The European Business Council for Africa

Zambia's government this week announced that it is asking investors in Eurobonds totalling $3bn for a six month delay in repayments, raising the prospect of becoming the first default of Africa’s new debt crisis.

The news should come as no surprise. 

The continent’s second-biggest copper producer has been struggling to keep up with debt repayments for years, and is already looking at options for restructuring the $11.7bn it owes.The requested delay, until April 2021, is to implement this and avoid a default. {...}

Sudan’s inflation rate hit a record high of 168.8% in August according to figures released this week. This follows the declaration of a three-month economic state of emergency to stabilize a plunging currency on September 11.

Just over a year since Abdalla Hamdok was appointed prime minister to oversee a three-year transition to civilian rule, following the surprise ousting of longtime ruler Omar al-Bashir, Sudan’s hopes for a new beginning are being stifled by old economic problems.

They’ve piled up since South Sudan seceded in 2011, taking most of the country’s oil reserves with it, stripping the government of cheap cash and exposing decades of mismanagement.

The head of Nigeria’s national oil company, Mele Kyari, on Thursday said that all four of the country’s oil refineries have been shut down due to damaged pipelines.

He gave no details on how long the closure will last, but it’s  unlikely that many Nigerians will notice a difference. The state-run refineries usually operate at a fraction of capacity, with the country having to import an estimated 90% of petroleum products.

Africa’s coronavirus-induced economic slowdown could last at least three years, Ghana’s finance minister Ken Ofori-Atta warned this week.

This comes amid growing concerns about Africa’s economic prospects, which is expected to be pushed into its first recession in 25 years in 2020, costing up to $79bn of its GDP.

Ofori-Atta’s words are a dampener on hopes for a speedy recovery. They could also be optimistic.

As bad as the impact of the pandemic is, it’s too simple to blame it for the downward trajectory. 

Outgoing World Trade Organization (WTO) director general Roberto Azevedo will officially leave the post on Monday, August 31.

The race to succeed him is underway, and it’s generating excitement around Africa, as three of the eight candidates are from the continent - Nigeria, Egypt, and Kenya.

Should one of them succeed, there are hopes that this could help push the continent’s trade agenda on a global platform.

A high level delegation from the Economic Community of West African States (Ecowas) is expected in Mali’s capital, Bamako, on Friday, as part of efforts by the bloc to stop a military takeover there.

The country’s president Ibrahim Boubacar Keita resigned on August 19 after being detained by military officers. The move, coming after months of protests against his rule, has been met with outrage and near universal condemnation, including being suspended by Ecowas.

Keita’s removal is just the latest in a series of crises to befall the country.

South Africa’s government plans to focus on infrastructure investment to help revive its struggling economy and boost development, according to details of a new growth plan revealed this week.

The ‘Economic Reconstruction, Recovery and Growth Plan’ hopes to tackle the immediate impact of the coronavirus pandemic - which has hit South Africa hard - and support wider economic development. 

It joins a steadily growing list of growth plans devised by South African governments over the years aimed at fixing its ailing economy, which has averaged just 1.12% growth since 2015.

This includes the high profile National Development Plan 2030, launched in 2012, and a new growth plan focused on industrialization announced by current finance minister Tito Mboweni just twelve months ago. 

South African retail giant Shoprite this week said it is considering selling its operations in Nigeria, Africa’s biggest economy and most populous country.

The potential sale comes amid tough economic conditions due to the coronavirus pandemic, which has seen the company’s sales across the continent drop by 1.4%, excluding its home market of South Africa.

Leaving would mark the end of 15 years of trying to cash in on the promise of consumer-led growth, driven by a rising middle class. This narrative has been a major selling point for the African growth story in recent years, helping to fuel an investment boom into consumer retail, including Wal-Mart’s $2.4bn investment into South Africa’s Massmart in 2011.

Radisson Hotel Group this week announced the addition of six hotels to its Africa portfolio in Mali, Ethiopia, Ghana, Nigeria and South Africa.

This is part of an expansion strategy by Radisson, which is on a growing list of global hotel chains including the likes of Marriott and Hyatt ramping up their presence on the continent.

The company plans to “further accelerate” its expansion despite the coronavirus pandemic.

It’s a rare piece of good news for Africa’s beleaguered tourism sector. It’s estimated that international arrivals to the continent dropped 13% from January - March 2020, against a 6% increase in 2019, and there has been little support for companies.

The bullish outlook hints at untapped potential.

Africa’s tourism sector was the world’s fastest growing for international arrivals in 2017 at 8.6% , with 62.7m visitors bringing in $37.7bn in receipts. Surging demand from new source markets, particularly China, means this may well go up in the next few years.

Future potential will do little to comfort a sector on life support at the moment, but the willingness to continue investing against the backdrop of a continent-wide recession should provide some cause for optimism.

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This week’s editorial comes in the form of our new podcast (links to Spotify), which looks at foreign direct investment (FDI) into Africa.

With FDI to the continent expected to plummet by as much as 40% this year due to the coronavirus pandemic, explore what - if anything - foreign investment is doing to drive meaningful growth and development.

Africa lags well behind other regions when it comes to attracting FDI, accounting for just 2.9% of global flows in 2019 with $45.4bn. In the same year developing Asia (which includes India and China) attracted $473.9bn, while Latin America and the Caribbean saw $164.2bn -  more than triple the volume in Africa.

Flows are dominated by a few key markets, like Nigeria, South Africa and Egypt, while natural resources account for much of the money being invested. Oil and gas and mining for example represent around 40% of all planned projects in Africa.

Until there is much more committed action on structural reform by governments on the continent, this picture is unlikely to meaningfully change.

You can listen to the full discussion, which also includes our take on other interesting stories doing the rounds, on Spotify or Apple Podcasts, or by clicking the image below.

Read the full article here.