#EarlySignals - Dec. 2021

Analysis

Our monthly selection of news, quotes and figures that slipped through the radar but could have significant implications

NEWS

Towards a boom of green bond finance in Africa

Since the first green bond issue was issued in Africa in 2012, the number and value of green bonds has increased almost every year, according to a recent report released by the European Investment Bank. Between 2014 and 2020, 20 green bonds worth about USD 2 billion were issued in six African countries. Over this period, Africa represented only 0.2% of the global green bond market, compared to 1.4% for Latin America and 36.4% for Europe. What is at stake for African countries? Green bonds can mobilise significant capital to finance climate adaptation and sustainable development. Although 97% of total green bond emissions are still shared between South Africa, Morocco and Nigeria, Egypt and Benin have recently entered the race with bonds of 800 and 500 million, respectively. Will green bonds become a new economic lever in Africa? The outlook is promising.

QUOTE

“Everybody seeking in-person government services should be fully vaccinated and proof of vaccination availed by December 21st, 2021.” Kenyan Health Minister Mutahi Kagwe

Kenya’s controversial decision to deny the unvaccinated access to public services is the latest of a new wave of measures announced by the government late November. Bars, restaurants, public transport and government offices will only be accessible to those with a vaccination certificate. With less than 6% of the population fully vaccinated, is Kenya’s move realistic? After experiencing vaccine shortages, issues of mismanagement and vaccine hesitancy, vaccination rates are starting to decline in certain regions of the country. Elsewhere in Africa, Zimbabwe and Uganda have already made vaccines mandatory for government and health workers, respectively. Will this have a domino effect across the continent? South African President Cyril Ramaphosa, who stressed a few months ago that "no one will be forced to take this vaccine", has just set up a task force to consider introducing mandatory vaccination.

FIGURE

1/3rd - Cut of of Chinese loans to Africa for the next 3 years

At the eighth ministerial conference of the Forum on China-Africa Cooperation (FOCAC), Xi Jinping pledged that China would invest USD 40 billion in Africa by 2024, a 33% drop from previous years. Does this mean that China has started to shift its focus away from Africa? In fact, China’s lending portfolio in Africa has been declining for years, from USD 28 billion in 2016 to USD 7 billion in 2019. Although China is increasingly wary of Africa’s economic uncertainty and growing indebtedness, it remains the continent's largest bilateral lender and trading partner. Concurrently, Europe, among other key players, has begun to fill the gap left by China’s retrenchment from infrastructure financing, with the recent announcement of the "Global Gateway" plan, a six-year, EUR 300 billion investment to compete with China's silk roads.