June 2020 / Focus Africa

June 29 2020

Rwanda unveils $11bn climate action plan

Rwanda has become the first African country to submit a new national climate plan, whose implementation requires $11 billion (10.2 trillion), as an essential tool to implement the Paris Agreement.
The Paris Agreement, signed in 2015, aims to limit global warming to 2 degrees Celsius with an ambition to contain any increase at below 1.5 degrees.
The updated pledges to fight climate change are being submitted ahead of COP-26. The 26th session of the Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) was planned to take place from 9-19 November 2020, in Glasgow, UK but it has been postponed to 2021. According to the submitted new climate plan to fight climate change through 2030, the total estimated cost for mitigation measures is estimated at around $5.7 billion, and over $5.3 billion for adaptation priorities, representing a combined funding requirement of around $11 billion. Rwanda’s mitigation contribution seeks a 38 percent reduction in gas emissions equivalent to 4.6 million tonnes of carbon dioxide in 2030. The emissions that include gases carbon dioxide, methane nitrous oxide, and hydrofluorocarbons are from the sectors of energy, industrial processes and product use, waste, and agriculture, forestry and other land use and others. And 24 adaptation interventions are proposed in eight sectors of water, agriculture, land, and forestry, human settlement, health, transport, and mining. “The Government of Rwanda will continue to commit significant resources to climate change relevant strategies. Rwandan communities, the private sector, and NGOs can also contribute significantly to these climate change-related activities through public-private partnerships” reads part of the new climate plan. It also says that the Rwanda Green Fund (FONERWA), will continue to play a vital role in financing low carbon projects and programs. However, the full implementation of the strategic mitigation actions are conditional on the support of international stakeholders. “The implementation of the prioritized policies and actions assume the continued use of existing and planned national and international financial sources. Rwanda intends to meet its conditional contribution through the use of climate finance and international market mechanisms where appropriate, building upon the experience of the Clean Development Mechanism (CDM) and other existing market mechanisms,” says the report. These, it says, include the potential involvement in international cooperative approaches under Article 6 of the Paris Agreement. The Agreement is a comprehensive framework for action on climate change, guiding the steps all nations will take to reduce their contribution to global warming. The Agreement also includes the provision for the US $100 billion per year of climate finance and technology transfer to support developing nations to deal with the impacts of climate change and make the transition to a green economy. Rwanda is already experiencing the impacts of a warming planet, including increased and longer droughts and more frequent and severe floods leading to landslides and therefore needs climate finance for mitigation and adaptation. Since the 1970s, the average temperature in Rwanda has increased by 1.4°C. If no substantive action is taken to mitigate global climate change, it is predicted that the average temperature in Rwanda will rise by 2.5°C by the middle of the century.  
June 29 2020

African Telecommunications Union and Ericsson sign MoU to accelerate ICT growth in Africa

The partnership will promote regional coordination and harmonisation of spectrum usage to decrease cost of technology by increasing economies of scale and maximising affordability in Africa.   The African Telecommunications Union (ATU) has signed a Memorandum of Understanding (MoU) with Ericsson to help fast track the roll out of technology across the continent. According to ATU, a specialised agency of the African Union in fostering the growth of ICT in Africa, The MoU will support the growth of ICT as a critical infrastructure for the 21st century and help set the foundation for social and economic progress in the continent. In the understanding, the two organisations look towards promoting global and regional coordination and harmonisation of spectrum usage to encourage economies of scale and maximise the affordability for all users in Africa. “Our collaboration with Ericsson is geared towards connecting, innovating and transforming the continent into a knowledge economy,” commented John Omo, Secretary General of the ATU. Omo, who spoke during the signing of the MoU in Nairobi, Kenya further noted that it is imperative for economies across the continent to become more competitive, agile, open and innovative in order to leverage on ICT innovations to transform African nations into smart economies. Lauding the partnership with ATU, Fadi Pharaon, President of Ericsson Middle East and Africa, added: “Our collaboration with the African Telecommunications Union (ATU) will focus on spectrum management strategies. Leveraging our global experience working on spectrum management, we aim to share global best practices that will ensure efficient use of scarce resources and allocation of new spectrum. This will yield societal benefits that will enable a more connected and knowledge-based society in Africa.” This move comes at a time when Africa continues to experience an unprecedented growth in mobile broadband, with traffic, subscriptions, and ownership of devices growing at exponential rates. The continent has emerged as one of the strongest adopters of innovation, with a rapid rise in usage of technology and smartphones. According to a November 2019 Ericsson Mobility Report, by 2025, Sub-Saharan Africa mobile broadband subscriptions will increase to about 70% of mobile subscriptions, with increased 4G coverage and uptake being the main engine. Driving factors behind this shift include a young and growing population and availability of lower priced smart and feature phones. Developing countries today face the prospect of robust economic development given that mobile communications users now greatly outnumber those using fixed line telecommunication services. With radio spectrum a limited resource, the number of services and users that can be accommodated in any given part of the spectrum, remains limited, even in the digital world. Therefore, the harmonised and globally aligned frameworks as envisaged in the partnership between ATU and Ericsson will assist African countries in spectrum management activities that will facilitate cost efficient roll out of ICT.
June 29 2020

Kenya – First public road by private investors to open in Kajiado

Kenya is set to complete its first annuity road this year after nearly one decade of false starts, easing demand for foreign debt.
The annuity financing model allows private contractors to design, build and maintain public roads using their own resources with the Treasury reimbursing lenders at uniform rate for cash advanced for the projects.
Transport Secretary James Macharia said the 91km road project in Kajiado County will be opened for use before the year ends.
The State had planned to build 10,000km of paved roads under the annuity model and laid out plans to raise the reimbursement cash from the fuel levy.
At one point, however, the Roads ministry threatened to drop the model, citing inflated costs and the slow pace of project approvals.
On Wednesday, Mr Macharia said the road in Kajiado, comprising 48km through Ngong, Kiserian and Isinya townships, and joining the 43km Kajiado-Imaroro road, will serve industrial establishments, colleges and homes.
“We have tarmacked 8,000 kilometres and on the way to fulfilling the 10,000 kilometre pledge made in 2013 and that will be achieved within the next two years,” he said.
The annuity model also reduces Kenya’s reliance on foreign loans to fund projects, thereby easing public debt standing at Sh6.3 trillion as at end of March.
Mr Macharia said the planned expansion of the Nairobi-Mombasa highway was also lined up under the public private partnerships where users will pay toll.
The Treasury has lined up 80 projects worth Sh1.1 trillion to be executed via the PPP model cutting across sectors with the bulk in transport and infrastructure, energy, health and education.
The projects include projects for second Nyali Bridge, Nairobi-Nakuru-Mau-Sumit road as well as maintenance of Thika Road, Nairobi Southern Bypass and Nairobi-Mombasa highway.
June 29 2020

KIFC affirms Rwanda’s position on becoming Africa’s financial hub

The UK’s development finance institution and impact investor, CDC Group, has signed a partnership agreement with Rwanda Finance to support the development of a new international financial capital for Africa. The Kigali International Financial Centre (KIFC) is intended to be a world-class financial hub, designed to promote inward investment and the creation of thousands of highly skilled financial sector jobs for the benefit of Rwanda and the African continent. The finance centre is modelled on Luxembourg and Singapore in the way it will provide a wide range of services for both regional and international clients. Rwanda Finance is mandated by the Government of Rwanda to develop effective frameworks for regulations, tax and capacity-building in the country. The organisation is also set out to promote the KIFC as a jurisdiction which provides a range of professional, business and financial services to international clients. This partnership will see CDC provide expertise that will help shape a strong legal and regulatory framework, which is designed to attract institutional investors seeking to finance African businesses through a world class financial centre. During the virtual signing of the partnership, Rwanda Finance’s CEO, Nick Barigye, said: “This partnership is a major milestone for our nascent International Financial Centre. It will ensure that we have an optimal legal, regulatory and institutional framework that is in line with international norms and standards.” He added that Rwanda already has a strict compliance framework, which makes the country an ideal conduit for multinational investment deals. Nick O’Donohoe, Chief Executive of CDC Group, also commented: “The African continent needs a vibrant and stable financial services industry to foster inward investment and nurture a professional and technical skills base to support wider economic development. “It is still very early days in Kigali’s development as a financial hub, but we are confident it will deliver on its early potential. And if it does, then I see no reason why we wouldn’t look to use it ourselves.” The KIFC will only support transactions that have a substantial business and economic purpose, rather than those that are designed for managing tax liabilities. Rwanda has already made great strides to ensure that the new KIFC initiative thrives. The country has a stable and resilient economy with a 10-year average growth rate of 8.6%. It has also been ratedthe number one country in Africa for government transparency according to the 2019 Transparency International Report. Rwanda is ranked second for the rule of law in Africa according to the WJP Rule of Law Index 2020. Rwanda also has established trading relationships with other African markets and is a key player in the creation of the African Continental Free Trade Agreement (AfCFTA).    
June 29 2020

Mozambique offers $2.25 bln funding guarantee to LNG project, says report

Partners in Mozambique LNG, the $20 billion gas project led by Total, have received a $2.25 billion guarantee from the government that it will pay the state oil company’s equity share if required, Portugal’s Lusa news agency said. Carlos Zacarias, president of Mozambique’s regulator, the National Petroleum Institute (INP), said state financing had been secured, the news agency reported late last week. Partners agreed to accept a $2.25 billion government guarantee in lieu of an immediate equity contribution from state-run National Hydrocarbon Company (ENH), Zacarias said in Cabo Delgado, the northern province where the project is sited. Zacarias said the guarantee was valid for five years. A spokesman for ENH did not immediately respond to a request for comment and INP could not immediately be reached. A Total spokesman in Mozambique said he had no information on the report. Each partner in the project, one of several LNG developments in the region following a massive gas find off Mozambique’s coast, is required to make a minimum capital contribution. ENH has a 15% interest in the project that is expected to start production in 2024, while Total owns 26.5% after acquiring its stake from Anadarko for $3.9 billion in 2019. The French energy major has secured $15 billion in funding for the project. Signing for the financing is due to take place on June 30, a source with knowledge of the project said.  
June 29 2020

Ghana signs agreement with China’s Dongfang Electric International Corporation for locomotives

Ghana has signed a contract agreement with China’s Dongfang Electric International Corporation for the supply of Locomotives and Rolling Stock, which makes up a total of 35 standard gauge trains for passenger and freight services in Ghana. The quantities and categories of rolling stock which would be delivered include nine Passenger Locomotives with capacity of 4500HP and 160km/hr speed and15 Freight Locomotives with capacity of 4500HP and 100km/hr speed. Others are 11 Shunting Locomotives with capacity of 1000HP, 48 Passenger Coaches and 330 Wagons made up of 230 box wagons and 100 flat wagons. This forms a total of 35 new standard gauge trains to be imported into the country for the first time in the history of the country. The Contract would be implemented in two phases. In the first phase, Ghana is expected to take delivery of two trains within 12 months with an additional seven trains within the following six months bring the total to nine trains in the first phase. The remaining twenty-six trains would be delivered in the second phase within 18 months from a date to be agreed by the parties. Speaking at the signing ceremony in Accra, Mr Joe Ghartey, the Minister of Railways Development, said the Ministry, as part of its mandate to revamp and modernize Ghana’s railway sector was undertaking the construction of a number of standard gauge railway lines. He said the new standard gauge lines were currently on-going on the Western line from the Port of Takoradi through Kojokrom and Manso to Huni Valley which makes a track length of approximately 134 km. “Currently on-going is also the construction of the Tema to Mpakadan standard gauge railway line which is also approximately 100km, Mr Joe Ghartey said. “The development of these standard gauge lines is in line with Government policy, as contained in the Railway Master Plan, for all new railway lines to be developed with the standard gauge.” He said in view of the need to obtain standard gauge rolling stock in time for testing and commissioning of the works, the subsequent operation of the lines, as well as, the minimum duration required for the delivery of Rolling Stock, it was imperative, the Ministry considered the urgent procurement of Rolling Stock. He recalled that Dongfang Electric International Corporation submitted a financing offer in the form of a Supplier’s Credit facility to the Ministry in January, 2019 for consideration. He said the financing offer received a favourable response and was approved by the Ministry of Finance who then gave them the concurrence to go through the necessary statutory approval processes including obtaining Cabinet and Parliamentary approvals. He said in order to successfully execute this project, Dongfang Electric International has formed a partnership with CRRC Dalian Company Limited (CRRC Dalian) and CRRC Qiqihar Rolling Stock Company Limited (QRRS). The Minister said CRRC Dalian and QRRS were subsidiaries of the giant Chinese Rolling Stock Manufacturer CRRC, a Chinese publicly traded rolling stock manufacturer and one of the largest rolling stock manufacturers in the world. He said a Committee was constituted to undertake a due diligence exercise and independently assess the capabilities, experience and the track record of the Supplier to deliver the rolling stock. He said the Committee was made up of officials from the Ministry of Railways Development, the Ministry of Finance, the Office of the Attorney General and Ministry of Justice, the Ghana Railway Development Authority, Ghana Railway Company Limited, as well as Parliament’s Select Committee on Roads and Transport. He said a due diligence mission was undertaken from 27th April -1st May 2019 in China; adding that it included site visits to the manufacturing plants and offices, as well as, technical meetings with the supplier and its partners. He said based on the observations and findings made after the inspection of the plant and facilities of the manufacturers in China, as well as, the outcome of the technical meetings, it was established by the Committee that, the Supplier had the experience, track record and the capacity to manufacture the locomotives and rolling stock required by the Government. “We remain committed to the process and we are going to work hard to complete the remaining steps in the statutory approval processes by obtaining approvals from Cabinet, Parliament and also the Public Procurement Authority,” the Minister said.
June 29 2020

Botswana grants first ever generation licenses to IPPs

Botswana Energy Regulatory Authority (BERA) has allotted generation licenses to three Independent Power Producers (IPPs) for the construction of power plants with a 827MW generation capacity.   The licence has a term of 15 years, the three IPPs include the Gaborone based Energy & Natural Resource Corporation and Sese Power, which is based in Francistown, as well as listed stock exchange company, Tlou Energy.   Energy & Natural Resource Corporation has been granted authority to construct a 600MW coal-fired power station north of Morupule Colliery in the Central District. According to Botswana Daily News, the company is expected to export the generated electricity to the Southern African Power Pool, ZESA and Eskom. Sese Power will construct a 225MW coal-fired power station east of Makomoto village, near Tonota, and is expected to export electricity to mining companies in Zambia. Lastly, Tlou Energy will generate 2MW of coal bed methane gas and solar power at the Lesedi project to Botswana Power Corporation (BPC) at the approved BPC tariff, as well as a series of standard conditions.

Botswana opens energy sector to IPPs

It is reported that the three companies have agreed to build their own transmission lines from the proposed power stations and connect to the BPC transmission network. Speaking during a handing over of the licenses in Lobatse, BERA chief executive officer, Rose Seretse, said it was encouraging to see the three companies enter the electricity-producing sector. Seretse appreciated the prospect of Botswana becoming an exporter of power. “It has been a journey to arrive where we are today. But we (BERA) are here to ensure that organisations such as yours add impetus to the economy of this nation. The work that you do is very important because electricity is very essential,” she said. BERA chief operations officer Duncan Morotsi explained that the three companies were the first IPPs in Botswana to be licensed to generate electricity. Morotsi said: “These are big projects and we believe that you will succeed. We don’t only want you to produce for Batswana, we also want you to export to make this one of the revenues earning industries for Botswana,” he said. Gabaake Gabaake of Tlou Energy expressed gratitude for the guidance and facilitation BERA gave the companies during the process of applying for the licenses. He said the development was a significant milestone for the energy sector in this country.