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Earth Finds

COVID-19 Pandemic Intensifies Uganda’s Urgency To Increase Clean Renewable Energy

By Patrick Edema

The COVID-19 pandemic has highlighted the deep inequalities in Uganda in terms of access to clean, modern, affordable and sustainable energy.

Electricity has been a vital underpinning of the response to the public health emergency however, millions of people in the country still lack basic access to it with the majority in rural and semi-urban areas.

Even before today’s unprecedented crisis, Uganda has not been on track to meet key sustainable energy goals. Now, it's likely to become even harder to achieve.

This means as a country, we must redouble our efforts to bring affordable, reliable and cleaner energy to all especially in rural areas, where the need is greatest in order to build a more prosperous and resilient economy. 

Access to reliable energy is a lifeline, especially in the context of the COVID-19 crisis. It is essential not only for preventing and addressing the pandemic but also for accelerating the recovery and building back better by securing a more sustainable and resilient future for all.

Renewable energy is key to achieving SDG 7 and building a resilient, equitable and sustainable economy in a post-COVID-19 world. Now more than ever is the time for bold national cooperation to bridge the energy access gap and place sustainable energy at the heart of economic stimulus and recovery measures. 

Despite an increase in the number of people with access to electricity of 21.6%, under policies that are in place to increase access to clean renewable energy still lack sufficient implementation and enforcement which is an obstacle to achieve the universal energy access for all by 2030.

According to the Energy Tracking Report by International Renewable Energy Agency (IRENA), significant progress had been made on various aspects of the Sustainable Development Goal (SDG) 7 prior to the start of the COVID-19 crisis.

This includes a notable reduction in the number of people worldwide lacking access to electricity, strong uptake of renewable energy for electricity generation, and improvements in energy efficiency. Despite these advances, global efforts remain insufficient to reach the key targets of SDG 7 by 2030. 

Other important elements of the SDG goal also continue to be off track. More than 90% of the people remain without clean cooking in the country. Largely stagnant progress since lead to millions of deaths each year from breathing cooking smoke.

The share of renewable energy in the country’s energy mix is only inching up gradually, despite the rapid growth of solar power in electricity generation. An acceleration of renewables across all sectors is required to move closer to reaching the SDG 7 target, with advances in heating and transport currently lagging far behind their potential.

However, aaccelerating the pace of progress in all regions and sectors will require stronger political commitment, long-term energy planning, increased public and private financing, and adequate policy and fiscal incentives to spur faster deployment of new technologies An increased emphasis on “leaving no one behind” is required, given the large proportion of the population without access in remote, rural, poorer and vulnerable communities.

Therefore, in this time of a global health crisis, protecting the health of 47 million people without clean cooking solutions is more critical than ever. Government, foundations, donors, and the private sector need to combine their efforts to accelerate the transition to clean and sustainable fuels and technologies to protect the health of the most vulnerable population.

And as to the current situation, the COVID-19 pandemic can either widen the sustainable energy access gaps or accelerate the path towards achieving SDG 7 in Uganda, which will, however, depend on priorities of national economic stimulus packages. 

Patrick Edema, Environmental Engineer at African Institute for Energy Governance (AFIEGO)

 

 

 

 

 

 

 

 

 

 

Banking Sector Urged To Go Digital To Build Resilience And Sustainable Growth Post Covid-19

Bankers from Sub Saharan Africa and China who attended the Huawei Sub-Saharan Africa Financial Services Industry Online Summit 2020 agree that digitisation of the sector will give it resilience against the current Covid-19 pandemic and enable sustained growth in the post Covid era. 

The pan-African conference themed “Accelerating Digital Transformation, Enable Business Growth Again” was attended by 1200 delegates from across banks, telco operators, fintech and ICT services companies.  

Opening the event, Liao Yong, vice president of Huawei Southern Africa Region, said advances in ICT present unique opportunities for the banking sector, especially when almost 70% of the region’s population don’t have a bank account. 

“All of these ICT advances will be critical enablers to a thriving banking sector in Sub Saharan Africa. As we can see, the merging of these two curves of ICT and banking services is powerful. But how much we can unleash the power, depends on how much and how soon banking sector goes digital.” Liao said. 

There has been a rapid uptake of mobile technologies in the region with strong economic growth in the past 2 decades. According to statistics by GSMA, 4G, mobile broadband technology, adoption will overtake 2G in 2023 and the total of unique subscribers in Sub Saharan Africa will reach 600 million by 2025, representing half the region’s population. 

Speaking at the online event, Brett King, author of Bank 4.0, a New York-based mobile banking startup, said the behavioural changes that come with coronavirus further underpins the needs for digital transformation in banking sector.

“The declining use of physical branches is likely for many customers to remain a permanent feature of their lives. The reality is this is likely to accelerate a multi-decade trend we've already seen towards digitisation. So when we look at the architecture of banking moving forward and the real elements that have been accelerated during the coronavirus period, you can see that that shift to digital is creating much more aligned, some digital experience. This basically brings us to a new model of banking…we moved to this low friction banking embedded in the world around us,” said King. 

In China, bucking the decline in Q1 GDP, the financial sector recorded a 6% year-on-year growth. Analysts attribute this growing to the sector’s years of unremitting efforts in digital transformation.

Chen Kunte, former Chief Information Officer of China Merchants Bank and current Chief Digital Transformation Officer of Global Financial Services in Huawei’s Enterprise Business Group said digitisation will give the banking sector the resilience it needs in the public health crisis. Banking everywhere can’t come true without leveraging cloud, AI and Big Data.

“We need to restructure banks’ ICT platforms from legacy architecture to cloud-based, open architecture by building AI-Powered and Data-Driven platforms to expand the way financial institutions engage and interact with their customers, and accommodate more innovative business models and service scenarios,” Chen said. 

Banks from the region shared some case studies on digitisation in banking services in the region. 

Lucille De Kock, Head of Data Analysis and Product Management at FNB, South Africa, introduced FNB’s fundamental shifts across all dimensions to transform the bank into a helpful, trusted and people centric money manager leveraging digital and data platforms. 

According to Alex Siboe Wekunda, head of DFS, KCB, said 97% of all transactions are done digitally which lead to substantial growth during the pandemic. Luckily enough, we had invested well in our platform, so we're able to handle the traffic that comes through this ecosystem. And Joshua Oigara, CEO and MD, KCB Group PLC, said KCB will continue accelerate that investment beyond just lending platform, which has been very successful. 

Huawei works with over 1,000 financial institutions globally, including 6 of the world’s top 10 banks in the digital transformation voyage. 

Liao concluded, “Our operations of over 20 years in Sub Saharan Africa enables us think global and act local by providing our clients in the region with tailored made solutions to make digitisation process painless and smooth, as if it is a tech company that happens to work in the financial sector rather than as a bank that tries to adapt disruptive technologies.”

 

Covid-19: African Energy Chamber Supports South Sudan

The African Energy Chamber has provided financial and material support to the government of South Sudan to support its efforts to respond to the global Covid-19 pandemic. The number of reported cases in South Sudan is currently nearing 1,000, with 10 deaths already confirmed.

The donation comprises a cash grant and sanitizing products, and represents the long-standing commitment of the Chamber towards the prosperity of South Sudan. It was received in Juba by H.E. Daniel Awow Chuang, Undersecretary at the Ministry of Petroleum, who will, in turn, coordinate the relief activities with the Ministry of Health.

"It is our wish at the Chamber that our contribution will support the laudable ongoing efforts of the government of South Sudan to respond to the pandemic," stated NJ Ayuk, Executive Chairman at the African Energy Chamber.

"This ongoing pandemic goes beyond the oil sector only and we are calling for a much broader support for South Sudan, its workers and its refugees. Short-term relief is critical to the country, especially when it comes to alleviating the economic pain caused by the pandemic and felt throughout the country," concluded Ayuk

Unfortunately, the ongoing pandemic and the crash in oil prices have slowed the good progress that was made by the peace agreement signed by H.E. President Salva Kiir and Riek Machar.

Economic stability and development remain critical to ensuring a successful and long-lasting peace, and the ongoing crisis gives an opportunity to address the fundamental vulnerabilities of the country's economy. Politicians, energy stakeholders, and the international investment community must come together to think about adopting the right approach to ensure a sustainable recovery post Covid-19.

In light of the consequences of the Covid-19 pandemic across African oil markets, the Chamber has multiplied initiatives and efforts to bring relief and guidance to the industry. Since the start of the pandemic, the Chamber has notably published a Common-sense Energy Agenda of top key policy measures to support the industry, and a set of Guidelines for the Movement and Safety of Oil Workers amidst sustained travel restrictions.

A Historical Opportunity For The Transformation And Diversification Of Cemac Economies

By Leoncio Amada NZE

In Chinese, the word crisis is made up of two characters. One means danger and the other opportunity. Even though in the middle of a crisis one never sees opportunities, crises lead us to situations that we would never have anticipated and force us to make decisions that we would never have made otherwise. In such situations, developing Appreciative Intelligence is what allows us to see the opportunities that accompany a crisis.

A good example is the following story: in the 18th century, a Spanish ship arrived on the shores of Dundee, in Scotland, with a shipment of oranges. The ship's captain offered to James Keiller the shipment of oranges and quickly reached a good deal. However, Keiller discovered that most of the oranges were overdone and had turned sour, and that it would be impossible to sell them. Until then, oranges were only consumed in juice or fresh. But all of this was to change thanks to James Keiller's Appreciative Intelligence.

Marmalade comes from "marmelo", a Portuguese word that means quince, a fruit that in the 18th century was ideal for preparing preserves or making marmalades. Keiller put his Appreciative Intelligence to work, using oranges instead of quinces to prepare marmalade, and realized that the new jam had a very characteristic flavor. For all these reasons, he set up a company that changed the future of the Keiller family, dedicating himself to the business of what we know today as “bitter orange marmalade”.

Looking back on another historical example, we can quote the British economist John Maynard Keynes, who appeared before a committee of the British government. As the world was sinking into the Great Depression, he exhorted those who listened to him to overcome the narrow mentality of the bureaucracy and to look at the bigger picture. It was still six years before Keynes published his General Theory, but he already anticipated the sharp observations that he would later capture in his book: "We enter a vicious circle: we do nothing because we do not have money, but it is precisely because we do nothing that we don't have money,” he said.

Keynes wanted to save the market economy, and, in an era of communism and fascism, he was frightened by the political consequences of not doing so. His call to overcome narrow interests found no echo. Governments' reaction to the Depression was ineffective. Nations indulged in competitive policies of national selfishness. And the catastrophe came.

However, Keynes's ideas, arising from the opportunity imposed by the crisis, still influence today’s world events. He and other men of his generation created the multilateral system that still lasts and to which African countries in general and those of the CEMAC zone have to adhere without the slightest guarantee that their interests will necessarily be considered and evaluated at their fair value in this global chess game.

What Keynes and the others accomplished, even in the heat of World War II, was due to the combination of ideas backed by action. They helped create the post-war economic structure. They laid the foundations for the formation of the World Bank Group, the International Monetary Fund and what later became the World Trade Organization.

In times of deep crisis, people are more psychologically prepared to face and accept structural reforms and changes that their leaders propose to them for the operation and articulation of a new socioeconomic structure. It is in this sense that the Covid19 crisis represents a historic opportunity for CEMAC countries to initiate deep structural reforms in their economic and social models. Reforms that in another historical context would be very difficult to undertake and implement in order to permanently align themselves with models that guarantee sustainable economic growth, prosperity and well-being of the people.

Today we should not shy away from the task of uniting ideas and actions. In a time when trust has been lost, we need facts that restore the faith of the public, private companies, civil society, foreign investors, etc ... The governments and institutions of the CEMAC subregion are ready to tackle that challenge ahead of them. In the face of a crisis of the magnitude and implications such as that of Covid19, it is riskier, irresponsible and dangerous to do very little than to do much.

The CEMAC region is made up of 6 countries with an approximate population of 54 million people, and an economy dominated mainly by the oil sector, which represents 80% of exports and 75% of fiscal income according to World Bank and the IMF. It is one of the areas most exposed to fluctuating oil prices in international markets and will be the most affected economic zone by the Covid-19 crisis in the entire African continent due to the low integration and diversification of its economies.

In the Central African subregion, countries such as Gabon, Congo, Chad and Equatorial Guinea will be among the most affected in economic terms given the weight of oil exports in their total exports. In a scenario of $30/barrel, this represents a 50% reduction in oil export earnings caused by a contraction in demand and price, with its negative implications for states social programs.

The economic situation of the subregion described above requires a pragmatic and courageous analysis to undertake structural reforms that would allow it to emerge from the state of lethargy in which it finds itself. Despite the current situation of the oil industry, oil & gas will continue to be the locomotive of economic activity in the CEMAC subregion. However, oil revenues should from now on be used under a new economic-financial paradigm, to fund the kind of economic diversification that would allow the creation of a regional business fabric capable of competing at the highest level with other companies from other economic poles.

The implementation of policies to diversify economic activity, in combination with a strong Local Content component within the oil sector through the implementation of downstream projects to maximize local value of our resources hence become imperative. A strong, dynamic and innovative regional and indigenous oil industry with access to financing will act as a catalyst and drive that will allow other economic sectors to take off in all CEMAC countries. Local Content policies must go from being mere regulations and laws adopted by national parliaments, to actually being implemented and enforced without thereby jeopardizing the continuity of operations in the oil sector.

Accelerating the physical and commercial integration of the entire Central African subregion, especially that of CEMAC member states, must be prioritized by all economic and political actors. This must be done in favor of economic diversification and industrialization induced by more relaxed cross-border trade and taking advantage of the opportunities and synergies offered by digital transformation and regional integration promoted by the African Continental Free Trade Area (AfCFTA). Only in this context can oil sector consolidation become a true locomotive that would allow the resurgence of other economic sectors.

Central Africa cannot advance considerably with national and intraregional projects in their current state of low economic diversification. The institutions of the subregion must have the courage and the will to deepen economic and financial integration among all the countries of the economic pole through policies that promote a greater distribution of income, fiscal coordination and a common budget, in order to mitigate the "country risk" criteria when negotiating with international creditors or companies from other economic blocks for the financing and implementation of projects in the CEMAC region.

Economic integration within CEMAC may be favored by the implementation of the African Continental Free Trade Area (AfCFTA); which requires a paradigm shift towards greater horizontal and vertical diversification of export products. AfCFTA has immense potential to contribute to the diversification of CEMAC economies and deepening the sophistication of export products.

In this new stage of continental changes such as the implementation of the AfCFTA, Central African countries must dare to use expansionary monetary policies, including the quantitative easing that involves the injection of money into the productive ecosystem by governments and other stimulus, as short-term measures. These are only temporary measures to navigate the crisis. In the end, getting out of this vicious circle of external shocks vulnerability will require of CEMAC countries to invest in the fundamentals of diversifying their economies. Such investments must be made both horizontally through the increase in the number of products destined to exportation, and vertically to delve into the added value of goods and services. Therefore, governments must intervene to create the enabling environment for these changes to happen, improving the positions of CEMAC countries in the “Ease of Doing Bussines” index, instituting and monitoring local content policies with the aim of localizing the acquisitions of services, which in several cases represent 60% of the OPEX of the large companies that operate in the continent.

Governments should also facilitate the participation of small and medium-sized enterprises (SMEs) in local and regional value chains by dismantling tariff and non-tariff barriers and working towards and for a real integration of CEMAC economies. These initiatives must have the private sector in the driving seat when designing them, to make sure that government bureaucracy does not derail the proposed objectives. The participation of local and regional companies in the redefinition of the economic architecture of the subregion towards the long-awaited economic diversification must be based on meritocracy and the competences that these economic actors have.

It is utopian to speak of economic diversification of the CEMAC subregion in the absence of a solid banking and financial sector that lives up to the challenge and is capable of accompanying the transformation of the region’s economies. The BEAC and all financial institutions in the CEMAC subregion must review and redefine their role on how they are financing economic activity. The implementation and use of new technologies such as mobile banking platforms, mobile money and other technological innovations in the financial sector will allow and facilitate the creation of new SMEs. Banks have to abandon their comfort zone in which they have been acting until now and move to real banking activity that is none other than to properly finance economic activity and favor conditions in the financial market that allow sustainable economic growth.

Compared with the banking sectors of other economic subregions on the African continent, it can be concluded that the banking sector of CEMAC is the least developed and requires a profound structural reform to face the subregion’s economic situation.

We cannot get tired of repeating, emphasizing and advocating for economic diversification and industrialization in Central Africa, because if CEMAC countries do not address their structural problems now, the problems we face today will only get worse. That is the vicious circle of dependence on the sale of raw materials in the CEMAC area that the Covid19 crisis has exposed.

It will be up to us to turn this crisis into a historic opportunity that will allow us to definitively transform the economies of our subregion, harmonize and converge our economic and financial systems, and create a regional business fabric capable of competing in the international arena.

If we do not do so now, we may possibly have lost forever the train that leads to sustainable development.

Crisis, as our Chinese friends say, are accompanied by opportunities.

Leoncio Amada NZE, President for the CEMAC Region at the African Energy Chamber and CEO of APEX Industries.

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