Nile Basin – Water Politics

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Shifting regional politics as the approval of Ethiopian dam and co-operative agreement may signal new directions in dispute over Nile-basin water resources

On March 23rd, Ethiopian Prime Minister Hailemariam Dessalegn, Egyptian President Abdel Fattah al-Sisi and Sudanese President Omar Al-Bashir, met in Khartoum and signed an agreement on the ‘Declaration of the Principles’ of the Grand Ethiopian Renaissance Dam (GERD).

Ethiopia started diverting water from the Blue Nile in 2013 for the construction of the 6000MW dam in the Benishangul region near the Sudanese border. It will be Africa’s largest when completed in 2017, at 1,780 metres long and 145 metres high, costing around US$4.8 billion, reported Al Jazeera.

Egypt, largely reliant on the Nile for water and agriculture, had opposed the proposed dam claiming that it would reduce its already strained water supply and the energy generating capacity of its Aswan dam possibly by 30-40%, reported Al-Monitor.

Under current colonial-era treaties Egypt and Sudan receive the majority of water from the Nile; the 1959 Nile Waters Agreement, was a revision of an earlier English-Egyptian agreement, governing infrastructure projects and water allowances. However while Sudan has supported the GERD, Egypt has often boycotted negotiations. In the past the dispute between Ethiopia and Egypt has degenerated into threats of war.

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AFP reported that on March 24th, the day following the meeting in Khartoum, Al-Sisi met with Dessalegn in Addis-Ababa, he explained that “the agreement…represents a positive step on the right path. We’re not going to waste any more time”. This position marks a considerable change from his predecessor Mohamed Morsi, who opposed the “theft of the Nile”.

Rwandan Internal Security Minister Sheikh Musa Fazil Harerimana hailed the agreement as “unprecedented historical action… a step towards increased cooperation as well as regional peace and stability”, report the New Times.

In 1999 the Nile Basin Initiative (NBI) was founded as a ‘framework for co-operation’ and a ‘regional inter-governmental partnership’ led by Burundi, DR Congo, Egypt, Ethiopia, Kenya, Rwanda, South Sudan, Sudan Tanzania and Uganda.

However water demands and populations continue to grow; the report by ISS estimates that the Nile basin population will double by 2050. Already existing pressures on the water supply include consumption needs, irrigation, energy demands from hydro-power, and environmental and climatic factors.

In 2010 the Cooperative Framework Agreement (CFA) was introduced to replace the NBI by countries who wanted more access to water and did not want to seek Egypt’s permission before implementing projects on the Nile. It has been signed by Rwanda, Uganda, Burundi, Ethiopia, Tanzania and Kenya, while Egypt and Sudan blocked the operationalisation of the agreement, explains the ISS report.

Often the upstream countries have favoured co-operative deals, while downstream countries have stuck to colonial decrees that provided Egypt and Sudan exclusive rights to the water; Egypt opposed the CFA claiming that it would deprive them of their veto power over development projects on the Nile, on which they are much more dependant than ‘upstream’ countries.

Sudan ended a two year boycott of the NBI in 2014 but Egypt continued its stance. Additional confusion as to whether a newly independent South Sudan had any ‘official rights’ to the Nile water led to intense external pressure to ratify the CFA, a move opposed by Egypt. South Sudan however, did not sign the agreement and instead signed a military agreement with Egypt in March 2014, report Le Monde diplomatique.

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In recent years the financing arrangements have also changed; funding for infrastructure projects used to come from the Nile Basin Trust Fund (NBTF) managed by the World Bank. Now other investors, largely from China, have allowed governments to push ahead with smaller projects without considering resulting consequences for other countries.

Similarly, recent regional events have made the politic situation increasingly unpredictable; domestic instability in many of the Nile basin countries is rising and tensions between states continue, disputes may be reignited as water sources are strained by plans to turn the Nile into an “axis for development”.

The historical trans-boundary water relations are changing and Egypt’s support for the GERD may signal a shift in direction. Egypt’s State Information Service explained that “the agreement is considered a road map for action in the future as it lays down the bases for maintaining the Egyptian rights and helps promote confidence-building measures within a political, legal and technical framework”.

Find out more in the Africa Research Bulletin:

Egypt-Ethiopia: Nile Dam Problems
Economic, Financial & Technical Series, 
Vol.50, Issue.10, Pp.20154B-20155B

Egypt-Ethiopia: Battle for the Nile
Political, Social & Cultural Series, 
Vol.50, Issue.6, Pp. 19729B-19730B

Nile Basin: Egypt and Sudan Cling to Historic Rights
Political, Social & Cultural Series, 
Vol.47, Issue.5, Pp.18389A-18390A

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Sierra Leone: Mining Stalled, Economy Strained Further

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Ebola, falling iron prices and a stalling mining industry add burdens to Sierra Leone’s economy; analysts note the need for diversification.

The effects of Ebola have been widespread; as of January 12th 2015 there were 21,206 reported cases and 8,386 deaths, alongside significant economic costs with the three most affected countries, Guinea, Sierra Leone and Liberia losing around 12% of GDP so far in 2015, according to a World Bank report.

The economic affects have spilled over into adjacent countries; regional trade hubs and trade routes, and countries neighbouring those with Ebola such as Côte d’Ivoire and Mali, have experienced noticeable declines in cross-border trade and restrictions on travel.

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(DFID 2015)

The World Bank  explain that since 2014 all three countries have seen ‘negative or flat growth’, particularly Sierra Leone, whose economy the World Bank predicts will shrink by 2% this year, a reduction from projections of 8.9% growth before the onset of Ebola.

Growth rates in Sierra Leone peaked at 21% in 2013; an Institute for Development Studies (IDS) report, ‘Ebola and Extractive Industry’, explains that huge amounts of Foreign Direct Investment (FDI) flooded into Sierra Leone following the end of the 1991-2002 civil war, creating strong growth on the back of an ‘extraction-based’ economy.

However a recent drop in iron ore prices due to lower Chinese demand, has placed further constraints on the economy and resulted in the closure of Sierra Leone’s two flagship mines.

The Tonkolili iron ore project, operated by UK based African Minerals, was closed in December 2014 due to a lack of working capital and a default on loan repayments to partner, Chinese-based Shandong Iron and Steel Group, report Ventures Africa.

The Financial Times notes how another company, London Mining, one of the biggest employers in the region, went into administration 2014; these two companies took on debt in attempts to expand but were caught out by fluctuating mineral prices and the Ebola crisis.

Projects across the Ebola-affected region are at a standstill; Arcelor-Mittal has delayed a US$1.6bn expansion of its iron-ore mine in Liberia; Rio Tinto has halted its operations at a US$20bn iron ore mine in Guinea, reports Business Daily

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Photo: Jbdodane, CC 2013

John Bonoh Sisay, Sierra Leone’s Chairman of the Chamber of Mines, is quoted by the Guardian as saying that Sierra Leone could look to diversification away from a heavy reliance on mineral extraction. Sisay explains; “there are other opportunities especially in agriculture, which, from a stability point of view, really does create a lot of jobs very quickly”.

However the impact of Ebola on Sierra Leone’s agricultural sector, already with issues of food insecurity, is uncertain; the World Bank claim more than three-quarters have not completed the harvest this year. Sisay also identified the growing concerns around corruption following an auditors report of financial aid sent to Sierra Leone that showed a third was unaccountable for.

The mining industry, on which Sierra Leone heavily depends, has faced criticism, resistance and  local disillusionment with promised benefits. Sisay explained that mining companies will need to place a greater emphasis on healthcare and corporate social responsibility; he suggests incorporating the Extractive Industries Transparency Initiative (EITT) as a global accountability mechanism.

Research by IDS identifies that the ‘resource boom’, while contributing to high rates of economic growth, has failed to provide benefits to local communities and generated a suspicion of government and foreign intervention, that may correlate in some way to local mistrust of the Ebola containment effort.

To quote the report; “While there has been much excitement about the recent mining resource boom and its possible impacts on transforming Africa’s economies, the Ebola crisis has exposed its limits – the resource boom was not having wider transformative impacts for communities, which experienced few of the benefits while bearing the brunt of the impacts. Rethinking the styles, relations and politics of mining developments will be an essential part of rebuilding societies that are not just less vulnerable to outbreaks, but able to respond effectively to them”.

Find out more in the Africa Research Bulletin:

Ebola Crisis: World Bank Report
Economic, Financial & Technical Series
Vol.52, Issue.1, Pp.20699A-20700C

Ebola Crisis: Worsening Economic Impact
Economic, Financial & Technical Series
Vol.51, Issue. 9. Pp.20547A-20549C

West Africa: The Economic Impact of the Ebola Crisis
Economic Financial & Technical Series
Vol.51, Issue.8, Pp. 20516A-20516C

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Africa: The Future Looks Bright for African Solar Power

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Surge in investment and implementation of solar power projects is hoped to address developmental needs.

On January 25th the World Bank introduced ‘Scaling Solar’, an initiative aimed at creating favourable market conditions for private solar projects across Africa, increasing the energy supply to both residential and commercial customers. This is one of a number of projects that have become operationalised in recent months.

Africa provides huge scope for solar projects, with abundant sunlight and open-space, solar power could provide novel solutions to development needs.

Scaling Solar is combining resources from the World Bank, the Multilateral Investment Guarantee Agency (MIGA) and finance from the International Financing Corporation (IFC). The IFC website quotes Vice President for Global Client Services, Jean Philippe Prosper, explaining that “by quickly delivering affordable electricity to previously un-reached populations, significant progress can be made on other development goals”.

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According to the IFC a number of obstacles have constrained the development of solar energy in Africa including:

  • A lack of utility-scale projects due to unique structures and features of African markets
  • A lack of competition and inexperienced investors
  • High transaction costs that constrain smaller projects
  • Perceived risks and costs of capital
  • The limited institutional capacity of African governments

The Scaling Solar initiative seeks to overcome these hurdles by providing access to solar technology, increased participation and risk management and credit enhancement products.  The World Bank hopes to build upon its experience of large and small scale solar power, particularly the Renewable Energy Independent Power Producer Program (REIPPP) in South Africa.

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Under the REIPPP in South Africa a number of successes have been highlighted; on March 6th 2015 Abengoa and the Industrial Development Corporation (IDC) announced the operationalisation of Africa’s first concentrated solar power project (CSP), the 100 Megawatt (MW) KaXu Solar One Project. Abengoa and IDC are also implementing the 100 MW CSP Xina Solar Project expected to be commissioned in 2017 and the Khi Solar One Project, a 50 MW CSP project.

In Rwanda, Gigawatt Global Ltd have implemented East Africa’s first utility-scale energy project, a 8.5 MW solar field at Rwamagana, 60km from Kigali. The solar field consists of 28,360 PV panels across a 20 hectare plot of land and is expected to provide 6 % of Rwanda’s energy needs.  Chaim Motzen, Managing Director and Co-founder of Gigawatt Global Ltd, told Ventures Africa that the project was testament to the viability of financing and building large utility-scale solar in Africa.

In Ghana, plans are under-way for the Sankana project; Home Energy Africa Ltd are hoping to construct a 100 MW project in the Nadowli-Kaleo district by 2016. Ghana has already seen huge investments in utility-scale solar projects including the Nzema Solar Power Plant expected to be one of the largest in the world, report Ventures Africa.

The increased positivity around African solar power is due largely to rapidly improving technology and cost efficiency. The International Energy Agency predict a huge increase in African solar projects, for both residential and commercial uses, and the World Energy Outlook 2014 states that by 2040 renewable energy is expected to account for 45% of power generation capacity across the continent.

Find out more in the Africa Research Bulletin

Power: Cameroon
Economic, Financial & Technical Series
Vol. 52, Issue 1, Pp.20722-20725

Power: Egypt
Economic, Financial & Technical Series
Vol.51, Issue 12, Pp.20686A- 20689C

World Energy Outlook 2014 – Energy in Sub-Saharan Africa Today
Economic, Financial & Technical Series
Vol.51, Issue 10, Pp.20615A-20615B

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Nairobi – The ‘Smartest City’ in Africa

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‘Silicon Savannah’ paving the way for technological development across the continent.

In January, the Intelligent Community Forum (ICF) announced Nairobi as one of 21 ‘intelligent cities’ predicted to prosper in the broadband economy. This is the second time Nairobi has been selected, although it failed to progress to the final short-list of the ‘top 7’ intelligent cities.

Nairobi, the only African city to make the short-list, is predicted to gain developed status within the next twenty years, a substantial change from the period following independence in which, according to ICF, it was seen as one of the most corrupt cities in Africa and still today many cite its high crime rates and traffic problems.

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The Mail & Guardian Africa report that Kenya’s technology services sector has grown from $11 million in 2002 to over $300 million in 2013. By focusing on telecommunications Kenya is becoming the ‘go-to African market’ with a technologically minded young population and a supportive government.

CNN quote ICF co-founder Robert Bell as saying “We see a strong foundation being put into place [in Nairobi]: sensible, pro-growth government policy, a more diversified economy, and an innovation ecosystem of start-ups, international companies and universities”.

The Kenyan government’s inclusion of ICT development as a major part of its Vision 2030 plan and huge investments in a ‘technocity’ at Konza, just 60km from Nairobi, are growing signs of confidence in this development. Silicon Savannah, as it has been locally named, has caught the eye of many public and private investors including Google, Microsoft, Nokia and IBM.

Growth of the Mobile Phone Economy

Analysts have credited Nairobi’s rapid development to the liberalisation of communications. In 1999 Kenya’s fledgling mobile phone industry was held under a state monopoly and it was only once this monopoly was removed that new companies took advantage of the fruitful market. In contrast to Europe many emerging African economies do not have widespread land-line networks and the installation of digital networks is easier and more cost-effective.

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In 2007 mobile phone operator Safaricom introduced the M-Pesa service that allows users to upload and transfer money using mobile phones. Today M-Pesa handles around $320 million in payments each month, a figure equivalent to a quarter of Kenya’s GDP. According to the Mail & Guardian Africa over half the population in Kenya now use the M-Pesa service and it has been observed that it is easier to pay a taxi fare by mobile phone in Nairobi than it is in New York.

In 2012 Safaricom introduced M-Shwari, a savings and investments service operated by mobile phone, accumulating a customer base of 7 million in two years and providing services to communities on the lowest incomes previously without internet access and banking facilities.

Nurturing Innovation and the Future of Smart Cities

A number of innovation and incubation facilities have been integrated into Nairobi’s urban culture. Following from the success of the iHub, an open space for the technology community that opened in 2010, many other initiatives have attempted to create breeding grounds for new ideas. One example is the 4Afrika Youth Device Program, for which Microsoft and Intel have partnered to provide technology, educational materials, data plans and financing.

ITWeb Africa report that IBM and the Kenyan government are working towards expanding the idea of a ‘smart city’ to include traffic control. Nicholas Nesbitt, General Manager of IBM East Africa told journalists that “IBM has a concept of smart cities. We are bringing that concept, technology and research to Kenya. And we are looking with our IBM research lab and the County government of Nairobi on ways you can use technology, data and analytics to improve the traffic “.

The future looks bright for Nairobi; with the increasing spread of 5G networks it is expected that Kenya’s place on the global economic stage will be further secured. 5G networks will bring performance for mobile internet on a par with fibre optic and compact, easily fitted antennae that will help connect the most rural areas and increase Kenya’s technological capabilities.

However some have urged caution with the ‘smart cities’ narrative; commentary from London School of Economics (LSE) observes that the growing positivity around smart urbanism in Africa should not draw attention away from the challenges of rapid urbanisation and stark urban inequalities. We need to push for greater understanding of the consequences of this data-driven urbanism.

Find out more in the Africa Research Bulletin

Rwanda – High Tech Hub?
Economic, Financial and Technical Series
Volume 50, Issue 10, Pp. 20174C 

Nigeria: Africa’s First Smart City
Economic, Financial and Technical Series
Volume 50, Issue 2, Pp. 19883 – 19884 

Telecommunications: Africa
Economic, Financial and Technical Series
Volume 50, Issue 1, Pp.19850C – 19851C

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Uganda – Aviation Development

A twenty-year aviation plan will need investment of $400m.

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Four new international airports will be constructed in Uganda within the next 20 years with the aim of boosting the growth of tourism, air travel and the industrial sector.

According to the Uganda Civil Aviation Authority (CAA), the 20 year Aviation Master Plan (2014-2034) launched in late January, will see international airports established in Arua (West Nile), Pakuba in Murchison Falls National Park, Kabaale oil region in Hoima and Kasese in Western Uganda.

The Master Plan that was carried out by Spanish Consultants MS INECO will cost about $400m. This will include the $200m earmarked for the renovation of Entebbe International Airport with the construction of two more terminal buildings, cargo handling facility, re-tarmacking of the runways and putting self-service check-in counters.

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Dr. Rama Makuza, the CAA Managing Director said with the expected 7.5% growth in air transport, the country cannot wait to be caught off guard by the growing numbers. He said they expect about 7.6m passengers to use the different airport facilities by 2034. Currently, Entebbe Airport handles 2m passengers with capacity to land a Boeing 747/400, East African Business Week reported.

Makuza said Arua International Airport will be fitted with all the necessary requirements to land an Airbus A380. Apart from the Entebbe Expansion project, where the government will solicit and fully fund it, the four new international airports will be developed under a Private Public Partnership (PPP) arrangement.

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Africa – A Door Opens

An African-registered Team will Compete in the 2015 Tour de France.

In what looks set to be a turning point for cycling in Africa, an African-registered team will be featured for the first time ever in the 2015 Tour de France: South Africa’s MTN-Qhubeka received one of five wild cards on January 14th from race organisers.

To have a whole team in the Tour de France … for Africa and South Africa, it’s going to be huge,” MTN General Manager Brian Smith told VeloNews.

“The Tour team will be selected on merit but I’d hope to see the African riders there,” says Smith, who was appointed in 2014 to lead the team’s attempt to earn a place in the Tour.

MTN-Qhubeka, which made its Grand Tour debut in the Vuelta in 2014, was one of five teams to receive Tour de France wild cards and now join the 17 UCI World Tour teams that have already qualified for the world’s most prestigious cycling race that begins in July.

Africans on the nine-man MTN-Qhubeka team include South African Louis Meintjes and Eritreans Merhawi Kudus and Natnael Berhane, the two-time African champion. There are also riders on the roster from Rwanda and Algeria. Others on the squad include Norwegian Edvald Boasson Hagen, Australian Matthew Goss and American Tyler Farrar.

Natnael Berhane from Eritrea

Natnael Berhane from Eritrea

Team principal Doug Ryder told BBC World Service Sport: It’s been almost 10 years of hard work and getting people to believe in this project and to believe in African cycling and the potential.

“African sport has always been good, especially endurance running, and our theory was always if we can get more kids on bicycles in Africa, can you imagine how we can transform cycling because of the endurance running talent that has just been so successful over the last 30 years.

“For us to go to the Tour de France as the first African-registered team, that door will literally never close now.”

The team had previously stated its desire to mark Nelson Mandela Day on July 18th with a specially-designed kit if it was invited to take part. A special number 67 jersey will be produced signifying Mandela’s 67 years of service to South Africa, encompassing his years fighting apartheid, 27 years in jail, and five years as the country’s president between 1994 and 1999.

MTN-Qhubeka’s main sponsor is the South African telecoms company MTN, and the team is also backed by Samsung, Their other title backer, Qhubeka, is not a sponsor in the conventional sense but a volunteer organisation whose name means “progress”. It distributes bicycles to rural African children.

 

Nigeria – New Development Finance Institution

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A financial package of $500m to support the establishment of the Development Bank of Nigeria PLC (DBN) has been unanimously agreed by the African Development Bank (AfDB) Group.

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The package consists of loans worth $450m and an equity investment in the DBN of $50m according to the AfDB. The funds will be used to support micro, small and medium-sized enterprises (MSMEs) operating in various sectors of the Nigerian economy.

As well as the AfDB Group, other international development financial institutions such as the World Bank (with a commitment of $500m according to THISDAY newspaper), KfW of Germany ($200m) and the French Development Agency, Agence Française de Développement (AFD) are collaborating with the Federal Government of Nigeria (itself providing $200m) to set up the DBN.

“Recognizing the limitations of the existing development finance institutions (DFIs) in Nigeria, the Federal Government has decided to establish a DFI, which will be better regulated and more clearly aligned with development priorities,” PANA quoted Project Team Leader Sofiane Sekioua as saying.

Stefan Nalletamby, Director of the Financial Sector Development Department at the AfDB Group, said: “The MSME sector is critical to the development of the Nigerian economy as it possesses great potential for employment generation and output diversification.

“MSMEs in Nigeria cover the entire range of economic activity; nevertheless, there has been gross under-performance of these enterprises and this has undermined their contribution to economic growth.

“Among the issues affecting their performance, the shortage of finance, particularly investment finance, occupies a very central position. Therefore, through the DBN, the AfDB Group will contribute to mobilizing significant long-term financing to an important yet under-served sector with high development potential.” The Director also emphasized the critical role that the AfDB Group had played in the design of the DBN and the important role that it would play in its corporate governance as one of its founding shareholders.

Nigerian Finance Minister, Dr. Ngozi Okonjo-Iweala has described the proposed bank as a key part of the President’s vision for the country to realise the economy’s potential.

“We want to create an institution that can make wholesale long term finance available to our young entrepreneurs, our businessmen, our industrialists so they can grow their businesses sustainably, create jobs and contribute to the economic development of the country,” she has been quoted as saying.

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