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The Africa Confidential Blog

  • 23rd March 2020

AFRICA/CORONAVIRUS: UN's Economic Commission for Africa calls for $100 billion cash boost and suspension of debt-repayments to counter pandemic

Patrick Smith

As the effects, direct and indirect, of the coronavirus pandemic course across Africa, we want you to know that our correspondents on the ground will be producing detailed reporting on the medical, political and security developments as well as the economic risks and consequences.

We will also report on the responses of the international system, the UN agencies, the multilateral development banks, the financial sector and major companies to the unfolding crisis. At the same time, we will continue our coverage of national politics and economies as countries and institutions adapt to the new conditions. Most importantly, we hope this letter finds you safe and well.

AFRICA/CORONAVIRUS: UN's Economic Commission for Africa calls for $100 billion cash boost and suspension of debt-repayments to counter pandemic

After a virtual meeting chaired by the finance ministers of Ghana and South Africa and convened by the UN's Economic Commission for Africa on 19 March, the body has called for a $100 bn stimulus for the continent – of which $44 bn could take the form of a waiver of interest payments due this year, and perhaps beyond.

Finance ministers at the meeting, attended by an Africa Confidential correspondent, explained how the growing pressure on budgets, currencies and reserves could hold back the region's response to the global public health emergency.

This suspension of interest payments, said the ECA on 23 March, should cover both official debt owed to governments and multilateral institutions as well as to holders of sovereign bonds. Led by Vera Songwe, a Cameroonian economist and former senior official at the World Bank, the ECA's analysis will be taken seriously by the markets.

This call by the ECA focusses attention on the financial damage the pandemic has triggered. It's estimated that African countries have in the past month lost $29 bn from the shutdown of tourism and aviation, cutbacks in mineral, agricultural and oil exports, worsened by a wave of capital flight.

The ECA forecasts $10.6 bn of extra health-spending across Africa, followed by re-evaluation of national budgets. After staunchly resisting market pressures for over two years, Nigeria's central bank devalued the naira by 15% –N360 to the US dollar – on 21 March. Traders expect a further downwards shift towards around N400 to the dollar.

On current trends, debt-servicing costs are set to spiral. Yields on Zambia's Eurobonds have shot to 46.5% and Angola faces yields of 23.4% on its Eurobonds, triple the rate of a month ago.

African leaders have been quicker to impose travel bans and restrictions than their European counterparts, and in all but a handful of countries the number of confirmed cases remains low. But the World Health Organisation chief, Tedros Adhanom Ghebreyesus, last week urged African governments to 'wake up' to the seriousness of Covid-19.

Governments in Egypt, South Africa and Tunisia have already deployed the army to boost the response to the pandemic. Cities such as Nairobi are fast emptying as concerns grow that infection rates could start to match, or exceed, those in Europe.

KENYA/UNITED STATES: Regional economic grouping lambasts Nairobi's bilateral trade deal with Washington

Not everyone in East Africa was thrilled when President Donald Trump offered President Uhuru Kenyatta the first bilateral trade pact between the United States and an African state.

The six-nation East African Community (EAC) in Arusha complained that a US-Kenya pact would undercut regional trade and customs rules. And the African Union warned that a bilateral deal with Washington would weaken the African Continental Free Trade Area set to launch in July.

The US-Kenya trade talks, yet to begin formally, face a legal challenge from a petition at the East African Court of Justice. It seeks to make the US-Kenya pact illegal as well stop Nairobi from importing wheat from the US.

In the markets and among rival regional states, there would be some kudos to be held up as Washington's preferred trading partner. But trade experts see no big gains for Kenya in the planned deal: Kenya would be expected to reduce or scrap tariffs on US wheat and dairy and open up its insurance and telecoms markets.

A trade pact would probably be less generous than the preferential terms of the African Growth and Opportunity Act (AGOA), which is set to expire in 2025.

GUINEA: Disregarding public health concerns, President Condé holds referendum giving him chance of a third term

A referendum on 22 March to change the constitution went ahead despite rising fears about the growing number of coronavirus cases and election observers' complaints about the integrity of the electoral roll.

President Alpha Condé, 81, described the poll, which is expected to allow him to serve for two more six-year terms as merely a 'democratic exercise'. Yet opposition to his rule is mounting, as shown by the telecoms blackout and clashes between police and protesters which left 10 dead, according to local reports. Condé postponed the original 1 March date of the referendum and parliamentary polls after discrepancies arose over the electoral roll.

CAMEROON: Reports circulate of closed door negotiations over status of Anglophone region after mass election boycott amid the spreading insurgency

Minister for Territorial Administration Paul Atanga Nji declared the rerun of elections in the Anglophone region to have been 'calm, free and fair' on 22 March despite more deadly clashes between the military and separatist rebels.

The military says it killed 24 separatists in attacks on those who vowed to disrupt the election rerun. But there are reports that a number of civilians were also killed.

President Paul Biya's Rassemblement démocratique du peuple Camerounais (RDPC) set great importance by the poll rerun but early reports suggest that turnout was not much higher than the 5% recorded in February. Those results were overturned after the country's constitutional council said that the RDPC had stuffed ballot boxes and chased opposition voters from the polling stations.

As the stand-off between Cameroon's Anglophone and Francophone regions intensifies, we understand that some officials from Yaoundé are trying to reopen negotiations with those Anglophone activists who have stuck to non-violent protests.


MOZAMBIQUE'S NEW WAR: As insurgents mount more attacks, ExxonMobil and Total suspend gas export project at Cabo Delgado citing worries over coronavirus effects

ZIMBABWE'S DIGITAL DOLLAR: Cash withdrawals limited to local equivalent of US$12 a week triggering boom in mobile money and also rising worries on food security

ETHIOPIA-EGYPT TALKS DISRUPTED: Negotiations over the dam on the Blue Nile paused as the region's states rush to step up defences against pandemic and rising political pressures