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Africa in focus

Africa in the news: Kenya and Ethiopia ink $200 million trade deal, South African rand sinks to new low, and UN makes record $20 billion humanitarian appeal

 

Kenya and Ethiopia sign historic trade and peace deal

 

The Kenya-Ethiopia border region has a long-standing history of power struggles between herding communities over grazing lands, water sources, and other constrained resources, especially as population pressures have intensified in recent years. This week, Kenyan President Uhuru Kenyatta and Ethiopian Prime Minister Haile Mariam Desalegn oversaw the signing of a five-year agreement to jointly develop the borderland regions of Marsabit County in Kenya and Borana Zone in Ethiopia. This deal, called the “Marsabit County/Kenya-Borana Zone/Ethiopia Integrated Cross-border and Area-based Program,” will create a special economic zone within these regions, which will aim to leverage the area’s relatively untapped natural resource base and livestock sector to boost the local economy through industrialization and cross-border trade. It also strives to increase access of basic public goods and services to local communities, including in health and education, in a region that has been largely marginalized from public and private investments in social goods. The deal will be carried out in partnership with the United Nations and the Intergovernmental Authority on Development (IGAD) and will unlock approximately $200 million for the region.

Rough road for the rand

The market opened this week with the rand at a record low against the dollar due to speculation that a strengthening U.S. economy will speed up the pace at which the Federal Reserve increases interest rates. The forecast for the rand is not any better as the current account deficit widened sharply in the last quarter and the country’s net gold and foreign exchange reserves have also declined since October. Just last week, Fitch Ratings cut South Africa’s credit rating to BBB- from BBB and Standard & Poor’s lowered its outlook to negative. The weakness in the rand spurred fears among investors, making the portfolio investments abroad spike to the biggest quarterly outflow on record. This trend changed by the middle of the week and the rand grew stronger, taking into account that the inflation and retail sales figures in the country had exceeded the estimates. However, this was short-lived as the rand came again plummeted on Thursday following the dismissal of the country’s finance minister, Nhalnhla Nene. The new finance minister, David van Rooyen, acknowledged upon his appointment the “colossal” task that awaits him as he seeks to alleviate market fears.

 

UN appeals for record sum of humanitarian aid

 

This week, the United Nations launched an appeal for a record sum of humanitarian aid: $20 billion to fund its 2016 operations. The world’s increased demand for humanitarian aid stems in large part from a doubling in the number of highly violent conflicts across the globe and a more than 50 percent increase in the number of refugees and internally displaced people. According to Under-Secretary-General for Humanitarian Affairs Stephen O’Brian, “human suffering has reached levels not seen since the Second World War.” With 125 million people in need of humanitarian aid, the U.N. agencies—the World Health Organization, the Office of the United Nations High Commissioner for Refugees, and the Office for the Coordination of Humanitarian Affairs—are attempting to bring assistance to the most vulnerable, i.e., 87 million people in 37 countries, which include Syria, Yemen, South Sudan, and the Ukraine.

With two-thirds of the funds being allocated towards solving the crisis in Syria, $1.3 billion will be dedicated to resolving the crisis in South Sudan. Other African countries in profound need of assistance according to the U.N. agencies include the Central African Republic, Burundi, and Nigeria, where humanitarian crises have spilled into neighboring countries and taken on a regional dimension.

Author

Amy Copley

Research Analyst and Project Coordinator - Africa Growth Initiative

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