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A changing world
The infrastructure shortage in most of sub-Saharan Africa needs a major financing solution but given fiscal constraints and other financial limitations it isn’t likely to come from African governments anytime soon.
The size of the infrastructure gap would require $93 billion a year till 2030 to get the region to where it needs to be, the World Bank estimates. McKinsey thinks it’ll take around $1 trillion. The African Export-Import Bank says power shortages alone subtract 2% to 4% a year from GDP in African countries every year.
The growing demand for infrastructure in already under-resourced African countries comes as these countries face rising urbanization rates while the success of democracy puts governments under political pressure to deliver on promises (or at least appear to be trying to deliver). It’s a dynamic that has evolved rapidly in development finance since 2008’s financial crisis.
This inability of African governments to fully own their infrastructure ambitions has led to the rise in importance of development finance institutions (DFIs), export credit authorities and even commercial banks, says a survey of development finance executives and sponsors, by global law firm Baker Mckenzie. It found nearly 40% of respondents expect more demand for infrastructure by African governments. Up to 34% also think the continued perception of Africa as risky by private investors has this same impact.
The executives also think DFIs will benefit from a “strategic importance of the region to policy lenders”. This is an obscure way of saying China and the US are battling for ascendancy in sub-Saharan Africa albeit with their very different approaches. China’s banks loaned $19 billion to energy and infrastructure projects in the region from 2014 to 2017 while China Exim Bank has been “the largest policy lender by far in the region” from 2008 to 2017. China Development Bank was the second largest bilateral DFI during this period, closing in on multilateral lender IFC.
In fact, the rise of China’s “win-win” financing and US decision to double its development finance budget to $60 billion means bilateral finance, which already leads multilateral finance, will become even more dominant globally, at least for the foreseeable term. The “big issues of our time” like climate change and the impact of major shifts in political agenda, which are probably dealt best with a multilateral approach, will probably see that balance shift again.
— Yinka Adegoke, Quartz Africa editor
Stories from this week
Netflix is finally really investing in original African content. Global streaming giant Netflix has committed to commissioning original African shows from next year. For the media company, putting its billion-dollar production budget to work in Africa is part of its moves to make its content library as diverse as its global audience.
The next smartphone you buy will be a lot more expensive if DR Congo has its way. The world’s leading producer of cobalt—an essential ingredient of smartphone production—has slapped a three-fold tax increase on the resource. The tax increase is the latest hurdle mining investors in DR Congo have to deal with in addition to the country’s political instability and spates of conflict.
Trevor Noah’s grandmother doesn’t get to watch the Daily Show. As part of his “Self-Deportation Editon,” Trevor Noah took his Daily Show audience to his childhood home in Soweto in a “Cribs: Oppression Edition” spoof. The highlight is a visit to his 91-year-old grandmother who confessed to missing his show for a quintessentially South African reason.
Africa’s fastest-growing cities are the most vulnerable to climate change. High birth rates and increasing rural-urban migration means Africa has 86 of the world’s 100 fastest growing cities. At least 79 of those cities, including key political and commercial hubs from Lagos to Luanda, will face “extreme” risks due to climate change.
What’s the best way to define Africa’s middle class? Various methods have been used to define the size of Africa’s much-vaunted middle-class population. The latest attempt identifies 330 middle-class Africans most of which are concentrated in just five countries, Yomi Kazeem writes.
Ethiopian Airlines is starting an MBA program for young Africans. Ethiopian Airlines has continuously made its mark both regionally and globally as Africa’s most dominant airline. To solidify its pan-African strategy, it is now establishing a graduate business school aimed at shaping young African minds.
Chart of the Week
Private equity investments are doubling down on their African investments. Private equity exits in Africa have steadily increased year-on-year for much of the past decade, weathering political uncertainty, weak currencies, and slowed economic growth. But as Abdi Latif Dahir reports, that hasn’t deterred financiers, who are even promising to increase their allocations.
Other Things We Liked
The US keeps saying it has a light military presence in Africa but that’s not the whole picture. Even as the US increasingly sees Africa as a ground zero for the future of terrorism, it has said it will be reducing some of its presence there. For The Intercept, Nick Turse obtained documents from AFRICOM via the US Freedom of Information Act, which show a sprawling network of US.military outposts in Africa, including previously undisclosed or unconfirmed sites.
What is the place of Africa in African American history and popular culture? “There is an umbilical cord that ties us together,” Nelson Mandela told us. ”My only regret is that I am unable to embrace each and every one of you.” For Africa is a Country Benjamin Talton recalls a famous visit to Harlem and reflects on Africa’s place in African American politics and popular culture on the fifth anniversary of Mandela’s death.
Commonwealth 2019 master’s scholarships. African students from Commonwealth nations can apply for a full-time master’s study at a UK university. (Dec. 19)
The Mekatilili fellowship. Focused on artificial intelligence and human-centered design, the program allows fellows to co-design specific solutions on agriculture and manufacturing for communities in Kenya. (Dec. 21)
The African Biomedical Engineering Mobility project. The program helps scholars and students from African universities cooperate and develop solutions for health challenges from an African perspective. (Jan. 29)
Keep an eye on
Startup Battlefield Africa 2018 (Dec. 11). Sub-Saharan Africa’s best innovators, makers, and technical entrepreneurs will battle it out in Lagos with the winning startup taking home $25,000.
Global conference on migration (Dec. 11-12). With the exception of several states, members of the United Nations will convene in Marrakech, Morocco to sign the landmark pact to guarantee safe and orderly migration.
Intra-African Trade Fair (Dec. 11-17). The 7-day show in Cairo, Egypt will bring together over 70,000 people from the public and private sectors to explore business and investment opportunities in Africa.
*This brief was produced while listening to Ndibambe by Heavy K, feat. Ntombi (South Africa).
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