Next Africa: G20 to IMF Give Poorest Countries Space to Breathe

Africa has been given some financial oxygen.

Urged on by French President Emmanuel Macron, the Group of 20 nations has called for a debt moratorium for the world’s poorest nations, many of which are in Africa.

That could prove essential to countries shuttering their economies to limit the spread of the coronavirus, with Nigeria, Uganda and Malawi among those to have imposed lockdowns. The financial problem has been compounded by a slump in demand for the commodities they produce as the whole world struggles to cope with the Covid-19 pandemic.

Africa would benefit from $44 billion in interest waivers this year as part of the $100 billion needed for an emergency stimulus, according to the United Nations’ Economic Commission for Africa. The International Monetary Fund has pledged $11 billion to 32 sub-Saharan African countries and the African Development Bank has set aside $10 billion.

There are caveats. To receive funding, nations must be up to date with their payments to the World Bank and IMF. That will mean some of the continent’s poorest countries, such as Zimbabwe, aren’t eligible. It’s also unclear whether multilateral institutions will forgo the $12 billion in repayments they are due. 

Overshadowing all that is the coronavirus itself. While Africa remains among the least-affected regions, it’s far from clear how devastating the pandemic will ultimately become for the continent. About 300,000 people in the region could yet die this year, even with assertive government measures, according to the United Nations.

Still, the financial gesture will go some way toward preserving the economic and social gains many African countries have made in recent years.

News & Opinion

Rate Cuts | South Africa’s central bank unexpectedly cut its benchmark interest rate to a record low of 4.25% to support the economy after the government extended a nationwide lockdown by two weeks. Namibia, Lesotho and eSwatini — all with currencies pegged to the rand — followed suit, while Mozambique and Mauritius added their own reductions.

Chocolate Slump | Cocoa processing is on the decline after the shuttering of retailers around the world reduced demand for chocolate. The downturn has been compounded by Ivory Coast and Ghana, the world’s biggest bean producers, which have imposed a premium of $400 a metric ton for a so-called living-income differential for the 2020-21 crop.

Glencore Feud | Zambia escalated a battle with Glencore, threatening to revoke the company’s copper-mining license and preventing the CEO of its local unit from leaving the country. Glencore has said it needs to close shafts due to falling metal prices, disrupted logistics and travel restrictions related to the coronavirus pandemic. The government disagrees.

Abandoned Airline | South Africa told its embattled national carrier not to expect more government funding as it struggles to stay in operation. South African Airways was already cutting routes and consulting on job losses before the coronavirus brought most global travel to a halt, and the absence of a fresh bailout leaves it starved of much-needed cash.

Cameroon Silence | While many African countries have imposed lockdowns to contain the coronavirus, the leader of one of the continent’s worst-affected countries has remained silent. Cameroon’s main opposition head said he wants a top court to declare a power vacuum because President Paul Biya hasn’t addressed the crisis. The 87-year-old was seen on social media meeting with the French ambassador to Cameroon today, his first appearance since March 11.

Past & Prologue 

Data Watch

Nigeria’s 2047 dollar-bond yield, which soared as high as 13.21% when oil prices collapsed in March, dipped back into single digits amid hopes a deal to reduce output would support the commodity. The bond rally proved short-lived, however, as it became clear the production cuts wouldn’t dent the global glut. The yield headed back into double digits on Thursday.

Coming Up

• April 20 South African cabinet meet about key priorities of the country’s economic-recovery plan
• April 21 Webinar about implications of the Covid-19 pandemic for African economies and development with Hafez Ghanem, World Bank vice president for Africa
• April 22 Ghana GDP and PPI 

Last Word

A Sudanese militant group that once drew international condemnation for leading a bloody anti-insurgency campaign emerged as the unlikely leader in the country’s fight against the coronavirus. Once feared as the ”devils on horseback,” the Rapid Support Forces have risen to near the top of Sudan’s transitional government after backing last year’s overthrow of former President Omar al-Bashir. They now run a quarantine center, disinfect the streets and distribute equipment and medical advice, all while enthusiastically promoting the measures on social media. One cartoon on Facebook shows its fighters squaring off against a monstrous fanged depiction of the virus clinging like King Kong to the Corinthia Hotel in Khartoum, the capital.

Source: Bloomberg