Tag: #Africadevelopment

The Role of Africa’s Critical Minerals in the Clean Energy Transition  

  • 6th May, 2024
  • 3 min reading

As the world transitions from carbon-based sources of energy to a more sustainable future, demand is increasing for a range of minerals and metals required for the transition to cleaner sources of energy. From uses in home appliances, transportation, construction, electrical components, and medicine to aerospace technology and infrastructure development, minerals are essential components of modern life. In addition to these applications, minerals such as copper, nickel, platinum, silver, gold, aluminium, cobalt, and lithium are used in renewable energy technologies like batteries for electricity storage, wind turbines, and photovoltaic cells for harnessing energy from the sun. 

Sustainable Development Goal 7 (SDG7), which calls for “affordable, reliable, sustainable, and modern energy for all,” aims to increase the share of renewables in the global energy mix and ensure universal access to affordable, reliable, and clean energy. The decarbonizing technologies required to transition to wind, solar, batteries, and other sustainable energy sources are driving increased demand for these scarce natural resources, creating significant economic opportunities for countries where the minerals are found but also posing social and environmental risks. 

Risks Associated with Mineral Mining 

While minerals are essential for the transition to an electrified future, their extraction from the ground creates a range of social and environmental challenges in countries where the minerals are mined. Extractive industries pose risks to human health, water supplies, and ecosystems. Mining can ravage landscapes, decimate biodiversity, lead to human rights abuses, and be a significant source of greenhouse gas emissions as well. 

Other risks include deforestation, soil erosion, water contamination, dust, and noise pollution. Land-based mining is encroaching on wildlife areas and accelerating the rates of extinction of endangered plant and animal species. The extensive land required for mining is also impacting indigenous populations and leading to a crisis of pollution and toxic waste in local communities. 

Economic Opportunities for African Countries 

With growing demand, proceeds from critical minerals are poised to rise significantly over the next two decades. Global revenues from the extraction of just four key minerals—copper, nickel, cobalt, and lithium—are estimated to total $16 trillion over the next 25 years, in 2023-dollar terms, says the IMF. With sub-Saharan Africa estimated to hold about 30 percent of the volume of proven critical mineral reserves needed to power the transition to renewable energies, this means that Africa stands to reap over 10 percent of these cumulated revenues, which could correspond to an increase in the region’s GDP by 12 percent or more by 2050, according to the IMF. 

The Canadian Mining Journal on Africa’s mining potential reports that the extraction and export of these mineral resources contribute significantly to national revenues, foreign currency reserves, and employment. Lithium, cobalt, copper, manganese, graphite, and many other critical minerals are abundant in the region. Africa produces over 60 metal and mineral products and has huge potential for mineral reserve exploration and production. Over 30% of the world’s mineral reserves are found in Africa, with practically every country on the continent producing at least one critical mineral. According to the Policy Centre for the New South’s research on Africa’s mining potential, sub-Saharan Africa accounts for around 80% of global platinum production, 50% of manganese, two-thirds of cobalt, and a considerable proportion of chromium. 

In spite of the abundance of raw materials, many African countries still export most of the mineral resources in their raw forms. Approximately 70% of mined minerals are exported to Europe or Asia for refining. This shows that local processing options for critical minerals are still limited. 

Mining vehicles digging coal: Source freepik.com

Since the bulk of the economic benefit from these minerals is derived from the refining of the raw materials, the greatest economic gains are realized elsewhere. Developing local processing industries could significantly create higher-skilled jobs and increase tax revenues, thereby supporting poverty reduction and sustainable development. Africa can generate even greater windfalls by not only exporting raw materials but processing them as well. Raw bauxite, for instance, fetches a modest $65 per ton, but when processed into aluminium, it commands a hefty $2,335 per ton in end-2023 prices according to the IMF. 

In line with this, many governments on the continent are undertaking structural reforms to support domestic companies in mining and related processing sectors to retain greater economic value onshore. This includes implementing policies aimed at restricting the exports of raw mineral resources. For instance, Ghana has implemented a green minerals policy aimed at retaining a greater portion of the value chain from the country’s natural resources. Namibia and Zimbabwe have taken similar steps regarding the export of unprocessed lithium. 

Realizing the Gains While Minimising the Risks 

If managed properly, the extraction of these critical minerals has the potential to transform the region’s economic status, according to IMF’s latest Regional Economic Outlook. Accessing these critical minerals in ways that minimize the impact on local communities, protect biodiversity, respect the land rights of indigenous communities, protect workers, and reduce the environmental impacts on surrounding ecosystems is essential if we are to create a sustainable future for everyone. Massive wealth transfers of raw materials in ways that negatively impact communities in the global south to the benefit of consuming economies in the global north are not the answer to a sustainable future. 

 

Exploring Opportunities in the African Market: Key Considerations

  • 12th January, 2024
  • 3 min reading

Recently, while sharing valuable tips on mastering adaptability in entrepreneurship and navigating career transitions on the BLACK RISE Podcast Series with Flavilla Fongang, ETK Managing Director Bolajo Sofoluwe emphasised that success is a marathon, not a sprint.

The same could be said about doing business in Africa. If you are a company trying to enter the African market in 2024, our advice to ‘newbies’ is to treat doing business in Africa as a marathon, not a sprint.

Do you need a crash course on entering the African market? Our FREE Market Entry Guide will teach you all you need to know, from picking the right partners to selecting the suitable market for your product and service, promotion, and finding your African client base.

Doing business in Africa is a marathon; if you aren’t physically fit, don’t start. African marketplaces require a significant amount of discipline, attention, time, and investment. The goal is to cross the finish line, and whether you’re first or last, the real achievement is getting started and earning the “medal” of success.

Before you get started, it’s crucial to outline your market entry objectives when considering expansion and entry into the vibrant African markets. Whether you’re eyeing Nigeria, Ghana, Kenya, South Africa, or any other country on the continent, consider these key points:

Business Objectives for Africa Expansion
It is critical to define your African expansion goals and how success will be judged. Set precise targets to help you track your development and measure your triumphs as a starting point. Measuring progress and determining whether your strategy is performing as anticipated can be challenging without clearly defined targets. This must be in line with the goals of your firm. For example, if you are expanding into a new African market like Ghana, your objectives could include increasing your customer base, increasing revenue, or enhancing brand visibility.

Understand your Sales Value or Volume
Rather than monetary profit, your targeted sales volume reflects the quantity of products you need to sell in your chosen African market. While it may appear that sales volume is less essential, this is not true. Africa’s growing population presents significant prospects for retail and distribution expansion. As a result, your sales volume is an important sign of the health of your African business. It enables you to monitor the effectiveness of marketing initiatives, assess the efforts of sales personnel, and select the ideal sites for real stores.

Identify Relevant Product or Service
If you have considered direct sales or exporting as your main entry options into your chosen African market, the overall success of your export business in Africa will depend strongly on the products and markets you have chosen to export to.
The right market can give you a competitive advantage and the chance to expand your business. On the other hand, picking the wrong market can lead to low sales, higher expenses, and legal difficulties.

Define your Target Market or Markets
When expanding into Africa, one of the major areas to consider is market size. While most African countries can boast of a sizeable population, a market worth targeting should be sizeable enough to be profitable, have growth potential, not already be swamped by competitors, be accessible, and fit with your firm’s mission and objectives.

Allocating Resources for Project Success
Funds and resources play a vital role in the success of your expansion into African markets. You might have a great idea to compete in the sustainable energy market in Africa. However, it is a business that is capital-intensive. What this means is that you will either need a lot of money or must be able to raise funds. The question then is: does your organisation have the resources to do business in Africa?

Is your business eyeing economic opportunities in Africa? Our team of African business expansion experts is ready to guide you in achieving your African market entry goals.

Fascinating Insight into ETK Clients’ Profile

  • 5th January, 2024
  • 3 min reading

A warm welcome to 2024! As we begin yet another remarkable year, it’s a moment for us to reflect on the distinctive characteristics of the businesses that placed their trust in our services throughout 2023. To offer a fascinating insight into our customer base, we’ve taken the opportunity to categorise them.

Join us as we explore the diverse and prevalent categories of clients that ETK Group had the privilege to collaborate with in 2023.

1) Enterprise Catalysts for Growth (ECG)

These risk-takers are major contributors to economic growth in Sub-Saharan Africa. They are energetic business owners with a strong desire to succeed. They have strong managerial and ownership control over a huge portion of African enterprises and are responsible for an estimated 80% of jobs on the continent. Despite the continent’s current economic predicament, this set of clients continues to strive for the top. Their business goal is to become more structured and to develop their businesses into scalable African enterprises. They ensure that their teams have the appropriate competencies across a range of functional areas with our bespoke organisational transformation and capacity-building solution for African MSMEs.

2) The Market Frontier Navigators (MFN)

This clientele consists of daring risk-takers who have had success in other markets or have gotten it right with their products and services on other continents. They, like the three wise men, have heard of Africa’s immense potential and are eager to capitalise on it. However, they are hampered by a lack of advice and knowledge about African markets. They frequently come to us for guidance on how to strategically marshal each market on the continent. Our team of professionals assists them through the market entry process, giving assistance, insights, and research to ensure their success on the continent.

3) The Impact Development Partners (IDP)

This group of clients is less concerned with profit and more concerned with the well-being of their host communities. Non-profit companies, development institutes, foundations, and charities are looking for highly qualified individuals to implement, manage, and oversee their projects in Africa. They are looking for progress partners who might be their third eye on their impact projects in Africa. Our team of Africa-based consultants got to work, providing monitoring, evaluation, and reporting services to maximise the success of their impact investments in Africa through our project management and implementation services.

4) The Global Expansion Pioneers (GEP)

These are resilient enterprises that weathered the storm, mastered the skill of doing business in a specific African country’s market, and gathered sufficient expertise to establish, maintain, and expand their operations in the dynamic marketplace of the continent. They embody the potential to drive economic advancement and make meaningful contributions to Africa. These clients face the challenge of extending their thriving local operations to new markets within Africa or across other continents. They’ve successfully ventured into markets not only in Africa but also in the United Kingdom, Europe, and various other continents by leveraging our state-of-the-art market expansion solutions, and they are eager to explore additional markets.

5) The Enterprise Stewards for Global Success (ESGS)

These customers come to us for long-term, in-person management of their enterprises. These clients are MSMEs, family-run businesses in a range of sectors, who have worked hard to manage and scale to a desirable level within Africa’s difficult business climate, attain their full potential, and attract investors. These companies have achieved success and sustainability by investing sweat, equity, and personal finances to ensure that they not only survive but thrive. However, for various reasons, they must ‘japa’ to other regions of the world but do not want to abandon their businesses. These clients are confident in the viability of their enterprises but are unsure who to turn to. We ensure the stability, success, and security of their businesses throughout their extended absences by providing managed business services. We collaborate with them to provide additional layers of management to ensure that these enterprises’ high standards are maintained throughout their ‘staycation’ abroad. This enables them to continue focusing on providing outstanding service to their clients and consumers while remaining profitable.

As experts in assisting businesses to expand and scale, we are committed to delivering a variety of business support services aimed at assisting Africa-focused businesses and organisations to achieve their objectives. Whether it’s entering a new African market, expanding into other African markets, strengthening institutional capacities, providing trade support services, or managing environmental, social, and governance (ESG) activities in Africa, our services have been proven to help our clients achieve their goals.

Regardless of where your company is on the growth curve, ETK can provide insights to guarantee that your targets and goals are met.

Ready to increase your business success in Africa? Let our expert consulting services be the catalyst for your success. Contact us today, and let’s embark on a journey of innovation, growth, and unparalleled achievements together in 2024.

Economic Comeback: Sub-Saharan Africa anticipates a 4.0% growth surge in 2024, says IMF

  • 26th October, 2023
  • 2 min reading

Sub-Saharan African countries have faced yet another difficult year in 2023. For a region still recovering from the COVID-19 pandemic and inflationary shocks from Russia’s war in Ukraine, which have resulted in higher interest rates and lower demand, economic growth is expected to be slow. According to the International Monetary Fund (IMF), Africa’s growth rate in 2023 is predicted to be 3.3 percent.

However, there is reason to be optimistic, with the IMF Regional Economic Outlook for Sub-Saharan Africa projecting a rebound to 4.0 percent in 2024, with growth picking up in four-fifths of Sub-Saharan Africa’s countries and strong performances in non-resource-intensive countries. Africa’s macroeconomic imbalances are also improving, owing mostly to lower inflation and more sustainable uses of public finances.

Is it time to celebrate?

While the projection calls for some sort of celebration, the IMF has cautioned that growth is not inevitable because obstacles such as financial constraints, higher debt payback costs, and expensive debt servicing remain.

The IMF suggests that Sub-Saharan African nations could delay the predicted economic rebound due to a slowdown in their reform efforts, rising political instability, or external risks that might harm growth potential. To achieve the anticipated increase, the IMF has proposed four policy actions.

Managing inflation: To start with, inflation remains in the double digits for 14 African countries, which is far higher than the target in most countries. Addressing inflation in countries where inflation is firmly on track to target levels may be required, whereas monetary tightening may be required in nations where inflation is growing until there are clear indicators that inflation is dropping.

Managing exchange rate volatility: Exchange rate fluctuations remain a major concern across Africa, causing significant challenges for businesses in the region. The IMF has proposed aligning monetary policy demands with the anchor country in order to maintain external stability and avoid further reserve losses. Currency movements in countries with floating exchange rates should be allowed to adjust as much as feasible, because efforts to block fundamental-based movements come at a high cost. Other policy measures, such as tighter monetary policy to keep inflation under control and structural changes to enhance the export industry, should accompany the adjustment, according to the IMF.

Debt management and prudent spending: Debt management while making room for development spending African countries’ debt risks are increasing. Borrowing rates are still high, and rolling over debt is a burden for African countries, with half of the region’s low-income countries at high risk or in economic crisis. Effective domestic income mobilisation, a deliberate approach to expenditure, careful borrowing, and debt restructuring may also be required.

Raising living standards, especially in resource-rich countries: while the recovery is underway, economic disparities within the area are expanding, with per capita incomes in resource-intensive economies remaining subdued. According to the research, increasing income per capita through structural reforms such as strategic investment in education, better natural resource management, improved business, and a true commitment to trade integration will guarantee the growth projection, according to the IMF.

To ensure that the coming rebound is more than a passing fad, African countries must heed the cautions of the global finance agency in that economic stabilising policies are put in place while focusing on reforms that address the region’s development needs.

Photo by Douglas Bagg  and Joecalih on Unsplash

Africa’s Potential as a Key Manufacturing Hub for Technology-Intensive Sectors and Global Supply Chains.

  • 24th August, 2023
  • 2 min reading

In a world marked by constant change and evolution, the African continent stands on the brink of an exciting opportunity.

With its vast potential, #Africa has the capacity to emerge as a pivotal hub for high-tech manufacturing across various industries, including #automobiles, #smartphones, green energy, and #healthcare says UNCTAD’s Economic Development in Africa Report 2023.

The shifting tides of geopolitics and economics have prompted a re-evaluation of global manufacturing and supply chains. Today, stakeholders are driven to fortify and diversify these chains, seeking resilience in the face of #disruptions.

Africa’s rich natural resources, such as aluminum, cobalt, copper, lithium, and manganese, hold the key to unlocking a prominent role in the global supply chain. These essential materials are crucial for the production of high-tech and green products like smartphones and #solar panels.

Remarkably, the Democratic Republic of the #Congo alone boasts an astounding 46% of the world’s cobalt reserves, a vital ingredient in battery manufacturing. To put things into perspective, UNCTAD estimates that the production of an electric car demands approximately six times more #minerals than a conventional vehicle, underscoring the significance of these resources.

As the global drive towards clean and sustainable energy gains momentum, the demand for critical metals is poised to surge. This presents an exceptional opportunity for Africa to position itself as a major exporter of high-value goods. The ripple effects are profound: #economic growth, #job creation, heightened productivity, and improved wages.

However, seizing this momentous potential requires strategic action. African nations must enhance productivity by embracing #technology, securing favourable mining contracts, and obtaining exploration licenses. By doing so, local industries can flourish, empowering domestic firms to not only design, procure, and manufacture but also supply the essential components for technology-intensive products.

In this era of transformation, Africa stands ready to play a pivotal role in reshaping #global supply chains and high-tech manufacturing. The journey ahead promises growth, innovation, and prosperity.

Join us on this transformative expedition.

Your support drives our shared success.

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