Debt Crisis Looming for African Nations
As African economies grapple with the most efficient source of vaccines, they are simultaneously setting their eyes on a post Covid economic scenario of growth. No less than three countries have recently gone to the Eurobond market for debt issues, Ivory Coast, Kenya and Ghana. This is because of Janet Yellen’s pledge to keep US interest rates low and the growing revenue shortfalls in the near term for these countries. The big risk is if there is a sudden change in interest rates arising from inflationary fears. This could be a recipe for a debt service crisis in 2022.
In the meantime, G20 nations are showing signs of being more accommodative of debt standstill requests from African countries in the debt relief program. China, Africa’s biggest bilateral creditors is on-board the program as it has granted Angola a 3-year debt relief and plans to suspend Kenya’s debt repayment. This is a sigh of relief for African countries with huge debt stocks at a time of spiking Covid cases and growing insecurity. However, it just delays the inevitable, especially with the expectation that interest rates could climb in the near term.
Violence & Terrorism Pushing Back Growth in Africa
In addition to multidimensional poverty challenges and rising unemployment, the level of violence and terrorism in the Maghreb and Sahel region is now posing a major problem for countries like Nigeria, Mali, Niger and Cameroon. This could stall the economic recovery process and push the worst affected countries further into recession in 2021/2022.
This edition of the FDC Afriscope highlights some issues on industrialization and insecurity in Africa. It also provides interesting economic, social and political updates for your delight.
Do enjoy your read!