Africa

🇳🇬 Airport workers in Nigeria began a two-day strike on Monday that left thousands of travelers stranded following the cancellation of flights. Employees from across seven trade unions are demanding better working conditions. They blocked access to the country’s largest airports, in Lagos and the capital, Abuja, on the first day of the strike yesterday.

🇬🇭 The International Monetary Fund said it would not ask its board to approve a $3 billion bailout package for Ghana until the West African country addresses its domestic debts. The debts in question include money borrowed from local banks, pension funds and insurance companies. The demand has “opened a can of worms” because in future restructuring elsewhere “is going to have this issue hanging over it,” a debt portfolio manager tells the Financial Times. Ghana and the IMF reached a preliminary bailout agreement last December.

🌍 Italy’s Prime Minister Giorgia Meloni announced an African energy cooperation deal during talks with officials in Ethiopia over the weekend as part of Rome’s so-called “Mattei Plan”. The plan is a strategy by Meloni’s far-right government to position Italy as a major energy hub and curb African migration to the country. Meloni met with Ethiopian Prime Minister Abiy Ahmed Ali, African Union President Moussa Faki Mahamat and Somali President Hassan Sheikh Mohamud during her trip.

🇹🇿 Tanzania signed agreements worth $667 million yesterday with three Australian companies — Evolution Energy Minerals, Ecograf and Peak Rare Earths — to mine rare earth minerals and graphite. Tanzania will have a 16% stake in each of the jointly established companies that will mine the minerals used in consumer electronics, electric vehicles, smart phones, renewable energy and military equipment.

🇿🇦 A bill that will allow independent candidates to contest provincial and national elections was signed into law by South Africa’s President Cyril Ramaphosa yesterday. Many analysts predict the ruling African National Congress (ANC) will suffer its worst performance since the end of apartheid in 1994 in next year’s general elections. Support for the ruling party could fall below 50%, forcing it to rely on a coalition to stay in power.

The estimated cost to construct the Ndayane deep-water port in Senegal. The project is a joint venture between United Arab Emirates-based Dubai Ports World and Senegal’s Autonomous Port of Dakar. Construction finally started this month after delays following a foundation stone-laying ceremony in 2021. The project’s first phase will include the construction of a 5-kilometer shipping channel and a container terminal with an 840-meter quay. The next phase includes another quay of 410 meters and plans to build an industrial economic zone near the port and Blaise Diagne International Airport.

Africans want the global financial system overhauled

THE NEWS

African countries are pushing for greater influence at the World Bank and International Monetary Fund to prioritize the needs of developing countries grappling with one of the harshest economic environments since the 2008 financial crisis.

“It is time for the world to take action and create a more inclusive global financial system that works for all nations,” said Ghana’s finance minister Ken Ofori Atta, in a speech in Washington D.C. last week. “To start, Africa must have a seat at the table in the global multilateral system.”

About half the economies in sub-Saharan Africa face  a triple whammy this year of a funding squeeze, escalating public debt, and double-digit inflation.The inability of developing countries to access alternative sources of funding is due to the rapid tightening of global monetary policy sparked by wealthier countries trying to combat rising inflation. It has also been aggravated by a US-dollar effective exchange rate reaching a two-decade high last year, which has worsened the burden of dollar debt service payments.

Calls to reform the so-called Bretton Woods’ financial institutions have grown louder in recent months as the mounting debt problem threatens to wipe away socio-economic gains of the last 25 years. The process to restructure distressed debt has been held up in countries including Ghana and Zambia, where China, a key bilateral lender, has so far been reluctant to take a “haircut” without the World Bank doing so too.

African finance ministers and their teams want the World Bank and the IMF to move quicker and offer much larger support than seems possible under the current order. There are also concerns that the efforts to reform the World Bank, with an increased focus on climate change, will deprioritize poverty alleviation and end up benefiting high and middle income countries rather than low income countries. South Africa’s finance minister expressed concern at the bank’s proposed wider remit earlier this year.

YINKA’S VIEW

The biggest issue on every African finance ministers’ mind during the Spring Meetings last week was the risk of a debt crisis in the region. Even if you were one of the few sub-Saharan African countries not on the official distressed debt or high risk list, you would have to be concerned because there’s a real risk of contagion, certainly when it comes to perception.

I moderated the Atlantic Council event where Ghana’s Ofori-Atta pulled few punches about the ineffectiveness of the World Bank and other multilaterals in this critical moment. He said the system was failing to solve problems of eliminating poverty and boosting shared prosperity “at the scale and speed that is required.”

Speed and scale were the refrains heard throughout the Spring Meetings last week, particularly when it came to dealing with Africa’s challenges. IMF’s Africa director Abebe Selassie, who told me he “remains optimistic” about sub-Saharan Africa’s resilience, did not sugarcoat the difficult choices some African governments will have to make as debt payments are weighed up against both social and physical infrastructure necessary for development. He also acknowledged that more needed to be done to overcome the funding squeeze his report highlighted.

“We typically rely on our richer members to provide us with subsidies and resources that we can then send on to the region but that’s been constrained,” Selassie told me in an interview. “With all the other sources of financing dried up, it’s all the more important that this is available for countries to avoid a grim outlook.”

Which brings us back to the need for reforms. Much of the reform that has been proposed so far hasn’t been focused on real development priorities such as debt system reform.

One of the more notable features of the current system, as the chart above shows, is how little influence is wielded by the countries that need the support the most. This is what Ofori Atta meant with his call for a “seat at the table”. Perhaps it’s unsurprising that wealthy countries who foot the bill make the significant decisions in how the system works. But, in an increasingly multipolar world with the rise of other financial partners including China, Turkey, and the Gulf nations among others, African governments who are trying to develop their countries will be less likely to accept the status quo.

Room for Disagreement

Major reforms will be slow and steady and many of the Bretton Woods institutions’ shareholders will be in no hurry to overhaul the current system, explained Amin Mohseni-Cheraghlou, a macroeconomist at Atlantic Council. “We can expect debt forgiveness and restructuring to happen in some shape and form, especially for low-income economies and those with strategic importance in the continent,” said Mohseni-Cheraghlou.  “However, having ‘a seat at the table’ is not going to happen within the next few years because it goes to the core of the governance structure of these Bretton Woods institutions unless major changes in that structure take place, which is very unlikely.”

The View from Comoros

One of the reasons there have been calls for the reform of the Bretton Woods’ institutions is the growing influence of China, whose own institutions have become major lenders to developing countries. At the same time, the U.S. is seeking deeper engagement with the continent.

“Africa should not take sides with one of these blocs,” Mze Abdou Mohamed Chanfiou, the finance minister of Comoros, which is also the current chair of the African Union, told a press conference. “Africa works with both of them; the US and China. Africa doesn’t want to be a continent in the middle of this decoupling.”

NOTABLE

• Atlantic Council’s Bretton Woods 2.0 Project examines challenges facing the World Bank, IMF, and World Trade Organization in research papers and data visualization to reimagine the governance of international finance institutions.

Nigerian digital bank Kuda quietly restructured its executive team last week by letting go of Elena Lavezzi, its chief strategy officer hired last August, two people familiar with the matter told Semafor Africa. Lavezzi was tapped to drive Kuda’s expansion beyond Nigeria and London. She had led Southern Europe operations for Revolut, the British digital bank, and helped launch Uber in Milan in Italy. Kuda did not immediately respond to a request for comment.

Companies providing alternative energy to businesses and households in Africa have received $2.4 billion in investment since 2015, according to data compiled by Briter Bridges, a consultancy that tracks funding on the continent. Of the top five beneficiary companies, only M-Kopa — a provider of solar-powered home devices — is based in an African country (Kenya). Cleantech companies tend to rely on development finance sources for funding: the US African Development Foundation, and Belgium’s ElectriFI have made the most investments, Briter said.

Cassava Technologies, an internet and data services company, said it will invest 4.5 billion rand ($250 million) in South Africa through its existing businesses. Cassava owns Liquid Technologies, a fiber network provider, and cloud storage service Africa Data Centres which operates in six countries. Chief executive Hardy Pemhiwa announced the pledge at an investment conference in South Africa, saying Cassava wants to “partner with the government to drive economic development and create jobs.”

— Alexander Onukwue

Sudan conflict poses risks beyond its borders

→ What’s happening? Sudan’s army and a powerful paramilitary force are fighting in much of the country with airstrikes and artillery fire concentrated in the capital, Khartoum, and nearby cities.

Fighting broke out on Saturday between the army and the Rapid Support Forces (RSF) paramilitary group.

→ What’s behind the conflict? The fighting is the culmination of a power struggle between two generals: Khartoum’s army chief, Lt. Gen. Abdel Fattah al-Burhan, and RSF commander Lt. Gen. Mohamed Hamdan Dagalo, who is better known as Hemedti. The pair seized power after toppling long-standing dictator Omar al-Bashir in a 2019 coup. The military negotiated a plan to move to a democratic government after unseating Bashir following mass demonstrations demanding civilian rule.

Burhan heads the transitional government’s ruling council. The RSF, led by his deputy Dagalo, was due to merge with the army as part of the internationally backed transition plan to pave the way to elections but the two generals have argued over the makeup of this future military body.

→ Why does Sudan matter? The mineral-rich north-east African country — whose resources include gold, natural gas and iron — is at the center of competing interests in the region. It borders the Red Sea, the Sahel and the Horn of Africa, putting it in a prime position for trade with central African countries, north Africa and Gulf states.

→ What’s at stake? Prolonged violence could further destabilize a volatile sub-region. Neighboring countries including Ethiopia, Chad and South Sudan have been hit by political unrest in recent years.

“The fallout from the generals’ battle has huge geopolitical implications,” writes Semafor’s security editor Jay Solomon. He points out that Russia is in talks with Khartoum to build a naval base on the Red Sea and the Kremlin’s paramilitary Wagner Group helps Dagalo’s forces mine gold in the country, with some of the proceeds returning to Russia.

Saudi Arabia and the United Arab Emirates are major investors in Sudan, Israel has forged diplomatic relations with Khartoum in recent years, and Egypt is a major backer of the country’s armed forces.

— Alexis

Samaila Zubairu is CEO of Africa Finance Corporation, a multilateral lender focused on infrastructure projects on the continent. He describes the ‘Africa prejudice premium’ as the difficulty of attracting private capital to the continent and the higher cost of raising capital in international capital markets due to the perception of higher risk.

• Coastal states along the Gulf of Guinea continue to experience varying degrees of political instability, making them attractive targets for Islamist insurgents. The U.S. enacted the Global Fragility Act to counter expansion efforts by jihadist groups that have established strongholds in landlocked Sahelian countries. However, not enough attention is being paid to the spread of jihadism in Nigeria, according to a study by conservative U.S. think-tank the Hudson Institute. Its authors argue that links between Nigeria’s jihadists and warlords cannot be ignored when seeking long lasting security solutions in the sub-region.
• The Associated Press tracked the journey of would-be migrants, whose boat had drifted all the way from West Africa to the Caribbean with their bodies. It was one example of the thousands of West African migrants who perish in the Atlantic each year trying to cross to Europe. The International Organization for Migration’s records show at least 1,109 people died or disappeared trying to reach the Canaries in 2021 — the highest number on record. Europe’s efforts to stop crossings on the Mediterranean Sea has been partly blamed for this. Migrants escaping economic disruption return to the more dangerous Atlantic route from northwest Africa via the Canary Islands instead.

Grammy Award-winning Senegalese singer Baaba Maal and Malian singer and Sahel activist Inna Modja have joined forces with the U.N. Convention to Combat Desertification (UNCCD) as Goodwill Ambassadors. Maal said he’s proud to use his music and influence to fight against desertification, land degradation, and gender inequality. “By empowering women and ensuring equal opportunities, we can shape a sustainable and just future for our planet.” According to a UNCCD report, the number and duration of droughts has risen by 29% since 2000.

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— Yinka, Alexis, Marché, Alexander, and Muchira