Agriculture of Africa
Agriculture is by far the single most important economic activity in Africa. It provides employment for about two-thirds of the continent’s working population and for each country contributes an average of 30 to 60 percent of gross domestic product and about 30 percent of the value of exports. Nonetheless, arable land and land under permanent crops occupy only about 6 percent of Africa’s total land area.
Except for countries with sizable populations of European descent—such as South Africa, Zimbabwe, and Kenya—agriculture has been largely confined to subsistence farming and has been considerably dependent on the inefficient system of shifting cultivation, in which land is temporarily cultivated with simple implements until its fertility decreases and then abandoned for a time to allow the soil to regenerate. In addition, over most of Africa arable land generally has been allocated through a complex system of communal tenure and ownership rather than through individually acquired title, and peasant farmers have had rights to use relatively small and scattered holdings. This system of land ownership has tended to keep the intensity of agricultural production low and has inhibited the rate at which capital has been mobilized for modernizing production. A number of countries have made effortsto raise productive levels by selecting better varieties of seeds and planting materials, using tractors and other mechanized equipment, or increasing the use of mineral fertilizers and insecticides. Such measures, however, have been relatively limited, and they have raised concerns about their part in accelerating soil erosion and desertification. In areas of cash crop production, land has become private rather than community property, and cultivation is intensive.
Principal crops
Africa produces all the principal grains—corn, wheat, and rice—in that order of importance. Corn has the widest distribution, being grown in virtually alecological zones.
Real Estate
With new spending on infrastructure by the East African governments, this is the prime time to start investing heavily in the East African region.
East African countries plan to increase spending dramatically on infrastructure projects in budgets to be released Thursday.
Kenya, Tanzania, Uganda, Rwanda and Burundi will unveil plans to fund the building of more roads, railways and power plants, as well as expand services such as health care and education, for the year starting July 1. In most cases, this will raise budget gaps as a percentage of gross domestic product, and increase borrowing requirements.
“There is a risk of rising fiscal deficits coming from the fact that many have ambitious revenue targets they may fail to meet,” said Tony Watima, a Nairobi-based independent economistSpending will probably climb about 10% in Kenya in the next fiscal year, 17% in Uganda and 11% in Rwanda, while it will be broadly flat in Tanzania, the nations’ respective governments have said in forecastsWhile the governments forecast that revenue will increase by double digits next year, Kenya, Uganda and Tanzania all have plans to approach the debt markets to help raise the funds to finance their deficits. In Kenya’s case, the nation will borrow about 607 billion shillings ($6 billion) locally and internationally in 2019-20, according to Treasury Secretary Henry Rotich.GDP in East Africa will probably expand 5.9% in 2019 and 6.1% in 2020, according to the African Development Bank, making it the fastest-growing region on the continent. Economic expansion in Kenya, Tanzania, Uganda, Rwanda and Burundi will average a combined 5.5% for the next two to three years, Citigroup Inc. Chief Economist for Africa David Cowan said Wednesday.
GOLD TRADING
Geopolitical Dynamics
The trend of Russian gold trading relocating to Hong Kong can be attributed to several geopolitical factors, most notably stringent US sanctions and a crackdown in the United Arab Emirates (UAE). According to insights shared by Robert Besseling, CEO of Pangea-risk, the shift has been particularly noticeable since April, with a discernible decline in gold volumes passing through the UAE, a traditional hub for minerals, including gold.
Besseling explained that the decline is a consequence of the UAE’s concerted efforts to enhance its commodity trading center and align with Financial Action Task Force directives. This shift has led to an increase in gold volumes directed towards Hong Kong, raising questions about the overall stability and attractiveness of Africa as a hub for gold trade. The implications of this shift are profound, presenting both challenges and opportunities for African nations deeply intertwined with the gold trade.
Simultaneously, the surge in the price of gold beyond the $2,000 mark, the first time since May, has added a new layer of complexity to the gold trade landscape.
The rise in gold prices, fueled by weakening of the US dollar and geopolitical uncertainty, has led to investors turning to gold as a widely considered safe-haven asset. Moreover, expectations that the Federal Reserve will not raise interest rates further, with markets pricing in a potential interest rate cut as early as March, have contributed to the increased demand for gold and intertwines with the ongoing shifts in the gold trade dynamics.
Regulatory Frameworks and Local Dynamics
The regulatory impact on gold trading in African countries has become a focal point of discussion. According to Besseling, African nations are now prioritizing compliance with international sanctions. The decline in Russian gold entering the UAE is viewed as a positive development in this regard, potentially enhancing regulatory frameworks for gold trading in African countries.
Besseling emphasizes that, with African nations looking to strengthen their regulatory mechanisms, transparency becomes a key element in their quest for reliable trading partners. The emphasis is on seeking transparent counterparties, avoiding violations of international sanctions, and building robust local regulatory frameworks. This renewed focus on compliance and transparency is seen as a positive step towards fortifying the integrity of gold trading in the region.
Beyond regulatory considerations, Tibor Nagy, Former US Assistant Secretary of State, adds valuable insights into the recent Mali-Russia agreement to build a gold refinery. This agreement signifies a growing partnership and raises questions about the potential benefits and risks associated with increased collaboration between African nations and global players in the gold trade.
Nagy underscores that the agreement aligns with Africa’s broader interest in local beneficiation and processing within the gold mining industry. The move towards refining gold locally is seen as a step towards stimulating economic growth, creating jobs, and fostering economic diversification. While the agreement is still in its nascent phase, it reflects a broader trend across the continent where African nations seek greater beneficiation for their local economies in the gold trade
Navigating uncertainties
As geopolitical shifts, strategic alliances, and local dynamics reshape the global gold trade, stakeholders must focus on transparency, compliance, and sustainable economic development. Adapting to these changes is crucial for the continued resilience and growth of the gold trade industry, both in Africa and on a global scale.
