This article first appeared in my weekly column with the Business Daily on January 13, 2019
Last year was a dynamic year for Africa in both positive and challenging ways. The Africa Continental Free Trade Area (AfCTA) was effected; Nigeria showed signs of moving out of recession with risks of going back, South Africa dipped into recession and the growing debt burden of African governments was brought into focus. In terms of economic diplomacy, 2018 saw China announce a USD 60 billion package for Africa during FOCAC, the USA passed the BUILD Act which saw the creation of the International Development Finance Corporation, an agency that can invest up to USD 60 billion in the developing world; further the Trump Administration announced USA’s new strategy for Africa. The EU proposed a new Africa-Europe Alliance for Sustainable Investment and Jobs involving a 25 percent hike in the EU Africa budget for 2021-27 to about €40 billion. Given all these factors, what are the key focus points for Africa in 2019?
Firstly, the indebtedness of African governments will be watched in 2019. The pace at which African governments are accruing debt is causing concern. The IMF points out that Sub-Saharan Africa public debt was at 57 percent of its GDP in 2017, an increase of 20 percentage points in just five years. In other words, Africa as whole, owes more than half the value of its economic output (GDP). In terms of Kenya, in October the IMF raised Kenya’s risk of defaulting on debt repayments from low to moderate, forecasting Kenya’s total public debt will reach 63 percent of GDP in 2018. Rapid debt accrual by African governments juxtaposed with serious concerns about the mismanagement of public funds will be watched and be a key point of interest in 2019.
Secondly, the stakes of a geopolitical focus on Africa will be heightened in 2019. The three economically dominant regions in the world all have plans for Africa: the EU, USA and China. The EU continues to pursue bilateral deals and EPAs as it gears up for the Africa-Europe Alliance. The USA has both a new Africa strategy and new development financing capabilities. China has tweaked FOCAC with a facility for both SMEs and encouraging African imports into China. The basic point is that all three powers are learning and their strategy into Africa is informed by their new insights, for better or worse. Thus, enlightened African agency is needed in 2019. African governments will have to ramp up their economic diplomacy and negotiation capacity; African private sector will have the opportunity to use their agency to expand in light of the focus from three economically powerful regions; and the African public will need to continue to use their agency ensure they get fair deals given all the aforementioned dynamics.
Finally, internal African dynamics will be key in 2019. AfCTA is already indicating the potential of Africa as well as the issues Africa has with itself. The performance of South Africa and Nigeria will be in focus, even as the East Africa region continues to power African growth forward. Given the renewed focus on Africa, 2019 may well be a year where the complexities of Africa will be highlighted. Africa, like any other continent, is multidimensional and complex; 2019 may well be the year where this is truly better understood.
Anzetse Were is a development economist