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Africa in the news: Energy and climate finance updates, Mozambique’s debt write-off, and US COVID-19 vaccine donation

Africa in the news: Energy and climate finance updates, Mozambique’s debt write-off, and US COVID-19 vaccine donation | Speevr

Africa proposes expanding and tracking climate finance; Egypt and Greece plan to link electrical grids; South Africa seeks low-cost financing for clean energy
Frustrated with a lack of climate-related funding from wealthy nations, Africa’s lead climate negotiator proposed this week to build a new system to track climate finance contributions by country. Indeed, funding has fallen short of the 2006 agreement to raise $100 billion per year for climate change-related financing by 2020. From the existing pool,  African countries only received 26 percent of the funding in 2016-2019, compared to 43 percent on average by Asian countries. African countries are now pushing to scale up funding tenfold by 2030 for global climate change mitigation and adaptation finance, calling the $100 billion package a political commitment and “not based on the real needs of developing countries to tackle climate change.”

Tamara White

Research and Project Assistant – Global Economy and Development, Africa Growth Initiative

Twitter
_TamaraDWhite

Following the signing of an agreement on October 14, 2021 between Egypt and Greece to construct undersea interconnectors, transmission cables used to link electrical grids between countries, the Greek Prime Minister Kyriakos Mitsotakis pledged on Tuesday to connect Egypt with the European Union’s electricity market via an undersea cable network running beneath the Mediterranean Sea. Although formal details of the project have not been released,  Prime Minister Mitsotakis is confident that connecting Egypt’s energy grid to Greece, and ultimately Europe, will promote energy security during times of global turbulence in the energy market and energy diversification.
In related energy news, South Africa continues its search for low-cost financing to develop its clean energy infrastructure and decommission coal-burning power plants. The world’s 12th largest carbon emitter seeks 400 billion rand ($27.6 billion) of electricity infrastructure for its energy transition, earmarking 180 billion rand for cleaner energy technology and 120 billion rand for transmission gear. The rest of the funding will go toward transformers, substations, and electrical distribution technology. With more than 80 percent of South Africa’s electricity generated by burning coal, the state energy company, Eskom, plans to decommission between 8,000 to 12,000 megawatts of coal-derived electricity over the next decade and replace this electrical capacity with other energy sources such as wind, photovoltaic, and natural gas.
Credit Suisse to write off $200 in Mozambican debt after defrauding prosecutors
Regulators announced on Tuesday, October 19, that Credit Suisse will forgive $200 million worth of Mozambican debt as part of a settlement with UK, Swiss, and U.S. authorities due to corruption issues. The regulators alleged that Credit Suisse employees received and paid bribes while they arranged industry loans totaling $1.3 billion. According to U.S. prosecutors, three Credit Suisse bankers, two middlemen, and three Mozambican government officials diverted at least $200 million of the  loans for their private use. The debt write-off is part of a settlement agreement with regulators that includes a $175 million fine to the U.S. Justice Department, a $99 million fine to the U.S. Securities and Exchange Commission (SEC), and a $200 million fine to Britain’s Financial Conduct Authority. The SEC indicated on Tuesday that the Credit Suisse staff and their intermediaries have been indicted by the U.S, Department of Justice.
On Thursday, October 21, the Budget Monitoring Forum (FMO), an independent public finance organization based in Mozambique, called Credit Suisse’s offer insufficient and instead demanded the “full cancellation of illegal debts.” As of Friday, October 21, Mozambican officials have yet to comment publicly on the debt forgiveness.
US announces COVID-19 vaccine donations for Africa as South Africa rejects Sputnik V
On October 14, U.S. President Biden met with President Kenyatta of Kenya where Biden promised an additional donation of 17 million doses of the Johnson and Johnson (J&J) vaccine to the African Union . Indeed, this announcement is timely as the World Health Organization (WHO) announced in September that in order to fully vaccinate 70 percent of the continent by September 2022, COVID-19 vaccine shipments must increase from 20 million per month to 150 million.
In other related news, South Africa’s drug regulator has rejected the Russian Sputnik V vaccine due to safety concerns. According to the Associated Press, regulators asked the makers of Sputnik V for data proving the vaccine’s safety but their request was not suitably addressed. Sputnik V is currently being reviewed for authorization by WHO and the European Medicines Agency. Both AstraZeneca and J&J have been approved in South Africa.

Africa in the news: Energy and climate finance updates, Mozambique’s debt write-off, and US COVID-19 vaccine donation

Africa in the news: Energy and climate finance updates, Mozambique’s debt write-off, and US COVID-19 vaccine donation | Speevr

Africa proposes expanding and tracking climate finance; Egypt and Greece plan to link electrical grids; South Africa seeks low-cost financing for clean energy
Frustrated with a lack of climate-related funding from wealthy nations, Africa’s lead climate negotiator proposed this week to build a new system to track climate finance contributions by country. Indeed, funding has fallen short of the 2006 agreement to raise $100 billion per year for climate change-related financing by 2020. From the existing pool,  African countries only received 26 percent of the funding in 2016-2019, compared to 43 percent on average by Asian countries. African countries are now pushing to scale up funding tenfold by 2030 for global climate change mitigation and adaptation finance, calling the $100 billion package a political commitment and “not based on the real needs of developing countries to tackle climate change.”

Following the signing of an agreement on October 14, 2021 between Egypt and Greece to construct undersea interconnectors, transmission cables used to link electrical grids between countries, the Greek Prime Minister Kyriakos Mitsotakis pledged on Tuesday to connect Egypt with the European Union’s electricity market via an undersea cable network running beneath the Mediterranean Sea. Although formal details of the project have not been released,  Prime Minister Mitsotakis is confident that connecting Egypt’s energy grid to Greece, and ultimately Europe, will promote energy security during times of global turbulence in the energy market and energy diversification.
In related energy news, South Africa continues its search for low-cost financing to develop its clean energy infrastructure and decommission coal-burning power plants. The world’s 12th largest carbon emitter seeks 400 billion rand ($27.6 billion) of electricity infrastructure for its energy transition, earmarking 180 billion rand for cleaner energy technology and 120 billion rand for transmission gear. The rest of the funding will go toward transformers, substations, and electrical distribution technology. With more than 80 percent of South Africa’s electricity generated by burning coal, the state energy company, Eskom, plans to decommission between 8,000 to 12,000 megawatts of coal-derived electricity over the next decade and replace this electrical capacity with other energy sources such as wind, photovoltaic, and natural gas.
Credit Suisse to write off $200 in Mozambican debt after defrauding prosecutors
Regulators announced on Tuesday, October 19, that Credit Suisse will forgive $200 million worth of Mozambican debt as part of a settlement with UK, Swiss, and U.S. authorities due to corruption issues. The regulators alleged that Credit Suisse employees received and paid bribes while they arranged industry loans totaling $1.3 billion. According to U.S. prosecutors, three Credit Suisse bankers, two middlemen, and three Mozambican government officials diverted at least $200 million of the  loans for their private use. The debt write-off is part of a settlement agreement with regulators that includes a $175 million fine to the U.S. Justice Department, a $99 million fine to the U.S. Securities and Exchange Commission (SEC), and a $200 million fine to Britain’s Financial Conduct Authority. The SEC indicated on Tuesday that the Credit Suisse staff and their intermediaries have been indicted by the U.S, Department of Justice.
On Thursday, October 21, the Budget Monitoring Forum (FMO), an independent public finance organization based in Mozambique, called Credit Suisse’s offer insufficient and instead demanded the “full cancellation of illegal debts.” As of Friday, October 21, Mozambican officials have yet to comment publicly on the debt forgiveness.
US announces COVID-19 vaccine donations for Africa as South Africa rejects Sputnik V
On October 14, U.S. President Biden met with President Kenyatta of Kenya where Biden promised an additional donation of 17 million doses of the Johnson and Johnson (J&J) vaccine to the African Union . Indeed, this announcement is timely as the World Health Organization (WHO) announced in September that in order to fully vaccinate 70 percent of the continent by September 2022, COVID-19 vaccine shipments must increase from 20 million per month to 150 million.
In other related news, South Africa’s drug regulator has rejected the Russian Sputnik V vaccine due to safety concerns. According to the Associated Press, regulators asked the makers of Sputnik V for data proving the vaccine’s safety but their request was not suitably addressed. Sputnik V is currently being reviewed for authorization by WHO and the European Medicines Agency. Both AstraZeneca and J&J have been approved in South Africa.

SDRs for COVID-19 relief: The good, the challenging, and the uncertain

SDRs for COVID-19 relief: The good, the challenging, and the uncertain | Speevr

In August 2020, as a response to the pernicious impact of the COVID-19 pandemic on the global economy and on the finances of member states, the International Monetary Fund (IMF) decided to issue $650 billion of special drawing rights (SDRs). Conceptually, SDRs are a form of unconditional financing for addressing urgent liquidity challenges.

Ali Zafar

Author – The CFA Franc Zone: Economic Development and the Post-COVID Recovery

Macroeconomist

Twitter
zafarglobal

Jan Muench

Banker

Aloysius Uche Ordu

Director – Africa Growth Initiative

Senior Fellow – Global Economy and Development

Twitter
AloysiusOrdu

SDRs were created in the late 1960s as a precautionary mechanism to address potential sovereign liquidity shortfalls in the context of the rigid monetary order of fixed exchange rates of the Bretton Woods system. SDRs were designed to serve as a low-cost reserve asset that could be sold by a government via the IMF acting as intermediary to another government and thereby converted into currency using an exchange rate pegged to a basket representing five of the world’s leading currencies. Currently, these five currencies are the U.S. dollar, the Chinese renminbi, the euro, the Japanese yen, and the British pound sterling. SDRs are not technically the IMF’s currency but a claim on reserves. To that effect, SDRs are not money per se but rather a means to establish a line of credit with a sovereign lender (government) acting as buyer of SDRs. Besides paying a low rate of interest on SDR use, countries benefit from the absence of refinancing risks imposed by conventional maturities. For foreign currency-strapped economies, many emerging markets, and lower-income economies in Africa, SDRs can, therefore, provide the immediate means to pay for vaccines and/or other health care investments.
The Good
As the pandemic has wreaked havoc on both developed and developing country finances, the IMF moved to address the liquidity shortfalls in the global economic system and help provide financing for many countries. Given the pronounced contraction in output and employment, this injection of liquidity represents a lifeline to countries with scarce reserves. SDRs buy time as they can be used to finance critical expenditure, build reserves, and service debts, although they do not provide a long-term remedy for underlying problems. In operational terms, the IMF SDR department facilitates the exchange of existing SDRs between countries and reduces any transaction costs.
The Challenging
The formula for SDR allocation is based on a country’s quota within the IMF, which reflects its relative position in the world economy (Table 1). The problem with the SDR allocation is that richer countries receive more than poorer countries. In fact, barely 3 percent of the $650 billion total in pandemic response went to low-income countries, and only 30 percent went to middle-income emerging markets. In other words, the countries that are most in need of financial relief and support are not the top beneficiaries of the SDRs. Instead, countries like the U.S., which can print its money, and China, which has several trillions in reserves, benefit the most.

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This disconnect occurs because SDRs were created to address potential liquidity shortfalls in an entirely different monetary system rather than in the present context. As a result, experts are proposing reforms to this system. In October 2021, the IMF began building support among members for a proposed “Resilience and Sustainability Trust”—a funding mechanism that would allow richer countries to channel their IMF reserves to poorer countries in need. By lending at cheaper rates and with longer maturities than the IMF’s traditional lending terms, and with funding targeted toward areas such as climate and pandemic preparedness, the trust could help channel funds toward development projects. Another potentially good option is for the IMF to work closely with the regional development banks, such as the African Development Bank, to channel some of the SDR financing through the regional bank’s lending program. Given the regional banks’ proximity to the client, this approach could help to ensure greater links to the development strategies and programs of member states.
Table 1. Select country SDR quotas and SDR allocations

Country
Quota (%)
Allocation (USD billions)

USA
17.43
79.5

China
6.4
29.2

France
4.23
19.3

United Kingdom
4.23
19.3

Nigeria
0.52
2.4

South Africa
0.64
2.9

Cote d’Ivoire
0.14
0.62

Kenya
0.11
0.52

Mali
0.04
0.18

Source: IMF.
The Uncertain
SDRs were not originally designed as open-ended cash transfers. For one, SDRs are not included in the assessment of debt sustainability. While the SDRs can provide liquidity, there is no mechanism for ensuring that money is used productively and reaches those in need. Conversion of SDRs into foreign currency happens on a sovereign level with few strings attached, meaning multilateral leaders cannot ensure that the SDRs are properly used for COVID-19 relief. There is also no discrimination between progressive or dictatorial countries in terms of SDR allocation. Some of the SDRs can end up being used by developing-country governments to pay debt service to public and private creditors in the absence of debt restructuring. For instance, SDRs can be used to boost reserves in Nigeria and South Africa, to pay back debt in the case of Argentina or, in the case of the CFA franc zone, especially in countries like Equatorial Guinea and Republic of Congo, to postpone necessary governance and exchange rate reforms. In this context, it would be good to have oversight by international experts to ensure SDRs are used for developmental impact. However, even assuming effective governance frameworks, for low-income African countries, the flows of SDRs may be too low to have a strong impact anyway.
Conclusion
Unless we believe limited liquidity shortfalls of a more-or-less temporary nature are the only consequence of current macroeconomic and public health stresses, policymakers should not just fall back on SDRs to avoid the more complex questions typically raised in the context of conventional debt or more permanent financial transfers. Beyond a limited (and welcome boost), liquidity SDRs appear to be an imperfect substitute for a financing package able to serve both specific pandemic relief and long-term development objectives. In sum, SDRs represent a second-best solution to a complex problem, with clear advantages and clear shortcomings.

SDRs for COVID-19 relief: The good, the challenging, and the uncertain

SDRs for COVID-19 relief: The good, the challenging, and the uncertain | Speevr

In August 2020, as a response to the pernicious impact of the COVID-19 pandemic on the global economy and on the finances of member states, the International Monetary Fund (IMF) decided to issue $650 billion of special drawing rights (SDRs). Conceptually, SDRs are a form of unconditional financing for addressing urgent liquidity challenges.

SDRs were created in the late 1960s as a precautionary mechanism to address potential sovereign liquidity shortfalls in the context of the rigid monetary order of fixed exchange rates of the Bretton Woods system. SDRs were designed to serve as a low-cost reserve asset that could be sold by a government via the IMF acting as intermediary to another government and thereby converted into currency using an exchange rate pegged to a basket representing five of the world’s leading currencies. Currently, these five currencies are the U.S. dollar, the Chinese renminbi, the euro, the Japanese yen, and the British pound sterling. SDRs are not technically the IMF’s currency but a claim on reserves. To that effect, SDRs are not money per se but rather a means to establish a line of credit with a sovereign lender (government) acting as buyer of SDRs. Besides paying a low rate of interest on SDR use, countries benefit from the absence of refinancing risks imposed by conventional maturities. For foreign currency-strapped economies, many emerging markets, and lower-income economies in Africa, SDRs can, therefore, provide the immediate means to pay for vaccines and/or other health care investments.
The Good
As the pandemic has wreaked havoc on both developed and developing country finances, the IMF moved to address the liquidity shortfalls in the global economic system and help provide financing for many countries. Given the pronounced contraction in output and employment, this injection of liquidity represents a lifeline to countries with scarce reserves. SDRs buy time as they can be used to finance critical expenditure, build reserves, and service debts, although they do not provide a long-term remedy for underlying problems. In operational terms, the IMF SDR department facilitates the exchange of existing SDRs between countries and reduces any transaction costs.
The Challenging
The formula for SDR allocation is based on a country’s quota within the IMF, which reflects its relative position in the world economy (Table 1). The problem with the SDR allocation is that richer countries receive more than poorer countries. In fact, barely 3 percent of the $650 billion total in pandemic response went to low-income countries, and only 30 percent went to middle-income emerging markets. In other words, the countries that are most in need of financial relief and support are not the top beneficiaries of the SDRs. Instead, countries like the U.S., which can print its money, and China, which has several trillions in reserves, benefit the most.

Related Content

This disconnect occurs because SDRs were created to address potential liquidity shortfalls in an entirely different monetary system rather than in the present context. As a result, experts are proposing reforms to this system. In October 2021, the IMF began building support among members for a proposed “Resilience and Sustainability Trust”—a funding mechanism that would allow richer countries to channel their IMF reserves to poorer countries in need. By lending at cheaper rates and with longer maturities than the IMF’s traditional lending terms, and with funding targeted toward areas such as climate and pandemic preparedness, the trust could help channel funds toward development projects. Another potentially good option is for the IMF to work closely with the regional development banks, such as the African Development Bank, to channel some of the SDR financing through the regional bank’s lending program. Given the regional banks’ proximity to the client, this approach could help to ensure greater links to the development strategies and programs of member states.
Table 1. Select country SDR quotas and SDR allocations

Country
Quota (%)
Allocation (USD billions)

USA
17.43
79.5

China
6.4
29.2

France
4.23
19.3

United Kingdom
4.23
19.3

Nigeria
0.52
2.4

South Africa
0.64
2.9

Cote d’Ivoire
0.14
0.62

Kenya
0.11
0.52

Mali
0.04
0.18

Source: IMF.
The Uncertain
SDRs were not originally designed as open-ended cash transfers. For one, SDRs are not included in the assessment of debt sustainability. While the SDRs can provide liquidity, there is no mechanism for ensuring that money is used productively and reaches those in need. Conversion of SDRs into foreign currency happens on a sovereign level with few strings attached, meaning multilateral leaders cannot ensure that the SDRs are properly used for COVID-19 relief. There is also no discrimination between progressive or dictatorial countries in terms of SDR allocation. Some of the SDRs can end up being used by developing-country governments to pay debt service to public and private creditors in the absence of debt restructuring. For instance, SDRs can be used to boost reserves in Nigeria and South Africa, to pay back debt in the case of Argentina or, in the case of the CFA franc zone, especially in countries like Equatorial Guinea and Republic of Congo, to postpone necessary governance and exchange rate reforms. In this context, it would be good to have oversight by international experts to ensure SDRs are used for developmental impact. However, even assuming effective governance frameworks, for low-income African countries, the flows of SDRs may be too low to have a strong impact anyway.
Conclusion
Unless we believe limited liquidity shortfalls of a more-or-less temporary nature are the only consequence of current macroeconomic and public health stresses, policymakers should not just fall back on SDRs to avoid the more complex questions typically raised in the context of conventional debt or more permanent financial transfers. Beyond a limited (and welcome boost), liquidity SDRs appear to be an imperfect substitute for a financing package able to serve both specific pandemic relief and long-term development objectives. In sum, SDRs represent a second-best solution to a complex problem, with clear advantages and clear shortcomings.

Africa in the news: Nigeria, climate change, and Tunisia updates

Africa in the news: Nigeria, climate change, and Tunisia updates | Speevr

COVID-19 maintains lingering economic disruption in Nigeria
On Tuesday, Nigeria’s National Bureau of Statistics and the United Nations Development Program reported that approximately 20 percent of workers in Nigeria lost their jobs due to the COVID-19 pandemic. In fact, the joint research examining the pandemic’s impact on Africa’s largest economy uncovered a staggering 33 percent unemployment rate in the fourth quarter of 2020. Informal-sector workers particularly struggled to access credit and funding to stay open as commerce slowed. Notably, losses across sectors were not uniform, as more than half of the businesses surveyed managed to retain their staffing levels, a finding which the authors say suggests that Nigeria maintained “pockets of resilience” throughout the pandemic.

In related news, on Wednesday, JP Morgan announced markedly lower economic growth forecasts for Nigeria than the International Monetary Fund (IMF) and Central Bank of Nigeria. JP Morgan now predicts that the Nigerian economy, which contracted by 1.79 percent in 2020, will grow by only 1.5 percent in 2021. The IMF and Central Bank of Nigeria had estimated GDP growth to be about 2.5 and 3 percent, respectively, for the country this year. JP Morgan explained its prediction of a weaker outlook on the country’s “continued lack of foreign-exchange liquidity, underlying economic weakness, an emerging third wave of Covid-19 infections and a slow rollout of vaccines will likely slow the recovery process.”
For more commentary on COVID-19’s impacts on Nigeria’s economy, see: “Understanding the impact of the COVID-19 outbreak on the Nigerian economy.” For more on strategies for creating jobs for Africa’s youth, see the paper, “Addressing youth unemployment in Africa through industries without smokestacks: A synthesis on prospects, constraints, and policies.”

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Gabon wants payment for its role in the fight against climate change; South Africa takes steps to reduce emissions
Earlier this week, officials in Gabon stated that the country will be seeking payment for its role in the fight against climate change. Importantly, in March of last year, a study published by the journal Nature found that many areas of the Congo Basin were showing signs of reduced carbon uptake and specifically predicted that, by 2030, the basin will absorb 14 percent less carbon than over the previous 10 to 15 years. This decrease in the carbon-absorbing capabilities of the Congo Basin will be detrimental to the fight against climate change given the area’s key role in regulating moisture transport, rainfall patterns, and the global climate. In fact, according to the study, while the Congo Basin is the world’s second-largest rainforest behind the Amazon, it stores more carbon over the same area of land. Gabon, which is home to 12 percent of the Congo Basin, has managed to protect its share of the rainforest, making it one of the few carbon-negative countries in the world.
In related updates, on Thursday, September 23, South Africa’s cabinet adopted new, ambitious emissions reduction targets. As a result, South Africa, Africa’s biggest emitter of greenhouse gases, is now aiming to reduce emissions to between 350 million and 420 million tons of carbon dioxide by 2030. This announcement comes ahead of the United Nations Climate Change Conference taking place in November where South Africa’s state-owned power company, Eskom, plans to ask for funding to help finance its shift from coal to renewable energy sources. Similarly, an announcement by the Minerals Council of South Africa stated that South African mining companies plan to invest $2.7 billion to construct 2,000 megawatts of power generation capacity. According to Bloomberg, persistent power cuts by Eskom have pushed mining companies to develop power plants, and mining companies have shown a willingness to move away from power fueled by coal as investors become more attentive to the climate crisis.
In other climate news, a startup in Benin has been building computers from jerrycans—plastic containers used for carrying liquids. The startup, BlowLab, has not only been utilizing recycled jerrycans, old computer parts, and other recycled materials to build computers, but has also been teaching others how to build their own for free. These computers are also cost-effective: A traditional office computer can cost between 300 and 350,000 CFA francs ($0.54 and $625) while the “jerrys” can cost between 100 and 150,000 CFA francs ($0.18 and $266). BlowLab has also announced plans to make these computers available to schools in remote areas.
Tunisian president declares rule by decree
On Wednesday, September 22, Tunisian President Kais Saied announced new measures that will allow him to rule by decree, ignoring stipulations in the current constitution. The measures, which include bestowing himself with the power to unilaterally issue legislative directives and appoint cabinet positions, come on the heels of Saied suspending the Tunisian parliament and sacking the prime minister on July 25. The actions of the past few months have drawn criticism from Tunisian political rivals as well as from Western donors, who have pressured Saied to take steps toward finding a new prime minister and reinstating democratic rule. On Thursday, four political parties in opposition to the president (who ran as an independent)—Attayar, Al Jouhmouri, Akef and Ettakatol—released a joint statement condemning Saied’s decision, stating, “We consider the president has lost his legitimacy by violating the constitution.” The party with the greatest representation in Tunisia’s parliament, Ennahda, also rejected Saied’s claim and had previously called his suspension of the parliament a “coup.”
In Wednesday’s announcement, Saied indicated that he would form a committee to draft amendments to the 2014 constitution with the goal of eventually establishing “a true democracy in which the people are truly sovereign.” In the meantime, Saied indicated that the preamble to the 2014 constitution and any clauses that do not contradict his new legislative and executive powers will still be enforceable.

The new child tax credit does more than just cut poverty

The new child tax credit does more than just cut poverty | Speevr

With COVID-19’s disruptions in employment, child care, and education, it is unsurprising that child poverty substantially increased in 2020—roughly 1.2 million more children were living in poverty in 2020 when compared to 2019 (an increase from 15.7% to 17.5%). As child poverty is unequally distributed in America, so too were its increases—poverty rates grew the most among Latino children (4.2 percentage points), Black children (2.8 percentage points), and children from female-headed families (4.1 percentage points), while they remained flat for white and Asian children.

In response to these trends, President Biden signed a bill this March that restructures the child tax credit (CTC) for one year—making it larger ($3,000 per child between the ages of six and 17 and $3,600 per child under six), broader (gradual phaseouts start at $75,000 for individuals and $150,000 for those married filing jointly), and more periodic (monthly payments). This restructuring would allow the CTC to act like a child allowance, which has been used in a variety of other countries. While the new CTC officially launched in July of 2021, policymakers are already considering whether or not to extend the new CTC beyond 2021. Here, policymakers are not only considering the impact that the new CTC will have on child poverty, but also the impact that it could have on family social mobility.
Concerning child poverty and racial/ethnic equity, researchers from Columbia University estimate that the new CTC could cut child poverty by 45 percent and would have the largest impacts on Latino and Black children. Considering other outcomes, some scholars argue that the new CTC could disincentivize parental employment and thus curb social mobility, while other scholars argue the contrary: Cash payments can simultaneously decrease child poverty and increase mobility. Some scholars also suggest that policies like the CTC could increase birth rates, an important consideration given that recent declines in U.S. birth rates may pose both social and economic challenges such as reductions in GDP growth rates.
Our findings suggest that the child tax credit will not only act as a tool for decreasing child poverty in the short term, but also as a tool for increasing family social mobility in the long term.
As policymakers grapple with whether or not to extend the new CTC beyond 2021, it is important to understand how families will use the CTC payments. To inform these policymakers, we utilized a probability-based online panel to survey a nationally representative group of 1,514 U.S. parents eligible for the credit. The survey was administered immediately before the first CTC payments were delivered. One of the key questions we asked parents in this survey was how they planned to use their CTC payments. Our findings suggest that the CTC will not only act as a tool for decreasing child poverty in the short term, but also as a tool for increasing family social mobility in the long term.
Figure 1. Planned usage of the child tax credit

Source: Employment, Financial and Well-being Effects of the 2021 Expanded Child Tax Credit, Social Policy Institute. Notes: n=1,056 – 1,078 respondents who anticipate receiving the CTC. Responses differ slightly across categories as some respondents skipped answering yes/no for certain categories.
Overall, 64 percent of eligible parents anticipated receiving the CTC. We examine how these parents planned to use these payments in Figure 1. The most common planned use was building emergency savings (75%), followed by paying for routine expenses (67%), essential items for children (58%), purchasing more or better food (49%), starting or growing a college fund (42%), and paying for child activities (42%), moving or making home improvements (32%), health care expenses (29%), child care expenses (26%), spending more time with children (20%), and purchasing gifts or entertainment (20%). Relatively few parents planned to use the CTC to pay for tutors for children (7%), working less or changing jobs (6%), or sending their children to a different school (6%).

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In Figure 2, we look at the relationship between planned uses of the CTC and families’ income in 2020. Overall, we find that:

Families across the income spectrum planned to use the CTC to build emergencies savings at similar rates.
A greater proportion of lower-income families (76%) planned on using their CTC for routine expenses than middle- (64%) and higher-income (54%) families
A substantially greater proportion of lower-income families (75%) planned on using their CTC for essential items than middle- (52%) and higher-income (37%) families
A substantially greater proportion of lower-income families (66%) planned on using their CTC to purchase more or better food than middle- (44%) and higher-income (27%) families
A slightly smaller proportion of lower-income families (38%) planned on using their CTC to start or grow a college fund than middle- (42%) and higher-income (50%) families
A slightly greater proportion of lower-income families (45%) planned on using their CTC for child activities than middle- (44%) and higher-income (32%) families
A slightly greater proportion of lower-income families (29%) planned on using their CTC for emergency savings than middle- (24%) and higher-income (24%) families
A substantially greater proportion of lower-income families (28%) planned on using their CTC to spend more time with their children than middle- (16%) and higher-income (11%) families
A greater proportion of lower-income families (12%) planned on using their CTC to hire tutors for their children than middle- (5%) and higher-income (3%) families.

Figure 2. Planned usage of the child tax credit, by 2020 household income

Source: Employment, Financial and Well-being Effects of the 2021 Expanded Child Tax Credit, Social Policy Institute.Notes: n=1,049 – 1,071 respondents who anticipate receiving the CTC. Responses differ slightly across categories as some respondents skipped answering yes/no for certain categories.
There are four main takeaways from these results:

The results show that the new CTC will likely have the intended effect of alleviating child poverty, as seen in the relatively large proportions of respondents planning to use their CTC for emergency savings, routine expenses, essential items, purchasing more or better food, and paying for health care and child care expenses.
The results show that the new CTC will likely increase social mobility both for families and their children. For example, when considering family social mobility, a relatively large proportion of respondents planned to use their CTC for moving and making home improvements or starting/growing a college fund for their children.
While some fear that the CTC will disincentive work, this fear appears to be relatively unfounded, as only 6 percent of families planned on working less or changing jobs.
These results show that low-income families planned to use the CTC to both cover the essential expenses for their households and children, while also commonly planning to use the CTC to build their emergency savings. This is important for promoting the financial well-being of these families, who often struggle with severe budgetary constraints and have very minimal amounts of emergency savings.

U.S. families, and low- and middle-income families in particular, must often manage tight budgets that make it difficult to build even modest savings and put them at risk of taking on high (and often expensive) debt burdens. Based on these results, it appears that the CTC will help give families a little more slack in their budgets to help them meet their essential needs, while also allowing them to make important investments in their children’s future, such as college savings or paying for extracurricular activities. Both of these functions may help improve children’s well-being both now and over the long term, and policymakers should consider these benefits as they debate whether or not to make the CTC permanent.

Africa in the news: Vaccine, energy, and climate change updates

Africa in the news: Vaccine, energy, and climate change updates | Speevr

New South African tech transfer hub to replicate Moderna vaccine
A tech transfer hub in South Africa established in June aims to replicate, with the aid of Moderna, the Moderna COVID-19 vaccine, according to a senior official with the World Health Organization. Moderna said in October 2020 that it would not enforce patents on its vaccine during the pandemic, but talks between the tech transfer hub and Moderna about disclosing the formula and the manufacturing process have yet to make significant progress. Regardless of whether the hub can rely on Moderna for assistance, the hub must still undertake requisite clinical trials, meaning it would not be able to distribute vaccines until the second half of 2022.

This new effort will supplement South Africa’s current production of mRNA vaccines. In July, Pfizer-BioNTech reached an agreement with South African pharmaceutical company Biovac to produce 100 million doses a year. However, the deal does not impart knowledge of the formula behind the vaccine, as the agreement is only to “fill and finish,” meaning Biovac will put the solution into vials and package them for shipping.
Expanded vaccine production is an urgent issue around the world, and Africa is no exception: According to the Africa CDC, only 3.3 percent of the continent is currently vaccinated against COVID-19 due to challenges in access, cost, and logistics, among other difficulties.
For more on Africa’s efforts to spur vaccine production and access, read, “Africa must produce its own vaccines.” Also consider listening to the Honorable Dr. Michel Sidibé, African special envoy for the African Medicines Agency of the African Union  and Dr. Agnes Binagwaho, vice-chancellor of the University of Global Health Equity,  share their thoughts on addressing vaccine inequity at the recent AGI event, “Accelerating COVID-19 vaccinations in Africa.”

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South Africa seeks international investment to shift away from coal; DRC attempts to renegotiate a 2008 minerals-for-infrastructure contract with China
On Thursday, September 16, South Africa’s Ministry of Environment, Forestry and Fisheries announced it will seek international cooperation around facilitating and financing the country’s energy transition away from coal, which generates over 80 percent of its electricity. As a first step, the British envoy to COP26, John Murton, announced an upcoming visit South Africa prior to the COP26 conference in Glasgow. The planned meeting follows a proposal from the state power company, and Africa’s largest source of emissions, Eskom, to raise $10 billion to replace most of their coal-fired power plants with renewable energy infrastructure by 2050. However, some South African government officials fear the transition away from coal, which supports more than 90,000 jobs in the country, will cause substantial economic disruption. Proponents of the plan suggest investing in decarbonizing South Africa’s electricity infrastructure offers magnitudes more impact than similar efforts in Europe: According to energy expert Clyde Mallinson, director of Virtual Energy and Power (VEP), “For every kilowatt hour of electricity you offset in South Africa, you get four or five times as much carbon reduction as you do in Europe.”
In related news, on September 11, Democratic Republic of the Congo (DRC) President Felix Tshisekedi proposed that the country review its $9 billion minerals-for-infrastructure mining contract, which it signed with China in 2008. In the announcement, Tshisekedi panned the contract, which was signed by former President Joseph Kabila, calling such agreements “exploitation contracts… [that keep the rich] getting richer while our people remain poor.”
Sudan and Kenya suffer from floods and droughts
According to a statement made Wednesday by the Kenyan National Drought Management Authority (NDMA), 2.1 million people in 23 counties across Kenya’s north and coast will be in urgent need of food aid in over the next six months as droughts continue to threaten livelihoods. Furthermore, on September 8, President Kenyatta officially declared the droughts a national disaster. In July, the Kenyan government, along with the Food and Agriculture Organization of the U.N. (FAO), established a drought response plan, which states that a total of 9.4 billion Kenyan shillings will be needed to support food and safety nets as well as non-food interventions to the drought.
As Kenya struggles to deal with droughts, Sudan is currently experiencing flash floods that have reportedly affected over 88,000 people in 13 of its 18 states since July. According to a report by the U.N. Office for the Coordination of Humanitarian Affairs (OCHA), more than 12,700 homes have been damaged and 4,800 homes destroyed. The latest flooding comes a year after the flooding in East Africa affected nearly six million people, including 1.5 million displaced. Sudan, according to the BBC, was one of the worst affected countries with 860,000 people having their homes damaged or destroyed.
As the region grapples with natural disasters, the World Bank released the 2021 Groundswell report The report projects that by 2050 sub-Saharan Africa could see as many as 86 million internal climate migrants due to climate-related losses in livelihoods and livability.

Africa in the news: Guinea, Côte d’Ivoire, and vaccine updates

Africa in the news: Guinea, Côte d’Ivoire, and vaccine updates | Speevr

Guinean special forces oust president and dissolve government
On Sunday, September 5, Guinean special forces led by Col. Mamady Doumboya announced on state television that they had removed President Alpha Condé from office and dissolved the current government. In the announcement, Doumboya indicated that military officials would rewrite Guinea’s constitution and also accused Condé of human rights abuses and corruption. Condé, who was elected to a third term in October following a controversial amendment to the constitution allowing him to extend his stay in power, remains in an undisclosed location, according to the country’s military. Social unrest in the country had been building in advance of the coup, particularly after Condé’s government oversaw violent crackdowns on those protesting the constitutional amendment that led to the deaths of 92 protestors over several months.

In response to the coup, leaders of the 15-country Economic Community of West African States (ECOWAS) suspended Guinea from the regional bloc on Wednesday and sent a delegation to meet with the junta behind the coup. The African Union (AU) followed ECOWAS in suspending Guinea from its decisionmaking bodies and related activities, stressing the importance of diplomatic efforts to guide Guinea toward a civilian-led, constitutional government.
In related news, the price of aluminum skyrocketed this week as buyers feared supply disruptions in Guinea, which has the world’s largest reserve of bauxite, an ore that’s the most common source of aluminum.
Côte d’Ivoire discovers new oil and gas reserves
Last week, Italian oil company Eni announced the discovery of a large oil and natural gas field off the coast of Côte d’Ivoire. A deepwater exploration detected the field at a depth of 3,445 meters (11,300 feet) and produced estimates that it contains as many as 2 billion barrels of oil and more than 50 million cubic meters of natural gas. In reaction to the news, the Ivorian Energy Ministry stated that the field would “greatly increase Ivory Coast’s proven reserves in coming years.” The discovery reveals yet another oil field off the Ivorian coast: In total, Côte d’Ivoire has identified 51 onshore and offshore oil fields, of which 21 are still untapped.
Also in Côte d’Ivoire, substantial rainfalls across most of the nation’s cocoa-growing regions bode well for crop yields this year, according to farmers in the region. The rains come weeks before Côte d’Ivoire, the world’s largest cocoa producer, will begin its primary harvest season. In 2019, cocoa and cocoa byproducts accounted for almost 40 percent of the country’s exports. This week, Ghana and Côte d’Ivoire agreed to cooperate on cocoa pricing after Ghana, the world’s second-largest cocoa producer, reported that last year’s cocoa bean harvest of 1.1 million metric tons was its largest on record.
Africa’s vaccination campaign hits hurdles as COVAX lowers vaccine delivery goals
On Thursday, September 9, World Health Organization (WHO) Africa Director Dr. Matshidiso Moeti, announced that, for various reasons, Africa will receive 25 percent fewer doses than originally anticipated for the year. This statement came after a declaration on Wednesday from COVAX that is was lowering its delivery goal to 1.425 billion doses instead of its previous goal of 2 billion. According to a joint statement by the WHO, the Coalition for Epidemic Preparedness, and other involved organizations, the decision to lower the COVAX target is due to export restrictions of the Serum Institute of India as well as manufacturing problems at Johnson & Johnson and AstraZeneca facilities.

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Criticisms of many developed countries’ vaccine policies are on the rise, as the U.S. recently announced it would make booster shots available to its population: In fact, on Thursday, September 9, Moeti stated, “in the past week, the COVAX Facility delivered over 5 million doses to African countries—while the United States has thrown away three times that amount of doses during the pandemic.” In addition, countries such as the United Kingdom and Germany have secured enough vaccines for five times their populations.
Experts predict that, at the current pace of vaccinations, Africa will remain far behind the rest of the world: In fact, forecasting by The Economist Intelligence Unit predicts that most countries in Africa will not achieve widespread vaccination until the year 2023 while others such as the Unites States will achieve the goal later this year. Indeed, the region is far behind the rest of the world in obtaining and distributing the vaccine due to a myriad of challenges, including supply, cost, poor infrastructure, few cold chain storage facilities, and patient hesitancy, among other constraints.
For more information on vaccine equity and strategies for accelerating the rollout in Africa, join the Brookings Africa Growth Initiative on September 15 for the event, “Accelerating COVID-19 vaccinations in Africa.”

The role of fiscal decentralization in promoting effective domestic resource mobilization in Africa

The role of fiscal decentralization in promoting effective domestic resource mobilization in Africa | Speevr

The lingering economic impact of the COVID-19 pandemic is disrupting sub-Saharan Africa’s traditional financial inflows, revealing the heightened need to strengthen domestic resource mobilization and improve tax administration in the region. This unprecedented shock to the world economy has revealed the volatility of financial inflows that African nations are dependent on: Indeed, foreign direct investment (FDI)—an increasingly important source of development financing traditionally rooted in oil, gas, and infrastructure projects—has declined approximately 12 percent and 25 percent in sub-Saharan and North Africa, respectively, between 2019 and 2020. Remittance inflows, which millions of African households rely on to support their families, declined by 12.5 percent throughout sub-Saharan Africa over the same period. In addition, discontent with globalization, inconsistent political environments, and competing humanitarian issues are transforming official development assistance (ODA) into an increasingly uncertain source of development financing.

The fragility of Africa’s external financial inflows to shocks in the global economy suggests African nations should focus on securing more consistent domestic revenue streams. Indeed, ensuring more effective domestic resource mobilization and tax administration systems—sources of revenue that governments have direct control over—via fiscal decentralization reforms can offer an avenue to simultaneously bolster government coffers, improve the impact of government spending, capture uncollected tax revenue spillage, and augment taxation’s prominent role as a source of development financing.

Achieving better governance is easier said than done: Indeed, the experience from relatively well-executed fiscal decentralization in Brazil and Indonesia provides evidence that fiscal decentralization has the potential to improve the collection and spending of domestic tax and nontax sources of government revenue and, in addition, improve government accountability.
How can fiscal decentralization boost domestic resource mobilization?
For fiscal decentralization to be effective, countries must meet several key institutional preconditions. Meeting these institutional preconditions ensures regional/state and local/municipal governments have the capacity to institute effective decentralized expenditure allocation and revenue collection. Otherwise, fiscal decentralization has the potential to worsen public service delivery. Such preconditions include:

Stable political environments.
Effective autonomous subnational governments.
Institutional capacity at regional/state and local levels of government.
Government accountability.
Effective democratic election infrastructure at all levels of government.
Capacity to raise adequate levels of revenue locally.

Importantly, the potential for fiscal decentralization to benefit domestic resource mobilization stems from improvements in public service delivery, particularly in terms of allocative efficiency, preference matching, and stronger government accountability.

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Local governments benefit from an informational advantage, whereby their proximity allows them to better understand the needs and preference of their local constituents. Relative to the central government, this informational advantage enables local governments to more effectively allocate public resources and serve needs of the people.
Local governments’ geographic proximity to their constituents—the direct beneficiaries of public services—also pressures local authorities to efficiently allocate fiscal resources. This productive efficiency of local public service delivery promotes government accountability through the direct election of local officials by the local populace, which also empowers voters with control over their public authorities and institutions. The subsequent performance of neighboring localities also provides local voters with a model to compare the competencies and effectiveness of their local politicians, as well as encourages competition among local governments to produce effective public services.
Drawbacks of fiscal decentralization
While fiscal decentralization provides an alternative fiscal structure to improve the collection and spending of government revenue, drawbacks exist. Hierarchical fragmentation of government services can impose the loss of economies of scale and, therefore, cause decreased efficiency and higher costs in the production, implementation, and distribution of public goods and services. Fiscal decentralization, which reduces federal government revenue, may also weaken the central government and hinder its full capability to redistribute national resources from regions/states with surpluses to localities in need of funding. Furthermore, without the infrastructure to support legitimate democratic local elections, fiscal decentralization will not improve government accountability and may introduce incentives for rent-seeking political behavior and the misallocation of local resources to nonproductive expenditures. In what follows, we compare the experiences of Brazil, Indonesia, and Nigeria—three economic powerhouses in their respective regions.
Evidence from Indonesia
Following economic and financial crises, Indonesia transitioned to a decentralized governmental system in 1999. Regional governments became empowered to manage governmental and public services, with notable exceptions in the regulation of religion, defense, national security, and monetary policy. Indonesia’s fiscal structure enables provinces and municipalities to collect local taxes and set local tax rates according to their budgetary needs, while maintaining a fiscal network between the subnational and federal government to ensure an equitable budgetary balance across provinces. These transfer payments alleviate horizontal, cross-state fiscal imbalances and promote equitable distribution of state revenue.
Since the implementation of fiscal decentralization in Indonesia, social welfare, public service delivery, and a myriad of development indicators have improved significantly.

Evidence from Brazil
Brazil’s model of fiscal decentralization offers an insight into the importance of intergovernmental tax transfers to prevent revenue imbalances among states. The redistributive structure of the Brazilian federal fiscal system allows poorer states to access a greater share of revenue from federal transfers than wealthier states, which enjoy a more substantive tax base. In turn, these wealthier states also benefit from greater budgetary autonomy. As a result of the integration of intergovernmental transfers mediated by the federal government, Brazil’s equitable revenue transfer system allows it to maintain low levels of vertical imbalances—the differences between budgetary mandates and revenue assignments throughout all levels of government—relative to the international average and select wealthy countries such as United Kingdom, Spain, and Australia.
Evidence from Nigeria
Nigeria’s model of fiscal decentralization has persisted since 1946, but its decentralized system of revenue allocation and collection has not manifested in notable improvements to the country’s nominal tax revenue or tax-to-GDP ratio over the years. While some of Nigeria’s revenue collection inefficiencies may be tied to its relatively high rate of tax evasion and avoidance, the bureaucratic, administrative, and institutional requirements at the local level of government may be limiting the proper implementation and delivery of decentralized public services. Studies, however, have uncovered positive relationships between fiscal decentralization and social and health outcomes in Nigeria, such as higher literacy rates and lower infant mortality rates.

Can effective fiscal decentralization improve domestic resource mobilization?
The successful implementation and outcomes of fiscal decentralization in Brazil and Indonesia offer insight into decentralization’s ability to improve public service delivery, increase government accountability, and promote social, economic, and human development goals. Yet, the institutional preconditions throughout all levels of government that are necessary for successful implementation of fiscal decentralization suggest the reform is not always fully successful, as seen in Nigeria. Nonetheless, the potential for fiscal decentralization to improve public service delivery, efficiency, and accountability remains an attractive alternative governmental system, as Kenya became the most recent African nation to successfully institute a decentralized fiscal system following the approval of its new constitution in 2010.
Lessons for Africa
Shoring up and capturing the full potential of domestic taxation is one of the most important sources of development financing and therefore needs to be a policy priority for African governments. The ability of domestic resource mobilization to provide a hedge against fluctuations in the global economy and volatile commodity prices is especially important for resource-rich countries whose fiscal systems are heavily commodity dependent.

Because 46 African countries and 89 percent of sub-Saharan Africa are commodity-dependent economies (as categorized by the U.N.), African fiscal systems maintain significant exposure to international commodity markets and the global economy. The COVID-19 pandemic exposed this vulnerability, as large commodity-dependent economies with a hefty fiscal reliance on commodity exports, such as Angola, Nigeria, and the Democratic Republic of the Congo, experienced precipitous declines in government revenues in 2020. As a result, these countries were forced to respond with spending cuts, debt issuance, and support from international financial institutions, alongside heightened budgetary requirements, to tackle the pandemic and its economic fallout.

Considering the deleterious impact of the pandemic on African finances, restructuring fiscal dependence away from financial inflows and toward domestic tax resources will provide a route to greater fiscal self-reliance and economic stability. In turn, bolstering internal revenue streams and downstream fiscal stability will make African economies more attractive to international investors—who simultaneously see the continent’s enormous growth potential but remain apprehensive about its economic and political risks.

Africa in the news: South African economy, energy production, and Nigerian foreign relations updates

Africa in the news: South African economy, energy production, and Nigerian foreign relations updates | Speevr

New definition measures South Africa’s GDP 11% higher than previously thought
This week, authorities in South Africa announced that the country’s economy is 11 percent larger than previous estimates after Statistics South Africa altered its method for calculating gross domestic product. The national statistical service’s new definition utilizes a refined, more modern classification of activities, new sources of information, and a new reference year (2015 instead of 2010). The new definition also changed estimates for other key variables, including household consumption relative to GDP and GDP per capita, which became 16 percent and 9 percent higher, respectively. This higher GDP also means that Africa’s (still) second-largest economy has a lower debt burden than previously thought. According to Annabel Bishop, chief economist at Investec Bank Ltd, the new definition suggests that South Africa’s debt-to-GDP ratio will remain below 80 percent through 2023-2024, whereas earlier estimates had it at 87.3 percent by that time. For more on South Africa’s debt burden and how the country’s economy has fared during the pandemic, read “From stimulus to debt: The case of South Africa.”

Meanwhile, South Africa’s unemployment rate has become the highest in the world, according to Bloomberg, which regularly monitors the indicator in 82 countries. The unemployment rate increased to 34.4 percent in the second quarter of 2021, up from 32.6 percent in the first quarter. South Africa is not the only country in the region with such high unemployment rates: The country’s jobless mark barely eclipses fellow sub-Saharan African countries Namibia (33.4 percent) and Nigeria (33.3 percent), which rank second and third in Bloomberg’s database. An expanded measure of unemployment, which includes those available for but not seeking work, reached 44.4 percent in South Africa, an increase of 1.2 percentage points from the first quarter. For recommendations for policies to create jobs for youth in South Africa, see “Solving South Africa’s unemployment: Could tourism, horticulture, agro-processing, or logistics hold the key?“

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New energy projects announced, including transforming landfills in Rwanda, expanding solar and wind capacity, and building and upgrading nuclear power plants
This week, the Rwandan capital of Kigali announced a new environmentally friendly project that aims to use the Nduba landfill to generate energy for the national grid. In 2020, the area was designated an environmental and health hazard, and this new project will transform the landfill so that it will capture gases (such as methane) that it produces and convert those gases into power instead of releasing them into the air. The solid waste can also be turned into other materials like plastic and repurposed into items like bricks, electric poles, and chairs. According to The New Times, the capture and use of landfill gas, the transformation of waste to energy, and aerobic composting can all make major contributions to the reduction of gas emissions that cause global warming. Overall, the government plans on investing $28 million in projects that can utilize gas landfills for power generation and which are also expected to create new green jobs.
The government argued that such action is essential as Rwanda’s cities undergo rapid urbanization—the population of Kigali alone has skyrocketed from just over 600,000 people in 2002 to 1.6 million in 2021.
At the launch, Environment Minister Jeanne d’Arc Mujawamariya explained the reasoning and outlined hoped-for next steps in the effort: “The waste should not be wasted. We should turn waste into revenues. Once investors generate revenues from recycling waste, we will work with them to reach the level of providing incentives to households.” The project is part of an agreement between Rwanda’s Ministry of Environment and the government of Luxembourg and is also a part of efforts to strengthen diplomatic ties and aid in the transfer of technology between the two nations.
Other renewable energy sources like solar continue to grow throughout the continent. Investment companies Gridworks and New GX have announced investments of $40 million into the company Sustainable Power Solution Investments (SPS), which will be used to build additional solar plants that can collectively generate 100 MW of power across sub-Saharan African countries, especially Ghana and Nigeria. The investment in SPS is Gridworks’ second since 2019, when it committed $31 million to facilitate the installation of 45 MW of solar energy across the region.
In related news, South Africa moved forward with plans to expand its solar and wind capacity by 2.6 GW and, this month, received 102 bids from companies for such projects. The Department of Mineral Resources and Energy, which will fund the projects, said that it would announce the successful bidders in October and November of this year, and the winners must complete the projects by April 2024.
Also as part of efforts to reduce the country’s dependance on carbon-intensive energy sources, South African energy regulators are looking to increase the country’s nuclear energy capacity. Last week,  Mineral Resources and Energy Minister Gwede Mantashe announced plans to build a new 2,500 MW nuclear power plant by 2024. The announcement was met with some early opposition, though, with the civil society group Organization Undoing Tax Abuse (OUTA) arguing that the project is “not affordable, not appropriate and should not be approved.”
South Africa currently has the continent’s only nuclear plant, the Koeberg Nuclear Power Plant near Cape Town, which generates 5 percent of the country’s electricity. Notably, a new $1.2 billion program was recently launched to extend the operating life of that plant, which will involve replacing six steam generators and forced air cooler units, as well as perform needed maintenance on the turbine system. The modifications are expected to extend the operational life of the plant, which has been connected to the national grid since 1984, by 20 years.
Nigeria deepens relationships with Russia, South Korea
This week, Nigeria and Russia signed a military cooperation agreement that details the framework for the supplying of equipment from and training of troops by Russia to the West African country. According to the Nigerian ambassador to Russia, President Muhammadu Buhari feels Russia can aid Nigeria in defeating Boko Haram, which continues to contribute to insecurity in northern Nigeria.
This deal is another step in the strengthening of ties between the two countries: For example, in October 2019, Russia hosted its first summit with Africa that included 43 heads of state or government, with the purpose of reviving the economic, political, and military influence of Russia in Africa. At the summit, Russia made the first of many security and economic deals, including a contract to supply attack helicopters to Nigeria. For more on the Africa-Russia relationship see the 2019 op-ed, “Vladimir Putin is resetting Russia’s Africa agenda to counter the US and China.”
In related news, Nigeria and South Korea have been working to expand their political, economic, and defense relationships, as recently demonstrated by the visit of Korea’s First Vice Minister of Foreign Affairs Choi Jong Kun to Nigeria early this week. In fact, during his visit, Kun stated that, COVID situation pending, within the next five years, he wants to see a direct flight between the capitals of both countries, as well as increased cultural collaboration, technology, education, and trading. The two countries are looking to cooperate on security issues as well, as Kun and the Nigerian Minister of Transportation Rotimi Amaechi met to discuss maritime security during the visit.
This trip was another step in Korea’s pursuit of a long-term, mutually beneficial relationship with Africa in recent years: For example, Korea has sent $200 million in masks and medical equipment to the continent to aid its fight against COVID-19. In March of this year, the South Korean Ambassador to Nigeria stated that the embassy of South Korea was interested in a joint program for children as well as other cultural programs to aid Koreans in understanding Nigerians culturally. The Korea International Cooperation Agency (KOICA) has also been rapidly increasing its aid to the region since 2016.