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Vol 64 No 1

Published 5th January 2023

How the polycrisis will play out

A succession of political, economic and international structural changes will shake the continent amid a global downturn

With a third of the world, including many African economies, forecast by the IMF to go into recession, unsustainable debts with all their socio-political consequences will take centre stage this year. A deadly combination of rocketing western interest rates, hangovers from pandemic economics, the spillover from Moscow's war in Ukraine, spiralling food and fuel prices, and vulnerabilities to climate shocks are forcing reforms on the international system. Raising serious sums to finance energy transitions in Africa will move up the agenda.

Serial debt meltdowns in economies in Africa, South Asia and Latin America will not be enough to wobble the global market system, but they will compel a rethink of the financing capacity of the international financial institutions, the IMF, the World Bank and regional development banks.

In the short term, that will mean more IMF bailouts, more debt restructurings and tougher questions being asked about Africa's development finance strategy. The year started with the World Bank, on orders from the United States treasury, launching a plan to reform its operating model and sharply boost its capital resources. Days earlier, the Bank's chief economist conceded that the current case-by-case system of dealing with developing country debt crises was outdated and inadequate.

Announcing on 19 December that it would suspend most foreign debt payments, Ghana is the latest country to hit a financing impasse, after Zambia, Ethiopia and Chad. The difference is that Ghana was one of Africa's more dynamic and diversified economies. Officials in Nigeria, Kenya and Angola are watching Accra's next moves carefully.

Africa should get a louder voice in international negotiations over development finance reform this year, with China and the United States backing the African Union's (AU) full membership of the G20. Piqued by the diplomatic battles over Russia's war in Ukraine, the US is also backing permanent seats on the UN Security Council for Africa and Latin America.

Devolved responsibility
The quid pro quo is that African institutions will be expected to do more – by their own people and other organisations in the international system. Once on the G20, the AU will face louder questions about its silence over the crises in Cameroon's Anglophone region, Tunisia's gallop towards autocracy, Libya's recurring civil war, electoral violence in Zimbabwe and the insurgency in northern Mozambique. That could amplify repressed voices in those states, long campaigning for change.

Responsibility for the polycrises – droughts, conflict and financial crashes – in the Sahel and the Horn will increasingly devolve to regional organisations such as the Economic Community for West African States and the Intergovernmental Authority on Development. In both areas, the European Union and the AU are pulling in their horns.

How the regional organisations develop will depend on those governments with the most legitimacy, credible elections and functioning economies. This year, 17 countries are due to hold national elections, including Nigeria, Congo-Kinshasa and Zimbabwe, as well as Liberia and Sierra Leone.

All are struggling with unprecedented economic pressures and multiple security crises in the cases of Nigeria and Congo-K. That makes the elections vulnerable to political violence, perhaps triggering authoritarian responses. Few think that serious change in an economy with inflation at over 200% and mass precarity is possible in Zimbabwe until the ruling party loses power. That question will loom large over this year's elections.

Harsher conditions could also prompt more robust popular resistance, reminiscent of the North African spring a decade ago, against attempts to crack down on dissidents and cover up state-sponsored malfeasance. That has played out in South Africa, Nigeria, Ghana and Angola in recent months.

Across the continent, many young people share a sense that the trajectory of more credible elections, free media and organisational rights should be reinforced against the authoritarian tendencies of incumbent powers. Civil society organisations are growing in organisational and advocacy skills honed via the digital economy. They will be squaring up against wily securocrats who are sharpening their own cyber-war skills as pressures mount on their regimes.

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