Dear Friends,

Your weekly update here, have a great weekend!

• AI in Africa. The United Kingdom insisted Africa was not forgotten when it hosted an international AI summit last week. To prove its point, it pledged £38 million toward projects that “support home-grown AI expertise and computing power” on the continent. As part of a broader £80 million initiative with the U.S., Canada, and the Bill & Melinda Gates Foundation, the aim is to make “five or more African countries globally influential in the worldwide conversation” and create at least eight AI research labs at African universities. (Devex). 

• Democratic Republic of Congo (DRC). The main opposition presidential candidates standing in the election next month called for urgent measures to secure proper democratic processes. Electoral authorities have not published voters’ roles or lists of polling stations (The Economist). 

• Emerging Markets. The Economist Global Outlook forecast that developing and emerging economies will contribute about 60% of global GDP growth over the next five years (The Economist).  

• Guinea. Former Guinean dictator, Moussa Dadis Camara, was recaptured after he attempted a jailbreak over the weekend. Camara’s lawyer insists the former leader was instead kidnapped (The Guardian). 

• Macros. Kenya’s inflation rate unexpectedly quickened to a three-month high in October, due to higher energy costs — consumer prices rose 6.9%. Meanwhile, inflation slowed to 2.4% in neighboring Uganda (Bloomberg). 

• Norrsken22’s Raise. The Pan-African venture capital firm, Norrsken22, achieved the final close of its debut fund. It raised a total of US$205 million, surpassing its initial target (TechCrunch).

• Polycrisis. Bloomberg writes that the next source of turbulence in the polycrisis era is a packed 2024 election calendar. The year will bring 40 national elections – 41% of the world’s population will be represented by active voters. In Africa, big name countries will go to the polls including South Africa, Ghana, Botswana, and Senegal (Bloomberg). 

• Somalia. Ziraat Katilim, a Turkish bank, became the first foreign lender to operate in Somalia since 1970, when a Marxist government nationalised the financial system (The Economist).

• Rwanda. President Kagame announced that his country will allow all Africans to visit Rwanda without a visa. Benin, the Gambia, and Seychelles have since initiated similar programs. Kenya plans to join them by the end of the year (Independent).

In Context: A combination of war in Europe, droughts and floods, and general instability is keeping domestic food price inflation high, hitting people in Venezuela, Lebanon, Argentina, Nigeria and Egypt especially hard. In real terms, food price inflation exceeded overall inflation in more than three quarters of 170 countries where figures are available (Bloomberg).

African governments continue to be shut out of global debt markets due to exceedingly high interest rates, making foreign borrowing too expensive. They’ve had to turn to their Central Banks to print money, which has led to devalued local currencies and higher costs of living according to a S&P Global Ratings report. The increased cost to foreign borrowing is in part due to the tightening of the eurobond markets as investors grappled with shocks from the pandemic, Russia’s invasion of Ukraine, high global inflation and aggressive interest-rate increases led by the Federal Reserve. The increased demand for local debt has also pushed up the cost of refinancing domestic loans across the continent (Bloomberg). 

Zambia’s Central Bank raised the ratio of deposits that commercial lenders must hold in a bid to reverse a slide in one of the world’s worst-performing currencies. The Zambian kwacha has fell by more than 20% against the US dollar so far in the second half of 2023. Metal prices and production have taken a hit, as have delays to the nation’s plans to restructure more than US$10 billion of external sovereign debt (Bloomberg).

On the topic of metals, Zambia is home of KoBold Metals — a mining start-up backed by Bill Gates that’s developing a copper project in the country. The company is getting closer to investing in neighboring Democratic Republic of Congo (DRC). “We think it is probably the best place in the world for the types of materials we’re looking for,” Chief Executive Officer Kurt House said in an interview on the DRC. Congo is the world’s largest cobalt producer and one of the biggest sources of copper. Both cobalt and copper are critical to the global green-energy transition (Bloomberg). 

In South Africa, the Logistics Group has built a new port facility, the Saldanha Dry Bulk Terminal, that will enable increased volumes of manganese to be offloaded from one of the world’s longest freight trains, according to CEO Anton Potgieter. The new terminal will have the capacity to accept 100 tons per wagon over the 63 tons that existing operations can currently process. Volumes transported by state rail operator Transnet have gone down over recent years due to mismanagement and locomotive shortages (Bloomberg). 

Finally, Bloomberg reports that an acute shortage of skilled workers in South Africa is restraining already tepid expansion, limiting job creation and pushing some foreign investors to think about moving their money elsewhere. South African leadership identified the broken immigration system as the second-biggest obstacle to economic growth, second only to the ongoing and crippling power outages. The Home Affairs department has been accused of exacerbating the problem because it has failed to deal with a malfunctioning visa system (Bloomberg).

The Institute for Security Studies writes that while China is not solely responsible for Africa’s debt crisis (see Business & Finance section), the terms of Chinese loans are certainly concerning. China is now the world’s largest debt collector, with its overseas debt collection hitting US$1.5 trillion, primarily owned by financially distressed low- and middle-income countries (The Guardian). 

Meanwhile, the Economist’s Global Economic Outlook warns of the impacts of Chinese loans on the continent. Rising interest payments, as a share of GDP, will squeeze the fiscal space for government spending in areas like healthcare and education. Rising borrowing costs have also made it increasingly difficult for countries with high levels of debt to finance extra spending by issuing more debt on the bond markets (The Economist). 

The DRC army alongside the UN’s blue helmets launched a joint military operation to secure Goma, a city in North Kivu, which has come under attack from several militia groups. The DRC’s President Felix Tshisekedi has in the past called for UN forces to withdraw from his country (Africa News). 

In the Sahel, The Economist reports that dozens of UN peacekeepers have been injured in attacks on their convoys as they were withdrawing from northern Mali. The UN destroyed equipment that could not safely be withdrawn — the Malian government refused requests to provide air support for the UN withdrawal (The Economist).

African tech start ups are struggling to secure funding. 2023 has been a tough year for VC in Africa following a record year in 2022, when the continent attracted between US$5 billion and US$6 billion. This year funding has so far dwindled to a range between US$2.5 billion and US$3.4 billion reflecting the decline in overall VC activity (TechCrunch). 

In more positive news, SBI Holdings, a Japanese financial services conglomerate and one of the largest VC firms in the country, made a US$40 million multi-fund commitment to anchor Pan-African VC firm Novastar Ventures’ future funds (TechCrunch).

United States in Africa

The US Export-Import Bank (Ex-Im) is increasing its focus on Africa and clean power, just this week approving its biggest ever renewable energy investment on the continent. The bank cleared a direct loan of more than US$900 million for two solar plants in Angola, an unprecedented project for Ex-Im that will create thousands of jobs in the US according to the export credit agency’s chairwoman, Reta Jo Lewis (Bloomberg).