As the government steps up intimidation of its LGBT community, it risks the suspension of donor aid and a wider international backlash, which may well play into the president’s hands as he seeks to target foreign investments.
The government is failing to accomplish economic growth and fiscal consolidation, yet the prospect of post-electoral policy changes and broad institutional reform should be sufficient to stave off another credit ratings downgrade.
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.
President Magufuli’s nationalist economic stance affects every sector in Tanzania’s economy, which is posing a serious threat to longer-term investment and growth just as the government seeks to issue more debt.
NGOs and media will face an increasingly restrictive operating environment and risk hefty punitive fines in case of violations of new regulations, while such measures are likely to be extended to key export sectors such as mining.
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.
Political disputes over the petroleum tax and interest rate cap have forced the government to halt its pursuit of a Standby Credit Facility from the IMF. In the absence of an IMF cushion, Kenya remains vulnerable to more severe shocks.
The West African cocoa sector is still feeling the pain from lower revenues over the past two years, which is motivating Ghana and Cote d’Ivoire to consolidate their markets; however, implementation of such plans will be hampered by serious financing concerns and lingering local content regulations.
While the South African economy is again stuck in a deep recession and measures aimed at fiscal consolidation are stalled, the new administration may have achieved sufficiently firm institutional gains to stave off a third sovereign credit rating downgrade by Moody’s in October.
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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