🔅 Africa's elusive Covid-19 debt relief programme

The G20 launched the debt overhaul programme two years ago.

Oct 24, 2022

Good morning ☕

In today’s issue, Somalia signs major petroleum exploration agreements, the Congo is praised for progress in its mining sector, and around 50 people have died in the wake of violent clashes in Chad…

Markets - Year to Date

🔺 Nigerian SE: 44,396.73 (+3.93%)

🔻 Johannesburg SE: 65,539.25 (-11.08%)

🔻 Ghana SE: 2,365.89 (-15.18%)

🔻 Nairobi SE: 128.30 (-22.92%)

🔻 US S&P 500: 3,752.75 (-21.76%)

🔻 Shanghai Composite: 3,038.93 (-16.34%)

*Data accurate as of close of markets across the continent

Somalia: The government of Somalia has signed a petroleum exploration agreement with Coastline Exploration, a United States-based company. Under the terms of the deal, Coastline Exploration has paid a $7 million signature bonus to the government of Somalia. The agreement was signed in February, and the company has already begun exploration activities. The discovery of oil deposits in Uganda and Kenya and gas finds in Mozambique and Tanzania has generated intense interest in the oil and gas sector in the wider East African region.

Global Markets: Jeff Bezos has warned that the U.S. economy is heading for tough times, saying that growth has already slowed and inflation is rising. The billionaire Amazon founder said households and businesses need to prepare for a potential recession. U.S. President Joe Biden has downplayed the risk of a recession, saying that the economy is just experiencing a normal slowdown after a period of solid growth. However, many economists are concerned that the combination of high inflation and interest rates could trigger a more severe downturn. Amazon itself has already been affected by the slowdown, with the company slowing hiring and cutting expenses.

ECONOMY

African nations and the G-20’s elusive Covid-19 debt relief plan

person in blue jacket holding white textile — Photo by Mufid Majnun on Unsplash

What is happening:

At the International Monetary Fund and World Bank annual meeting in Washington, progress on debt relief for the world's poorest nations was not achieved, frustrating policymakers, campaigners and investors.

The Group of 20 launched the Common Framework - a mechanism designed to provide a swift and comprehensive debt overhaul to nations buckling under debt burdens after the COVID-19 shock - two years ago.

Results have proven elusive, hampered by a combination of a lack of progress in bringing key creditors around the table and getting them to commit to joint action, and establishing debt parameters that form the basis of talks as well as political upheaval in some of the countries.

Why it matters:

The world's poorest countries face $35 billion in debt-service payments to official and private-sector creditors in 2022. More than 40% of that is due to China, the World Bank found.

U.S. Treasury Secretary Janet Yellen and other Western leaders gathering in Washington criticised China, the world's largest bilateral creditor, as the main obstacle to moving ahead with debt restructuring agreements.

For Kevin Gallagher, director of the Boston University Global Development Policy Center, the U.S. Treasury also needs to get more forceful with private creditors.

Other Headlines

photography of excavators at mining area — Photo by Dominik Vanyi on Unsplash

🇨🇩 The Extractive Industries Transparency Initiative (EITI) has praised the Democratic Republic of Congo for its progress in implementing transparency in its extractive mining sector, but has called for more to be done in terms of publishing contracts and revenue from the industry. President Felix Tshisekedi has promised to tackle corruption and opacity in Congo's mining sector, and has vowed to review and publish deals that did not benefit the country. Congo has published around 200 contracts and related documents in the last two years, including agreements with Chinese companies and Israeli businessman Dan Gertler, who is under U.S. Treasury sanctions.

🇬🇳 The government of Guinea, led by Colonel Mamady Doumbouya, has agreed with West African regional mediators to hold new elections in approximately two years. This comes after protests against the duration of the transition turned deadly, with three people killed on Thursday. The agreement between the government and ECOWAS comes after similar coups in both Mali and Burkina Faso. Elections in Mali are scheduled for March 2024, but the situation in Burkina Faso is now in doubt after the latest coup there.

🇸🇩 In recent days, at least 151 people have been killed and 86 injured in fighting in Sudan's Blue Nile state. The fighting is the latest outbreak of violence to rock remote conflict-weary regions. Analysts blame the fighting on unresolved issues of land and citizenship as well as the militarisation of tribal groups. It threatens to destabilise further the country, which has been in political and economic turmoil since the military seized power and disbanded a civilian-led government a year ago. The violence was renewed one week ago, on October 13, with fighting involving the Hausa and Hamaj tribes and others in the Wad Almahi area over several days.

🇹🇩 In Chad, around 50 people have died in the wake of violent clashes between pro-democracy protesters and security forces on Thursday, according to the military-led government. The unrest happened shortly after President Mahamat Idriss Déby Itno, who was originally intended to step down, extended his rule for another two years.The African Union has condemned the violence, and the U.N. and E.U. have also called for calm. The authorities say an investigation will be launched, and a special commission will try those responsible for the deaths of members of the security forces. Chad recently formed a new unity government after negotiations between the military junta, political parties, and armed groups, but part of the opposition boycotted the initiative that they deemed not inclusive.

Xi Jinping makes history by being confirmed for a third term

What happened:

China's President Xi Jinping has been confirmed to remain in power for another five-year term, breaking with a decades-long precedent that limits the terms of Chinese leaders.

The confirmation came at the end of the week-long 20th Party Congress of the Communist Party of China, which happens once every five years and selects the people who will sit at the top leadership roles for the next five years.

The two-term limit on Chinese presidents was introduced in the early 1980s after Chairman Mao's death in order to move to a more "collective leadership" model and ensure power could never again be so centralised in the hands of one person.

In 2018, Mr Xi successfully removed the two-term limit from the constitution, paving the way for the consolidation of his power this weekend.

Other constitutional amendments have been made this week to further highlight the "core" status of Mr Xi at the centre of the party, suggesting he has become increasingly unchallengeable.

What’s next:

The confirmation that President Xi Jinping will remain in power for another five-year term makes him the most powerful leader in China since Chairman Mao. It cements his vision for the country as the unchallengeable status quo.

This weekend, the consolidation of power around Mr Xi indicates that he has become increasingly authoritarian in his ten years in power, centralising much of the power within the state and the party under his control while purging rivals and stifling dissent.

The implications of Mr Xi's continued rule are far-reaching, both for China and for the world. In his speech at the Party Congress, he spoke about his ambition for a "great rejuvenation" of China. Still, he repeated mentions of a "dangerous storm" ahead, which may concern some international observers.

Proverb of the Day

"One may have two legs, but that does not mean one can climb two trees at the same time."

— Ethiopian Proverb.

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