Africa

1. Mining costs
2. Rising debt
3. Protect at all costs
4. Binance let-off
5. Backsliding
6. Another Bric

Also, and new funding for an African electric bus operator.

Welcome to Semafor Africa, where we’re reporting this week from the sidelines of the World Bank/IMF Fall meetings. As usual, with this event, there are plenty of discussions about reforming the global financial system. There are also a flurry of reports about the state of the global economy with a particular focus on emerging markets and developing economies —many of which are in Africa.

Some of those reports look at the sheer magnitude of debt load that many African countries have piled on over the last decade (see our chart below). The IMF has noted that the average debt ratio in sub-Saharan Africa has almost doubled in just a decade to nearly 60% by the end of 2022. Crucially in that period the region’s ratio of interest payments to revenue has more than doubled since the early 2010s. The average country is paying 12% of its revenue on servicing external debt payments.

New research argues that the IMF could help ease some of these challenges it identifies by deploying the special drawing rights program more strategically. “IMF members can vote to create new issuances of special drawing rights,” write Boston University’s Kevin Gallagher and University of Cape Town’s Abebe Shimeles. Of course, they acknowledge that SDRs are not an answer in themselves, but say: “our new research shows that special drawing rights can play an important role in establishing financial stability and enabling investments for development.”

🟡 Please join us today and tomorrow for Semafor’s World Economy Summit Fall in Washington DC and online. We’ll be speaking with leading African bank CEOs including Dr. James Mwangi of Equity Bank, Sim Tshabala of Standard Bank, and Abdulmajid Nsekela of CRDB Bank.

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Mining in Ghana linked to forest cover decline

The area of forest cover that Ghana lost between 2001 and 2020 attributed to mining activities, according to analysis of tree cover loss data from the University of Maryland and global mining studies. The studies revealed that about 2,500 hectares total tree cover loss is linked to artisanal small-scale gold mining. It occurred in tropical primary rainforests, threatening endemic species like the green-tailed bristlebill and the Tai Forest treefrog. Indigenous Peoples and local communities who live in and near forests often rely on them for food, water, fuelwood, medicine and cultural benefits. But small-scale gold mining has also been a source of livelihood for about 4.5 million people in Ghana, so now the focus has turned to the impact of poor working conditions and toxic pollutants, as well as accelerating deforestation.

The rising cost of debt

African countries have seen their external debt rise by 240% between 2008 and 2022, mainly due to an increased reliance on the sale of bonds, as well as borrowing from China and the World Bank.

In particular, Senegal, Rwanda, Mozambique and Ethiopia have seen tenfold increases in external debt, according to data by the Debt Relief for a Green and Inclusive Recovery (DRGR) project, a collaboration between Boston University’s Global Development Policy Center, Heinrich-Böll-Stiftung and the School of Oriental and African Studies.

The nature of these debts have been expensive due to high interest rates, saddling African governments with repayment liabilities that take away needed funding from social needs, especially healthcare and climate change adaptation, DRGR said. The group projects that 34 African countries will need “signif­icant debt relief” to unlock funding needed to meet the UN’s Sustainable Development Goals and Paris Agreement targets.

US lawmakers try to protect African diaspora council

A pair of Democratic lawmakers plan to introduce a bill on Friday to protect the future of the White House’s advisory council on African Diaspora Engagement, with an eye on the potential return of Donald Trump to the Oval Office.

The African Diaspora Council Act will be introduced by California Congresswoman Sydney Kamlager-Dove with lead co-sponsor and fellow Californian Sara Jacobs, who is the lead Democrat on the House Foreign Affairs Subcommittee on Africa. They said the bill would codify the year-old council and help prevent a future Trump presidency from dismantling or shifting resources away from African affairs or diaspora issues.

Kamlager-Dove, who sits on the House Foreign Affairs Committee, said it matters who is in the White House: “I saw when Trump was in office that he essentially had a zero Africa policy.” She said the US lost ground during the previous Trump years. “I think [the Biden] administration has been working really hard to play catch up, and we have seen an expanded influence from other countries.“

If passed, the act will ensure that the incoming administration does not consider political affiliation when appointing members to the council. It will also mandate that the Secretary of State consult with foreign relations committees on Capitol Hill while selecting representatives for its council. The bill, among other things, also stipulates that the Secretary of State will be the primary channel for advising the president, thereby moving responsibility away from the White House.

Nigeria drops charges against Binance official

A Nigerian court ordered the release of Tigran Gambaryan, the Binance executive imprisoned in the country since February, after prosecutors dropped charges against him. Gambaryan had been charged with laundering more than $35 million in connection to a case against the crypto trading platform Binance, which the government blamed for destabilizing its currency.

Nigeria’s Economic and Financial Crimes Commission (EFCC) withdrew the case against Gambaryan and said the decision would allow him to access medical treatment abroad. Gambaryan and his family had previously raised concerns over his deteriorating health while at Nigeria’s Kuje Correctional Center in Abuja.

The commission plans to proceed with the case against Binance without Gambaryan in the dock. Both Gambaryan and Binance had denied all charges brought against them in separate proceedings.

Without offering details, EFCC lawyer Ekele Ihenacho disclosed that diplomatic arrangements had played a role in securing Gambaryan’s release. Gambaryan is a US citizen and former law enforcement officer, who was working as head of financial crimes compliance at Binance at the time of his arrest. The company said Gambaryan left Nigeria on Thursday to return home to his family.

In its tax evasion case against Binance, Nigeria is seeking $10 billion in penalties. It accuses the crypto platform of facilitating the flow of around $26 billion in untraceable funds in 2023, which purportedly contributed to the naira falling to record lows against the dollar.

— Martin K.N. Siele

Africa’s governance improvement has “stalled”

Deteriorating security conditions in several African countries are driving a decline in overall governance and democracy on the continent. This is according to the latest edition of the Ibrahim Index of Africa Governance, which considers aspects including rule of law, human development, participation and inclusion to track trends in the continent’s governance.

The overall governance performance in 21 countries, hosting 47.9% of the continent’s population, was worse in 2023 than in 2014. Eleven of them, including Burkina Faso, Eswatini, Guinea, Mozambique, Nigeria, Sudan, Tunisia, and Uganda — recorded worsening performance over the second part of the decade.

Conflicts in the Sahel including in Sudan and Burkina Faso contributed to the fall in security and rule of law, driving a larger overall decline. “After years of steady progress, Africa’s overall governance has stalled,” wrote Mo Ibrahim, the Sudanese-British chair of the Mo Ibrahim Foundation.

Up to 33 countries hosting just over half of the continent’s population, however, recorded progress in overall governance over the past decade. 13 of them, including Congo Brazzaville, Côte d’Ivoire, Egypt, Malawi, and Zambia — recorded accelerating progress in the second half of the decade.

— Martin

BRICS takes African turn

African leaders joined their counterparts at the 16th annual BRICS Summit in Kazan, Russia, this week as the alliance, challenging the Western political and economic hegemony, seeks to expand.

Egypt’s President Abdel Fattah el-Sisi and Ethiopia’s Prime Minister Abiy Ahmed were officially welcomed into the club, joining Brazil, Russia, India, China, and South Africa in the expanding group. Iran, Saudi Arabia, and the United Arab Emirates were also formally welcomed.

President Cyril Ramaphosa reiterated concerns about military aggression by Israel against the people of Gaza, and maintained that South Africa supported a two-state solution. He also urged the BRICS members to deepen financial and economic co-operation as they seek to create a multipolar global order.

Egypt’s El-Sisi highlighted escalating regional and international crises, while Abiy called for more “intra BRICS trade, investment and tourism” to enhance economic growth.

Congo Brazzaville’s President Denis Sassou Nguesso was also present, alongside other leaders invited by President Putin.

Last year, BRICS members announced plans for a common currency as they move towards de-dollarization and de-centering from the United States’ dominance in global financial architecture.

— Muchira Gachenge

Governance

🇨🇲 Cameroon’s President Paul Biya on Tuesday announced changes in the country’s defense forces with new appointments, a day after returning from a long stay abroad, according to several decrees read on state radio. His non-appearance in public for more than a month had sparked speculation about his health.

Economy

🇷🇼 Rwanda will have access to $185 million in funding from the IMF upon completion of a fourth review by the fund’s executive board.

🇸🇴 Somalia has unveiled the Badmaal marine welfare project funded by the World Bank to the tune of $50 million in a bid to tap into East Africa’s $2 billion fisheries market, and empower coastal communities.

Deals

🌍 African electric bus operator BasiGo has raised $42 million in new capital. It consists of $24 million in equity led by Africa50 and $17.5 million in debt facilities from British International Investment and the US Development Finance Corporation.

🇰🇪 Kenya’s Equity Bank will access a $20 million risk-sharing facility form the International Finance Corporation, an arm of the World Bank, to boost lending to the country’s small businesses.

🇪🇬 Egypt’s state-owned United Bank is set to list on the Egyptian Exchange in Cairo today (Oct. 24), at a price that will value it at about $113 million.

Earnings

🇳🇬 Unilever Nigeria reported a 46% rise in turnover to 103.8 billion naira ($63.2 million) in its unaudited interim report for the nine months period ended Sept. 30.

Elections

🇲🇿 The European Union observer mission in Mozambique said that there were irregularities and “unjustified alteration” of election results at some polling stations for the Oct. 9 presidential and parliamentary elections.

🇹🇳 Tunisia’s President Kais Saied was inaugurated for a second term following his reelection with 90.7% share of the vote on Oct. 6.

🇬🇦 Gabon is set to hold a referendum on Nov. 16 on a proposed new constitution as it draws closer to a return to civilian rule, the transitional government said.

Geopolitics

🇸🇩 The Russian embassy in Sudan said it was investigating reports by Sudan’s paramilitary Rapid Support Forces that it had shot down a cargo plane with Russian crew who were said to be on a mission to deliver equipment and medicine to the army-held city of el-Fasher.

Madagascar’s Isalo National Park might have been home to a community from Persia who belonged to the Zoroastrianism state religion of the Persian Sasanian Empire. New archeological evidence shows that part of the Teniky site in the park consists of rock-cut architecture that could be the work of a community with Zoroastrian origins. Researchers used high-resolution satellite images revealing the Teniky site was much larger than previously known, and that there were more terraces and stone walls on a hill to the west. More archeological evidence consisting of pieces of ceramic items of southeast Asian and Chinese origin found there have been dated by a specialist to the 11th to 14th centuries AD, which researchers said pointed to possible Indian Ocean trade networks at the time.

• US intelligence warns of foreign election interference.
• Apollo, SoftBank eyed giant AI fund.
• One big loophole threatens the global energy transition.

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Happy 60th Independence Day to the people of Zambia!!! 🇿🇲

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— Yinka, Alexis, Alexander Onukwue, Martin Siele, and Muchira Gachenge