These are major developments across Africa this week.
Ecowas in a bind over Niger
The rival sides in the geopolitical crisis that erupted in West Africa with the July 26 coup in Niger, are digging deeper into their positions.
The only sign of blinking came from the regional body, the Economic Community of West African States (Ecowas), that watched its deadline for the coup leaders to restore toppled leader, Mohammed Bazoum, to office, pass without any military action.
Yet, it managed to flex some muscle by declaring at its leaders summit in Abuja, the neighbouring Nigeria’s capital, that it was putting an intervention force for Niger on standby while still exploring dialogue.
Still the odds against a short, swift and successful military intervention continue to mount, not necessarily enough to deter it, but enough to ensure it will be a costly, brutal and prolonged war of doubtful value. Meanwhile, the junta continues to consolidate its hold on power, buoyed by popular anti-colonialist fervour directed at France, specifically, and the West in general.
Ecowas is essentially split into a pro-Western group (led by the likes of Nigeria’s Bola Tinubu, the current president of the bloc, and Côte d’Ivoire’s Abubakar Ouattara, and the pro-Russian group that includes the leaders of Mali, Burkina Faso and Guinea, with the support of Algeria.
With Russia’s Wagner mercenary group already lurking around in Niger, the Kremlin warned this week against military intervention in the uranium-rich country. Such a move would result in a “protracted confrontation” that would do no one any good, the Russian foreign ministry said in a statement, avoiding a direct threat while still implying it.
Nigeria’s debt to Goldman Sachs and JP Morgan
For the first time in eight years, the Central Bank of Nigeria (CBN) made its statements of account public, and it came with a bombshell.
Under former President Muhammadu Buhari, the CBN, then run by detained former Governor Godwin Emefiele, pledged the country’s external reserves as collateral to borrow U.S. $7.5 billion from JP Morgan and Goldman Sach as cash backing to print local currency to fund extra budgetary spending. There’s also another US$7 billion outstanding in unsettled foreign-currency forwards trading.
The implication is that the economy is even more parlous than previously thought. Foreign reserves worth US$33.8 billion on paper, with a hold of over $14 billion certainly ties Nigeria deeper into debt than previously thought, providing further justification for the investigation of Emefiele.
Still, the fact remains that Emefiele’s actions in office were apparently approved by the former president, who seemed quite pleased with his central bank governor, even at a time the state security police were seeking his arrest.
The big question is to what extent will Tinubu’s government probe Emefiele (and Abdullahi Bawa, former head of the Economic and Financial Crimes Commission, who’s also being detained) without touching the soft underbelly of the inner circle of the former regime? Are his minions fair game while the big man himself is spared? Only time will tell.
South African and Chinese companies in $2.2 billion trade deals
South African and Chinese companies agreed trade deals worth more than US $2.2 billion in Johannesburg following talks on economic cooperation led by both countries’ trade ministers.
A total of 20 agreements involving companies in different sectors, including mining giant Anglo American Platinun, commodities trader Glencore and wood company Sappi, which announced it got a US$20 million deal to supply wood fiber to China.
The meetings precede Chinese President Xi Jingping’s visit to South Africa for the BRICS (Brazil, Russia, India, China and South Africa). Russian President Vladimir Putin decided to skip the summit in the swirl of controversy generated by his potential presence in South Africa at a time an international warrant was out for him for alleged war crimes.
The African National Congress-led government in South Africa has sought to stay neutral in the confrontation between the West and Russia and China.
South Africa’s Trade Minister Ebrahim Patel welcomed the agreements as positive steps for relations between both countries. “This represents the building block to the next phase of our relationship, to deepen the close partnership with China to strengthen industrialization in South Africa,” Patrl said.
It was a view welcomed by his Chinese counterpart Wang Wentao, who expressed joy at not only the prospect of expanding into the South African market but of expanding into the wider African market.
South Africa’s trade with China is currently valued at US$47 billion last year, with Chinese invest err rnrs in the country valued at US$10.5 billion, according to Patel.
World Bank suspends credit over anti-gay law
The World Bsnk suspended all new credit to Uganda, saying that its anti-hokosexuality laws are in violation of its key values.
“We believe our vision to eradicate poverty on a livable planet can only succeed if it includes everyone irrespective of race, gender, or sexuality,” the Bank said in an August 8 statement.
Uganda’s law against homosexuals and queers are among the harshest globally, prescribing jail terms of up to 20 years and even death force we what is described as “aggravated homosexuality.”
Ugandan President Yoweri Museveni was defiant in his response, accusing “the World Bank and other actors” of seeking to coerce Africans with money into abandoning their culture and beliefs.
World Bank funding for Uganda stood at $5.2 billion at the end of last year.
Economic Indicators
- The Democratic Republic of Congo raise its benchmark interest rate to 25 percent as the currency plunged.
- Madagascar’s central bank raised its key interest rate for a second time this year, by 50 basis points to 11%, as it struggles to bring inflation back to single digits. Kenya kept its benchmark interest rate unchanged at 10.5% as it expects inflation to continue to slow.
- Ghana inflation rate quickened for the fourth straight month to peak at 43.1%
Ghana’s inflation rate unexpectedly rose to a four-month high of 43.1% in July.
- Tanzania’s consumer price index increased 3.3% over the same period
Insights Newsletter is published by Afrika Insights, an Ontario, Canada-based business advisory and publishing firm. Email: afrikainsights@africainsights.ca