Next Africa: Ethiopia faces a new crisis

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

The nation’s request to restructure its External debt under a Group of 20 program highlights how much circumstances have changed for the country and for 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 hailed for promising to open up the economy and create more space for democratic expression.

The coronavirus outbreak and a war with the rebellious Tigray region put a stop to this. Little progress has been made in privatization, and victims and displacement in Tigray have seen the leader of one of Africa’s fastest growing economies internationally condemned.

The country is now concerned about meeting its debt obligations and its announcement that it is discussing liabilities with official creditors has generated panic among private creditors. The country’s Eurobonds were the most plummeted last week.

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

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

Coronavirus has reduced the country’s demand for horticulture and textile exports, and tourism has stopped.

The war, which threatens to drag on in guerrilla form resistance, Did not help.

News and opinion

Inoculation of Africa | Covax, the program that fights for equitable access to vaccines against coronavirus, has allocated millions of AstraZeneca vaccines to African countries, with the first deliveries being seen in late February. Meanwhile, Moderna offered to supply its vaccine to South Africa, in what would be its first such an agreement with an African nation. The largest in south africa the companies are in talks with the government to help facilitate national vaccination under an estimated $ 802 million program.

Auto Boost | Ford Motor Co. will invest $ 1.05 billion in South Africa, its biggest investment so far in the country. The automaker, which is expanding into 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 increase the power systems division after its main wide-body jet engine business was derailed by the coronavirus.

Enigma of Sanctions | Several Democratic House legislators are asking Treasury Secretary Janet Yellen to reverse the Trump administration’s decision to ease sanctions on Israeli billionaire Dan Gertler. The U.S. sanctioned Gertler and his companies in 2017 for allegedly corrupt oil and mining businesses in the Democratic Republic of Congo. But in his last days in office, President Donald Trump’s Treasury Secretary Steven Mnuchin issued a license allowing Gertler and his companies to resume business until January 2022.

WTO work | Nigeria’s former finance minister, Ngozi Okonjo-Iweala, is left as the the only candidate for the most important position in the World Trade Organization, after South Korea’s Minister of Commerce gave up her candidacy to lead the institution. Yoo Myung-hee’s withdrawal comes after some former U.S. government officials urged President Joe Biden to endorse Okonjo-Iweala after the Trump administration blocked his choice. The opposition has suspended the selection process because WTO decisions are made on the basis of consensus.

Acquisition of State | After acquiring local operations from Glencore and Vedanta for the past two years, Zambia is not looking to acquire more mining companies nor does it plan to nationalize the sector, according to the Minister of Finance, Bwalya Ng’andu. A new wave of government acquisitions is feared following President Edgar Lungu’s statements 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 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 kept its basic interest rate unchanged at 14.5%. The rate was maintained at an almost nine-year low for the fifth consecutive meeting, while inflation was again above the target range.

Arriving

• February 8 Mauritius, January inflation, presidential elections in Djibouti, Central African Republic hold second round of parliamentary elections
• February 10 South African business confidence index and Ghana inflation in January
• February 11 President of South Africa delivers speech on state of the nation, 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 largest animal population in the world, fell 33% last year – partly because coronavirus blockages have reduced incursions into game reserves. About 394 rhinos were killed because of their horns, which are smuggled into 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, an Israeli-sized reserve on the border with Mozambique. Of the dead rhinos, 245 were in the park.