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 suspension of work on the Uganda to Tanzania crude pipeline is a major setback for the development of the Lake Albert oil sector and is likely to push back the deadline for commercial production even further. EXX Africa assesses the wider risk outlook for the Ugandan oil sector and the factors that could cause further delay to project completion.
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.
Tanzania’s current administration has embarked on a number of reforms to harness the potential of artisanal and small-scale mining and address its associated environmental and social concerns. EXX Africa examines these changes and assesses whether enough has been done within the mining sector as a whole.
State-owned enterprises in Africa have a notorious reputation for being mismanaged and for repeatedly requiring financial bailouts. EXX Africa unpacks this notion by looking at some of the best and worst-performing entities across the continent. Our analysis spans from examples in Morocco, Ghana, and Ethiopia to Zambia and South Africa.
An ongoing mining contract review is motivated by a need to raise state revenues from the sector to support the government’s debt servicing and higher social development spending that was promised in the last election campaign. The review also supports the government’s crackdown on corruption associated with the previous government and a current trend to disfavour Chinese partnerships. If implemented prudently, the review may stimulate future investment by strengthening institutions, while improving transparency and accountability.
The government is gearing up for the next election cycle, thus seeking new revenues from the mining sector and accelerating negotiations with foreign investors in the natural gas sector. Despite a record of human rights abuses, repression of political freedoms, and mounting evidence of manipulation of economic statistics, many foreign companies will remain interested in participating in Tanzania’s state-led development drive that includes large industrial and infrastructure projects.
The dismissal of Zambia’s finance minister was a politically motivated act seeking to distract from a planned constitutional amendment that would remove a requirement of parliamentary approval of government loans and guarantees. The risk of a default will rise further in the second half of 2019, although Zambia’s new finance minister may still seek abrupt recourse to the IMF to avoid such a scenario.
In President Buhari’s second term, the government will continue to prop up the local currency and maintain costly subsidies, policies which have fostered massive fraud and embezzlement and undermined economic recovery. As the budget deficit widens, debt servicing spikes, and some banks again face non-performing loans, there are growing concerns that Nigeria may be running into ‘bankruptcy’. However, oil sector state asset sell-offs might be sufficient, at least in the short term, to stave off another recession or liquidity crisis.
- 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