Last year was a dynamic year for Africa in both positive and challenging ways.
The Africa Continental Free Trade Area (AfCTA) was effected; Nigeria showed signs of moving out of recession with risks of going back, South Africa dipped into recession and the growing debt burden of African governments was brought into focus.
In terms of economic diplomacy, 2018 saw China announce a $60 billion package for Africa during Forum on China-Africa Cooperation (FOCAC), the US passed the Build Act which saw the creation of the International Development Finance Corporation, an agency that can invest up to $60 billion in the developing world; further the Trump Administration announced new strategy for Africa.
The European Union proposed a new Africa-Europe Alliance for Sustainable Investment and Jobs involving a 25 per cent increase in the EU Africa budget for 2021-27 to about €40 billion. Given all these factors, what are the key focus points for Africa in 2019?
Firstly, the indebtedness of African governments will be watched. The pace at which African governments are accruing debt is causing concern. The International Monetary Fund (IMF) points out that Sub-Saharan Africa public debt was at 57 per cent of its GDP in 2017, an increase of 20 percentage points in just five years. In other words, Africa as whole, owes more than half the value of its gross domestic product (GDP).
In October the IMF raised Kenya’s risk of defaulting on debt repayments from low to moderate, forecasting the country’s total public debt will reach 63 per cent of GDP in 2018. Rapid debt accrual by African governments juxtaposed with serious concerns about mismanagement of public funds will be watched and be a key point of interest in 2019.
Secondly, the stakes of a geopolitical focus on Africa will be heightened this year. The three economically dominant regions in the world all have plans for Africa: the EU, US and China.
The EU continues to pursue bilateral deals and Economic Partnership Agreements (EPAs) as it gears up for the Africa-Europe Alliance. The US has both a new Africa strategy and new development financing capabilities.
China has tweaked FOCAC with a facility for both SMEs and encouraging African imports into China. The basic point is that all three powers are learning and their strategy into Africa is informed by their new insights, for better or worse. Thus, enlightened African agency is needed in 2019. African governments will have to ramp up their economic diplomacy and negotiation capacity; African private sector will have the opportunity to expand in light of the focus from three economically powerful regions; and the African public will need to continue to ensure they get fair deals given all the aforementioned dynamics.
Finally, internal African dynamics will be key in 2019. AfCTA is already indicating the potential of Africa as well as the issues the continent has with itself. The performance of South Africa and Nigeria will be in focus, even as the East Africa region continues to power African growth forward.
Given the renewed focus on Africa, 2019 may well be a year where the complexities of Africa will be highlighted. The continent, like any other, is multi-dimensional and complex; 2019 may well be the year where this is truly better understood.