While Nigerian shoppers have been stockpiling essential goods and food, sex toy sellers in Lagos and Abuja say their sales have also shot up.

Findings by PREMIUM TIMES have shown that in most online stores where sex toys are sold, the items are either in short supply or sold out.

A cross-section of sex toy sellers told this newspaper on Wednesday that sales began to pick up two weeks before President Muhammadu Buhari announced the 14-day lockdown in Lagos, Ogun and the nation’s capital, Abuja.

They also said they are overwhelmed by the demand for their products amid the Coronavirus lockdown.

“The pandemic has been challenging generally but it has not affected the sex toy market. Pre lockdown in Lagos and Abuja, the weekend before it started, sales really skyrocketed. I was getting orders, left right and centre,” said Lami, owner of Sextoysnaij.

“It felt like people knew there was going to be a lockdown and they had to be ready. The lockdown started on Tuesday, on that day and Wednesday, I had just four orders. By Thursday, sales increased again. I sold out on half of my stock. My vibrators and wands were sold out.

“It went above average and beyond.”

Hannah Jonathan, a sex toy store owner popularly known as Soulspice the Sex goddess, said she exhausted her supplies as early as 10.00 a.m. two weeks ago.

Ms Jonathan also said she has witnessed an over 50 per cent increase in sales since the lockdown was enforced, a development, she said, she never saw coming.

Before the lockdown came into full effect, the sex toy retailer said she ships out an average of about 100 sex toys to online customers in Lagos, Abuja, Port-Harcourt, Kaduna, Kano, Ibadan, Delta, Edo and Akwa-Ibom States. She said in Lagos State alone, the orders were triple the amount that she ships outside the state weekly.

“The boom in sex toy sales is a good one for us because Nigerians don’t rest. Most low and middle-class citizens don’t even go on vacation, so this has been the best time for us all,” she noted.

“A lot of people now have better sex lives now because they have time to explore and be adventurous with one another. The lockdown has helped reduce stress, which is a major problem, – and this would boost people’s libido as well as boost fertility in women.”

Married couples too

The sex toy merchants sampled by this newspaper admitted that in particular, the demand for sex games and toys by couples has spiked.

“It makes me happy that Nigerians are satisfying their urges at this difficult time when people feel vulnerable,” said Mathew Okon, co-owner of Hot Pleasurz, an Abuja-based sex toy shop.

“I’m happy that many marriages will be strengthened at a time like this because hopefully, they are having more sex while side chics are left lonely.

The Sexgoddes also said she has recorded an increase in patronage by married couples, especially men who live far away from their wives. She said patronage has risen more than fourfold since mid-March compared with the same period before the lockdown.

“Trust me, married people buy from us more. Men buy for their wives, especially when those who are not always home to sexually please their wives,” she said.

“Couples have also been making good use of the opportunity of the lockdown to spice up their sex lives and rediscover their bodies. Apart from toys suitable for single people and couples that live apart, couples have also been purchasing sex toys to help make their sexual relationships more interesting.”

Ms Lami of Sextoynaij also said her patrons outside of Nigeria are mostly married women.

“There’s a particular state, I don’t want to be specific, only one of my customers there is single,” she noted.

Another sex toy seller, Adeola Badmus, owner of Sextoy9ja said she has also experienced a very high increase in sales in the past weeks. She ascribed the boost in sales to two factors.

“The first thing is people being alone right now, especially the single ones that can’t have access to their significant others, so they resort to more self-love(Masturbation).

Secondly, because we have a strong presence online and people spend more time online now, more people have been seeing our social media pages and reaching out to get these toys.”

Ms Badmus added that people (men) order more of female toys in recent times, specifically 80 per cent of her clients.

She said there has been a balance in the gender of people who order her products. According to her, most of her male clients buy female sex toys for their female friends and wives because people are more open to using sex toys.

The Sexgoddes also added that a lot of sex toys are actually designed for couples and not singles. According to her, people, religion, culture, and traditional beliefs have made it impossible for most Nigerian couples to accept themMs Badmus said one of the sex toys designed for married couples is the finger vibrator.

She said, “Men can use this by wearing it on their fingertips and gently caress her breasts, clitoris, and labia. It can also be used to stimulate her G-spot and do body massage.

“There are others like the wand and clitoral massagers that allow the woman to pleasure herself while the man pumps in using a sex position that allows the couple to look into each other’s eyes.”

Shortage of sex toys

However, despite the boost in sales, the lockdown has also affected the sex toy business in Nigeria negatively, as sellers have been unable to bring in new toys because of the Coronavirus lockdown.

The Sexgoddes, who said she ships her sex toys from China and the United States, lamented the shortage of sex toys, not only at her store but in other sex toy shops as well.

Sex experts in Denmark say the sales of sex toys in the country have more than doubled after Danes were told to stay at home to limit the spread of the virus.

Source: Nigeria: Sex Toy Sellers Record Boom in Sales

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Africa, Health, COVID-19

The African Development Bank and partners are set to host an online #AfricaVsVirus Challenge from 16 to 19 April 2020. The 72-hour competition is a global hackathon – or “ideathon” – to develop effective solutions to the coronavirus pandemic. 

The Challenge is open to entrepreneurs, companies, civil society organizations and governments with bankable solutions or ventures to address the pandemic. The top pitches will be eligible to win thousands of dollars’ worth of financial, technical and skills-learning support to advance their implementation. Details on competition qualifications and methods of participation can be found here: www.africavsvirus.com.  

“COVID-19’s impact on the global economy is pushing millions of people, especially women and young people, into unemployment, underemployment and working poverty. Part of our response is  the #AfricaVsVirus Challenge,” said Tapera Muzira, Coordinator of the African Development Bank’s Jobs for Youth in Africa Strategy. “This online Challenge will channel youth creativity and innovation to real life solutions that mitigate the impact of the coronavirus on health, the economy, SMEs and jobs,” he added.

The #AfricaVsVirus Challenge opens on Thursday, 16 April at 6:30 pm CET and runs non-stop through to Sunday, 19 April at 6:30 pm CET. Entrants can choose to submit ideas under one of the following sectors: public health and epidemiology; vulnerable populations; businesses and economy; community; education; entertainment; government support; environment and energy; and food security. Alternatively, they may choose their own theme. 

An expert panel will select the twenty best solutions submitted, and these finalists will be invited to take part in a one-month educational program by Seedstars. The top three winning ideas will receive up to $50,000 worth of in-kind prizes. 

#AfricaVsVirus Challenge is part of the Bank’s strategy to support young African entrepreneurs – especially young women entrepreneurs – and their SMEs and startups by providing an enabling environment to innovate appropriate solutions to the COVID-19 crisis. The Bank’s Innovation and Entrepreneurship Lab, working closely with the Youth Entrepreneurship & Innovation Multi-Donor Trust Fund is hosting the ideathon, with partners Seedstars, digital agency WAAT and development consultants Luvent Consulting.

Rollout of the Challenge follows the African Development Bank’s launch on 8 April of a $10 billion COVID-19 response facility, and the sale of a record $3 billion debt issue last month to raise financing to help African countries confront the pandemic, which is already wreaking havoc on their economies.

Interested parties can follow the global conversation about the competition by following #AfricaVsVirus on social media, or by logging on to www.africavsvirus.com.

Source: The African Development Bank and its partners want your ideas for beating the COVID-19 pandemic

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Africa, Nigeria, Health, COVID-19, Cameroon, Microentrepreneurs
African countries have joined the rest of the world in imposing severe restrictions on human mobility in a bid to contain the COVID-19 pandemic. With the rapid rise of infection rates—which approached 1.3 million globally and 8,000 in Africa as of this writing—social distancing and other public health measures are crucial for reducing further contagion. The immediate focus of policymakers on improving the capacity of health care systems to test, isolate, and treat patients has been appropriate considering the millions of lives at risk.

At the same time though, social distancing restrictions have disrupted the livelihoods of tens of millions, exposing vast populations to an acute financial shock. Many countries, such as Nigeria and Cameroon, have introduced strict lockdown measures that closed business without sufficient mitigation measures to assist the affected individuals and households. For the poor without the luxury of bank savings or a resort to credit cards, public health measures that cut their lifeline of daily income could appear to offer a cure that is as bad as the sickness. Such measures, then, will also be highly ineffective, as people are more likely to disobey the law rather than stay at home and go hungry. Given these devastating potential consequences, it is ethically questionable to bar people from working without offering a means to support their basic needs.

Thankfully, Africa’s agrarian households—which make up more than half of the total population—will be comparatively insulated from potential food shortages as they produce most of their own consumption needs. A disadvantage in normal times due to its low productivity, subsistence farming offers the benefit of self-reliance, shielding farmers from the immediate costs of trade restrictions induced by COVID-19. Likewise, paid urban workers, most of whom work for the government or state enterprises, will face limited financial crises unless the provision of food supplies becomes severely strained or inflation skyrockets.

The first to feel the brunt of stay-at-home restrictions will be informal business owners and daily wage workers in the urban centers of Africa. Self-employing and family-owned small enterprises in sectors such as retail trade, sewing, handiwork manufacturing, and taxi/motorcycle ride services, make up more than two-thirds of urban employment in Africa. Tens of millions of Africans and their dependents rely on income from these businesses and will be unlikely to endure a lockdown for more than a few days.

Without robust government support, microentrepreneurs are unlikely to abide by the stay-at-home measures, creating risk for themselves and their communities. In addition, since microenterprises use cash for businesses exchanges and deal with several customers daily, their return to business will undercut ongoing efforts to contain COVID-19. In some cases, violations of these stay-at-home orders—caused by hunger and desperation—might lead to confrontations with the police, as happened in Lagos recently.

While microentrepreneurs are known for their resilience, they are also highly vulnerable to the economic shocks induced by COVID-19. Because they are so often unregistered and unorganized, they are unlikely to get immediate government support in the form of financial compensation or tax benefits. Even in normal times, these businesses fly under the radar of government programs for policy support, which puts them at a disadvantage relative to medium-sized or large businesses. African countries also have a history of cracking down on informal businesses during times of crisis. At the same time, most microentrepreneurs come from disadvantaged social segments, including women and ethnic and religious minorities. Their powerlessness and fragmentation perhaps explain why they have received so little attention in the current debate on the economic costs of COVID-19.

The ability to sustain social distancing, thus, crucially hinges on the presence of policies that help these businesses and individuals cope with the costs of the lockdown. Unlike in the West, where the focus is on a broad economic stimulus, the immediate focus in Africa is on disaster relief. Where there have been economy-focused policies, unfortunately, many of the responses have been generally lacking in detail and ambition. The sizes of the financial packages are also generally minuscule. In Ethiopia, the planned aid package is just 0.15 percent of GDP, while Rwanda’s relatively robust package amounts to 1.5 percent of GDP. (By contrast, the size of the U.S. stimulus package is equivalent to 10 percent of GDP.) In oil-producing countries such as Nigeria, Angola and Gabon, governments’ ability to introduce a sufficient relief package is constrained by large budget deficits caused by the unprecedented oil price crash. International funders are also preoccupied with the urgent issue of supporting health systems and have not yet started to address the humanitarian costs of economic lockdown.

African governments need to rapidly put together or further bolster social safety net programs that target informal businesses and other vulnerable economic groups such as day-wage laborers. Wherever possible, they should facilitate (micro) credit and tax exemptions to increase the ability of micro-entrepreneurs to fulfill their financial obligations. Unfortunately, since so many of these firms are informal, most are not in government registries, and so the status of their activities is unknown, limiting the feasibility of specific, targeted interventions like these.

Instead, policymakers should introduce policy measures that will have a beneficial effect for microentrepreneurs and the urban poor at large. Examples of helpful programs include subsidies for (or direct distribution of) key commodities such as food (bread or other staples), energy (fuel and electricity), and a reduction in fees for key services like phone, internet, and banking. Imposing moratoria on real estate or rental income taxes can also have beneficial effects for many of these small-scale enterprises that occupy rented spaces. For individuals and families in dire financial conditions or facing health emergencies, policymakers should consider measures such as free provision of health insurance or direct financial transfers. Given the large number of affected people, however, African governments will be unable to make direct financial transfers for a sustained period of lockdown without the aid of international development financing.

Governments can also take this crisis as an opportunity to bring greater organization to the informal economy. The crisis offers a unique chance to start systematic efforts to digitize, register, and organize microentrepreneurs, and to avail essential services to help them thrive. One example is promoting the opening of standard or mobile-based bank accounts, which will reduce the logistical challenge of making rescue fund transfers at the last mile. In a positive development, Ethiopia has just recently passed a law opening up its mobile banking sector to nonfinancial firms in response to the COVID-19 outbreak. Similar initiatives that strengthen the capacity of microbusinesses can improve their preparedness to cope with potential future crises of a similar nature.

Without effective support for informal businesses and the urban poor, it is only a matter of time before social distancing restrictions created to combat COVID-19 will start to crumble. For these public health measures to hold up, African governments need to act quickly to devise emergency social safety net programs that offer a lifeline to those severely affected by the economic lockdown.

Source: Social distancing unlikely to hold up in Africa without a safety net for microentrepreneurs

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Africa, South Africa, Manufacturing, Health, COVID-19

South African company ready to roll out low-cost ventilators for the African market



EPCM is an engineering, procurement and construction company specialising in oil and gas projects in Africa and beyond.

EPCM’s co-founder and CEO, Tom Cowan, came up with the idea for the ventilator following a visit to his sister, a medical doctor, just before South Africa went into lockdown. She voiced her concern regarding the shortage of ventilators, both in South Africa and the rest of the continent.

“At that stage I wasn’t even 100% sure what a ventilator does. We talked about it and she explained it to me, and it sounded like something very similar to a gas system that we usually design,” he says.

After some internet research, Cowan came to the conclusion that designing a ventilator wasn’t “too complex”.

“About two hours after that, the first concept of a ventilator was born, and maybe two hours after that we started with some more detailed design … And it took about two, three days for us to completely understand what we wanted to build and do a few prototypes.”

The company deliberately kept the design very basic to reduce costs and ensure that it can be made from materials and machines currently available in most African countries. “The whole ventilator can be cut from a perspex plate … and then you basically have to add the electronic component to that and then it will work,” he says.

“We’ve specifically designed it to be easy to manufacture … Our design can be made from perspex, it can be made from stainless steel. If you have nothing else, you can even make it from wood.”

“The whole idea behind this was to get it rapidly manufactured. We’ve partnered with a laser cutting company in South Africa which is able to cut many of the sheets in a day, and we can just assemble,” Cowan adds.

A ventilator is a machine that provides mechanical ventilation by moving breathable air into and out of the lungs, to deliver breaths to a patient who is physically unable to breathe, or breathing insufficiently. Modern ventilators are computerised microprocessor-controlled machines.

Cowan says the Covid-19 outbreak has prompted many people to design simple mechanical ventilators, but these often lack the ability to precisely control the flow of gas. “Our system is designed so that you can physically set the breaths per minute, volume per breath, maximum pressure and flow for the machine,” he explains

Whereas modern ventilators used in top hospitals cost anything from $20,000 and upwards, EPCM’s model will go for less than $2,000.

The company will this week start with the production of 50 units for delivery to Zimbabwe, Mozambique and Ghana. Cowan says these countries have less stringent regulations around the approval of medical devices than South Africa, where EPCM is yet to receive the go-ahead for its ventilator.

“If you want to get a ventilator approved in South Africa, you need European Union approval … The regulations and the hurdles that you have to jump over to get these ventilators certified is actually the biggest concern and probably the reason why there is not a lot of innovation or new companies starting to focus on the ventilator industry.”

According to Cowan, the South African authorities are however relaxing some of their regulations in response to the Coronavirus crisis. “They have to. It is either, relax some of the regulations or have a lot of people die.”

Commenting on the effects of Covid-19 on EPCM’s core business, Cowan said while most of the company’s construction projects are currently standing still, its consulting, engineering and procurement work continues.

The company is, however, seeing an impact from the dramatic weakening of the South African rand against major currencies. The currency has weakened from R14.76/$1 on 5 February to R19.05/$1 today. “Once you have a crisis, emerging [market] currencies are all going down. I think it is important that you have US dollar-based income, which we do have. But we also have procurement with fixed-price contracts in the European, Asian and American markets, which definitely provides challenges when you have our currency fluctuating like it is now,” he explains.


Further reading

[March 2020] Kenya-based investor sees opportunity in Covid-19 crisis
[March 2020] Africa: crisis a once in a decade opportunity
[March 2020] Coronavirus will hit African economies hard

Source: South African company ready to roll out low-cost ventilators for the African market

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Africa: crisis a once in a decade opportunity

By Rob Eloff, managing partner, Lateral Capital

As one of our portfolio CEOs in Kenya said this week: “It would be a shame to let a crisis go to waste.”

Valuable companies will emerge from Africa irrespective of the Covid-19 pandemic because innovation happens in a backdrop of scarcity in normal times. It will pay to continue to focus on frontier markets while the world is melting down because this innovation is likely to continue at more attractive valuations, with the potential to deliver greater impact than elsewhere.

Funding will slow down, in Asia venture funding slowed ~30% for two consecutive years after the ’02 SARS epidemic and in Latin America funding was down 50% following the 2015 Zika virus outbreak. In the years that followed these crises, the world got to know Alibaba, JD.Com and Nubank.

In Africa technology emerges as a response to everyday challenges

Well known examples include Kenya’s M-Pesa, Africa’s decentralised renewable energy revolution and the prevalence of remote learning in Nigeria.

In his upcoming book “Out Innovate: How Global Entrepreneurs from Delhi to Detroit are Rewriting the Rules of Silicon Valley“, author and friend of Lateral, Alex Lazarow reminds us how companies operate and scale in markets without economic stability or a supportive startup ecosystem.

“Start-ups operating amid conditions of relative scarcity, where capital and talent are hard to come by and economic shocks are more likely to occur, face unique pressures. Yet many have become superstars in their own right. Their formula involves a more balanced approach to growth, a focus on solutions to real problems, and investment in their workforce for the long term. These ‘frontier innovators’ hold important lessons for companies of all sizes and in all locations – including Silicon Valley itself.”

Africa breeds anti-fragility

In the African context, key tenets of survival include:


Products and services that solve essential problems vs cyclical trends
  • Measuring profitability from the outset rather than a singular focus on growth
  • Enabling legacy infrastructure to work better, rather than simply focusing on disruption
  •  
  • At this strange moment in history, we look to the technology community in Africa for leadership through innovation.
  •  
  • This week we learned of the Nairobi and Lagos technology community responses to Covid-19.
  • Portfolio company Koko Networks has re-calibrated its supply chain which spans across India and Kenya to convert ethanol for cooking fuel to sanitation products as part of a large scale collaboration to avert a humanitarian crisis in Kenya’s urban centres. 4G Capital is also part of the response via its working capital products to essential services for SMEs during the lockdown. Meanwhile portfolio company Lynk, which matches informal workers to demand for their products and services is working to match its B2B team with services delivery challenges. As we know, unless you solve for the poorest of the poor, transmission is a given.
  •  
  • Lagos based Medsaf has been a leading provider of first response supplies to pharmacies and hospitals.
  • Aside from our existing portfolio companies, a founder that we are following closely in Nigeria has a clear response to Covid19. Lifebank founder and CEO Temi Giwa-Tubosun has launched a national Quip register for critical healthcare infrastructure to fight Covid-19 across 200 Nigerian hospitals. Lifebank is then connecting suppliers and technicians to get functioning hardware to where it is needed most.
  •  
  • In Ghana, digital diagnostics company Redbird has launched its Covid-19 self check and resources app which will also cover Kenya, Nigeria, South Africa and the US.
  • In South Africa, Epione.net is leading the charge with its primary care logistics platform response.
  •  
  • A Kauffman report titled ‘Is This The Black Swan Moment To Solve Big Problems?’ reminds us that:
  • 95% of the jobs created in the US over the past 20 years were from companies less than five years of age. Arguably this skew will be even more notable in frontier markets when we look back at 2020.
  • VC fund vintages during adverse economic periods tend to outperform. We have written extensively about why a different model to traditional VC makes sense for Africa, but the valuation discount that we are already seeing this quarter cannot be ignored. What happened in more mature emerging markets historically that led to a crisis being a catalyst?
  •  
  • SARS forced Alibaba and JD.Com online
  •  
  • The ’02 epidemic directly contributed to the birth and scale up of Chinese e-commerce. How?
  •  
  • In a look back to how SARS contributed to the birth of e-commerce in China, this post reminds us that:
  •  
  • “In 2003 e-commerce was just starting to emerge in China. After all, not many people had access to the internet. Alibaba was primarily a B2B platform, connecting US buyers with Chinese suppliers. JD.com was a chain of small electronics shops that launched an online e-commerce site…
  •  
  • “Alibaba was a four-year-old company that focused on B2B e-commerce, matching American procurement teams with Chinese suppliers. An Alibaba employee caught SARS when she was sent to attend the Canton Fair in May 2003. Alibaba’s 500+ employees were quarantined at home for twelve days and required to work from home.
  •  
  • “Many countries around the world issued travel warnings for businessmen travelling to China, and thus many turned to Alibaba’s online business to source Chinese goods. Starting in March 2003, Alibaba’s B2B e-commerce business added 4,000 new members and 9,000 listings each day, a 3-5x increase over the pre-SARS rate.”

Similarities and differences to Africa

Africa’s company formation, technology deployment and funding are on track with 2013-2014 South East Asia as outlined in our end of year report. The key differences between the regions remain large scale adoption of e-commerce due to disposable income and last-mile infrastructure constraints, and fragmented regulatory environments. The rails to solve for some of these gaps have started to emerge with technology facilitating cross border payments, regional and continent-wide economic integration and savvy founders now focusing on last-mile logistics.

SARS drove Chinese suppliers and consumers online. That is not going to happen the same way in Africa as we have seen with Jumia‘s struggle to scale. Mobile app-based commerce for specific needs is however starting to scale as we have seen with Lynk’s products and services on its Uber-like trust platform. It is difficult to pinpoint exactly which aspects of this crisis will bring down costs and behavioural barriers to a migration to online scale in Africa, but here are a few speculative guesses:

De-monetisation could accelerate as countries outside of the East African Community, Ghana and Côte d’Ivoire realise that mobile money is not a luxury. Blockchain applications could finally take off with the to decreased friction they provide for consumer wallets when the value of local currency savings fall off a cliff in times of crisis.

Multiplier effects from co-operation between ventures that can plug and play via APIs to leverage each other’s platforms.

Renewable energy that is interoperable between central and microgrids. In Nigeria remote work is impossible when the average Lagosian can rely on only 45 minutes of a 60W lightbulb daily from the central grid.

Once in a decade opportunity

Critical infrastructure needs are similar across Africa’s cities. A forced migration online (Zoom, e-everything) likely brings boundaries, barriers and costs lower and leads to a hustle and innovation gear shift that is already incredibly exciting.

In sub-Saharan Africa there is already an element of “business as usual” for innovators with stretched resources and daily challenges. There will be pain, funding will become scarcer and macro-economic developments command a repricing of all assets, but for the engaged investor that is willing to roll up their sleeves and be part of the solutions demanded by the world’s fastest growing and youngest continent the opportunity to generate once in a decade returns and impact comes with high correlation and alignment.

Source: Africa: crisis a once in a decade opportunity

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Africa, COVID-19

McKinsey offers four scenarios of Covid-19’s economic impact on Africa

This article is an excerpt of a McKinsey report titled, Tackling COVID-19 in Africa


By Kartik Jayaram, Acha Leke, Amandla Ooko-Ombaka, and Ying Sunny Sun

As of March 31st, more than 770,000 cases of COVID-19 had been recorded worldwide, with nearly 40,000 deaths. The number of cases, and deaths, has been growing exponentially.

Compared to other regions, the number of recorded cases in Africa is still relatively small, totaling about 5,300 cases across 47 African countries as of March 31st (Exhibit 1). Even though the rate of transmission in Africa to date appears to be slower than that in Europe, the pandemic could take a heavy toll across the continent if containment measures do not prove effective.

Exhibit 1

Against the backdrop of this worrying public health situation, African countries will have to address three major economic challenges in the coming weeks and months:

The impact of the global pandemic on African economies. This includes disruption in global supply chains exposed to inputs from Asia, Europe and the Middle East, as well as lower demand in global markets for a wide range of African exports. Moreover, Africa is likely to experience delayed or reduced foreign direct investment (FDI) as partners from other continents redirect capital locally.

The economic impact of the spread of the virus within Africa, and of the measures that governments are taking to stem the pandemic. Travel bans and lockdowns are not only limiting the movement of people across borders and within countries, but also disrupting ways of working for many individuals, businesses and government agencies.

The collapse of the oil price, driven by geopolitics as well as reduced demand in light of the pandemic. In the month of March 2020, oil prices fell by approximately 50 percent. For net oil-exporting countries, this will result in increased liquidity issues, lost tax revenues, and currency pressure. (We should note, however, that lower oil prices will potentially have a positive economic impact for oil importing countries and consumers.)

For Africa’s economies, the implications of these challenges are far-reaching. A slowdown in overall economic growth is already being felt, and this is acute in hard-hit sectors such as tourism. Many businesses, particularly SMEs, are under significant cost pressure and face potential closure and bankruptcy. That is likely to lead to widespread job losses. At the same time, the pandemic will impact productivity across many sectors. Closures of schools and universities could create longer-term human capital issues for African economies and could disproportionately affect girls, many of whom may not return to school. Not least, the crisis is likely to reduce household expenditure and consumption significantly.

The knock-on effects for the African public sector could be severe, in terms of reduced tax revenues and limitations on access to hard currency. African governments will face rising deficits and increased pressure on currencies. In the absence of significant fiscal stimulus packages, the combined impact of these economic, fiscal, and monetary challenges could greatly reduce Africa’s GDP growth in 2020.

Four scenarios of economic impact: Africa’s GDP growth reduced by 3–8 percentage points


To gauge the possible extent of this impact, we modelled four scenarios for how differing rates of COVID-19 transmission – both globally and within Africa – would affect Africa’s economic growth.

Even in the most optimistic scenario, we project that Africa’s GDP growth would be cut to just 0.4 percent in 2020 – and this scenario is looking less and less likely by the day. In all other scenarios, we project that Africa will experience an economic contraction in 2020, with its GDP growth rate falling by between five and eight percentage points (Exhibits 2 and 3).

Exhibit 2

The four scenarios are as follows:

Scenario 1: Contained global and Africa outbreak. In this least-worst case, Africa’s average GDP growth in 2020 would be cut from 3.9 percent (the forecast prior to the crisis) to 0.4 percent. This scenario assumes that Asia experiences a continued recovery from the pandemic, and a gradual economic restart. In Africa, we assume that most countries experience isolated cases or small cluster outbreaks – but with carefully managed restrictions and a strong response, there is no widespread outbreak.

Scenario 2: Resurgent global outbreak, Africa contained. Under this scenario, Africa’s average GDP growth in 2020 would be cut by about five percentage points, resulting in a negative growth rate of -1.4 percent. Here we assume that Europe and the United States continue to face significant outbreaks, while Asian countries face a surge of re-infection as they attempt to restart economic activity. In Africa, we assume that most countries experience small cluster outbreaks that are carefully managed.

Scenario 3: Contained global outbreak, Africa widespread. In this scenario, Africa’s average GDP growth in 2020 would be cut by about six percentage points, resulting in a negative growth rate of -2.1 percent. This assumes that significant outbreaks occur in most major African economies, leading to a substantial economic downturn. Globally, we assume that Asia experiences a continued recovery and a gradual economic restart, while large-scale quarantines and disruptions continue in Europe and the United States.

Scenario 4: Resurgent global outbreak, Africa widespread. In this case, Africa’s average GDP growth in 2020 would be cut by about eight percentage points, resulting in a negative growth rate of -3.9 percent. Globally, we assume that Europe and the United States continue to face significant outbreaks as China and East Asian countries face a surge of re-infection. In addition, significant outbreaks occur in most major African economies, leading to a serious economic downturn.

Exhibit 3

These scenarios do not take into account the potential effects of any fiscal stimulus packages that may be announced by African governments; these should improve the economic outlook. However, we should also note that the scenarios do not take into account currency devaluations, inflationary pressure, or recent credit ratings from Moody’s and similar bodies – which could worsen the outlook. There is no room for complacency.

Depending on the scenario, Africa’s economies could experience a loss of between $90 billion and $200 billion in 2020. Each of the three economic challenges outlined above is likely to cause large-scale disruption. The pandemic’s spread within Africa could account for just over half of this loss, driven by reduced household and business spending and travel bans. The global pandemic could account for about one third of the total loss, driven by supply-chain disruptions, a fall-off in demand for Africa’s non-oil exports, and delay or cancellation of investments from Africa’s FDI partners. Finally, oil-price effects could account for about 15 percent of the losses.

Differing impact on major African economies

While the pandemic’s economic impact – alongside the oil-price shock – will be serious right across the continent, it will be felt differently in different countries. For example, our analysis suggests that the following impacts would occur in Nigeria, South Africa, and Kenya:

  • Nigeria. Across all scenarios, Nigeria is facing a likely economic contraction. In the least worst-case scenario (contained outbreak), Nigeria’s GDP growth could decline from 2.5 percent to -3.4 percent in 2020 – in other words, a decline of nearly six percentage points. That would represent a reduction in GDP of approximately $20 billion, with more than two thirds of the direct impact coming from oil-price effects, given Nigeria’s status as a major oil exporter. In scenarios in which the outbreak is not contained, Nigeria’s GDP growth rate could fall to -8.8 percent, representing a reduction in GDP of some $40 billion. The biggest driver of this loss would be a reduction in consumer spending in food and beverages, clothing, and transport.
  •  
  • South Africa. Across all scenarios, South Africa is facing a likely economic contraction. Under the contained-outbreak scenario, GDP growth could decline from 0.8 percent to -2.1 percent. This would represent a reduction in GDP of some $10 billion, with about 40 percent of that stemming from supply-chain import disruptions, which will impact manufacturing, metals and mining in particular. There will also be major impact on tourism and consumption. However, as South Africa is an oil importer, this impact will be cushioned by lower oil prices. In scenarios in which the outbreak is not contained, South Africa’s GDP growth could fall to -8.3 percent, representing a loss to GDP of some $35 billion. This impact would be driven by disruptions in household and business spending on transport, food and beverages, and entertainment, as well as prolonged pressure on exports. South Africa’s recent sovereign-credit downgrade is likely to exacerbate this outlook.
  •  
  • Kenya. In two out of four scenarios, Kenya is facing a likely economic contraction. Under the contained-outbreak scenario, GDP growth could decline from 5.2 percent (after accounting for the 2020 locust invasion) to 1.9 percent – representing a reduction in GDP of $3 billion. The biggest impacts in terms of loss to GDP are reductions in household and business spending (about 50 percent), disruption to supply chain for key inputs in machinery and chemicals (about 30 percent) and tourism (about 20 percent). In scenarios in which the outbreak is not contained, Kenya’s GDP growth rate could fall to -5 percent, representing a loss to GDP of $10 billion. As in Nigeria, disruption of consumer spend would be the biggest driver of this loss.
  •  
  • Kartik Jayaram and Acha Leke are senior partners of McKinsey & Company, based in Nairobi and Johannesburg respectively. Amandla Ooko-Ombaka is an engagement manager and Ying Sunny Sun is a partner at McKinsey; both are based in Nairobi.

Source: McKinsey offers four scenarios of Covid-19’s economic impact on Africa

 

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NJ: Ayuk: Underneath Coronavirus panic lies opportunity for African oil producers

NJ Ayuk

Sometimes it is easy to forget how interconnected human lives across the globe have become. Perhaps we no longer talk as much about globalisation as we used to in the 1990s because it is no longer an issue to be discussed or protested against, it is simply the reality that surrounds us. And there is no cruder evidence of that than the Coronavirus.

Despite the fact that the virus hasn’t yet affected African nations in any way as seriously as other regions of the world, a fact the World Health Organisation is still unable to explain, forecasts already indicated that just through reduced demand for African exports, the virus was expected to wipe at least $4 billion in revenue from the continent’s economy. Most of that was simply because China in particular, and Asia and Europe in general, were reducing oil and gas consumption dramatically as transport and economic activities came to a standstill in light of the epidemic that already forced several dozens of millions of people to be put under quarantine.

Last week, news reports indicated that oil traders in Africa were unable to find buyers for fifty-five Nigerian oil cargoes as global demand crashed. By last Friday morning, the virus had wiped the equivalent of $5 trillion in value from the global stock markets. That’s two and a half times the GDP of the whole African continent.

And all that was before OPEC+’s Friday meeting in Vienna. Wasn’t that one surprising?

I believe it is safe to say that few people could have expected this outcome. After all, for the last three and a half years, the world, and the oil industry in particular, had learned to trust the alliance of OPEC countries with Russia and other oil producers to work together to stabilise the markets and guarantee a sustainable price for the barrel of crude.

Through their decision to cut down oil production to address reduced demand and balance out the effect of the US shale play, all together, they were keeping 1.7 million barrels of oil per day away from the market, a landmark decision of cooperation like we had never seen in history. Perhaps also because of its novelty, of its width and because it was dependent on the will and cooperation of so many, it also fell victim to the infestation this virus has brought.

The Saudi-led consortium of nations was proposing a combined further cut of 1.5 million barrels per day to continue to match the decline in global demand. The Russia-led group was not going to go further than 600,000. The conclusion… no new cuts at all and no renewal of the previous cuts. The OPEC+ alliance that saved the industry from collapse in 2016 has, at least for the moment, come to an end. All bets are off. At the end of April, when the current agreement ends, all restrictions will be lifted and the world is bracing for an oil flood.

The markets have already factored that in, with the Brent and the WTI registering its biggest daily crash since the beginning of the first Gulf War. While oil seems to have rebounded slightly, it will take time to make up for Monday’s 25% crash. That is, if the recovery is anywhere in sight, since Saudi Arabia announced it was ramping up production and selling its oil discounted by as much as $8 per barrel, on a barrel priced at little more than $30.

In all honesty, the situation looks bleak. If Saudi Arabia and Russia do go on having a price war, a $20 barrel is possible, if not probable.

But what does this mean for Africa?

Several African petroleum and energy ministers were in Vienna last Friday, both as members of OPEC and as members of APPO. Shortly before the announcement on the fall of the agreement, they had decided to strengthen cooperation between African oil producers, promote synergies, intra-African trading, and knowledge exchange. Surely, we need that more than ever.

For the moment, however, there is no reason to panic. Surely, things might get worse before they get better, as the world battles this rapidly spreading virus. And surely, some oil-dependent African nations will suffer with reduced revenue. Angola’s state budget, for instance, was designed for an oil price of $55, not $35. But we have survived the oil price crisis of 2014, and we will survive this one too. Further, most African producers have learned from the past experience and have adjusted themselves to respond to price crashes. The progressive economic diversification the continent has witnessed in recent years will also contribute to minimise the impact of this situation. Yes, final investment decisions might be slightly delayed until the situation stabilises, but they will come in due time.

So what’s next?

If 2020 is showing itself challenging for African energy, 2021 will be a year of opportunity, but for that to happen, we have to start adapting now, laying down the policies that will allow us to take advantage of the future opportunities. It is in moments of crisis that true leaders have the opportunity to shine.

While it is difficult to predict the future, there are a few deductions and inductions we can try to make with some certainty.

One, is that neither Russia nor Saudi Arabia want a low oil price and there is a limit to how long they are willing to sustain it. No one gains from it and if anyone has the capacity and funds to sustain it for a longer period of time, it is Saudi Arabia. So, it is not really a price war, since it can’t really be a war if you already know the winner at the head start. Already, Russia has suggested it might be open to negotiate coordinated cuts within OPEC+ during the group’s next meeting in May/June.

What seems likely that will happen, is that the first to suffer from this will be American shale producers. This sector was already finding it hard to finance itself in recent years but continued to unbalance the market with its rapid response times to price fluctuations. These producers are highly leveraged, and it is likely that most will go bust in the present situation. This is something Russia and Saudi Arabia tried to do back in 2015/2016. While it did not succeed at the time, it might have better chances now.

Further, in three months’ time, at the time of the next OPEC+ meeting, the virus situation might also be very different. This week, president Xi Jinping visited Wuhan, the epicentre of the epidemic, for the first time since the beginning of the outbreak, in a clear demonstration of a strong response to a rapidly evolving situation that seems to be stabilising. China itself is an extremely leveraged economy and cannot afford to slow down for much longer. It can be expected that demand in the country will start rising again in the foreseeable future. If that happens in a scenario when the US shale sector is no longer able to respond, it might just be that the price will climb higher than it was before the virus, and with Saudi Arabia securing for itself a much larger slice of the global marketplace. Again, things will get worse before they get better, but they will certainly get better.

So, for African nations, this is the time to position ourselves correctly, and that will require close attention to international developments and close cooperation, to be able to take advantage of new opportunities. The African Energy Chamber will be instrumental in that, but so will be the African members of OPEC. The time to show statesmanship and stay close to Saudi Arabia and the decision-making table is now. To grow Africa’s relevance on the international oil stage by showing level-headedness and cooperation in the face of a global crisis. If we take that route, we will come out of this stronger than ever.

NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of pan-African corporate law conglomerate Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.

Source: NJ: Ayuk: Underneath Coronavirus panic lies opportunity for African oil producers

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shutterstock

The novel coronavirus disease (COVID-19) outbreak, recently declared a pandemic by the World Health Organisation, has taken the world by surprise. The good news is that tremendous scientific and technological advances have permitted scientists to understand a lot about this virus in a short amount of time.

Within just two months of the first case, the causative virus has been identified, its genetic makeup has been determined, and detection methods have been optimised. Scientists have also found that there is more than one strain circulating.

Despite these rapid advances, there is still significant uncertainty. Scientists don’t yet fully understand its transmission route, although person-to-person transmission, through inhalation of droplets in the air, is the most common mode. Another uncertainty is its low detection rate, especially with mild or asymptomatic cases. A third is how weather could affect transmission.

Currently, Africa has very few cases of COVID-19 compared with most other parts of the world. The highest number of cases has been reported in Egypt (currently 126 cases). It remains unclear why this is so. But the trend has generated several kinds of reactions, such as doubts around the slow spread despite the weak health systems in most of the countries, and some attributing the low spread to a low level of urbanisation.

Other factors being cited include the fact that cases are more recent, giving countries more time to prepare, as well as a lack of testing capability.

There is also speculation that the virus has not spread because it cannot thrive in warmer regions, like much of sub-Saharan Africa.

The environment and respiratory virus transmission

Among the several environmental factors that influence the survival and spread of respiratory viral infections, air temperature plays a crucial role. Cold weather makes the respiratory system sensitive to infections. This is why people tend to suffer from respiratory infections during cold winter months. In tropical climates, influenza and respiratory viruses are transmitted more during the cold rainy seasons.

Despite the uncertainties surrounding its spread, the SARS-CoV-2 virus may be following this pattern.

Other members of the coronavirus family have displayed a certain degree of sensitivity to weather patterns. For instance, cases of the Severe Acute Respiratory Syndrome (SARS) were 10 times higher in lower temperatures than higher ones.

However, the effect of air temperature is also related to other factors, such as relative humidity as these viruses prefer low humidity.

Also, the Middle East Respiratory Syndrome (MERS) coronavirus was stable in air at low temperatures which could favour its spread. Despite this, the virus did not observe a seasonal trend but rather occurred sporadically. Other factors, such as animal (camel-to-human) transmission and weakened immune systems, also favoured its spread.

Temperature and SARS-CoV-2

A look at the temperature data of the most affected countries outside China – South Korea, Italy, Iran and Spain – shows that the mean monthly temperatures between January and March of 2020 range between 6 and 12 degrees Celsius.

In sub-Saharan Africa, most countries that have recorded cases of COVID-19 – such as South Africa, Nigeria, Senegal, Togo, Cameroon and Benin – had mean monthly temperatures of 20 to 32 degrees Celsius in this same period. Meanwhile, Algeria and Egypt – North African countries that have seen cases – had monthly temperatures between 11 and 17 degrees Celsius.

Therefore, previous coronaviruses spread more during the colder winter months. Also, there are marked temperature differences between the most affected (colder) and least affected countries (warmer) in the COVID-19 pandemic.

But this pattern alone cannot fully explain the current low number of cases in affected African countries.

The first reason is that following the onset of the outbreak in December in China, measures were taken to prevent the transportation of the virus to other places outside China. This allowed many countries to prepare for any new cases. Secondly, the cases in the African countries are recent, and the first affected persons have been quarantined. Thirdly, many countries do not have adequate capability to test for the virus.

These factors, together with the higher temperatures, could contribute to the apparent lower spread.

African countries need to prepare more

Now that the virus has made its way into Africa, countries on the continent need to be more prepared for greater action to contain the virus, especially if it follows a seasonal pattern.

For example, the peak circulation of flu in South Africa is in the winter season between April and July. In Senegal, the peak season is in the rainy season, from July to October. Many other African countries experience these peaks during the cold rainy season. This could mean that the preparedness of most African countries may soon be tested when these seasons come, especially as many more countries are confirming imported cases into the continent.

African countries need to strengthen their capacity in terms of identifying new cases. Health-care facilities and personnel need to be well equipped to manage identified cases. The general public needs to be sensitised on how to go about getting medical attention if they suspect any signs or symptoms. Personal and household hygiene practices using detergents, such as bleach, need to be encouraged to prevent possible environmental transmission.

The Conversation

Akebe Luther King Abia is affiliated with the Antimicrobial Research Unit, University of KwaZulu-Natal. He is also an Aspen New Voices Fellow, Class of 2020.

Source: COVID-19 in Africa: fewer cases so far, and more preparation needed

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Africa

Coronavirus will hit
African economies hard

By Richard Li While the number of COVID-19 cases in China is on the decline, there has been a drastic increase globally and various governments are scrambling to put together contingency plans to contain the coronavirus spread within their respective territories. The immediate fallout of this viral outbreak is the slowing down of global economic activities. To make matters worse, failing to control and contain this coronavirus can potentially lead to a global recession.

As for Africa, there are now at least 99 confirmed cases in nine countries with Egypt having the most cases, according the World Health Organisation (WHO) data, as of March 10th. While some African countries have suspended flights from China and blocked/put in quarantine travellers from there, most of the imported cases seem to be coming from elsewhere. Unfortunately, with this outbreak, the African continent is being hit by a double whammy with demand and supply shocks, that will definitely impede the recovery of the larger economies in the short term. Even if the number of COVID-19 cases in Africa is still relatively low, the impact on African economies should already be felt by now.

COVID-19 impact on the global outlook

The main finance news headlines are currently being monopolised by some of the major consequences of the coronavirus outbreak, like Brent crude prices crashing by about 24% to hit below $35 on March 9th as well as the American stock market index, the Dow Jones Industrial Average, slumping by more than 2,000 points and down by about 20% since its February 12th closing peak. However, since 2017, the global economy was already on a steady decline with major economies like China, Europe and Japan slowly decelerating. Even the American economy is also slowing down, after being boosted by the tax cuts from the Trump administration in 2018. Now with the spread of the coronavirus, the global economic outlook is looking grim and this is indeed not good news for the African continent.

Both the World Bank and the International Monetary Fund (IMF) are revising downward their global growth estimates. As a result, the African continent will not be spared and will definitely be hit hard if the COVID-19 outbreak eventually becomes a pandemic. Besides China, all other major economies that are Africa’s major trade partners, are not in any better shape. In Asia, the Japanese economy shrank by 7.1% in the fourth quarter of 2019 and is on the brink of a recession, whereas South Korea is not only trying to stimulate its economy with nearly $10 billion, but also battling a major outbreak of COVID-19 within its territory. Even growth in India, a major economic partner of Africa, decelerated to stagnate at around 5%.

As for the European Union (EU), its economy is stalling and risks falling into recession with its top three economies – Germany, France and Italy – stagnating and barely growing. In the last quarter of 2019, Germany barely grew while both France and Italy contracted. Adding on to its economic woes, Europe is experiencing a rapid increase of coronavirus cases and Italy is now under lockdown. For the United States (US), the Federal Reserve cut interest rates three times in 2019, 25 basis points each time. In addition, even if the US central bank did an emergency rate cut of 50 basis points at the beginning of this month to prevent an economic slowdown, the financial markets are expecting more drastic cuts. As IMF chief Kristalina Georgieva warned last October, the global economy is experiencing a synchronised slowdown. Making matters worse with COVID-19, a global recession may even happen. With no doubt, African economies will also be sucked into this maelstrom of global events, that will affect them negatively.

African exports affected by global slowdown

China is the largest trade partner of the African continent. The latest economic data from China shows that its purchasing managers’ index (PMI) for manufacturing and services sectors collapsed to 35.7 and 26.5 respectively in February (a PMI reading below 50 indicates contraction). Moreover, due to supply chain disruptions with the coronavirus outbreak, the Chinese exports fell by a significant 17.2% over the first two months of this year. Chinese imports also fell by 4%. In the short term, China is facing a slump in its growth and is also struggling to rev up its economic engine. As a consequence, Africa will face a twin shock of a declining demand for its commodities used in Chinese manufacturing as well as more expensive Chinese products.

With the Chinese government extending the Lunar New Year holidays as well as locking down the Hubei province and many other affected areas, it has created a domino effect within the global value chains. China is now a global manufacturing hub and the repercussions of the extended manufacturing shutdown are estimated to reach a $50 billion drop in global exports in February, according to the analysis by the United Nations Conference on Trade and Development (UNCTAD). The top three most affected economies are the EU, the US and Japan with an estimated output decline of $15.6 billion, $5.8 billion and $5.2 billion respectively. This means that the negative economic spiral affecting global manufacturing and trade will eventually impinge on the overall global growth, business confidence and investment. With the global slowdown, demand for commodities will drop and the financial markets are already re-pricing downward commodity prices. Being mainly a commodities exporter, the African continent will be hard hit. Except for gold, prices for most hard and soft commodities have declined over the last two months.

Ebola economic impact and now COVID-19

Besides the economic costs, Africa will have to incur significant costs in dealing with a potential COVID-19 outbreak within the continent. An important amount of funding will be required to deal directly with a public health crisis in terms of mobilising doctors, healthcare workers as well as needing the necessary medical infrastructure, including lots of medical and safety equipment. Africa is indeed familiar with deadly viral outbreaks with the ebola virus. The biggest ebola outbreak in 2014-2016 affected mainly three west African countries – Guinea, Liberia and Sierra Leone – infecting 28,610 people and causing 11,308 casualties, according to the WHO. Besides the human costs, the direct economic impact on these three countries was estimated to be $2.8 billion by the World Bank. With ebola in the headlines, the whole African continent also suffered from intangible and incalculable losses with Africa being perceived as a high risk investment destination.

As for COVID-19, there is no doubt that the virus will continue on spreading further in Africa and globally. While African countries should remain vigilant and not fall in panic mode, they must already start taking all precautionary measures to detect and isolate suspected cases, especially at border areas. Doing so, Africa will not only be able to avoid major coronavirus outbreaks, but also mitigate any potential economic losses.

Richard Li is a Partner with STEEL Advisory Partners, a management consulting firm that serves clients across industries. Having spent his working career in strategy consulting, he worked with various global clients and covers themes such as corporate strategy, transformation, digital innovation and risk management. He is an avid observer of world affairs and emerging markets, particularly the African continent.
 

Source: Coronavirus will hit African economies hard

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Africa, South Africa, AfroFuture, Egypt, Morocco, Ghana, Johannesburg, Accra, Cairo, Durban, Cape Town, Casablanca, Kenya, Pretoria, Angola, Luanda, Nairobi, Nigeria, Lagos
https://i0.wp.com/assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xODY4OTg3Ny85ODB4LmpwZyIsImV4cGlyZXNfYXQiOjE1NTQyNzEzNjh9.Ow_Fupf2NwVELdD3E4ExkZu68nmqeprJ4NjOCqjeNCg/img.jpg?w=1170&ssl=1

 


Africa’s 10 wealthiest cities:

1. Johannesburg (South Africa): $276 billion

 

2. ​Cape Town (South Africa): $155 billion


3. Cairo (Egypt): $140 billion


4. Lagos (Nigeria): $108 billion


5. Durban (South Africa): $55 billion


6. Nairobi (Kenya): $54 billion


7. Luanda (Angola): $49 billion


8. Pretoria (South Africa): $48 billion


9. Casablanca (Morocco): $42 billion


10. Accra (Ghana): $38 billion



source: https://bigthink.com/strange-maps/richest-cities-in-africa

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