Next Africa: Zambia Is Focus of Global Debt Crisis - BLOOMBERG
OCTOBER 16, 2020
By Antony Sguazzin
Zambia is in the global spotlight for all the wrong reasons.
The southern African nation skipped a coupon instalment on its Eurobonds this week, increasing the likelihood of a debt default. The government has called on private creditors to agree to a deferral of payments at an Oct. 20 meeting, but many are reluctant to comply.
The country is now a test case for how the international community will treat nations that can’t meet their commercial debt obligations, even if it's a result of the Covid-19 pandemic. Countries from Africa to Latin America and beyond are facing similar struggles, leaving them at the mercy of lenders trying to get their money back.
Zambia's creditors want the government to sign up to an International Monetary Fund plan, but the institution would no doubt want transparency on arrangements with loans from China that make up as much as a third of the debt. There’s also an election in 10 months time, making the government reluctant to curb spending.
The G-20 group of the world’s richest nations this week extended debt relief until the end of June 2021 and chided private creditors for not joining the program. China, the biggest lender to many African nations, is yet to fully commit.
Zambia is finding that balancing the interest of its private creditors with those of its development partners is difficult. Lenders may have to accept some losses and China could come under more pressure to make its intentions known.
News & Opinion
Nigerian Protests | Mass demonstrations against police brutality have entered their 12th day, with at least 10 people known to have died. The army has offered to help bring the uprising to heel, signaling a potential escalation of a standoff that's so far seen authorities refrain from using force. Twitter CEO Jack Dorsey and Google Africa posted messages in support of the protesters, who have been linked to the local technology startup industry.
U.S. Troops | President Donald Trump has told top advisers he wants to withdraw troops from Somalia, allowing him to make good on pledges to bring soldiers home. The East African country remains beset by al-Qaeda-linked insurgents. The U.S. has 650 to 800 troops in Somalia, according to the U.S. Africa Command, including special forces helping to train soldiers.
Facebook Scrutiny | Guineans go to the polls on Sunday. Voters are grappling with a familiar-sounding problem: disinformation and a lack of transparency over who’s providing election campaign news. Social-media platforms such as Facebook are proving a powerful tool for the government of the west African country, which was under authoritarian rule until 2010. Meanwhile, Makalé Traoré has won praise for the policies underpinning her presidential campaign, a rare example of a woman running for the Guinea leadership.
Gas Windfall | Mozambique published its proposed model for a sovereign wealth fund as it prepares to reap as much as $96 billion from liquefied natural gas projects being built by companies including Total. The fund will accumulate savings and contribute to fiscal stability when commodity prices fluctuate, according to the Bank of Mozambique. The developments are the biggest private investments yet in Africa.
Trade Barriers | Hundreds of trucks have been parked at Benin’s border for more than a year since its eastern neighbor Nigeria abruptly curbed imports. To the west, officials in Ghana’s capital have shut Nigerian-owned stores to comply with a law that restricts foreign participation in its retail trade. Such actions embody the hurdles that must be overcome if Africa is to fulfill its vision of instituting a continental free-trade agreement.
Past & Prologue
- The Mauritian economy has been struck by waves of adversity this year, and it’s evident in the Indian Ocean island’s stock market — one of the worst performers in the world. The country's main index of shares has dropped 32% in 2020, the second-poorest performance among 93 equity benchmarks tracked by Bloomberg.
- Kenya’s economy contracted for the first time in almost 12 years in the second quarter as the impact of the coronavirus pandemic battered key sectors.
The Togo slippery frog lives among the waterfalls and forests of eastern Ghana and belongs to a family that dates back 70 million years. Hunted relentlessly for its meat over the last five millennia, today it’s one of the most endangered amphibians on the planet. The frog is among about 100 species protected by an initiative funded by the Zoological Society of London, but the future of the program has been plunged into uncertainty by the Covid-19 pandemic. The ZSL was forced to close both its U.K. zoos for three months as part of that country's lockdown, depriving it of ticket sales and vital funds for animal care and scientific research. Travel restrictions have stalled a number of ZSL’s 300 conservation projects around the world. The organization's plight shows how the coronavirus is hurting African conservation as well as national economies and health-care systems.