The year 2020 will, of course, be remembered for the Covid-19 pandemic. Many African countries have handled the public health effects of coronavirus well compared with neighbouring continents, with some 55 000 related deaths and 2 million recovered out of a population of just over a billion. This can be credited to quick action and leadership by the Africa Centres for Disease Control and Prevention (Africa CDC) and others. This was assisted by public support and a youthful population where about only 3% are over 65 and there are relatively few institutionalised homes for the elderly. Climate, prior exposure to other coronavirus strains and effective community health networks set up in response to contain other epidemics such as Ebola also clearly played a role.

Unfortunately, many African countries will be much more seriously affected by the socioeconomic consequences of the global economic slowdown triggered by the pandemic. Even before Covid-19 hit, an increasing number of African countries were indebted and financially stressed. African debt will become a greater global concern in 2021 as many African states remain the world’s poorest and most fragile and have been hard hit by the economic and financial costs imposed by the pandemic. 

In April, the World Bank’s development committee and G20 finance ministers endorsed the Debt Service Suspension Initiative (DSSI) which includes 40 African least developed countries (LDCs). This G20 initiative, backed also by the International Monetary Fund (IMF) and G7, did not provide any reduction in the net value of debt, but it suspended repayment to no earlier than 30 June 2021. 

The DSSI has made $5.4-billion in African debt owed in 2020 eligible for deferment. This, however, is only a fraction of the $13.6-billion in interest and principal owed by sub-Saharan African states to bilateral creditors (many of them are not part of the G20).

Bilateral debt management is also not the main debt burden in 2021. There is estimated to be $20-billion in private obligations, much of it owed to Chinese commercial creditors or Eurobond repayments. China, as a key lender to Africa, has provided its backing for the G20 plan but private creditors are not part of this plan and China has been reluctant to fully disclose all its loans. Talk of a Chinese debt-trap strategy in Africa is overstated, although Djibouti’s debt exposure to Beijing might have been partly the result of this because of its geostrategic location. 

 

 

Looking ahead

2021 will be a slow recovery year for many African states, with increased unemployment and growing debts and reduced liquidity to provide public services. A few countries are likely to struggle particularly:  Zambia –  which in November became the first sovereign-debt defaulter of the Covid-19 era – Angola and Namibia are badly exposed. Zimbabwe is already in debt arrears to the Bretton Woods institutions and rejected being an LDC so is not eligible for DSSI debt relief. 

A number of eligible African states, such as Angola, Congo-Brazzaville and Equatorial Guinea, have entered into programmes with the IMF. For such countries, hit by a sharp dow-turn in commodity demand, their overdependence on raw material exports has once again exposed their debt sustainability: Angola will in 2020 have reached a debt to GDP ratio of just short of 120%. 

The DSSI also has a key flaw. It treats debt as a liquidity issue, yet for many African countries it is a solvency crisis. More African states will turn to the IMF or have existing programmes extended to keep afloat and we should expect a strong call from Africa and from concerned rich countries for a round of bilateral debt forgiveness in 2021. 

 

African debt forgiveness could become a key agenda item for the Italian presidency of the G20 and the UK presidency of G7 in 2021. France and Germany have already signalled that they would consider this. This will not be simple, given that over the past decade African borrowing has expanded significantly to a constellation of private actors, but it is urgent. 

2021 will also see increased geopolitical rivalry for influence in Africa. This will include competition over generosity, ranging from positioning over debt forgiveness to providing Covid-19 vaccines. China is planning this through the Covax mechanism; the Russians via their Sputnik V vaccine; the UK via the AstraZeneca and University of Oxford vaccine; and the US via the Pfizer-BioNTech vaccine and others. Africa will also become of greater American focus under a Biden administration, including assisting Covid-19 recovery, but also for containing Russian and Chinese advances on the continent.

This will also be reflected via international summitry currently scheduled for 2021 with the second UK-Africa Investment Summit in January  (this time a virtual affair); the eighth Forum for China Africa Cooperation in Dakar; the sixth EU-AU summit in Brussels (postponed from 2020) and possibly a fourth India-Africa Forum Summit (also postponed from 2020). 

These international summits will focus on trade and investment but should also focus on combating poverty. The economic impact of Covid-19 has significantly slowed down poverty reduction in Africa. Already flatlining because of unequal and patchy economic growth, coupled with continued demographic growth, this remains a key challenge for Africa in coming years to unlock economies that provide sufficient and equitable growth for a youthful continent of 1.2-billion people. 

Democratic development – and stagnation

Sub-Saharan Africa’s 48 countries prior to Covid-19 featured several of the world’s fastest-growing economies and a burgeoning middle class, but also remained mired in some regions by debt, conflict and protests, and plagued by elites clinging to power.  Civilian-led reform movements toppled regimes in Algeria and Sudan in 2019 paving the way for ongoing messy transitions. Youth-led protests have clashed with government security forces, pushing for accountable government, such as the #EndSARS Movement in Lagos or the 11 November (Independence Day) demonstrations in Luanda. More protests should be expected in 2021.

 

There have been democratic advances in 2020. An independent court in Malawi overturned fraudulent presidential elections, resulting in a rerun that brought opposition leader Lazarus Chakwera to power. The Seychelles electorate voted for an opposition candidate for the first time since independence in 1976. These positive developments and smooth but fiercely contested elections in Ghana, resulting in the re-election of incumbent Nana Akufo-Addo to the presidency, offered hope for the health of democracy in Africa.  A smooth transfer of power in early 2021 in Niger hopefully occurs as President Mahamadou Issoufou steps down having served two terms, following presidential and legislative elections. 

Fourteen presidential or legislative elections are scheduled for 2021. There will be a few democratic advances and many set-backs where fiercely contested elections are heavily skewed in favour of incumbents. Some like Chad, Congo-Brazzaville, Djibouti and Uganda are expected to see the return of their long-standing leaders; others such as Cape Verde and São Tomé e Principe will be freely contested — Zambia’s elections will be fiercely contested

2021’s elections will continue to show a continental trend of mostly democratic stagnation. Incumbents were re-elected in Guinea and Côte d’Ivoire this year, following controversial redrafting of constitutions; elections in Tanzania were overtly oppressive and fraudulent. Flawed electoral practice in Mali contributed to a military coup in August, which toppled an unpopular government and has introduced an 18-month transitional process.

A year ago, Ethiopia’s Prime Minister Abiy Ahmed was lauded as Nobel Prize winner and a reformer, but his military action against the leaders of the Tigray region in November has unlocked a regional conflict that also involves Eritrea and will not be resolved militarily.

Conflict resolution

Resolving persistent conflicts continues to be a top priority for African security in 2021, whether in South Sudan, the Central African Republic, the Democratic Republic of the Congo or elsewhere. Covid-19 may have encouraged exploratory peace talks with Anglophone separatists in Cameroon but divisions within Cameroon’s regime appear to have since undermined progress. 

In 2020, countering Islamist-linked terrorism increasingly dominated Africa’s security agenda and will do so in 2021, from established networks like al-Shabab in Somalia and Boko Haram in West Africa, to widening threats in the Sahel and the emboldened Islamic State-affiliated efforts in northern Mozambique, also now spilling over into Tanzania. Meanwhile, long-standing violence between nomadic herders and sedentary farmers in West Africa and the Sahel continues to be largely overlooked.

African leaders are set to elect a new African Union Commission at the continental body’s next ordinary summit early in 2021. This new commission will have plenty on its plate: Covid-19 recovery, peace and security, and navigating geopolitics and economic recovery. 

Kick-starting the African Continental Free Trade Area (AfCFTA) that starts trading on 1 January 2021 will need to be a priority. This is an internationally significant moment for Africa, and although a long-term project, provides Africa an economic pathway for internal growth that is not entirely dependent on foreign direct investment or the exportation of commodities. The economic effects of Covid-19 on African economies is a reminder of why the success of the AfCFTA is strategic for Africa’s future.

Despite these challenges, 2021 could be an important moment for a fresh start, providing debt forgiveness to re-crafting Africa’s economic relationship with the global economy for greater pan-African prosperity and resilience for future generations.

Source - Mail & Guardian