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Let’s jump right in this week.

Too Long; Didn’t Read

• AGOA: Biden extended AGOA beyond 2025. 30 African countries benefit from this trade agreement with the U.S. Estimated value is $10B plus. But some countries didn’t get it - Ethiopia being one of them (Bloomberg).

• Ethiopia: Ethiopia finally floats its currency (FT) - a massive step in IMF-requested reforms. Immediate positive reaction from the international community - World Bank pledges $16.6B in funding (Bloomberg) and IMF agrees to $3.4B (Bloomberg).

• Ghana: The International Finance Corporation (IFC) has invested $130M in a $1B solar-energy project (Bloomberg).

• Kenya: Inflation hit 4-year low (Bloomberg) - Is Ruto’s work paying off? Court declares taxes introduced in 2023 unconstitutional (Reuters).

• Morocco: France has officially recognized Morocco’s sovereignty over Western Sahara (Bloomberg), while Algeria withdrew its ambassador from France (FT) over the decades-long dispute. Why so much political tension over this scrap of land? (The Economist). 

• Mozambique: Won $2B bond fraud case (Bloomberg); will use $825M cash from court win to pay “tuna bonds” (Bloomberg, FT). 

• Uganda: Coffee exports hit 30-year high at $1.14B. Go Robusta! (FurtherAfrica).

Graphic of the Week 

Ethiopia Takes Major Step Forward in Economic Liberalization. Floats Ethiopian Birr…

On July 29, the National Bank of Ethiopia introduced reforms to boost foreign reserves and promote investment (Bloomberg); banks can now trade foreign currencies at negotiated rates, ending the government-mandated exchange rate.

• Birr Devaluation: The Birr lost 23% on July 29 and then went to 30% from 57 ETB/USD (Reuters).

• Parallel Market Volatility: Local sources say the parallel market is still operating at significantly different rates between 128 to 140 ETB/USD throughout the week.

• IMF and Investments: The IMF approved a $3.4B funding program and the World Bank committed 16.6B (Bloomberg).

Ethiopia Poised to Overtake Nigeria in 2026

Protests Against Fiscal Reforms in Nigeria

At least three protesters were killed in Nigeria's Kaduna state as demonstrations erupted across the country against the rising cost of living and governance issues. Protests took place in major cities including Abuja and Lagos, where police fired tear gas to disperse crowds and armed security personnel were deployed to preempt potential violence. 

Despite President Bola Tinubu's call for patience and his economic reforms aimed at stabilizing the country, such as removing fuel subsidies and hiking electricity tariffs, widespread discontent persists due to rampant inflation and increasing hardship for ordinary Nigerians. In 2024, fiscal reforms continue to be a focal point for countries across Africa particularly in Kenya, Nigeria, Egypt and now Ethiopia.

Read More About Nigeria’s Fiscal Reform Journey Here: Bloomberg.

Business & Finance in Africa 

Kenya’s Economy Strengthens as Inflation Cools…

Kenya's annual inflation rate fell to a four-year low of 4.3% in July, driven by lower transport costs and a strong shilling, which has appreciated in value by 21% (Bloomberg).

Record Coffee Exports Boost Growth for Uganda and Ethiopia

Uganda's coffee exports reached $1.14B in the 2023/24 financial year, the highest in 30 years, with 6.13 million bags exported compared to 5.76 million bags worth $846.02M in the previous year. The Uganda Coffee Development Authority attributes the success to effective regulation and support for farmers and remains optimistic about achieving the 2017 Coffee Roadmap's goal of producing 20 million 60 kg bags and earning $1.5B annually by 2030. Europe remains Ugandan coffee’s top export destination.

Meanwhile, Ethiopia, Africa's leading coffee producer and the world's fifth-largest exporter of Arabica coffee, achieved a record $1.43B in coffee export revenue for 2023/24, marking a 7.5% increase from the previous year. 

Despite these successes, African coffee exporters face challenges from the EU Deforestation Regulation (EUDR) regulations requiring proof that coffee is not sourced from deforested land, as well as shipping delays due to the Red Sea crisis.

Peace & Security in Africa 

France Sides with Morocco Over Western Sahara🇲🇦

This week, France shifted its longstanding policy on the Western Sahara dispute by backing Morocco's plan, marking a significant geopolitical development. In a letter to King Mohammed VI, President Emmanuel Macron endorsed Morocco’s 2007 proposal to the United Nations, describing it as the "only basis" for resolving the conflict. The 2007 proposal offered the Sahrawi people a local parliament and government with autonomy over certain internal affairs. However, Rabat would retain control over foreign affairs, defense and other national matters. The pro-independence Polisario Front rejected the proposal and continues to advocate for the Sahrawi people's right to self-determination.

Why it Matters: Macron's stance aligns France with the United States, Israel and Spain bolstering Morocco's international support. Algeria has condemned the decision, accusing France of supporting Moroccan expansionism. The shift in France's policy, given its influence as a permanent member of the UN Security Council, is a game-changer for the stalled UN-mediated peace process. This development will likely impact key issues including migration, smuggling and counterterrorism. 

Tech & Society in Africa

Startups Attract $1B in Funding…But Slower Than Last Year

In Context: Several large deals in July including d.light’s $176M facility and MNT-Halan’s $157M raise are helping move startup fundraising levels to respectable levels for 2024 (Africa The Big Deal).

Africa’s AI Opportunity 

AI is expected to add $16T to the global economy by 2030. 

However, Africa's dearth of infrastructure means it is projected to get a meager $400M boost in annual GDP from AI by 2030, or just 2.5% of the total. Seems like an opportunity (Economist).

U.S. in Africa

Biden Extends AGOA

The Biden administration signaled support for the early reauthorization of the African Growth and Opportunity Act (AGOA) beyond its current expiration in September 2025. The legislation allows more than 30 sub-Saharan African nations to retain duty-free access to the U.S. market.  African trade ministers, attending an AGOA forum in Washington asked for a minimum 16-year extension to stabilize trade and investment relations. 

Extending the legislation still requires U.S. congressional approval.

Sports and Entertainment in Africa

Investors See Africa’s Sports Potential 

The International Finance Corporation (IFC), Proparco and Helios Sports and Entertainment Group are teaming up to inject fresh cash into Africa's burgeoning sports and entertainment sectors. 

According to a study by UNESCO “every $1 invested in a sporting intervention yields as much as $124 in economic value given the large ecosystem the sector supports.” In contrast, in Africa, sports account for just 0.5% of GDP compared to 2% of GDP in other parts of the world. Investment is needed to activate African sports and the follow-on economic impact could be vast.

Climate and Conservation in Africa

IFC Helps Fund Africa’s Largest Single Roof Solar Project in Ghana

The International Finance Corporation (IFC) is supporting a $1B solar project by a Ghanaian conglomerate that aims to increase the country's solar generation capacity sevenfold by 2030. IFC has lent $130M, a portion of the total investment requirement, to LMI Holdings to help build 1,000 megawatts of solar installations over the next six years. This project has already set up one million square feet of rooftop solar panels that produce 16.8 megawatts. Interested? Look back our deep drive about Africa’s untapped energy potential.

Embarrassed But Alive

The number of rhinos killed illegally in South Africa dropped significantly in May and June, with only 43 poached compared to 76 in the same period last year. The decline is attributed to a policy of dehorning which included removing the horns of more than 1,000 rhinos in targeted reserves (Bloomberg).

This week’s brief is brought to you by Andrew Larsen in Rwanda, Mary Ann Achieng and Shaynerose Magabi in Kenya. Email us @ [email protected].

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