All posts by Michael Patotschka

South Africa

Solar and wind can’t fix South Africa’s power crisis, says analyst

Myles Illidge 10th December 2023

While South Africa is leading the continent’s transition to renewable energy, it is unrealistic to think that 590 million of Africa’s residents, or even South Africa’s 60 million residents, can be supplied with renewable energy.

This is according to Gracelin Baskaran, mining economist and research director of the energy security and climate change programme at the Centre for Strategic and International Studies.

Baskaran told City Press that several components of the national power grid, including transmission infrastructure, must be upgraded before transitioning to renewable power sources.

This comes at a high cost. Using the US as an example, Baskaran said it would cost $2.2 trillion (R42 trillion) for the transmission grid upgrades required to supply 85% of the country’s population with renewable energy.

This would be an even more challenging exercise in a country like South Africa, where government has less money and collects less tax.

Baskaran believes it would be more prudent for African countries to transition from coal to gas power rather than rolling out renewable power sources.

According to the US Energy Information Administration (EIA), burning natural gas is considered a “relatively clean” way of generating electricity.

“Burning natural gas for energy results in fewer emissions of nearly all types of air pollutants and carbon dioxide (CO2) than burning coal or petroleum products to produce an equal amount of energy,” it states on its website.

Furthermore, 40% of gas discoveries globally in the recent past were in Africa.

However, it is still far more damaging to the environment than solar, wind, and nuclear power.

Baskaran’s ideas echo those of South Africa’s Presidential Climate Commission, which, in May 2023, advised that the country should build gas-fired power stations for future power generation.

Eskom plans to build a 3,000MW gas power station in Richards Bay.

It said the plan would only require 3,000 MW to 5,000 MW worth of gas-fired plants to be built, which will only be used during times of peak demand.

“There should be no new coal and gas should be kept to the role of peaking support,” the commission said

The National Energy Regulator of South Africa (Nersa) approved South Africa’s state-owned power utility’s plan to build a 3,000 MW gas power station in Richards Bay in May 2023.

Nersa effectively backtracked on an earlier decision to block the power station’s construction, allowing Eskom to proceed with acquiring funding.

However, this presents a challenge for the power utility, whose R254-billion debt relief conditions say it cannot borrow more money to build new power stations.

As such, Eskom entered into negotiations with the National Treasury to find an alternative means of funding the project.

Possible funding models include a public-private partnership or a power-purchase agreement with an independent power producer.

Eskom said it plans for the gas-powered plant to start supplying electricity to the grid from 2028, meaning it won’t help load-shedding in the short term.

Source: MyBroadband, 10th December 2023

 

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General

‘Presence Matters’: Space Force Activates New Component for Europe and Africa

The U.S. Space Force, U.S. European Command, and U.S. Africa Command activated their newest service component on Dec. 8, in an expansion of USSF’s growing reach into combatant commands.

“This is an important day in the history of the Space Force as we mature our organization and our partnerships to take on the challenges of the space domain,” Chief of Space Operations Gen. B. Chance Saltzman said in remarks at a ceremony held at Ramstein Air Base, Germany, where the component will be headquartered.

U.S. Space Forces Europe and Africa (SPACEFOREUR-AF), under the command of Space Force Col. Max Lantz, gives the USSF into its own organization in the vast combined area of U.S. European Command and U.S. Africa Command.

“We are activating the component because presence matters,” Lantz said.

Previously, U.S. military space capabilities in Europe and Africa, which Lantz already headed, were part of the air component, U.S. Air Forces in Europe-Air Forces Africa (USAFE-AFAFRICA), in a model that predated the Space Force as an independent service. Inside combatant commands, services provide their own components that the command can draw on. Now, the Space Force has its own organization.

The activation of Space Forces Europe and Africa is a “critical step” in USSF’s growth as its own service with its own voice in operations, Saltzman said.

“Space has become more and more central to joint operations,” he added. “We are better connected, more informed, more precise, and more lethal thanks to space.”

The official party for the U.S. Space Forces Europe & Africa activation ceremony stand at attention during the USSPACEFOREUR-AF activation and assumption of command, at Ramstein Air Base, Germany, Dec. 8, 2023. USSPACEFOREUR-AF will provide U.S. European Command and U.S. Africa Command a cadre of space experts who collaborate with NATO allies and partners to integrate space efforts into shared operations, activities and investments. (U.S. Air Force photo by Senior Airman Edgar Grimaldo

SPACEFOREUR-AF is now the fourth service component embedded in one of the U.S. military’s regional commands, joining U.S. Central Command, U.S. Indo-Pacific Command, and U.S. Forces Korea. Joint combatant commanders and Space Force leaders say the new organizations help better articulate what space capabilities are available and ensure they are taken into account and put to use.

“The joint force’s missions increasingly rely on space and the Space Force is committed to ensuring that the force has the space resources it needs to succeed,” Saltzman said. “That is particularly important here in the European and African theaters of operation. The Space Force is already very actively involved in supporting efforts in the region, with our support to Ukraine being most visible.”

The USSF is considering establishing components in other commands, possibly including U.S. Cyber Command, U.S. Special Operations Command, and U.S. Forces Japan.

“Space operations is our daily lives, our operations, our activities, and our investments,” Marine Corps Gen. Michael E. Langley, the head of U.S. Africa Command, said during the ceremony. “All the space-based assets [are] ensuring the joint force has the right information at the right time to fight and to win. SPACEFOREUR-AF will work with all other components to ensure that space planning and support is embedding in all of our operations.”

Like the rest of the Space Force, SPACEFOREUR-AF is a small organization. But throughout 2023, after the plans for SPACEFOREUR-AF were announced, senior U.S. military space leaders visited Europe to strengthen the U.S. military space alliances. On Dec. 1, the U.K. agreed to host a new advanced space tracking radar system along with Australia and the U.S.

The activation will “finally normalize how space forces are presented to the theaters—sound, structural changes,” Lantz said. “The component we’re standing up today will never be as small, under-ranked, or less resourced than at this very moment. Starting tomorrow, we will gain in strength, understanding, and resources in order to add value to EUCOM and AFRICOM. Every day we will get better.”

The new U.S. Space Forces in Europe-Space Forces Africa patch is displayed at Ramstein Air Base, Germany, Dec. 6, 2023. U.S. Air Force photo by Senior Airman Jared Lovett

Source: Space & Airforce Magazine, 8th December 2023

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Senegal

What’s in store for China-Africa relations in 2024?

With the ninth Forum on China–Africa Cooperation due to take place in Beijing and many opportunities for Chinese venture capital to invest in the continent, 2024 is likely to be a busy year in China-Africa relations.

 

November 27th, 2023 – Opinion by Hannah Ryder

Just over two years ago in Dakar, Senegal, I and a few of my team organised a dinner for a few of the African ambassadors to China, who had been deployed to Dakar to join delegations for the eighth Forum of China Africa Cooperation (FOCAC). While the mood was celebratory – the diplomatic corps and their heads of state and government had secured many hard-won new commitments from China to the Africa partnership – in many areas from trade to foreign direct investment and lending, there was also an undercurrent of significant uncertainty. We were still in the midst of the pandemic and none of us could, for instance, have predicted that China’s quarantine measures for inbound travel would last until the end of 2022.

But it was this hard-to-predict shift, as well as the existence of the 2021 commitments, that set the stage for 2023 being a very interesting and extremely busy year in Africa-China relations. 2024 is likely to be even more so.

My team maintains a database on public AfricaChina announcements made in Chinese, English and other languages – and we categorise them by sector or issue, type of activity, financier, and other variables.

During 2023, the predominant coverage of China in African and international news sources was of course about China as a lender, due to prevailing narratives that China has “turned the tap off” on global lending. There was also significant reporting of the ongoing debt relief negotiations with Zambia and a few other low and middle-income countries. Certainly, China’s opening up after Covid-19 made a difference to these negotiations, enabling delegations from those countries and China to travel back and forth to come closer to clear understandings.

There are many things besides debt

But the fact is, even when Zambia’s president visited China in 2023, debt hardly featured in his itinerary. The visit, and visits by over 20 other African heads of state and foreign ministers this year – well above average from 2010, when our records begin – were focused on re-engaging China on economic growth on the continent – from pitching for more concessional lending in energy and transport to pitching for investments in value addition and manufacturing, and finalising new export agreements for African products to China.

Around these visits of African leaders to China, which we have previously found are correlated with positive trade and investment flows, were numerous other forums – from the biennial China-Africa Economic and Trade Expo to the China-Africa agricultural forum, which had been committed to at FOCAC 2021 but which Africans were unable to travel to China to attend until this year. That said, it was activity on the continent with Chinese stakeholders that we found featured the most in our database in 2023, and certainly more so than in 2022. We saw agreements for investments in road upgrades in Zambia, a new industrial park in Mozambique, a digitally networked cement factory in Uganda, and much more.

We saw trade and tourism promotion conferences, Chinese medical teams, agreements on broadcasting and new agricultural ventures. And we saw financial transactions inked that we knew would be coming due to commitments at FOCAC 2021 – investments into Afreximbank and Africa Finance Corporation, and Egypt’s issuance of a “panda bond”, to name a few, while African governments continued to use Chinese contractors on their new construction projects.

Each month over the past year we have recorded at least 50 Africa-China activities, in some cases over 100. This might seem like an overly positive picture of 2023. The questions are: what was missing from 2023? And what might be rectified in 2024? While 2023 was certainly very busy, there were some notable gaps, which may set the tone for 2024.

A gap in connectivity

Commitments to financing ten regional connectivity projects have not yet been met, and while lending from China Development Bank and China Exim Bank is increasing once again after the pandemic hiatus, it is not yet at the level in ticket size, volume, or even concessionality terms that would really make a significant difference to African governments’ need to plug infrastructure gaps on the continent.

And, while exports from the continent to China are growing and diversifying, especially into agricultural products, investment in the opposite direction into manufacturing of value-added goods in all sectors – from textiles to solar panels to batteries for export

to China as well as globally – is still lagging behind its potential. In my view, there is also significantly more potential for exposure of African entrepreneurs to Chinese venture capital and equity investment, which has yet to really be seen.

Can these gaps be plugged?

In 2024, the ninth FOCAC will be held – this time returning to Beijing, after the eighth in Dakar. It’s too early to tell now what can be expected from the Beijing session, during or beyond the dinners we will have with African delegations there afterwards.

However, based on the 2021 conference, plus three new initiatives on industrialisation, agricultural modernisation and talent that were announced at the China-Africa conference in South Africa on the sidelines of BRICS, plus our experience of a very busy “catching up” year in 2023, I and my team are poised for an extremely busy 2024 when it comes to Africa-China. I hope you will be too. ■

We saw agreements for investments in road upgrades in Zambia, a new industrial park in Mozambique, a digitally networked cement factory in Uganda, and much more.

Source: AfricanBusiness,

 

 

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Zambia

China announces plans to boost renminbi use in Southern Africa

In a visit to Zambia, the vice-president of the Bank of China, Lin Jingzhen, announced plans to boost the use of the renminbi in Southern Africa as Beijing seeks to extend the influence of its currency and counter the dominance of the US dollar.

December 8th, 2023 – By Harry Clynch

In a meeting with Zambian President Hakainde Hichilema in Lusaka earlier this week, Lin said that the Bank will promote the use of renminbi across the region from its office in the country’s capital.

“We will earnestly act upon our responsibility and leverage our role in Zambia to provide holistic services and products related to RMB and to promote the use of RMB in bilateral trade and economic activities,” he said.

M’khuzo Mwachande, an investment banker in South Africa, tells African Business that the move makes economic sense for both parties.

“China remains Africa’s largest trading partner, and it’s already the fourth largest provider of investment capital, having made around $300bn worth of investments as of 2022.

“In relation to Zambia, China has invested more than $3bn in the country, with more than 500,000 jobs having been created by Chinese investments.

“Just last week, the Tanzania-Zambia Railway Authority announced that a firm from China has been shortlisted to submit a proposal to operate the Tanzania-Zambia transnational rail for $1bn.

“The recent announcement that China will promote the use of its currency in Zambia and the region could therefore be deemed as a practical illustration of the close economic relationship that already exists. It’s natural that partners who conduct so much trade together will seek to use their own currencies.”

Positive news for Zambia

Mwachande is also optimistic that the move shows Zambia remains an attractive trading partner for China, despite the problems Lusaka has faced in trying to pay back the debt issued by China and other international creditors. Zambia is the world’s second-largest exporter of copper, a metal that is deemed critical to the world’s green transition. China accounts for approximately half of global consumption for the commodity, making Zambia an important partner in southern Africa.

“This is positive news in the sense that it reflects that China still wants to do business with Zambia despite the $70m worth of debt that Zambia still owes to them, and the recent stall in the debt restructuring negotiations, which China co-chairs,” Mwachande says.

China and several African countries have also expressed the ambition to reduce the power of Western-dominated financial institutions and the prevalence of the dollar in international trade, which critics argue gives the United States outsized influence on a global level.

Mwachande believes that de-dollarisation is necessary for African countries including Zambia but rejects the idea that the continent should be caught up in a wider geopolitical battle.

“The renminbi is a good option for now simply because there isn’t yet any other viable alternative to the dollar,” Mwachande tells African Business.

“We’ve seen in the last couple of years how vulnerable Africa is to higher interest rates in the United States and how that has caused debt problems or massive currency devaluations – whether that is in Nigeria, Ghana, or indeed Zambia. To return to pre-Covid levels of economic growth, Africa needs other currency options, and one option is the renminbi.”

However, he notes that it doesn’t need to be a case of “either/or”.

“It’s a matter of African countries making sound economic decisions based on which international partners are best placed to help deliver higher growth,” he says.

Harry Clynch

Harry is Finance Reporter at African Business.

Source:  AfricanBusiness, 8th December 2024

 

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