macroafricaintel | Water is the new black gold

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

“It’s clear that in Africa and globally we need to be working towards doing more with less water” – Kate Brauman, Lead Scientist, Global Water Initiative (GWI), Institute on the Environment, University of Minnesota

Negative water externalities
Insecurity in the Sahel, terrorist activities in the Lake Chad area, and frequent clashes between pastoralist Fulani cattle herders and sedentary farmers on grazing routes can be traced to a lack of water or little of it. Not that there used to be much water in the Sahel. But even the little that there was, has been depleted or long gone. The Lake Chad, one of Africa’s largest once, which straddles the borders of Nigeria, Niger, Cameroon and Chad, could easily be mistaken for a stream these days. It is not an exaggeration. More than 90 percent of the lake is gone. “The shrinking of Lake Chad poses the greatest threat to peace, security and food security [for] the populations of the [countries in the] area”, says Verner Ayukegba, principal analyst for Sub-Saharan Africa economics and country risk at London-based IHS Markit, a research firm. “It is very likely, that the shrinking is directly linked to the economic hardship in the region which in turn provided a fertile ground for the Boko Haram insurgency. Being unable to continue fishing and farming activities supported by the lake, local populations on the shores have had to move to urban areas…for opportunities which remain scarce. Countering the shrinking of the lake or at least addressing the effects…will be at the centre of dealing with the Boko Haram insurgency long term.” Thankfully, efforts are afoot to replenish the Lake Chad.

There are competing needs for water elsewhere. Lately, Egypt has become increasingly nervous about Ethiopia’s big dam on the River Nile. Ordinarily, Ethiopia, being an upstream country on the river, is strategically located to determine or affect the flow of water downstream to Egypt and Sudan. Naturally, the Grand Ethiopian Renaissance Dam (GERD) has become a source of tensions; particularly with Egypt, which is historically, emotionally, and existentially attached to the River Nile. Sudan, on the other hand, is not as antsy. It is happy, in fact. The GERD would be helpful in stopping potential floods when the Nile overflows its banks. For that favour, it would also get cheap electricity once the dam starts generating electricity. Shouldn’t Egypt be happy as well? It worries about losing control over something so crucial to its national identity and existence. With water increasingly scarce, its sovereign pride makes its leaders wonder about their vulnerability to the whims and caprices of the Ethiopian regime. Say, a word or action by an Egyptian official rubs off in a bad way, what is to stop the Ethiopian government from cutting Egypt off? Well, nothing. Understandably, some worry about the likelihood of conflict. The Egyptians could bomb the dam, for instance. This has been assumeed for a long time now. There is, however, limited probability that this would ever happen.

Restraint, efficiency and creativity
But there is a different sort of water trouble elsewhere; down south in fact. Cape Town could run out of water in another year or so. That is, if concrete action is not taken to tackle the crisis. And there is good reason for concern. “Investigation on government’s effectiveness in handling the crisis effectively exposes politics, not rainfall, at the heart of the problem”, says Ibrahim Sagna, director and head of advisory and capital markets at Cairo-based African Export-Import Bank. Rising debt, mismanagement and corruption at the government’s department for water and sanitation hampered drought relief funding, for instance, according to South African Water Caucus, a civil society group. Day zero, the nomenclature the authorities have coined for the ominous day that the taps could run dry, has been shifting depending on attitudes of Capetonians. Now more conscious of saving water, when there has been an appreciable water conservation effort, day zero has been pushed back. When behaviour has not been responsible, it has been brought forward. The point is a water crisis is imminent. Without concrete action, day zero will come eventually; in Cape Town and/or elsewhere. Still, how is a city like Cape Town, awash with water, without water? What about all that ocean surrounding it? Yes, it is salty water. To make it palatable and drinkable, it has to be desalinated; an expensive endeavour. Should that be an excuse, though? Israel, another water-scarce country, is already adept at desalinating the abundant salty water on its shores. In other words, the technology exists and can be used cost-efficiently. For instance, water infrastructure could be redesigned to distinguish between that needed for drinking and cooking and those for laundry, toilet, and so on. Some businesses in Cape Town, hotels especially, are not waiting for fate or the government. Some already desalinate what is really abundant sea water. Others have deployed interesting technologies like one that harvests air to produce drinking water. Imagine that? And a more water conscious society is certainly beneficial in the long run. Since even though the ocean is abundant, the money for refining it for use is not. Dr Brauman of GWI gives another example. “There is appropriate concern in Malawi about water and energy, as the sole hydroelectric facility and really only source of domestic electricity production is on the Shire river and threatened by falling lake levels.” For Malawi and indeed other countries with similar problems but abundant alternative power sources like year-round sunlight, she advises them “to move away from centralized (not to mention water-depenedent) energy production all together and focus on distributed solar energy.”

Predominantly rain-fed, recent droughts in eastern and southern Africa weighed significantly on agriculture and power supply. So how should African countries better prepare to mitigate or prevent these negative effects in the future? For food supply, irrigation would be necessary, certainly. But where will the water come from? “The focus should be on ensuring that irrigation water is used as productively as possible – improving “crop per drop” of agriculture”, says Dr Brauman. “Water is effectively wasted if yields are low because of too little fertilizer or crop disease. That means instead of focusing just on water, we would be better rewarded by focusing on integrated farm management including fertilizer and pest management as appropriate”, she adds. The water scientist has other creative ideas: “To use water effectively, it needs to be clean enough to  use. One really cheap thing that people have done with water for a long, long time is [to] use it for waste disposal. There’s actually an old engineering adage, “the solution to pollution is dilution” – and that was really true when there weren’t many people! But now it’s a lot cheaper to keep water clean than to clean it once it’s dirty, so we need to build systems that not only use less water but keep it cleaner so it can be re-used later.” She goes further: “one idea that I think is really intriguing but I haven’t seen developed relies on flexibility in water use. If we go back to the idea of thinking about the end goals, I think it’s reasonable to assume that farmers want to be able to feed their families and make a living, not that they specifically want irrigation water. So what if there was a system in place to pay farmers to fallow their land during droughts and not use some of the water? I also think developing ways to use groundwater strategically is important. It turns out that there’s a lot of untapped groundwater in Africa, and much of it is a situation similar to the central US where the groundwater is very old and not being recharged. Could that water resource be used, but only in times of drought? Historically, once people put wells in they use them all the time, whether there’s a drought or not (to grow a crop during the dry season, for example). Perhaps there’s some kind of institutional constraint that could come along with physical access to the water to make sure it’s used wisely.”

So what models are there to make irrigation accessible, affordable and available to African farmers? Again GWI’s Brauman has some ideas. “There’s been lots of great work on what’s sometimes called “green water” harvesting – capturing and storing rainfall on farms by, for example, building small dams on gulches. What I think is critical is not trying to grow crops in places where it’s totally impossible without irrigation, but instead using affordable, small-scale irrigation to help ensure that a dry spell during the growing season doesn’t cause crop failure. There is hope. (An edited version of this article was first published by African Business magazine in April 2018)

#Africa #Markets | 22 Jun

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares flirt with 6-mth lows as signs of tariff effects appear
  • Daimler’s profit warning among first signs of tariff damage
  • Philly Fed survey falls unexpectedly
  • Emerging market shares at 6-mth low
  • Oil choppy ahead of crucial OPEC meeting

Oil Markets

  • Oil prices climb on uncertainty ahead of OPEC meeting
  • OPEC, Russia meet in Vienna on Friday to discuss output
  • Saudi Arabia, Russia want to raise supply
  • Escalating trade tensions keep market on edge
  • Brent crude oil futures up 1.4 pct at $74.04 per barrel (0308GMT)
  • US WTI crude futures up 1.5 pct at $66.49 per barrel

Precious metals

  • Gold prices edge up after sliding to 6-mth low
  • Spot gold up 0.1 pct at $1,268.24 per ounce (0057GMT)
  • US gold futures for August delivery nearly unchanged at $1,270.20 per ounce

Grains

  • Soybeans set for 4th week of losses, hit by US-China trade tensions
  • Most active CBOT wheat futures down 0.1 pct at $4.95 per bushel (0038GMT)
  • Most active corn futures up 0.4 pct at $3.58-1/2 per bushel
  • Most active soybean futures up 0.5 pct at $8.84-3/4 per bushel
  • Most active rice futures unchanged at $12.70 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • Kenya’s Kenyatta to address devolution summit today
  • All eyes on World Cup soccer match between Nigeria and Iceland

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • US welcomes Ethiopia-Eritrea peace moves – State Dept
  • US State Department imposes visa ban on several DRC officials
  • Plastic ban raises hopes for Kenya’s sisal farmers
  • More time needed to achieve peace, South Sudan rebels say
  • Survivors report 220 migrants drowned off Libya in recent days – UNHCR
  • US’s Kushner meets with Egypt, Qatar leaders about Mideast plan
  • East Libyan forces reclaim key oil ports
  • Algerian prime minister urges Bouteflika to seek fifth term
  • Egypt taking risks with sharp subsidy cuts, economists say
  • Africa Crude – Supply of Forcados to rise; Angolan slow
  • Nokia seller HMD looks to smart and feature phones to grow its African business
  • South Africa coal terminal boosts productivity with $98 million upgrade
  • South African rand recovers slightly on technical factors, stocks falter
  • World Bank approves $455 million loan for Tanzania power projects
  • UN rights experts urge Egypt to free couple unlawfully detained
  • South Africa’s Imperial to hive off auto dealership arm
  • South Africa health minister backs medical insurance changes
  • Zimbabwe regulator cuts mobile data tariffs by 60 pct
  • UAE regulator asks listed companies to declare exposure to Abraaj
  • Libyan coastguard picks up 301 migrants headed for Europe
  • Zambia aiming for power prices that reflect costs by end 2018
  • Former CEO of Kenya’s Nakumatt faces investigation over loss of funds
  • Nigeria extends crude for oil products contracts until end 2018 – NNPC
  • Kenya finance minister reassures central bank on new regulator
  • Ugandan shilling weakens to all-time low of 3,890/3,900 to dollar – traders
  • Talks before main OPEC meeting to debate 1 mbpd output hike – sources
  • South Africa’s Q1 current account deficit widens to 4.8 pct of GDP, weakening rand
  • Kenya financial markets conduct bill does not infringe on central bank – finmin
  • Kenyan shilling firm, withstands surge in dollar strength
  • Driven away by conflict, thousands of Ethiopians stranded without a home
  • Sanctions-hit Rusal restarts alumina refinery in Guinea

N.B. Full stories of above headlines are available on Reuters

#Global #Markets | 22 Jun

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1, Lagos Time)

CALENDAR
07:45 France GDP Growth Rate QoQ Final 
08:00 France Markit Services PMI Flash 
08:00 France Markit Manufacturing PMI Flash 
08:30 Germany Markit Services PMI Flash 
08:30 Germany Markit Manufacturing PMI Flash 
09:00 Spain Balance of Trade 
09:00 Euro Area Markit Manufacturing PMI Flash 
09:00 Euro Area Markit Services PMI Flash 
09:00 Euro Area Ecofin Meeting 
12:00 UK BoE Quarterly Bulletin 
13:30 Canada Retail Sales MoM 
13:30 Canada Core Inflation Rate YoY 
13:30 Canada Inflation Rate MoM 
13:30 Canada Inflation Rate YoY
NEWS
Macau Tourist Arrivals Rise 5.2% YoY in May 
Japan Flash Manufacturing PMI Edges Up 
New Zealand Tourist Arrivals Climb in May 
Argentina Consumer Confidence Edges Down 
Argentina Retail Sales Lose Steam in April 
US Stocks Close Lower on Thursday 
Paraguay Interest Rate Left Unchanged 
Argentina Trade Deficit Widens Sharply 
Argentina Jobless Rate Climbs to 9.1% 
Mexico Raises Key Rate to 7.75% in June 
European Shares Fall 
Eurozone Consumer Confidence Falls More than Expected 
US House Prices Rise Less than Expected: FHFA 
Philadelphia Fed Manuf Index Lowest since 2016

Source: Trading Economics, Macroafricaintel Research

#Africa #Markets | 21 Jun

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares edge ahead, oil subdued before OPEC meeting
  • Asia markets make tentative gains, await news on trade
  • Growing talk of China stimulus underpins sentiment
  • Dollar index holds near 11-mth top, yen eases
  • Oil wary ahead of OPEC meeting on risk of expanded supply

Oil Markets

  • Oil prices dip as Iran signals support for small OPEC supply increase
  • OPEC to meet in Vienna on June 22 to agree output policy
  • Iran previously resisted any OPEC output rise
  • Supply rise would come along amid strong demand
  • US refinery runs hit record, crude stocks decline
  • Brent crude futures down 0.3 pct at $74.55 per barrel (0040GMT)
  • US WTI crude futures down 8 cents at $65.63 a barrel

Precious metals

  • Gold prices inch up, but firm dollar limits gains
  • Spot gold up 0.1 pct at $1,269.05 per ounce (0055GMT)
  • US gold futures for August delivery down 0.3 pct at $1,271.30 per ounce

Grains

  • Wheat up for second day on supply concerns, bargain-buying
  • Most active CBOT wheat futures up 0.1 pct at $4.88-3/4 per bushel (0037GMT)
  • Most active corn futures down 0.2 pct at $3.53-1/2 per bushel
  • Most active soybean futures up 0.1 pct at $8.90-1/2 a bushel
  • Most active rice futures unchanged at $12.65 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • Kenya’s Kenyatta in Addis today for South Sudan talks under aegis of IGAD
  • Nigeria’s budget minister to make public presentation of 2018 budget highlights
  • South Africa’s Ramaphosa to address launch of “Indlulamithi South African Scenarios towards 2030”
  • South Africa Q1-18 current account data due [fcst. -2.4% of GDP, prev. -2.5%]

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Dubai’s Abraaj sells LATAM, Africa businesses to Colony Capital
  • US strongly condemns attacks on Libyan oil ports – State Dept
  • Suicide bomber kills 4 east Libyan security force members – spokesman
  • Sanctions-hit Rusal restarts alumina refinery in Guinea – minister
  • South Sudan’s president and rebel leader meet for peace talks
  • Separatists have killed 84 troops since Sept. 2017 – Cameroon
  • Ugandan president unveils measures to curb crime wave, criticises police
  • Africa Crude – Traders await tender results, Nigerian supply
  • South Africa’s Basil Read applies for suspension of listing
  • Nigeria’s President Buhari signs off on record 2018 budget
  • Ten killed in collapse at Zambian copper mining dump
  • Eritrea welcomes Ethiopia’s olive branch, raising hopes of breakthrough
  • Zambia urges South African firms to invest in public projects
  • Egypt buys six of nine LNG cargoes via competitive tender – trade sources
  • South Africa’s rand recovers after soft CPI data, EM rebound
  • Avocado ‘green gold’ ripe and ready for South Africa’s farmers
  • Nigeria’s Buhari says concerned by lawmakers’ changes to 2018 budget
  • Kenyan shilling strengthens despite a surging dollar
  • Ebola outbreak in Congo “largely contained”, says WHO
  • S&P doesn’t see downside risks to South Africa’s sovereign rating
  • Libya has lost 450k bpd of oil output due to port clashes – NOC head
  • Uganda shilling extends losses on demand for dollars from banks, importers
  • Nigeria could borrow back its plundered Benin Bronzes – governor
  • South Africa’s CPI slows to 4.4 pct y/y in May

N.B. Full stories of above headlines are available on Reuters

#Global #Markets | 21 Jun

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1, Lagos Time)

CALENDAR
05:00 Thailand Balance of Trade 
05:30 Netherlands Unemployment Rate 
05:30 Netherlands Consumer Confidence 
05:30 Switzerland SNB Financial Stability Report 
07:00 Switzerland Balance of Trade 
07:45 France Business Confidence 
08:00 Turkey Consumer Confidence 
08:30 Switzerland SNB Interest Rate Decison 
09:00 Spain Balance of Trade 
09:00 Norway Norges Bank Monetary Policy Report 
09:00 Norway Norges Bank Interest Rate Decison 
09:00 Euro Area Eurogroup Meeting 
10:45 Germany Bundesbank Weidmann Speech 
12:00 UK BoE Quantitative Easing
NEWS
New Zealand GDP Growth Eases to 0.5% QoQ 
New Zealand Economy Expands 2.7% YoY in Q1 
Moody’s Changes Pakistan’s Outlook to Negative 
Brazil Holds Interest Rate as Expected 
Brazil Job Creation at 5-Month Low 
US Stocks Close Mixed on Wednesday 
Russia Economy Grows 2.1% in May 
Colombia Trade Gap Narrows in April 
Colombia Imports Rise 5.1% in April 
US Crude Oil Inventories Fall More than Expected 
Fed Sees Strong Case for Further Rate Hikes 
Brazil Business Confidence Lowest Since 2016 
Russia Real Wages Growth Eases in May 
Russia May Jobless Rate Lowest Since 1992

Source: Trading Economics, Macroafricaintel Research

#Africa #Markets | 20 Jun

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Stocks recover from earlier rout but trade war fears seen capping gains
  • Japan’s Nikkei up 0.1 pct, South Korea’s KOSPI up 1 pct
  • Shanghai Composite Index down 0.3 pct in early trading
  • Bitcoin down 1.8 pct at $6,614.39
  • S&P 500 futures, dollar against yen, largely flat

Oil Markets

  • Oil prices edge up on report of lower US crude inventories
  • Markets eyeing Jun. 22 OPEC meeting
  • Saudi Arabia, Russia pushing for modest output increase
  • Other OPEC-members like Iran resist increase in supply
  • Escalating US/China trade dispute keeps markets on edge
  • Brent crude futures up 0.3 pct at $75.30 per barrel (0008GMT)
  • US WTI crude futures up 0.4 pct at $65.34 a barrel

Precious metals

  • Gold holds steady amid firm dollar, stronger equities
  • Spot gold held steady at $1,273.82 an ounce (0054GMT)
  • US gold futures for August delivery down 0.2 pct at $1,276.10 per ounce

Grains

  • Soybeans struggle after hitting 10-yr low on US-China trade war
  • Most active CBOT wheat futures unchanged at $4.77-3/4 per bushel (0114GMT)
  • Most active corn futures down 0.1 pct at $3.53-1/4 per bushel
  • Most active soybean futures down 0.3 pct at $8.86-1/2 per bushel
  • Most active rice futures unchanged at $12.21 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • South Sudan’s Kiir and rebel leader Machar to meet in Addis
  • South Africa inflation data for May-18 due [fcst. 4.6% yy, prev. 4.5%]
  • Nigeria’s Buhari to sign longsuffering 2018 budget today, cabinet cancelled

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Morocco keeps benchmark interest rte unchanged at 2.25 pct
  • CAR minister says Boris Becker passport ‘fake’
  • Flooding kills at least 18 in Ivory Coast’s Abidjan – govt
  • Soccer-Senegal punish Poland errors to win 2-1 in Group H
  • South Africa’s Eskom offers 4.7 pct wage hike to unions
  • Morocco will be affected if trade dispute slows growth in Europe – central bank gov
  • South Africa’s rand at near 7-mth low on US-China trade war, stocks dip
  • Ethiopian Airlines eyes orders at Farnborough air show
  • Kenya opens up deals with private firms to public scrutiny
  • Libya port attack cut output by 400k bpd – NOC head
  • Africa Crude – Angolan crude exports to hit 2006 low in August
  • Storage tank at Libya’s Ras Lanuf oil port has collapsed – oil workers
  • Mali says some soldiers implicated after mass graves found
  • Italy wants EU border agency in Africa, not at sea
  • Forking out: Egyptians angered by new austerity after Eid feast
  • South African accounting body charges former Eskom CFO with misconduct
  • Nigeria’s Buhari to sign 2018 budget on Wednesday – presidency spokesman
  • Ugandan shilling weakens as commercial banks’ demand for dollars weighs
  • South Sudan civil war foes to meet in Ethiopia – Addis ministry
  • Total to start Uganda oil production in 2021 at the earliest
  • Suspects bailed in $100 mln Kenyan graft case
  • Kenyan shilling holds steady, seen trading in tight range
  • South Africa’s Murray & Roberts moves closer to Aveng tie-up
  • OPEC sees strong oil market, possible need for more output
  • Andarko Mozambique staff told not to leave LNG site – consultant
  • Attacks in northern Mozambique kill 39 since May – report
  • Turkey, South Africa CDS spike on trade war risk aversion
  • Egypt says to receive $2 bln IMF payment by end-July – newspaper
  • Saudi Aramco to supply Egytpian refineries for another 6 months – minister
  • South Africa’s rand falls to 6-1/2 month low as global trade war escalates

N.B. Full stories of above headlines are available on Reuters

#Global #Markets | 20 Jun

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1, Lagos Time)

CALENDAR
05:00 Malaysia Inflation Rate YoY 
07:00 Germany PPI MoM 
07:30 Japan BoJ Kuroda Speech 
09:00 South Africa Inflation Rate YoY 
09:00 Euro Area ECB Lautenschläger Speech 
11:00 UK CBI Industrial Trends Orders 
11:30 Euro Area ECB Cœuré Speech 
13:30 US Current Account 
14:00 Russia Unemployment Rate 
14:30 US Fed Chair Powell Speech 
14:30 Australia RBA Gov Lowe Speech 
14:30 Euro Area ECB President Draghi Speech 
15:00 US Existing Home Sales MoM 
15:00 US Existing Home Sales
NEWS
New Zealand Current Account Surplus Narrows in Q1 
New Zealand Consumer Confidence Slips in Q2 
US Stocks Close Lower as Trade War Escalates 
Argentina GDP Growth Loses Steam in Q1 
European Stocks Fall on Tuesday 
Israel Factory Activity Contracts for the 1st Time in 6 Months 
Colombia Consumer Confidence at Near 3-Year High in May 
Ukraine GDP Growth Confirmed at 3.1% YoY in Q1 
Russia Producer Inflation Highest in 14 Months 
Namibia Economy Contracts 0.1% YoY in Q1 
Soybean Prices at Over 2-Year Low 
Morocco Leaves Interest Rate Unchanged at 2.25% 
Botswana Holds Interest Rate Steady at 5% 
US Building Permits Fall More than Expected

Source: Trading Economics, Macroafricaintel Research