Next Africa: Ethiopia faces new crisis

Welcome to Next Africa, a weekly newsletter where the continent is now and where it is going.

First there was a war, now Ethiopia is facing a debt crisis.

The nation’s request to restructure it external debt under a Group of 20 program highlights how much the circumstances of the country and Prime Minister Abiy Ahmed have changed in just over a year.

In 2019, Abiy won the Nobel Peace Prize to end two decades of conflict with Eritrea. After coming to power in 2018, he was hailed for his commitment to opening up the economy and creating more space for democratic expression.

The coronavirus outbreak and the war with the rebellious Tigray region have suffocated him. Little progress has been made in privatization and civility casualties and displacement in Tigray have internationally condemned the leader of one of Africa’s fastest-growing economies.

The country is now worried about meeting its debt obligations and the announcement that it is discussing liabilities with official lenders has caused panic among private creditors. The country’s Eurobonds hit a record high last week.

“The World Bank has stepped in to fill the gap” in the past, said Mark Bohlund, a senior credit research analyst at REDD Intelligence. This “becomes a political challenge after the alleged human rights abuses committed during the war in Tigray,” he said.

Currently there is no immediate exit for Abiy.

The coronavirus has reduced the demand for horticultural and textile exports from the country and tourism has stopped.

The war, which threatens to crawl into guerrilla form resistance, has not helped.

News and opinions

Inoculation of Africa | Covax, the program that seeks equitable access to coronavirus vaccines, has allocated millions of AstraZeneca shots to African countries, with the first deliveries scheduled for late February. Meanwhile, Moderna offered to supply its vaccine to South Africa, in what would be first such agreement with an African nation. The largest in South Africa companies are in talks with the government to help facilitate national vaccination in an estimated $ 802 million program.

Automatic increase | Ford Motor Co. will launch $ 1.05 billion in South Africa, his the largest investment in the country. The vehicle manufacturer, which is shrinking in other regions, including Brazil and Europe, will upgrade the Silverton plant near the capital, Pretoria, to an annual capacity of 200,000 units and create about 1,200 direct jobs. Separately, Rolls-Royce plans to do so expand into Africa to grow the division of power systems after the coronavirus derailed its main business of wide-body jet engines.

Enigmas of sanctions | Several Democratic House lawmakers are urging Treasury Secretary Janet Yellen reversing the Trump administration’s decision to soften sanctions on Israeli billionaire Dan Gertler. The US sanctioned Gertler and his companies in 2017 for allegedly corrupt mining and oil operations in the Democratic Republic of Congo. But in his final days in office, President Donald Trump’s Treasury Secretary Steven Mnuchin issued a license that allowed Gertler and his companies to resume business until January 2022.

WTO work | Former Nigerian Finance Minister Ngozi Okonjo-Iweala remains as the only candidate for the World Trade Organization’s best job, after South Korea’s trade minister withdrew her candidacy to head the institution. Yoo Myung-hee’s retirement comes after some former U.S. government officials urged President Joe Biden to approve Okonjo-Iweala after the Trump administration blocked his selection. The opposition stopped the selection process because WTO decisions are made on the basis of consensus.

State acquisition | After acquiring the local operations of Glencore and Vedanta in the last two years, Zambia does not want to take over more mining companies nor does it plan nationalize the industry, according to Finance Minister Bwalya Ng’andu. There has been fear of a new wave of government acquisitions following statements by President Edgar Lungu in December that the second African copper producer wanted “significant stakes” in unspecified mines. Other miners operating in Zambia are First Quantum Minerals and Barrick Gold.

Past and prologue

Data visualization

• Absa’s South African purchasing managers ’index rose to 50.9% in January, from 50.3% in December. It was the best January recorded by the index since 2015.
• Ghana’s central bank left its key interest rate unchanged at 14.5%. The rate remained at almost a nine-year low for a fifth straight meeting as inflation fell above the target range.

Going up

• February 8 Mauritius January inflation, Djibouti’s presidential election, Central African Republic holds second round of parliamentary elections
• February 10 South African business confidence index and Ghana inflation in January
• On February 11, the South African president delivers the speech on the state of the nation, South African mining production and December manufacturing production data

Last word

The name of rhinos killed by poachers in South Africa, which has the world’s largest animal population, fell 33% last year, in part because coronavirus blockages reduced incursions into game reserves. Some 394 rhinos died from their horns, which are smuggled to East Asia, where they are believed to cure cancer. South Africa has about 20,000 white rhinos and some black rhinos. Most animals live in the Kruger National Park, an Israeli-sized reserve located on the border with Mozambique. Of the dead rhinos, 245 were in the park.