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Sahara Desert, Morocco (Sergey Pesterev via Unsplash)

In his 2005 book Collapse: How Societies Choose to Fail or Succeed, author Jared Diamond examines various factors that led to instances of societal collapse in the past, and argues that our modern society faces many of these same challenges but on a larger scale. Today, let alone the collapse of societies, there is even a risk to the survival of our species.

Diamond was one of the first to propose that climate change and environmental degradation could lead civilizations to collapse. According to him, our current society is unsustainable and unless we make profound changes in behavior. History he showed us is full of examples of civilizational collapse because of limited resources and exploding populations.

Africa is the focus of world population growth this century. The African population is expected to increase from about 1.3 billion in 2020 to 4.5 billion by 2100, the biggest change in human history in just a few generations. If economic development and industrialization continue to be based on fossil fuel, it would probably mean the end of the planet.

Climate change and the environmental consequences will have increasing impact on the continent in the next few years. As we saw with the recent locust invasion in East Africa, Africa will see a number of environmental challenges, ranging from desertification to natural disasters, and new pandemics similar to Ebola could arrive very soon. This, coupled with a population explosion humankind, could make Africa the first “failed continent” in human history.

Any country would struggle to provide subsidized shelter, education, jobs, healthcare, and pensions for such a fast-growing population. Nor will it be possible to manage the brutal urbanization that will inevitably follow the provision of the required infrastructure, transportation, and telecommunications.

Looking to emulate “First World” societies, the youth in Africa will want improved living standards, and if they cannot get them at home, they will go in search of it, making the current migration surge to Western countries look like a picnic.

 

Political and Economic Challenges

Fast population growth also has implications for democracy. Many African dictators have been in power for decades. Neither party systems nor civil society organizations seem to be able to take the lead in a democratic transition. Compounding the problems of inefficient institutions, endemic corruption, and a lack of capacity and know-how are weak states, climate change, and resource scarcity. It’s a recipe for collapse. And COVID-19 has become a threat multiplier.

Besides the health crisis, the biggest challenges of the COVID-19 pandemic for Africa will be the economic and political ones. A report by the African Union warns that Africa could lose about 20 million jobs in 2020 due to the pandemic. This report was, however, done at the beginning of the spread of the disease in Africa, when there were relatively few cases. Another study, “Tackling COVID-19 in Africa” by McKinsey & Company—also compiled at the beginning of the pandemic on the continent—predicted that Africa’s economies could experience a loss of between US$90 billion and US$200 billion in 2020. But if the pandemic were to continue into 2021, as is starting to appear likely, things will get much worse.

For post-pandemic recovery, there would therefore be a strong need to increase the welfare state in all African countries, with Keynesian policies of government support. But this risks a mounting debt crisis for many African states. Africa already has some of the poorest and most indebted countries in the world, including Eritrea with a debt-to-GDP ratio of 127 percent and Mozambique with a ratio of 124 percent.

Competition among the major world powers has led to China in particular seeking to gain influence on the African continent by using debt-trap diplomacy. It extends large loans for infrastructure projects through its Belt and Road Initiative, but uses these investments to demand greater influence and access to commodities.

At social and political level, much unrest and instability are anticipated as the economic crisis unfolds this year and even more so next year. Furthermore, political heavy-handedness and anti-democratic enforcement measures will risk provoking more popular unrest. Since refugees, migrants, and displaced people across Africa are particularly vulnerable to COVID-19 transmission, governments should help to control the refugee camps and avoid border closures that could put vulnerable people at greater risk. Exacerbating the situation is the fact that the health infrastructure in Africa is inadequate to deal with such crises.

 

An Opportunity for Change

Yet not all is lost. The future always brings challenges and threats, but also possibilities and opportunities.

Africa could still do a lot with good leadership and cooperation. And the post-COVID-19 era could provide the opportunity for change. The most important step for Africa in the near future is to move rapidly toward an integrated market by implementing the African Free Trade Zone, and at the same time to have the support of Europe.

 The Mediterranean could again become the bridge between Europe and Africa, with the possibility to make societies on either side flourish again. Instead of being the cemetery for migrants trying to cross its waters, the Mediterranean could become the connector between civilizations and histories, markets and people, for a future of prosperity and peace on both shores.

To make Africa the region of opportunities, both the Europe Union and the African Union will have to invest in the stability of the continent and in the human security of its people.

The United Nations has defined human security as “freedom from fear, from want, and from indignity,” but human security in Africa is at the lowest level in the world.

To invest in human security in Africa means first of all to address the root causes of instability and to carry out a real “peace-building” process with investments at the social, political, and economic levels of society.

Addressing the root causes of instability would involve combating endemic corruption at institutional level, empowering civil society organizations, supporting democratization, and working with international businesses to stop the pillaging of African resources. It also requires speaking out about human rights violations, tackling the security-development nexus, fighting armed groups benefitting from economic underdevelopment, supporting local economic development, and ending gender inequality and violence against women.

 

A Marshall Plan For Africa

Europe and the African continent will have to make important choices over the next few decades after the pandemic-induced economic crisis, which will be much worse than the economic downturn that started in 1929 leading to the "Great Depression."

This will be the decisive century for the survival of the world, and Africa and Europe will take center stage. The European Union could consider something similar to the United States’ Marshall Plan, a program to provide aid to a devastated Europe after World War II. My own country, Italy, was the third largest recipient of Marshall Plan aid. Decades after independence, African countries are still recovering from the effects of colonialism and the dictatorships that followed it, which Europe often supported. A similar plan should be developed for these countries.

The European Union will have to choose between pivoting to Africa or looking inward while struggling with domestic economic stagnation, and possibly losing the opportunity to become the cooperative leader that the world needs in this century. And Africa will have to decide whether it will look to the future or keep blaming the past.

These are tough choices, but there is no easy solution for ensuring the future of humankind: we need visionary leadership and courageous actions, or face the collapse of societies.

 

Maurizio Geri is an analyst on peace, security, defense, and strategic foresight. He is based in Brussels, Belgium.

 

Egyptian president Abdel Fattah el-Sisi (left) shakes hands with Chinese president Xi Jinping during the Forum on China-Africa Cooperation in Beijing on September 3, 2018. (Andy Wong/AFP)
Egyptian president Abdel Fattah el-Sisi (left) shakes hands with Chinese president Xi Jinping during the Forum on China-Africa Cooperation in Beijing on September 3, 2018. (Andy Wong/AFP)

Egypt’s El Nasr Automotive Manufacturing Company and China’s Dongfeng Motors have signed a deal for electric car production in Egypt. An agreement was signed on June 18, stipulating that El Nasr will produce 25,000 electric vehicles annually.

Not only is this a boon for Chinese car manufacturing, which according to the China Association of Automobile Manufacturers saw a 42 percent decline in the first quarter of 2020, but it also revives Nasr after the company shuttered its production plant in 2009.

 

Strategic Relations

This marks yet another expansion of China’s growing footprint in Egypt. Economic and political relations between the two nations go back to 1956, when Egypt formally recognized the communist government of the People’s Republic of China, making it the first Arab and African nation to do so. Since the 2011 Arab Spring, which saw the overthrow of Hosni Mubarak, Egypt’s succeeding presidents Mohammed Morsi and Abdel Fattah el-Sisi have made foreign relations with China a top priority.

For China, Egypt’s strategic location and its ownership of the Suez Canal make it an important ally as it expands its Belt and Road Initiative.

 

Algerian president Abdelmadjid Tebboune prays during a ceremony in Algiers on July 5, 2020, to lay to rest the remains of twenty-four resistance fighters returned from Paris after more than a century-and-a-half, on the fifty-eighth anniversary of Algeria’s independence from France. The skulls of the fighters, who were shot and decapitated in the early years of the French occupation, were on display at the Palace of Culture before they were interred in coffins draped with the national flag in El-Alia Cemetery’s Martyrs’ Square. (Via Algerian Presidency Press Office/AFP)
Algerian president Abdelmadjid Tebboune prays during a ceremony in Algiers on July 5, 2020, to lay to rest the remains of twenty-four resistance fighters returned from Paris after more than a century-and-a-half, on the fifty-eighth anniversary of Algeria’s independence from France. The skulls of the fighters, who were shot and decapitated in the early years of the French occupation, were on display at the Palace of Culture before they were interred in coffins draped with the national flag in El-Alia Cemetery’s Martyrs’ Square. (Via Algerian Presidency Press Office/AFP)

Algerian President Abdelmadjid Tebboune has initiated a program to convince highly educated expatriates to return and put their skills to use in service of the country. This charm offensive aimed at the diaspora makes sense as an effort to bring in not only immediate financial gain but also knowledge and expertise as the country finds itself in a precarious economic situation.

The energy industry is the backbone of the Algerian economy. As a result of falling oil prices and the COVID-19 pandemic’s impact on petroleum and gas exports, the country’ foreign exchange reserves have plummeted to record lows. The president’s charm offensive toward the diaspora makes sense as an effort to bring in not only immediate financial gain but also knowledge and expertise.

To facilitate this program, Tebboune has been pushing hard for constitutional reform. Among several other changes, it would eliminate a provision that in order to hold public office or another high functionary position, a candidate must hold exclusive Algerian citizenship. Given that most Algerians living abroad have dual citizenship, this provision denies expatriates a chance of entering into civic life.

 

A Major Hurdle for the President’s Plan

The Hirak movement in Algeria poses a challenge to Tebboune’s diaspora outreach. The popular movement has been mobilizing Algerians against the regime since February 2019, holding peaceful mass protests across the country every Friday—save for a brief suspension due to COVID-19—to demand, among others, the dissolution of both chambers of parliament and a fundamentally new constitution.

 

Local residents buy and sell fish at the Malindi Fish Market in Stone Town, on the island of Zanzibar, on December 28, 2017.  GULSHAN KHAN / AFP
Local residents sell and buy fish at Malindi Fish Market in Stone Town on the Tanzanian island of Zanzibar. (Gulshan Khan/AFP)

NovFeed, a Tanzanian company, has begun developing a low-cost, sustainable fish feed by raising black soldier fly maggots, then drying and grinding them up into a high-protein powder.

NovFeed co-founder Elisha Otaigo explains that these maggots have a higher protein, fat and micronutrient content than housefly maggots. Unlike houseflies, black soldier flies do not transmit diseases and reach maturity quite quickly. Just two to three weeks of feeding them organic waste gets the larvae to its highest nutrient state, and then they can be processed, to be used as an ingredient in fish feed.

 

Fish contributes to almost a quarter of the population’s animal protein diet

 

Animal products make up about 3.4 percent of Tanzania’s total exports, of which fish products make up the vast majority. The Tanzanian fishing industry also provides up to 4 million jobs—about 35 percent of all rural employment—and fish contributes to almost a quarter of the population’s animal protein diet.

Recent years have seen a decline in fisheries due to mismanagement and rising costs, making NovFeed’s innovation a boon to some of Tanzania’s poorest citizens.

 

GE-Kerry
John Kerry (second from right), then US secretary of state, gestures on a tour of the General Electric Sonils compound at the Port of Luanda in Angola on May 4, 2014, alongside Jay Ireland (second from left), president and CEO of General Electric Africa. (Saul Loeb/AFP)

Angolan President João Lourenço’s lofty goal to clean up deep-rooted corruption faces a major hurdle, as the country has become embroiled in a dispute between General Electric and the Angolan-registered power producer Aenergy, owned by Portuguese businessman Ricardo Leitão Machado. Potential sanctions of up to $550 million are at play, the remainder of a US$1.1 billion credit line General Electric established with Lourenço’s predecessor, Jose Eduardo dos Santos, to boost Angola’s electricity production via twelve turbines spread over thirteen separate contracts.

Aenergy was to act as the local contractor responsible for constructing the turbines and furnishing material from General Electric. However, a dispute regarding the payment of four of the turbines, valued at about US$120 million, resulted in a delay of the project’s implementation and a falling-out between Aenergy and the Angolan government.

When Lourenço assumed office, he began revisiting contracts granted by his predecessor, leading him to eventually cancel via presidential decree all thirteen contracts after negotiations for the four turbines fell through.

 

General Electric is seeking to recuperate its investments

 

Aenergy is accusing the Angolan government of engaging in fraudulent behavior, and General Electric is seeking to recuperate its investments, placing the company in the position of a tendentious ally with Angola during the ongoing civil liability proceedings.

 

A Mozambican woman walks in Palma, on February 16, 2017. The small, palm-fringed fishing town of Palma was meant to become a symbol of Mozambique's glittering future, transformed by one of the world's largest liquefied natural gas projects, but it is now under threat from construction delays, fallen gas prices and a huge government debt scandal. JOHN WESSELS / AFP
The small, palm-fringed fishing town of Palma was meant to become a symbol of Mozambique’s glittering future, transformed by one of the world’s largest liquefied natural gas projects, but it is now under threat from construction delays, fallen gas prices and a huge government debt scandal. (John Wessels/AFP)

The most recent report from Mozambique’s National Statistics Institute (INE) reveals the nation’s economy has flipped from a consistent inflationary trend toward a 0.6 percent deflationary one. Drawing on data from consumer price fluctuations in Mozambique’s three largest cities—Maputo, Nampula, and Beira—the INE’s research suggests this recent bout of deflation stems from the sudden drop in prices for private education, a first in the country’s history. Due to the government-mandated closure of all schools to mitigate the spread of COVID-19, private education facilities either lowered their fees or were unable to collect tuition from parents.

 

The informal economy has come to a near complete standstill

 

The Center for Democracy and Development (CDD), a civil society organization, warned that the INE’s deflation numbers are “misleading.” Typically, deflation arises when demand for goods is at a lower rate than its supply, forcing vendors to lower prices in an effort to raise demand. In a Facebook post, the CDD argues “that this deflation is not the result of an excess supply of products on the market, but from the shortage of demand as a result of the deterioration of the purchasing power of families, especially those of low income.” The Center urges the Mozambican government to prioritize support for low-income families who are most at risk of economic ruin from the pandemic.

All border posts are closed save for one shared with South Africa, which is open for cargo purposes only, and the informal economy has come to a near complete standstill. Whatever little benefit consumers would normally have gained during a deflationary period is cancelled out by the broader economic precarity of the country and its most vulnerable communities.

 

An aerial view shows people waiting while adhering to social distancing in a parking lot before entering a supermarket as only persons with the last names starting from A to G are allowed to enter at the Super U supermarket in Grand Baie, Mauritius, on April 2, 2020. Residents of the Indian Ocean island nation Mauritius rushed to supermarkets on April 2, 2020, after they had been shut for 10 days under a lockdown to curb the
An aerial view of people waiting in a parking lot to do their shopping as only persons with the last name starting from A to G are allowed to enter at the Super U supermarket in Grand Baie, Mauritius, on April 2, 2020. (AFP)

Mauritius reported its first cases of COVID-19 on March 19 and closed its borders to all foreigners on the same day. It was a radical step for a small, open economy, but a necessary one.

Subsequent containment efforts proved successful. A travel ban on foreign visitors was declared as early as February 2. Contact tracing began soon after, along with an aggressive public information campaign about the disease and the precautions people should take. Under a countrywide lockdown, schools, markets, and even the country’s famous beaches were closed.

The World Health Organization had projected that Mauritius could have more than 20,000 COVID-19 cases and 1,139 deaths, but the authorities’ swift action limited the number of infections to 337, and only 10 people died.

With the virus outbreak now largely contained, attention must shift to the economic and social fallout. Although Mauritius has reinvented itself before, the consequences this time challenge its economic philosophy and will require vision, creativity, and innovation.

The country, heavily exposed to global dynamics, now faces a triple threat of declining tourism, capital flight from its financial sector, and increasing concerns about food security. A rethink is needed of how to adapt, especially with a downturn in the global economy.

 

Pressures in the offshore sector could not have come at a worse time

 

COVID-19 has devastated the tourism and hospitality industry all over the world, which has effectively been shut down along with border closures. In Mauritius, the sector contributes an estimated 25 percent of GDP and 15 percent of all employment.

French and British visitors are among the biggest contributors of foreign exchange receipts, with China also a fast-growing market. For many, lost income makes island holidays an unaffordable luxury. The fear of infection and practicalities of travel will also keep visitors away. South African Airways and Air Mauritius, two of the main carriers bringing tourists to the island, have been grounded by the pandemic, and both have entered business rescue.

It is not just the tourism sector, however, that is taking a beating. Pressures in the offshore sector could not have come at a worse time. Last year, Mauritius narrowly escaped being blacklisted by the European Union as a tax haven, an issue that has recently resurfaced. Dismissed as noise in some quarters, its impact could be dramatic.

More recently, the European Commission added Mauritius to its “grey list”: countries that pose financial risk due to lax regulatory systems to counter money laundering and terrorist financing, but have committed to resolving the identified deficiencies. Despite the Mauritian government’s assurances that it will implement remedies to be removed from the list, the reputational damage could exacerbate COVID-19-related outflows and divestment.

The damage to the country’s reputation is already evident, says Anuradha Ramphul, managing director at the financial services consultancy St Lawrence Management. “We have seen some initial impact outside of the EU last week, for example, the Reserve Bank of India turning down investment proposals from Mauritius-based entities in the Indian financial services industry.” She nevertheless believes the authorities will soon address regulators’ concerns.

 

Other Setbacks

In May, Senegal announced it was withdrawing from its Double Taxation Avoidance Agreement with Mauritius, criticizing the agreement as lopsided. This is a blow to Mauritius’s intra-Africa relations amid efforts to pivot towards the continent. This will dent sentiment and future investment prospects, especially if other African nations follow Senegal’s example.

Food security is another growing concern. Mauritius has diversified away from agricultural output (sugar and vanilla) for nearly five decades, all the while drawing subsistence farmers into the now-collapsing services labor market.

Mauritius imports most of its food, which makes up 20 percent of total imports. In a climate of growing nationalism and protectionism, many countries have restricted some food exports to protect domestic food security. A sudden stop of staple imports from any one country would have a dramatic inflationary impact, heightening social pressures.

The impact of COVID-19 alone has forced extraordinary downward economic revisions. The economy is forecast to contract by up to 11 percent year on year in 2020, and unemployment to grow from 7 percent to 17.5 percent. With economic and regulatory headwinds mounting, both Moody’s and Fitch Ratings revised Mauritius Commercial Bank’s outlook to negative in line with their downwardly revised sovereign rating.

 

Mauritius needs to radically reinvent itself to stay relevant

 

This is not the first time Mauritius has faced such existential shocks. Policy makers have previously reacted with dexterity, but this was when Mauritius was a lower-income country moving up the industrial value chain. Now, the country needs not only to avoid the middle income trap, but also to radically reinvent itself to stay relevant.

It therefore finds itself at a crossroads. The tenets of its economic success—being attractive to international markets in an increasingly globalized world—are threatened as nationalism grows and countries look inward.

But as Eumonix CEO Claude Baissac argues, decision makers should be careful not to throw the baby out with the bathwater. With its small domestic market, endogenous solutions are limited. Instead, Mauritius should use one of its main comparative advantages: its seat at all diplomatic tables.

An aerial view shows people waiting while adhering to social distancing in a parking lot before entering a supermarket as only persons with the last names starting from A to G are allowed to enter at the Super U supermarket in Grand Baie, Mauritius, on April 2, 2020. Residents of the Indian Ocean island nation Mauritius rushed to supermarkets on April 2, 2020, after they had been shut for 10 days under a lockdown to curb the
Mauritians streamed to supermarkets on April 2, 2020, after they had been shut for ten days under a lockdown to curb the spread of COVID-19. (AFP)

The country’s strategic location and geopolitical appeal to foreign powers allow it to develop new sectors and industries tailored to specific needs. The sovereignty dispute over the Chagos Archipelago is illustrative of the rapidly changing geopolitics of the Indian Ocean region. With India, China, the United States, the United Kingdom, and France all having vested interests from a strategic and economic perspective, this remains a unique comparative advantage.

That said, there is a need for creativity, says Kevin Teeroovengadum, a Mauritian finance executive. “First, Mauritius must target self-sufficiency; it is essential to reduce its import bill, which has been growing faster than exports for the past two decades. Second, we need to go big bang into innovation, digitalization, and big data. Third, the blue economy is key given that we are surrounded by the ocean. Fourth, make the environment the center of everything and create an economy around it.”

Having already lowered interest rates and tapped reserves for business lending, the Bank of Mauritius was recently granted permission to make equity investments in private companies. These investments should be directed to future-facing industries in science, technology, and innovation.

The country’s established manufacturing base can capture some of the shift away from Chinese supply chain dependence. And its skilled, multilingual workforce can drive a greater share of the global business process outsourcing market. Looking ahead, a strong services focus positions Mauritius to play in emerging sectors such as health and medical tourism, medical cannabis technology, and green-geared industries.

While “business as usual” is under threat, Mauritius has proved agile in adapting to a changing world. The crisis requires it to fortify existing economic sectors, but offers the opportunity to forge a new future. To do so will require bold and visionary leadership. The question is whether the incumbents are ready for the challenge.

 

Ronak Gopaldas is a consultant for the Institute for Security Studies, director at Signal Risk, and co-founder of Mindflux Training

This article was first published by ISS Today.

 

Viola Llewellyn
Viola Llewellyn

New Africa Daily spoke to Viola Llewellyn, president and co-founder of Ovamba Solutions, about her company’s approach to some of Africa’s challenges. Ovamba creates technologies for banks so they can serve small and medium-sized enterprises with sharia-compliant trade finance products.

New Africa Daily: Ovamba started in Cameroon. Could you tell us a little about your model and how Ovamba has transitioned from a classic fintech company to a tradetech company?

Viola Llewellyn: We started in 2013 as a platform for the African diaspora to take what would ordinarily be remittances and use that capital for investment in home communities. This was not a viable model back then and it failed before it even started. Our pivots since then took us through the journey of our actual customers. By going through bank account opening, loan application, trying to get services, importing, and looking at how risk works and who would be a reliable customer, we were able to shift effectively to our current model, namely a tradetech solution with additional services. It is comprised of a suite of services available on a mobile app and connected to a risk-measuring and transaction-authorization back office, from e-commerce to logistics services.

 

NAD: Do you think lending is a healthy option for development of prosperity in Africa?

VL: Lending requires a steep list of criteria to qualify, which inevitably excludes businesses and people who are a good risk but their best aspects cannot be measured by traditional credit processes. Credit that can be secured or not secured has a punitive consequence in the face of non-performance and can create a cycle of poverty, especially amongst sub-prime candidates. Africa requires capital and services together. It has been shown that focusing on inventory and business performance not only produces better transaction and capital deployment outcomes, but also trains businesses for better performance.

 

NAD: What has Ovamba learned regarding the formulation of risk models?

VL: We have learned that risk models that are formulated correctly open a wider catchment of customers. We formulate our risk models to look for ways to mitigate, not prevent, exposure to risk. We have noticed that in the African market, banks approach risk from the standpoint of total prevention of any exposure to risk, which shuts out customers who may just need an adjustment to the conditions of a transaction.

Case in point: It is common practice that if you want a loan of US$10,000, your bank will require that you have $10,000 “blocked” in your bank account. So lending is secured by your own capital, and you may be required to bring collateral to the table on top of that. This is not how risk management should be done.

Cameroon
Ovamba believes sharia finance can play an important role in providing financial services to people in the informal sector.

 

NAD: What can sharia finance offer in terms of providing financial services to the informal economy?

VL: Sharia finance offers an ethical fee-based “risk-sharing” approach to finance. It puts inventory at the heart of the transaction, and not the client’s past or future financial performance. It removes the need to have a perfect track record from the main criteria for approval. After all, you can have perfect credit but absolutely poor choice in suppliers or business timing. That makes the transaction a failure. Or you could have great business acumen and mediocre cash flow or reserves, but if the financier has legal and physical control of the asset, there is a balance in the sharing of business outcomes. It works remarkably well for Africa, where wholesale and retail trade drive whole economies.

 

NAD: What does Ovamba’s description as a tradetech company mean to you?

VL: It means designing innovations to support and drive trade, while simultaneously impacting the business ecosystem through performance and capital. It involves customer selection and onboarding, and having deep knowledge of assets, inventory, logistics, market sector dynamics, value chain, and supply chains, all rolled into easily accessible innovations, apps, and processing algorithms. It is a suite of digital solutions for traditional problems.

 

NAD: What has Ovamba learned from working with African central banks? How can they be more efficient?

VL: We have learnt that central banks are not technology innovators. We also understand that policy development and response times cannot keep up with innovation. Central banks fully understand what is at stake. The general wariness of fintech and tradetech solutions is slowly giving way to collaboration in the form of sandboxes. Central banks are concerned about financial inclusion and the poor track record of banks who cannot control non-performing loans. We have had the opportunity to speak to quite a few central banks, which all agree that tradetech is a bona fide solution to financial inclusion and better portfolio performance from lending to the informal sector, but that it has to be at scale. Having a digital platform that has the security and bandwidth is the perfect tool to achieve this while also being mindful of data protection.

 

Viola Llewellyn is a member of the Africa Professional Services Group, the European Women’s Payment Network, and the African Women in Fintech & Payments. In October 2019, she was appointed to the board of advisors of Lobbying Africa. She was born in the United Kingdom to a Cameroonian family and currently lives in the United States.

 

Mining wall Tanzania
A banner featuring Tanzanian president John Magufuli adorns the wall at the only entrance in a newly built 24-kilometer wall around the country’s tanzanite mines in the north to prevent smuggling of the precious violet-blue stones.

 

Barrick Gold, which has its headquarters in Toronto, Canada, has paid Tanzania US$100 million out of a US$300 million settlement after the government lifted a ban on the export of mineral concentrates. The settlement is part of a dispute resolution that emerged after Tanzania accused Acacia Mining, which Barrick Gold acquired last year, of tax evasion in 2017. Included in the settlement is an agreement struck between Tanzania and Barrick whereby the government would take a 16 percent stake in the subsidiary Twiga Minerals to manage three gold mines leased to Barrick.

 

This is not the last of the company’s legal woes in Tanzania

 

Gold makes up close to a third of all of Tanzania’s exports, meaning this resumption of trade is highly beneficial to economic stability in the country, especially as mineral exports globally have shrunk due to the COVID-19 pandemic.

Barrick Gold will settle the rest of the claim with five annual payments of US$40 million each. But this is not the last of the company’s legal woes in Tanzania. Only a few weeks after the signing of the Twiga Minerals deal in late January, a group of seven Tanzanian miners filed a legal claim at the British High Court over alleged human rights abuses committed by security forces at Barrick’s North Mara gold mine, making this the second lawsuit filed against a Barrick Gold subsidiary for human rights violations at the same mining site.

 

 

Harvet of Pear Millet in Namibia
A woman harvests pearl millet, locally known as mahangu, near Rundu in northern Namibia. It is a staple food in the Southern African country.

 

Namibia is set to suspend imports of white maize and pearl millet in an effort to protect local farmers from foreign competition. The Namibian Agronomic Board (NAB) announced that these imports will be suspended starting June 1 and June 30, respectively, and ending sometime in November, after millers had taken up the entire local harvest. This while Namibia’s agricultural sector is still recovering from a three-year drought. Grain stores were already depleted in late April, according to the executive director of the Ministry of Agriculture, Percy Misika.

Such a policy harkens back to an earlier economic era for developing nations in sub-Saharan Africa, using a strategy known as import substitution industrialization to reduce dependency on foreign goods in order to encourage domestic growth. 

 

Namibia’s dry, hot climate makes this import suspension gambit a risky one.

 

What makes this decision relatively strange is that agriculture contributes only about 5 percent to Namibia’s total GDP, yet close to 70 percent of Namibians are dependent either directly or indirectly on the agricultural sector. Nonetheless, the country’s dry, hot climate makes this import suspension gambit a risky one, and unlikely to be replicated any time soon. Heavier-than-usual rainfall may help Namibia reach its maize and millet quotas this year, but it cannot rely on abnormal weather patterns in perpetuity.

 

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