Happy Friday from Addis Ababa, Ethiopia. To see a city in transformation, you can find more photos: HERE. It’s a fascinating week in news, so let’s jump in!

Too Long; Didn’t Read

• Algeria: $455M agricultural project aims to enhance food security.  (Bloomberg)

• Bretton Woods Legacy: Calls for reform in global financial architecture face opposition. (Devex)

• Cameroon: Lawmakers' terms may be extended, impacting 2025 elections. (Bloomberg)

• Egypt: Inflation eases in June despite bread price hike and food cost increase. (Bloomberg)

• Kenya: President Ruto has fired his cabinet following Gen-Z protests. (New York Times)

• Miombo Forests: Study show Africa's miombo woodlands stores 2X carbon previously thought. (Bloomberg)

• Mozambique: US supports country’s first utility-scale wind-power project. (Bloomberg)

• Nigeria: Many question the effectiveness of "Tinubunomics." (FT)

• Sahel States: Mali, Niger and Burkina Faso formed the Confederation of Sahel States. (France 24) 

• South Africa: Celebrates 100 days without load shedding. (Bloomberg)

• Sudan: Ethiopian PM Abiy Ahmed met Sudan’s armed forces chief General Abdel Fattah al-Burhan. (Al Jazeera)

• Uganda: Plans to purchase domestic gold to bolster foreign exchange reserves. (Bloomberg) 

• Zimbabwe: President Mnangagwa plans to retire and adhere to constitutional limits. (All Africa)

Graphic of the Week 

The Hidden War on African Stability

In Context: Disinformation campaigns in Africa have surged nearly fourfold since 2022, generating destabilizing and antidemocratic consequences. The Africa Center for Strategic Studies reports 189 documented campaigns, the majority of these disinformation efforts are foreign state-sponsored, primarily Russia, followed by China. These campaigns exploit the rapid expansion of digital communications to manipulate information systems, fostering violence, promoting coups, silencing civil society and enabling corruption. Social media usage in Africa, particularly in Nigeria and Kenya, is among the highest globally, making these platforms ripe for disinformation. The proliferation of misinformation campaigns correlates strongly with instability. As press freedom declines and foreign and domestic actors increasingly weaponize disinformation, the challenge to stable and prosperous African societies may intensify. (Africa Center)

Business & Finance in Africa 

Bretton Woods Legacy: Time for Change? 

Eighty years after the Bretton Woods Conference, the global financial architecture remains largely unchanged, favoring high-income countries. The Bretton Woods Conference, held in July 1944 in Bretton Woods, New Hampshire, established the International Monetary Fund (IMF) and the World Bank to stabilize and rebuild the global economy post-World War II. Fast forward to COVID-19 and advanced economies spent 10% of GDP to respond to shocks, while low- and middle-income countries (LMICs) had to borrow, risking debt crises. Special Drawing Rights (SDRs), the IMF's reserve asset, could help mitigate inequalities but remain underutilized. In 2021, $650B SDRs were allocated, mostly to wealthier nations due to an outdated quota system. Calls for reform, including $500Bnew SDR issuance and needs-based allocations, face opposition from powerful IMF members like Germany and the U.S. (devex)

Algeria's Food Security Boost

Algeria signed a $455M deal with Italian firm Bonifiche Ferraresi SpA to develop a 36,000-hectare agricultural project in the Timimoune state. The project, aiming to enhance food security, is set to start this year and will focus on wheat and beans, among other crops. Algeria's investment fund will provide 49% of the funding and the Italian company will invest the rest. This initiative is part of a strategy to achieve self-sufficiency in key crops. (Bloomberg)

Egypt’s Inflation Eases

Egyptian inflation slowed for the fourth month in June, reaching 27.5% annually compared to 28.1% in May, and this despite a massive reduction in bread subsidies that resulted in a 300% hike in prices. Egypt's inflation has been declining despite a significant currency devaluation in 2024. Further subsidy reductions are expected as Egypt continues economic reforms backed by a $57B bailout. The central bank is likely to keep interest rates high to maintain tight monetary policy (Bloomberg). According to the Central Bank of Egypt, the country’s net foreign exchange reserves had risen to $46.34B at the end of June, an increase of $258M. (Amwal Al Ghad)

Fiscal Reform Yields Investment

We can see it in the numbers! Investors are clearly prioritizing emerging market (EM) countries like Egypt and South Africa that are making hard fiscal policy choices over those with high yields. Bloomberg reports that investors are willing to buy debt with low yields as long as they trust the country’s fiscal reforms. (Bloomberg) 

Will Economic Shock Work in Nigeria?

A worthy read from Financial Times this week delves into Nigeria’s economic shock strategy. The economic reforms, known as "Tinubunomics," have resulted in food insecurity for 26.5 million people, with transport costs doubling and small businesses suffering. Critics argue that the reforms are poorly executed, lacking a clear strategy and are worried at the country’s continued dependence upon oil prices. With foreign exchange reserves depleted and trust needing to be rebuilt, Nigeria faces a tough road ahead (FT - 14 minute read). A 150-day duty-free import window on key food imports has been implemented to stabilize prices and bolster food security under President Tinubu's plan. (Legit) 

South Africa's Power Breakthrough

South Africa is celebrating 100 days without load shedding, thanks to state-owned power company Eskom’s recovery plan and aggressive maintenance, which have improved power supply, boosting the economy and quality of life. Eskom's increased repairs and a ZAR 254B bailout in 2023 enhanced capacity from 51% to 65%. The South African economy is projected to grow 1.2% in 2024 (Bloomberg). And as we mentioned last week, the country plans to rely on coal for longer and is pushing to renegotiate deals worth $2.6B related to the country’s clean energy transition.  

Uganda Turns to Gold

Uganda plans to purchase domestic gold to bolster foreign exchange reserves, reducing reliance on reserve investments. The Bank of Uganda will buy gold directly from artisanal miners, supporting local livelihoods and reducing raw gold imports. This move follows similar actions by Nigeria and Zimbabwe, where gold-backed currencies aim to stabilize economies. Uganda's reserves declined by $149M to $3.47B due to capital outflows, necessitating the gold purchase program to mitigate risks and support economic stability. The country exported $2.8B worth of gold in the past year, despite lacking significant mining operations. (Bloomberg) 

Zimbabwe Currency Reserves Surge

Zimbabwe’s currency and mineral reserves rose to $370M from $285M over three months, providing a strong buffer for the new Zimbabwe Gold (ZiG) currency. The central bank accumulated reserves from gold royalties and minerals like diamonds, lithium and platinum. The ZiG, introduced in April, replaced the Zimbabwe dollar, which had lost 80% of its value against the US dollar this year. (Bloomberg) President Emmerson Mnangagwa hinted recently that the bullion-backed ZiG might become the sole legal tender before 2030. This week, President Mnangagwa also announced he will retire after his current term, the first such indication since taking power in a 2017 coup. The announcement aligns with the country’s two five-year term limit. (All Africa)

Climate in Africa

Miombo Forests Store Twice the Carbon

A new study reveals that Africa's miombo woodlands, spanning from Mozambique to Angola, store more than double the carbon dioxide previously estimated, highlighting their critical role as carbon sinks. Using advanced data from drones, sensors and helicopters, researchers found the forests' carbon storage capacity to be significantly underestimated by older methods. These findings underscore the importance of protecting these forests, which have shrunk from 2.7 million square kilometers to 1.9 million square kilometers in recent decades, releasing more carbon into the atmosphere and impacting millions who rely on the woodlands for fuel and resources. (Bloomberg)

US to Boost Mozambique's Wind Power 

The US International Development Finance Corp. has approved a loan of up to $99M and $80M in political risk insurance to support Mozambique's first utility-scale wind-power project. Developed by Globeleq Africa Ltd., the 120-megawatt plant near Namaacha will diversify the nation's energy sources, currently dominated by a single hydroelectric dam. The project, requiring $268M in total funding, is expected to reach financial close this year and marks a significant step in Mozambique's renewables journey. (Bloomberg)

EU’s Good Intention Harming Farmers

Having invested in a coffee farm, I am happy to see this in the news! 2024 EU deforestation regulations require coffee, cocoa and palm oil buyers to prove the goods did not come from deforested land post-2020. An importer found negligent can be fined up to 4% of its turnover in the EU. This rule imposes high costs to geo-locate small farms, significantly impacting African farmers who are struggling to meet compliance deadlines. Some believe the regulations could yield a 10% increase in export costs, which for a country like Ethiopia could reduce GDP by 0.7%. A solution using satellite imagery to track deforestation is being explored. The EU has pledged €70M to help reduce deforestation, but exporting countries criticize the tight timeline and implementation challenges. (Economist)

Democracy in Africa

Ruto Fires Cabinet

President William Ruto of Kenya has dismissed all but one of his cabinet secretaries following recent protests against a proposed finance bill, which led to the deaths of at least 39 people. Despite defending his administration's performance, Ruto acknowledged the electorate's demands for better governance and promised extensive consultations to form a broad-based government. The only retained cabinet member is Foreign Minister Musalia Mudavadi. This shake-up comes after Ruto, a key Western ally, decided not to sign the controversial finance bill. (New York Times) Moody's Ratings downgraded Kenya's credit rating from B3 to Caa1, deepening it into junk status, after the government abandoned a $2B tax plan due to deadly protests. (Bloomberg) Kenya's Treasury will cut spending by KES 177B and increase borrowing to cover a revenue shortfall. This adjustment will raise the budget deficit to 4.6% of GDP.  (Bloomberg) 

Sahel States Break Away

The Economic Community of West African States (ECOWAS) faces disintegration as military leaders in Mali, Niger and Burkina Faso form the "Confederation of Sahel States" and boycott the ECOWAS summit. The breakaway states aim to counter France’s influence. The group’s primary grievances align along an anti-colonial struggle, anger at France for its control over resources, its failure, in their opinion, to help in the fight against Islamist extremism and a nationalist call to strip away European customs and language, which has been present in these countries since independence from France in the 20th century. This policy creates opposing alliances in the region, with these countries aligning more closely with Russia, Iran and Turkey, while severing military ties with France and the US. ECOWAS warns of political isolation and insecurity, with potential loss of funding and disrupted regional force plans. Nigeria's President Tinubu calls for Senegal's President Faye to mediate. The bloc struggles with jihadist violence, financial troubles and forming a regional force amid this challenge. Neighboring Chad has also hinted at an interest in joining the new confederation. (France 24) 

Recap: Take a look back at our analysis of the West African Franc Zone. Shifting alliances could mean a new currency for Mali, Niger and Burkina Faso. New partners, namely China, Russia or Iran, could step in to help stabilize it. And read more about the victors of Africa’s coup belt: The Economist

Mauritania's Stability Amid Chaos

Mauritania, led by President Mohamed Ould Ghazouani since 2019, has achieved unprecedented stability despite its history of coups and terrorism. Under Ghazouani, the country has seen its first peaceful transfer of power, expanded social security, and over 13 years free of terrorism. However, regional instability threatens to spill over, with rising border clashes, an influx of refugees from Mali and a surge in migrants heading to Europe. While Mauritania benefits from European aid in exchange for migration control, militant Islamism and regional conflicts remain concerns. (Economist)

Cameroon Voting Extends MP Terms

Cameroon's parliament is deliberating a bill to extend lawmakers' mandates by a year to March 30, 2026, potentially eliminating opposition for the 2025 presidential election. President Paul Biya's party, holding 152 of 180 seats, supports the extension to "lighten the electoral calendar." Biya, 91, Africa’s second-longest-serving leader, has maintained power since 1982, with consistent electoral victories. Opposition candidates Maurice Kamto and Cabral Libii face increasing challenges, with government accusations of promoting disorder. Cameroon’s opposition parties claim this new policy is the president’s ploy to stay leader for life. (Bloomberg)

Ivory Coast’s Ouattara Eyes Fourth Term

Ivory Coast’s ruling party is rallying support for President Alassane Ouattara to seek a controversial fourth term in the October 2025 election. The Rally of Houphouetists for Democracy and Peace has hosted events to show backing, including a ceremony where cocoa farmers donated 50M CFA ($82,650) for his candidacy. Ouattara, who at 82 has been in power since 2011, argues that the 2016 adoption of a new constitution reset his term limits, allowing him to run again. Despite criticism of nepotism and civil rights limitations, the country's economy has grown robustly, with rates of 6.9% in 2022 and 6.2% in 2023. (Bloomberg)

South Sudan's Independence Woes

As South Sudan marked its fifth Independence Day on July 9th, the country faces a severe food crisis with 4.8 million people in extreme hunger, a 50% increase from earlier this year. Inflation has surged to 295%, exacerbating economic issues. The transitional government's hope for stability is overshadowed by escalating conflict and economic collapse, requiring international support to prevent further deterioration. (CARE) U.S. Secretary of State Antony Blinken urged leaders to ensure genuine elections and transparent governance  (Radio Tamazuj). South Sudan will hold its first presidential elections on Dec. 22. The UN warns caution is essential to avoid violence amidst ongoing conflicts and refugee influx. Bloomberg)

Kagame Eyes Fourth Term

Rwandan President Paul Kagame, 66, is expected to win a fourth term in the upcoming election, on July 14, 2024 facing only two opposition candidates, Frank Habineza and Philippe Mpayimana. Kagame, who has been in power since 2000, won nearly 99% of the vote in 2017 after a constitutional change removed term limits. Despite international praise for Rwanda's post-genocide recovery and its emergence as a regional financial hub, Kagame's government faces accusations of rights abuses and backing rebel groups in the Democratic Republic of Congo. Over 9 million voters are registered for the election, with provisional results expected by July 20. (Reuters)

Peace & Security in Africa 

Ethiopian PM Mediates Sudan Conflict

Ethiopian Prime Minister Abiy Ahmed met Sudan’s armed forces chief General Abdel Fattah al-Burhan to seek an end to the ongoing conflict between Sudan’s military and the paramilitary RSF, which began in April 2023. Ahmed’s visit to Port Sudan is the highest-level state visit since the conflict started. The UN estimates that 10 million people have been displaced, 755,000 people face extreme hunger and also says there is evidence of genocide in West Darfur. (Al Jazeera)

P.S. We’d love to hear from you @ [email protected]. This week’s Brief is brought to you by Andrew Larsen, Josh Parker Allen and Mary Ann Achieng. See you next week from Maputo, Mozambique.