Next Africa: Ethiopia faces a new crisis

Welcome to Next Africa, a weekly newsletter about where the continent is now – and where it’s headed.

First there was war, now Ethiopia is facing a debt crisis.

The nation’s request to be external debt under a Group-of-20 program shows just how much conditions have changed for the country and Prime Minister Abiy Ahmed in just over a year.

In 2019, Abiy won the Nobel Peace Prize for ending two decades of conflict with Eritrea. After taking power in 2018, he was praised for pledging to open up the economy and create more room for democratic expression.

The outbreak of the coronavirus and a war with the rebellious Tigray region have suppressed that. Little progress has been made in the areas of privatization and civil victims and displaced people in Tigray have seen the leader of one of Africa’s fastest growing economies face international condemnation.

Now the country is concerned about meeting its debt obligations, and the announcement that it is discussing debts with official lenders has sparked panic among private creditors. The country’s Eurobonds fell the most last week.

“The World Bank has stepped in to close the gap,” said Mark Bohlund, senior credit research analyst at REDD Intelligence. That has become “politically more challenging in the wake of alleged human rights violations during the Tigray war,” he said.

For now there is no direct way out for Abiy.

The coronavirus has drastically reduced the demand for horticulture and textile exports from the country and has brought tourism to a standstill.

The war, which threatens to drag on in the form of guerrilla warfare resistance, did not help.

News and opinion

Africa vaccination | Covax, the program that strives for fair access to coronavirus vaccines, has allocated millions of AstraZeneca shots to African countries, with the first deliveries in late February. Meanwhile, Moderna offered to deliver its vaccine to South Africa, in what it would be first such a deal with an African nation. South Africa’s largest companies are in talks with the government to help facilitate national vaccination in an estimated $ 802 million program.

Automatic boost | Ford Motor Co. will be $ 1.05 billion plows in South Africa largest investment to date in the country. The carmaker, which is scaling back in other regions, including Brazil and Europe, will upgrade its Silverton plant near the capital Pretoria to an annual capacity of 200,000 units and create approximately 1,200 direct jobs. Separately, Rolls-Royce is planning expand in Africa to grow the power systems division after the main business of wide-body jet engines was derailed by the coronavirus.

Sanctions conundrum | Several Democratic House lawmakers are urging Treasury Secretary Janet Yellen the Trump administration’s decision to ease sanctions against Israeli billionaire Dan Gertler. The US sanctioned Gertler and his companies in 2017 over allegedly corrupt mining and oil deals in the Democratic Republic of Congo. But during his last tenure, President Donald Trump’s Treasury Secretary, Steven Mnuchin, issued a permit that would allow Gertler and his companies to resume business until January 2022.

WTO job | Former Nigerian Finance Minister Ngozi Okonjo-Iweala is left behind as the The only candidate for the World Trade Organization’s top job after South Korea’s trade minister dropped her bid to lead the institution. Yoo Myung-hee’s withdrawal comes after some former US government officials urged President Joe Biden to back Okonjo-Iweala after the Trump administration blocked her selection. The opposition has halted the selection process because WTO decisions are made by consensus.

Takeover by the state | Following the acquisition of the local operations of Glencore and Vedanta in the past two years, Zambia does not intend to acquire more mining companies, nor does it intend to nationalize the industry, according to Finance Minister Bwalya Ng’andu. There was fear of a new wave of government takeovers following President Edgar Lungu’s comment in December that Africa’s second-largest copper producer wanted “significant stakes” in unspecified mines. Other miners operating in Zambia include First Quantum Minerals and Barrick Gold.

Past and prologue

Data Watch

• Absa’s purchasing managers index in South Africa rose from 50.3% in December to 50.9% in January. It was the best January recorded by the index since 2015.
• Ghana’s central bank has left its main interest rate unchanged at 14.5%. Interest rates were held at their lowest level of nearly nine years for the fifth time in a row when inflation rose back above the target band.

Shortly

• February 8 Mauritius Inflation in January, Djibouti presidential elections, Central African Republic hold second round of parliamentary elections
• February 10 South African business confidence index and inflation in Ghana for January
• February 11 South African President delivers state-of-the-nation speech, South African mining production and manufacturing production data for December

Last word

The number of Rhinos killed by poachers in South Africa, which has the world’s largest population of animals, fell 33% last year – in part because the coronavirus lockdown reduced raids on game reserves. About 394 rhinos were killed for their horns, which are smuggled to East Asia, where they are believed to cure cancer. South Africa has about 20,000 white rhinos and some black rhinos. Most of the animals live in the Kruger National Park, a reserve the size of Israel on the border with Mozambique. Of the killed rhinos, 245 were in the park.