Improving relations with neighbouring Sudan and a nascent recovery in the all-important oil sector are motivating rival parties in South Sudan’s long-running civil war to seek to implement the 2018 peace deal and to form a transitional government. However, foreign investors may be dissuaded from committing to new projects due to continued insecurity, widespread corruption, and potential repayment issues as pre-export oil financing deals increase the debt burden.
Despite their upset defeat in the first-round presidential elections, establishment parties will rally behind a unity candidate in the second round and maintain a strong course for legislative dominance. This makes the probability of a strongman populist president emerging from this electoral cycle marginally less likely. Regardless of the outcome, the IMF programme is likely to remain in place.
The government has admitted that the economy is slowing, although it still refuses to blame weak debt management. As the import bill is set to rise and debt servicing costs creep up, the risk of delayed payment on state contracts and sovereign default will remain high in coming months. Chinese companies are seeking mining assets as collateral in case of non-payment, leaving western investors potentially more exposed.
A shock to global oil prices leaves many African markets unprepared for more expensive import bills, while some crude producers may struggle to reap the benefits of higher oil export revenues. EXX Africa assesses the risk outlook for Africa’s largest oil producers and the continent’s main fuel importers.
The government will capitalise on Robert Mugabe’s legacy to consolidate its authority and establish further control over patronage networks in the banking and agricultural sectors. However, it is failing to make headway on an economic recovery, taming inflation, and restoring power supply. The opposition is set to resume protests and strikes in coming weeks, raising the risk of a complete economic shut-down. Foreign partners, even benevolent ones, will struggle to push through any form of debt relief and a mooted bailout as the crisis deepens.
The new government will have little time to celebrate a court ruling confirming its electoral victory earlier this year, as concerns mount over weak tax collections and rising debt servicing costs at a time of sluggish economic growth. The administration will also need to apply measures to protect its commercial assets like crude cargoes from seizure following a recent court ruling over a gas dispute.
The latest outbreak of anti-immigrant violence in South Africa has been unusual only because of its timing coinciding with a major investment conference and the potential political motivations behind the attacks on foreigners. EXX Africa investigates the political and economic drivers of such violence, as well as the commercial impact of retaliatory action against South African interests elsewhere in Africa.
Following a two week ban on protests, political demonstrations are set to resume across major cities. Security forces will seek to protect border crossings and airports from blockades, although a spike in retaliatory attacks, intimidation tactics, and political assassinations may increase the prospect of violence that would threaten relations with donors and the IMF. Optimistic economic projections may also be thwarted by commercial disruption and weak tobacco sales.
The presidential election remains too close to call as establishment parties are set to rally behind a unity candidate in the second round to fend off a challenge from emerging populist candidates. Low voter interest in the presidential contest indicates that the real political battle will focus on the parliamentary vote in October. Whoever wins the elections, the current IMF programme is likely to remain in place. Benefits from the loan programme are starting to show as inflation slows and the government issues new bonds to finance its budget deficit.
Algeria’s ruling general is either preparing to install himself as a strongman-president of an Egyptian-inspired securocratic state or he is seeking to transition political power to a civilian administration that will protect the military’s interests. EXX Africa investigates the probability and implications of both scenarios.
- EXX Africa director Robert Besseling moderated a panel on Africa’s commodity rollercoaster at GTR Commodities in Geneva hosted by Global Trade Review (GTR)
- SOUTH SUDAN: DEBT BURDEN AND CORRUPTION MAY DISSUADE FRESH FOREIGN INVESTMENT
- TUNISIA: MAIN POLITICAL PARTIES SEEK TO MITIGATE IMPACT OF UPSET ELECTORAL DEFEAT
- ZAMBIA: CHINA SEEKS MINING ASSETS AS COLLATERAL TO PROTECT AGAINST LOOMING DEFAULT
- SPECIAL REPORT: SHOCK TO GLOBAL OIL PRICES WILL IMPACT AFRICAN PRODUCERS AND IMPORTERS