Rising foreign debt threatens to ravage African economies

What you need to know:

  • The silver lining. The silver lining is that Africans will have to start fixing problems themselves. America is distracted by trade wars with her trading partners. The EU is grappling with a massive fallout of Brexit, which could have been worse, but for a better economic environment.

The global economy as 2018 draws to a close maybe unravelling for poor countries. After a strong 2017, 2018 is closing with higher energy prices, lower commodity prices and rising interest on foreign debt. The fortunes of the BRICS (Brazil, Russia, India, China and South Africa) are mixed.
Brazil is heading into a general election which is a contest between the capitalist class and the social welfare State created by the socialists during president Luiz Inácio Lula da Silva’s time. Mr Lula unfortunately was disqualified from running for re-election from a jail cell for corruption. Brazil’s real has slid against the dollar and matters are not helped by a glut of coffee stocks produced by Brazil on the world market.

Russia has been quietly trying to fix its economic problems and reducing aggression on its neighbours, but its oil industry needs foreign investment. Strategically, a falling population (South Africa’s is falling too) is not a very good sign.
Mr Indrani Modi fresh off an African visit offered mostly platitudes, but there is a general feeling that India’s economy, which in 2016 overtook that of Great Britain, is healthier. For all its shortcomings, BJP has not reached the depths of the machine politics of the Congress Party.

Global India may still be a mirage, most of its technical artisanal skills remain next door in Pakistan where Imran Khan, a former cricketer, is promising to turn things upside down, slimming the State and most likely, challenging the military for authority.
China just did a $50 billion African conference where all African heads of State trekked to China. China constructed the AU Headquarters five years ago opened to much fanfare.

China infrastructure projects have transformed the landscape, but attracted a lot of concern as most African countries are struggling to pay.
Zambia, Zimbabwe, Uganda, Kenya, Ethiopia are all at varying levels of debt sustainability warnings. The forthcoming 2019 election in South Africa will be ANC’s first real electoral challenge, but it’s likely to entrench an even more corrupt political class in power as President Cyril Ramaphosa is still struggling to find his bearing in a shrinking economy.

Lots of countries are changing places. Eastern Africa now has Ethiopia growing fastest. Kenya’s economy is slowing down after a decade of growth held down by debt, rising inflation and falling revenues. Tanzania better managed is also struggling with recessionary tendencies.
In West Africa, Nigeria the region’s bellwether, is struggling partly by a notoriously corrupt political system, but also the threat of Boko Haram.

The African renaissance, clean government, free and fair elections, free movement of people and capital can’t flourish. In their places, the Africans are driven by reflexive responses, authoritarianism, higher taxes, manipulated elections and in the case of Central Africa and the Sahel, gun-running between borders.
Political changes have come few and far between, but are changing the landscape a positive note. Angola, Zimbabwe, South Africa, Ethiopia, Ghana have all elected or promulgated new presidents in the past five years. In the next five years, Kenya, Nigeria, Malawi will most likely have new leaders.

The case for the geriatric presidency is becoming weaker. The traditional strongman approach perfected in Equatorial Guinea, Gabon, Cameroon, Rwanda is likely to be the exception. Uganda in the throes of People Power protests established a limit to how far State actors can go to enforce order after unrest brought Uganda’s fragile economy to its knees mid-year.
The silver lining is that Africans will have to start fixing problems themselves. America is distracted by trade wars with her trading partners. The EU is grappling with a massive fallout of Brexit, which could have been worse, but for a better economic environment. China doesn’t seem ready for a full Africa occupation replete with foreign bases, arms factories, war heads, etc. Africa’s strategic returns lie in wealthier consumers, not guns and bullets.

Mr Ssemogerere is an attorney-at-Law and an advocate.