Nigeria’s Tinubu approves new infrastructure fund to boost competitiveness

Nigeria’s President Bola Tinubu on Friday, 21 July, announced the creation of a new infrastructure fund, part of a series of measures to boost the economy and ease the inflationary impact of his decision to scrap an expensive petrol subsidy.

Bola Tinubu, president of Nigeria, at the New Global Financial Pact Summit. 2023. Source: Lewis Joly/Reuters

The new Infrastructure Support Fund (ISF) will help Nigeria’s 36 states revamp transportation, including upgrades of farm-to-market roads. It will also fund health, education, power and water projects, the president’s office said in a statement, without providing details of how it will be funded.

The fund “will improve economic competitiveness, create jobs and deliver economic prosperity for Nigerians”, spokesman Dele Alake said in the statement.

The announcement comes a day after a programme to distribute free grains and subsidised fertiliser was unveiled. It will be managed by the central bank.

Pressure to offer households relief

Tinubu has been under pressure to offer relief to households and small businesses after he scrapped a popular but expensive petrol subsidy that kept prices cheap for decades but cost the government $10bn last year, leading to wider deficits and driving up debt.

Labour unions in particular have criticised government’s ending of the fuel subsidy without measures to mitigate rising prices.

Source: Reuters.

In another measure to ease inflation, Nigeria also plans to freeze ₦790bn naira ($997.47m) of ₦1.9tn naira of federal revenue that had been due to be shared among its three tiers of government in June, Alake said.

Distributable revenue among the tiers of government almost tripled after the removal of the subsidy and a move to liberalise the exchange rate.

Inflation, which has been in double-digits since 2016, in June climbed further to 22.79%.

African Development Bank secures $32.8bn for projects in Africa

The African Development Bank (AfDB) has secured $32.8bn in investment commitments for projects in Africa, the bank’s president said at the closing of a meeting with investors on Thursday, 17 March.

Akinwumi Ayodeji Adesina, president of the African Development Bank Group, attends a meeting of the 2020 African Economic Outlook report in Abidjan, Ivory Coast, 30 January 2020. Reuters/Luc Gnago

The largest deal secured at the three-day Africa Investment Forum was $15.6bn for the Lagos-Abidjan mega highway, connecting West Africa’s two major cities in Nigeria and Ivory Coast, said AfDB President Akinwumi Adesina.

The highway of about 1,200km will have four to six lanes and should be completed in about six years, he said.

“Africa is a very bankable continent. We’ve gone through hard times because of the Covid-19 situation but here we are on a rebound,” said Adesina. “Africa is back for investments.”

Part of the Covid-19 response

The projects, part of the bank’s Covid-19 response, touch on sectors including agriculture and agro-processing, education, energy and climate, healthcare, minerals and mining, and information and communications technology.

Adesina said that on the health side, projects include a new medical city in Accra, a fund for health services for low-income populations in South Africa, and two platforms for manufacturing pharmaceutical products: one in West Africa and one in Kenya.

The forum was meant to be held late last year but was postponed due to a surge of Omicron coronavirus variant infections.

Why Nigeria’s electricity grid collapses and how to shore it up

The power outages, which prevent people from meeting routine business and household needs, result in huge economic and social costs. In sub-Saharan Africa, every 1% increase in power outages (in terms of hours) has been associated with a 2.86% decrease in gross domestic product (GDP). This translates to a loss of about $28bn in GDP.

There are also health risks from the emissions of inefficient petrol [generators], which are widely used in Nigeria. It is estimated that electricity generator sets consume $22bn worth of fuel yearly.

The grid collapsed twice in March 2022 within 48 hours. There are a number of factors to explain this situation and thus inform what needs to be done about it. They include insufficiently trained personnel, deficiency in local manufacturing, poor utility performance, theft of grid equipment, weather, gas supply, insufficient funding and the age of grid infrastructure.

What is the national electricity grid?

The Nigerian national electricity grid is a network of generation companies, distribution companies and the Transmission Company of Nigeria.

Private companies are allowed to generate and distribute electricity. The Federal Government of Nigeria is solely responsible for transmission of electricity generated by the generating company to the distribution companies at a standardised voltage of 330kV and 132kV.

Nigeria’s electricity generation mix is made up mostly of gas combined cycle plants followed by gas open cycle. At the lower end of the contribution scale are large hydropower plants and tiny portion from solar PV.

In one study, we found that without diversifying Nigeria’s electricity mix and improving efficiency, the current grid network would be unable to meet electricity demand for Nigeria’s growing population. Nigeria’s on-grid electricity demand is about 4-12 times the total electricity distributed on the grid.

The national grid is designed to function under controlled limits to ensure stable grid operations. Exceeding the limits leads to instability – and often leads to collapse.

The transmission company is supposed to allocate the load to the distribution companies based on demand information received from the National Control Centre. This ensures that there is no mismatch between power supply and demand to avoid national grid system collapse.

In some situations, the amount of electricity supplied to the grid is lower than the electricity demand. When this occurs, an automatic load shedding plan is activated. But if this fails, the generators switch off one after another until there is a complete collapse of the national grid.

In Nigeria, the system mismatch occurs frequently because demand is regularly beyond available power allocated to distribution companies at certain periods. This is in addition to the high transmission and distribution losses.

Although the transmission company often attempts to bring the mismatch under control, it doesn’t always succeed. In some instances, sensitive generating units trip as they cannot cope with additional loads. If cascaded tripping continues, the whole power grid eventually loses supply.

South Africa's approach to energy transition could be a lesson for Africa

Recent power generation problems

Between late February and March 2022, electricity generation in Nigeria has been erratic, and this was primarily due to low rainfall feeding Nigeria’s major hydropower plants. In the dry season (November to April), water levels are normally low.

Secondly, there is a shortage of gas supply to power thermal gas plants. This is due to gas pipeline vandals and supply chain issues. Also, there was a fire at Egbin power plant.

Other issues include maintenance work.

These collective shortcomings led to the low daily generation and supply of electricity (a decrease of about 13% in January 2022) to the grid.

Why is this happening more frequently?

The national grid requires significant upgrades.

Since 2018, load rejection by the distribution companies in Nigeria has been a problem. Load rejection occurs when the distribution companies reject electricity transmitted by the transmission companies. The rejection is partly due to the poor state of the transmission and distribution network and faulty power lines.

Another reason is non-payment by consumers. For example, consumers in communities hosting power generation plants perceive that they own the electricity generated in their locality.

In these situations, supply is being generated and transmitted but not distributed. To address this issue, the Nigerian Electricity Regulatory Commission in February 2021 released guidelines that would sanction distribution companies for load rejection and punish the transmission company for inability to wheel electricity. However, there were still cases of load rejections by the distribution companies in early 2022.

In summary, the grid collapse can be attributed to the following major factors:

  • low water levels at the hydropower plants, low gas supply at the gas power plants and fire at the largest power generating station,
  • load rejection and inability of the transmission companies to wheel electricity from generators to distributors,
  • archaic and weak national grid,
  • poor utility performance and theft/vandalisation of grid equipment,
  • insufficient funding to upgrade from analogue to a smart grid, and
  • extraordinary transmission and distribution losses (up to 18%, with an average above 8%) due to aged electricity infrastructure.
How Africa can ride the green wave and lift itself out of energy poverty

What can be done?

The first step is to optimally generate electricity.

To achieve this, the Transmission Company of Nigeria can upgrade and increase transformer capacity. The distribution companies recently improved the network and are willing to take up demand from consumers. This can reduce the issue of load rejections.

Second, a better revenue collection method is needed and there needs to be a wider distribution of prepaid meters.

Third, the Nigerian lawmakers recently supported the constitutional amendment bill to allow state governments to generate and transmit their own electricity. This presents an opportunity to investors and industries to participate in the Nigerian energy market. Also, the states or businesses can transmit excess supply to the national grid. Micro-grid projects could also expand to send excess power to the national grid.

Fourth, a modern smart grid would enable data to flow between consumers and electricity retailers. This will enable grid operators to match electricity supply with demand, understand consumer behaviour and plan grid expansion.

Finally, the Nigerian government should speed up efforts to decentralise the national grid. This can be through mini-grids driven by renewable energy sources like solar photovoltaic and wind turbines.

The effect would be increased local reliability of electric power supply, especially in the rural and peri-urban communities.

This article is republished from The Conversation under a Creative Commons license. Read the original article.
The Conversation

Renewable energy continued to grow, gain momentum in 2021

The International Renewable Energy Agency (Irena) released new data last month showing that by the end of 2021, global renewable generation capacity amounted to 3,064GW, increasing the stock of renewable power by 9.1%. This growth and momentum continued despite global uncertainties.

Source: Gallo/Getty

Although hydropower accounted for the largest share of the global total renewable generation capacity with 1,230GW, Irena’s Renewable Capacity Statistics 2022 shows that solar and wind continued to dominate new generating capacity. Together, both technologies contributed 88% to the share of all new renewable capacity in 2021. Solar capacity led with a 19% increase, followed by wind energy, which increased its generating capacity by 13%.

‘Energy transition is far from being fast’

“This continued progress is another testament of renewable energy’s resilience. Its strong performance last year represents more opportunities for countries to reap renewables’ multiple socioeconomic benefits. However, despite the encouraging global trend, our new World Energy Transitions Outlook shows that the energy transition is far from being fast or widespread enough to avert the dire consequences of climate change,” says Irena director-general Francesco La Camera.

“Our current energy crisis also adds to the evidence that the world can no longer rely on fossil fuels to meet its energy demand. Money directed to fossil fuel power plants yields unrewarding results, both for the survival of a nation and the planet. Renewable power should become the norm across the globe. We must mobilise the political will to accelerate the 1.5°C pathway.”

To achieve climate goals, renewables must grow at a faster pace than energy demand. However, many countries have not reached this point yet, despite significantly increasing the use of renewables for electricity generation.

SOUTH AFRICA

SA's green transition to cost over $64bn by 2030

Asia leads in new capacity

In 2021, 60% of the new capacity was added in Asia, resulting in a total of 1.46TW of renewable capacity by 2021. China was the biggest contributor, adding 121GW to the continent’s new capacity. Europe and North America, led by the USA, took second and third places respectively, with the former adding 39GW, and the latter 38GW. Renewable energy capacity grew by 3.9% in Africa and 3.3% in Central America and the Caribbean. Despite representing steady growth, the pace in both regions is much slower than the global average, indicating the need for stronger international cooperation to optimise electricity markets and drive massive investments in those regions.

MALAWI

Malawi solar mini-grid shows promise as way of electrifying rural Africa

Highlights by technology:

  • Hydropower: Growth in hydro increased steadily in 2021 with the commissioning of several large projects delayed through 2021.
  • Wind energy: Wind expansion continued at a lower rate in 2021 compared to 2020 (+93GW compared to +111GW last year).
  • Solar energy: With an increase in new capacity in all major world regions in previous years, total global solar capacity has now outgrown wind energy capacity.
  • Bioenergy: Net capacity expansion increased in 2021 (+10.3GW compared to +9.1GW in 2020).
  • Geothermal energy: Geothermal capacity had an exceptional growth in 2021, with 1.6GW added.
  • Off-grid electricity: Off-grid capacity grew by 466MW in 2021 (+4%) to reach 11.2GW.

Read the full Renewable Capacity Statistics 2022, including the highlights, here.

7th Regional Conference for Africa to focus on smart, safe and resilient roads

The seventh Regional Conference for Africa will be held from 18-20 October at the Cape Town International Convention Centre. The theme is ‘Connecting Africa through smart, safe and resilient roads: Stimulating growth and trade on the continent’.

Asphalt resurfacing on the R43 between Hermanus and Stanford, Western Cape. Image: Imile van Rhyn, EFG Engineers

The conference is hosted by the South African Road Federation (SARF) in collaboration with both the International Road Federation and the World Road Association (PIARC).

“Physical conferences have always provided crucial and unique networking and knowledge-sharing opportunities that we’ve lost over the past few years. We believe the return this year to a physical venue post-pandemic will mark a pivotal event for our industry worldwide,” says local conference organiser Basil Jonsson, the operations director for SARF.

Keynote speakers

A number of international and local keynote speakers have already confirmed their attendance, among them World Bank consultant and civil engineer Nazir Alli, a South African who is currently the president of PIARC and formerly the founding CEO of the South African National Roads Agency (Sanral).

Other keynotes confirmed to date include Professor André Roux, head: futures studies programme, University of Stellenbosch Business School; and Dr Pierre Voges, CEO of the Atlantis Special Economic Zone Company and former CEO of the Mandela Bay Development Agency.

Basil Jonsson, operations director for SARF

Basil Jonsson, operations director for SARF

Jonsson also notes that over 114 abstracts have been received for consideration by the conference technical committee, indicating a strong interest in the event not only from the countries that usually attend (including the UK, the USA, various EU countries as well as those in the Middle East and Africa), but also from Japan, Mexico and New Zealand.

He adds that, as always, strong local support for the event had also already been demonstrated: “To date, 45% of all abstracts submitted have been from South Africa.”

With the final programme to be finalised by the end of June, presentations and speakers would fall under seven key sub themes, namely:

  • Determination of roads needs and financing mechanisms,
  • Preserving Africa’s road assets,
  • Safe and efficient transport by road,
  • Innovative practices to optimise road networks,
  • Roads and the environment,
  • The role of low volume roads in rural connectivity, and
  • Capacity development in the roads sector.

Jonsson believes there will be particular interest both locally and internationally in two of these focus areas, namely road safety and low-volume roads, but notes that the sub themes cover the full scope of the reach of the South African Road Federation. To accommodate the volume of topics and information to be exchanged, each day of the conference will be structured with an overall main session to start, followed by numerous breakaway sessions.

ESCA accreditation has been secured by SARF with 1 CPD Point in Category 1 for each of the three days of the conference.

A trade exhibition will once again run alongside the conference.

it needs to focus on fixing what it’s got

A common response to a gathering urban crisis is to imagine starting afresh with new cities. The impulse crosses the political spectrum.

In his 2019 state of the nation address, President Cyril Ramaphosa envisioned the construction of a new smart city. He has since announced new cities at Lanseria (north of Johannesburg), Mooikloof (east of Pretoria), and along the Wild Coast of the Eastern Cape.

In April 2022, former opposition leader Mmusi Maimane argued that South Africa should be building many new cities, doubling the number of metros from eight to 16.

New cities are a catchy idea. But that doesn’t make them a good one.

What would it take to create a sustainable new city without bankrupting the national fiscus? Are they a viable prospect or white elephants in the making?

There is, fortunately, a history of new city thought and practice that we can draw lessons from.

New cities may be appealing since newer, smarter, more sustainable infrastructure can be put in place. But in South Africa, this expenditure competes with the need to improve the deteriorating infrastructure of existing cities, which do in fact have the capacity to accommodate projected urban growth for decades to come.

While carefully planned new city development may play a role in South Africa’s urban future, it would be a critical error to divert attention and resources from the country’s primary urban challenges.

New forms of urban planning are emerging in Africa

New cities

Most large cities globally have evolved over long periods of time, responding to growth in the local economy. But there are cities that have been consciously designed from scratch for many different reasons – including political egos, land speculation, colonial expansion, post-colonial developmentalism, and attempts to relieve existing cities of over-population and congestion.

In modern times, there was a surge of new city (or, rather, new town) development in Europe after the second world war. This was done to decentralise development from heavily bombed large cities and to create better living environments for working class families as part of a larger welfarist programme.

The British new town programme was the most extensive and well known, but new towns were also built in France, Italy, Sweden and elsewhere.

Western countries turned away from new town development but, from around the 1990s, new city development gained momentum in other parts of the world, including East Asia and the Middle East.

In China, for example, new cities were built to accommodate some of the additional 590 million people in cities from the 1980s. Saudi Arabia has an astonishing plan to build a 100-mile-long megacity called Neom which would be only 200 metres wide.

In Africa, Egypt has a long history of new city development.

Elsewhere there were three recent waves of new city development. Just prior to the 2008/09 financial bust, an ambitious first wave was launched (for example, Konza Tech which is 64km south of Nairobi, Eco Atlantic on land reclaimed from the sea outside Lagos, Cité du Fleuve on an island in the Congo River outside Kinshasa, and Kigamboni across a large estuary north of Dar es Salaam).

Most faltered. The late South African academic Vanessa Watson called them “urban fantasies”.

The second wave was initiated by the Moscow-based property developer Rendeavour, which targeted the rising black African middle class (for example, Tatu City outside Nairobi, King City near Takoradi port in Ghana, and Appolonia City near Accra). The developments were more modest in size and have had some market-based success.

The third, most recent wave is diverse, ranging from Lanseria Smart City in South Africa to Akon City in Senegal, an attempt by an African American rapper to recreate the fictional Wakanda. Most recently, in May 2022, Elon Musk made an extraordinary announcement. He intends to build a $20bn new city, called Neo Gardens, outside Gaborone in Botswana.

This international story offers many lessons, but so does an earlier South African history which includes the establishment of nearly 80 new towns under apartheid for ideological reasons. These included Welkom, Vanderbijlpark, Sasolburg and Secunda, which were created to support new single-industry economies.

These did well for a time. But they did not diversify substantially and their industries have suffered in recent years from international competition.

These patterns mirror those evident internationally, where the picture is more often economic vulnerability and instability over the long term.

Conditions for success

There are some places where new town economies have thrived – such as Shenzhen in China, Abuja in Nigeria, and Milton Keynes in the UK. These are quite specific cases: Shenzhen was one China’s first initiatives to open up to the private sector in the 1980s and is close to Hong Kong; Abuja is a national capital; Milton Keynes houses a major university and a cluster of dynamic industries.

New places do sometimes develop around new or emerging economic activities, although often the attraction of existing economic cores remains strong.

New towns have had a better track record in places of rapid economic and population growth such as in east Asian countries where large-scale resources have been available for infrastructure development and growth is rapid enough to divert some economic activity into new cities.

So the prospects for new cities depend significantly on the context in which they are developed.

New cities are costly as new infrastructure must be developed from scratch. And they have high risks in terms of outcome. At the same time, they do not replace existing cities, which continue to grow.

In our view, South Africa needs to engage with the realities of existing towns and cities and make them work better for their residents and the country.

This article is republished from The Conversation under a Creative Commons license. Read the original article.
The Conversation

Desalination may be key to averting global water shortage, but it will take time

Desalination is the process of extracting salt from saline water to make it drinkable. There are two main types of desalination.

In the first – called thermal desalination – heat is used. This produces water vapour that condenses on pipes into fresh water. This process remains dominant across the Middle East, where nearly half of the world’s desalinated water is produced.

The second process is membrane desalination, commonly referred to as reverse osmosis. This process is used in 60% of plants worldwide. Saline water is forced under high pressure through a semi-permeable membrane whose pores are too small for the salt molecules to pass through.

Where is desalination used?

Desalination is used to extend drinkable water supplies beyond what is naturally available. Water-scarce regions are therefore particularly reliant on the technology. Desalination provides the United Arab Emirates with 42% of its water needs.

Because of the minimal cost of pumping, desalination is most economical in large coastal locations. However, our changing climate is contributing to increasing water shortages in typically mild regions, necessitating the expansion of desalination plants further inland and from brackish water. China, the US, and South America are all expanding their desalination capacity.

While desalination may be a technology capable of countering global water shortages, there are issues regarding its cost and efficiency.

SOUTH AFRICA

South African engineers are trying to solve the global water crisis

Why does desalination remain so expensive?

Large amounts of energy are required to drive the process. This is particularly true for thermal desalination, where energy costs represent up to half of a plant’s entire production cost.

The reverse osmosis process generally has a lower energy requirement. However, treating highly saline water remains energy intensive. This is because higher salinity means more pressure is needed to force the water through the membrane.

Heavily polluted water sources must also be treated before desalination, requiring costly infrastructure such as sedimentation tanks and filtration systems. Treatment prevents the accumulation of debris on membrane surfaces that may impede the reverse osmosis process.

Treatment costs will grow as reliance on desalination increases and the process is applied to polluted and inland brackish water sources. Facing an increasingly dry climate, California now has 23 desalination plants that turn brackish water into drinking water.

Producing one litre of drinking water also creates 1.6 litres of brine, a highly saline waste product that can damage the environment. Brine deposits on the sea floor can lead to the destruction of sea ecosystems, while brine discharge reduces the oxygen content of seawater.

The safe disposal of brine is expensive. Most of the brine that is produced is pumped back into the sea, subject to environmental quality standards. If brine discharge does not meet these standards, then it requires further treatment.

Brine can be treated in evaporation ponds or diluted with a separate water source before being discharged. The prohibitive cost of brine treatment remains a significant barrier to the wider application of desalination.

SOUTH AFRICA

Managing dam siltation in South Africa: Implications for water security

Can desalination become cheaper?

Reducing the energy intensity of the process may deliver considerable cost reductions. Technologies such as forward osmosis, which allow desalination to occur at lower temperatures and pressures, are in development.

While promising, these technologies remain in their infancy. The market is small and there are few commercial installations. Technological evolution takes time, and further development will be required to ensure these processes can produce drinkable water on a commercial scale.

Developing more durable membranes will also reduce the cost of desalination. Using different materials, Japanese manufacturers have constructed membranes that successfully reject salt particles at low operating pressures. This both reduces the cost of replacing membranes and the energy requirement of the process.

Desalination could also be powered by cheaper sources of renewable energy. Solar-thermal technologies can generate direct heat, which can then be used to evaporate seawater. The Metito solar desalination plant under construction in Saudi Arabia will initially have the capacity to produce 30,000 cubic metres of drinking water per day.

However, solar desalination technology is littered with complexities. Solar energy supply is inconsistent and energy storage technology remains expensive, impeding its wider application. Therefore, most solar desalination projects are too small to produce drinking water for commercial use.

Novel solutions for brine management must also be further explored.

Brine can be recycled within the desalination process. The use of waste brine in the manufacture of sodium hypochlorite, a chemical disinfectant that can substitute chlorine, is a promising development.

Research has shown that on-site sodium hypochlorite production can save Caribbean desalination plants more than £300,000 per year.

Desalination facilities can further exploit waste brine through processes such as electrolysis, where brine is decomposed into simpler substances through electric currents. Future studies should investigate the potential of using the byproducts of this electrolysis, hydrogen and salts, for energy production.

Despite growing water insecurity worldwide, desalination technology remains too expensive for widespread use. Efforts have been made to reduce its cost, with many showing promise. However, technological evolution takes time and it will be decades before costs fall to a level that facilitates the wider expansion of desalination.

This article is republished from The Conversation under a Creative Commons license. Read the original article.
The Conversation

Lagos shortlists consortium to build $2.5bn bridge

A consortium led by Portugal’s builder Mota-Engil and two Chinese ventures has been shortlisted by Nigeria’s Lagos state to build a $2.5bn bridge that is expected to relieve severe congestion in the mega city, an official said on Sunday, 27 November.

Source: Gallo/Getty

The 37km Fourth Mainland Bridge will be built under a public-private partnership. It will include three toll plazas, nine interchanges and a design speed of 120km per hour, said Jubril Gawat, a senior spokesperson for the Lagos state governor.

Mota-Engil is partnering with China Communication & Construction Corporation and China Road & Bridge Corporation in the bid.

China Gezhouba Group Company and China Geo-Engineering Corporation joint venture and a consortium led by China Civil Engineering Construction Corporation are the two other shortlisted bidders.

The winner of the bid will be announced before the end of the year, said Gawat.

the link with host political regimes

China has rapidly become Africa’s most important infrastructure builder, and the footprint of Chinese construction companies is seen in cities, towns and villages across the continent.

Chinese workers are part of most Chinese government-funded projects in Africa. Wikimedia Commons

With the launch of Beijing’s “Go Global” policy in 2000, and President Xi Jinping’s Belt and Road Initiative in 2013, the volume of roads, bridges, railways, power stations and other infrastructure built by China has increased markedly. The number of overseas contracts signed by Chinese companies more than doubled from just under 6,000 in 2004 to almost 12,000 in 2019.

In 2019, Chinese companies won over $250bn of infrastructure contracts around the world, paid for by the Chinese government, international institutions and host governments. Chinese firms won over 30% of public works contracts funded by the World Bank, one of the world’s largest infrastructure financiers.

Chinese records also show that the number of Chinese citizens dispatched to work on infrastructure projects increased almost five-fold, from a global total of 79,000 in 2002 to 368,000 in 2019 (with a peak of 405,000 in 2015). Of these, around one quarter were recorded in sub-Saharan Africa, while one-third were in the Middle East and north Africa region.

The presence of large numbers of Chinese workers labouring on these projects is one of the most controversial aspects of China’s economic engagement with Africa and the wider world.

Chinese workers have been accused of taking job opportunities from locals, undercutting labour standards by being willing to work for longer hours and with fewer rest days, and being the source of culture clashes. A 2021 meta-analysis of Chinese labour practices in Africa found evidence of tense labour relations driven in part by practices such as weekend work and dormitory systems. These are common practice in China but not in many African economies.

However, the debate on Chinese workers underplays the agency of host governments. After all, they make local laws and issue work visas.

Our research covering 195 countries explored whether different types of host regime were more likely or less likely to allow Chinese workers in or force Chinese companies to hire locally. We found that democratic governments were much more prone to limiting the number of Chinese workers in the infrastructure sector in the face of potential domestic opposition to those workers. The opposite was true in more authoritarian countries.

This means that the long-term economic benefits that Chinese-built infrastructure brings are likely to be limited in authoritarian countries. It also gives rise to the possibility that local dissatisfaction with the lack of job opportunities complicates the political relations between China and the host country.

China’s overseas infrastructure builders

Prior research has shown that Chinese companies like to bring their own workers because they require less training, work efficiently and help to avoid difficult labour relations issues. However, the number of Chinese workers varies a lot across different host countries. For example, Algeria has long hosted huge numbers of Chinese citizens building infrastructure. Others, like Ghana, have relatively few, despite China playing a large role in the country’s infrastructure sector.

There has been remarkably little quantitative research on the factors shaping the number of Chinese workers completing infrastructure projects in different countries. Our research, using data gathered from Chinese statistical yearbooks (many of which are available only in mainland China), aimed to address this gap in knowledge.

The starting point of our research was that it matters how policymakers assess and pursue their interests. In democracies, governments face more pressure to ensure that construction projects deliver local jobs. They run the risk that opposition groups can use the presence of foreign workers as an issue to stir up opposition to the government. Therefore, they are more likely to force Chinese firms to hire locally, even if it means projects are completed more slowly.

Autocrats, on the other hand, do not face the same electoral pressures. Instead, their interest lies in completing construction projects quickly and efficiently. Doing so boosts their “performance-based legitimacy” – citizens accept them because they get things done. Foreign workers, who are politically neutral, provide a convenient way to do this.

The evidence

Our analysis used data gathered from 195 host countries and territories. It showed strong empirical evidence that democracies host significantly fewer Chinese workers than autocracies, all other things being equal. The results hold up using a variety of different statistical modelling techniques.

We also explored two case studies: Ghana and Algeria.

In Ghana, a vibrant democracy, we found that both the country’s main political parties faced pressure to ensure Chinese-built projects delivered local jobs. For example, in the construction of the Bui Dam, the agreement between Sinohydro, the Chinese state-owned behemoth contracted to complete the project, and the Ghanaian government stipulated that a certain proportion of the workforce would be local.

Unlike many governments, Ghana tends to limit foreign workers in practice as well as on paper.

In Algeria, on the other hand, Chinese labour has been used to quickly complete projects seen as politically expedient. Algeria is a “hybrid” regime that was ruled by a single man, Abdelaziz Bouteflika, from 1999 to 2019. Even when domestic discontent over Chinese workers prompted measures to limit their presence, the measures were not implemented.

Why this matters

Our findings have several important implications. First, host country agency is important. Host governments have the ability to ensure Chinese companies hire locally.

Second, projects that hire locally may bring more long-term economic benefit to host countries. This can happen both directly through the jobs that they create, and via knowledge and technology transfers into the wider economy. Our analysis therefore suggests that the wider developmental benefits of Chinese built infrastructure may actually be stronger in democracies than in autocracies.

Finally, there’s an implication for China’s foreign policy and diplomatic relations. Many Chinese citizens are in autocratic countries where they may be welcomed by leaders but resented by the local population.

This article is republished from The Conversation under a Creative Commons license. Read the original article.
The Conversation

Leveraging AfCFTA for a thriving African mining industry

Africa is the world’s top producer of numerous critical mineral commodities. With the rapid increase in the rate of the global energy transition, the continent’s mining industry has a role to play in sourcing and supplying these critical minerals for use in clean energy projects, manufacturing capacity, electric vehicles and other sustainable solutions.

The continent is a large supplier of bauxite, chromium, cobalt, copper, diamond, gold, iron ore, platinum group metals, lithium, rare earth metals and zinc, for example, with most of them being exported as ores, concentrates or metals.

Exporting these critical minerals as raw materials, however, reduces Africa’s trading position to one of price taker, and subjects the continent’s mining sector to changes in global commodity markets. Adding to these challenges, the current disruptions in global supply chains are hampering the trade of these commodities in Africa, with mining companies now subject to long delays and higher costs.

This high level of global and economic uncertainty has the added effect of holding back investment in new mining projects, placing more obstacles in the way of a continent that desperately needs to be able to capitalise on its vast mineral resource base.

Addressing infrastructure gaps, boosting manufacturing capacity

Enter the African Continental Free Trade Area (AfCFTA) — implemented in 2021, it is intended to act as a strong impetus for African governments to address their infrastructure gaps, boost their manufacturing capacity, streamline their supply chains, and overhaul regulation relating to trade, cross-border initiatives, investment-friendly policies and capital flows.

The trade in mineral commodities in Africa is expected to benefit from these reforms, but the extensive infrastructure development that is needed to facilitate the movement of goods across borders will clearly take time.

Projects are already in progress to boost continent-wide infrastructure needs. For example, Tanzania’s construction of the Standard Gauge Railway (SGR) Project is expected to provide a safe and reliable means for efficiently transporting people and cargo to and from the existing Dar es Salaam port. Other large projects underway include the Trans-Maghreb Highway in North Africa, the North-South Multimodal Corridor, the Central Corridor project and the Abidjan-Lagos Corridor Highway project.

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Investment in transport and logistics

According to the World Economic Forum’s (WEF) latest report — AfCFTA: A New Era for Global Business and Investment in Africa — investment in transport and logistics will be crucial to enable the trade of goods in Africa, including in the mining sector. The report notes that AfCFTA is expected to increase trade demand by 28%, which will lead to a requirement for “2 million trucks, 100,000 rail wagons, 250 aircraft and more than 100 vessels by 2030”.

To assist with much-needed investment in the sector, the WEF notes in its report that it is actively working with the AfCFTA Secretariat on trade and investment tools that align with the AfCFTA negotiation process. The tools are intended to identify areas “where public-private collaboration can help reduce barriers and facilitate investment from international firms”.

The report goes on to say that “public-private collaboration can help remove obstacles in the supply chain, improve cross-border payments and access to trade finance, reduce the costs and delays of moving goods across borders, help to mainstream environmental sustainability, and tackle barriers to investment entry and expansion”.

Africa Mining Vision

The intended advantages of these new tools are aligned with the goals of the Africa Mining Vision (AMV), which was adopted by African Union heads of state in 2009. One of the aims of the AMV is the “transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socioeconomic development”.

Also listed as intended goals of the AMV are the need to facilitate and nurture human resources and skills, provide supporting infrastructure, encourage instruments of collaboration, promote local beneficiation and value addition of minerals, establish an industrial base, ensure cross-border compliance with corporate governance and ESG, and establish enabling markets and platforms for services, such as capital raising, commodity exchanges, and legal and regulatory support.

In order for the AMV to be successful, Africa’s countries and its regional bodies must implement integrated resource-based development and industrialisation policies that take into account operations that benefit local workers and the communities, and that produce results that are net positive for the region. Also essential is the ability of African nations to be able to successfully negotiate with global mining companies and stipulate the importance of local inputs.

Regionally, mining legislation must be integrated with the continent’s industrial and trade policies. One of the intended end results of these policies is that African countries will be able to launch more lucrative value-addition industries that are involved in the final product manufacturing of raw minerals.

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Opportunity to diversify African economies

Recent Baker McKenzie research, compiled in conjunction with Oxford Economics, AfCFTA: A Three Trillion Dollar Opportunity, revealed that over three-quarters of African exports to the rest of the world were currently heavily focused on natural resources, primarily raw materials. According to this report, manufacturing GDP represents on average only 10% of GDP in Africa. This means that limited production capabilities within Africa are currently being compensated for through foreign imports. This manufacturing deficit is intended to be eventually satisfied within the continent and enabled by AfCFTA.

AfCFTA is providing the opportunity for African countries to diversify their economies, scale up production capacity, improve their trade in services, and widen the range of final products made in Africa. Closer integration of neighbouring economies is also a potential avenue for creating scale and competitiveness through domestic market enlargement, thereby promoting development through greater efficiency. This relates to both intra-regional trade and trade with non-African nations.

Taking a longer view, regional trade cooperation could potentially become a successful bridge for connecting the region’s wealthier and poorer nations, promoting the growth of value chains and laying the foundations for increased international exports of the continent’s resources and its manufactured products. According to goals of the AfCFTA and the AMV, the key beneficiaries of improved manufacturing and trade across the continent is intended to be Africa and its citizens.