Updates on the South African Economy, Power Generation and Nigerian Foreign Relations

New definition measures South Africa’s GDP 11% higher than previously thought

This week, South African authorities announced that the country’s economy was 11% higher than previous estimates after Statistics South Africa changed its method of calculating gross domestic product. The new definition of the national statistical service uses a refined and more modern classification of activities, new sources of information and a new reference year (2015 instead of 2010). The new definition also changed estimates of other key variables, including household consumption to GDP and GDP per capita, which became 16% and 9% higher, respectively. This higher GDP also means that Africa’s second-largest economy (again) has a lower debt burden than previously thought. According to Annabel Bishop, chief economist at Investec Bank Ltd, the new definition suggests that South Africa‘s debt-to-GDP ratio will remain below 80% until 2023-2024, when previous estimates had put it at 87.3% at that time. To learn more about South Africa’s debt burden and the state of the country’s economy during the pandemic, read “From Stimulus to Debt: The Case of South Africa”.

Meanwhile, South Africa’s unemployment rate has become the highest in the world, according to Bloomberg, which regularly monitors the indicator in 82 countries. The unemployment rate rose to 34.4% in the second quarter of 2021, from 32.6% in the first quarter. South Africa is not the only country in the region with such high unemployment rates: the country’s unemployment rate barely eclipses other countries in sub-Saharan Africa, Namibia (33.4%) and the Nigeria (33.3%), which ranks second and third in Bloomberg’s database. An expanded measure of unemployment, which includes people available for work but not looking, reached 44.4 percent in South Africa, an increase of 1.2 percentage points from the first quarter. For policy recommendations to create jobs for young people in South Africa, see “Solving unemployment in South Africa: could tourism, horticulture, agribusiness or logistics hold the key? ”

New energy projects announced, including transformation of landfills in Rwanda, increasing solar and wind capacity, and construction and modernization of nuclear power plants

This week, the Rwandan capital of Kigali announced a new environmentally friendly project that aims to use the Nduba landfill to generate power for the national grid. In 2020, the area has been designated an environmental and health hazard, and this new project will transform the landfill to capture the gases (like methane) it produces and convert those gases into energy instead of them. throw back into the air. Solid waste can also be made into other materials like plastic and reused into items like bricks, utility poles and chairs. According to The New Times, capturing and using landfill gas, turning waste into energy, and aerobic composting can all make major contributions to reducing emissions of gases that cause global warming. Overall, the government plans to invest $ 28 million in projects that can use gas landfills for power generation and that are also expected to create new green jobs.

The government has argued that such action is essential as Rwanda’s cities undergo rapid urbanization – Kigali’s population alone has grown from just over 600,000 in 2002 to 1.6 million in 2021. .

At the launch, Environment Minister Jeanne d’Arc Mujawamariya explained the reasoning and described the next steps hoped for in the effort: “Waste should not be wasted. We need to turn waste into income. Once investors generate income from waste recycling, we will work with them to achieve the level of incentives for households. The project is part of an agreement between the Rwandan Ministry of the Environment and the Luxembourg government and is also part of efforts to strengthen diplomatic relations and aid in the transfer of technology between the two nations.

Other renewable energy sources like solar continue to grow across the continent. Investment firms Gridworks and New GX have announced investments of $ 40 million in Sustainable Power Solution Investments (SPS), which will be used to build additional solar power plants that can collectively generate 100 MW of electricity in countries of the world. Sub-Saharan Africa, particularly Ghana and Nigeria. The investment in SPS is Gridworks’ second since 2019, when it committed $ 31 million to facilitate the installation of 45 MW of solar power in the region.

In related news, South Africa has moved forward with plans to increase its solar and wind capacity by 2.6 GW and, this month, received 102 offers from companies for such projects. The Ministry of Mineral Resources and Energy, which will fund the projects, said it will announce successful bidders in October and November of this year, and that winners must complete the projects by April 2024.

Also as part of efforts to reduce the country’s dependence on carbon-intensive energy sources, South African energy regulators are seeking to increase the country’s nuclear capacity. Last week, Mineral Resources and Energy Minister Gwede Mantashe announced plans to build a new 2,500 MW nuclear power plant by 2024. The announcement, however, met with some opposition to the government. At first, the civil society group Organization Undoing Tax Abuse (OUTA) arguing that the project is “not affordable, not appropriate and should not be approved”.

South Africa currently has the only nuclear power plant on the continent, the Koeberg nuclear power plant near Cape Town, which generates 5% of the country’s electricity. Notably, a new $ 1.2 billion program was recently launched to extend the life of this plant, which will involve the replacement of six steam generators and forced air cooling units, as well as the necessary maintenance of the plant. turbine system. The changes are expected to extend the operational life of the plant, which has been connected to the national grid since 1984, by 20 years by 20 years.

Nigeria deepens relations with Russia, South Korea

This week, Nigeria and Russia signed a military cooperation agreement which details the framework for the supply of equipment and the training of troops by Russia to the West African country. According to the Nigerian Ambassador to Russia, President Muhammadu Buhari believes that Russia can help Nigeria defeat Boko Haram, which continues to contribute to insecurity in northern Nigeria.

This agreement is a new step in strengthening ties between the two countries: for example, in October 2019, Russia hosted its first summit with Africa which included 43 heads of state or government, with the aim of reviving economic, political and military relations. Russian influence in Africa. At the summit, Russia struck the first of many economic and security deals, including a contract for the supply of attack helicopters to Nigeria. For more on Africa-Russia relations, see the 2019 editorial, “Vladimir Putin resets Russia’s agenda in Africa to counter the United States and China.”

Meanwhile, Nigeria and South Korea are striving to expand their political, economic and defense relations, as Korea’s First Deputy Foreign Minister Choi Jong Kun recently visited Nigeria earlier this year. week. In fact, during his visit, Kun said that, pending the COVID situation, in the next five years, he wants to see a direct flight between the capitals of the two countries, as well as cultural, technological collaboration. , educational and commercial increase. The two countries are also looking to cooperate on security issues, as Kun and Nigerian Transport Minister Rotimi Amaechi met to discuss maritime security during the visit.

The trip was another step in Korea’s pursuit of a long-term and mutually beneficial relationship with Africa in recent years: for example, Korea sent $ 200 million worth of masks and medical supplies to the continent to help it in its fight against COVID-19. In March of this year, the South Korean Ambassador to Nigeria said that the South Korean Embassy was interested in a joint children’s program as well as other cultural programs to help Koreans understand Nigerians on culturally. The Korea International Cooperation Agency (KOICA) has also rapidly increased its assistance to the region since 2016.

Katy F. Molnar