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.
The newly elected president has consolidated his political authority through shaking up the cabinet, while he is sending a reformist message to creditors that he will prioritise growth as a mechanism for development, beginning with measures to stabilise the country’s precarious fiscal and monetary positions.
A booming economy and improved governance are creating fresh opportunities for project finance deals. While the economic and financial outlook is relatively strong, there are emerging concerns over political patronage and contract discrimination under the current administration.
Critical oil industry reform has once again become stuck in parliamentary processes, while political will to implement the various governance, licensing, and fiscal policy reforms is waning ahead of the 2019 elections.
On the one year anniversary of Angola’s political transition, there are growing indications that initial investor optimism has waned due to a persistently weak economy, rising debt levels, and fresh allegations of state corruption.
Following the defections of influential lawmakers and governors to the opposition, President Buhari is likely to ramp up corruption prosecutions to strengthen his anti-graft image, yet he faces political turf wars and may be running out of time ahead of party primaries and next year’s elections.
Political uncertainty over the succession, high-profile corruption probes, and wide-ranging purges of critics ahead of next year’s elections do not bode well for Algeria’s economic recovery and the sustainability of liberalizing reforms.
The government has announced a new anti-graft initiative in response to high-profile corruption scandals, yet it is unlikely to be effective as late payments increasingly impact state contractors and expand non-performing loans in the banking sector.
A broad review of contracts in the construction and mining sectors is expected as an anti-graft probe extends to the most senior ranks of the previous government, although foreign investments are not expected to be targeted.
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