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The Africa Confidential Blog

  • 31st March 2020

Over half Africa's production suspended as debt and financing pressures mount

Patrick Smith

Coverage this week is dominated by the economic and political effects of the coronavirus pandemic in Africa, starting with South Africa and Nigeria. We're publishing an extra feature today on the response of the region's policymakers and the international system to the crisis. In this letter we also look at political developments in Guinea and Mali, two resource-rich countries which were already in crisis before the pandemic struck.

NIGERIA AND SOUTH AFRICA SHUT DOWN: Over half Africa's production suspended as debt and financing pressures mount

With over 20 countries shutting down their economies over the next two weeks, well over half of Africa's trade and production will pause as factories, mines, offices, motor parks and airports close.

In South Africa and Nigeria, which have both announced shutdowns to stop the spread of the coronavirus, the knock-on effects on regional economies and on trade networks will hit another 10 countries at least.

These two, the biggest economies in Africa, produce almost half of the continent's US$1.5 trillion GDP. Of the two, South Africa is the worse hit by the virus for now. While South Africa shuts down nationwide, in Nigeria, the shutdown will be enforced in Lagos and Ogun States, which house over a third of the country's industries and agricultural processing, as well as the capital, Abuja, where several top officials are reported to have tested positive for the virus.

South African Finance Minister Tito Mboweni's comments that South Africa may be forced to ask the International Monetary Fund (IMF) and World Bank for funds would have amounted to a political earthquake in ordinary times. But after Moody's downgraded its credit rating to 'junk' on Friday (27 March), there are few other options. Although the Fund and the Bank have called on world leaders to back new financial initiatives to alleviate the economic downturn, there have been few substantive discussions and no agreement yet.

Historically, South Africa has resisted any resort to IMF financing and the policy conditions that go with it. But the damage wreaked by the virus and shutdown on top of a decade of grand corruption at the centre of the state, will cut the government's leverage in the coming negotiations.

Egypt, whose economy is about one third smaller than South Africa's, recently completed a three-year US$12 billion IMF programme (AC Vol 61 No 1, Polls, poverty and protest).

MALI'S DELAYED ELECTIONS: Government unclear about next steps after it holds first round of elections amid Covid-19 crisis

Opposition parties were quick to question the legitimacy of the first round of parliamentary elections on Sunday (29 March) where the turnout fell as low as 5% in places, the lowest ever.

The elections came less than a day after the country's first death from coronavirus, and just days after the kidnapping of Soumaïla Cissé, leader of the opposition Union pour la République et la Démocratie (URD).

Cissé and six members of his team were abducted while campaigning, and one bodyguard was killed. Local sources say they are being held by jihadists loyal to Fulani preacher Amadou Koufa, although some media have doubted the story because the area is Cissé's own stamping ground (AC Vol 60 No 19, The talking cure). The URD did not join other opposition parties in calling for a delay in the polls.

The public health crisis, the high number of internally displaced people, and widespread distrust of the political establishment would have depressed turnout anyway. The parliamentary polls had already been delayed since November 2018. The government is yet to announce whether the second round, due on 19 April, will take place.

There have been 18 confirmed cases of Covid-19 and one death so far. But health experts say the long-running conflict with jihadist terror groups, putting large swathes of territory outside government control and services, has left the country particularly vulnerable.

GUINEA'S NEW CONSTITUTION: Condé risks international sanctions after pressing ahead with third – and perhaps fourth – term plan

Despite questions about fraud and turnout figures, the government insists the 92% 'yes' verdict for President Alpha Condé in the 22 March referendum is valid. It will allow the President and his supporters to rewrite the constitution and allow him to contest a third term later this year and after that a fourth, but it may trigger international sanctions.

France, the European Union and the United States have dismissed the referendum as illegitimate. They cited the deaths of dozens of protestors at the hands of security forces in recent months and the electoral roll's lack of credibility. We hear the European Union is considering sanctions against Guinean officials.

TUNISIA HEADS THE QUEUE: Inheriting a battered economy, new government gets first EU aid package to tackle Covid-19

The preoccupation of the European Commission and EU member states with the disease in their own territories and the financial consequences have so far relegated Africa's concerns about the coronavirus pandemic.

However, Tunisia is to be the first recipient of EU cash to cope with the economic and health effects of the pandemic after a €250 million aid package was announced on Saturday (28 March). Other country-specific aid packages in Africa are expected in the coming days, we hear.

UGANDAN RIVALS CLASH ON PANDEMIC: President Museveni and opposition leader Bobi Wine clash over government response and health care funding  

Although there were no cases of Covid-19 in Uganda at the beginning of the month, President Yoweri Museveni was one of the first leaders in Africa to announce movement restrictions, closing schools and Entebbe airport, and halting religious services and big public gatherings.

Drawing on the country's experience with preventing Ebola coming in from neighbouring Congo-Kinshasa over the last three years and managing tens of thousands of HIV-AIDS cases over several decades, Uganda has established expertise in dealing with public health threats.

But national elections are due next year and funding for the healthcare budget will be a central issue. Over the years, activists have accused the Museveni government of using national emergencies to crack down on dissent. Opposition mobilisation will be heavily controlled in the coming months.

In his new track 'Coronavirus Alert', Ugandan activist and presidential contender Bobi Wine sings about hand-washing and social distancing and adds a political twist. The lyrics accuse the Museveni government and others in Africa of spending money on weapons and repression rather than healthcare. Uganda allocates less than 15% of its budget to public health, although African nations promised the World Health Organisation (WHO) in 2001 they would keep spending above that level.


AFRICAN DEVELOPMENT BANK ELECTION: The bank is to hold its annual meeting in Abidjan on 26-29 May when it is due to re-elect Akinwumi Adesina as its President unless pressured to organise a virtual meeting due to public health risks

ZIMBABWE'S CURRENCY CRASH: Reserve bank pegs new currency to the US dollar but at almost double the parallel market rate - now it is heading south again

AFRICA'S BILLIONAIRES SHELL OUT: Nigeria's Aliko Dangote, Zimbabwe's Strive Masiyiwa and South Africa's Patrice Motsepe all launch public health initiatives in response to the pandemic but most of the super rich are missing in action