The story is partly one of reduced demand. Most cobalt goes into the battery packs which power smartphones, tablets and laptops. Appetite for these, already strong in the 2010s, exploded during the covid-19 pandemic. It has since waned as people spend less time staring at their screens: as demand for consumer electronics fell, so did that for cobalt. Even a boom in electric vehicles has not been sufficient to counteract this, since manufacturers have done their best to reduce use of the formerly super-expensive metal.

At the same time supply is rising, and fast. Susan Zou of Rystad Energy, a consultancy, forecasts that Congolese production will jump by 38% this year, to 180,000 tonnes. Most striking is a surge in Indonesian exports, which are projected to hit 18,000 tonnes this year, up from virtually none a few years ago. The world could find itself swimming in cobalt.

In other markets low prices would force producers to shut mines. Not for cobalt. The price has already fallen below many miners’ break-even point. Yet Glencore, the world’s biggest, said on February 15th that it may keep output nearly unchanged this year, having cranked it up in 2022; China Moly, a rival, is about to open a new facility that may yield 30,000 tonnes a year (equivalent to 16% of the world’s output in 2022). Big firms can tolerate low prices because cobalt is a by-product of the extraction of copper and nickel, both of which remain pricey.

Credit: Mark-Anthony Johnson

Most of the major countries in Africa gained independence in the 1950s and 1960s. Others like the Republic of South Africa got independence from the white minority rule as late as 1994 and are yet to find their bearing in order to make any significant progress. Politics (poor governance), corruption, education, health and tribalism have been known to be some of the main causes of Africa’s economic stagnation, but with more and more Africans gaining access to higher education, better health facilities, and growth of democracy, Africa is finally getting ready to take its place on the world stage.

Africa is endowed with alot of natural resources that for a long time has been exploited by the western world while its inhabitants wallowed in poverty. These include Bauxite from Guinea which is the world’s fifth largest producer after Australia, China , Brazil and india, Uranium from Namibia, Niger and South Africa with Namibia and Niger ranking fourth and fifth place respectively in the world production. Gold, with South Africa’s Witwatersrand Basin holding the world’s biggest gold reserve. Gas, which is mainly found in South africa, Mozambique, North African countries such as Egypt, Libya Algeria and in Nigeria. Infact, Africa accounted for 60% the world’s gas discovered in 2013. Other resources include Diamond where Africa accounts for about half of the world’s produce and is mainly found in South Africa, Angola, Botswana, Namibia and the Democratic Republic of Congo. Oil mainly from Nigeria , Libya, Algeria, Egypt and Angola and many others African countries including Kenya where  extraction is yet to begin.

There are many international companies such Tullow oil that are making in -roads to invest in building the necessary infrastructure in preparation for the take off.in addtion, countries like China foron are also investing huge amounts of money in building infrastructure mainly roads, railways and Airports across African, some of them big enough to cover entire regions such as East Africa where they are currently putting up the famous $4 Billion SGR Standard Gauge Rail, 90% of which is funded by China. The SGR has so far been partly completed between Mombasa and Nairobi and is expected to extend to Kampala, Uganda and eventually to Rwanda knitting together swaths of the east African Community’s emerging trade bloc.

These infrastucture once ready will sporadically propell economic development in the continent making Africa the next best frontier for potential investors after Asia. Infact the European Union is making strides in cementing the relationship with some of its existing African partners such as South Africa, Nigeria, Ethiopia and Kenya among others and even inviting them to sit at the negotiating table as was evidenced in the G7 meeting held on the 28th may 2017 in Sicily Italy. “Perhaps the choice to be in Taormina and Sicily says much about how important our relations are with Africa,” Italian Prime Minister Paolo Gentiloni said in his opening remarks.“Today our discussion on Africa will focus on the need for a partnership across all sectors with innovation and development our core objective,” he added.

If the projections by PwC are anything to go by, then South Africa Nigeria And Egypt will be shifting their positions to become some of the worlds strongest Economies with most Western Economies either falling behind or making insignificant progress. PwC Put Nigeria at position 14 from its current position at number 2. Egypt is expectect rise to position 15 from its current position at number 21 with an estimated annual population growth of 1.4% and finally South Africa which is expected to rise to position 27 from its current position 29 with it’s population expected to grow by 0.5% per year by 2050.

The report suggests that most western economies are likely to slow down mainly because of unfavourable demographics as in the case of Italy and Germany which are estimated to move drastically from thier current position 5 to position 9 for Germany and position 12 to position 21 for Italy . The USA will be replaceds by India from position 2 to position 3 even though it will still keep it’s place as one of the largest and most important world Economic powers.

When this happens, eyes will turn to African, with Africans themselves opting to look for opportunies closer to home within the contentinent thereby changing the current trend that is robbing Africa of its finest skilled labour which will be in high demand in order to facilitate the expected growth. Most skilled labour from the western countries with the relevant experties may also end up looking to Africa for well paid jobs.

Some of the Key Infrastructural Projects in Africa include:

Transport costs are 100 per cent higher in Africa compared to other continents. Only a third of the population have access to electricity—in rich countries this rises to between 70-90 per cent. Just 6% have access to the internet, compared to 40 per cent in other developing nations. Despite its rich water resources food security is a constant thorn in the flesh, but only 5 per cent of agriculture is under irrigation.

Such infrastructure gaps continue to weigh down the continent, reducing the dividend from its brisk growth of the last two decades. But some countries—and mega investors too—are making huge progress in reducing the size of the deficit.

It is for this reason that a number of big infrastructural projects have been initiated and built in Africa by International economic and trade partners. They vary from, railway lines, power projects, water dams to roads. This paper will highlight just a few, both complete and ongoing.

The Grand Ethiopian Renaissance Dam : The Ethiopian government is currently constructing the Grand Ethiopian Renaissance Dam (GERD). Once complete, GERD will be the largest hydropower facility in Africa. It will add about 6 000 Mega Watts to the national grid. This is nearly triple the country’s current electricity generation capacity – and represent a potential economic windfall for the government.

Ethiopia has not succeeded in getting international/outside financing for the project, in part due to its lack of competitive bidding for the project’s construction contract. The project therefore is 100 per cent sponsored by the Ethiopian government. It says it will sell dam bonds directly to the citizens to realise this.

Most public workers in Ethiopia earn relatively low wages and face a significantly high cost of living.  Hence, they are not likely to be able to sacrifice that much of their salaries to invest in this national project.  Nevertheless, many of them have been observed purchasing the GERD bonds, primarily because of pressure from the government and the belief that participation in this national project is a show of one’s patriotism.

The Trans-Kalahari Railway: Namibia and Botswana took the first steps in 2015 to establish a multi-billion dollar railway project to link Botswana’s rich coal fields to the Namibian coast. The project, which is still ongoing, is meant to be developed by the private sector in the two countries. Private companies will have to gather capital for the project and not the two governments.

Although several media reports from Botswana have said that the government may have changed its mind about supporting the project, it is said the project is more beneficial to Botswana’s coal exports through Namibia.

Financing: Botswana and Namibia have already signed a bilateral agreement for plans to develop the 1 500-kilometre railway for transporting coal exports to Walvis Bay that will cost US $15 billion. Once the two countries resolve outstanding issues, this will make way for funding initiatives and tenders. In addition, China and India’s demand for the more than 200 billion metric tonnes of coal in Botswana’s central Karoo basin could boost economic growth in the landlocked southern African nation.

Lake Turkana Wind Power Project : Kenya with 11 eleven projects, has the greatest number of large infrastructure projects in East Africa equivalent to 26 per cent of the total. Lake Turkana Wind power project, a renewable energy project is one of them. It aims to provide 300MW of reliable, low cost wind energy to Kenya’s national grid, equivalent to over 20 per cent of the current installed electricity generating capacity. The wind farm site is located in northern Kenya, approximately 50km from the Capital, Nairobi. The Project will comprise a wind farm, associated overhead electric grid collection system and a high voltage switchyard. The Project also includes rehabilitation of an existing road which covers a distance of approximately 200km.

Financing: The total project cost is estimated at US$680 million and includes the cost of the envisaged 400 km transmission line from Lake Turkana to a sub-station near the capital Nairobi, as well as the cost of upgrading 200 km of roads and various bridges. The project will be financed through equity debt (25 per cent), mezzanine debt (5 per cent) and senior debt (70 per cent). As the mandated lead arranger and senior co-lender, Africa Development Bank (AfDB) will provide a long-term senior loan of USD 150 million.

Coastal Railway – Nigeria: This is the largest ever contract awarded to a Chinese company in Africa. The project is worth $12 billion. The deal was signed between the Federal Republic of Nigeria and China Railway Construction Corp (CRCC) in 2014. The railway is 1,402 km in length and upon completion (final phase ongoing), it will link Lagos, the nation’s economic capital, with the eastern city of Calabar, passing through 10 states. It will also link cities with the oil rich state of Niger Delta.In the last 20 years, Chinese companies have built and upgraded around 4500km of railway in Nigeria.

Bagamoyo Port – Tanzania: The project is worth $7 billion. It is funded by China Merchants Holdings International and State Government Reserve Fund of the Oman government. The port is being built in Bagamoyo, a coastal town in Tanzania. Upon completion, it will be able to handle about 20 million containers annually and will be the largest port on the East African coastline, bigger than the Port of Mombasa in Kenya.  Its construction started in October, 2015, but was halted earlier 2017 due to financial constraint facing the Tanzanian government.

Grand Inga lll Hydropower Project Dam, DRC: This is one of the projects that redefine the meaning of a ‘mega project’ in Africa. It can potentially power 40 per cent of the continent. When completed, this dam will be the largest of its kind, with double the capacity of the Three Gorges dam of China (the current largest in the world). The ongoing project is estimated to the tune of US$100 billion from the World Bank.Once Inga III is completed, the DRC will then begin building the Grand Inga Dam which is expected to be completed by 2025.

Mozambique is one of the poorest nations in the world. It is 185th out of 189 countries in terms of gross domestic product (GDP) per capita, according to International Monetary Fund data (IMF – World economic outlook of April 2017). However, the country has an ace in the sleeve that could allow it to rise and go against the current – natural gas, a resource that is still largely unexploited. So far, the only company actively producing this is South Africa’s Sasol, with operations in the province of Inhambane, which, according to estimates, has reserves amounting to 730 billion cubic meters of gas. This figure represents only a small part of Mozambique’s overall potential as it is estimated that one of the reserves has more than 5,000 billion cubic meters of natural gas, placing the country among the top ten in the world with the largest reserves.

It is estimated that by 2023, Mozambique could be one of the world’s largest natural gas exporters. Currently, the project called Coral South liquefied natural gas has taken the lead after signing of a $ 7 billion investment contract to export oil from Mozambique. On the day of signing the Coral South project development agreement in Maputo, Mozambique President Filipe Nyusi expressed his enthusiasm saying, “We are finally transforming this resource into money. We hope it will help us bring the economy back to the performance of the last decade. ”

The country is in fact coming out of 2016 having performed very poorly , with GDP barely rising by 3.4%, marking the worst performance since 2000. The year was characterised with a sharp decline in direct foreign investments, drought (agriculture accounts for a quarter of GDP), the fall in commodity prices (particularly aluminium and coal) and control of public spending to contain the public debt which according to the latest IMF survey is currently standing at 106.9% of GDP.

Despite all this, international investors have not lost confidence in the future of the country. They are optimistic about the possibilities of developing what has now become the country’s main asset, natural gas. According to IMF’s projection, the  economy will grow by 4.5% this year, a figure that is still below the average 7.3 percent seen in the years 2006 to 2015.

A river of money

While waiting for natural gas to be exported from Mozambique, companies that have discovered the deposits are engaging in the industrial development projects. In addition to the Coral South project, South African Sasol will invest $ 1.4 billion in the development of thirteen wells and a natural gas liquefaction plant, while Anadarko and Eni have entrusted a consortium of companies with the development of the Afungi Lng Park complex, ranging between $ 25 and $ 30 million worth of investment.

Along with investment in the development of production facilities,  which  in most cases are entrusted to western companies with the relevant technologies, also come resources for the infrastructure and development a country that is quickly changing face.

The default in debt repayment is likely to slow down development plans and funding that in the past years, have been coming mainly from major international institutions in very large amounts. However, it will not stop them altogether as the next decade will require $ 40 billion in investment, just for the modernization of ports, airports and roads alone.

The change in progress

Mozambique’s change process has already begun and is seen above all in major cities, particularly in the Maputo capital. In ten years a panorama of disastrous roads, dilapidated buildings and closed shops has changed. Five-star hotels and corporate venues, restaurants and fashion designers now dot Maputo’s upmarket streets.

However, 70% of the population still lives in rural areas and does not benefit from money entering the country. Infact Mozambique remains one of the least developed countries according to the latest Human Development Report released by the United Nations Development Program (Undp).

For this reason, with the help of companies engaged in the industrialization of energy reserves in the country, the government is developing programs to improve the educational system, with the aim of offering citizens the necessary preparation to enter the virtuous circle triggered by natural resources.

To this end, the truce between the two main parties of the country, the Flemish Liberation Front of Mozambique (Frelimo) of the acting President Filipe Nyusi and the Mozambican National Resistance (Renamo) lead by Alfonso Dhlakama of the opposition is of importance. After the civil war between these two factions between 1977 and 1992, a peace agreement has been in place since 1994. Other than economic slowdown, political instability represents a fundamental card that can be a source of discougarement for  companies that are willing to invest in the country.

BOX: Maputo’s capital of gas from 18 to 20 October

Mozambique is keen to become one of the world’s natural gas hubs and is committed to starting a multitude of initiatives. One of these is the Mozambique gas summit, which is in its fourth edition. The summit will be held in Maputo capital from 18 to 20 October 2017 and will be attended by leading government representatives, country agencies and over 500 managers of companies engaged in or interested in the development of natural gas resources, including ExxonMobil, Anadarko, British Petroleum, TechnipFmc, Sasol, Siemens Power & Gas, Société Générale. During the three days of round tables and conferences, the state of the oil & gas sector in the country will be discussed with  the main focus being on the policies to be implemented for its development and the effects and benefits for the country.