Though Kenyan avocados are delicious, Europeans are not just content with flavour. They have deeper concerns about the environmental cost of production and logistics.

The EU’s Farm to Fork Strategy and the Corporate Sustainability Due Diligence Directive (CS3D) have been introduced to ensure that food production and logistics are ethical and cause minimal harm to the planet.

Kenyan exporters are well aware that sustainability is no longer optional and is a prerequisite for market access to one of the wealthiest markets in the world. Maersk has recognised this demand and is rebranding its logistical network as ‘Blue Shipping’, an end-to-end framework for decarbonising cargo movement from inland farms to ocean freight, to meet the sustainable demands of Kenyan premium produce.

The Carbon Footprint Problem With Perishable Goods

Perishable logistics is a race against time. It requires precise temperature control, and the journey is often complex. Traditionally, people used the cold chain model, which is just uninterrupted refrigeration.

However, that is very energy-intensive and does not comply with EU demands. It is also definitely bad for the planet. Refrigerated transport alone accounts for roughly 2.5%-3% of global logistics carbon dioxide emissions.

Not just that, if there are inefficiencies, delay of any kind, or equipment failure, the food is spoiled. Spoiled food emits methane, which is around 80 times more harmful to the planet than carbon dioxide over 20 years.

Kenyan exporters face two challenges simultaneously. One is the distance (journey from Mombasa to Rotterdam takes 20-25 days), and the other is the climate impact. If they optimise for speed, they create a lot of emissions and waste. However, if they optimise for environmental sensitivities, the cost surges.

This is where Maersk comes in. According to Tito Okuku, Managing Director of Maersk East Africa: “The avocado season is a critical time for Kenyan exporters, and we are committed to providing not just transportation services, but comprehensive support that empowers our customers to meet the world’s growing demand for premium Kenyan avocados.”

Decarbonisation And Waste Reduction Through ‘Blue Shipping’

Maersk has been committed to decarbonising logistics and reaching net zero emissions by 2040 through ‘Blue Shipping’. The company hopes to achieve this through different methods, including strategic resource positioning and inland optimisation.

In the world of logistics, strategic resource positioning and in-line optimisation are the two gears that make a global supply chain more efficient.

Strategic resource positioning is the art of placing physical assets such as shipping containers, trucks, or specialised equipment, in the exact locations where they need to be before demand spikes.

In agriculture, harvest seasons are sudden and massive. If empty refrigerated containers (reefers) are sitting in Mombasa and the avocados are harvested 500 kilometres away in central Kenya, a lot of time is wasted just moving these reefers next to the farm.

To address this, a strategic move involves analysing historical data to figure out when the peak harvest will be, and moving the empty resources to the staging areas a few weeks in advance. This ensures that produce is picked, packed, and boarded onto container ships quickly, thus improving shelf life.

Inland optimisation is about how things move between the farm and the ship. Maersk focuses on the first and middle mile, which involves transporting goods from the farm to the warehouse, and then from the warehouse to the port.

Another point of focus is the ’empty mile’, which is also called ’deadheading’. This refers to when a truck drives empty to pick up a load.

Optimisation software ensures that the truck is already delivering something to rural areas, only picking up avocados after unloading whatever goods (such as fertilisers) it has brought. This software might suggest that utilising a train for the long-haul journey from the dry port to the coast is a more cost-effective option than using a fleet of trucks.

Furthermore, inland optimisation involves streamlining various processes, such as handling customs and pre-clearance, documentation, and inspections. All of these critical steps must occur without disruption.

Reefer Technology And Training

The second part of ‘Blue Shipping’ involves state-of-the-art reefer technology and training. Maersk has developed and deployed advanced refrigerated shipping technology with atmospheric controls, while also providing specialised technical training to exporters regarding proper reefer handling and cold chain management.

The third method is efficient ocean routing and freight decarbonisation.

Maersk prioritises vessel capacity on the Kenyan-European trade route and focuses on high schedule reliability. Reliable, efficient routing minimises the time produce spends at sea, preserving shelf life and reducing the total energy required for refrigeration during transit.

Capitalising On Appetite For Avocados

European per capita avocado consumption has grown dramatically, and so has its compliance bar. According to a 2013-2024 analysis of the European Union by Indexbox, Italy recorded the fastest compound annual growth rate in avocado consumption at about +20.9% in that period. In 2024, Europe consumed around 1.1 million tonnes of avocados, marking a 8.1% increase since 2023.

The World Avocado Organisation (WAO) found that Spain leads European per capita consumption at 4.6 kg per person per year, followed by the Netherlands at 3.3 kg and Portugal at 3.1 kg. Data from 2020-2024 revealed other consumption levels across the continent, with France at 2.31 kg, the UK at 1.7 kg, Germany at 1.48 kg, and Italy at 0.81 kg.

The growing appetite for avocado is creating opportunities for exporters in Kenya. But, they would not be able to access European markets without a sustainability tag.

Maersk helps small African producers gain access and compete in the European markets through sustainable logistics. Whether that access holds and expands will depend less on the quality of the fruit and more on the reliability of the supply chain delivering it to the market.

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Today, there is a Silicon Savannah in Nairobi and a computer village in Lagos. They are infrastructure that were unthinkable just a decade ago. And as a result, the continent is brimming with chaotic and innovative energy.

The GDP growth of Africa is expected to reach around 4.1% by 2025. It is easily one of the fastest-growing regions on the planet. It might sound astounding, but if you take into consideration digital architecture, which includes 570 million users along with 855 million mobile data subscriptions, and if you also notice that the mobile money sector in the region accounts for an astonishing 74% of all global mobile money transactions, the maths adds up.

Of course, where there is growth, there are parasites. The hackers and cyber criminals are outpacing the defensive capabilities of the continent. These nefarious individuals and organisations are weaponising the same APIs, mobile payment gateways, cloud platforms, and other technological advancements that are facilitating the financial inclusion of the region.

There are several malicious groups to worry about, such as the local Yahoo Boys and international groups with state sponsorship, like the hacking group Anonymous Sudan.

This is what happens when you have high digital adoption and low cybersecurity maturity. There’s a gap that is perfect for criminals who want to siphon the continent’s economic gains. Nobody really knows how much of the economy is at risk, but there are even studies that claim that cybercrime causes Africa almost 10% of its GDP. There are conservative estimates that are also alarming, which tell us the number is in the billions. And more than money, reputation and structure are at risk.

The stakes can’t get any higher. Africa is trying to emulate the European Union (EU) through the African Continental Free Trade Area. This organisation, like the EU, is trying to bind the continent into a single market where people can move and trade freely. But this ambitious goal is under threat by cybercriminals.

The financial institutions in Nigeria lost over ₦52 billion to fraud in 2024 alone. And South Africa was dog-piled by ransomware attacks, which were striking with precision at its critical infrastructure. This is a theoretical and operational threat that affects everything about the economies of these nations. The breadth of the issue is so wide that it can affect the issuance of Kenyan visas and the stability of the Central Bank of Uganda.

The anatomy of digital boom

If you have to understand the magnitude of the cyber threat to Africa, you have to understand Africa’s digital story, which is unique in the history of economics. The West had to go through industrialisation over centuries, having to go through so many different types of technologies and slowly evolve into the economy it is today. For example, there were copper wires and land lines, desktop computing, and then mobile connectivity in Europe.

But Africa was colonial and far behind the times. When globalisation hit and technology was being transferred to every nook and corner of the world, Africans skipped telegrams, landline telephones, and desktop computers and jumped directly to the age of mobile connectivity. It is called the “leapfrog effect” and is most visible in the financial sector, which happens to be the bedrock of Africa’s identity. Look no further, in today’s sub-Saharan Africa, there are about 1.1 billion homes with registered mobile money accounts. That’s almost half the global total. And in 2024 alone, these platforms processed about 81 billion transactions, which can be valued at a staggering $1.1 trillion.

The mobile-centric architecture democratised finance, and millions of unbanked individuals are now in the formal economy, sending money to relatives in rural villages and paying for solar power or accessing microloans by pressing a few buttons.

Small and medium enterprises benefited greatly from this. Currently, they contribute about 50% of total GDP and constitute 95% of all registered businesses. Unfortunately, these SMEs are most vulnerable to these cyber attacks as they don’t have the resources to defend themselves and aren’t informed enough to take precautions.

The integration of technology into the daily life of common Africans essentially means that a cyber attack on Africa doesn’t just affect corporations and can also disrupt the subsistence of its citizens.

The infrastructure of vulnerability

The nations of Africa have prioritised speed over security when building digital infrastructures. And this is what industry experts call a maturity gap, where technology is built too fast to be secured. The continent’s digital growth is mostly driven by artificial intelligence, application programming interfaces (APIs), and cloud adoption. These technologies facilitate the connection of disparate financial services. However, they do come with systemic risks. For example, a third-party payment processor can be compromised, which would cascade into banks, telecom operators, government portals, and so on. It is a domino effect where all this interconnectivity creates a risk to the economy as a whole.

And the physical infrastructure supporting this massive boom is expanding at an astounding pace. There are investments in undersea cables, such as Google’s Equiano and Meta’s 2 Africa, and there is also a proliferation of local data centres, thus reducing latency and, of course, data costs too.

Security engineers believe that the modernisation of infrastructure, including shared digital infrastructure (SDI), where governments and companies pool resources, broadens the attack surface. The larger the system, the easier it is for it to fall.

The economic calculus of cybercrime

Determining the exact cost of cybercrime in Africa is difficult, as we discussed earlier. The UN Economic Commission for Africa has a disturbing statistic, pinning the losses at 10% of GDP. One must note that Africa’s GDP is around $2.8 trillion, which should imply that almost $300 billion is lost annually. Many economists are skeptical about this data, but if it’s true, it would mean that cybercrime is actually taking away more money than what is required to combat malaria and HIV combined.

INTERPOL doesn’t truly agree with the UN estimates and believes the direct losses must be in the range of $4 billion to $10 billion annually. While this isn’t the jaw-dropping 10% of GDP, it is still 0.15% to 2.13% of total GDP. To put things into perspective, Sierra Leone has a GDP of $4 billion, and this figure is an exact equivalent.

No matter the precise data, it’s an undeniably alarming trajectory. In Nigeria alone, financial institutions lost ₦52.26 billion to fraud in 2024. There was around a 7.63% increase in fraud cases. The attacks are becoming more precise, targeting high-value, high-net-worth individuals or organisations.

They are no longer casting a wide net, but spearing specific whales. The cost of data breaches in South Africa reached $2.95 million in 2034 (one of the highest in the world) before slightly coming down to $2.45 million in 2035, due to better detection technologies.

The spectrum of threats

There is a wide array of attacks ranging from crude, volume-based to highly sophisticated and targeted campaigns. The spectrum can range from a lone hacker in a cafe to a state-sponsored operative from a distant capital.

Ransomware was just a nuisance once upon a time, but it’s one of the most dominant threats in the economy right now, with South Africa and Egypt bearing most of the brunt of the assault.

In 2024, South Africa reported approximately 18,000 ransomware detections, closely followed by Egypt with around 12,000. Both Nigeria and Kenya also experienced significant threats, with thousands of incidents occurring.

Most of the targets are strategic and high-value. Hackers usually target critical infrastructure, government databases, or major financial institutions. And they also encrypt data to paralyse operations of an organisation or individual and demand a ransom for not blackmailing victims with threats to leak their private data to the public. Organisations like Kenya’s Urban Roads Authority (KURA) and Nigeria’s National Bureau of Statistics (NBS) are prime examples of organisations that had to pay due to ransomware attacks.

And then there is business email compromise (BEC) and phishing. Phishing is still the primary vector for initial access. Phishing victims in Africa rose from 26% to 32% in 2024. In BEC attacks, which usually follow phishing, fraudsters compromise legitimate email accounts of executives or finance officers and authorise fraudulent wire transfers. It’s most prevalent in West Africa, where there are criminals who have honed their skills over decades.

Digital sextortion is one of the worst forms of cyberattacks. Criminals often use explicit images generated with AI to blackmail victims. With the rise of AI, criminals no longer need real photos; they can use deepfake technologies to blackmail anyone sensitive about their public image. This can disproportionately affect women and public figures.

And finally, there is DDoS. DDoS, or distributed denial of service attacks, has moved beyond vandalism to become a real tool of geopolitical coercion. The high-profile attack by Anonymous Sudan against Kenya’s digital infrastructure in 2023 and 2024 exemplified this shift. Although they claim those attacks were political and for the benefit of the nation of Sudan, security researchers believe Anonymous Sudan may have ties to Russian cybercrime ecosystems like KillNet. This connection was observed when they targeted Kenya’s eCitizen platform, M-PESA services, and power utilities. The attack was so humiliating for Kenya because they were issuing digital visas, which no longer worked, and they had to roll back to issuing visas on arrival. It caused so much chaos in Nairobi without even firing a shot.

Of course, things are at their worst when there is a spy or a colluder in your organisation. For example, Access Bank in Nigeria lost over 800 million Naira because of an employee who was colluding with cybercriminals. If you have underpaid or disgruntled employees, criminals might recruit them to work as insiders.

The insider threat is very difficult to detect because no amount of sophisticated monitoring of the digital infrastructure is going to prevent internal sabotage. Employees might be tempted to sell their credentials if they are going to be paid much more by a criminal than by their employer, especially in poor regions like Africa.

The future of defence

The future of cybersecurity is defined by the sovereignty of data. We are going to see a lot of data nationalism rise, where nations demand that their data be stored locally. This might complicate the operations of global tech giants, but it will spur the growth of local cloud infrastructure.

Rwanda’s Data Governance Policy is a good example of this. However, we are playing a game of catch-up as quantum computing is moving too fast; any current encryption standard is easily overcome by hackers in a matter of weeks or months. Even if Africans use the current technology available in Europe, by the time they implement it, they will be left behind by all the technological advancements happening in the world and adopted by malicious actors. If they want to be ahead of the game, they have to prepare for post-quantum cryptography.

Experts like Dr. Bright Gameli Mawudor predict that attacks will be fully automated, meaning the hacker will be an AI in the near future rather than a human being. He also warns that automated scripts could theoretically compromise national central banks if there are vulnerabilities, suggesting that the future of war is going to be machine against machine, where humans are either spectators or victims.

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Stating that the Jomo Kenyatta International Airport is operating beyond capacity and requires ‌modernisation, Ruto told the nation, “The ⁠expansion of the Jomo Kenyatta International Airport will be the first major project financed through this new model of financing under the National ⁠Infrastructure Fund. Between 15 and 20 billion shillings from the National Infrastructure Fund, from the ⁠proceeds of the Kenya pipeline IPO, will go to financing the seed money ⁠for the expansion of Jomo Kenyatta International Airport.”

The development strategy for the airport, drawn up by the Kenya Airports Authority, follows the completion of an “Integrated Master Plan and Feasibility Study” in February 2026. The report recommends a phased approach combining near-term infrastructure upgrades with longer-term capacity expansion to ensure the airport, also known as a hub for Kenya Airways, can continue operating as a key aviation touchpoint in East Africa, in terms of managing the increasing passenger and cargo traffic flows.

Currently, JKIA is facing operational huddles across its runway system, passenger terminal facilities and apron areas. In 2025, the airport handled approximately 8.93 million passengers, exceeding its designed capacity of around 7.5 million annually. The airport, which operates with a single runway and a terminal complex that has expanded slowly over time, is facing circulation and space constraints.

“Traffic forecasts developed as part of the study project sustained long-term growth between 2025 and 2045. Passenger volumes are expected to increase from 8.93 million to approximately 22.31 million during the forecast period, representing an average growth rate of 4.6%. Air cargo volumes are also predicted to rise significantly, growing from 407,214 tonnes in 2025 to around 860,400 tonnes by 2045. Assessments comparing future demand with current infrastructure highlight capacity shortfalls across airside, terminal and landside operations. Key constraints include limited runway capacity, insufficient aircraft stands and apron space, congestion in passenger terminals and growing road traffic affecting airport access,” reported International Airport Review.

Now, the first phase of the development programme will focus on optimising existing infrastructure. Planned improvements, during this particular stage, include runway upgradation and construction of a partial parallel taxiway to improve the overall airfield circulation. Two rapid exit taxiways, along with a runway end exit taxiway, will also be developed to reduce runway occupancy time, which in turn will increase overall aircraft movement efficiency.

“Additional short-term improvements will target passenger processing systems and terminal operations. The airport plans to reconfigure and selectively expand existing terminal facilities to alleviate bottlenecks and improve passenger flow. Digital modernisation will also be introduced across check-in, security screening, immigration and baggage handling processes to improve service levels and operational efficiency. Vehicle parking areas and access routes within the airport precinct will also be optimised to improve circulation and accessibility for passengers and airport users,” International Airport Review concluded.

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The plan, announced two years ago, will see the African country’s top financial body boosting its reserves, apart from cushioning the domestic economy from risks in international financial markets.

“If all goes as planned, we should be able to purchase at least 100 kg of gold between March and June 2026. We are finalising with gold refineries that have been contracted to carry out fire assaying and ‌refining of gold to required purity levels,” Adam Mugume, executive director for research and economic analysis at the bank, told Reuters.

Spot gold jumped more than 2% on March 2 to USD 5,395.99 an ounce, amid concerns about the impact of US-Israel strikes on Iran, and most importantly, its fallout on the Middle East region, driving an investor ‌rush into safer assets. Adam Mugume did not say whether or how the price move would impact the plan.

On the other hand, on 3rd March, the US dollar rose to ⁠a ‌more than one-month high, which will likely make dollar-denominated commodities such as gold more expensive for buyers with other currencies.

Bullion has hit record highs in 2026 amid heightened geopolitical and economic uncertainties. Against this backdrop, central bankers in Kenya and the Democratic Republic of Congo have also announced moves to diversify their reserves by buying gold.

Uganda exported USD 5.8 billion worth of gold in 2025, a 76% increase from 2024. The African country has already commissioned its first large-scale gold mine. The Chinese-owned facility is projected ‌to process 5,000 metric tons of gold ore per day and produce about 1.2 tons of refined gold a year.

“The central bank will purchase from artisanal miners as well as medium-scale and large-scale producers,” Mugume said.

Uganda set up its first bullion processor, “Africa Gold Refinery,” in 2017, and several others ‌have since been established, processing both locally produced gold and shipments from neighbouring Democratic Republic of Congo.

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Ghana’s growing reputation as a West African investment powerhouse, combined with its track record of political stability and business-friendly regulations, helps draw in foreign capital. The industries that demand attention include financial services, tourism, infrastructure, mining, oil and gas, agriculture and agro-processing, particularly cocoa, and information and communications technology.

China, the United States, Germany, Japan, Italy, and Ireland are among the larger economies with businesses operating in Ghana. Procter & Gamble, Volkswagen, Toyota, and Sinotruk are among the more well-known brands. International telecom providers include Vodafone, AirtelTigo, Huawei Technologies, and MTN of South Africa.

Incoming mining operators include Newmont Ghana Gold Ltd, Gold Fields Ghana Ltd, and Anglogold Ashanti Ghana Ltd., while foreign companies seeking to increase production are also entering Ghana’s relatively new oil industry. These companies include Tullow Oil, Kosmos Energy, and Italy’s ENI.

Despite growing interest, Ghana’s annual FDI has fluctuated due to macroeconomic uncertainty, culminating in a debt crisis in 2022.

According to Macrotrends, an investor research platform, FDI inflows into Ghana increased by 35% to $2.5 billion in 2021. However, inflows fell to $1.3 billion in 2023, a 7.6% decrease from 2022.

Stabilisation successful

When Ghana and the International Monetary Fund finalised a loan support agreement in May 2023, it might have marked the start of a new era. The stabilisation was further reinforced by the presidential election in December 2024.

In a December 2024 report, the IMF stated, “The capital and financial account is expected to gradually improve over the coming five years, with FDI projected to increase to 3% of GDP by 2028 following the completion of the debt restructuring and gradual reform implementation.”

Recently, fund representatives visited Accra to evaluate Ghana’s economic performance and structural changes under the stabilisation plan.

In his March 2025 budget speech, Minister of Finance Cassiel Ato Forson said, “The commitment to continue implementing the ongoing IMF-supported programme and reforms to forge macroeconomic stability and debt sustainability will restore investor confidence, resulting in further improvement in FDI flows.”

According to Ghana’s Exemption Act of 2022, manufacturing, minerals and mineral processing, mining by Ghanaian indigenous people, oil and gas (value addition), real estate (property development and road infrastructure), pharmaceuticals, agro-processing, and tourism are among the priority investment sectors that will benefit from investor tax incentives.

Politically speaking, Marcel Okeke, a former Senior Economist at Zenith Bank, Nigeria’s top lender, argues that Ghana’s peaceful election in December means that democracy has come to stay.”

John Dramani Mahama, a former president, was chosen by Ghanaians to succeed President Nana Akufo-Addo. There was no demand for court intervention during the changes in government and political party, which suggests that a time of stability may be on the horizon.

There have been some benefits from the financing arrangement with the IMF. A bigger trade surplus and more IMF borrowing were the main drivers of Ghana’s modest gains in external reserves, which grew to $8.8 billion in 2024 from about $6 billion the year before.

Notwithstanding these encouraging indications, difficulties still exist. Although the increase in reserves is a good thing, Ghana still owes $28.3 billion in external debt, which includes a portion of eurobonds whose payments have had to be postponed. In 2027, more than half of the $8.7 billion in foreign debt service is due.

“We will fix it,” Forson said, adding that “these humps are cancerous and pose a significant risk to the economy.”

With only $8.8 billion in total reserves, Ghana’s central bank might run out of money in roughly three and a half months because it owes the IMF about $2.5 billion, or nearly 30% of its reserves.

Emeka Ucheaga, head of Research and Business Intelligence at Credit Direct, a financial company based in Lagos, said, “The reserves are too low to offer tangible protection to investors in the event of external shocks.”

Ucheaga cautions that despite the economy’s improved GDP growth in the second and third quarters of last year, macroeconomic fundamentals are still precarious. Rising inflation is eroding investor profits and purchasing power. According to official data, the rate barely decreased to 23.1% in February 2025 from 23.8% in December 2024. After a brief upswing toward the close of 2024, the Ghanaian cedi has since reverted, falling 5.3% in the first quarter.

Cautious optimism post-crisis

Foreign investors and analysts have reacted to Ghana’s post-crisis landscape with a mix of caution and guarded optimism. In mid-2023, as Ghana grappled with debt restructuring, Fitch Solutions warned that uncertainty and a sharply devalued cedi would “keep foreign investors cautious,” noting that sentiment remained weak and FDI inflows were unlikely to return to pre-pandemic levels immediately.

Memories of the 2022 default still loom large, and investors have been awaiting clear signs of stabilisation.

Emeka Ucheaga, head of research at a Lagos-based finance firm, argues that Ghana must “demonstrate a sustained commitment to economic stability,” from taming inflation to building reserves from non-debt sources, before confidence truly returns.

That said, there are growing rays of optimism. The International Monetary Fund’s support programme, secured in 2023, and the successful presidential election in 2024 have improved the outlook.

“Over the coming five years, the capital and financial account is expected to gradually improve,” the IMF observed in late 2024, projecting FDI to rise to 3% of GDP by 2028 once debt restructuring and reforms are complete.

Ghana’s officials echo this optimism: “Commitment to…reforms to forge macroeconomic stability and debt sustainability will restore investor confidence, resulting in further improvement in FDI flows,” Finance Minister Cassiel Ato Forson affirmed in the 2025 budget speech.

Some regional analysts are bullish on Ghana’s prospects given its stability. Marcel Okeke, a former chief economist at Zenith Bank, points out that, unlike some neighbours plagued by insecurity, “We do not hear about [terrorism] in Ghana… Investors look for a place to put their money and go to sleep. That is why investors will want to put their money into Ghana.”

In short, while scepticism remains until reforms bear fruit, many see Ghana turning the corner, provided it stays the course on prudent policies.

Stacking up against regional peers

Ghana’s bid to attract FDI cannot be viewed in isolation. It competes with regional peers like Kenya, Cote d’Ivoire, and Nigeria, which each offer a different mix of opportunities and risks.

In 2023, Ghana drew about $1.35 billion in FDI inflows, a respectable sum, but slightly behind Cote d’Ivoire (around $1.75 billion) and Kenya (about $1.5 billion).

Notably, Ghana far outpaced Nigeria, which saw FDI plummet to just $377 million amid its own economic challenges. These numbers tell a story. While Ghana remains one of West Africa’s top FDI destinations, accounting for roughly 20% of the region’s FDI stock, it has lost some momentum to rivals.

Cote d’Ivoire has emerged as a standout, steadily growing its FDI even through global turbulence. The Ivorian economy, buoyed by annual growth above 5%, attracted more investment in 2022 and 2023 than it did pre-pandemic. Abidjan’s government has implemented pro-business reforms, such as digitising administrative procedures and a major development plan. These changes, combined with political stability, make it a favourable destination for foreign investors.

The result is diversified inflows spanning industry (over 50% of FDI), services, and agriculture, with investors from Europe, Asia, and the region. Even neighbouring Burkina Faso was a top source.

Kenya, for its part, leverages its status as East Africa’s commercial hub. Nairobi hosts numerous regional headquarters for multinationals and has nurtured a dynamic tech sector. These factors helped Kenya remain among Africa’s largest FDI recipients.

Even though FDI to Kenya dipped 5.8% in 2023, totalling $1.5 billion, the country’s appeal lies in its relatively diversified economy and investor-friendly climate. Over nearly two decades, Kenya climbed global rankings for ease of doing business thanks to regulatory improvements. These changes have made it attractive for manufacturing and service offshoring projects.

Nigeria presents a more cautionary tale. Africa’s biggest economy has an unquestionable market size and oil wealth, yet chronic issues have driven foreign investors away.

In 2023, Nigeria’s FDI inflow was not only a fraction of Ghana’s, but it fell by 19% to $377 million, an extraordinarily low figure relative to Nigeria’s GDP.

Capital flight from Nigeria stemmed from political uncertainty, high operating costs, and an unfavourable business climate that saw major multinationals in oil and telecoms curtailing or divesting investments. However, late-2023 policy shifts under a new administration, including removing fuel subsidies and liberalising the exchange rate, have started to restore some confidence. This was evidenced by a modest uptick in capital inflows in Q4 2023. If Nigeria follows through on reforms, such as tackling forex shortages and security issues, it could regain ground. For now, Ghana holds an edge in stability and predictability.

The comparison reveals Ghana’s relative strengths and areas for improvement. Unlike Nigeria, Ghana has maintained peace and a smoother regulatory environment, and unlike smaller peers, it boasts a sizeable consumer base and abundant natural resources.

Yet, Kenya and Cote d’Ivoire have been more aggressive in reforms and infrastructure investment, which enhances their FDI appeal. Ghana still ranks behind Kenya on some competitiveness measures and has recently been leapfrogged by the Ivory Coast in annual FDI.

Ghana’s FDI numbers

Digging into the data reveals where Ghana’s FDI is coming from, and where it is not. According to the Ghana Investment Promotion Centre (GIPC), FDI project commitments in 2023 totalled $649.6 million, spread across 122 projects.

The figure based on GIPC-registered projects was barely half of the previous year’s, mirroring the sharp drop in actual inflows recorded in the balance of payments.

The investments Ghana did secure in 2023 were concentrated in a few key sectors. Manufacturing led the pack, accounting for about $280 million, which was the single largest FDI value by sector. Close behind were services, which drew roughly $226 million, reflecting investor interest in Ghana’s financial services, telecom, and hospitality segments.

Retail and trading activities also saw some investment ($75 million), while sectors like agriculture and construction made up smaller portions of the pie. This sectoral breakdown aligns with Ghana’s traditional strengths: processing of resources (cocoa, gold, etc.), consumer goods manufacturing, and a growing services economy. Oil and mining, often major FDI magnets, were not explicitly broken out in the GIPC figures, likely because much of the recent activity there involves reinvestment by established players rather than new inflows.

Another way to analyse the FDI is by source and structure. Ghana has long welcomed investors from around the globe. By 2023, the stock of FDI in the country had swelled to $47.3 billion, with multinationals from South Africa, the United Kingdom, and the Netherlands, France, Mauritius, and China among the top contributors over time.

Recent project data, however, show a shifting mix of countries driving new investments. In 2023, China was the standout, responsible for the largest portion of new FDI, about $212 million across 31 projects. This likely reflects Chinese firms increasing their footprint in Ghana’s resource and industrial sectors.

Surprisingly, Turkey contributed a substantial $173 million through only four projects, suggesting that a few large Turkish ventures, possibly in construction or manufacturing, made a significant impact. Other notable sources included India ($78 million), traditional partners like the United States ($26 million) and the Netherlands ($22 million).

The dominance of China, which provided one-third of 2023’s FDI value, underscores Ghana’s pivot toward Asian capital. Meanwhile, relatively smaller contributions from Western investors indicate that there is room to rebuild confidence among US and European firms in the post-crisis period.

In terms of investment type, Ghana’s FDI inflows are primarily equity-based. This includes mainly greenfield projects and business expansions, rather than debt-financed deals. For instance, in 2022, Ghana recorded 39 new greenfield projects valued at approximately $1.33 billion, which aligns with the total FDI inflow for that year. This indicates that foreign companies are focused on establishing or expanding their businesses locally, rather than acquiring stakes in or lending to local firms.

By contrast, portfolio investment and loans experienced major volatility during the debt saga. The joint venture model is also significant. In 2023, around 32 out of 122 FDI projects were joint ventures between foreign and local partners, with the remainder wholly foreign-owned. These joint ventures not only bring in capital but also involve Ghanaian stakeholders, which can promote local employment and facilitate knowledge transfer.

Overall, the data depict an FDI profile in transition. While overall volumes have declined, the manufacturing and service sectors have remained resilient. Meanwhile, newer investors like China and Turkey play a more prominent role. Encouragingly, early 2024 showed signs of a rebound. Ghana’s central bank reported net FDI of $1.74 billion for the year, up 32.7% from 2023.

In late 2023, the macroeconomic stability improved, and investor funds began returning. However, reaching the pre-crisis high of over $2.5 billion in 2021 will require sustained investor confidence, underpinned by structural reforms and perhaps a few landmark investments.

The government’s targeted sectors for incentives, including manufacturing, mining value-addition, agriculture and agribusiness, infrastructure, and tourism, highlight where it hopes the next wave of FDI will land. The challenge will ensure that future FDI flows align with these priorities and that policy consistency sustains momentum.

A positive view

Ucheaga said, “When combined, these indicators show a country still in the early stages of stabilisation rather than in a phase of renewed investor confidence. This ongoing uncertainty is reflected in the fluctuations in FDI inflows.”

He argues that investor sentiment continues to be influenced by memories of Ghana’s December 2022 debt default, as well as a broader global economic environment marked by rising protectionism and the looming threat of a global trade war, even in the face of improved trade data and IMF backing.

Ucheaga emphasises that Ghana must show a consistent commitment to economic stability to reverse this trend. That involves steadily increasing foreign reserves through reliable, non-debt-driven sources, maintaining a trade surplus, and continually expanding the real economy.

He also stresses that to preserve the value of investments, inflation must be under control and the exchange rate must be stabilised. The government has outlined targets for economic growth, including a non-oil GDP expansion of 4.8%, an overall real GDP growth of at least 4%, and an inflation rate aimed at reaching 11.9% by the end of the year.

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The banking industry’s resilience is demonstrated by data from the Central Bank of Kenya (CBK), which indicates that profits have increased from $1.09 billion during the same period last year.

CBK Governor Kamau Thugge claims that March was the banks’ best-performing month, with pre-tax profits hitting $184 million.

On the other hand, August saw the lowest profits of $119 million, the only month since January when profits fell below $136 million. Despite this minor decline, the banking industry has continued to grow while other economic sectors have experienced severe disruptions.

Kenya had a difficult year, marked by challenges such as severe flooding and rain from March to June, political turmoil with anti-government demonstrations in June and July, and limited liquidity.

Despite challenges, banks have shown resilience, with the finance and insurance industry expanding by 7% in the first quarter of 2024, according to the Kenya National Bureau of Statistics.

However, in the second quarter, this growth slowed to 5.1%. According to the CBK, the banking industry will expand by 6% for the entire year, which is the slowest growth since the COVID-19 pandemic hit the economy in 2020, when growth was only 5.9%.

The general economic outlook seems more muted. The CBK has revised its prediction for the growth of the national economy from 5.4% to 5.1%. This change follows a slowdown in the second quarter, when growth slowed to 4.6% compared to 5.6% during the same time last year. Lending has decreased, which has also affected Kenyan banks.

The loan book for this sector was $27.2 billion at the end of August, a $1 billion decrease from $28.2 billion at the end of 2023. As the value of the Kenyan shilling increased relative to the United States dollar, this indicates both a decrease in lending and a depreciation of loans denominated in dollars.

The expansion of private sector credit has decreased dramatically; in August, it was only 1.3%, the lowest level in over five years. At the same time, the non-performing loan ratio rose to 16.7%, the highest level in 18 years. High credit costs have coincided with an increase in defaults and a decrease in borrowing. In February 2024, Kenya’s benchmark lending rate reached a 12-year high of 13%.

The CBK implemented consecutive reductions to the benchmark rate, bringing it down to 12%, in an effort to alleviate the burden on borrowers in response to these economic pressures. Reviving economic activity and encouraging borrowing are the goals of this.

In a statement, CBK said, “The Monetary Policy Committee noted the sharp deceleration in private sector credit and the slowdown in economic growth during the second quarter of 2024. It concluded that there was scope for further easing of monetary policy to boost economic activity while ensuring exchange rate stability.”

The performance of the industry will still be strongly correlated with more general economic developments, such as initiatives to control inflation, exchange rate swings, and international financial circumstances.

Strong security over PoS rollout

Network International, a Middle Eastern and African digital commerce enabler, has reaffirmed its commitment to ensuring strong cybersecurity measures as it launches new payment solutions in Kenya.

Judy Waruiru, its Regional Managing Director for East and South Africa, said, “We are introducing our point-of-sale (POS) solutions as part of our strategy to enter the in-person payments market in Kenya, a key hub for East Africa.”

Network International is providing merchants with new point-of-sale solutions at no cost as part of this rollout, enabling companies of all sizes to conveniently accept payments in-store or while on the go.

In order to accommodate a variety of payment preferences, customers will also have the option to pay with cards or mobile wallets. As the number of digital transactions in the area rises, the business is expanding its service portfolio and addressing growing concerns about payment system security.

During an interaction with African Banker, Paul Mutethia, Head of Commercial at Network International Kenya, said, “The risks in cyberspace have increased, especially Denial of Service, malicious codes, botnets, and bugs which hamper operations. We secure our internal systems when they interact with the external environment. Our transactions are encrypted, and all our solutions are secure. We ensure there is no exposure to cyber-attacks because we hold sensitive customer data.”

He revealed that there is a dedicated department within the company that handles threat management and cyberspace monitoring. It would be better to close the business if you don’t make any investments in cybersecurity.

According to data from the Central Bank of Kenya, there are only slightly more than 55,000 point-of-sale machines in the country. This is insignificant when you consider that the Kenya National Bureau of Statistics reports that there are 7.4 million registered micro, small, and medium-sized businesses (MSMEs). This reveals a serious weakness in the infrastructure for digital payments for companies across the nation.

The most recent products from Network International include contactless payment systems, improved mobile payment gateways, and e-commerce solutions designed to increase convenience while upholding strict security regulations.

JPMorgan Chase eyes presence in Nairobi

JPMorgan Chase, the biggest bank in the world by market capitalisation, is expanding in Africa, with plans to open an office in Nairobi, Kenya.

The bank is the largest lender in the United States, with $4 trillion in assets and operations in more than 100 countries.

It received an operating license from the Central Bank of Kenya (CBK) just days before Jamie Dimon, the CEO of the bank, travelled to the country. The action is part of the bank’s strategy for global expansion and demonstrates its increasing interest in making investments in the African market.

The bank has identified Africa, which has the youngest population in the world, as a key growth region due to its fintech innovations and the rise in institutional bankers.

In October 2024, JPMorgan Chairman and CEO Jamie Dimon travelled to Kenya as part of a trip to Africa that also included stops in South Africa and Nigeria.

“We are opening our first branch in Kenya, which we are really happy to do. We want to add a country or two in Africa every couple of years or so. And when you do it, you are basically covering the government, maybe some big government enterprises, and the multinationals that are going in there with traditional banking services,” Jamie Dimon said during an event in Nigeria.

Sailepu Montet, a former executive at CBK, has been appointed as the bank’s new Country Manager for Kenya. He has more than 20 years of banking experience and a solid foundation in financial markets from both the public and private sectors.

According to Dimon, the bank’s primary areas of interest are treasury services, commercial and investment banking, and possibly some lending in Kenya. Nevertheless, it does not currently have any plans to provide asset and wealth management services in the country, which are already offered in Nigeria and South Africa.

“We are not doing asset and wealth management now, but that doesn’t mean it won’t happen in the next few years,” Dimon added.

Nairobi was selected as the site for JPMorgan Chase’s office because of its growing prominence as a technology hub and its status as the gateway to the wider East African market, which makes it a desirable location for companies wishing to grow throughout the region.

Ten international banks, including Bank of China, Access Bank of Nigeria, Bank of Kigali, First Rand Bank and Nedbank of South Africa, Rabobank of Mauritius, and French lender Societe Generale, have representative offices in Nairobi.

The bank must, however, differentiate its offerings in various markets, such as Kenya, where regional and local lenders are well-represented. There are 46 commercial banks in the nation, providing services to 55 million people.

Nigerian banks go big

One of Nigeria’s leading commercial banks, First Bank, is now planning to expand to at least three African countries in its next growth phase, starting in 2025.

According to the Deputy Managing Director of the bank, Ini Ebong, the countries being targeted include Ethiopia, Angola, Cameroon, and Ivory Coast.

He asserted that there are growing opportunities in markets across the African continent, similar to “what we saw in the early 2000s in some of the larger African markets. We believe it is an opportune time to take part in this phase of growth.”

In December 2024, the Ethiopian parliament passed a law that allows foreign banks to open subsidiaries in Ethiopia. Foreign firms will only be allowed to own 49% of shares.

Also, during a panel session at the recently concluded Africa Financial Industry Summit, Ethiopia’s central bank governor, Mamo Mihretu, said the country had been working on the legislation that would finally open the banking sector to foreign competition over the past year.

FirstBank, which has been operating in Nigeria for 130 years, began establishing subsidiaries in other African markets in 2011 when it acquired Banque International de Credit, one of the leading banks in the Democratic Republic of Congo.

In November 2013, it acquired subsidiaries of International Commercial Bank Financial Group Holdings AG (ICBFGH) in The Gambia, Sierra Leone, Ghana, and Guinea. It purchased ICB Senegal the following year, completing its acquisition of West African assets and operations of ICBFGH. FirstBank also has operations in London and Paris, France, as well as a representative office in Beijing, China.

In January 2025, news emerged about Bidvest Bank being sold to Nigerian-based Access Bank, which is set to expand the latter’s operations in South Africa substantially. Johannesburg Stock Exchange-listed Bidvest is now eyeing the disposal of 100% of its holdings to Access Bank.

Bidvest is expected to raise R2.8 billion from the sale, which will then be used to settle its existing debt. Access Bank, on the other hand, plans to implement Broad-Based Black Economic Empowerment (BBBEE) ownership, including an Employee Stock Ownership Plan. The acquisition is expected to close in the second half of 2025, subject to regulatory approvals in South Africa and Nigeria.

The Bidvest Bank book, which mainly consists of leased assets, loans and advances, totalled R6 billion in December, and was funded by deposits of R8 billion. In its most recent financial year, Bidvest Bank generated a trading profit of R371 million and an operating income of R377 million.

Speaking of Access Bank, the largest lender in Nigeria by assets, it has established itself as a full-service bank with over 60 million customers globally across three continents, serving three principal segments: retail, business, commercial, and corporate.

Following the acquisition, Bidvest Bank is set to be merged with Access Bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.

Using Bidvest Bank’s local capabilities and its established pan-African presence, Access Bank now hopes to have increased capacity for intra- and inter-Africa trade, connect businesses, and create new opportunities for regional integration.

The Nigerian-based company noted that South Africa’s banking sector is the largest in Africa, with a combined tier-one capital exceeding $42.2 billion in 2022. Despite a tough operating environment, the industry still achieved headline earnings growth of 2.5% year-on-year and maintained strong profitability (ROE of 17%) in the first half of 2024. Access Bank will now leverage the latest acquisition to strengthen its business and SME banking as well as its foreign exchange services, while also introducing new services tailored to the South African market.

Access Bank has already been operating in South Africa since 2021 after it acquired Grobank Limited. Grobank, which was previously known as Bank of Athens, was primarily focused on agriculture before Access Bank transformed it into a retail banking operation. The group currently offers personal, business, and corporate banking in South Africa.

Banks embrace WhatsApp banking

In order to process payments more quickly and interact with customers more effectively, Kenyan banks are increasingly using WhatsApp banking. Conversational banking is encouraged by this model, which also streamlines customer journeys and improves user intuitiveness.

Kenya’s Housing Finance Group, commonly referred to as HF Group, became the first major bank in the country to deploy WhatsApp banking in 2019.

HF Group CEO Robert Kibaara said, “Customers can simply add HF’s WhatsApp phone number to begin a secure banking chat session.”

Since 2019, the KCB Group, Kenya’s biggest bank by assets, has also adopted WhatsApp banking. KCB hopes to improve its communications by utilising widely used messaging platforms as part of a larger plan to offer individualised services.

A subsidiary of South Africa’s Absa Group, Absa Bank Kenya, followed suit in 2021 by launching the “Abby” WhatsApp banking service.

A Mumbai doctor’s loss of $2,000 from his WhatsApp wallet raised cybersecurity concerns, while many Kenyan consumers were ecstatic about the new banking model at the time.

“We have put up stringent measures to make WhatsApp banking secure for everyone. We have several security layers on the platform,” the bank’s head of digital channels, Andrew Mwithiga, told African Banker.

In 2022, Equity Group, which has the largest customer base in Kenya, introduced the Equity Virtual Assistant, a WhatsApp banking platform. With its open banking model, I&M Bank has also entered the WhatsApp banking space, initially providing customer service for non-transactional enquiries.

Through its AI-powered chatbot, Zuri, M-Pesa, the top mobile money platform in the world, has integrated WhatsApp banking since 2020. In Kenya, M-Pesa is used by more than 95% of households.

According to Statista, as of January 2024, 86% of Kenyan internet users were using WhatsApp, making it the most popular messaging app in the country. In Kenya, there were 7.9 million WhatsApp users as of 2023.

Meanwhile, an €8.51 million loan from the African Development Bank has been approved for Senegal’s “Programme to Promote Efficient Lighting Lamps” (PPLEEF), a groundbreaking project aimed at promoting energy efficiency in the nation. This establishes a new standard for sustainable development in Africa and is the bank’s first entirely focused demand-side energy efficiency investment project.

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This airline crisis was just the tip of the iceberg. The reality is that Africa has become a hot zone of suffering for multinational corporations. The main culprit? Weak local currencies. These currencies made repatriating profits a nightmare. Assets held by local subsidiaries lost value. Unlike Emirates, which chose to make noise, most multinationals packed up and left without much fuss. Others, unable to leave entirely, have scaled back their operations, hoping to minimise their losses.

Irmgard Erasmus, a senior economist at Oxford Economics, said, “The high cost of doing business, bureaucratic red tape, and the looming risk of further currency devaluations have rendered operations in Africa unprofitable.”

Across Africa, the currency crisis is spreading. South Africa, Nigeria, Egypt, Kenya, Ghana, Zambia, Ethiopia, and Zimbabwe are all facing the brunt of it. Egypt’s pound, for example, has lost over two-thirds of its value since early 2022. In 2023, Nigeria’s naira was ranked among the worst-performing currencies globally, having depreciated by 49.4%.

Zimbabwe has fared no better. Its dollar has lost over 70% of its value on the official market since January 2024. Traders have abandoned it, favouring US dollars. In response, the Reserve Bank of Zimbabwe launched a new currency, the ZiG, backed by gold reserves and foreign currencies. But for ordinary citizens, the shift has not brought immediate relief. Many are struggling with rising prices and diminishing purchasing power, with basic commodities slipping further out of reach.

Out of Africa

The currency crisis has led to widespread suffering and sleepless nights for policymakers. For foreign companies, the impact has been devastating. Many have found it impossible to endure the economic pain. UK’s financial conglomerate Atlas Mara cited currency volatility as a key factor in its 2021 decision to exit Africa, reporting a staggering $145 million decline in the dollar value of its assets due to depreciating local currencies.

Barclays Bank, Procter & Gamble, GlaxoSmithKline, Cadbury, Eveready, Bayer, Nestle, and Unilever have all exited or drastically scaled down operations. Although other factors have been involved, weak currencies were the common denominator.

Foreign investors in Africa’s capital markets are also feeling the pain. The Johannesburg Stock Exchange saw $53 billion in foreign investment outflows over the past eight years. In 2023 alone, equities worth $8.3 billion were dumped. In Kenya, the situation has been similar: foreign investors sold $17 million worth of stocks in the first quarter of 2024.
The biggest hit for investors is not just repatriation issues; it’s the conversion loss when weak African currencies are exchanged for dollars or pounds.

Jonathan Munemo, an economics professor at Salisbury University, said, “The exits and outflows are a sign of how quickly foreign investors will flee when a cratering currency shakes their confidence.”

The causes of this crisis are both internal and external. Structural imbalances within countries are coupled with pressures from the outside. Tight global funding conditions, geopolitical risks, and aggressive rate hikes by the United States Federal Reserve since March 2022 have all played a role. The result? The dollar soared, and African currencies dived. Many countries are stuck in a cycle of dependency, reliant on external borrowing to stay afloat, with each new loan increasing vulnerability.

Turning up the heat

Global food and energy prices soared due to the war in Ukraine, adding more fuel to Africa’s inflation fire. High debt loads meant countries spent dwindling revenues on costly debt repayments. About 40% of Africa’s public debt is external, and over 60% is in US dollars. Countries like Kenya, burdened with an $82 billion public debt, have faced persistent deficits and shrinking reserves.

Between March 2022 and December 2023, the Kenyan shilling fell by 22% against the dollar. The decline only stopped after Kenya’s government concluded a buyback operation on a maturing $2 billion Eurobond in early 2024.

The broader impact of these conditions has been devastating for ordinary citizens. Inflation has eroded purchasing power, with prices for staples like bread, cooking oil, and fuel surging across the continent. In Ghana, the inflation rate hit 54% in late 2023, and many households have had to make difficult choices: cutting back on meals, delaying healthcare, and even pulling children out of school to save money.

The depreciation of currencies has forced foreign companies to rethink their African investments. Hasty actions by governments to stabilise domestic currencies have, in many cases, made things worse. Risks associated with repatriation are acute, especially in countries with rigid forex regimes. Even in nations with flexible regimes, currency convertibility remains a thorny issue.

Desperation has driven many African governments to take extreme measures. Nigeria’s President Bola Tinubu has pursued reform policies such as unifying exchange rates and allowing market forces to determine the exchange rate. His government aims to raise $10 billion to boost foreign exchange liquidity. These reforms have also included subsidy removal and public sector cost-cutting, moves that have made life tougher for ordinary Nigerians in the short term but aim to restore economic balance in the future.

Egypt, too, has been forced to acknowledge that economic transformation requires painful sacrifices. The country adopted a flexible exchange rate to access an $8 billion IMF bailout. Moreover, it secured $35 billion from the UAE, $7 billion from the European Union, and $6 billion from the World Bank.

These funds eased Egypt’s forex crunch and allowed the pound to float more freely. But the effects on the ground have been mixed; while foreign reserves have stabilised, the impact on inflation and the cost of living has been severe. Many Egyptians are finding it hard to afford necessities like bread and electricity.

Hard road ahead

The efforts to fix structural issues, such as liquidity problems, market distortions, and a lack of transparency in forex markets, have yielded mixed results. Nigeria’s naira took a turn for the better in early 2024, becoming one of the world’s best-performing currencies, rising 12% in April after a 14% rise in March, according to Goldman Sachs.

However, it’s a hard road ahead. Many African countries are willing to accept tough measures for long-term currency stability. Ethiopia, for instance, still clings to a rigid forex regime. As a result, foreign interest in Ethiopia’s ambitious privatisation and liberalisation plans remains lukewarm.

The government has tried to incentivise investment, in September 2023, the National Bank of Ethiopia approved offshore accounts for strategic investors, making it easier for them to manage their funds and guaranteeing currency convertibility for dividends and loans.

Despite these initiatives, progress has been slow. Ethiopia’s economy remains under pressure, and the reluctance to fully open up its forex market is holding back potential growth. Businesses continue to struggle with access to foreign currency, which has hindered imports of essential goods and stunted industrial activity. Meanwhile, inflation in Ethiopia climbed to 30% by early 2024, driven by rising food prices and a depreciating birr.

The parallel forex market is thriving across Africa. In some countries, it’s a lifeline, offering better rates than official exchanges. While the black market may provide a crucial source of foreign exchange, it also undermines stability.

When restrictions are imposed to stabilise exchange rates, companies and individuals look for ways around them. This fuels black market activity.

That entanglement with the dollar, and other hard currencies, has caused tremendous suffering for Africa. This is why leaders, including Kenya’s William Ruto, are calling for de-dollarisation and the development of local currency debt markets. There is a belief that advanced economies, in pursuit of stability, often ignore how their actions create havoc for developing nations. Borrowing in their currencies would shield African nations from volatile exchange rates and the impact of rising global interest rates. But this is easier said than done.

A lack of deep financial markets, political instability, and the sheer scale of existing foreign-denominated debt make de-dollarisation a daunting task. Still, some progress is being made. In 2024, Nigeria announced plans to issue more bonds in naira rather than in dollars, attempting to wean itself off foreign dependency. Ghana is also exploring options to tap into domestic capital markets to finance public projects.

Moving forward

To address this crisis, Africa will need support and must continue demonstrating the resilience it has always shown. Leaders must make tough decisions, often unpopular ones, to bring stability. Citizens must keep adapting, keep working, and keep believing that better times will come. And the rest of the world? It must not look away. Africa’s struggle is a shared challenge, one that demands a collective response.

International support must go beyond loans and aid. There is a need for technology transfer, capacity building, and fairer trade practices that allow African economies to flourish. The international community must help create an environment where African nations can stand on their own, reduce their debt burden, and build resilient economies.

Africa’s currencies may be shaky, but its spirit remains unbroken. It is this resilience that will ultimately prevail, because it always has. Within the hardship lies an opportunity for change, a chance for a more balanced and just global economy, where no nation is so vulnerable to another’s economic whims.

These nations are now taking steps to boost regional trade and reduce dependency on foreign goods. The African Continental Free Trade Area (AfCFTA), launched in 2021, aims to create the largest free trade area in the world by connecting over 1.3 billion people. This initiative could be a game-changer, reducing reliance on external markets and fostering intra-continental economic resilience.

However, for AfCFTA to fulfil its promise, political will and infrastructure development must align to remove trade barriers and streamline customs processes.

If successful, such initiatives could allow African economies to diversify, boosting manufacturing and value-added services that have long lagged. For now, Africa remains at a crossroads, one path leads to deeper crisis and greater dependency, while the other points toward sustainable development and self-sufficiency. The choice will depend on the decisions made by its leaders and the support provided by the global community.

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Kenyans are demanding more accountability from the Ruto government, despite the latter agreeing to withdraw his tax reforms. These were intended to help reduce the African country’s large debts but protesters insisted the government should first cut spending, saying there was too much waste. Ruto has already announced several austerity measures, including a freeze in proposed pay rises for the Parliament. However, the protesters are determined to see Ruto go.

Tracing the reason

During his 2022 presidential election campaign, Ruto promised to improve living conditions for low earners by tackling corruption within Kenya’s institutions, reducing government waste, and eliminating the country’s $82 billion debt.

“However, Ruto’s detractors say he has not delivered on those claims. What have irked many in particular, they say, are the frequent hikes in taxes with no corresponding improvements in social amenities. Already, a 2023 law doubled taxes on fuel, and the initial draft of this year’s finance bill was set to further raise that fuel tax,” Aljazeera reported.

The value of the shilling has dropped by 22% against the US dollar since 2022, causing prices to soar, while incomes have largely stayed the same. Ruto initially justified the tax increases, saying they were necessary for Kenya’s debts. His government took office amid a punishing drought in 2022 and after the Russia-Ukraine war disrupted food imports.

However, critics have long said massive waste in public spending could offset the debts. In April 2024, the IMF said there was a significant shortfall in tax collection that would keep Kenya’s domestic borrowing needs up, although it also stressed the need to cut government waste.

Ruto’s now-withdrawn tax hikes as well as similar legislation passed in 2023 are both linked to IMF loans as Kenya staggers under the weight of a heavy debt crisis. When he entered the President’s office in August 2022, Kenya was already in a crisis. Its external debt was about $62 billion, or 67% of its GDP.

Former President Uhuru Kenyatta had borrowed heavily from commercial lenders and countries like China to finance huge infrastructure projects, including a rail line that links Nairobi to the port city of Mombasa and 11,000km (nearly 7,000 miles) of tarmacked roads. Most of those loans were commercial, meaning they had high interest rates. Meanwhile, the infrastructure efforts failed to generate the expected revenue.

COVID-related disruptions and the inflation pressures also weighed heavily upon the African country. Added to that were the supply chain disruptions in agriculture in Kenya that followed Russia’s invasion of Ukraine. All these combined meant food and the general cost of living were soaring in 2022 and so were Kenya’s debts as interests accumulated.

As of July 2024, the nation’s debt has reached $82 billion, including domestic borrowing. More than half of government revenue goes towards debt repayments. In April 2021, Kenya under Kenyatta and then-Vice President Ruto entered into an agreement with the IMF for relief.

The package came in the form of a 38-month programme the international lender said would help Kenya manage its debt and create a conducive economic environment for needed private-sector investment. Under the programmes, Kenya is set to unlock $3.9 billion in funding. A separate climate fund was also approved at $542 million.

Can IMF be blamed here?

The IMF conditioned the loans on hiking taxes, reducing subsidies and cutting government waste, measures it said would increase government revenue while reducing spending. Those measures kicked off in 2023. Ruto since 2022 has made the IMF relief programme a priority, as disbursements under the programme come based on periodic reviews of how well the government has pushed through some of the reforms. The last review in January unlocked $941 million.

After taking over the country’s reign, Ruto suspended subsidies on fuel and fertilisers as part of the programme. Fuel subsidies were reinstated in 2023 after protests broke out. The Finance Bill 2023 was also backed by the IMF. The bill, which passed in June 2023, introduced a 2.5% housing levy for employed people and raised the VAT on fuel from 8% to 16%.

The now-withdrawn Finance Bill 2024 with its tax hikes was backed by the IMF. It was set to generate $2.7 billion to fund a budget deficit and fund development programmes. Analysts said Kenya still needs to fill that gap to meet some targets under the IMF programme.

The IMF loans helped Kenya avoid defaulting on a $2 billion Eurobond that matured in June 2024. The country does not have any pressing repayments in the short term.

As per Martin Muhleisen, a non-resident senior fellow at the Atlantic Council’s GeoEconomics Centre and a former IMF official, Kenya’s decline into fiscal trouble has been entirely predictable, “led by the ambitions of past leaders who followed the path of easy money.”

“During the mid-2010s, under President Uhuru Kenyatta, Kenya was looking for ways to leverage its frontier market status into higher growth via debt-financed investments and infrastructure projects. As a result, within a decade, Kenya’s public debt ratio almost doubled from 41% of gross domestic product (GDP) in 2014 to a projected 78% of GDP in 2024,” Martin remarked.

One prominent creditor has been China’s Export-Import Bank, which provided Kenya with $3.2 billion to build a Standard Gauge Railway (SGR) between Nairobi and the port of Mombasa—a project that has been criticised because of its weak governance and high cost but, as per the recent reports, will be extended to Kenya’s western border with Uganda.

“Although public investment does have an important role in raising a country’s economic fortunes, Kenyans are still waiting to see the social returns of the debt-financed investment spree. GDP growth has hovered around 5% since the mid-2000s, real GDP per capita has stagnated in recent years, and the poverty rate (at just below 40%) remains above pre-COVID-19 levels. It is no wonder that the fiscal belt-tightening now required to arrest a further run-up of public debt has met with resistance, amid legitimate questions about who benefited from the loans that ordinary Kenyans now have to repay,” Martin added.

However, the former IMF official also mentioned that after turning to the IMF, Ruto’s administration was doing reasonably well, in terms of predicting a steady pace of fiscal adjustment (at about 1% point of GDP per year over five years) and allowing for measures to absorb its social impact.

Both the primary fiscal deficit and the trade balance improved, and the shilling unwound much of its decline against the dollar as Kenya surprised markets by repaying a two-billion-dollar Eurobond in June 2024. Moreover, the IMF programme unlocked a considerable amount of concessional multilateral financing, including from the World Bank.

“But the country remains in a financial hole from which it will be very difficult to climb out. One problem is that higher interest rates keep adding to Kenya’s debt dynamics, as illustrated by the hefty 10% interest rate on a smaller Eurobond that Kenya issued in February to meet its June payment. Therefore, despite an improvement of the primary deficit broadly in line with programme targets, Kenya’s public debt is still projected to increase this year,” Martin commented.

Is there any way out?

With interest payments accounting for more than a quarter of total revenue, the Kenyan government may decide to seek a debt restructuring. As per Martin, this is not something the IMF could impose on Kenya, unless it judged that public debt was unsustainable.

However, the government went to great lengths in the past to service its debt and retain access to financial markets. It would have been cynical on the part of IMF shareholders to force Kenya into an unwanted debt operation, as long as there was still a realistic chance of avoiding it. This now looks less assured, and it may be the only avenue left for Ruto.

As per Martin, the IMF and other multilateral institutions have raised funds and mobilised special drawing rights (SDRs) to subsidise interest rates paid by poorer member countries, and Kenya is already benefiting from this effort. However, there are limits to this approach. Subsidies have to be either financed from donor countries’ budgets (with dwindling political support) or they are generated from richer countries’ SDR holdings.

“SDR-based lending works only to a limited extent. SDRs derive their value from their status as foreign exchange reserves and being exchangeable for dollars and other hard currencies held by central banks in wealthy countries. Any overuse or exposure to default risk (for example, from rising public debt in recipient countries) could compromise their reserve-asset status, which would impact both the IMF’s financing model and its capacity to lend to countries in distress,” he noted.

Could the IMF and World Bank provide larger loans? The two institutions regularly review the amounts that countries can access under various conditions. Ceilings have gone up over time, but shareholders require that larger loans come with stricter macroeconomic conditionality, an approach that would presumably have triggered a similar outcome for Kenya. Also, multilateral loans already account for more than a quarter of Kenya’s public debt.

Since these loans cannot be restructured, private creditors might be more hesitant to invest in the African country, because any future debt operation might need to be deeper than in similar countries with a smaller share of multilateral debt.

Going by Martin’s analysis, Kenya’s ongoing economic mess is largely homemade, albeit with help from willing external lenders. The COVID crisis exacerbated a lack of fiscal discipline, eventually forcing the country to adopt a stabilisation programme.

“While meeting with some initial success, recent events have made it clear that the government’s adjustment strategy needs to change, putting a possible debt operation on the table. The IMF did its best to support an initially credible effort by the government, but it must also ask itself what could have been done to prevent the sharp increase in public debt that is at the heart of Kenya’s problems today,” he concluded.

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Deeply wealthy investors in companies from EAC nations like Tanzania, Uganda, Rwanda, and Somalia have been extending their reach into the nation, endangering the long-standing dominance that has been almost entirely enjoyed by residents and companies from outside the region.

Regional companies are becoming more interested in the Kenyan market. This is in response to years of expansion into the EAC market by numerous Kenyan companies, including banks, insurers, manufacturers, Taifa Gas, Maziwa, Premier Bank, Yego Global, Liptons Teas, and Infusions Rwanda.

According to data from the trade bloc, the EAC region had a population of 300.4 million and an economy valued at USD 312.9 billion at the end of 2021.

The Tanzanian company has promised to upend National Cement Company, Mombasa Cement, and East Africa Portland Cement Company to solidify Bamburi’s position as a “leading” cement player in the East African cement market.

The announcement of Amsons’ planned entry into the market comes just three months after Pearl Dairy Farms, the well-known milk processing company in Uganda and owner of the Lato brand, was permitted to purchase a dairy company in Kenya, allowing it to get past obstacles that had been preventing it from selling and supplying its goods in Kenya.

The Comesa Competition Commission approved Maziwa, the non-operating holding company incorporated in Mauritius, to purchase a 100% interest in Highland Creamers and Food Limited, a Kisii-based company that began operations in 2015 and is the company behind the Family Milk brand, in a notice dated March 11.

“The access to the two separate milk pools in Kenya and Uganda, will also allow for growth in the local Kenyan market without dependency on imports from other nations,” Pearl Dairy said on getting the approval.

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Uganda is paying Vitol Bahrain USD 81.50 per tonne of super petrol, while Kenya agreed to pay USD 90 per tonne with three Gulf oil majors under a government-to-government (G-to-G) arrangement. This is based on a comparison of freight and insurance rates.

But Unoc has added more logistics costs, USD 36.92 per tonne, instead of Kenya’s USD 28.03 per tonne under the G-to-G agreement.

Furthermore, Unoc’s indicated pipeline rates are USD 57.38 per tonne, which is more than the Kenya Pipeline Company’s (KPC) charges of USD 5.93 per tonne. This begs the question of who is pocketing the money and why the pipeline prices are greater than what KPC is charging.

Uganda President Yoweri Museveni in 2023 attributed Kenya’s government-backed gasoline importation agreement’s “middlemen” to the high fuel cost in Kampala. After that, Uganda and Vitol Bahrain inked a five-year contract.

At present, the price of a litre of super petrol in Nairobi and Kampala is the same, underscoring the direct impact of Kenya’s G-to-G agreement on fuel prices in Uganda. In its examination of the pricing build-up, one of the neighbouring country’s oil marketing companies asked, “Why is Unoc’s price greater than Kenya’s government-to-government deal?”

According to the analysis, Uganda charges USD 990.29 per tonne for gasoline, USD 9.82 more than Kenya does for the same amount of fuel.

The initial diesel shipment that arrived at the Mombasa port with super gasoline has not yet had its price increased by Unoc.

Ruth Nankabirwa, Uganda’s Minister of Energy and Mineral Resources, has already issued a warning to the populace about the surprise that awaits them when the nation begins to determine pump prices by its import agreement with Vitol Bahrain.

The pipeline fees cover the cost of transporting fuel from KPC’s Mombasa facilities to the Eldoret depot, from which the cargoes of the Unoc are transported by truck to Kampala.

Uganda had claimed in 2023 that by cutting away the “middlemen” in Kenya’s G-to-G agreement, their agreement with Vitol Bahrain would guarantee reduced pump costs in Kampala. Kenya entered into agreements to deliver fuel on credit for 180 days per consignment with Saudi Aramco, Emirates National Oil Company (Enoc), and Abu Dhabi National Oil Company.

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