Belt and Road initiative forums mask debt pile up, geopolitical tensions, and stuttering Chinese economy
The BRI forum in Beijing ends today and it is now widely acknowledged that the next 10 years will not be like the last. Three things have happened that make it improbable that China will continue the same aggressive strategy of the last 10 years. The debt piled up on the back of the initiative has been huge. Geopolitical tensions have emerged around international trade and globalisation. Also, the Chinese economy is weaker than it was before the pandemic. The initiative, focused on Africa, Asia, and Latin America has been one of China and the world’s most comprehensive trade and foreign policy, allowing Chinese companies to build transportation, energy and other infrastructures funded by Chinese development bank loans. 152 countries signed up, with Italy the only European country to do so. 3,000 projects at different stages of completion and nearly US $1 trillion investment.
France to withdraw troops from Niger end of year
President Macron of France says the country will withdraw its troops from Niger at the end of this year. The relationship between France and Niger has deteriorated rapidly since the coup in the African country, Nigeria’s neigbour to the North. First, the French ambassador will leave immediately while the troops will leave end of year. The current Niger authorities welcome the French decision to leave the country. Since the Coup in July, a military intervention by ECOWAS to restore the democratically elected President Bazoum has not been implemented.
Tall order on SDGs
After the United Nations General Assembly (UNGA) 78th meeting last week, one of the conclusions was that it will be difficult to meet the Sustainable Development Goals (SDGs) targets set for 2030. The ambitious 17-point Agenda set in 2015 to promote prosperity, address inequalities, while protecting the environment did not envisage the catastrophic global economic crisis that followed Covid – 19 and the geopolitical tensions following the Russia / Ukraine war. Halfway into 2030, the SDG summit 2023 provided initiatives to speed up the success including on energy transition, catalysing global push for transforming education, acceleration on jobs and social protection and inclusive digital infrastructure.
Egypt and IMF agree to merge review
The Arab Republic of Egypt and the International Monetary Fund (IMD) has agreed to merge the first and second review of its US $3 billion extended arrangement agreed December 2022. The first review was supposed to hold in March 2023 and the second this month. Those reviews will now hold together. The IMF support was designed to support macroeconomic stability, reduce inflation, and allow fiscal consolidation. Egypt, like most African economies has faced heightened economic uncertainty following recent global economic shocks. Poverty remains high at near 30%, while unemployment is near 10%. Growth expectation for 2023 is at 4%. Egypt is the largest Africa borrower from the IMF.
Nigeria’s Interest rate body meeting postponed
Following the appointment of a new board of governors chaired by Yemi Cardoso, a Citi Bank veteran, and the resignations of the four previous deputy governors, the Central Bank of Nigeria’s monetary policy meeting scheduled for today was postponed indefinitely. The transition came at a very critical time for the economy and the CBN. Since the exchange rate reforms of June 14th, the Naira exchange rate to the US dollar has weakened by about another 25% on top of the 40% devaluation when it moved from N460 to the $ to N750. Meanwhile, the previous board had pursued very rigorous monetary policy orthodoxy to combat inflation. In its last meeting, the monetary policy rate was raised to 18.5%.
AFCON to name hosts of 2025 and 2027 competitions tomorrow
The Confederation of Africa Football (CAF) president Patrice Motsepe will tomorrow announce the winning hosts of the Africa Football competition for 2025 and 2027. The right for the 2025 edition is between Algeria, Morocco, Zambia and a co-hosting bid of Nigeria and Benin while the 2027 hosting rights is between Algeria, Botswana, Egypt and the joint candidacy of Kenya, Tanzania, and Uganda. The 2023 edition, holding January / February 2024 will be in Cote d’Ivoire.
Kenya seeks to raise funds by leasing ports
The Kenyan government has plans to lease out sections of its ports to private investors to raise much needed fund, according to the Nation. The seaports in consideration include the Kilidini Harbour, Dongo Kundu Port, Lamu Port, Kisumu Port, and Shimoni Fisheries Port.The government plans to raise US $304 million from the lease of Lamu Port for 25 years. Kenya, like most African economies, have been hit by rising prices, including energy and food prices. The International Monetary Fund (IMF) in July completed the fifth review of its extended fund facility and extended credit facility arrangement that it has so far disbursed US $2.04 billion since April 2021.
Nigeria’s economy in dire straits
Ahead of the end of Q3 2023 this week, the growth data for the quarter will be keenly expected. Nigeria’s economy recorded a growth rate of 2.51% Q2 2023 compared to 3.54% in the corresponding period in 2022. As the graph below shows, both oil and non-oil sector growth are largely on downward trend. The data pattern resembles that of 2015 that culminated in a recession in 2016. The economy today is squeezed on all fronts. News from the agriculture sector points to a weak outlook next year on the back of rising input and energy prices, trading is squeezed by exchange rate volatility and accompanied inflation, while manufacturing is squeezed by rising input prices and exchange rate volatility as well. The oil sector that should have provided the base for Nigeria’s next wave of growth is strangled by oil theft and weak investments. Meanwhile, according to Premium Times report, Russia’s 34,000 tones of fertilizer export to Nigeria is stranded in EU ports for over a year, buttressing the point on rising input prices and outlook for lower agricultural output next year.
CAF announces hosts of AFCON 2025 and 2027
The Confederations of African Football (CAF) yesterday announced Morocco as the host of the 2025 AFCON and the bid of Kenya, Uganda, and Tanzania as hosts of the 2027 edition. The combined bid of Nigeria and Benin were withdrawn before the votes. The 2025 edition will be the second time Morocco is hosting the competition, after 1988 while the East African countries will be hosting it for the first time in 2027. It was going to be tough for the Nigeria / Benin bid given that the 2023 (played next year) competition is in Cote d’Ivoire and the last competition was in Cameroon, all West African countries.
US withholds aid to Gabon
Following the Coup in Gabon last month, the US has withheld aid to the country. However, the US will continue diplomatic and consular services in the country. After the coup on August 30th that followed the announcement that President Ali Bongo won reelection, General Brice Nguema, a cousin to the deposed president, became the new leader of the country. The coup was the latest in the spate of military coups across the central Africa region and the Sahel. Gabon is an oil producing country, with an estimated 200,000 barrels per day, down from the peak of 370,000 barrels per day in 1997. The military leadership has promised a free and fair elections but not provided a timeline for that yet.
