Hi, Quartz Africa readers! |
Zambia first |
This week there was almost an air of disappointment in the voice of one analyst I was speaking with when news broke that Zambia had not officially gone into default as was expected on Tuesday. In truth it might be more accurate to say Zambia had not gone into default for now as it had negotiated to negotiate again with its bondholders at a later date next month. |
You could call it an early birthday present, as Zambia marked its 56th year of independence on Saturday (Oct. 24), but a few weeks of reprieve from what seems inevitable is more temporarily helpful than long-term generous. |
But how did we get here? For a few years we have published articles which considered the risks of a so-called " debt time bomb" as several African countries racked up eurobond loans from commercial lenders in global financial centers including London, New York, and elsewhere. What has happened, as we all know, is that the post-Covid economic crisis has amplified and accelerated the timeline. |
In absolute dollar terms Zambia is not the most egregious case. It has officially racked up about $12 billion in external debt, with just over half of it owed to China. But this external dollar debt alone accounts for a whopping 68% of GDP in 2020, according to the IMF. The World Bank says Zambia's fiscal situation is expected to worsen this year. |
To be clear, the reason there are so many eyes on Zambia is, despite its usual place in the English language alphabet, the southern African country is the first of what some of the more pessimistic (realistic?) watchers believe will be a trend of defaults or/and debt restructurings by over-extended African countries. So the sense of disappointment from my analyst friend was not one of wishful thinking but at not being proved right… yet. |
Several long-time watchers or economic historians point out that in real terms African countries are in a stronger economic position than previous 80s and 90s iterations of African debt crises. But this time the challenge for countries like Zambia is who they owe as much as what they owe. In the past, multilateral Paris Club lenders were probably more incentivized to reach a solution than now where countries owe commercial lenders and have significant bilateral debt to China. |
The bondholders—as commercial parties with a fiduciary responsibility to their pension fund investors—are reluctant to take a "haircut" on their holdings without knowing for certain the influential Chinese lenders will be taking one too. That said, Zambian economic watchers I've been speaking with in Lusaka are a lot less worried about the Chinese but uncertain about what will happen with the bondholders in a few weeks. It'll be one to watch as it has implications for several other African countries. |
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Stories this week |
What developing countries can teach rich countries about how to respond to a pandemic. One of the biggest global trends of the ongoing Covid-19 crisis has been how less affected Africa has been in comparison to Europe and North America. Africa's relative successes with managing the pandemic partly come from prior experience with deadly viral outbreaks and serve as a blind spot for Western nations. |
The post-Covid debt crisis in African countries is being aggravated by unreliable data and global ratings agencies. As Africa reels from the economic after-shocks of the global pandemic, governments on the continent are being confronted by a long existing problem. The lack of credible and accurate data, which is seen again during the Covid-19 crisis, and its impact is being exacerbated by credit ratings which don't understand African economies, finds Misheck Mutize. |
Across Africa, citizens are resisting attempts to raise tax revenue from rising mobile use. The reversal of a controversial tax on mobile phone purchases in the wake of public criticism in Cameroon and new mobile levies in Liberia has been big news this month. But as Amindeh Blaise Atabong explains, it's only the latest in an ongoing trend as cash-strapped governments on the continent attempt to further monetize telecoms-related activity by taxing citizens. |
Ethiopia has slammed a Trump suggestion Egypt could "blow up" its Grand Dam. In a triumphant White House call with the leaders of Sudan and Israel to announce normalization of relations between those countries, US president Donald Trump raised the prospect of a deal between Ethiopia and Egypt but suggested Egypt could be forced to "blow up" the Grand Ethiopian Renaissance Dam. From Addis Ababa, Samuel Getachew reports on a strong Ethiopian government reaction. |
Nigeria's EndSARS (Week 2) |
Nigeria's #EndSARS protests take an ugly turn. The ongoing campaign against police brutality in Nigeria was rocked as soldiers fired into a crowd of peaceful, unarmed protesters in Lagos this week. Yet, amid denials by the army despite contrary video footage, Nigeria's president Buhari addressed the country without mentioning the shootings and instead issuing threats against protesters, writes Yomi Kazeem in Lagos while also evaluating the growing concerns of a possible internet shutdown. |
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By J.Horne CC BY-SA 4.0, |
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Chart of the Week |
The global pandemic is hobbling Africa's progress in boosting access to electricity. With African governments juggling pressing health and economic effects of the Covid-19 pandemic, key utilities are left shorn of vital resources to sustain the momentum of improving access to electricity. As a result, the number of people living without electricity in Africa is set to increase for the first time in eight years. |
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Dealmaker |
•Ilara Health, a Kenyan health-tech startup, received a $1.1 million grant from the Bill & Melinda Gates Foundation. The startup, which provides diagnostic testing to primary care clinics and has partnered with over 100 clinics in the country, will focus on using the grant to improve local maternal health outcomes. |
•Secha Capital, the southern African investment impact firm, has closed a $30 million fund to support small and medium-sized enterprises in the region. It's the second fund closed by the firm and will focus on businesses in the fast-moving consumer goods, agribusiness, manufacturing, and healthcare sectors. |
Quartz gems: How podcasting became big business |
Even with fewer people commuting to work—a popular time for listening—Covid-19 couldn't stop the rise of podcasting. Overall downloads of podcasts in the US have soared in 2020, according to data from podcast measurement company Chartable. |
The pandemic does seem to have affected what people are actually listening to, though. Podtrac, another podcast data firm, tracks podcast downloads by genre. For the shows Podtrac measures, which is a subset of the ones measured by Chartable, overall downloads by US listeners grew by 42% from October 2019 to October 2020. Yet there was a huge disparity across genres. Find out which genres exploded, and which have seen virtually no growth, in our field guide to the podcast business. |
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Other things we liked |
After 20 years, there's more than mere economic exchange in China's trade relationship with Africa. This month China and its African counterparts marked the 20th anniversary of FOCAC, the Forum on China Africa Cooperation which has become an "important and dynamic platform for dialogue between China and Africa" and an important model and banner for south-south cooperation. For South China Morning Post, Jevans Nyabiage writes on how the relationship has evolved far beyond trade. |
Ghostly presences in Addis Ababa: A conversation with Maaza Mengiste. The Ethiopian-born author pulled together a diverse array of contributors to write about Ethiopia's capital city, Addis Ababa, and "exhume its depths through fiction" in a new anthology called Addis Ababa Noir. In an interview with the Los Angeles Review of Books, Mengiste says the writers "came back with these stories that really felt to me like an examination of different ruptures in society in Addis Ababa." |
ICYMI |
Africa No Filter Research Program. A fellowship for African scholars who are currently undertaking a PhD or post-doctorate programs or have been in junior academic posts for less than three years. (Nov 13) |
Climate Innovation Labs. The UN-backed program offers participants a chance to work alongside climate technology experts to explore and create "solutions for enhanced climate action." (Nov. 5) |
Keep an eye on |
Tanzania goes to the polls (Oct. 28). This Wednesday (Oct,. 28) Tanzanians will go to the polls to vote for a president and a new parliament. President John Magufuli is up for a second term with Tundu Lissu, 52, as his closest opposition rival from about a dozen other rivals. Magufuli, 60, is widely expected to win but not without controversy given recent rights clampdowns. |
Côte d'Ivoire votes (Oct. 31). Next Sunday (Oct. 31) Ivorians will head to the polls to vote for a president and new parliament. President Alassane Outtara, 78, is running for an unprecedented third term but faces notable opposition from three other candidates, Henri Konan Bédié, 86, a former president; Pascal Affi N'Guessan, 67, a former prime minister, and Kouadio Konan Bertin, 51, a former member of parliament. |
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Our best wishes for a productive and ideas-filled week ahead. Please send any news, comments, suggestions, ideas, and Zambian debt-for-equity swap term sheets to africa@qz.com. You can follow us on Twitter at @qzafrica for updates throughout the day. |
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