by implication, it makes a new currency less prone to speculative attack or massive devaluation.

    In Senegal, Pastef’s election programme had a roadmap towards leaving the CFA franc and setting up a national currency. Among the key steps are:

    • creating a national central bank
    • refinancing of state expenditure at 0%
    • demonetising gold and preventing its import and export to build up a gold reserve
    • repatriating gold reserves still stored in Paris and all over the world
    • reprofiling public debt and cancelling private debt through monetary fiat
    • installing a deposit insurance scheme for small savers
    • building a national stock exchange.

    Finally, the new currency will be floating and non-convertible or semi-convertible to shield it from speculative attacks.

    This menu is similar to some of the strategies China has employed over the last decades to maintain government control over the economy and shield the Chinese economic growth path from foreign – in other words speculative – interference.

    The success of such a strategy depends to a large degree on mobilising domestic financial and real domestic resources. And, in the absence of China’s massive domestic market, building regional economic complementarities.

    The strategic challenge for Diomaye will thus be to enlist a sufficiently large group of small business people, landowners and power-brokers around Mouride and Tidjaniyya Muslim brotherhoods and the capitalist class in Senegal to his economically transformative project.

    This will be a sizeable challenge in the face of upcoming export revenues from gas and oil – contracts Pastef has vowed to renegotiate – and an overall economic structure that is not yet domestic market oriented.

    A national currency could support this shift in focus towards the well-being of the Senegalese people. This is because its logic would be to reorient the government towards the domestic economy and its people. Imports and easy repatriation of earnings by foreign corporations, which are some of the main effects of the often overvalued CFA franc, would become more difficult.

    Make or break factors

    The reaction to Faye’s agenda by the International Monetary Fund, the World Bank and other donors and creditors will be crucial to watch. To what extent the new Senegalese government is prepared to dispense with their sizeable sums in aid and credits remains to be seen. Niger recently did dispense with them and reduced its budget by 40% as aid was frozen.

    Overall, Senegal and the Sahel governments are in a stronger position globally than ever before. The African continent is seen as essential to ensure the energy transition in Europe as well as its diversification of oil and gas supply. And western military, diplomatic and trade hegemony on the continent is being challenged by China and Russia as well as the United Arab Emirates, Qatar and Turkey.

    If Senegal and the Sahel governments position the end of the CFA franc well in their overall negotiations with their international partners as well as their domestic capitalist class and opposing political forces, its end may indeed by near.

    That will not be the end of the long road towards food, energy and overall economic sovereignty to the benefit of the people. But it will be an important symbolic and material victory against postcolonial interference and meddling.

    The colonial CFA franc has outlived its usefulness for today’s “Left Panafricanism”.

    Organising its end is a sizeable challenge, but for the first time in decades is one that can be confronted head on.

  • Namibia Energy Sector Needs Local Content Guidelines (By NJ Ayuk)

    Namibia Energy Sector Needs Local Content Guidelines (By NJ Ayuk)

    WINDHOEK, Namibia, March 29, 2024/ — By NJ Ayuk, Executive Chairman, African Energy Chamber (https://EnergyChamber.org).

    Namibia’s oil and gas sector is still looking forward to reaching the production phase — S&P Global analysts don’t anticipate Namibia’s first oil to come until 2029, and the country’s first gas-to-power project is scheduled to begin in 2027. Before Namibia achieves these hotly anticipated milestones, Namibian lawmakers have the opportunity to implement thoughtful, effective policy to benefit their people.

    Specifically, I’m talking about local content laws that will help spread future wealth among Namibians, develop the skills of the Namibian people in oil and gas professions, and promote the establishment of Namibian oil and gas businesses. Ultimately, this will help ensure a long-term, sustainable economic impact from the resources.

    Local content laws are broad policy tools that governments use across many industries. The goals of local content are multifaceted, promoting domestic businesses by requiring a certain percentage of goods or services to be sourced from domestic companies, motivating international companies to share knowledge and expertise with local firms, stimulating job growth in the domestic economy, and encouraging investment in local infrastructure that benefits the industry.

    Namibia is fortunate to be in a position to benefit from the experiences of other oil- and gas-producing states. Namibia can use the best practices that have benefitted others and learn from their mistakes. Standing at the precipice of an energy revolution that will help transform its economy, lawmakers in Namibia have something of an advantage, and they need to capitalize on this.

    Namibia’s Recent Finds

    What’s driving the need for local content directives in Namibia’ nascent oil and gas sector are recent petroleum discoveries, in the Orange Basin in particular. That’s where, in 2022, Shell and TotalEnergies made significant finds in blocks Graff-1 and Venus-1, respectively.

    Graf-1 holds an estimated 2.38 billion barrels of oil (boe). And Venus-1 is estimated to hold more than 3 billion boe — potentially the biggest discovery ever in sub-Saharan Africa.

    While the commercial viability of extracting the oil still needs to be assessed, these initial discoveries have already sparked further exploration efforts. Galp Energia, for one, reported positive indications of hydrocarbons in their Mopane-1X well, hinting at the potential for the oil and gas play to extend further north.  The Mopane-2X encountered a significant column with light oil in good-quality reservoirs.

    Drafting Effective Legislation

    To help local companies and Namibian citizens benefit from oil and gas opportunities across the industry’s value chain, Namibia currently has a draft of the National Upstream Petroleum Local Content Policy, but it hasn’t been passed into law yet. The ministry is consulting with stakeholders to make revisions that will best serve the country and her people.

    The draft reflects the government’s desire to leverage its recent oil and gas discoveries for broader national development. There’s a focus on achieving a balance between local participation and attracting foreign investment.

    We love to see that Namibia is moving toward implementing local content regulation or directives, and the draft policy offers a glimpse into its goals.

    As I noted last year, I am heartened to see the productive cooperation of Namibian lawmakers and oil and gas companies. I have personally witnessed their efforts to ensure Namibia’s best economic opportunities. Unlike too many other African nations, Namibian policymakers are not throwing roadblocks in the way of exploration companies.

    They also realize that the country will reap the benefits of its new petroleum bounty only if all key stakeholders seize this historic opportunity to put the right policies in place and continue encouraging investments in energy.

    That’s why it’s all the more heartening that, even after the sad passing of President Hage Geingob in February, the ruling party (the South West Africa People’s Organisation, or SWAPO) has signaled that it will maintain its business-friendly approach to energy exploration and development.

    Challenges Ahead

    Still, Namibia has several key local content hurdles to overcome.

    For one, growing and maintaining a successful oil and gas industry in Namibia will require significant investments in infrastructure, workforce development, and regulatory frameworks. Because the complex energy sector requires high initial investment, specialized technology, particular workforce skills, and a long-time horizon for projects, it can be difficult for local companies to readily participate.

    In addition to the huge sums of infrastructure financing needed to build out the oil and gas sector, Namibia needs to invest in training and education programs to create a skilled workforce capable of operating and maintaining this infrastructure. Without substantial input — both financial and educational — from external experts, domestic involvement will likely remain limited, despite any well-planned local content policies.

    And we can’t overlook the need to define “local” clearly. Namibia has to make sure that its local content policy leaves no room for interpretation or nuance to avoid an unfair advantage for some Namibian businesses.

    At the same time, it’s equally important for the country to be pragmatic in its implementation of the regulations to continue fostering investment. Namibian policymakers need to avoid government overreach. While local content regulations can have positive effects, they can also raise concerns about potential drawbacks, such as increased costs or limitations on competition. Striking the right balance between local requirements and international competitiveness will be key to the success of the fledgling oil and gas sector.

    Cultivating Trust and Cooperation

    Meanwhile, the energy sector must tread carefully to avoid any backlash from the Namibian citizenry. One false step could quickly crumble the people’s support for oil and gas companies.

    In today’s world, simply focusing on resource extraction isn’t enough. Oil and gas companies that want to prosper in Namibia must also embrace corporate social responsibility (CSR) and social programs that foster positive outcomes for the people. Implementing sustainable practices that mitigate the environmental impact of oil and gas activities demonstrates a commitment to responsible resource development. Companies that neglect CSR risk facing community opposition and protests, potentially delaying or derailing projects.

    In addition, companies with a strong CSR reputation attract and retain top talent, creating a more positive work environment. That, of course, includes women: In Namibia, women make up almost 52% of the population so ignoring their potential would be a gross oversight. A positive social impact should ideally influence government decisions and create a smoother operating environment. The Namibian government can foster this cooperation by favoring companies with strong CSR initiatives when awarding licenses and concessions.

    Multinationals like Exxon, TotalEnergies, Shell, Galp, Woodside, and Chevron stand to be amazing allies in this growth. Likewise, service companies like Halliburton, SLB, Baker Hughes, Technip Energies and many others should play a big role — in boosting Namibia’s oil and gas production as well as in promoting Namibia’s local content environment. With the big contracts they’re going after, they’d be wise to start hiring and training Namibians in their oil and gas activities NOW.

    A Commitment to Namibians

    As long as the country continues along the path toward local content that the Geingob administration initiated, we might well see it becoming obligatory for companies to provide a local content plan and supplier development plan to be eligible to win contracts. Consider the recent ultimatum issued by Maggy Shino, petroleum commissioner of Namibia’s Ministry of Mines and Energy.

    “We would like to inform those envisaging to service the Namibian oil industry that local content is mandatory, and that the Namibian government will not compromise in providing opportunities for its people to participate meaningfully in the industry,” Shino said.

    In January, Shino shared the vision of the nation’s pathway to first oil. It is evident from her comments to World Oil that her people are foremost in her mind.

    “First, we need to build the capacity, both in the local workforce and in the institutions that will help oversee, develop and regulate Namibia’s oil and gas industry. We also have an obligation to share up-to-date information with the Namibian people so that they can prepare effectively for first oil production,” Shino said.

    She emphasized the importance of knowledge and skill transfer, to ensure that Namibian companies and Namibians themselves have the opportunity “to participate meaningfully and add value to the projects.”

    Shino also called on Namibians themselves, tasking them with some amount of self-determination.

    “A much bigger obligation is further placed on the Namibian people to ensure that they equip themselves with the necessary skills required. The oil industry is a highly specialized industry with high standards for HSE, and we will not compromise on the international requirements. We must ensure that the industry has an effective local content policy and regulatory landscape so that Namibians reap the fruits of their labor. This is central to sustainable governance.”

    On his part the Minister who has been a strong advocate for local content focused on the role of Namibians to step up their entrepreneurial skills and personal responsibility. “Without local entrepreneurs who are curious, innovative, and willing to invest their time and energy in acquiring the necessary skills to succeed, it will be extremely challenging, and possibly even impossible, to embark on our local content journey,” Stated Tom Alweendo, the Minister of Mines and Energy.

    With this mindset, Namibia’s foray into oil and gas will reignite the country’s sluggish economy by encouraging new investment and revitalizing the manufacturing sector. At the same time, a proactive introduction of solid local content regulations will no doubt foster job creation, help combat energy poverty, and promote hope and human dignity for the Namibian people.

    Distributed by APO Group on behalf of African Energy Chamber.

    SOURCE
    African Energy Chamber

  • If oil disappeared tomorrow, petroleum based-products would vanish with it(By HE Haitham Al Ghais)

    If oil disappeared tomorrow, petroleum based-products would vanish with it(By HE Haitham Al Ghais)

    JOHANNESBURG, South Africa, March 24, 2024/ — By HE Haitham Al Ghais, OPEC Secretary General.

    If oil disappeared tomorrow, there would be no more jet fuel, gasoline or diesel. Internal combustion engine automobiles, buses, trucks, lorries and coaches would be stranded. Airplanes powered by jet fuel would be grounded. Freight and passenger rail powered by diesel would halt. People could not get to work; children could not get to school. The shipping industry, transporting both freight and passengers, would be devastated.

    There would be no point calling emergency services. The majority of ambulances, fire engines, police cars, rescue helicopters and other emergency vehicles would be stationary. Most phones and computers would also vanish as their plastic components derive from oil, so it would be a struggle to find a way of communicating with the emergency services anyway.

    The construction sector would halt, as diesel powered vehicles would be stranded: excavators, bulldozers, dump trucks, cranes, cement mixers, rollers and compact loaders would remain stationary. New homes or buildings could not be built or receive vital maintenance work.

    If oil disappeared tomorrow, petroleum based-products would vanish with it. This would impact the production of electric vehicles (EVs). Aside from the supply chains disruption, the structure of lithium-ion batteries would be affected. A lithium-ion battery has four parts: an anode, cathode, electrolyte and a separator. Separators are engineered microporous membranes, typically made of polyethylene or polypropylene  petroleum-based products. The petroleum-derived synthetic rubber used on car and bicycle tyres would cease to exist.

    If oil disappeared tomorrow, food production would be devastated. Many of the vehicles necessary in agriculture  ̶ tractors, mowers, combine harvesters, balers, sprayers and seeders  ̶ would stop working. Food packaging necessary for storage and preservation would not be available. Petroleum coke, a by-product in oil refining, is used as a feedstock in manufacturing synthetic fertilizers, which are important in increasing crop yields. Food shortages and the knock on impacts would likely ensue.

    If oil disappeared tomorrow, it would be catastrophic for health services everywhere. Staff would lack mobility, and essential supplies would be stranded. Beyond transportation, petroleum is an essential feedstock for pharmaceuticals, plastics and medical supplies.

    Latex gloves, medical tubes, medical syringes, adhesives, some bandages, disinfectants, hand sanitizers, cleaning agents, prosthetics, artificial heart valves, resuscitation masks, stethoscopes, MRI scanners, insulin pens, infusion bags, medication packaging, face-masks, and Personal Protection Equipment are largely derived from petroleum-based materials. The equipment used in medical research such as microscopes, test tubes and goggles usually contain petroleum-derived components.

    The chemical synthesis that creates aspirin begins with benzene, which is derived from petroleum. The benzene is converted to phenol, which in turn is converted to salicylic acid. This is then transformed into acetylsalicylic acid, which the world knows as aspirin.

    It is difficult to conceive of a modern hospital without this range of essential petroleum-based products.

    If oil disappeared tomorrow, the renewables industry would be impacted. The fibreglass, resin or plastic necessary for the construction of most wind turbines, would disappear. The ethylene used in the production of solar panels would vanish. Most of the mining vehicles  ̶ large trucks, rotary drill rigs and rock drills  ̶ necessary to extract the critical minerals upon which the production of solar photovoltaic plants, wind farms and EVs depend, would become stationary.

    If oil disappeared tomorrow, homes would be transformed beyond recognition. There is the possibility roofs would collapse, for example, if bitumen was a key product. Other materials used in insulating homes would disappear. If you relied on heating oil to keep warm, that would go. The linoleum flooring and tiling would be impacted. Painting the walls would be a challenge. Furniture, pillows, rugs, curtains, dishes, cups and non-stick pans all are likely to be made from petroleum-derived products too.

    It would be a challenge to stay clean or keep homes clean, if oil disappeared tomorrow. Laundry detergent and dish detergents usually derive from petroleum-based products. Soap, toothpaste, hand-lotion, deodorant, shampoo, shaving cream, eyeglasses, contact lenses, combs, brushes; all normally contain petroleum-derived products.

    It would be a struggle to get anywhere, as the asphalt that paves roads and footpaths would vanish.

    If oil disappeared tomorrow, millions of jobs would be lost. Tax revenues would be depleted. Industrial production would crimp. Economic growth would go into reverse. The plight of the fuel poor would be worsened.

    This is not even the full list of everything that would be impacted, in such an unthinkable scenario.

    Yet, despite these realities, there are calls saying ‘Just stop oil,’ ‘Keep it in the ground,’ or ‘don’t invest in new oil and gas projects.’

    Of course, everybody wants to see greenhouse gas emissions reduced. OPEC believes that technological solutions and efficiency improvements can play a vital role. The oil industry is already proactive in this regard.

    We need to be cautious of endangering the present, in the name of saving the future. It is important we all fully understand the immense benefits that oil, and the petroleum products derived from it, continue to provide to people and nations across the world.

    Distributed by APO Group on behalf of African Energy Chamber.

    SOURCE
    African Energy Chamber

  • South Africa needs to use its Abundant Domestic Natural Gas to Fix its Energy Crisis today (By NJ Ayuk)

    South Africa needs to use its Abundant Domestic Natural Gas to Fix its Energy Crisis today (By NJ Ayuk)

    JOHANNESBURG, South Africa, March 8, 2024/ — By NJ Ayuk, Executive Chairman, African Energy Chamber (www.EnergyChamber.org)

    South Africans don’t want to breathe clean air in the dark. Energy woes are synonymous with South Africa right now.

    As the country’s fleet of mostly coal-powered plants struggles to keep up with electricity demand, South Africans are enduring daily power outages that last six to 10 hours a day.

    With businesses and institutions struggling to function, and tension mounting among South Africa’s people, the need for solutions is beyond urgent.

    I say “solutions” because providing the reliable power that South Africa needs now, and ensuring that the growing country will have what it needs well into the future, will require multiple strategies.

    As I’ve written, because of the country’s current reliance on coal to fire its power plants — and coal mines to fuel the economy — increased coal usage must be one of those solutions for the time being.

    South Africa also will need to continue building its renewable energy sector, and it has committed to do so in alignment with global goals to achieve net-zero greenhouse gas (GHG) emissions.

    But perhaps one of the most impactful solutions will be natural gas, which not only can power reliable electricity generation but also is a clean energy source – one that can be monetized and one that supports economic diversification as a feedstock for chemical and fertilizer factories.

    It only makes sense for South Africa to harness its massive – and largely untapped – reserves of natural gas. As described in the new African Energy Chamber (AEC) report, “The State of South African Energy,” cumulative output for South Africa’s large-scale Brulpadda and Luiperd natural gas discoveries, when developed, are estimated to be 50,000 barrels per day (bpd) of liquids and 125,000 barrels of oil equivalent per day (boepd). South Africa must do what it takes to reach that point as quickly as possible.

    During the 2023 African Energy Week in Cape Town, Gwede Mantashe, South African Minister of Mineral Resources and Energy Stated, “In recognition of the continued role of the fossil fuels in supporting energy security and the fact that 82% of energy sources in the world are from these fossil fuels, Africa must intensify its efforts aimed at developing its oil and gas sector in order to benefit from the expected increase of natural gas market in global supply”.

    I agree, that’s why South Africa should be encouraging ongoing oil and gas exploration through an enabling regulatory environment. Natural Gas financing and development again will be a key topic during African Energy 2024 scheduled for November 4th to 7th where I expect deals to be signed.

    And we cannot forget the importance of natural gas projects in neighboring African countries, including Gigajoule’s $550-million Matola Liquefied Natural Gas (LNG) Project in Mozambique, which will supply South Africa with gas; the 865-kilometer Rompco Gas Pipeline from Mozambique to South Africa; and Renergen’s Virginia liquefied natural gas project in South Africa. These projects need to be fast-tracked.

    Natural gas, if directed toward domestic markets and gas-fired electricity plants, can help South Africa find its way out of its current power crisis. Natural gas can also help ensure energy security and economic growth while the country transitions from fossil fuels to renewables for power generation. South Africa must move decisively to accelerate its gas agenda and start realizing these benefits.

    Renewables Alone Will Not Save the Day

    I’ve heard repeated arguments that South Africa’s energy crisis is proof that now is the time for the country to move, at lightning speed, to renewable energy sources like wind and solar power.

    As I’ve said more than once, South African can and should embrace solar and wind, but it also must consider the intermittency issues that come with them. They can’t be counted on to provide electricity around the clock.

    South Africa does not need more power fluctuations. It needs baseload power sources that can generate dependable power capable of consistently meeting demand. And the only way to get that is from coal and natural gas.

    We also have to be realistic about the financial requirements for a complete transition to natural gas. Yes, South Africa’s Just Energy Transition Investment Plan (JET IP) is an excellent program, but as of yet, the money generated is a drop in the bucket. South Africa has acknowledged that it will need about $99 billion to pay for a full transition to renewable energy. Currently, it has received commitments for about $8.5 billion.

    So, as South Africa pursues renewable energy, the logical approach would be to embrace natural gas as well. It can serve as a reliable energy source for the country’s current and future needs, and as it’s monetized, it can help generate revenue for South Africa’s energy transition.

    I was pleased to hear South African President Cyril Ramaphosa express that logic. He has made it clear that, while the country does plan to replace coal with lower-carbon alternatives, those alternatives will include both renewables and natural gas.

    South Africa has an Integrated Resource Plan in place that calls for gas technology generating 6,000 megawatts (MW) from combined-cycle gas turbines, including 3,000 MW from LNG-to-power, 726 MW from gas-to-power, and 1,500 MW from non-specified gas.

    This is doable, and it aligns with the AEC report’s forecast for South African power generation during the next decade and beyond. While coal currently accounts for about 80% of power generation, coal usage likely will decrease to 65% by the end of the decade, our report says. Gas and renewables, meanwhile, will see growth around the same time: Natural gas will account for 5% of power generation in 2031, while onshore wind and solar photovoltaic (PV)-generated power will make up 17% and 7%, respectively. In the long term, natural gas, onshore wind, and solar PV are expected to increase to 15%, 30%, and 20%, respectively, making up 65% of total power generation.

    It’s Time for a Regulatory Rehaul

    South Africa’s commitment to pursuing these avenues is praiseworthy, but when it comes to harnessing natural gas, more work is needed.

    I’m talking about government policies.

    South Africa needs a regulatory environment that encourages ongoing investment and exploration by oil and gas companies. Consider the Orange Basin, where Namibia is seeing record-breaking discoveries that will ensure its energy security. But only 20% of the Orange Basin is in Namibia, while 80% of it is in South Africa. Now is the time to capitalize on the opportunity it offers.

    Unfortunately, South Africa seems to be stuck: E&P is being hindered by unnecessary government red tape. We need to change that right away. Oil and gas companies already face tremendous pressure not to produce in Africa; this is no time to pile on the challenges.

    The African Energy Chamber strongly urges South Africa to ease regulatory burdens on oil and gas companies. And we call upon South Africa to fast-track permit approvals for more drilling, seismic surveys, pipeline developments, and LNG terminal construction.

    South Africa also needs to eliminate red tape that could slow the Brulpadda and Luiperd projects.

    These steps will be critical for South Africa to start putting natural gas to work for its people, its businesses, and its communities.

    Natural Gas Is a Reasonable Solution

    Not surprisingly, if you consider the constant pressure Africa has faced in recent years to leave our fossil fuels in the ground, the prospect of pursuing gas-to-power projects in South Africa is being met with sharp resistance. “Dirty gas” is not the answer, environmentalists and Western voices insist.

    I strongly disagree. We must be pragmatic: South Africa must harness every solution at its disposal, natural gas in particular, to address the country’s energy needs.

    Fortunately, President Ramaphosa has been pushing back against the anti-gas narrative as well.

    “Countries on the African continent need to be able to explore and extract oil and gas in an environmentally responsible and sustainable manner,” Ramaphosa said earlier this year

    during an address at the Investing in African Mining Indaba. “These resources are important for energy security, for social and economic development, and for reducing energy poverty on the continent. And we do not see this trajectory as being mutually exclusive to our focus on moving towards ensuring that we reduce our carbon footprint… In our onward march towards a low-carbon future it is critical that our efforts are both realistic and sustainable.”

    Well said!

    I would add that many of the environmental groups trying to keep people in the dark in South Africa – and across our continent – don’t have the same struggles with energy security. In fact, in a move that balances environmental stewardship with energy security, the United States just approved an $8 billion drilling program in Alaska. If it’s acceptable for wealthy countries to perform this balancing act, there’s no reason why Africa’s most industrialized nation cannot do the same.

    Having clean air doesn’t mean we have to be in the dark.

    To read the State of South African Energy 2023, visit https://apo-opa.co/3T7wR6K.

    Distributed by APO Group on behalf of African Energy Chamber.

    SOURCE
    African Energy Chamber