New revelations concerning public embezzlement, political intervention in the judiciary, overspending on military procurement, and public asset collateralisation are expected to frustrate any hope of a breakthrough during renewed talks with the IMF and motivate further donor aid cuts.
Both presidential campaigns are focussing on building broad-based local political coalitions to ensure victory in 2019, yet slowing investment and frustration of foreign investments are hampering the economic recovery and imperilling the local banking sector.
Ahead of next year’s elections, the government will maintain the political status quo and boost welfare spending in order to curb any outbreaks of unrest; yet falling foreign exchange reserves will determine longer term succession scenarios and pose a nascent threat to repayment schedules as debt balloons.
A new investigation by lawmakers into suspected embezzlement of gasoline subsidies is the latest in a series of high profile corruption probes that will draw a cloud over the Nigerian election campaign and frustrate foreign business interest.
In response to a unified opposition’s pro-business platform ahead of the February 2019 elections, the embattled incumbent is expected to leverage a strong anti-corruption mandate as an electioneering tool, posing fresh contract risks to investors in key sectors and further uncertainty for oil sector reform.
The resignation of the respected finance minister was undoubtedly a political blow for the government, yet may also boost President Ramaphosa’s vaunted anti-corruption campaign. Meanwhile, the appointment of an acclaimed successor bodes well for fiscal consolidation and long-term economic recovery.
The new government in Angola has made transparency and economic reform its much vaunted manifesto, which is buying it good will among international investors and is boosting its popularity at home. However, central tenets of control over the country’s political economy remain firmly entrenched with the same elite that has dominated Angola for generations.
Following another calamitous month, Zambia’s government needs to urgently commit to deficit reduction through additional taxes and debt restructuring, or face the prospect of a default by early 2019. A Chinese asset-backed bailout is unlikely to be a sustainable solution to the deepening crisis.
Western donors are suspending budgetary support to Zambia’s government due to concerns over financial mismanagement, thus straining debt servicing ability and casting into doubt ongoing project finance deals.
The ongoing contract frustration experienced by telecoms firm MTN in Nigeria and the threat of punitive action against banks such as HSBC are highly indicative of intensifying populist and politically motivated rhetoric against foreign investors ahead of next year’s elections.
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