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Short-Term Renewal of Ex-Im Bank Charter is Welcome but Brief Reprieve

Posted in Public Policy and Government Affairs

Included in the continuing resolution passed this week by  Congress was a measure which extends the charter of the U.S. U.S. Export Import Bank (“Ex-Im Bank”) through June 30th of next year.  Renewing the charter of Ex-Im Bank (which was set to expire on October 1st) was a hot topic of conversation this past summer including during the U.S.-Africa Business Forum of the U.S.-Africa Leaders Summit.  Thus this short-term renewal is a welcome (albeit brief) reprieve to an institution that provides important assistance to U.S. businesses looking to compete in Sub-Saharan Africa and other emerging markets .

Similar to the nearly sixty export credit agencies around the world, Ex-Im Bank provides businesses with loans, guarantees, credit insurance and other financing tools to support the trade and export of goods and services from the U.S. into foreign markets.  Sub-Saharan Africa is a priority region for Ex-Im Bank and, since 1999, the institution has assisted over $5 billion in transactions across the region.  Ex-Im Bank is especially important to small- and medium-sized enterprises since U.S. financial institutions often are reluctant to bear the risks and complexities of doing business in these markets.  With trade and investment becoming an increasing priority of the U.S.-Africa relationship, Ex-Im Bank has seen an expanding presence on the continent and, last year, it supported a record 188 transactions across 35 countries in the region.

Seeking to capitalize on this momentum, over the next two years Ex-Im Bank is set to commit up to $3 billion in financing in Sub-Saharan Africa in addition to an existing $5 billion commitment for Power Africa and a planned commitment of $1 billion for infrastructure projects in Angola.  Ex-Im also has plans to work with the Small Business Administration to target and assist small- and medium-sized enterprises who are interested or invested in the continent.

The short-term renewal is a welcome breakthrough after months of wrangling over the reauthorization of Ex-Im Bank.  The next steps must be to guarantee long-term renewal of an institution which is essential to helping U.S. exports stay competitive in a world where other countries “have adopted increasingly sophisticated export promotion plans and are offering national financing […] to support their companies’ deals in Africa.”

Ethiopia’s Grand Renaissance

Posted in Uncategorized

By any measure Ethiopia is experiencing impressive economic growth.  According to IMF data, GDP grew 8.7 percent in 2012, the country’s weakest year since 2009.  In 2010, GDP grew a blistering 12.6 percent, higher than all but a handful of countries worldwide.  Going forward, the IMF estimates Ethiopia’s economy will grow at 8.0 to 8.5 percent in the upcoming fiscal years.  Ethiopia’s Finance Ministry is even more bullish, predicting 11 and 11.4 percent growth in the next two fiscal years.

As Ethiopia’s economy grows, so too do its energy demands. Fortunately, Ethiopia is also blessed with some of the world’s greatest renewable energy resources.  As of 2010, nearly 90 percent of installed energy capacity came from hydroelectric power, and some estimates of the country’s total hydropower potential exceed 45,000MW, second in Africa only to the Democratic Republic of the Congo.  Despite this potential, Ethiopia has remained a net energy importer.  That may be set to change.

In Ethiopia’s northernmost region, close to the border with Sudan, a new structure is rising on the Blue Nile river that will shape Ethiopia’s — and East Africa’s — energy future: the Grand Ethiopian Renaissance Dam.  Its name is not modest, but neither is its potential impact.  Currently about 30 percent complete, the dam will become Africa’s largest, producing an estimated 6,000MW of electricity.  Ethiopia is largely funding the $4.7 billion project itself, through a combination of bonds and taxes.

There is no doubt that Ethiopia’s stunning growth is fueling its energy ambitions, including the ambitious Renaissance Dam project.  But it is not unreasonable to think that the Renaissance Dam itself will further drive Ethiopia’s growth.  The project has already created more than 10,000 jobs.  Moreover, a recent study of East Africa energy experts concluded that hydroelectric power provided the greatest potential to close the region’s energy gap — nearly two thirds of Africans have no access to electricity — and recommended greater investment.

To be sure, the project has not been without controversy.  Egypt and Sudan have expressed concern that the dam with have detrimental downstream effects, including to agriculture.  While relations have been icy since Ethiopia started construction in May 2013, the parties are continuing to work through the outstanding issues: a fourth round of tripartite was held last month in Khartoum.

Ethiopia’s torrid growth cannot continue forever, but if the Renaissance Dam is as successful as predicted, it is hard to see how the view from Addis Ababa will not be bright.

President Obama’s Response to the Ebola Crisis

Posted in Public Health, Public Policy and Government Affairs

According to the U.S. Department of Defense, December 30, 2013 was epidemiological week 1 for the current Ebola crisis in West Africa.  Since that date, more than 4,985 cases — 2,461 of which have resulted in death — have been confirmed or suspected.

Today, nine months after the epidemic’s outbreak, President Obama has made an overdue announcement that the U.S. will deploy an estimated 3,000 troops in an effort to stem the crisis.  The response is certainly welcome but it remains far from certain that an intervention by the U.S. military will be sufficient to defeat this deadly epidemic.

President Obama is right to characterize the Ebola outbreak as a top national security priority for the U.S., and the past is instructive for what we might be dealing with in this situation.

The last time that the U.S. declared a health emergency to be a threat to U.S. national security was in 2000, when the Clinton administration designated HIV/AIDS as a threat that could undermine governments, lead to conflict and weaken progress on democracy and economic growth.  At that time, the Clinton Administration doubled its budget request to combat HIV/AIDS internationally to $254 million.  However, it was not until 2003 when President George W. Bush requested from Congress $15 billion over five years that the U.S. began to turn the tide of that deadly pandemic.  It was still another two years before medicines became widely available to those infected with HIV and, in 2008, PEPFAR was reauthorized for $48 billion for another five years.

To date, the Obama administration has spent $175 million to address the rapidly spreading Ebola crisis in West Africa.  This is likely to be a fraction of the ultimate cost required to defeat this disease.  Recent estimates from the United Nations place the costs around $1 billion.

In addition to involving the U.S. military, President Obama has committed the U.S. to the construction of 17 treatment centers (each of which will have 100  beds) in Liberia and the establishment of a site to train up to 500 local health care providers per week.  In terms of containing this deadly disease, this “whole of government” response from the Obama Administration is a good, if belated, start.  However, key questions remain.

It is not clear how long the strategy will take to implement and, according to international health officials who spoke with The New York Times, 1,000 beds are needed in the next week alone to contain the spread of the disease.  It also is not clear how the U.S. will work with the governments of Sierra Leone and Guinea, as nearly half the cases reported come from those two countries, nor Nigeria and Senegal who also have reported cases.

Over the weekend, chief executives from 11 companies operating in Liberia, Sierra Leone and Guinea made an urgent appeal to the international community to pool its resources to fight Ebola.  It is an important development that the U.S. is moving forward with a more aggressive response to this plea.  Yet victory will likely require a “whole of community” response from all stakeholders, including governments, businesses, NGOs and others, who want to see the governments of West Africa defeat this deadly scourge.

Angola’s Sovereign Wealth Fund Is Underway

Posted in Corporate and Investment

Announced in 2008, established in 2012, and receiving the final installment of its initial endowment in June of this year, Fundo Soberano de Angola (Angola’s sovereign wealth fund) finally has progressed to investing its $5 billion in assets.  In a series of recent interviews, fund Chairman José Filomeno Dos Santos has been detailing how the fund’s portfolio will be diversified and answering questions about its governance structure.

The guiding principle of the fund will be to “[pursue] investments that generate long-term and sustainable financial returns” and, in turn, use that wealth “to promote growth, prosperity and social and economic development across Angola” and sub-Saharan Africa more broadly.  To accomplish these goals, up to one third of the $5 billion fund will be put into alternative investments across sub-Saharan Africa.  Through private equity-style special purpose vehicles set up as limited liability partnerships (in which the fund is one of the investors), the fund will identify and pursue opportunities in priority sectors such as agriculture, commercial real estate, energy, hotels, and infrastructure.  The other two-thirds of the fund will be allocated equally between “highly liquid securities such as cash, bonds and listed equities” and “opportunistic investments internationally: distressed assets that the fund could take advantage of, spin around and refocus.”

Although Chairman Dos Santos has international financial management experience, he also is the son of the sitting President which is a fact that has raised questions about the governance and transparency of the fund.  Chairman Dos Santos has asserted that the fund’s organizational structures has several layers of review and supervision.  In addition to a Board of Directors, a Fiscal Council, and an Advisory Council, the fund will have Deloitte serving as its independent auditor.  It also has signed on to the IMF-backed Santiago Principles which provide a set of voluntary principles and practices for sovereign wealth funds.

Notwithstanding these protections, additional concerns have been raised about the fund’s autonomy because its Board is appointed by the country’s President and its investment strategy is approved by the government.  Chairman Dos Santos’s response is that the fund “is a state entity, not a corporation that is owned by the state” and so its investment strategy operates within the bounds of the government’s own investment policies.  This relationship between the State and the fund leaves open the possibility that a future government could redefine the country’s investment policies and, in turn, the parameters of the fund’s investment strategy.

To date, the fund has appointed only one external manager, the Swiss-based Quantum Global Group.  Chairman Dos Santos says that the fund would like to bring on additional external managers but has had “quite a difficult time” finding ones with “the right experience in Africa.”

Looking Towards the Future of Pharmaceuticals in Africa

Posted in Public Health

Over the past six months, the Ebola virus has killed approximately 2,100 people in West Africa, creating an international health crisis and terrorizing communities in Guinea, Liberia and Sierra Leone.  The race to develop, produce and disseminate Ebola vaccines has proven to be immensely challenging.  Experimental but potentially life-saving drugs were produced in insufficient quantities during the crucial initial phase of the epidemic, forcing physicians to determine who would receive potentially life-saving medicine and who would not.  The WHO recently announced  that two possible vaccines will be available as early as next month, reflecting a remarkably rapid pace of drug testing that sharply contrasts with the often slow process of pharmaceutical research, development and patenting.  The urgent actions necessitated by the Ebola crisis point to the need for a more efficient, collaborative, and modernized pharmaceutical industry that is better equipped to devote additional resources to the research and development of pharmaceuticals in Africa.  In Sub-Saharan Africa–a region that accounts for 12% of the world’s population but that shoulders 26% of the global disease burden—such innovations are especially essential.

Throughout the global pharmaceutical industry, the research and development of drugs is progressing at a decreased rate while the cost of such development is rising drastically.  Some companies have responded to these escalating costs by establishing joint ventures and mergers that increase companies’ resources and promote cost reduction.

The use of e-information and mobile technologies is another means by which pharmaceutical companies can redistribute resources towards drug development in an informed, efficient manner.  The digital pooling of regional pharmaceutical data can maximize pharmaceutical companies’ understanding of the specific challenges that face Sub-Saharan Africa and reduce unnecessary expenditures.  While such measures would be beneficial in any market, they are particularly essential in the fast-developing countries of Sub-Saharan Africa, where patients exhibit a wide array of access to healthcare services, basic infrastructure, and medical knowledge.  Additionally, mobile devices can be used to track the sale of specific drugs in order to eliminate the use of counterfeit and expired medications; the use of counterfeit medications results in approximately 100,000 Africans’ deaths each year, and decreases pharmaceutical companies’ profits.

Lastly, mobile technologies may assist the industry in meeting Africa’s growing preventative care needs.  By 2030, non-communicable diseases (NCDs) that typically plague middle-class populations in the developed world will overtake communicable and parasitic diseases as the lead cause of disease-related mortality in Africa, particularly among Africa’s growing middle class.  If the pharmaceutical industry is to meet future Africa’s healthcare needs, it will need to better utilize monitoring devices and personal digital assistants–these items can play a key role in the preventative care of persons who may not have regular geographical or financial access to healthcare services.

The recent Ebola crisis has shed light on the importance of tailoring pharmaceutical resources to the needs of particular emerging healthcare markets.  In the future, knowledge-sharing, modernization, and an increasingly efficient business model will likely be essential to the success of pharmaceutical companies that provide drugs in Sub-Saharan Africa.

e-Curriculum Portal: Innovative Service Delivery in Nigeria’s Education Sector

Posted in Media, Internet, and Technology

As various African countries seek to engage their sizeable youth populations, this human capital investment will prove as important as the other types of investments being made on the continent.  The e-Curriculum portal in Nigeria demonstrates how the public and private sector can work together to ensuring that these youth have the skills needed to succeed in a modern economy.  The product of joint collaboration between the Nigerian government and leading Nigerian and U.S. ICT companies, the portal has the potential to revolutionize the delivery of education services in Nigeria and beyond.

The e-Curriculum portal is a new software platform launched by the Nigerian National Educational Research and Development Council (“NERDC”), a parastatal of the Federal Ministry of Education.  Focused on senior secondary school education in the country, the portal digitizes the nine-year basic education curriculum and makes it available on a browser-based online platform accessible to (and downloadable by) students, teachers, and the general public.  In addition to providing digital access to school curricula and learning materials, the portal will offer resources for teachers to compare and collaborate on work and lesson plans for students.

Leveraging the capabilities of the private sector, the NERDC developed the portal in partnership with Sidmach Technologies Nigeria Limited, a domestic ICT firm recognized for its innovations in the educational sector.  In addition, the portal will be powered by an Intel processor and run on a Microsoft Windows platform.  In explaining the benefits which Nigeria may realize from the portal, Microsoft Nigeria’s Education Director Patrick Onwumere noted that “the pace at which a nation’s economy develops is strongly tied to its ability to access and utilize knowledge, the achievement of which is largely attributable to the development and deployment of ICT.”

The e-Curriculum portal and other ICT-based innovations in the educational sector are likely to play an important role in converting the youth bulge into a demographic dividend.

Drones Over Kenya and South Africa?

Posted in Media, Internet, and Technology, Public Policy and Government Affairs

Similar to the growing U.S. interest in exploring civilian uses of unmanned aircraft systems (“UAS”), efforts are underway across the African continent to deploy UAS in innovative ways such as protecting wildlife, expanding internet connectivity to isolated communities, and delivering humanitarian aid.  In Kenya, Dickens Olewe and his African SkyCAM project is helping journalists to revolutionize their news reporting and coverage.

The winner of the inaugural African News Innovation Challenge, African SkyCAM “establishes Africa’s first newsroom-based ‘eye in the sky’ drones and camera-equipped balloons to help media that cannot afford news helicopters cover breaking news in dangerous situations or difficult-to-reach locations.”  It has the potential to address two of the main shortcomings faced by traditional news media in the region.  First, journalists who lack financial and technological resources to conduct remote reporting often are “‘risking life and equipment’” to get their story.  Second, by not resorting to state-owned UAS, journalists are able to maintain editorial independence in their reporting.

Use of UAS for journalism and other civilian purposes in the region is facing the same regulatory challenges which are delaying their widespread deployment in the U.S.  Although the Kenyan government has not yet established a regulatory framework for civilian UAS, it has indefinitely grounded both the Flying Donkey Challenge (a high-profile, Swiss-funded competition to develop flying robots which are capable of carrying heavy cargo over long distances) and the Ol Pejeta Conservancy’s wildlife surveillance drone.  Similarly, earlier this year, the South African Civil Aviation Authority announced a “clampdown” on civilian UAS, a warning that some observers believe has chilled this nascent industry.  However, it is promising that the South African government has stated that it is “cognizant of the urgent need and demand for UAS usage” and that it will be releasing an interim guidance document by March 31st of next year.  In addition, South Africa and other countries in the International Civil Aviation Organisation Unmanned Aircraft Systems Study Group are continuing to work to develop a safe and harmonised regulatory framework.

In the meantime, African SkyCAM (which is looking to expand to Mozambique and Namibia) and others will need to pay careful attention to finding the proper balance between business, compliance, and innovation.

This post can also be found on GlobalPolicyWatch, the firm’s blog on public policy and governmental affairs issues.

Uganda Nullifies the Anti-Homosexuality Act and Backs Away from the Pursuit of Similar Legislation

Posted in Uncategorized

            On August 1, 2014, Uganda’s Constitutional Court overturned the Anti-Homosexuality Act (AHA) on procedural grounds, holding that the Act’s passing was unconstitutional because the necessary quorum of lawmakers was not present in parliament to vote on the bill.  This controversial legislation, which was passed on February 24, 2014, imposed a life sentence for certain homosexual conduct and criminalized the “promotion,” “aiding,” and “abetting” of homosexuality.  The Act’s harsh penalties elicited strong international criticism, U.S. sanctions, and the withholding of over $120 million in assistance funds by Western donors.  The Constitutional Court’s uncharacteristic speed in reaching a ruling concerning the AHA may reflect the considerable diplomatic controversy and economic consequences that resulted from the Act’s severe provisions.

            The retaliatory actions of Western donors against the AHA had a relatively mild impact on Uganda’s fast-growing economy, yet recent developments indicate that lawmakers will be slow to initiate a similar bill in the near future.  Pursuant to a presidential directive, Uganda’s Attorney General cancelled plans to appeal the Constitutional Court decision that invalidated the AHA.  Uganda’s president, Yoweri Museveni, reportedly stated that the reintroduction of the Act is “not a priority,” and declared that if a new version of the law was to be initiated, it would not criminalize the homosexual acts of consenting adults.  One Ugandan lawmaker claims that a new law would penalize the promotion of homosexuality and the “recruitment” of children to homosexual acts, but that the legislature has “agreed to come up with a new version that doesn’t hurt our Western friends but also protects Ugandans.” 

            Uganda’s current hesitation to reintroduce the Act seems to be influenced, at least in part, by the potential for intensified economic consequences and additional diplomatic tension that new anti-gay legislation could create.  Most notably, President Museveni expressed concern regarding a July 14, 2014 letter signed by ten U.S. Senators, petitioning U.S. President Obama to remove Uganda and Nigeria from the list of U.S. trade partners under the African Growth and Opportunity Act (AGOA) if these countries do not make “continual progress” in upholding the human rights of lesbian, gay, bisexual and transgender (LGBT) individuals.  AGOA requires signatories to uphold certain human rights standards.  As the AGOA legislation provides the foundation of U.S.-Africa trade relations and permits duty-free treatment of certain imports from Uganda and Nigeria to the U.S., the Senators’ proposed approach would have significant economic ramifications for Uganda.  The petition may have significantly influenced President Museveni’s approach to the pursuit of additional anti-gay legislation; recently, he reportedly warned Ugandan lawmakers that Uganda’s “exports to [the] American market risk being rejected because of” the AHA.

            The World Bank, Denmark, the Netherlands, Norway, Sweden and the U.S. were among Western donors that withheld assistance to Uganda because of the AHA’s provisions.  Sweden resumed its financial support of Uganda several days before the AHA’s nullification.  Despite the Constitutional Court’s recent decision, homosexual acts continue to be illegal in Uganda under a seldom enforced law that has existed since colonial times.  Like the AHA, this provision permits the imposition of a life sentence for homosexual acts.

 

What I Did This Summer: Reflections of a 2014 YALI Fellow

Posted in Current Events

This guest post was written by YALI Fellow Aichatou Tamba, a Senegalese national who is working in Addis Ababa, Ethiopia as the Technical Advisor to the African Union Border Program at GIZ (African Union Office).

This summer marked the first year of the Washington Fellowship (now renamed Mandela Washington Fellowship) which is a component of the Young African Leaders Initiative (“YALI”) launched by President Obama in order to strengthen and invest in the next generation of African leaders.  From an applicant pool of over 50,000 young Africans between the ages of 25 to 35, the State Department selected five hundred individuals to attend six weeks of leadership training and mentoring in one of three areas:  public management, civic leadership and business entrepreneurship.  As the Technical Advisor to the African Union (“AU”) Border Program at GIZ, I was selected by the US/AU office in Addis Ababa to attend the public management track at the Maxwell School of Citizenship and Public Affairs at Syracuse University.

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Egypt Begins Work on New Suez Canal Lane

Posted in Corporate and Investment, Uncategorized

On August 5th, Egypt announced the commencement of a project to dig a new canal lane running parallel to the existing Suez Canal in an effort to expand trade and speed up traffic transiting through the existing waterway.  The project is also expected to increase the number of ships that use the waterway each day, and generate income to boost the struggling Egyptian economy.  Revenues from the Suez Canal, which total about $5 billion every year, are a crucial source of foreign currency for the Egyptian economy, which has seen a sharp decline in tourism over the past few years since the 2011 uprising.  The project, which is estimated to cost $4 billion, is thought by officials to be capable of creating up to 1 million jobs in Egypt, and will coincide with a related project to develop the surrounding port and storage facilities in the Suez Canal area.  Both projects have been planned for years to develop the area around the Canal and generate more income.

Currently, the Suez Canal, which carries about 12 percent of all international trade and allows ships to travel from Europe to Asia without sailing around southern Africa, only provides one-way traffic.  However, the new 45-mile lane would allow ships to travel in both directions for just under half of the Canal’s 101-mile span.  Further, the project is expected to reduce the maximum waiting hours for ships from 11 hours to three hours.  Egyptian officials have set an ambitious schedule for the project, stating they would like to complete the project by mid-2015.

Egyptian President Abdel Fattah El-Sisi has stated that the project will not depend on foreign funding, and would be financed through the offer of 500 million shares to Egyptians only.  However, other sources indicate that shares may be offered to non-Egyptians at a premium rate of $100 per share.

Although the project and related development of the surrounding area have been touted as a way to boost revenues and expand the capacity of the Canal, some analysts are skeptical that the expansion project will have such an effect.  In particular, one analyst notes that because capacity will be expanded for only part of the length of the canal, it is not clear how much of an effect this will have on the Canal’s overall operations.  Others note that the Canal will not be deepened to allow fully-laden supertankers to pass through the canal.  Egyptian officials, however, are bullish on the project, estimating that the new Canal lane will increase annual revenues to $13.5 billion by 2023.