Cyber crime: It’s a war
Cyber crime knows no boundaries and the perpetrators are constantly improving their capabilities
According to Ivory Coast’s police department in charge of cyber crime (PLCC) nearly 100 internet criminals were arrested in the country in
2018. The country is known for its Web scammers. Photo: ISSOUF SANOGO / AFP
Cyber crime cost Africa an estimated $3.5 billion in 2017 alone, according to pan-African IT business advisory company Serianu, but most countries don’t have the right legislation to defend themselves from – let alone prosecute – this new form of crime. The brutal war in Yemen provides a timely example of how what might appear to be a traditional regional conflict of the type far too common in Africa and the Middle East is also one being fought in a uniquely modern way using cyber warfare and drone attacks. The conflict between the Iran-backed Houthi rebels and a Saudi Arabia-led coalition backed by the United States, United Kingdom and France is brutally old fashioned, fought with guns, mortars and tanks, killing about 91,600 people since 2015 and displacing more than two million others, according to recent reports by the Armed Conflict Location and Event Data Project (ACLED) and the United Nations. But in two ways it is a very modern war; two Houthi drone strikes in September 2019 on Saudi oil facilities threatened 10% of the world’s supply, while cyber warfare is also a key part of this conflict.
Rebels also took control of Yemen’s internet service provider (ISP), Yemen Net, when they took over the capital, Sana’a, in 2015 – opening up “another front”, Allan Liska, a threat intelligence analyst at internet technology company RecordedFuture, said in an interview with Cyberscoop, an online media outlet for technology decision makers. But cyber war is not just part of an active conflict like Yemen; it is growing in Africa, too. “Cyber crime today knows no borders, and its technical capabilities are improving fast,” says Riaan Badenhorst, general manager at IT security consultants Kaspersky Africa. Moreover, cybercrime in Africa is increasing at an “exponential rate”, says Nozipho Mngomezulu, a specialist telecoms and internet partner at Johannesburg law firm Webber Wentzel. Quoting Serianu’s 2017 cyber security report, Mngomezulu says that in Africa cyber attacks hit Nigeria the hardest, with losses of $649 million, followed by Kenya with $210 million and Tanzania with $99 million.
Meanwhile, during that time, more than 95% of public and private organisations across the continent spent less than $1,500 a year on cyber-security measures, with SMEs in particular failing to invest. Mngomezulu noted that the Institute for Security Studies had found that South Africa was the target of 13,842 cyber attacks every day. “Cyber criminals currently see Africa as a safe haven, where they can conduct their operations without the fear of being held accountable,” she told Africa in Fact. “Cyber criminals view Africans as easy targets that can be easily manipulated. And most African countries are yet to catch up with the rest of the world insofar as cyber security is concerned.” Several African countries have also effectively shut down their own internet during times of crisis – including Zimbabwe, Cameroon and Chad – making it possible for repressive regimes to keep citizens from protesting, literally by cutting off their means to communicate. Social media such as Facebook, WhatsApp and Twitter, which are key channels for spreading information, are the most frequent targets.
In the past year WhatsApp, the messaging service owned by Facebook with over a billion users, has been “turned off” in several countries. Social media are also the most important avenues for the spread of disinformation. In September 2019 Google’s security team revealed that Apple phones had been hacked, apparently by the Chinese, to spy on the oppressed Muslim Uyghur population in that country. Not long afterwards, WhatsApp sued Israeli security firm NSO Group for attacks on about 100 users, mostly human rights activists, lawyers and journalists. Yemen has also seen a spike in malicious software, known as malware, although it is unclear whether cyber criminals intend them for espionage or criminal purposes. But “the intent for criminals to take advantage of people in a war zone, as well as nation states to do espionage … is there,” said Winnona DeSombre, a threat intelligence researcher at RecordedFuture in an interview with Cyberscoop.
One fearsome form of cyber crime with clear criminal intent is ransomware, in which hackers take control of computer systems and demand a payment to return control to their owners. In August 2019, Johannesburg’s city power utility was hacked with ransomware, while the city of Johannesburg itself was hit in October. The 2017 WannaCry ransomware attacks, which targeted several African countries, including South Africa, Nigeria, Angola, Egypt, Mozambique, Tanzania, Niger, Morocco and Tunisia, are thought to have hit 200,000 computers in 150 countries, and the total damage was estimated at between hundreds of millions and billions of dollars. A 2016 African Union Commission and Symantec report analysing cyber-security trends and governments’ response to them, found 34 out of the continent’s 55 countries lacked specific legal provisions to combat cyber crime, says Mngomezulu, citing also “weak infrastructure security, a lack of skilled human capital and a lack of awareness of the sector’s dynamics”.
“There is little sense of a cohesive strategy to fend off cyber attacks, little knowledge sharing, and certainly no cyber-defence capacity as part of national defences,” says Arthur Goldstuck, the managing director of South African-based researchers World Wide Worx. Meanwhile, the threat of ransomware remains as powerful as ever, while it also evolves in sophistication, says Badenhorst. Attacks on urban infrastructure, such as the recent ones on Johannesburg, are often worryingly successful, he added. They have a far-reaching impact on essential systems and processes and affect local businesses and citizens as well as the municipal or government authority itself. Kaspersky’s detection data shows that larger organisations, such as city authorities and enterprises, are the fastest growing target. The company monitored 194,803 ransomware attacks in South Africa alone in 2018. That was a 64% increase over 2017, according to the company. Meanwhile, attacks on the employees of large organisations surged 17.9% in the 12 months to May 2019.
“Phishing and malware continue to be relentless threats, leveraged by cyber criminals,” warns IBM’s Sheldon Hand, business unit leader at IBM Security, told Africa in Fact. Organisations must understand the need to educate employees about attempts to trick log-in details and other information out of them. “Unpatched vulnerabilities will continue to be exploited by attackers,” Hand adds, pointing to the need to continually update business cyber-security measures. Most African countries are “one ransomware attack away” from waking up to the need for defensive capabilities against these attacks, says Goldstuck. “The most commonly used tactic is to pray that nothing happens. However, prayer does not have a great track record in cyber security.” Meanwhile, the threat landscape is changing rapidly, with new cyber threats emerging every year. “Many organisations across all industries face unmanageable levels of threat, the risk of exposure, and an ever-growing attack surface,” says IBM’s Hand.
Retailers, particularly those with a growing online presence, continue to be vulnerable, while the finance and insurance industries are the most targeted, he says. Transportation services – including airline, bus, rail, and water forms of transport – are an increasingly attractive target for malicious actors, Hands points out, because of the industry’s reliance on information technology to facilitate operations, its ubiquitous need for integration of third party vendors, and its vast supply chain. All around Africa, at a continental level, “the lack of political urgency in enacting adequate cyber-security legislation is particularly worrying,” says Mngomezulu. Given the increasing sophistication of cyber crime and cyber warfare, and the general lack of sophistication around these problems in government and business circles, as well as among individuals, we all should be worried.
Nuclear weapons: the African view
African states argue that the total elimination of nuclear weapons is the only guarantee against their use or threat of use
Russian Foreign Minister Sergei Lavrov (L) flanked by South Africa’s former Minister of International Relations and Cooperation Maite Nkoana- Mashabane give a joint press conference in Pretoria in February 2013, where Lavrov said he expected the UN Security Council to agree on ‘an adequate response’ to a controversial North Korean nuclear test.
Photo: STEPHANE DE SAKUTIN / AFP
The climate crisis – the process of climate change – and its far-reaching and unprecedented challenge to all aspects of society, is often (and perhaps correctly) viewed as the defining issue of our time. At the same time, another threat to the future of humankind while not new, continues to haunt the majority of the international community – the possibility that nuclear weapons will be used either by design, accident or miscalculation. As Egypt told the UN General Assembly in October 2018, “rising levels of tensions at the global level coupled with rapid technological developments make the risk of intentional or accidental use of nuclear weapons at one of its highest levels since the Cold War era”. With the Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) due to take place in April and May this year in New York, this article focuses on African initiatives to bring about a world without nuclear weapons.
All too often, the role of African states in advocating for a world free of nuclear weapons is under-reported, or perceived as marginal, as they strive to cope with what some regard as of more immediate concern, namely: the alleviation of poverty, the provision of housing, education and health care and the illicit trade in small arms and light weapons. All African states, except for South Sudan, are party to the 1968 Treaty on the Non- Proliferation of Nuclear Weapons (NPT). This means that they have undertaken not to acquire or manufacture nuclear weapons. South Africa remains the only country to have manufactured nuclear weapons and then to take a unilateral decision to renounce and dismantle its nuclear weapons programme (an account of this is given in a 2014 book by Nic von Wielligh and Lydia von Wielligh- Steyn, The Bomb). The NPT, which came into force in 1970 and was extended indefinitely in 1995, is regarded as the cornerstone of the global nuclear non-proliferation regime. The NPT is designed to prevent the spread of nuclear weapons, further the goal of nuclear disarmament, and promote co-operation in the peaceful uses of nuclear energy.
The treaty defines two categories of parties – nuclear weapon states (NWS) and nonnuclear weapon states (NNWS). NWS are defined as the five states that detonated a nuclear device before January 1967 – China, France, the then Soviet Union, the United Kingdom (UK) and the United States (US). All other UN member states, which have ratified the NPT, are regarded as NNWS that have agreed not to manufacture or otherwise acquire nuclear weapons and, in accordance with the International Atomic Energy Agency (IAEA), to prevent diversion of nuclear energy from peaceful uses to nuclear weapons or other nuclear explosive devices. The five NWS, on the other hand, are obliged to pursue nuclear disarmament negotiations in good faith. The NPT entered into force some 50 years ago, and in 1946 the first UN General Assembly resolved to establish a commission “to deal with the problems raised by the discovery of atomic energy and other related matters” and to make specific proposals on the control of atomic energy and on “the elimination from national armaments of atomic weapons”.
Nevertheless, 14,000 nuclear warheads remain in existence today. Notwithstanding numerous attempts to ensure that the NWS fulfil their side of the “grand bargain” – to pursue disarmament – the states possessing these weapons continue to argue that it is within their rights to keep their nuclear arsenals for as long as the current global political and security conditions remain unfavourable. Some analysts argue that this seeks to legitimise their perpetual possession of such arms. Most NNWS, including African states, argue that the total elimination of nuclear weapons is the only guarantee against the use, or threat of use, of such weapons and that the very possession of nuclear weapons encourages nuclear proliferation. In 2004, the African Union’s Common African Defence and Security Policy identified “the accumulation, stockpiling, proliferation and manufacturing of weapons of mass destruction, particularly nuclear weapons, chemical and biological weapons, unconventional long-range and ballistic missiles” as common external threats to continental security in Africa.
African states, both individually and as members of regional groupings within the UN system such as the Africa Group, the Arab Group and the Non-Aligned Movement (NAM), continue to affirm the urgent need for the NWS to diminish the role of nuclear weapons in their security policies and to ensure the early entry into force of the Comprehensive Nuclear-Test- Ban Treaty (CTBT) as a meaningful step in the realisation of a systematic process to achieve nuclear disarmament. Besides Egypt, only the African states of Mauritius, Somalia and South Sudan have neither signed nor ratified this particular treaty. At the same time, it is also important to note that African states reaffirm their inalienable right to pursue peaceful uses of nuclear energy in terms of Article IV of the NPT. Their view is that states can be totally committed to the non-proliferation of nuclear weapons, while also recognising the developmental benefits that nuclear material and related applications provide.
International co-operation for the peaceful application of such material should therefore not be undermined in the quest to prevent the spread of nuclear weapons. The lack of urgency and seriousness with which nuclear disarmament has been approached in the NPT context led to the negotiation and adoption in 2017 of the Treaty on the Prohibition of Nuclear Weapons (TPNW). An April 2019 statement to the Security Council by Ambassador Jerry Matjila, South Africa’s permanent representative to the UN, reflects Africa’s position, namely that the very possession of nuclear weapons by some countries encourages nuclear proliferation by others and that “efforts to prevent the proliferation of nuclear weapons should be matched by an equal commitment by the nuclear weapon states to eliminate all nuclear weapons in a verifiable and irreversible manner”. The TPNW is the first legally binding international agreement to comprehensively prohibit nuclear weapons.
Proponents of the treaty portray this as a key step towards achieving a world without nuclear weapons, but many states possessing nuclear weapons and their allies have been highly critical of the treaty. These latter states have argued, among other things, that the TPNW ignores the increasingly complex international security environment and that it may negatively impact on the NPT and its review cycle mechanism. That is, they claim that the TPNW undermines the step-by-step approach to nuclear disarmament, including the movement towards entry into force of the CTBT. Nevertheless, the TPNW was adopted at the UN on 7 July, 2017, with the support of 122 states, including 42 African states. The treaty will enter into force once 50 states have ratified or acceded to it. As of 26 October, 2019, there were 79 signatories and 33 states parties. These states are of the view that the more complex the international security environment becomes, the higher the risk of the use of nuclear weapons – thus making nuclear disarmament more urgent.
Furthermore, given their catastrophic humanitarian consequences, nuclear weapons cannot be used in a manner consistent with the rules and principles of international humanitarian law. Nuclear weapons do not increase security, but rather undermine regional and international peace and security. South Africa ratified this treaty in February 2019. The “ratification… sends a positive signal of our continued commitment towards the achievement of a world free from the threat posed by nuclear weapons and ensuring that nuclear energy is used solely for peaceful purposes,” the then minister of international relations and co-operation, Lindiwe Sisulu, said. Her view expresses those of many African states. Another important example of Africa’s commitment to a world free from nuclear weapons is the African Nuclear-Weapon Free Zone Treaty (Treaty of Pelindaba), which was approved by African heads of state on 23 June, 1995 and entered into force in July 2009.
The Treaty declares Africa a zone free from nuclear weapons and provides for the promotion of co-operation in the peaceful uses of nuclear energy. It requires complete nuclear disarmament by African states and aims to enhance both regional and global peace and security. Basically, the Treaty of Pelindaba seeks to ensure that nuclear weapons are not developed, produced, tested or otherwise acquired or stationed anywhere on the African continent or its associated islands. Presently, the treaty has 41 parties with (only) 14 states still to deposit their instruments of ratification with the AU. Parties also pledge to prohibit the testing of nuclear devices and the dumping of radioactive waste, while improving the physical protection of their nuclear materials and facilities. Uniquely, the Treaty of Pelindaba also prohibits armed attacks on nuclear installations, including nuclear research or power reactors.
Protocols to the treaty are designed to ensure that non-African states respect the status of the zone and undertake not to use or threaten to use nuclear weapons against any African country. Only Spain and the US have not ratified the relevant protocols. Spain, while not a nuclear-armed state, is de facto in control of three territories within the zone – the Canary Islands and two coastal cities in Morocco, Ceuta and Melilla. Spain claims these are integral parts of the European Union and therefore should not be included within the African nuclear weapons free zone. Spain has also argued that the Treaty of Pelindaba does not contain any global nonproliferation or disarmament provisions that it has not already signed. The US leases Diego Garcia from the UK as a military base. Both the UK and the US argue that the British Indian Ocean territory cannot be included in the geographical area of the Treaty of Pelindaba.
The AU, however, considers the islands to be part of Mauritius. In February last year, the International Court of Justice in The Hague stated that the island was not lawfully separated from Mauritius and that the UK should end its control of the Chagos Islands in the Indian Ocean “as rapidly as possible”, according to the judgment. Parties to the Treaty of Pelindaba have established the African Commission on Nuclear Energy (AFCONE) to ensure compliance with the treaty. Hosted in South Africa, AFCONE’s overall goal is “to ensure safety, security and socioeconomic progress in Africa through coordinating, strengthening and developing continental nuclear peaceful applications programmes and playing a dynamic role in disarmament and non-proliferation affairs”. It therefore plays a key role in advancing the peaceful application of nuclear science and technology in Africa and in bringing much-needed support to states parties to fully benefit from nuclear sciences and technology applications in the areas of health, agriculture and energy.
Both the continued existence of nuclear weapons and climate change are existential threats to humanity. Africa contributes the least to global emissions and has forsworn nuclear weapons, but the continent cannot argue that both are now “northern” problems to be ignored by the “global south”. Africa shares in the responsibility to enhance international peace and security. As a Nuclear-Weapons-Free Zone and as supporters of the TPNW, African states have reinforced their commitment to global nuclear disarmament and non-proliferation objectives of the NPT and the CTBT.
The arms industry: fuelling conflict
The world’s biggest arms fair, which turned 20 in 2019, is lauded as a ‘fantastic showcase’ by its British hosts, but critics strongly disagree
A vendor uses an Armtrac 20T robot to squash a 2015 Rugby World Cup branded rugby ball as
he demonstrates its capabilities during the Defence and Security Equipment International (DSEI) exhibition in London in September, 2015.
Photo: LEON NEAL / AFP
The Defence and Security Equipment International (DSEI), which boasts of being the world’s largest arms fair, celebrated its 20th anniversary last year. The biennial event, held in London, aims to bring together the global arms industry under one roof, showcasing more than 1,700 exhibitors and 36,000 attendants from more than 50 countries. It is supported by the United Kingdom’s Ministry of Defence and Department for International Trade, as well as BAE Systems, the UK’s largest arms manufacturer. Political insiders defend the country’s role as an arms exporter and the DSEI’s role in generating arms sales as sources of high-tech research and jobs. “The UK defence industry is looking to recruit more engineers, scientists and developers into 200,000 jobs and up to 10,000 apprentices within UK defence companies,” according to James Gray MP, a member of the House of Commons Defence Committee, quoted in a DSEI statement. “DSEI is a fantastic showcase for defence companies where international buyers, sellers, developers, thinkers, educators and the trainers can all get together.”
Yet critics of Britain’s role in the global arms trade, and the industry as a whole, see DSEI less as a “fantastic showcase” and more as the shiny centrepiece of a globally destructive sector unrivalled by any other. The exhibition is met with protests and the mayor of London, Sadiq Khan, has called for it to end. Arms exports are estimated to contribute as much as £12 billion to the UK economy. Andrew Feinstein, a former South African MP for the ANC and author of The Shadow World: Inside the Global Arms Trade, is one such critic. “In the 20 years of its existence DSEI has, probably more than any other trade show of any sort anywhere in the world, contributed to the death and suffering of Africans,” Feinstein told Africa in Fact. “Its legacy is one of bloodshed, corruption and Britain being at the forefront of undermining good governance across the African continent.” Countries with a recent history of conflict or military suppression sent delegations to DSEI 2019, officially invited by the UK government. From Africa, they included Algeria and Nigeria, while Morocco’s occupation of Western Sahara did not preclude it from an official delegation invitation.
Algeria found itself on the UK government’s list of core markets for defence and security opportunities, along with Tunisia, South Africa, Botswana, Mozambique and Angola. Egypt was also among them – and remains a core market for UK arms exports. A delegation was officially invited by the UK government to attend DSEI last year despite appearing in the UK Foreign and Commonwealth Office (FCO) 2018 “human rights priority countries” report. According to the UK government’s report, “the human rights situation in Egypt continued to give cause for concern”. It cited new restrictions on media and online freedoms, and a government campaign against civil society, cases of torture, enforced disappearances and extended pre-trial detention. At least 250 cases of enforced disappearances were documented by lawyers, with thousands of individuals estimated to be in pre-trial detention, often in solitary confinement for extended periods.” Andrew Smith, spokesperson for the NGO Campaign Against the Arms Trade (CAAT), explains the apparent contradiction within UK policy. “There’s always been a total hypocrisy at the heart of UK foreign policy and UK arms exports,” he told Africa in Fact.
“The FCO might deem some of these countries a concern, but the government as a whole can still deem them very close allies.” Feinstein agrees. “By any measure, Britian sells arms to whoever it wants to. The bottom line is the UK puts sales of weapons way ahead of any consideration of human rights. It puts profits ahead of people,” he says. But the DSEI does not see this as a true characterisation of its exhibition or of how it and the UK government operate. “The presence of a delegate or visitor from any country should not be taken as a presumption that the export of equipment to that country would be permitted,” a spokesman for DSEI said. “That is a matter for the UK government and their export licensing process, which operates to the highest regulatory standards.” Feinstein dismisses these assertions: “Their [DSEI] first assumption is profoundly wrong. The second, that the UK has an ethical system that guides export arms policy, is frankly a nonsense,” he argues. That Egypt and South Africa, the respective powerhouses of north and southern Africa, have been identified as core markets is no surprise due to the relative size of their economies and the different roles they fulfil.
Egypt, due to its proximity to the Middle East, can serve as a political ally for the UK arms industry’s main market, Saudi Arabia, and the ongoing conflict in Yemen. Egypt’s president, Abdel Fattah el-Sisi, has also called for the lifting of a UN arms embargo on neighbouring Libya. Under its former leader, Muammar Gaddafi, Libya was a key market for the UK government, especially after the former prime minister, Tony Blair, visited the country in 2004. Smith believes that the legitimacy conferred by the UK government is another driving factor behind the country’s large arms trade. “When a regime is buying weapons from the UK, they’re not just buying weapons; they’re also buying political support that goes with those weapons,” he argues. This applies equally to countries such as Libya, Egypt, Turkey and Saudi Arabia. The UK gets money and the buying country gets both arms and tacit political support to maintain their position. Although both the UN and European Union (EU) can, and do, implement arms embargoes, these can ultimately prove ineffective due to previous deals, Smith explains.
In Egypt, for example, arms sold to former President Hosni Mubarak in the 1990s were used against civilians during the Arab Spring, despite an embargo now in place. “After the coup [in Egypt], an arms embargo was brought in by Europe, but it was probably the single worst embargo in the history of arms embargoes, because it was [so] momentary [that] absolutely nobody followed it,” Smith says. Embargoes can prove ineffective because arms generally have a longer lifespan than the period of an embargo. Any arms deal signed the day before an embargo is put in place can still be completed. At the other end of the continent, South Africa is seen as the gateway to the African market, making it an attractive country to set up business in and to build links to the rest of Africa to sell arms. Feinstein outlines why the UK and Europe target this market particularly, and what advantages they have over the world’s largest arms exporter, the US. “South Africa has been involved in a number of very corrupt arms transactions so [it makes it attractive] for British and European arms companies who can’t compete with the Americans because the Americans have massive economies of scale over Europeans, or the Chinese who practically give away their weapons, so Europeans [are willing to] pay enormous bribes.”
Yet, after 20 years of DSEI few people, if any, celebrate the anniversary – other than global arms dealers and people in the corridors of a couple of UK government departments in Whitehall. “The best thing we can do, if we are truly concerned about the socio-economic development of Africa, would be to shut it [DSEI] down and to properly regulate our arms trade,” concludes Feinstein. For the moment, though, the UK and Europe will continue to sell weapons. DSEI will continue to bring together the global arms trade. And African citizens will continue to suffer the consequences. “Nobody is forced to sell weapons to anyone,” says Smith. “Not every country in Europe is a major arms dealer. But those that are, are doing tremendous damage around the world.”
China: the special relationship
Economic and political ties between Africa and China have led to infrastructural development on a monumental scale but their roots go back millennia
A statue of 15th century Chinese diplomat, admiral and explorer Zheng He. Photo: AFP
No one knows exactly how long ago the friendship between China and Africa began but contact and trade between the two can be traced as far back as 202 BC. This relationship deepened in the 14th century during the expedition of Ibn Battuta, a Moroccan scholar and explorer, to parts of Asia. The China-Africa connection was furthered in the same century by the travels of Sa’id of Mogadishu, a scholar who is said to have been the first African to study Mandarin. Besides being a pioneer in the translation of Mandarin to native African languages, Sa’id is credited with playing a role in establishing Somali merchants as leaders in the trade between Asia and Africa. In the 15th century, during the Ming Dynasty, Zheng He, a Chinese diplomat, admiral and explorer, is reputed to have made voyages to the Horn of Africa, passing Ajuran, a Somali empire that commanded the Indian Ocean trade.
Scholars now believe that during his final voyages Zheng followed the coast down to the Mozambique channel, between Madagascar and Mozambique. But while these medieval voyages might have established a strong foundation for relations between the two, it is China’s rapid economic growth in the late 20th and early 21st centuries, creating unprecedent demands for resources such as oil and other raw materials, that has undoubtedly underpinned the modern economic, political, and social ties between China and Africa. As Kenyatta University senior economics lecturer Emmanuel Manyasa notes, at no time has the friendship between China and Africa “been more pronounced” than in the 21st century. Kampala-based historian Peter Chemaswet argues that connections were first cemented in the late 1950s, when China signed the first bilateral trade pact with a number of African countries, namely Sudan, Guinea, Egypt, Morocco and Algeria.
More trade agreements were signed in late 1963, early 1964 with at least 10 recently independent African countries, when China’s first premier, Zhou Enlai, toured the continent. African signatories included Egypt, Algeria, Morocco, Tunisia, Ghana, Mali, Guinea, Sudan, Ethiopia and Somalia. The premier’s Ghana leg of his tour was regarded as a particular landmark because the country’s leader, President Kwame Nkrumah, was seen at the time as a champion of a united Africa. “The premier’s tour of Ghana was a strategic move that opened doors for China to warm its co-operation with African countries. It is in Ghana that the China- Africa relationship was actually born,” says Joel Savage, a Ghanaian journalist and author based in Brussels. Zhou’s prime objective in Africa was to elevate China’s profile on the continent, and in a speech in Mogadishu at the end of his trip the premier said China would support revolutionary struggles throughout Africa and fiercely oppose foreign interventions.
The outcome of Zhou’s visit was evident in 1971 when 26 African countries voted in the United Nations with 50 others to recognise the People’s Republic as the only legitimate China representative at the UN, replacing Taiwan, which had held the seat since 1949. The foundation of the current relationship between China and Africa was laid with the Beijing Declaration in October 2000 and the announcement of the Forum on China-Africa Cooperation (FOCAC) at a conference attended by at least 80 ministers from China and 44 other countries, as well as representatives from 17 international and regional organisations. Chinese President Jiang Zemin, Premier Zhu Rongji and Vice-President Hu Jintao were all present at the conference. “This is when the serious work that we see today between China and Africa began,” says Hongxiang Huang, the director of China House, a Nairobi-based research think tank he founded in 2014. Since then, China’s relationship with Africa has grown exponentially.
In 2006, at a FOCAC summit in Beijing attended by 35 African countries, the then president, Hu Jintao, rolled out $5 billion concessionary loans to Africa. The president also, as one of the “eight measures” for Sino-African relations, announced the creation of the China-Africa Development Fund to stimulate his country’s investment in Africa with $1 billion of initial funding. In 2009, the year China became Africa’s biggest trading partner, surpassing the US, a FOCAC ministerial conference in Egypt further defined China-Africa relations. At the conference an action plan to deepen cooperation was announced, including a $10 billion low-cost loan, double the amount committed in 2006. An additional $1 billion special loan for small- and medium-sized African enterprises was also established. At the same time, Premier Wen Jiabao announced a debt write-off for poor African nations, the construction of 100 new energy projects and a gradual lowering of custom duties on 95% of products from African countries with which China had diplomatic ties.
Crucially, China said it would ensure that Africa attained a stable food supply and it would provide the continent with modern medical equipment to fight malaria. Trade between China and Africa has expanded at an average annual rate of 20%, from $13 billion in 2001 to $188 billion in 2015. Figures from China’s General Administration of Customs show that in 2018, the country’s total import and export volume with Africa was $204.19 billion. During that period, China’s exports to Africa were $104.91 billion, up by 10.8%, and China’s imports from Africa were $99.28 billion, translating to a 30.8% increase. However, some analysts and observers – and the International Monetary Fund (IMF) – have cautioned that China’s economic slowdown and the sharp drop in commodity prices presents a risk for resource-dependent sub-Saharan African countries. The IMF, for example, has advised countries to look at diversifying their economies and reducing their reliance on natural resource exports.
On the other hand, China’s demand for consumer-related resources such as agricultural raw materials and food products has increased, and this focus on agriculture is likely to intensify China- Africa trade. To date, China has acquired 252,901 hectares of land for agriculture in Africa. According to the China Africa Research Initiative, a research programme dedicated to understanding the political and economic aspects of China-Africa relations, at the Johns Hopkins University School of Advanced International Studies, China has also established 14 agricultural centres across Africa, “taking an increasingly hands-on role in its work and investment related to African agriculture, leasing and developing land”. China is also synonymous with large scale infrastructural investment in Africa, historically epitomised by the construction of the 1,710 km Tanzania-Zambia railway, which was completed in 1976. “China finances one in five projects; it also engages in the construction of one in three mega projects,” observes Luke Mulunda, a finance journalist who runs business today. co.ke in Kenya.
Transport, shipping, ports, energy, power, real estate – encompassing industrial, commercial and residential real estate – are some of the key infrastructural works in which China has invested in Africa. A Deloitte report by Hannah Edinger and Jean-Pierre Labuschagne published in March this year noted that to date China has participated in over 200 infrastructure projects in Africa. They said Chinese enterprises have completed and are building projects that “are designed to help add to or upgrade about 30,000 km of highways, 2,000 km of railways, 85 million tonnes per year of port throughput capacity, more than nine million tonnes per day of clean water treatment capacity, some 20,000 MW of power generation capacity, and more than 30,000 km of transmission and transformation lines”. The China-Africa friendship has also seen an expansion in aid. Currently, China is one of the largest country donors to Africa. However, critics argue that some support has been extended to Africa disguised as aid when in reality it is in the form of loans.
Analysts also point out that some African countries, happy to take advantage of China’s “ready-to-assist” policy – and willing to overlook questionable labour and environmental practices by Chinese business operations in Africa – have ended up choking themselves with loans. “The secrecy that shrouds Chinese operations, and corruption in many African countries, is what has perpetuated this time-after-time interchangeable use of aid and debt,” says Manyasa. According to The Brookings Institution, a non-profit public policy organisation based in Washington DC, China’s loan issuance to Africa has tripled since 2012. New debt issuance by Chinese institutions to African countries has gone up substantially in the past five years, rising to some $5 billion to $6 billion of new loan issuances each year in the 2013–15 period. McKinsey & Company say that in 2015, these loans accounted for about a third of new sub-Saharan African government debt. Most of the loans have been linked to infrastructure projects, such as China EXIM Bank’s $3.6 billion loan to finance the Mombasa-Nairobi Standard Gauge Railway in Kenya.
Ongoing Chinese investment in African infrastructure is in line with its Belt and Road initiative (BRI) announced by President Xi Jinping in 2013. This hugely ambitious transcontinental project aims to revive the ancient Silk Road for the 21st century, improving interconnectivity between Asia, Europe and Africa to increase trade and development along economic corridors – and enhance Chinese influence along the way. Unsurprisingly, therefore, that when China announced a new $60 billion African development fund at FOCAC 2018 in Beijing it was made clear the money would be channelled to projects, including ports, telecommunications, bridges and roads, aligned to the BRI. The John Hopkins China Africa Initiative says in a recent report that “from 2000 to 2017, the Chinese government, banks and contractors extended $143 billion in loans to African countries and their state-owned enterprises (SOEs).
Importantly, the report notes, however, that while some government loans qualify as “official development aid”, others are “export credits, supplier credits or commercial, not concessional in nature”. It is in this context that analysts caution that it is up to African governments to ensure that these funds are put to productive use to have the desired impact on their economies. Otherwise, as financial journalist Luke Mulunda says, African countries may find themselves in a serious debt trap, jeopardising their development.
Sub-Saharan Africa: Islamic investment
Investors from Organisation of Islamic Cooperation member countries are increasingly looking at opportunities in sub-Saharan Africa
By François Misser
The Islamic world is increasingly seeing Africa as a destination for foreign investment, both on the institutional and corporate fronts. One sign of such interest was the recent forum on investments in Africa, held in Marrakech from December 17th -19th 2015 and organised by the Organisation of Islamic Cooperation (OIC), which groups 57 countries. The OIC has been active on the continent on the humanitarian and diplomatic fronts since its creation in 1969. More recently, the organisation’s financial arm, the Islamic Development Bank (IDB)—whose main shareholders are Saudi Arabia (23.6%), Libya (9.5%), Iran (8.3%), Nigeria (7.7%) and the United Arab Emirates (7.5%)—has become a major player in development finance in Africa. Some 30% of the $12 billion invested in 2015 by the IDB went to sub- Saharan Africa, says its regional director, Sidi Mohamed Taleb.
The bank is now focusing on removing obstacles to African development, among them poor infrastructure and agricultural productivity. The strategy, which has been largely designed by the OIC’s 22 African member states, according to Mr Taleb, will invest mainly in Africa’s energy, telecoms, transport and agriculture sectors. In the Sahel region the bank is financing the flagship Dakar-Port Sudan railway and key energy projects in Mali, Mauritania, Guinea and Côte d’Ivoire, in some cases with the geo-strategic aim of stabilising the region. Another major IDB initiative in Africa is the OIC Cotton Action Plan, first created in 2007 to rehabilitate decaying cotton and textile industries in OIC member states. The bank has a $400m portfolio in Mali, where it is building a new international airport. It is also financing a road between Algeria and Kidal, the capital of northern Mali, which fell to the extremist group Al Qaida in the Islamic Maghreb, in 2013.
“There is an absolute necessity to break the isolation of this region,” says Mr Taleb. It would appear that the OIC’s aim there is to restore political stability, including mediating between the government and the rebels. The Khartoum headquartered Bank for Economic Development in Africa (BADEA), established in 1973 by the Arab League member states, is another important institutional player in the Islamic world. Between 1975 and 2014 it allocated some $3.69 billion in loans. In 2014, it provided $200m in loans to 22 sub-Saharan countries, 57.6% of it to infrastructure, 22.6% to agriculture and rural development and the rest to the non-profit and private sectors. Certain gulf states rank high among Islamic partner countries. In 2014, the Saudi Fund for Development (SDF) supported 13 projects in 11 African countries, which received a total of SR1.27 billion ($340m). In November 2013, Kuwait said it would extend $1 billion in soft loans to the continent over the next five years.
Since its inception in 1961, the Kuwait Fund has contributed over $6.4 billion to projects in 48 African states. The Abu Dhabi Fund for Development (ADFD) has provided 65 billion dirhams (about $17.7 billion) to 76 countries around the world since its creation in 1971. It financed Egypt’s Sheikh Zayed Canal, built using a Dh348m (about $94.74m in 2012) grant (the canal has yet to be completed). Meanwhile, Qatar also has ambitions to be a major player in Africa. Its department of international aid spent more than $1.7 billion on development assistance in 2013, one third of it in Africa. Companies from several Islamic countries have also developed commercial and private investment ties with Africa. According to a 2015 report by the Economist Intelligence Unit (EIU), East Africa is attracting most of the Gulf’s non-commodity investment, with manufacturing in Ethiopia; leisure, retail and tourism in Mozambique and Kenya; and education in Uganda of particular interest.
Retail and hypermarkets, automotives, commercial banking and tourism are key sectors. However, trade between the Gulf Cooperation Council (GCC) and Africa is still modest. In 2014, GCC exports to sub-Saharan Africa totalled $19.7 billion, according to the IMF. However, direct investment flows are growing significantly. Gulf firms invested at least $9.3 billion in sub- Saharan Africa between 2005 and 2014, and $2.7 billion in the first half of 2015, according to the EIU. South Africa, Kenya and Uganda have attracted most Gulf investment. The trend is likely to continue. The UN Conference on Trade and Development (UNCTAD) recorded 17 bilateral investment treaties between the Gulf and sub-Saharan countries in 2013, one third of which were signed that year. Most GCC capital goes into Africa through listed stocks and bonds, including locally domiciled funds such as Invest AD’s Emerging Africa Fund in the UAE, which is co-managed with the Morrocan Attijariwafa Bank.
Significant investments recorded in 2014 were the purchase by Qatar National Bank of a 23% stake in Ecobank of Togo and the acquisition of $300m of Nigeria’s Dangote Cement shares by the Investment Corporation of Dubai. Morocco’s banks, insurance and agribusiness are expanding fast in Africa, helping to boost Moroccan exporters. The Attijawariwafa Bank now has subsidiaries and branches in 14 African countries, mostly in west Africa. The world leader in fertilisers, the Office Chérifien des Phosphates (OCP), a Moroccan company, is aggressively promoting its products south of the Sahara. Meanwhile, Turkish Airlines is expanding its presence on the continent, with 44 African destinations; Royal Air Maroc has 22 and Emirates Airlines 19. Turkey is becoming increasingly involved in FDI to Africa. It held two summits with Africa, in Istanbul in 2008 and in Malabo (Equatorial Guinea) in 2014. Turkish Airlines was one of the first airlines to resume international flights to Somalia in 2011. Turkish trade with Africa has risen nearly fourfold from $5.4 billion in 2003 to $20 billion in 2014, according to a 2015 research paper by Chatham House, the UK’s Royal Institute of International Affairs.
Turkey has signed investment treaties with 12 countries in sub-Saharan Africa and aims to sign a free trade agreement with the East African Community by 2019. At the end of 2011, then Turkish Foreign Minister Ahmed Davutoglu estimated Turkish investment in Africa at some $1 billion. It is likely much higher today. An Ethiopian Investment Agency official noted in 2014 that Turkey had invested about $1.2 billion in Ethiopia in recent years, particularly in the textile industry, as compared to China’s $836m over the past decade. Islamic finance is gaining momentum in sub-Saharan Africa, where about 30% of the population is Muslim, according to the Pew Research Center, a think tank in Washington D.C. Gulf African Bank, which offers sharia-compliant products, now has 14 branches in Kenya, with a rising portfolio of small and medium enterprises. Islamic finance is one of the fastest growing financial segments at global level. This is one reason why the World Bank Group’s International Finance Corporation (IFC) has invested in the Gulf African Bank.
In September 2015, South Africa issued its first $500m sukuk, a sharia-compliant and interest-free Islamic bond, in the international capital markets to broaden its investor base and diversify funding for infrastructure. Côte d’Ivoire plans to issue its first sukuk, for 350 billion CFA francs (roughly $700m), with the support of the IDB. According to the ratings agency Standard & Poor’s, new regulations and fiscal incentives around the continent “could accelerate Islamic finance development in Africa”. However, the low oil price may cause some disruption to Islamic foreign investment. Saudi Arabia has withdrawn tens of billions of dollars from global asset managers since September 2015, according to the Financial Times. Money transfers from Islamic countries or charities to Africa have also faced regulators’ concerns that networks could be used for criminal financing. Kenya suspended the operations of 13 firms in the first half of 2015 over concerns that funds were flowing to al-Shabab militants. In May 2013 Barclays said it would close the bank accounts of 250 money transfer companies as part of a drive to meet stricter money laundering rules.
A February 2016 study by the IMF concludes that there is no evidence that Islamic finance faces different risks from those of conventional finance as regards terrorism and crime. However, it concludes that an in-depth analysis of the intrinsic characteristics and arrangements used in Islamic finance is still required, and that Islamic financial institutions need to build more experience with regard to the risks they face in dealing with money laundering and terrorism financing. If so, this would apply also to the Islamic world’s investments in Africa.