Browsing: Europe

The crisis has thrown the energy market into chaos, sending fossil fuel prices soaring. This has birthed the global demand for thermal coal, especially from the Asian and European markets; with most countries in both regions having been dependent of Russia, as the country is the world’s third largest supplier of thermal coal used chiefly for power generation. Coal plants that had been scheduled for closure in Europe have been reopened, to fill the deficit in mitigating fuel costs and generating electricity; as the alternative gas, is inarguably more expensive. With energy security under threat, climate policies and commitments have taken a back seat. The EU recently declared that natural gas now qualifies for green investments.

The African coal market is projected to enjoy double its revenue for the next one year. The prevailing energy gap has created a window of opportunity for African coal producing nations. According to a report by Reuters, South Africa’s coal exports rose by 11 folds in the months following the war. Botswana has also projected growth in its coal market. The massive demand far outstrips the available supply, resulting into prices of thermal coal leaping to record levels. African countries with coal resources, have doubled profit margins, with the surge in demand from European buyers. Italy, France, Portugal and Spain have been sourcing from Nigeria, whilst Germany has sought Senegal for gas supplies.

The revenues gained from increased energy exports to Europe and other markets could be reinvested to boost agricultural productivity in Africa to mitigate reliance on Russia and Ukrainian wheat products. In addition, the surplus could boost the continent’s manufacturing sector, pertinently fertilizers to promote agricultural productivity which fuels most economies in Africa.

What is good for the goose must also be good for the gander. However, the EU commission has commissioned the Baltic pipe project, somewhat similar to the EACOP. The Baltic Pipe project was inaugurated on September 27, 2022, at an opening ceremony in Goleniów, Poland.

Due to globalization, countries worldwide are increasingly interdependent. This is why a conflict between two countries in Europe will cause ripple effects that the rest of the world feels. On this basis, the World Bank projects that economic growth in 2022 will slump. Not slow down but slump. The choice of words is intentional.

Malpass now believes that the world is in for several years of above-average inflation and below-average growth. This projection will most likely lead to destabilizing consequences for low- and middle-income economies. These low- and middle-income countries are largely on the African continent. Stagflation which the world last saw in the 1970s, will have a devastating effect on countries in Africa. Most countries in the continent do not have the resources like Germany to muster multibillion Euro or multi-billion United States dollar packages to subsidize the economic plight of their citizens.

World Bank forecasts a sharp downgrade of its global economic outlook and anticipates a sharp contraction in the economy. The global economy is expected to slow down from the GDP growth rate achieved in 2021 of 5.7% to 2.9% in 2022. The downgrade from the multilateral institution is because of the war in Ukraine, which has triggered food and energy increases as well as supply and trade disruptions.

Africa is considered largely the main source of natural resources needed to support and sustain the economic growth of developed and emerging developing countries, and, as noted above, the engagement is often concentrated in a few countries, particularly where they have strategic interests.

African countries do not have adequate capacity to engage emerging developing economies individually.

According to Aileen Kwa, Coordinator, Trade for Development Programme, South Centre, one of the Commonwealth’s mission is to reduce poverty in its member countries, especially the developing ones.

But looking at the poverty levels in Africa, they have been high over the last 30 years, at 74 per cent and 73 per cent in 1981 and 2005, respectively, despite policy reforms undertaken over that period. When translated into absolute numbers, the number of people living on less than US$ 2 per day increased from 295 million in 1981 to about 556 million in 2005.

A few African countries have also imposed similar restrictions on entry into their territories. The southern African countries include Lesotho, Botswana, Zimbabwe, Mozambique, Namibia and Eswatini.
Russia and South Africa, which later joined in 2011, are both members of the BRICS, and since the outbreak of the coronavirus in December 2020, have discussed some aspects as well as the prospects for collaborative work in fighting the disease.
Russia and South Africa previously proposed localizing production of Russian vaccines, but the key setback was that the vaccines were yet to be approved by the World Health Organization. As a result, there were neither concrete practical results nor effective collaboration between the two countries.

The reason there is so much interest in Latin America as an investment destination is that there is little value left in seed and early stage companies in North America, Europe and even India.

Over the coming years LatAm will also lose its appeal as valuations start to exceed value. There is therefore no doubt that the next geographical location in which this arbitrage will be practised is sub-Saharan Africa.