Welcome to Next Africa, a weekly newsletter of where the continent stands now — and where it’s going next.

South Africa could become a poster child for a climate-friendly energy transition — if it can seize the opportunity. 

Envoys from four of the world’s richest nations and the European Union were in the country this week. Their aim: A deal that would see South Africa ease a dependence on coal in exchange
for almost $5 billion. The funds would be earmarked for renewable energy development and to help soften the blow for communities that rely on the fossil fuel.

The rich nations want a success they can trumpet at the upcoming COP26 climate talks, while cash-strapped South Africa needs money to replace its aging coal plants. The country has two big advantages over the likes of Indonesia to secure the deal: It’s small enough for the transition to be affordable and has capital markets that can cope with complex green financial products.

Yet the government risks shooting itself in the foot.

While the envoys were meeting the environment and public enterprises ministers, their counterpart at the Department of Energy, Gwede Mantashe, was addressing mineworkers and campaigning for the
continued use of coal. 

Mantashe’s logic is easy to understand. The country has 90,000
coal miners, some of the world’s biggest reserves and the minister himself cut his teeth as a unionist in the industry.

But South Africa produces more greenhouse gases on a per capita basis than China and funding options for new coal developments are almost non-existent. Meanwhile, some of the country’s biggest trading partners, such as the EU, are planning import tariffs on goods that use carbon-heavy processes.

South Africa may not get a better chance.

— By Antony Sguazzin 

News & Opinion 

Chocolate Glut | Ghana, the second-biggest exporter of cocoa beans, is facing a problem many would’ve thought impossible: you can have too much chocolate. The country has reaped its ­largest-ever cocoa harvest, thanks to favorable weather and higher farmer pay. Yet the coronavirus pandemic, which shut down marketplaces and airport gift shops around the world, has weakened demand for chocolate.

Oxygen Man | The onset of the coronavirus pandemic
presented an opportunity for Bernard Olayo, the founder of a Kenyan company supplying African hospitals with oxygen. His strategy of building small plants near hospitals differs from that of larger producers, which typically favor centralized facilities. Olayo says this “milkman model” has allowed him to undercut his competitors’ prices.

Vaccine Shortage | About nine months after Covid-19 shots became widely available, dozens of countries have
yet to vaccinate 10% of their populations, a milestone seen as crucial in narrowing a glaring gap in access. About 70% of
African nations have fallen short, illustrating the supply problems the Covax distribution program has faced in its bid to roll out vaccines to every corner of the planet.

Mining Dispute | The Democratic Republic of Congo
began reviewing a $6.2 billion minerals-for-infrastructure deal with China that’s faced growing criticism. The contract, signed in 2008, promised a $3.2 billion investment by China in a copper-cobalt mine and another $3 billion worth of infrastructure projects, all paid for by mining revenue. More than a decade later, less than a third of the infrastructure funding has been disbursed.

Aviation Comeback | United Airlines 
expanded its reach to southern African destinations like Madagascar and Victoria Falls, signing a code-share deal with a local carrier Airlink. The U.S. firm will also start routes to Nigeria and Ghana, the latest sign of a post-pandemic pick up in international travel. In Sudan, the ending of all U.S. sanctions enabled Sun Air to resume operations, linking Khartoum with Egypt and the UAE. 

IPO Hunt | South Africa’s newest stock exchange opened this week, pledging to lure firms from across the continent with listing costs that are a third less than in Johannesburg. The Cape Town Stock Exchange would like to become the Nasdaq of Africa. In Nigeria, the Lagos-based bourse will review membership rules to lure tech unicorns and other companies after a lull in new offerings.

Past & Prologue

Data Watch

• A tourism boom in the Indian Ocean island nation of Seychelles is fueling a world-beating rally in its currency. The Seychelles rupee has strengthened about 60% so far in 2021 — the best performer of 146 currencies tracked by Bloomberg globally.

Big Winners

African countries dominate list of best-perfoming currencies globally

Bloomberg

• South Africa recorded its first quarterly primary budget surplus since 2018, a sign the National Treasury is succeeding in an effort to bring spending in line with revenue. 

Coming Up

• Oct. 4. PMI for Nigeria, Ethiopian parliament meets to form government and reappoint Abiy Ahmed as prime minister
• Oct. 5  PMIs for Ghana, Uganda, Kenya, South Africa and Zambia, South African Reserve Bank publishes six-monthly Monetary Policy Review, South African union scheduled to begin a strike over pay
• Oct. 6 Mauritius interest-rate decision, PMI for Mozambique, Digital Transformation of the African Economy conference
• Oct. 7 South Africa gross and net reserves and central bank bond holdings, Seychelles inflation, Mauritius inflation, gross reserves, South Africa electricity production and consumption

Last Word

Beyond Good, a maker of premium chocolate in Madagascar, aims to start selling carbon credits as it works with cocoa farmers to boost reforestation and provide a
safer habitat for lemurs. The company, based in New York, is working with Conservation International and the U.K.’s Bristol Zoo after identifying at least five species of lemurs in copses of trees under which the Criollo cocoa variety is grown. With much of the area having been cleared to grow rice and tobacco, saving the forest may help increase their numbers outside protected areas and, ultimately, allow for the sale of carbon credits. Forests absorb carbon, acting as so-called carbon sinks. If that absorption can be quantified it can be sold as credits to companies to offset the greenhouse gases they emit from activities such as power generation using fossil fuels.

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