African coronavirus cases will soon reach the one million mark based on the current trajectory of fast rising community transmissions. Prevalent economic optimism and hopes for a recovery next year seem unfounded as budget deficits spiral and new debt obligations balloon. Without further budgetary support, some of Africa’s largest economies are set to default on loan obligations in the coming year.
As COVID-19 continues to take an economic toll across the continent, many African states are increasingly eyeing the re-opening of their borders as a means of bolstering tourism and business revenues. However, international travellers will now face a range of new requirements and restrictions at African ports of entry. We assess the measures in the ten largest economies.
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.