Eurasian Resources Group has a pretty massive cobalt mining project in the works in the Democratic Republic of Congo. The company stands to realize a nice return on investment at the rate cobalt prices are skyrocketing. They jumped 71% last year and are expected to increase by 60% this year. Rising demand for electric vehicles and limited cobalt supply is driving these prices.
What concerns me about this project is the supply chain. Cobalt mining has come under scrutiny due to the health hazards associated with extracting the mineral. Even more concerning is the reality that evidence has been found of children participating in cobalt mining in DRC. Take a look through ERG’s website, and you’ll see it is fairly light on sustainable development and occupational safety.
Chinese cobalt miners have caught the spotlight in terms of not managing their cobalt sourcing well. ERG should get the same level of attention to be sure it keeps things on the up and up.
Radical economic transformation. Debate over what this means for South Africa reached fever pitch after President Zuma sacked Pravin Gordhan, probably the most respected high-ranking government official at the time. The midnight firing led to two credit agencies giving South Africa junk bond status. Yesterday, the country went into recession. Radical economic transformation. SMH.
Video: Senator Chris Coons Speaks at Council on Foreign Relations
Senator Chris Coons spoke at the Council on Foreign Relations yesterday, discussing US policy in Africa. Best line from the conversation, “On some level, I don’t want it to be a higher priority for the Trump administration.” Agreed.
Cote d’Ivoire’s Military Situation Continues to Concern
We continue to hear more and more about the cracks widening within Cote d’Ivoire’s Military. The military is a combination of trained career soldiers and rebel fighters who helped President Alassane Outtara oust Laurent Gbagbo when he refused to relinquish the presidency back in 2010/2011. Since that time there have been at least three mutinies, the latest occuring just a couple weeks ago.
Elections are coming up in a few years and I really hope the government figures out a solution to this problem well in advance. Further, investors have maintained relative excitement about the country with its high growth rates driven by economic reforms. You can’t expect that to continue should this military issue continue.
Former Obama Official Weighs in On US National Security Interests in Africa
Karen Attiah, the Global Opinions Editor at the Washington Post, did a nice interview with Grant Harris, former senior director for African Affairs in the Obama administration.
The main theme is that the US has to invest resources into the continent in order to maintain its engagement with countries as it keeps a pulse on threats around the world. Harris wrote a report on the topic and I look forward to checking it out.
UBA Group Enjoyed Africa Day
Yesterday was Africa Day and Nigeria’s UBA Group put on a royal affair where everyone wore their best traditional attire to work. Check out who won best-dressed for the men. Per usual, Nigerians never carry last.
Investor Highlights African Financial Services Opportunity Despite Headwinds
Kurt Davis surveys the financial services industry across Nigeria, Ethiopia, Kenya, Democratic Republic of Congo, and Cote d’Ivoire as ones where investors will find an upside though the current state of the industry isn’t the prettiest to look at. His projection of Cote d’Ivoire becoming the centerpiece of regional financial services action in West Africa is a really interesting that makes sense given the countries growth trajectory so far. Before that happens, I’m going to need the military to improve its operations, find money to pay soldiers, and decrease the specter of mutiny.
Lonmin Moves to Marikana
My mind immediately went to the Marikana Massacre a few years ago when I saw the news that Lonmin was moving it’s Johannesburg office to Marikana where dozens of Lonmin workers were killed by South African police during a wildcat strike. A couple years after that, the company along with the rest of South Africa’s platinum miners went through a very long strike that really put a dent in South Africa’s already struggling growth rate. Lonmin CEO Ben Magara got his start working in the mines and says that he wants to be closer to the company’s operation. Relations between the company and its employees aren’t getting any better with workers protesting last week. Hopefully this move helps improve relations.
China Pledges $100B to Finance Projects Globally
Chinese President Xi Jinping hosted several global leaders for China’s One Belt, One Road Forum. A year or so ago, China launched this effort as part of its aims to connect 60+ countries through a vast transport and logistics network to drive trade. Kenya and Ethiopia’s presidents were in attendance, and both have already seen hundreds of millions of dollars in investment as part of this effort. China’s trade with African countries is already sizeable at $39B for Q1 2017, and we can expect that number to grow significantly in the coming years if China is able to execute the projects it targets and gets paid back. If not, there could be a lot of debt floating around the world. African countries, particularly the ones that have issued large bonds in recent years, would do well to really ensure they have revenue streams to cover more debt should they pursue it.
Nigeria’s Bank of Industry Provides Interest-Free Loans to National Youth Service Members
Nigeria’s Bank of Industry has developed a Graduate Entrepreneurship Fund in partnership with the country’s National Youth Service Corps. The program provides NYSC members with loans they can use to further establish their businesses, and it seems like a nice program. Nigeria requires recent college graduates to participate in the NYSC, completing a year of national service in another part of the country. The program came about after the Biafra War in order to foster national pride and encourage understanding between the various parts of the country. This year, the BoI has distributed about $834,000 to 177 Corps members, an average of $4700 per member. Over the two years of the Fund, the BoI has distributed about $1.8M. I look forward to seeing how the program grows.
Video: Cars45 Explains Online Used Car Marketplace
Last week, I posted about Cars45 raising $5M for it’s online used car platform. Here’s an interview CNBC Africa did with Etop Ikpe, CEO of the company, this morning.
China’s Trade With Africa Keeps Growing
China’s commerce ministry says that the country’s trade with African countries totaled nearly $39B in Q1 2017, driven by a steep increase in agricultural imports. For comparison, the US did about $37B in trade with African countries over the whole of 2015. There’s been much discussion about US-China competition across the African continent. In terms of sheer volume, China continues to win out, while US stakeholders hang their hats on the quality of US-Africa partnerships. The difference in scale of trade levels is just incredible though. I look forward to seeing how China’s trade data takes shape over the course of the year and what stories come out about this sharp increase in demand for agricultural imports.
Former UBS Chief Economist wrote this fantastic analysis of China’s ambitious One Belt, One Road plan – essentially a remix of the Silk Road we heard about in Disney movies…
Magnus questions the likelihood of China realizing this plan due in large part to the difficulty of having the renminbi accepted globally as a reserve currency. Former Central Bank of Nigeria Governor made waves when the CBN began including the renminbi in its mix of foreign reserves, which include th euro, dollar, and British pound.
I would be interested to see a list of countries that have begun incorporating the renminbi in their reserve mix. As far as I can tell, Australia and Chile are the other two countries publicly incorporating the currency in their holdings.
What made this piece so helpful was the history Magnus drew from in putting it together. He goes back to before Christ’s birth to establish the economic context in which China’s Silk Road operated, and connects that analysis to China’s present-day ambitions.
I suppose we will see if China is able to realize this vision. In the meantime, I’ll continue beefing up my African economic history chops.