The U.S. tops list of FDI projects in Africa

This is from EY’s 2018 Africa Attractiveness report:

Screen Shot 2018-10-30 at 5.27.43 PMMature market investors continue building on their deep-seated ties to Africa. In 2017, the US remained the largest investor in the continent, with a noticeable 43% growth in FDI projects. Western Europe, another well-established investor, also built on its already strong investments into Africa, up by 17%. However, emerging-market investments fell, with both intra-regional and Asia-Pacific investment declining by 12% and 13%, respectively. This is, in part, attributable to slower emerging markets growth and weak commodity prices.

It is odd that this report does not give the dollar values of FDI projects. But it has a summary of the distribution of projects and the number of jobs created. This is an important indicator because it reveals projects’ real impact on the real economy — as opposed to projects designed to create enclave economies. Notice that China is far and away the leader on this metric — with Chinese projects resulting in nearly three times as many jobs as American projects (FDI from Italy appears to be particularly good at producing actual jobs).

Screen Shot 2018-10-30 at 5.40.30 PM

Here’s another interesting observation on the sectoral focus on FDI projects from the report:

Over the past decade, we have discussed a shift from extractive to “consumer-facing” sectors, thanks to Africa’s growing consumer market. Mining and metals, along with coal, oil and gas, previously the major beneficiaries of FDI flows, have slowed, while consumer products and retail (CPR), financial services, and technology, media and telecommunications (TMT) have risen.

In 2017, FDI shifted somewhat, with consumer-facing sector investments slowing, in line with challenging operating conditions. The focus changed instead to manufacturing, infrastructure and power generation.

And finally, here are of “FDI-to-jobs” conversation rates. On this measure South Africa and Kenya stand out for their apparent inefficiency in converting FDI projects into jobs.

Screen Shot 2018-10-30 at 5.54.29 PM.pngMore on this here.

 

 

On the promise and perils of the proliferation of provinces in the DRC

The DRC is huge. And so in 2015 the country saw an increase the number of provinces from 11 to 26. The provinces have elected assemblies (5 year terms) and governors & deputy governors (elected by provincial assemblies). However, while reasonable people would agree on the need for this increase in the intensity of government in the DRC, it has also not been lost on observers that considerations over political geography informed the decision on how the old provinces were split.

This is from Pierre Englebert:

One of the reasons for the increase from eleven to twenty-six provinces was to break up Katanga and deprive its governor, key Kabila opponent Moïse Katumbi, of his provincial base. Beyond such political expediency, however, this policy’s main effect has been to create ethnically homogeneous provinces. As Alma Bezares Calderon, Lisa Jené, and I write in a recent report for the Secure Livelihoods Research Consortium, up to eleven of Congo’s provinces are made up primarily of a single ethnic group. This is an increase from three provinces with a single ethnic group prior to this policy.

For Congo as whole, the largest provincial groups now average 46 percent of their province’s population. This evolution has turned politics on its head. At the national level, heterogeneity dominates and no single group reaches 8 percent of the population.Screen Shot 2018-10-29 at 7.39.44 PM.pngWhy the Congolese have reproduced the colonial practice of associating individuals with their territory of origin is somewhat unclear. From the perspective of the Congolese government, people might remain a threat, as they were for the colonial authorities, and thus must be disempowered when not in their customary sphere, so as to de ate their citizenship. Attaching people to geographic areas might also foster local divisions, thereby empowering authorities in Kinshasa…

H/T Lahra Smith.

Lome Port is now bigger than Lagos

Screen Shot 2018-10-25 at 3.33.07 PMLomé in Togo has become West Africa’s major port, surpassing Lagos. A key development backing Lomé was the commissioning of Lomé Container Terminal. It handles close to 890,000 TEU annually, close to 75 percent of Lomé’s total throughput of 1.2 million TEU. “The establishment of Lomé Container Terminal is part of a greater trend in West Africa, which sees more and more carriers becoming involved in ports and terminals. After all, carriers must go somewhere using their oversized ships,” says Wadey.

In 2017, 285 container ships sailed the seven intercontinental trade lanes to West Africa. Deployed by 24 different operators, their average capacity was 3,300 TEU. The biggest ship, a 13,600 TEU vessel, is operated by MSC in a hub and spoke service, connecting Lomé with a large number of regional ports by feeder.

More on this here.

Togo’s logistics play is an underrated phenomenon. Lome’s new airport is the hub of ASKY, a regional airline operated in conjunction with Ethiopian Airlines (which has a 40% stake in ASKY). Lome also functions as Ethiopia’s global hub in West Africa, with direct flights to the US and Latin America.

Togo, of course, is also led by a dictatorial dynasty which has dominated its political economy for over 50 years. Recent protests against President Faure Gnassingbé Eyadema’s autocratic rule have been met by brutal repression, resulting in dozens of deaths. Togo is the only country in the region that lacks presidential term limits.

 

How Russia Moved Into Central Africa

This is from Newsweek (highly recommended):

There are new guests at the ruined palace where Emperor Jean-Bédel Bokassa once held court. During his rule over the Central African Republic in the 1970s, Bokassa used a year’s worth of development aid to stage an extravagant coronation, and he personally oversaw the torture of prisoners. He fed some to his pet crocodiles and lions.

But the French government that helped install Bokassa in 1966 ousted him in 1979, deploying paratroopers to prevent any countercoup. Now, four decades later, it is Russian soldiers who mill around this crumbling estate in Berengo—and the shifting power dynamic is raising concerns in the West. President Vladimir Putin is pushing into Africa, forging new partnerships and rekindling Cold War–era alliances. “There will be a battle for Africa,” says Evgeny Korendyasov, head of Russian-African studies at the Russian Academy of Sciences, “and it will grow.”

How did Russia muscle its way into CAR? According to Reuters:

CAR has been under a U.N. arms embargo since 2013 so weapons shipments must be approved by the U.N. Security Council’s CAR sanctions committee, made up of the Council’s 15 members, including France and Russia. It operates by consensus.

France first offered to help CAR buy old weapons but the proposal was too expensive. France then offered 1,400 AK47 assault rifles it had seized off Somalia in 2016, according to a Security Council memo and four diplomats.

Russia objected on the grounds that weapons seized for breaching the U.N. arms embargo on Somalia could not be recycled for use in another country under embargo, two diplomats said. But mindful of the need for a quick solution, the sanctions committee approved Moscow’s donation of AK47s, sniper rifles, machine guns and grenade launchers in December, according to committee documents and diplomats.

Why Russia interested in the CAR now? Possible answers include (i) the potential for lucrative mining deals (Putin’s Chef, Evgeny Prigozhin, reportedly runs a diamond mine near Bangui and a gold mine in a rebel-held area); (ii) the CAR might be a great launching pad for Moscow’s ambitions in the Sahel and therefore a great addition to existing military deals on the Continent; and (iii) Russia’s defense firms might just be in it to run guns and make a quick buck in a country that remains overrun by all manner of rebel groups (some reports claim rebels control 80% of CAR’s territory).

And as for the CAR leadership, they just might be in the mood for a partner that delivers results without too much paperwork and rules:

President Touadéra has a number of incentives to work with Russia rather than France or the United States. Russia’s aid in arming the CAR’s military is a huge boon for the chronically underfunded state. The EU training mission in CAR has been agonizingly slow, leaving an underequipped and undertrained military to face a deteriorating security situation. Russian instructors, while certainly less concerned with the moral or ethical dilemmas of war, may give Touadéra the military he needs to combat the rebel groups across the country.