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Finance & Services

New signings add to impressive Africa sweep of law firm Asafo & Co

The Africa-focused international law firm, Asafo & Co continues to strengthen its projects practice with the recent addition of two new partners to its London office.

Andrew Thomas and Winston Bell-Gam join the firm whose very rapid expansion over just two years since it was formed is a clear indication of the hitherto poorly met demand for the services it specialises in.

Before Asafo & Co was formed, there was not a single international law firm fully dedicated to Africa-related matters with extensive teams on the ground in the continent, the law firm replied when asked what motivated its creation.

The firm specialises in the legal and finance aspects of all forms of large project development/PPP and project finance mandates, including power (conventional and renewable), oil and gas (mid and downstream), transportation (aviation, road and rail), extraction (mining and oil & gas) and social provision (healthcare, education and hospitality).

Other main practice areas of the firm include M&A and private equity, banking and finance, litigation and international arbitration, public and governmental affairs, international trade and AfCFTA,  capital markets and sovereign borrowing, fintech and venture capital/startups.

The firm, with nearly 200 legal professionals, works as a single integrated firm across eight offices located in countries across Africa, as well as in Europe and the US. The firm’s origins go back to a core team of lawyers in Paris, France and Abidjan, Côte d’Ivoire who worked together for several years before founding Asafo &Co.

The expansion to other countries – Morocco, South Africa, Kenya, the UK and US – has been led by teams recruited from large US or UK firms and with whom the core founders had already established solid working relations.

Earlier this year, a specialist projects team led by Cendrine Delivré was added to the Paris office and in April, projects partner Jude Kearney led the addition of a Washington DC office.

Andrew Thomas

With 30 years’ experience, Andrew Thomas began his career at Linklaters and later went on to head the UK practices of different US law firms in London, including Chadbourne and Parke, Akin Gump and Gibson Dunn.

He later founded the Africa-focused practice at Fasken Martineau and headed the banking practice at Hunton & Williams before becoming the head of project finance at Holman Fenwick Willan (HFW).

Andrew Thomas’ practice lays particular emphasis on the power, pipeline, infrastructure, healthcare and transportation sectors. He has extensive experience advising developers, financial and developmental finance institutions, corporate boards and governments in relation to high value infrastructure projects.

Winston Bell-Gam

Winston Bell-Gam has over 15 years’ experience, including working at White & Case, Ashurst, Winston & Strawn, as well as in-house at the East African Development Bank.

His practice focuses on the acquisition, financing, and project development of projects in power, infrastructure, healthcare, transportation and insurance sectors in Africa.

The additions of Andrew Thomas and Winston Bell-Gam brings Asafo’s total partner head-count to 50.

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Trade & Investment

Consortium buys 51% of South African Airways

South African public enterprises minister Pravin Gordhan has confirmed that a private consortium will buy a 51% stake and inject over 3 billion rand ($221.6m) into long troubled South African Airways.  

The government has selected the Takatso Consortium, comprising infrastructure investor Harith General Partners and aviation group Global Aviation, as SAA’s preferred strategic equity partner.  

The deal brings an end to years of speculation over the future of the troubled airline, which has been blighted by debt and mismanagement. The airline has received billions of rands in government bailouts but has not turned a profit since 2011, leading to a fierce debate in which some politicians advocated its permanent closure and others supported full or part privatisation. 

Consortium promises to transform SAA

The Takatso Consortium, which says it will relaunch SAA as “a viable, sustainable, scalable and agile airline,” will own 51% and the Department of Public Enterprises 49%. The consortium said that it intends to list the airline in the future as a way of addressing future funding requirements. 

The consortium is led by CEO Gidon Novick, former Comair co-CEO and co-founder of Global’s airline LIFT. Novick said that an “abundance of low-priced aircraft available globally” offered an opportunity for the relaunch, and said that transformation, including the accelerated training and promotion of qualified black pilots, would be at the heart of the relaunch. 

In a statement, the consortium said that a due diligence exercise will now get under way. Once completed, the consortium will reveal details including route network rollout, fleet selection, the  leadership team, transformation, brand relaunch, technology, the future of SAA’s subsidiaries, and global partnerships.

Harith General Partners co-founder and consortium chair Tshepo Mahloele said the consortium has the experience, expertise, and capital to transform SAA into a substantial operating business. 

“The partnership represents a robust, exciting South African-bred solution. Harith, as owners of Lanseria International Airport, has significant experience in the transport infrastructure and aviation sectors. We have deployed more than a billion dollars into a portfolio of critical infrastructure assets across the African continent that support regional economies.” 

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Finance & Services

Can intra-African trade buffer the continent against future recessions?

The economic uncertainty in the wake of the Covid-19 pandemic places a huge load on economists to formulate effective recovery and resilience strategies, and this is all the more the case in sub-Saharan Africa. 

According to the World Bank’s recent biannual Africa’s Pulse report, the pandemic has taken its toll on economic activity in sub-Saharan Africa, putting a decade of hard-won economic progress at risk.

Depending on the success of measures taken to mitigate the pandemic’s effects, it is estimated that economic growth in sub-Saharan Africa dropped from 2.4% in 2019 to between -2.1% and -5.1% in 2020. This could claw back some of the major strides that Africa has made in its participation in trade and value chains as well as result in a reduction of foreign financing inflows. 

Africa’s international trade relationships and transactions are vital and have showcased significant growth over the last two decades. According to a recent UNCTAD report, in the period 2015-17 total trade from Africa to the rest of the world averaged $760bn in current prices. Similarly, the share of exports from Africa to the rest of the world represented 80-90% of Africa’s total trade transactions between 2000 and 2017. 

However, a decline in Africa’s international trade activity could have a silver lining. There is growing consensus among economic planners of a need to shift the mindset on intra-African trade and view it as a key driver of economic growth in the post Covid-19 era. Intra-African trade provides a compelling opportunity to move away from significant reliance on extractive exports.

However, oil, minerals and agricultural exports are subject to price volatility and require less labour, thereby limiting employment opportunities for a continent with a young population.  

Conversely, according to the UN Economic Commission for Africa (ECA), when African countries trade with each other, they exchange more manufactured and processed goods, have more knowledge transfer, and create more value. In addition, greater value addition or sophistication increases the value of the exports and therefore productivity. Africa’s growth is fuelled by small to medium-sized enterprises (SMEs).

SMEs possess the extraordinary ability to tap regional African markets, grow exponentially and create jobs, while also accounting for 80% of the region’s trade, according to the Africa Trade Policy Centre (ATPC).

Reducing barriers

The opportunity for intra-African trade is best viewed with a “glass half-full” approach with an equally pragmatic view of the challenges that lie ahead. 

Let’s start with the barriers to trade on the continent. Barriers such as high tariffs and poor supply chain infrastructure raise trade costs, erode the competitiveness of goods and services, inhibit exports and generally stifle economic growth. Recent studies conducted by the World Bank indicate that 75% of the delays in the movements of goods are from trade facilitation and that 25% are attributed to infrastructure.

Proof exists that these barriers can be reduced. Poor infrastructure causes congestions, delay and ultimately high transportation costs. African countries have begun investing in physical infrastructure at key ports, introducing One-Stop Border Posts (OSBPs) whilst doubling down on soft infrastructure such as integrated border management systems as well as mobility of human resources.

The advantage of OSBPs is that they eliminate the need for vehicles, travellers and goods to stop twice to undertake duplicated border-crossing formalities. According to the African Union’s Programme for Infrastructure Development in Africa (PIDA), African regional economic communities have identified approximately 76 border posts for implementation. 

Addressing the infrastructural challenges will lead to a reduction in key trade bottlenecks, faster movement of goods through key links and nodes, and ultimately lower transport costs.  

Encouraging signs

The crystal ball shows encouraging signs on Africa’s trade facilitation front. Two years ago, African countries inked a landmark trade agreement, the African Continental Free Trade Agreement (AfCFTA), which commits countries to remove tariffs on 90% of goods, progressively liberalise trade in services, and address a host of other non-tariff issues including import quotas. 

The agreement will certainly deepen trade, boost economies, create jobs and achieve the elusive market integration objectives. The 54 signatures created a single African market of over a billion consumers with a total GDP of over $3 trillion, making Africa the largest free trade area in the world. Globally, trade agreements, like human relations, carry hopes and suspicions. Pulling off AfCFTA was therefore a great feat by African countries from a trade negotiations perspective. 

AfCTA’s scope exceeded traditional trade agreements and covers intellectual property rights, e-commerce and competition policies which have diminished trade and heightened protectionism. It provides an opportunity for African countries to improve diversification in exports and trade.

This is expected to significantly benefit agricultural products. African countries spend over $80bn in food imports. According to the ECA, AfCTA is expected to expand access to markets at a regional and international level, thus generating state revenue and increasing farmer income, resulting in the provision of reserves for investing purposes especially in modernising the agricultural sector through processing and mechanisation.

AfCTA is key to paving the road to intra-African trade but the road remains bumpy, for now. Apart from promoting intra-African trade, AfCFTA’s litmus test will showcase how quickly African countries can fast-track export diversification and product sophistication thus making trade more inclusive. Domestic policymakers need to demonstrate the commitment to industrialisation and manufacturing. 

A unique catalyst for intra-African trade is the empowerment and inclusion of women in cross-border trade. According to the UN Women factsheet Unleashing the Potential of Women Informal Cross Border Traders to Transform Intra-African Trade, informal cross-border trade has become an integral part of trade flows for the East African Community and Southern African Development Community countries.

The report states that over 70% of the cross-border traders are women. Meanwhile, in West and Central Africa, women informal cross-border traders “employ 1.2 people in their home businesses; support on average 3.2 children as well as 3.1 dependants who were not children or spouses”. Interventions targeted at intra-African exports and imports therefore have a huge potential to drive development, inclusion and poverty reduction. 

The consequences of a Covid-19-driven recession should be the perfect excuse for African governments to hasten the mainstreaming of intra-African trade in their respective national trade and development strategies. The impact will be felt for years to come if policymakers fail to address this now.

Sarmad Lone is regional head of corporate, commercial and institutional banking – Africa & Middle East at Standard Chartered.

Categories
Economy

Mastercard Foundation and Africa CDC partner on $1.3bn vaccine rollout

The Mastercard Foundation and Africa CDC have partnered to deploy $1.3bn towards boosting the rollout of Covid-19 vaccines Africa, in a bid to reverse the economic damage caused by the coronavirus.

The funds will be used to help buy and distribute vaccines to 50m people over the next three years. They will also help lay the groundwork for vaccine manufacturing capacity on the continent by focusing on human capital development, the two organisations said in a joint statement.

So far only around 2% of Africa’s 750m adult population have received at least one dose of the vaccine, Africa CDC says. But the African Union hopes that 60% of Africans in the 55 member state grouping will be vaccinated by the end of 2022.

Africa’s top public health official called on governments, global funders, the private sector, and others to help build vaccine manufacturing capability on the continent, which currently imports 99% of its supply. Dr. John Nkengasong, director of the Africa CDC said that the partnership will be “recorded as a game-changer in our ability to fight Covid-19 on the continent”.

“Ensuring inclusivity in vaccine access, and building Africa’s capacity to manufacture its own vaccines, is not just good for the continent, it’s the only sustainable path out of the pandemic and into a health-secure future,” said Nkengasong.

“This partnership with the Mastercard Foundation is a bold step towards establishing a New Public Health Order for Africa, and we welcome other actors to join this historic journey.”

Nkengasong said the partnership will provide an “equitable and accountable” way of strengthening key logistics, community engagement, genomic surveillance and digital tools across the continent.   

In 2020 the pandemic ushered in the continent’s worst economic recession in 25 years, which risks driving 39m Africans into extreme poverty this year. 

“This pandemic continues to ravage the world as well as our societies,” said Moussa Faki Mahamat, chairperson of the African Union Commission. “We will continue to work tirelessly for more than a year to bring responses to this sanitary crisis that not only devastates the lives of millions of people, but their living conditions and means of survival. Today a new page has opened on the continent… more than 2% of Africans have received one dose of vaccine which is worrying and very far from the objective, so the Mastercard partnership comes at the right moment.”

“We expect this initiative is an opportunity to unlock the economic potential of the health sector and create jobs and opportunities for thousands of people so they too can begin the recovery,” said Reeta Roy, CEO and president of the Mastercard Foundation.   

Rwandan president Paul Kagame also spoke at the launch event, where he commended the initiative and called for greater focus on domestic healthcare systems.

“We won’t get out of this crisis with a business-as-usual mindset, it means investing much more of our national resources in our health systems.”  

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Agribusiness & Manufacturing

Igbo apprenticeship system fuels Nigeria’s entrepreneurs

On a sunny Monday morning in Yaba Market in Lagos, James Igiri brings out some cotton bedspreads, puts them on the floor in front of his shop, and cuts them into sizes by yards to be sold to potential customers. He haggles with a female customer until they reach a consensus price, and successfully closes another sale. 

“I started my cotton business after serving my oga [boss] for six years. With the skills and experiences I gathered over the years, I have been running my business successfully,” says 40-year-old Igiri, from Abia state in southeastern Nigeria. 

Born in the town of Amurie-Nkporo in the Ohafia local government area, Igiri concluded his secondary school education in 2005. Despite his university ambitions, financial difficulties meant he could not continue his education at tertiary level. 

Instead, he decided to serve one of his brothers in Lagos under the Igbo apprenticeship system known as Igba boi – a cultural practice where young Igbo boys are sent to businessmen in various cities to learn trades. When the boy has learned from his master, the master sets him up with capital and goods to start his own business. 

Igiri started to serve his master in 2007 and learned how to trade cotton bedspreads until 2013, when he was given capital to start his own business. That launched in 2014, when he himself became an oga

“It is a great feeling being an oga,” he says. “It was not easy serving someone. When I came to Lagos to serve, I felt like going back to the village. It was not easy because it is something I had not been into before. I felt the impact. I learned the trade in addition to being obedient and submissive to my oga.

Igba boi is good. Without it I would not have had the skills and experience that I have now and the capital to start my own business. Igba boi makes you strong, obedient, and exposed. It is very good and it will make you versatile.”

Ndubuisi Ekekwe, a Nigerian academic and entrepreneur, says that the Igbo apprenticeship system was propelled by Igbo leaders when young men started to leave the region after the end of the civil war in 1970. After the defeat of Biafra, a break­away state dominated by the Igbo people, the Nigerian government seized the bank accounts of many Igbos but issued them with a small grant to start afresh. Many young men used the money to travel to various cities around the country and start businesses. 

“As the elders blessed them, they dropped a message: ‘onye aghala nwanne ya’ [do not leave your brethren behind],” Ekekwe told the BBC’s Igbo service in May. Ekekwe, whose work on Igba boi has been published in the Harvard Business Review, sees what followed as a valuable case study in “stakeholder capitalism” that has produced several prominent Nigerian businessmen, including car magnate Innocent Chukwuma.

“As people made progress, they came back home to pick their kinsmen, dividing and sharing opportunities in the cities. And with that playbook, a region that should be the poorest in Nigeria (they lost the war) is today regarded by the United Nations as the most secure on human development,” he told the BBC. 

Making millionaires

Supporters say the system has developed numerous entrepreneurs in Nigeria and beyond and helped improve the economic welfare of the Igbo people. It has enabled people to acquire lifelong skills such as running and nurturing businesses and building value chains, they say. 

Twenty-seven-year-old Uchenna Ogile chose the Igba boi system over formal education, concluding his secondary schooling in 2014 before travelling to Lagos to learn the cotton trade. He served his elder brother from 2014 to 2020, when he settled down to start his own business. 

“It was a tough journey,” he says. “It is not easy staying under someone and the person controls you. I endured and I learned. The advantage of Igba boi is that you are going to start your own business very soon. It is a matter of time and you will have the experience.” 

Ogile, who was given capital of N800,000 ($2,100) to start his own business, is now looking for a shop at Lagos’s bustling Yaba market, a magnet for Igbo apprentices.

The importance of education

However, the system has its drawbacks. Some young people are taken to their masters while in primary or secondary school. When they get to the cities, their education is abandoned. Igiri says some ogas need to do more to ensure that the young people who are brought to them have already learned how to read and write. 

“The person should be able to write and defend his product. Our business is all about calculating and measuring cotton by metres and inches. If you’re not educated or do not attend school, it will be hard for you,” he says. 

Others complain that bad ogas mistreat their apprentices and can summarily fire them without warning or compensation, as most agreements are merely verbal. Institutionalising the largely informal system would be one way to address apprentice security while retaining the benefits of the tradition, advocates argue. 

Igiri believes that if Igbo businessmen maintain the Igba boi culture and regularly return to their villages to pick the next generation to train, many more entrepreneurs will emerge in the coming years. 

“I am currently training someone from my village in the trade,” he says. “I plan to train more because it is a good culture that should be sustained.”

Categories
Energy & Resources

Solar investors bet on DRC

Two major solar energy projects have been announced in the Democratic Republic of Congo (DRC) in the space of a week as investors target one of Africa’s least electrified markets.  

A consortium led by Gridworks, a UK government-backed developer and investor in African electricity, has signed a deal with the government of DRC to create a new company, Moyi Power, to build greenfield solar-powered distribution and generation infrastructure for half a million Congolese. The initial investment for the three sites will be at least $100m, funded with a mixture of equity from the consortium, debt provided by development finance institutions and capital grants from donors and DFIs.  

The consortium, which includes French firm Eranove and Spain-based AEE Power, has signed concession agreements with the Ministry of Hydraulic Resources and Electricity to develop, build and operate three large scale, solar-hybrid off-grid utilities to supply the cities of Gemena, Bumba and Isiro. The consortium was selected as the winning bidder for the 22-year concession under the Essor Access to Energy (A2E) Initiative after an international tender process run by the government with the support of the UK.  

The development and financing process is expected to take at least 14 months, with construction expected to take 18 months thereafter. The firm anticipates an initial deployment of 14MW PV panels, 40MWh battery storage and 4MW diesel generation, and aims to connect more than 23,000 households and commercial consumers across the three sites in the first five years. The plant will then need to double its size every three to five years. 

The new company has committed to offer opportunities to local suppliers, consultants, and employees in the development, construction and operation of the solar-hybrid infrastructure.  

“In serving these three cities, Moyi Power has the critical mass and regulatory support that is missing from most mini-grid models. It can set an example to the off-grid industry, pushing down costs for consumers and attracting long-term capital from investors,” says Gridworks chief executive Simon Hodson.  

Separately, Swedish-based investment platform Trine has partnered with Altech Group, a DRC-based firm, to accelerate investments in solar in the DRC and expand access to clean, reliable, and affordable energy for off-grid and poor-grid households. The new partnership totals €5m across multiple tranches. The first debt financing round will finance over 3,000 solar home systems and is expected to reach nearly 14,000 people with clean energy across 21 of DRC’s 26 provinces. Later debt financing rounds will follow in 2021. 

Less than 20% of DRC citizens have access to electricity, according to the World Bank data from 2019, with almost all current electricity generation coming from hydropower. The International Energy Agency reports that solar energy will account for up to 5TWH of energy in 2040 compared to around 30TWH for hydro.

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Technology & Information

US dismay as mobile networks told to enforce Nigeria Twitter ban

The Nigerian government’s decision to ‘indefinitely’ suspend Twitter’s operations and order the country’s mobile networks to block access to the site has prompted an angry statement from the US and other international partners.

The minister of information and culture, Alhaji Lai Mohammed, announced the suspension of the social media network in a statement posted on the ministry’s official Twitter account on Friday, citing a “persistent use of the platform for activities that are capable of undermining Nigeria’s corporate existence.” By Sunday, citizens were unable to connect to Twitter through MTN and Airtel, two of the country’s largest phone networks.

The ban prompted a joint statement by major international partners including the US, UK and European Union.

The decision came a day after Twitter removed a post by Nigerian President Muhammadu Buhari threatening punishment for regional secessionists blamed for attacks on government buildings. Twitter suspended Buhari’s account for 12 hours under its abusive behaviour policy after he referred to his experience in the Nigerian Civil War (also known as the Biafran War) and warned that the government would “treat them (secessionists) in the language they understand.”

The minister said the government had also directed the country’s National Broadcasting Commission to immediately commence the process of licensing all social media operations and over-the-top media services in Nigeria. Mobile networks have been ordered to block access to Twitter and the government says it will prosecute anyone trying to breach the ban.

Domestic civil society organisations say they will take legal measures to protect Twitter access. SERAP, which describes itself as a Nigerian nonprofit, nonpartisan legal and advocacy organisation, said it would contest the decision in court.

The decision also irked the country’s network of tech entrepreneurs, many of whom blamed Nigeria’s heavy-handed tech regulation when Twitter announced that it had chosen Ghana to host its regional HQ in April, and followers of the scene abroad.

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Trade & Investment

Afreximbank sets timeline for major Nigerian hospital

The African Export-Import Bank (Afreximbank) has set a timeline for a long-planned 500-bed hospital in Nigeria which it intends to be the first in a continent-wide network of new health facilities serving citizens across the economic spectrum.  

Construction of the African Medical Centre of Excellence (AMCE) in Abuja is scheduled to begin in the fourth quarter of 2021 and commissioning is scheduled for the first quarter of 2024.

The project will be implemented in four phases over a six-year period, starting off with a 170-bed specialist hospital before expanding to a 500-bed facility. The bank says the hospital “will provide world-class care to both low and high-income patient groups across the continent.”

The AMCE will offer diagnostics, treatment, nuclear medicine, surgery and post-surgical care, along with specialist services covering oncology, haematological diseases – including sickle cell and blood cancers – and cardiovascular ailments. It will also offer education and clinical research services.  

Afreximbank predicts that the hospital will serve 50,000 people every year and provide 3,000 jobs during the construction and operational phases. The budget for the project has not been revealed.

The bank has enlisted London’s King’s College Hospital as a clinical partner, who will support the development of clinical expertise and protocols, governance and administration, facility and service set-up, recruitment, education and training. KCH will also work with the Christie NHS Foundation Trust, the largest single site cancer centre in Europe, to provide oversight of oncology services at AMCE.

“The African Medical Centre of Excellence is a landmark project for Africa. Designed as an initiative under Afreximbank’s 5th Strategic Plan, we are now pleased to be concretising our aspirations,” said Benedict Oramah, president of Afreximbank.

“With successful delivery of the Abuja AMCE, the Bank will be well prepared to implement its continent-wide plan of developing a network of AMCEs across Africa and contribute its quota in improving the quality of lives of the African people. The Abuja AMCE will tackle the rising burden of communicable and non-communicable diseases, with general care capabilities that will serve the entire West Africa region and beyond. It is a demonstration project that will trigger similar medical centres across the continent.”  

Healthcare has returned to the top of the agenda of African policymakers since the onset of the Covid-19 pandemic, which has spurred demands for new investment amid a shortage of adequate facilities to deal with the disease.  

A WHO survey carried out in May found that in many African countries, crucial equipment and the health workforce required to handle severely ill Covid-19 patients fall far short of needs. Of the 23 countries responding to the survey, most have fewer than one intensive care unit bed per 100,000 population and will require an increase of between 2500% and 3000% to meet needs during a surge. Among the countries providing information on ventilators, only a third of their intensive care unit beds are equipped with mechanical ventilators.

In 2001 African governments signed up to the Abuja Declaration, pledging to allocate at least 15% of their annual budgets to the health sector.

While things have improved – the average level of per capita public spending on health rose from about $70 in the early 2000s to more than $160 in 2014 – progress has not been uniform, with some countries spending less on health as a percentage of total public spending than was the case in the early 2000s.

Millions of Africans lack adequate coverage and remain dependent on expensive out-of-pocket expenses to cover healthcare emergencies. 

Categories
Technology & Information

EIB and World Bank to help African cities unlock green funding

Cities are the main sources of greenhouse gas emissions. Although they occupy only 2% of the world’s land area, they account for over 70% of emissions, according to the World Bank. Africa is becoming more urbanised, with younger populations increasingly moving from rural areas to cities to find work. As cities grow, new settlements are often built on land that is particularly vulnerable to climate risks, increasing the need for urban areas to be better adapted to climate change.

In September 2020, the World Bank and the European Investment Bank (EIB) launched the City Climate Finance Gap Fund, which aims to support the green and climate-resilient development of cities in low- and middle-income countries. 

Through donor support, technical assistance, and targeted finance of at least €100m ($122m), the fund plans to unlock an estimated €4bn to help cities transform climate ambitions into finance-ready projects. Germany intends to invest around €40m and Luxembourg up to €10m.

Giulia Macagno, head of the City Climate Finance Gap Fund at the EIB, says that Germany’s environment ministry and the Global Covenant of Mayors – which represents the heads of more than 10,700 cities – saw a funding gap at the beginning of climate resilient projects for low- and middle-income countries.

“Many project preparation facilities support urban climate projects when they are in the advanced stages. The Gap Fund helps cities much earlier in the process. To overcome cities’ inexperience and lack of knowledge, the Gap Fund provides technical assistance that moves project ideas to more advanced planning stages and thus facilitates their implementation,” Macagno tells African Business.

Cities and local authorities are able to apply for Gap Fund support by submitting an expression of interest, and those with successful applications will receive technical assistance from the EIB or the World Bank. The first round of technical assistance grants for nine cities were approved in early April, amounting to $1.8m in total. The selected African cities include Kinshasa, Democratic Republic of Congo (DRC); Addis Ababa, Ethiopia; and Fez, Morocco. The second list of city projects will likely be announced in June, Macagno says.

Fez’s drought challenge 

All of the three African pilot cities are particularly vulnerable to climate change. Over the last 50 years, droughts have intensified in Morocco’s arid climate, which houses thousands of square miles of the Sahara Desert. Since the beginning of the 1980s, recurrent droughts have impacted the hinterland of the northeast city of Fez. 

The primary sector, including agriculture, employs 40% of the North African country’s workforce and contributes 15% of the country’s GDP, making Morocco particularly vulnerable to dry spells, according to the UN Office for Disaster Risk Reduction. When there’s a dearth of water in dams, farmers turn to overused aquifers near the Atlantic Ocean to irrigate their crops.

Augustin Maria, senior urban specialist at the World Bank, says his team will work with both the ministry of environment and municipality of Fez to make the city more climate resilient. 

Morocco has 12 regions and the technical assistance would support the preparation of the territorial climate action plan for the region of Fez-Meknes, which includes the major urban areas of Fez, Meknes, and Taza.

The work will support Fez in developing the first city level climate action plan prepared by a Moroccan city. Fez’s action plan will include a city-level greenhouse gas emissions inventory, and the identification and priorisation of city-level actions for climate change mitigation and adaptation.

“As an example, potential low carbon investments typically include investments in urban transit, energy efficiency of public buildings, incentives for improving the energy efficiency of private buildings, or waste management,” says Maria.

Morocco already has several climate resilience projects in the pipeline. In February, the Moroccan minister of agriculture visited the coastal city of Agadir to view its new large desalination plant in development. It will be able to desalinate seawater for irrigation and municipal uses, relieving pressure on aquifers further inland.

Kinshasa’s floods 

Kinshasa faces an entirely separate list of challenges. The capital city lies on the banks of the Congo River, which floods regularly during heavy equatorial rain. The city is heavily exposed to flooding and erosion, with landslides regularly claiming lives – one in November 2019 killed at least 40 people and displaced thousands more.

DRC’s exposure to climate change is worsened by extreme poverty, environmental degradation and low adaptive capacity to extreme weather events. Soil erosion can also hurt farmers in surrounding areas, leading to lower crop yields and the destruction of critical infrastructure.

A man carries a young girl on his shoulders as he walks down a flooded street in the centre of Kinshasa during floods in 20017. (Photo; Junior Kannah / AFP)

The Gap Fund will help the city identify and prioritise investments in nature-based solutions and the “greening” of public buildings, spaces and street design to reduce emissions, enhance resilience and improve liveability in low income neighbourhoods.

“The technical assistance was requested by the Kinshasa city administration. The specific activities include data collection and mapping to help identify the opportunities in terms of investments in nature-based solutions. Once the identification is complete, there will be a preliminary assessment of the cost and impact of these investments in terms of greenhouse gas emissions reduction, flood risk reduction, cooling, increased quality of life, and job opportunities,” says Maria.

Planning ahead in Addis Ababa

In the Horn of Africa, Addis Ababa is exposed to heat waves, drought, and flash floods. Due to its undulating topography, poor waste management and the absence of sustainable storm water management, the Ethiopian capital is particularly vulnerable to climate change. Watercourses flow through the city, which during the rainy season can flood and damage settlements along the banks.

“The World Bank team has done a lot of work with Addis on improving the way that they look at capital investment planning. Capital investment planning is this whole process where you try to plan ahead in terms of needs to build new infrastructure, aligned with the special development plan for the city. They [Addis] need to maintain existing infrastructure and the idea is to bring this to the next level by integrating the climate dimension into this capital investment planning process,” Maria says.

“Then it’s really trying to use this to develop a pipeline of climate smart investments,” he adds.

Developing a pipeline of investments

In the first round of funding, the cities will build their greenhouse gas inventory scenarios and develop a pipeline of green urban infrastructure investments.

Maria says support from the Gap Fund does not involve any commitment from cities to take a loan from the EIB or the World Bank. Similarly, neither the EIB nor the World Bank commit to provide loans to a project that has received Gap Fund support.

“In general, by helping cities turn their climate ambitions into finance-ready projects, the Gap Fund is expected to provide financiers, including the EIB and the World Bank, more opportunities to increase their climate-finance flows towards cities,” says Maria.

“The World Bank has recently presented a new 2025 climate action plan which significantly increases the institution’s climate finance targets. Cities will play an important role, and the Gap Fund is one of the initiatives expected to contribute in achieving these increased targets.”

The EIB is also stepping up its investments in climate action, both inside and outside the EU. In November 2020, the Luxembourg-based bank approved a €1 trillion green investment package to be spent by 2030. As part of the pledge, from the start of 2021, all new EIB operations will be aligned with the Paris Agreement. In 2020 alone the bank provided €5bn for new private and public investment across Africa.

The team behind the Gap Fund hopes these city pilots will provide a blueprint on how to lower greenhouse gas emissions in cities and help them face climate change. There has been strong interest from African cities in the fund, Macagno says, and the institutions have been working with local officials to encourage more cities to apply for funding.

Macagno points out that many cities mentioned Covid-19 in their expressions of interest. “They are targeting climate projects but they are very much in line with this ‘build back better’ idea and they mentioned Covid as exposing some of the weaknesses of the municipalities, and they would like to react to that. That is a very positive sign.”

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Trade & Investment

Okonjo-Iweala joins leaders in $50bn pandemic demand

The heads of some of the world’s largest multilateral institutions have united to demand $50bn in immediate global investment to help the world recover from Covid-19. 

The leaders of the IMF, World Health Organisation, World Bank and World Trade Organisation called for investment at a “perilous moment in the pandemic” to boost manufacturing capacity, supply and trade flows and enable the equitable distribution of diagnostics, oxygen, treatments, medical supplies and vaccines. 

Kristalina Georgieva, Tedros Adhanom Ghebreyesus, David Malpass, and Ngozi Okonjo-Iweala said governments must act without further delay or “risk continued waves and explosive outbreaks of Covid-19″ as well as more transmissible and deadly virus variants which will undermine the global recovery. The extraordinary bid to galvanise a global response piles pressure on the leaders of the wealthy G7 nations, who will meet in Cornwall, UK for their annual meeting from 11-13 June. The multilateral leaders say that both rich and developing countries will benefit from a surge in investment.  

“At an estimated $50bn, it will bring the pandemic to an end faster in the developing world, reduce infections and loss of lives, accelerate the economic recovery, and generate some $9 trillion in additional global output by 2025. It is a win for all — while around 60% of the gains will go to emerging markets and developing economies, the remaining 40% will benefit the developed world,” say the leaders.   

Cost breakdown 

The $50bn figure is derived from a recent IMF staff analysis. Of the $50bn, the leaders say there is a “strong case” for grants of at least $35bn. Additional financing of about $13bn is needed to boost vaccine supply in 2022 and further scale up testing, therapeutics and surveillance, they say, while the remainder of the overall financing plan – around $15bn – could come from national governments supported by multilateral development banks, including the World Bank’s $12bn financial facility for vaccination. 

At the heart of the plans is a bid to boost COVAX, the ambitious vaccine scheme for developing world countries which has faced a host of difficulties, according to recent media reports. WHO and its COVAX partners have set a goal of vaccinating approximately 30% of the population in all countries by the end of 2021, but the leaders say at least 60% could be covered by the first half of 2022 with a surge in investment.  

“By now it has become abundantly clear there will be no broad-based recovery without an end to the health crisis. Access to vaccination is key to both…To urgently get more shots in arms, doses need to be donated immediately to developing countries synchronised with national vaccine deployment plans, including through COVAX. Cooperation on trade is also needed to ensure free cross-border flows and increasing supplies of raw materials and finished vaccines.” 

The leaders call for additional vaccine production capacity by at least one billion doses, diversifying production to regions with little current capacity and sharing technology and knowledge. The organisations say that speed is critical if the investment plan is to work, and will be dependent on upfront financing rather than “commitments that may be slow to materialise.” 

“Investing $50bn to end the pandemic is potentially the best use of public money we will see in our lifetimes. It will pay a huge development dividend and boost growth and well-being globally. But the window of opportunity is closing fast — the longer we wait, the costlier it becomes, in human suffering and in economic losses.”