Chinese firms are eyeing partnerships with Turkish construction firms in Africa and are also looking to take stakes in Turkish companies, the head of the Turkish Contractors Association said.
Mithat Yenigun said he had discussed possible acquisitions by Chinese companies with a Chinese business representative, without giving details of which firms could be involved.
“They asked if we could sell stakes or cooperate,” he told Reuters. “They want to partner up with us, they are very willing to work with us. They also have unlimited money. That is what we lack.”
Turkish firms, which thrived in a domestic economy fueled for years by cheap credit and a construction boom, are now faced with economic recession at home. Those that took out foreign currency loans have found their debts soaring as the Turkish lira slumped last year.
Turkish contractors are second only to Chinese companies in terms of international contracts, according to the Engineering News Record (ENR) which carries out annual surveys of the world’s top contractor companies.
Yenigun said Chinese firms had a 10-15 year headstart in Africa. They now see Turkish firms as potential rivals, he said, but are also looking for opportunities to work together. He gave no specific examples of companies or projects but said that Chinese contractors want to work in projects in sub-Saharan countries with Turkish companies.
Turkish contractors had proved themselves in the region, Yenigun said, with large infrastructure projects which provide jobs by employing local workers during construction.
CONFLICT HITS CONTRACTS
At their peak, Turkish companies won around $30 billion worth of international contracts a year in 2012 and 2013, according to the contractors association. Business declined as conflict in Libya and Iraq cut back infrastructure projects there, and strained ties with Moscow affected business with Russia.
Last year Turkish contractors registered $19.4 billion of work abroad, with Russia accounting 25% of those projects and Saudi Arabia another 19%. Since the killing of Saudi journalist Jamal Khashoggi, a critic of Saudi Crown Prince Mohammed bin Salman, in the kingdom’s consulate in Istanbul last year, relations between Ankara and Riyadh have deteriorated.
Approval processes for construction tenders won in Saudi Arabia now take longer than they used to, Yenigun said.
“We feel the coldness when it comes to the relations with the government. An official process that previously took three months, now takes a year over there,” Yenigun said.
Turkish companies now aim to reach an annual volume of $50 billion with potential business in Africa, Russia, and Iraq, where they hope Ankara’s pledge of $5 billion credit for the reconstruction will boost business.
Turkish contractors are expected to build roads, highways, railways, Mosul airport, a hospital as well as mosques and residence projects.
The world’s developed economies are facing a decline in fertility so pronounced that some will see their populations -- and economies -- shrink in years ahead. Sub-Saharan Africa faces the opposite situation: Its population has more than doubled in the past three decades and is expected to triple again by the end of this century.
While the growing number of young, working-age people creates economic opportunities, it’s not clear how governments will manage the boom and whether the path to prosperity followed by other developing regions -- shifting into manufacturing -- is still available. Will the benefits of a more crowded Africa outweigh the drawbacks, or are its problems too dire and its governance too weak?
1. Why the surge?
Population growth in sub-Saharan Africa owes primarily to better medical care, which has slashed infant and child mortality and raised average life expectancy from 50 to 61 since 2000. The population has soared to about 1.1 billion and it could hit 4 billion by 2100, says the United Nations. Nigeria alone is predicted to double to 400 million people by the middle of the century, making it the world’s third-most populous country after China and India. Sub-Saharan Africa’s per-capita gross domestic product has climbed 40% since the start of the century to $1,652, compared with $1,987 in India. However, oil and mineral riches mean a handful of nations are 10 or more times wealthier than a score of others that remain desperately poor.
2. How could Africa benefit?
Almost 60% of sub-Saharan Africans are younger than 25, compared with one-third in the U.S. This “youth bulge” could translate into an ample and energetic workforce. But the benefits accrue only when greater prosperity reduces fertility rates. If the next generation has fewer babies than their parents, the proportion of working age people would rise relative to the number of their dependents -- mainly children and the elderly -- creating a so-called “demographic dividend.” Smaller families allow more women to secure paid work, and parents and governments are able to invest greater resources in each child. That’s what happened as Asia and Latin America developed, but Africa’s fertility drop-off is forecast to take much longer due to deep-seated cultural attitudes and pervasive poverty.
3. What’s the biggest challenge?
Jobs. The African Development Bank estimates that more than 10 million new jobs must be created each year just to absorb the number of young people entering the workforce. Increased automation in manufacturing might squeeze off a traditional source of employment growth, so some countries are pinning their hopes instead on services. Call centers and other kinds of outsourcing operations have opened in South Africa and cities such as Lagos, Nigeria and Kinshasa, Democratic Republic of Congo. Tourism has overtaken coffee and tea exports as the top foreign currency earner in Rwanda.
4. What needs to change?
Education. Almost a third of children in sub-Saharan Africa don’t attend school, and on average just 4% of the population completes university. The region also struggles to feed its population, with one in four classified by the UN as malnourished. To move beyond subsistence agriculture, politicians must invest billions in public services and infrastructure such as water and electricity to serve a rapidly urbanizing citizenry. Mali and Uganda have improved roads and transport links to boost exports of mangoes and fish, while Ethiopia is building Africa’s largest hydroelectric plant, on the Blue Nile, to control flooding and generate power. Governments also must tackle environmental degradation, including worsening pollution and deforestation.
5. Can Africa’s population growth be slowed?
Yes, though progress has been slow compared with other regions. Women have 4.8 live births on average, down from 6.8 in the late 1970s but still nearly three times the number in Europe and North America. Rwanda encouraged family planning and made contraceptives available at clinics, driving its fertility rate down by more than half, to 3.8 over the past 20 years. But many other countries still fall short: on average, sub-Saharan African women have two more children than they want to, and in 14 countries, they average five or more children.
6. What if Africa can’t absorb all those people?
Overcrowded countries such as the Philippines, India, Bangladesh and Indonesia have seen waves of workers move abroad to fill jobs in more developed places and send earnings back home. While Africans are starting to follow suit, the outflows come as doors that were open for others may already be closing. In Italy, populist leaders are responding to rising anti-immigration sentiment by turning away the boatloads of Africans trying to reach Europe illegally across the Mediterranean.
Access to reliable and affordable electricity brings many benefits. It supports the growth of small businesses, allows students to study at night and protects health by offering an alternative cooking fuel to coal or wood.
This is mainly because there’s not enough sustained investment in electricity infrastructure, many systems can’t reliably support energy consumption or the price of electricity is too high.
Innovation is often seen as the way forward. For instance, cheaper and cleaner technologies, like solar storage systems deployed through mini grids, can offer a more affordable and reliable option. But, on their own, these solutions aren’t enough.
To design the best systems, planners must know where on- or off-grid systems should be placed, how big they need to be and what type of energy should be used for the most effective impact.
The problem is reliable data – like village size and energy demand – needed for rural energy planning is scarce or non-existent. Some can be estimated from records of human activities – like farming or access to schools and hospitals – which can show energy needs. But many developing countries have to rely on human activity data from incomplete and poorly maintained national census. This leads to inefficient planning.
In sub-Saharan Africa, there are more people with mobile phones than access to electricity, as people are willing to commute to get a signal and/or charge their phones.
This means that there’s an abundance of data – that’s constantly updated and available even in areas that haven’t been electrified – that could be used to optimise electrification planning.
We were able to use mobile data to develop a countrywide electrification strategy for Senegal. Although Senegal has one of the highest access to electricity rates in sub-Saharan Africa, just 38% of people in rural areas have access.
By using mobile data we were able to identify the approximate size of rural villages and access to education and health facilities. This information was then used to size and cost different electrification options and select the most economic one for each zone – whether villages should be connected to the grids, or where off-grid systems – like solar battery systems – were a better option.
To collect the data we randomly selected mobile phone data from 450,000 users from Senegal’s main telecomms provider, Sonatel, to understand exactly how information from mobile phones could be used. This includes the location of user and the characteristics of the place they live.
Data was gathered on the number of texts and calls, duration of call, and the locations where the texts and calls were made. This was compared to electricity profiles and consumption in urban areas and available information about the location of villages, schools and hospitals from the World Bank.
We found that mobile phone data produces an accurate representation of electricity demand through distinct patterns. For instance, when there are schools or hospitals nearby, there’s a huge spike in the number of calls and texts in the evenings – when people are at home.
This information gives us vital information for electrification planning. It lets us know how many people there are, the area’s electricity demands and the distance to the closest electricity grid. This allows us to then cost different electrification options – for instance if the grid should be extended or solar energy used – and select the cheapest option.
There’s huge untapped potential in mobile phone data as a source of human activity data. It opens up new possibilities to improve infrastructure planning in general. It can help increase electrification rates, but can also be used to make the provision of water, food, education, health and other valuable services more effective.
Eduardo Alejandro Martínez Ceseña, Postdoctoral Research Associate in the School of Electrical & Electronic Engineering, Electrical Energy and Power Systems Group, University of Manchester; Joseph Mutale, Professor of Sustainable Energy and Electric Power Systems, University of Manchester; Mathaios Panteli, Lecturer School of Electrical and Electronic Engineering, University of Manchester, and Pierluigi Mancarella, Professor of Smart Energy Systems, University of Manchester
The world is making remarkable progress in combating poverty. From 2000 to 2013, the portion of the world’s population living on less than the international poverty line of US$1.90 a day fell from 28.5 % to 10.7 %. That’s about one billion people lifted out of poverty.
In 2000 the United Nations launched the Millennium Development Goals, a coordinated international effort to eradicate poverty and raise living standards worldwide by 2030.
An even more ambitious global effort to eradicate poverty, called the Sustainable Development Goals was adopted in September 2015. This also seems to be producing significant results. An estimated 83 million people have escaped extreme poverty in the first three years after the goals were adopted – between January 2016 and July 2018.
At the same time, there’s been a dramatic shift in the geography of poverty around the world.
Poverty projections up to the year 2030 (the end of the Sustainable Development Goals) suggest that even under the most optimistic scenario, over 300 million people in sub-Saharan Africa will still be in extreme poverty. Thus success in poverty eradication under these goals will depend crucially on what happens in Africa.
According to our research, the adoption of the goals in 2000 played a significant part in accelerating the process of poverty reduction in the world. The implementation of antipoverty programmes and poverty reduction strategies in individual countries became a routine part of national development plans. But, there was considerable disparity in how different countries responded to the development goals as well as in their capacity to implement these plans.
In the early 1990s, African countries such as Nigeria, Lesotho, Madagascar, and Zambia had similar poverty levels to those of China, Vietnam and Indonesia. Yet, this group has been successful in reducing poverty, while the African countries haven’t.
So, why this disparity and how can poverty reduction in Africa be accelerated?
We looked at poverty trends in the developing world between 1990 and 2013. Using standard income poverty measures expressing the part of the population living on less than $1.25 and $1.90 a day, we found that poverty tended to fall faster in more poverty-ridden countries.
Good news? Yes, but such progress, although significant, doesn’t imply that the end of poverty is in sight everywhere. For example, if trends continue in a poverty-ridden country such as Mali, where 86.08% of people were living below $1.25 a day in 1990, it would take about 31 more years to eradicate extreme poverty altogether.
And, even a much less poor economy like Ecuador (where 6.79% people lived on less than $1.25 a day in 1990) is predicted to take about 10 more years to eradicate extreme poverty altogether.
Our research identifies a crucial role for state capacity in differing levels of poverty reduction. Sub-Saharan African states often suffer from limited institutional capability to carry out policies that deliver benefits and services to citizens. In other words, they have limited state capacity.
Building state capacity depends on many variables. It is greater when ruling elites are subject to effective limits on the exercise of their power through institutionalised checks and balances. It’s also greater in countries with a longer history of statehood. For example, China, an experienced state which is centuries old, may have developed a greater ability to administer its territory - through learning by doing. It has thus become more effective at delivering on policies compared to less experienced African states.
And our own research suggests that countries with the most effective governments reduced income poverty at up to twice the speed than countries with the weakest states.
Fighting poverty in Africa
The weaknesses of a state affects the fight against poverty in a number of ways.
Firstly, fighting poverty requires direct policy interventions. Yet poorer African countries are less effective in reaching their poor. For example, governments in sub-Saharan Africa don’t have the data and administrative know-how necessary for reliably identifying their poor. This means they can’t target resources to them. Anti-poverty programmes in countries such as Malawi, Mali, Niger and Nigeria miss many of their poorest households.
The growing evidence on the gaps in state capacity and the importance of effective states for poverty reduction implies that, without significant improvement in governance, Africa may fall further behind in meeting the first sustainable development goal target of ending poverty.
To accelerate the end of poverty, African states should focus on developing enough capability for designing and delivering poverty reduction strategies. Implementing these reforms is vital. After all, improving the quality of government is not only important to accelerating poverty reduction. It’s also a development goal in itself.
Much has been made about China’s role and profile in Africa and the factors underlying its activities on the continent. Less debated is the spread and depth of Russia’s contemporary presence and profile in Africa.
There was a strong Russian influence in Africa during the heyday of the Soviet Union. The post-independence governments of Angola, Mozambique, Guinea-Bissau, Democratic Republic of Congo, Egypt, Somalia, Ethiopia, Uganda and Benin at some point all received diplomatic or military support from the Soviet Union.
But this began to change after the superpower started to collapse in December 1991. More than a quarter of a century later Russia’s President Vladimir Putin seems to have new aspirations in Africa. This is in line with his desire to restore Russia to great power status.
Putin places a high premium on geopolitical relations and the pursuit of Russian assertiveness in the global arena. This includes reestablishing Russia’s sphere of influence, which extends to the African continent.
Like Beijing, Moscow’s method of trade and investment in Africa is without the prescriptions or conditionalities of actors like the International Monetary Fund and the World Bank.
Russia is gradually increasing its influence in Africa through strategic investment in energy and minerals. It’s also using military muscle and soft power.
Increasingly, the pressing question is: is the relationship between China and Africa as good for Africa as it is for China? The same question applies to Russia-Africa relations.
Energy and minerals
Interaction between Russia and Africa has grown exponentially this century, with trade and investment growing by 185% between 2005 and 2015.
The fact that 620 million people in Africa don’t have electricity provides Russia’s nuclear power industry with potential markets. Several Russian companies, such as Gazprom, Lukoil, Rostec and Rosatom are active in Africa. Most activity is in Algeria, Angola, Egypt, Nigeria and Uganda. In Egypt, negotiations have already been finalised with Moscow for the building of the country’s first nuclear plant .
These companies are mostly state-run, with investments often linked to military and diplomatic interests.
Moscow’s second area of interest is Africa’s mineral riches. This is particularly evident in Zimbabwe, Angola, the Democratic Republic of Congo, Namibia and the Central African Republic.
In Zimbabwe, Russia is developing one of the world’s largest deposits of platinum group metals.
Russia has also been reestablishing links with Angola, where Alrosa, the Russian giant, mines diamonds. Discussions between Russia and Angola have also focused on hydrocarbon production.Uranium in Namibia is another example.
Russia’s current controversial involvement in the Central African Republic (CAR) began in 2017, when a team of Russian military instructors and 170 “civilian advisers” were sent by Moscow to Bangui to train the country’s army and presidential guard. Shortly after that, nine weapons shipments arrived in the CAR.
Interest in the country has focused on exploring its natural resources on a concession basis. The murder of three Russian journalists in a remote area of the country last year focused the world’s attention on what looked like a Kremlin drive for influence and resources.
Military influence and diplomacy
Russia is the second largest exporter of arms globally, and a major supplier to African states. Over the past two decades it has pursued military ties with various African countries, such as Ethiopia, Nigeria and Zimbabwe.
Military ties are linked to bilateral military agreements as well as providing boots on the ground in UN peacekeeping operations. Combined, China and Russia outnumber the other permanent members of the UN Security Council in contributing troop to UN peacekeeping efforts.
Russia has also been actively supporting Zimbabwe. Shortly after it was reported in 2018 that China had placed new generation surface-to-air missiles in Zimbabwe, Russian Foreign Minister Sergey Lavrov announced that his country was pursuing military cooperation.
Significantly, Zimbabwe’s President Emmerson Mnangagwa has said that his country may need Russia’s help with the modernisation of its defence force during a recent visit to Moscow.
Russia, Africa and the future
Both Russia and China are keen to play a future role in Africa. The difference between these two major powers is that China forms part of the Asian regional economy. This will surpass North America and Europe combined, in terms of global power - based on GDP, population size, military spending and technological investment.
China and India have sustained impressive economic growth over many years. And, their enormous populations make them two world powers of extraordinary importance. Growth prospects for the Russian economy, on the other hand, remain modest - between 1.5% and 1.8% a year for 2018-2010, against the current global average rate of 3.5% a year.
Still, Russia remains a major power in global politics. For African leaders, the key word is agency and the question is how to play the renewed Russian attention to their countries’ advantage, and not to fall victim to the contemporary “geopolitical chess” game played by the major powers on the continent.
Sub-Saharan Africa is among regions in the world projected to record accelerated economic growth in 2019, amid a slowdown in global growth precipitated by heightened trade tensions and rising interest rates in the US.
The International Monetary Fund says that GDP growth in sub-Saharan Africa will rise from 2.9 per cent posted last year to 3.5 per cent this year, and 3.6 per cent in 2020.
The projection is however a 0.3 percentage point lower, blamed partly on the declining crude oil prices, which have plummeted from a high of $85 a barrel and are expected to average $60 this year.
These have significantly impacted growth for oil-producers Angola and Nigeria.
One-third of sub-Saharan economies are expected to post growth above five per cent, raising optimism of impressive performance in a year when external shocks, including trade tensions, rising US interest rates, dollar appreciation, capital outflows and volatile oil prices are expected to continue.
More critically, the nagging challenges of ballooning debt, expanding recurrent expenditures and slowdown in revenue mobilisation will continue to curtail growth.
"Across all economies, measures to boost potential output growth, enhance inclusiveness and strengthen fiscal and financial buffers in an environment of high debt burdens and tighter financial conditions are imperatives," says the IMF in its World Economic Outlook 2019 report.
The Fund forecasts that 2019 will not be a good year for the global economy, whose growth is projected to decline to 3.5 per cent from 3.7 per cent last year, largely due to an escalation in trade wars between the US and China.
The US has imposed import taxes on steel, aluminium and hundreds of Chinese products, drawing retaliation from China and other US trading partners like Mexico and Canada.
Other factors include the messy Brexit process, Italy's financial struggles, volatile commodity prices and rising interest rates in the US, which are projected to impact heavily on the global economy
Growth in advanced economies will slow from an estimated 2.3 per cent in 2018 to 2.0 per cent in 2019 and 1.7 per cent in 2020.
Growth in the Euro region is set to moderate from 1.8 per cent in 2018 to 1.6 per cent in 2019, while in the US, it is forecast to remain flat at 2.5 per cent, and decline to 1.8 per cent in 2020.
Growth in Asia is expected to dip from 6.5 per cent in 2018 to 6.3 per cent this year, and 6.4 per cent in 2020, with China's declining from 6.6 per cent to 6.2 per cent due to the combined influence of financial regulatory tightening and trade tensions with the US.
India's growth on the other hand, is poised to pick up to 7.5 per cent from 7.3 per cent last year, benefiting from lower oil prices and a slower pace of monetary tightening, plus easing in inflationary pressures.
In Latin America, growth is projected to recover from 1.1 per cent in 2018 to 2.0 per cent this year, and 2.5 per cent in 2020.
Credit: East African
Taxify, a European-based rival to Uber and the leading app-based taxi-hailing platform in Africa, expects to grow its African business ten-fold over the next two years while it works to dethrone Uber in Europe, its chief executive told Reuters.
Markus Villig said his firm, which has 15 million customers and half a million drivers on its platform in more than 25 countries, was on track for its drivers to rake a combined 1 billion euros ($1.1 billion) from rides this year.
The Estonian firm is looking to add more services and more countries in 2019, he said during this week’s Web Summit conference in Lisbon, without disclosing details. Taxify opened in Lisbon earlier this year.
“We see massive potential in Africa to grow at least ten times in the next two years,” Villig said. “We grew our number of rides ten times in 2017 and will be one of the fastest growing companies in the industry this year as well.”
In May, Taxify secured $175 million in funding from a group led by German automaker Daimler to help its battle against Uber.
As for Europe, where Taxify has sought to capitalise on mounting driver resistance to Uber over pay and other issues to get into new markets, including some abandoned by Uber such as Slovakia and Hungary, Villig is aiming to overtake Uber in both the number of users and rides.
“When you look at other regions in the world you have a local champion win in that place. We want to be that leader in Europe, that’s our focus,” he said.
San Francisco-based Uber is active in more than 80 countries and is the market leader in Europe. It takes around a 25-percent cut of fares from drivers using its app.
Taxify typically charges a 15 percent commission, arguing happier drivers provide a better service.
The company has been working with European regulators to try to amend strict public transport laws and rules, saying consumers benefit from the flexibility and competition brought by taxi-hailing platforms.
To increase flexibility, Taxify is working on different solutions for different types of trips, such as using smaller vehicles for city centres.
An attempt to enter the highly competitive London market ground to a halt last year when transport regulators there denied it a licence to operate. But Villig said the application was “in progress, and we’re working with Transport for London to show that we’re best-in-breed”.