Africa was looking forward to a renaissance in continental trade through the widely anticipated implementation of the landmark African Continental Free Trade Agreement in 2020. However, the onset of the coronavirus coupled with entrenched political and security barriers to trade have offset this vision and dealt the heaviest blow to the continent’s economy in 25 years.
The G-20 and Paris Club moratorium on loan servicing faces rejection by many African governments that seek more extensive debt relief measures. Meanwhile, private creditors warn that the G-20 proposal risks unnecessary costs and will thwart future access to capital. EXX Africa explains which countries are eligible for debt relief and highlights the examples of Nigeria and Kenya to demonstrate that the one-size-fits-all approach may not be effective in avoiding defaults.
Despite rating agency resistance, Africa wants to convert some of its debt into longer-term instruments in order to head off any risk of default. The extreme instance of Zambia demonstrates the urgency for debt distressed African countries to join a continental effort to restructure loans. Without such an approach, some of Africa’s largest economies will almost certainly default this year.
In the absence of global leadership, the IMF, World Bank, and African multilaterals are taking the lead in supporting Africa’s response to the coronavirus and the continent’s first economic recession in 25 years. While G-20 nations and Paris Club creditors have agreed to suspend debt service payments for Africa’s poorest countries through the end of the year, pressure is building for further interest suspensions and even complete loan write-offs. EXX Africa delves into the multi-faceted issue of financial support for the world’s most vulnerable continent.
Over the past month, the Sahel and Mozambique have seen some of their most brazen and deadliest militant attacks; peace agreements in East and North Africa have been placed on the backburner; Chad has threatened to pull out of regional security forces; and xenophobic violence has occurred in Uganda. COVID-19 is exacerbating political and social instability across not only the continent’s conflict zones but potentially its urban centres as well.
The collective response to the coronavirus pandemic has highlighted the consequences of the world’s current economic model, glaring discrepancies in development, and lack of progress on sustainable development goals, including mitigating the effects of climate change. EXX Africa assesses the probable impact of the pandemic on Africa’s role in developing renewable energy sources and identifies new opportunities for private investment in the post-pandemic era on the continent.
Africa has taken great strides in improving access to energy over the past decade where up to 44 percent of the population now has access to electricity, up from 39 percent in 2015. As the Africa Energy Indaba is held in Cape Town this week, we review which regions are likely to reach the 100 percent milestone by 2030 as per the UN Sustainable Development Goals and the challenges that remain.