In Zimbabwe, electricity is only lasting up to 10 hours daily in some areas and threatening mining output in one of the world’s biggest platinum and gold producers.
The sector, which generated most of Zimbabwe’s $4.8 billion of export earnings last year, is crucial to President Emmerson Mnangagwa’s pledge to revive an economy ravaged by drought and soaring inflation.
Three years ago, power cuts that extended up to 18 hours hit production at gold mines and producers subsequently agreed to pay a higher tariff to guarantee supplies.
The mines have so far been saved from the rolling cuts, which the state-owned power firm said would be open-ended, but there is no guarantee they will continue receiving electricity if the blackouts are prolonged.
Here is a look at why Zimbabwe is facing electricity shortages, what it means for economic revival efforts and what the government is doing to tackle the problem.
How did Zimbabwe get here?
For the past 20 years, Zimbabwe has struggled to generate enough electricity to meet demand, and has had to turn to countries like Democratic Republic of Congo, Namibia, Mozambique, South Africa and Zambia to top up supplies.
During the 2000-2008 recession when the southern African country was in the grip of a dollar crunch and hyperinflation, it became harder for it to pay for the imports, leading to most of these countries to demand cash upfront.
Zimbabwe has one hydro power plant and four coal-fired generators with a total combined capacity of 2,240 MW, just enough to meet the country’s demand.
But the Kariba hydro plant, which commissioned another 300 MW last year, is only producing a third of its design output because of low dam water levels due to the drought.
Hwange, the biggest coal-fired plant was built in the 1980s and work only started last year to add another 600 MW begin after years of false starts during Robert Mugabe’s 37-year rule.
The new generators will only come on stream in three years and even then, this does not guarantee power because the major coal supplier, Hwange Colliery, is struggling to stay afloat.
Three other smaller coal-fired plants with capacity to add 270 MW to the national grid are down after negotiations to secure funding from India’s Export and Import Bank to repair and upgrade the generators floundered.
In the last decade, Zimbabwe signed at least six power generation agreements, including solar power that would have added more than 3,000 MW in new electricity to the grid, but the projects failed to take off due to bureaucracy and lack of funding because of the country’s high political risk profile.
What is at stake?
Zimbabwe can ill afford any production interruptions in the mining sector, the mainstay of the economy.
Officially, the country is projected to register anemic economic growth this year after drought devastated agricultural output and a cyclone ripped through parts of eastern Zimbabwe.
A drop in mining production could tip the economy into recession, economic analysts say.
Gold is the single largest mineral export and the government is on an aggressive drive to raise output from the record 996,373 ounces last year, but without power, these efforts will be in vain.
Producers of platinum import their own power, which secures production, but gold mines rely on the unstable national grid. Although they have been spared from the power cuts so far, they are not assured this will continue if the blackouts continue.
Zimbabwe is the world’s third-largest platinum producer after South Africa and Russia.
The country’s manufacturing sector, for years struggling to compete with imports mostly from South Africa and China, also needs electricity to protect jobs in a country where formal employment is only 20 percent.
“The government cannot afford to switch off the mines, it will be like biting the hand that feeds you,” said John Robertson, a Harare-based economic analyst.
He said the power cuts would also hit farmers, particularly those who are in the process of planting irrigated winter wheat, the country’s second main staple crop after maize.
What is the government doing?
The government says it has approached Mozambique to negotiate a power purchase agreement. But given a severe shortage of dollars, Zimbabwe may not have money to secure adequate supplies from its neighbour.
In the long term, Zimbabwe will consider building a power station near Mozambique’s Hydro Cahora Bassa dam, Justice Minister Ziyambi Ziyambi told parliament on Wednesday. Mnangagwa this week replaced the energy and power development minister after a public outcry over the cuts.
The national energy regulator has been licencing a raft of solar power projects, most of which are still to take off. In any case, analysts say the projects are off grid and too small, averaging 5 MW and will only supply electricity to local communities in the countryside.
Africa’s smaller economies secure 13-year fragile sector protection
The LDCs, which constitute over 50 per cent of Africa’s 54 countries, are still heavily dependent on the trade taxes to fund their national budgets
Africa’s 32 Least Developed Countries (LDCs) have secured a 13-year reprieve to protect their sensitive economic sectors from duty-free imports under the African Continental Free Trade Area (AfCFTA) agreement, in a major concession aimed at securing their ratification of the deal.
The matter of tariff concessions has been a sticky issue for the LDCs, which have expressed fears that implementation of the AfCFTA agreement beginning July 1 next year will lead to heavy revenue losses.
The LDCs, which constitute over 50 per cent of Africa’s 54 countries, are still heavily dependent on the trade taxes to fund their national budgets.
Only about 15 per cent of trade by African countries takes place within the continent, with most commodity-dependent countries shipping out their goods to global partners.
“Despite low levels of intra-Africa trade, tariff revenue is still an important source of government revenue, and remains an important measure to reduce import competition and so protect domestic industry,” says Benedict Musengele, the acting Director-in-Charge of Trade, Customs and Monetary Affairs Department at the Comesa Secretariat.
Tariff liberalisation is, however, only expected to lead to a limited expansion in intra-Africa trade.
Exchange of goods and services on the continent is still highly concentrated within the regional economic communities (RECs), with more than half of the total trade taking place in the Southern African Customs Union (SACU), and more than 65 per cent in the Southern African Development Community (SADC).
The 13-year reprieve comes at a time when the Africa Export-Import Bank (Afreximbank) has announced a $1 billion financing facility to support countries to adjust in an orderly manner to the sudden revenue losses as a result of the implementation of the AfCFTA agreement.
The AfCFTA member-countries have agreed to liberalise 90 per cent of their tariff lines with the remaining 10 per cent divided into two categories, where 7 per cent are classified as sensitive products, while three per cent is to be totally excluded from the requirement to liberalise.
Tariff liberalisation –
It is argued that although the AfCFTA, which was officially launched at the 12th Extraordinary Summit of the African Union in Niamey, Niger July 7, enjoys considerable political support, individual member states still face difficult choices.
Africa’s economies vary considerably in size, levels of economic development and diversification and without exception, they face challenges to create jobs, develop their industrial sectors and diversify their production capacity.
Trade agreements –
The launch of the AfCFTA seeks to create a single market of over 1.2 billion people and open up markets with a combined $3 trillion in GDP, which is currently dominated by Nigeria, South Africa and Egypt. All the countries, except Eritrea, have signed the agreement, while 27 have ratified it.
The idea to launch the AfCFTA was mooted in 2012 to promoting country-to-country trade, boost economic growth, increase the competitiveness of the continent’s economies and create employment. Negotiations were launched in Johannesburg, South Africa in 2015, where the heads of states and governments issued a timeline of two years to complete the negotiations.
The negotiations were completed in December 2017 in Niamey, Niger and the report presented to the heads of states and governments in January 2018, leading to a signing ceremony on March 21, 2018 in Kigali Rwanda, where 44 countries immediately signed up.
On April 29, the agreement received the minimum threshold of 22 ratifications for it to come into effect.
However, the pact legally came into force on May 30 in line with the provisions of the agreement which binds member countries to put into operation the free trade area 30 days from the day the 22nd country ratified the agreement.
Nigeria’s border closure sparks tension after price hike of rice
The price of rice has skyrocketed, from ₦9,000 for a 50-kilo sack, to ₦22,000, meanwhile, Nigeria’s minimum monthly wage is ₦18,000
The days of heaping 50-kilo sacks of rice across the saddle of their motorbike and slipping a few notes to a customs officer are now gone.
With Nigeria having snapped its borders shut, the legions of motorbike riders who used to satisfy the nation’s hunger for imported rice are lucky at best to sneak through a few packets of Basmati.
The smugglers risk more than just jail time if they try to force or sneak across the border.
“They shoot us and kill us like goats,” said Adewole, who asked for his full name not to be published, stuttering with anger.
The some 3,000 sacks of rice per day that motorbike riders estimate they previously smuggled across the border from Benin have slowed to a trickle.
As a result, the price of rice has skyrocketed, from ₦9,000 for a 50-kilo sack, to ₦22,000, a price higher than Nigeria’s minimum monthly wage of ₦18,000.
The border closure is part of President Muhammadu Buhari’s plan to end Nigeria’s economic dependence on oil, by developing domestic agriculture and industry.
With cheap goods — smuggled or imported — long having hampered domestic producers, Buhari ordered a partial closure of the border with Benin in August.
This month, the borders with all neighbouring countries have been shut completely.
“The Nigerian borders will remain closed until the countries sharing borders with Nigeria” accept conditions put in place for the country’s economic policies on what is imported, warned Hameed Ali, comptroller general of the Nigeria Customs Service.
Analyst Adedayo Ademuwagun, of the Lagos-based consultancy Songhai, called the border closure an “extreme level protectionist policy”.
He said that the move was built on the idea that, instead of encouraging development with incentives, one can bring it about by necessity.
“They expect that by creating a gap in the supply, the industry should grow,” said Ademuwagun.
“But it’s not what’s happening.”
Nigeria has pursued this type of development strategy before, with some success.
Former President Olusegun Obasanjo, who was in office from 1999 to 2007, banned cement imports.
That helped local producers flourish, including Obasanjo protege Aliko Dangote, who now heads a multi-billion-dollar cement empire.
‘Not an island’ –
Buhari may have trouble repeating that outcome, however, as the situation with rice shows.
Nigeria has been ramping up rice production, with local output rising by 60 per cent since 2013, according to official figures, although specialists say they are inflated.
But at 4.8 million tonnes last year, local rice production was still not enough for the 190 million Nigerians, who spend about a tenth of their food budget on the staple.
Beyond quantity, there is also the issue of quality.
“It’s the imported rice people love,” said one trader at the market in Badagry, a coastal town between the capital Lagos and Benin.
“Nigerian rice is not good enough and too expensive.”
If you can get it.
The border closure means Nigeria is choked off from supplies until the next harvest by local farmers.
The Badagry market, usually teeming with activity thanks to its location near the border, now lacks its usual hubbub.
Not only is there almost no rice to be had, there is almost no macaroni, cooking oil, or sugar either.
“We can’t depend only on local production,” said market director Todowede Baba Oja.
“No one is on an island. We depend on one another. This suffering is getting out of hand.”
Even the butcher who sells locally-produced beef is having trouble, as his customers have little left for meat after paying higher prices for staples.
People have “no more money”, he said.
Uganda and Rwanda revisit trade talks
The meeting was aimed at boosting diplomatic relations between the two East African neighbours
Officials from Uganda and Rwanda on Monday met in Kigali following a Memorandum of Understanding signed by the two countries in Angola in August.
The meeting was aimed at boosting diplomatic relations between the two East African neighbours.
The two sides were seen to be at loggerheads for some time earlier this year, culminating in the closure of their borders.
The August MoU included agreements on regional co-operation and security, setting the pace for the improvement of political and trade relations between Uganda and Rwanda.
The two leaders also agreed to “resume as soon as possible the cross-border activities between both countries, including the movement of persons and goods, for the development and improvement of the lives of their population”.
The Ugandan delegation is led by Foreign Affairs minister, Sam Kutesa while his counterpart in Rwanda spearheads the opposite delegation.
Angola and DR Congo played a key role in bringing the Ugandan and Rwandan sides to the negotiating table.
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