Category: Africa Tales

  • 25th January, 2024
  • 5 min reading

The economic dynamics and investment landscape in east Africa present numerous business opportunities for investors looking to tap into the growth potential of the region. The East African Community (EAC), which comprises Burundi, the Democratic Republic of Congo, Kenya, Rwanda, South Sudan, Tanzania, Uganda, and the newly admitted member Somalia, offers exciting prospects for investments.

According to IMF’s Regional Economic Outlook for 2023, the East African Community (EAC) is on a trajectory of substantial economic growth, with region’s real GDP accelerating to 5.7 percent in 2024. The region will register the highest regional economic performance in Africa in 2024, with growth figures at over 5 percent, according to the African Development Bank’s 2023 East Africa Economic Outlook 

While the substantial growth is not equally distributed among member countries, the remarkable achievements of the Democratic Republic of the Congo and Rwanda, which are projected to grow at 7.2% and 8.0%, respectively, in 2024, according to the African Economic Outlook 2023, are commendable. The Democratic Republic of the Congo and Rwanda are among the world’s highest-growing economies in 2024, according to the World Bank’s report on Global Economic Prospects. For instance, Rwanda’s robust digital infrastructure, renewable energy capacity, and favourable economic and political landscape make it the largest economy in East Africa and a significant player in Sub-Saharan Africa.

The EAC’s development far outpaces the sub-Saharan African average, demonstrating the region’s economic vibrancy and the efficacy of its collaborative policies.

WHY EAC?

Ranked number one in Africa by sub-regional population, EAC boasts assets such as political stability, an English-speaking and enterprising workforce, a strategic location, and exceptional natural resources, all of which make the region appealing to investors.

According to a report from Journal Economic Analysis on the attractiveness of the East African Community (EAC) for Foreign Direct Investment, some of the main strengths of the EAC relevant for attracting FDI include fast economic growth, relatively low general government debt, relatively low cost of labour, geographical proximity to regional markets and international markets (special agreements with the EU, US, China, and India), and a high share of young people involved in primary education.

Additionally, the free visa policies of Kenya and Rwanda will substantially bolster economic activities in the tourism sector of the region, enhance regional integration and economic inclusion, and attract global investors to the region.

Another comparative advantage of East Africa is its vast reserves of critical minerals. According to UNCTAD’s Economic Development in Africa Report 2023, Africa is home to 48% of the world’s reserves of cobalt and manganese, 80% of the world’s reserves of phosphate rock, and 92% of the world’s reserves of platinum-group metals, which are critical minerals in the production of electric cars, lithium batteries, and hydrogen batteries. Like other African regions, East Africa is also endowed with a variety of minerals, including fluorspar, titanium, zirconium, gold, oil, gas, cobalt, nickel, diamonds, copper, coal, and iron ore. These mineral deposits offer an opportunity for the region’s mining industry’s development.

Opportunities for Sustainable and Renewable Energy Investment

Apart from the region’s investment potential in agricultural businesses, supported by its nutrient-rich soils and a climate favourable to crop growth, the renewable energy sector in East Africa offers excellent prospects for investors. Investing in renewable energy in East Africa can have great benefits on sustainable socioeconomic development of the region by catalyzing economic growth, supporting job creation for the teaming youth, and improve the livelihoods of people in the region.

According to Africa’s Development Dynamics 2023 report, investments have been a major driver of East Africa’s recent growth; however, their allocation towards social and environmental sustainability remains insufficient. Current investments in sustainable energy are insufficient to meet the region’s energy access needs. While the region’s renewable energy sector has grown, most of its potential for sustainable investments has remained untapped.

For instance, despite East Africa’s diverse renewable energy assets, encompassing vast hydro, wind, solar, and geothermal energy resources, only 4% of greenfield foreign direct investment inflows into the region were directed at renewable energy projects during 2017–2022, compared to 17% for Africa as a whole. One of East Africa’s economic ambitions today is to develop its infrastructure, especially sustainable energy infrastructure.

In a recent development, in recognition of the low level of clean energy in Global South countries, which include east African countries, at the just concluded Davos 2024, the World Economic Forum announced the launch of a new alliance to provide a platform for developing economies like East Africa and other emerging markets to raise awareness about their clean energy needs, share best practices, and sustainably accelerate their energy transitions.

Past investment in the sustainable and renewable energy sector in the region includes the construction of the first solar photovoltaic park in Tanzania with a projected capacity of 150 megawatts, the second largest solar PV plant in East Africa. Kenya’s Power and Lighting Company launched a Last Mile Connectivity campaign, which was financed by the Kenyan Government and the African Development Bank (AfDB) with the aim of providing electricity access to over 300,000 non-commercial households in the first phase, reports

Similarly, Uganda is endowed with renewable energy sources, particularly hydro, biomass, and solar. Biomass accounts for 94 percent of the country’s energy consumption and is followed by hydroelectric.

With investment-appealing features such as political stability, an English-speaking and enterprising workforce, a strategic location, and exceptional natural resources, the region possesses high potential for innovative and sustainable investment to accelerate the uptake of renewable energies and contribute to the productive transformation of the continent. East Africa holds unique potential for renewable energies. The East African region is also seeing a growing interest in the renewable energy sector driven by the high costs of fossil fuels, the need to reduce greenhouse gas emissions, and the challenges of climate change, which make investments in clean yet renewable energy more attractive in the region.

However, ineffective energy regulation, poor energy infrastructure, and unstable macroeconomic conditions, exacerbated by recent global shocks, weigh negatively on investor confidence in most East African countries. Africa’s Development Dynamics 2023 Report noted that suitable and renewable energies are core to East Africa’s goal to expanding access to electricity and clean cooking while supporting entrepreneurship and the region’s productive transformation. At the end of 2020, 49% of the population had access to electricity, and only 14% had access to clean cooking. Nonetheless, innovative enterprises are growing across the region and offer the potential to catalyse more investments in renewable energies and support productive transformation in the region.

According to the United Nations’ Renewable Energy in Africa: Prospects and Limits report, Africa has substantial new and renewable energy resources, most of which are under-exploited. Countries in the region have significant potential for renewable energy, particularly hydropower, solar, and wind. The report noted that only about 7% of Africa’s enormous hydropower potential has been harnessed. Existing estimates of hydro potential do not include small, mini, and micro hydro opportunities, which are also significant. Geothermal energy potential stands at 9000 MW, but only about 60 MW has been exploited in Kenya. Based on the limited initiatives that have been undertaken to date, renewable energy technologies (RETs) could contribute significantly to the development of the energy sector in eastern African countries. Renewable energy technologies (RETs) provide attractive, environmentally sound technology options for Africa’s electricity industry.

In the build-up to the UK-African Summit scheduled to take place in April 2024, UK and Rwandan business leaders, investors, and senior government officials will converge in Kigali from January 29 to 31, for the inaugural UK-Rwanda Business Forum, a Pre-event for the UK-African Investment Summit, to discuss business and investment opportunities in Rwanda and, by extension, the East African region. It is hoped that the forum will attract high-quality British investment in sustainable, yet renewable, energy to the region and further open opportunities for new investments from other parts of the world to East Africa.

As a leading African trade and investment firm focused on guiding existing and potential firms in Africa on their ESG and sustainability investments in Africa, our network of experts on the ground in east Africa can guide you in successfully exploring the untapped potential in the region. From Kenya, Rwanda, the DR Congo, and other countries in the region and across the continent, our experience and expertise will help your organisation successfully navigate the complexities of the East African market.

Image by ASphotofamily on Freepik

  • 20th October, 2023
  • 3 min reading
Diving into the vibrant African market?

Here are some essential tips to pave your way into this diverse continent with a growing middle class and an abundance of untapped potential.

Embrace Cultural Diversity:

Africa, the world’s second-largest continent by area and population, is unique with national and regional differences.

With this kind of diversity, it’s understandable that each African country also has its own unique identity, culture, and way of life. Although Africans have diverse cultures, they share common ground.

By taking the time to immerse yourself in the local culture and learn about their day-to-day #business practices and business etiquette, you can overcome some of the challenges that are faced when expanding into Africa.

Find Your Niche:

Finding the correct target market for your products or services is the key to effective African market expansion. Africa’s growing economies provide great potential for B2B and B2C expansion.

With around 1.3 billion consumers now and an anticipated increase to 1.7 billion by 2030, the future of retail and consumer spending seems promising. However, African income levels have not been increasing at a steady rate since household expenditure on the continent has remained largely static.

While studies demonstrate that African consumers are sophisticated and loyal to brands, the vast bulk of consumer purchasing on the continent currently occurs in informal, roadside marketplaces, even in countries with well-developed retail and distribution industries.

A well-defined niche in Africa will benefit from less competition and will produce significant commercial growth while using fewer resources.

Phase Your Entry:

Market expansion can be a daunting task; doing things carefully and strategically is essential. When entering new markets, and not just Africa, you may as well test the waters with one foot. Rather than incurring the risk of fully establishing a company, developing strategic alliances with local enterprises that are already taking the risk and navigating the market can be a wonderful strategy with fewer risks. Consider a staged approach to entering the African market.

This will allow you to adapt and alter as needed, as well as test different ideas and approaches before committing to setting up in a specific location.

Leverage Import-Export Opportunities:

When considering expanding your business in Africa, you have several options available to you, each with its own set of advantages and problems. From marketplaces to local sales reps, local branches, subsidiaries, or joint ventures, there is something for everyone.

Similar to how businesses in other markets search to export or import from different markets, #African businesses look for strategic import-export prospects both within and outside the continent. Strategic collaborations can give your product or service access to new markets, such as Africa, as well as shared expertise and reduced resource expansion.

Establish Local Roots:

Having a solid local presence and focusing on your expertise can give you the confidence to extend your company into African markets. Local knowledge can assist businesses in better understanding the legal and regulatory environments of emerging markets, such as Africa.

African countries, like the United Kingdom, Europe, and the United States, have legal systems. What is legal in the United Kingdom may be illegal or strongly regulated in another country. Businesses that lack local knowledge may find themselves in violation of these restrictions, which can result in large penalties and legal action. Having local experience in the form of legal advice or #consultants can thus be quite beneficial in assuring compliance with local laws and regulations.

Harness the Power of Connections:

In the dynamic African market, relationships matter. Building strong ties not only keeps you ahead but also streamlines your supply chain and product availability. Cultivate these connections to stay competitive and enhance your market penetration. Cultivate these connections to stay competitive and enhance your market penetration.

Remember, the African market is as diverse as it is promising. Embrace your uniqueness, find your niche, and nurture relationships—these are the building blocks for your success. Here’s to thriving in the heart of Africa!

Photo by kurt arendse and  pius quainoo on Unsplash

  • 4th October, 2023
  • 2 min reading

On the 29th of September, ETK Nigeria hosted a remarkable evening at the luxurious Wheatbaker in Ikoyi, Lagos, Nigeria. The event, named “ETK ConnectXperience,” served as a platform for us to introduce ETK to potential partners and share our vision for the future with those who have played a pivotal role in our growth and success in Nigeria.

We had the pleasure of hosting Nigerian development agencies, the UK-based ETK Team, along with other team members and stakeholders from the trade and exports, export financing, and exports sectors. This gathering allowed us to showcase ETK’s accomplishments spanning over 13 years, highlighting our expertise in international trade and business development across Africa. It was not just an event; it was an opportunity for networking and collaboration among our esteemed guests.

During the event, our Group Managing Director, Bolaji Sofoluwe, delivered an insightful presentation. She shed light on how ETK has utilised a combination of people, processes, and technology since our inception in 2010. This approach has enabled us to successfully execute projects in 34 African markets and engage in deals worth over $1 billion.

At ETK Nigeria, we offer a range of consulting services tailored to assist African businesses in achieving their growth and expansion goals. From organisational transformation to capacity building, ESG strategy, reporting, auditing, market entry and expansion services, managed business services, and access to capital markets, we provide comprehensive solutions to empower businesses.

In response to questions from our guests, attendees had the opportunity to engage with our Director of Operations, Brent Barnette. He emphasised ETK’s commitment to supporting companies at any stage of their reporting journey. Whether it’s creating an ESG strategy and framework, conducting an ESG audit, developing mitigation strategies, or offering technology and engineering services, we stand ready to assist companies in their ESG journey.

For more than 13 years, ETK has been the preferred consultant for international companies aiming to grow and expand in Africa’s dynamic markets. We have also assisted African companies in their global expansion plans. As we look ahead, we are eager to continue our collaborations with partners in Nigeria and other African nations. Together, we aim to achieve even greater success and contribute to the growth of businesses in Africa and beyond.

  • 15th September, 2023
  • 3 min reading

The inaugural Africa Climate Summit in Nairobi held from the 4th to 6th of September, 2023, has concluded leaving behind a trail of promises and commitments from both government and private sector stakeholders. In a world grappling with the dire consequences of climate change, African leaders gathered at the Kenyatta International Convention Centre in Nairobi, Kenya, for a three-day dialogue aimed at addressing critical climate change issues specific to Africa.

The Summit, which featured discussions on evaluations, funding mechanisms, partnerships, commitments, and pledges to combat climate change, had a twofold purpose. Firstly, it aimed to establish forward-thinking initiatives and sustainable plans essential for meeting international climate finance and adaptation targets. Secondly, it aimed to reshape Africa’s image from that of a continent vulnerable to climate crises to that of a hub of potential climate solutions.

KEY HIGHLIGHTS FROM THE SUMMIT

The Nairobi Declaration

While a lot has been said and written about the three-day event, one standout moment was the adoption of the Nairobi Declaration. This landmark document serves as a blueprint for Africa’s future negotiations with Western countries on international platforms.

Despite contributing the least to global climate change issues, Africa bears the brunt of its impact, as reported by the World Meteorological Organization. Yet, the continent receives only a fraction of global climate change financing. The devastating effects of climate change in Africa, including food shortages, displacement, and migration, result in over $8.5 billion in economic damages annually.

The Summit’s declaration was rooted in Africa’s inability to adapt to climate crises. A key element of this declaration was the establishment of a target of 300 GW for renewable energy generation capacity in Africa by 2030, up from the current 56 GW. Achieving this target requires a tenfold increase in current levels of climate investment in Africa.
According to the African Development Bank (AfDB), Africa will need to mobilise approximately $213.4 billion annually to close the climate financing gap by 2030. The Summit provided a platform for African leaders to emphasize the urgency of increased financial flows from developed countries to mitigate the impacts of climate change on the continent.

The declaration also highlighted the importance of developed countries honouring their commitment to provide $100 billion in annual climate financing, as promised 14 years ago at the Copenhagen conference. It emphasised the importance of decarbonising the global economy for the sake of equality and shared prosperity.

Climate Finance and Investments

Climate investment was a central theme of the Summit, with stakeholders and financiers making substantial commitments to climate financing. African leaders called for a reassessment of what they deemed unfair climate change financing practices.

A pivotal moment at the Summit was the announcement of a remarkable $23 billion commitment from various stakeholders, including governments, the private sector, multilateral banks, and philanthropists, for green growth, mitigation, and adaptation efforts related to climate change across Africa. This landmark announcement signaled African countries’ commitment to reposition the continent as a destination for climate investment rather than a hotbed of floods and droughts.

Notable investment pledges included $161 million from the United States government, £34 million from the UK government, and a $4.5 billion pledge from the United Arab Emirates to finance climate projects in Africa. The final communiqué from the Summit’s organisers revealed that the total capital commitments made during the week amounted to $26 billion, representing contributions from public, private, and multilateral development banks, foundations, and partners in the development finance community.

The African Carbon Market

One crucial discussion at the climate conference revolved around attracting investments to Africa’s carbon market through carbon credits, with the aim of bolstering incentives and enhancing climate action financing across the continent. The Summit provided African leaders with a platform to advocate for market-based financing instruments, such as carbon credits, and garnered substantial support for scaling up the Africa Carbon Markets Initiative.

This initiative, launched in 2022, enables companies operating in Africa to offset carbon dioxide emissions they cannot reduce from their own operations to help meet climate targets. The Summit’s first day witnessed significant investments in the African Carbon Credit Initiative, including a $450 million commitment from the United Arab Emirates (UAE) to purchase carbon credits from the Africa Carbon Markets Initiative (ACMI). While many applauded this initiative as a step towards making polluters accountable, critics and environmental analysts viewed it as an inadequate and unrealistic solution.

The three-day climate summit, along with the African Climate Week 2023, undoubtedly provided a platform for Africa to unite and demonstrate that, with the right investments and commitments, it can play a central role in a renewable future. We hope that these commitments will yield effective solutions to Africa’s climate challenges.

  • 10th March, 2020
  • 2 min reading

Last week started with a great round table meeting with HM Trade Commissioner to Africa, Emma Wade-Smith. The event was organised by Exemplas Trade Services on behalf of the Department for International (DIT) Trade East of England. It was great to have a discussion on the measures that the government is taking to support local businesses in their export plans. And I was honoured to be invited along with five other businesses in the region.

HM Trade Commissioner for Africa, Emma Wade-Smith, at the meeting with Bolaji Sofoluwe. Credit: John Brook

It was inspiring to see that Mrs Wade-Smith has a passion for Africa that in nearly 10 years of business, I have not yet seen. This filled me with extreme confidence and I know this is going to be the golden era of trade to Africa. I didn’t sense the imperious attitude towards the business opportunities on the continent and neither did I feel that this was an economic grab. As a result, I believed it was a genuine effort to build mutually beneficial relationships on the continent.

Healthcare and life science

This was followed by the Selling to Africa: Life Sciences and Healthcare event. Also run by the DIT, this event attracted businesses in the sector from across the East of England. It was fantastic to have a representative from DIT in Egypt, Salma Amin, present a pragmatic and detailed market entry approach to the delegates. Ayuk Foma Mafomekong, from DLRC Ltd, the regulatory consultants, also gave a great presentation on navigating the regulatory environment for medicines across the continent.

Bolaji with Salma Amin of the Department for International Trade in Egypt. Credit: DIT Egypt

This was the first time that I had heard about efforts to harmonise compliance across the continent – you learn something new every day! Above all my clients will be pleased to hear that this is progressing and that the target is 2021.

We also heard from Phil Jennings, from Santander, who gave an impressive presentation on the South African market and the bank’s large network of partners across the continent.

Finally, I gave a presentation on Nigeria, Ghana, Morocco, Ethiopia and Kenya – covering research and development, budget allocations and some opportunities available to businesses in those countries.

Progress

It’s safe to say that this was one of the most practical, detailed events I have been to in a while. Africa as a whole is hard to cover, but focusing on these specific countries, clarifying regulatory requirements and being open and honest about timelines, opportunities and challenges, was a refreshing experience. Well done to Marguerite and her team for organising this event.

So, the motto is, we progress. And, we keep calm and carry on.