Next Africa: Ethiopia faces new crisis

Welcome to Next Africa, a weekly newsletter on where the continent now stands – and where it’s going.

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

The request of the nation to restructure the country foreign debt under a Group-of-20 program highlights how many circumstances have changed 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 coming to power in 2018, he was praised for the promise 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 suppressed it. Little progress has been made with privatization and civil by victims and displacement in Tigray, the leader of one of Africa’s fastest growing economies is condemned internationally.

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

“The World Bank has stepped in in the past to fill the gap,” said Mark Bohlund, a senior credit research analyst at REDD Intelligence. It’s ” more politically challenging in the wake of alleged human rights abuses committed during the war in Tigray, ” he said.

For now, there is no immediate way out for Abiy.

The coronavirus reduced the demand for garden and textile exports of the country, and tourism came to a standstill.

The war, which threatens to continue in the form of guerrillas resistance, did not help.

News and opinion

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

Auto Boost | Ford Motor Co will plow $ 1.05 billion into South Africa largest investment yet in the country. The carmaker, which is downsizing in other regions, including Brazil and Europe, will upgrade the Silverton plant near the capital, Pretoria, to an annual capacity of 200,000 units and create about 1,200 direct jobs. Separately, Rolls-Royce plans to expand in Africa to expand the power system division after the main venture of wide-beam engines was derailed by the coronavirus.

Sanctions Conundrum | Several lawmakers from the Democratic House are appealing to Finance Minister Janet Yellen to reverse the Trump administration’s decision to ease sanctions against Israeli billionaire Dan Gertler. The US approved Gertler and his companies in 2017 for alleged corrupt mining and oil trade in the Democratic Republic of Congo. But in his last days in office, President Donald Trump’s Treasury Secretary Steven Mnuchin issued a license that allowed Gertler and his companies to resume until January 2022.

WTO Job | Former Nigerian Finance Minister Ngozi Okonjo-Iweala is being named as the sole candidate for the World Trade Organization’s top post, after South Korea’s trade minister dropped her bid to lead the agency. Yoo Myung-hee’s withdrawal comes after some former US government officials urged President Joe Biden to endorse Okonjo-Iweala after the Trump administration blocked her choice. The opposition halted the selection process because WTO decisions were taken on the basis of consensus.

State takeover | Following the acquisition of the local operations of Glencore and Vedanta over the past two years, Zambia does not want to take over any more mining companies and does not plan to nationalizes the industry according to Finance Minister Bwalya Ng’andu. There were fears of a new wave of takeovers by the government following President Edgar Lungu’s remarks in December that Africa’s second largest copper producer wanted ‘significant interests’ in unspecified mines. Other miners working in Zambia include First Quantum Minerals and Barrick Gold.

Past & Prologue

Data Watch

• Absa’s South African Purchasing Managers’ Index rose to 50.9% in January from 50.3% in December. It was the best January recorded by the index since 2015.
• Ghana’s central bank left its key interest rate unchanged at 14.5%. The rate was kept at a minimum of nine years for a fifth consecutive year as inflation moved above the target band.

Come up

• February 8 Mauritius inflation in January, the presidential election in Djibouti, Central African Republic holds second round of parliamentary elections
• 10 February South Africa’s business confidence index and inflation in Ghana for January
• 11 February The South African president delivers a state of the nation address, South African mine production and production data for December

Last Word

The number rhinos killed by poachers in South Africa, which has the world’s largest population of animals, fell by 33% last year – in part because coronavirus closures reduced invasion of game reserves. About 394 rhinos have been 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 animals live in the Kruger National Park, a reserve the size of Israel that lies on the border with Mozambique. Of the rhinos that died, 245 were in the park.