• D.C.
  • BXL
  • Lagos
  • Dubai
  • Beijing
  • SG
rotating globe
  • D.C.
  • BXL
  • Lagos
Semafor Logo
  • Dubai
  • Beijing
  • SG


Liberia’s tight vote, Kenya’s geothermal powers, AU’s deepfake, Thomas Sankara Blvd.͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
sunny Monrovia
thunderstorms Nairobi
sunny Dubai
rotating globe
October 17, 2023
semafor

Africa

Africa
Sign up for our free newsletters
 
Alexis Akwagyiram
Alexis Akwagyiram

Hi! Welcome to Semafor Africa, where we join the dots between Africa, its diaspora and the rest of the world.

We’re constantly told that the world is in the throes of a climate catastrophe. African nations are at the center of this unfolding disaster. Africans are arguably the worst hit on the globe — from the drought in East Africa made 100 times more likely by climate change, to deadly floods in Nigeria and Mozambique — despite the continent only contributing about 4% of global carbon emissions. It’s also widely known that there will be a huge financial cost attached to helping countries to fight the impacts of climate change. But nobody seems to be clear on how this will be paid for.

I looked at efforts to make it easier for private investors to finance climate projects for our main story in this edition, and I did so from the starting point of accepting that wealthy nations and Bretton Woods institutions have so far failed to move meaningfully to fill the continent’s huge climate financing gap. There isn’t one clear answer on the best way to ramp up private sector investments but there are moves by private equity investors and development finance institutions to tackle the climate funding conundrum — a curious problem in which the challenge is readily accepted but it’s hard to raise money to contribute to possible solutions.

🟡 Elsewhere in this edition, we report on the high profile victims of a deepfake scam, Kenya’s geothermal power players and Zambia’s debt restructuring. And, if you want more insights after reading the newsletter, remember that you can get our latest stories and analysis via social media and our website.

Need to Know
Reuters/Carielle Doe

🇱🇷 Liberia’s presidential election was heading for a run-off after provisional results on Monday showed President George Weah and opposition leader Joseph Boakai were running extremely close with 93% of the votes for the presidency counted nearly a week after the Oct. 10 election. Boakai, a former vice president to former President Ellen Johnson Sirleaf, held a slim lead of 43.7% versus Weah’s 43.65, according to the election commission. In order to win outright one candidate must have more than 50% of the vote.

🇿🇼 Zimbabwean migration to South Africa increased by around 50% between 2011 and 2022, according to Pretoria’s census data. Some 1.01 million Zimbabweans lived in the neighboring country last year, compared with 672,308 at the last count in 2011. The increase is more than double the growth in South Africa’s total population which rose 16.5% to 62 million over the same period. The accelerated migration follows a decade of worsening economic conditions in Zimbabwe. The neighboring countries have social and economic ties anchored around trade in nickel mattes, tobacco, electricity, and cotton.

🇿🇦 The World Bank is in talks to support South Africa’s energy sector reform with a $1 billion loan. The multilateral lender’s country director said in an interview the funding — which would be directly to the government rather than to state utility Eskom — would be “a policy development loan which supports critical reforms,” with a particular focus on transmission. South Africa is currently facing its worst power crisis, with Eskom’s aging coal-fired plants often breaking down.

🇬🇭 The U.S. Development Finance Corporation is backing African Data Centres for a new data center to be built in Ghana. The first phase of the construction in Ghana will begin in 2024 and will cost $50 million. The money will come from the $300 million loan already in place between DFC and ADC to build and expand data centers in African countries where DFC is interested. The go-ahead for “a first-of-its-kind” data center in Ghana comes after DFC approved $83 million in August 2022 for South Africa-based ADC — which operates facilities in Kenya and Nigeria — to expand data centers in its home country.

TweetEmail
Stat

The amount of debt Zambia will restructure under an agreement with its creditor committee — co-chaired by China and France, and vice-chaired by South Africa. In the agreement, Zambia, which defaulted on its debt payments in 2020, will pay about $750 million over the next decade compared with almost $6 billion that was due to official creditors before the restructuring. The reworked deals will extend debt maturities by over 12 years on average, with interest rates set at 1% during the next 14 years and up to 2.5% after that. If Zambia’s economy performs better than expected there is a mechanism to increase payments in that period.

TweetEmail
Alexis Akwagyiram

African investors take on climate finance even as international investors look away

USAID / Power Africa

THE NEWS

African investors are joining the race to raise funds needed to pay for climate adaptation projects. It comes amid a growing acceptance that the continent’s governments cannot fill a yawning funding gap while the world’s biggest lenders have largely turned their backs on the continent due to perceived risk.

African countries collectively need to raise around $2.8 trillion by 2030 to meet climate action goals, according to the Climate Policy Initiative research body. Many African governments cannot afford to pay for green initiatives and the ability of private investors to secure funding has been restricted by perceived risks associated with the continent and green projects more generally.

Some see a solution in blended finance, an approach through which public sources of money such as grants from development finance institutions or philanthropic organizations, are used to reduce the risk for private investors. The African Development Bank is partnering with African banks to fund projects aimed at addressing the impact of climate change through its African Green Bank Initiative. The scheme, which has access to a $1.5 billion fund and technical support from European asset management firm Amundi, was launched in May.

Audrey-Cynthia Yamadjako, who heads the AfDB program, told Semafor Africa that the scheme was expanding. It was launched in West Africa with lenders in Côte d’Ivoire and Benin and would be expanded to banks in North Africa next year, followed by others in East Africa.

“About 87% of climate finance on the continent comes from the public sector, when we know that it should be the reverse.” said Yamadjako, speaking last week on the sidelines of the AFSIC conference on investment in Africa. She said there is a need to “use blending more” to meet a “huge need” on the continent.

ALEXIS’ VIEW

Africa only attracts around 3% of global climate finance, despite being the continent hardest hit by the extreme weather patterns. So African countries clearly need to find a way to fund projects that address the impact of climate change — from renewable energy initiatives to those which prepare countries for increasingly extreme weather conditions. It’s also abundantly clear that the continent’s nations can’t afford to foot the bill while hobbled by their existing sovereign debts which, due to weakening currencies, are in many cases becoming increasingly difficult to service.

Wealthy countries have failed to honor an agreement to provide $100 billion a year to developing countries by 2020 to meet climate financing costs, so there is a need to find other ways to plug the funding gap. Ramping up private investment makes sense, even though it would be unrealistic to believe that this alone could plug the gap needed.

The use of local capital, in particular, seems sensible. Rather than focusing on dollar-denominated debt, where local currency fluctuations increase the risk of defaults, it makes sense to look closer to home. But, as Amal-Lee Amin, managing director and head of climate at BII told me, blended finance is “not a panacea.” It is a valuable part of a “toolkit” to increase climate finance shortfalls but there is dire need for an array of innovative solutions. More needs to change, including the approach taken by ratings agencies who view much of the continent as a risky bet. The hope is that the U.S.-led push to boost the lending firepower of the IMF and World Bank also bears fruit.

Read on for more details including Room for Disagreement and the View from Nairobi.

TweetEmail
Evidence

Kenya currently has the world’s sixth-highest installed renewable geothermal power capacity and has more capacity under construction than any other country with plans to nearly double overall output by 2030. That would make it the fourth highest in the world, according to data from Global Energy Monitor. The East African country’s plans would put it in the ‘Geothermal Gigawatt Club’ — countries which generate 1,000MW or more of installed geothermal power.

Renewable energy sources account for 87% of Kenya’s total energy output, according to regulators. The country is also spearheading a shift towards geothermal in its subregion. Since 2019, the Kenya Electricity Generating Company (KenGen) has bagged multi-million dollar contracts to drill geothermal wells in Ethiopia and Djibouti, and is eyeing similar projects in countries including Rwanda, DRC and Tanzania. Just as Kenya recognized its high geothermal potential, more African countries are increasingly looking to capitalize on their own ability to generate geothermal energy. Tanzania, which is considering KenGen to lead its geothermal forays, estimates its geothermal potential at 5,000MW.

TweetEmail
Intel
SIMON MAINA/AFP via Getty Images

Estonia Prime Minister Kaja Kallas is among officials in “several” Western capitals who fell victim to individuals posing as African Union (AU) Chairperson Moussa Faki in an elaborate scam involving email phishing and deepfake video calls. Following a request from a fake email address purporting to be a high level AU official, Kallas in September had a video call with scammers using deepfake technology to pose as Faki. In the presence of other state officials, she reportedly discussed topics including the Niger coup and food security, and sought to counter Russian narratives on the Ukraine war.

Faki’s spokesperson Ebba Kalondo on Friday confirmed the incidents, warning that communication from the AU would only come from its official ‘african-union.org’ email addresses and via diplomatic channels for high-level engagement. She told Semafor Africa that the AU itself was not targeted by the scammers.

The situation reveals the threat of deepfake technology for leaders and nations around the world, particularly as AI advances at a rapid rate.

Estonia said that it is investigating the incident and engaging other countries. Declining to reveal which other capitals fell for the scam, or if any sensitive information was lost, Kalondo said: “The AU is not privy to the contents of the conversations between the pranksters and the affected leaders. It is the prerogative of the capitals that fell victim to the pranksters, to identify themselves or not.”

Martin K.N. Siele

TweetEmail
Tech Talk
Editorum01/Creative Commons license

DUBAI, United Arab Emirates — Dozens of early stage African startup founders are in Dubai this week hoping to meet government officials from other countries and potentially interest investors in spite of the current global tech funding bear market. They’re here for GITEX Global, the annual technology exhibition event.

Elias Tadesse, a medical doctor from Ethiopia is a good example of a founder looking to deepen their pool of potential backers. He’s the co-founder of Blue Health Ethiopia which operates an app to connect residents in his country to first aid and emergency services from hospitals and other healthcare providers. His team has so far funded the startup from personal savings but are looking to raise venture capital to grow. It was a similar story with Tom Kinyanjui, an artificial intelligence researcher from Kenya. He also runs a healthcare startup that is at a “pre-seed” stage, with a venture fund by UNICEF as one of its first investors. Kinyanjui’s Neural Labs Africa is developing software to identify diseases by screening medical images, based on recurring markers learned from thousands of datasets. InstantRad, an online marketplace of sorts for healthcare providers to find radiologists and shorten the time required to generate reports from days to hours, is also hoping to catch the eye and add to its list of hospital clients.

Health-tech isn’t the theme of the expo but the presence of these startups seems a good indicator of the diversity of African innovation, outside of what can seem like an outsized investor focus on fintech. And as various funding trackers report steep drops in money going to African startups, showing up to sell in person increasingly seems crucial for all African entrepreneurs, especially those that haven’t got name recognition but are looking to break through.

TweetEmail
One Good Text

Oyintarelado Moses is the data analyst for the Global China Initiative at the Boston University Global Development Policy Center. Her research, which includes China’s Belt and Road Initiative (BRI), last month revealed just how much Chinese loans to African nations had declined since peaking in 2016.

TweetEmail
Outro
OLYMPIA DE MAISMONT/AFP via Getty Images

Burkina Faso has renamed Boulevard Charles de Gaulle in its capital city Ouagadougou, after its most famous citizen, former head of state, Thomas Sankara. The gesture was ordered by the council of ministers of the West African country’s military government. Sankara was designated ‘Hero of the Nation’ with Oct. 15, the anniversary of his assassination in 1987, also declared a national annual memorial day. The former president was regarded as a charismatic leader especially for a staunch anti-imperialist stance aimed at separating Africa’s ambitions from being subservient to Western economic interests, especially France. Part of the Ibrahim Traore-led junta’s plans to memorialize Sankara include a mausoleum to be built by Burkinabe-German architect Dibedo Francis Kere at a cost of 400 million CFA Francs ($641,000).

TweetEmail
Hot on Semafor
  • A high-profile memestock CEO sent sexually explicit images and messages in a weeks-long text exchange with a woman who tried to extort hundreds of thousands of dollars from him using fake identities.
  • OpenAI has quietly changed its “core values.” The AI startup now says its singular goal is to build “safe, beneficial” artificial general intelligence, noting that anything else is “out of scope.”
  • Three Hamas leaders have emerged at the top of Israel’s most wanted list. But targeting them will be a challenge for Israel.

If you’re enjoying the Semafor Africa newsletter and finding it useful, please share with your family, friends, optimistic Liberian voters, and deepfake impersonators. We’d love to have them aboard, too.

Let’s make sure this email doesn’t end up in your junk folder by adding africa@semafor.com to your contacts. In Gmail you should drag this newsletter over to your ‘Primary’ tab.

You can reply to this email and send us your news tips, gossip, and good vibes.

— Yinka, Alexis, Alexander Onukwue, Martin K.N. Siele, and Muchira Gachenge

TweetEmail
Semafor
Sign up now to get Semafor in your inbox.
Semafor, Inc. 228 Park Ave S, PMB 59081, New York, NY, 10003-1502, USA