Africa’s road to recovery in 2021 is a fresh start

The continent now has a chance to reshape its relations with the global economy to create greater pan-African prosperity and resilience for future generations.

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The year 2020 will of course be remembered for the COVID-19 pandemic, but many African countries have handled the public health effects of the first wave well compared with neighbouring continents, with some 55,000 related deaths and two million recovered out of a population of just over one billion.

This can be credited to quick action and leadership by the Africa Centres for Disease Control and Prevention (Africa CDC) and others, assisted by public support and a youthful population with about only three per cent aged over 65 and relatively few institutionalized homes for the elderly.

Climate, prior exposure to other coronavirus strains, and effective community health networks set up in response to contain previous epidemics such as Ebola also clearly played a role.

Unfortunately many African countries will be much more seriously affected by the socioeconomic consequences of the global economic slowdown triggered by the pandemic. Even before COVID-19 hit, an increasing number of African countries were indebted and financially stressed.

African debt will become a greater global concern in 2021 as many African states remain the world’s poorest and most fragile and have been hard hit by the economic and financial costs imposed by the pandemic.

In April, the World Bank’s development committee and G20 finance ministers endorsed the Debt Service Suspension Initiative (DSSI) which includes 40 African least developed countries (LDCs). This G20 initiative, backed also by the International Monetary Fund (IMF) and G7, did not provide any reduction in the net value of debt, but it suspended repayment to no earlier than 30 June 2021.

The DSSI has made $5.4 billion in African debt owed in 2020 eligible for deferment. This, however, is only a fraction of the $13.6 billion in interest and principal owed by sub-Saharan African states to bilateral creditors, many of which are not part of the G20.

Bilateral debt management is also not the main debt burden in 2021. There is estimated to be $20 billion in private obligations, much of it owed to Chinese commercial creditors or Eurobond repayments. China, as a key lender to Africa, has provided its backing for the G20 plan but private creditors are not part of this plan and China has been reluctant to fully disclose all its loans. Talk of a Chinese debt-trap strategy in Africa is overstated, although Djibouti’s debt exposure to Beijing might have been partly the result of this because of its geostrategic location.

Looking ahead to a struggle for many

2021 will be a slow recovery year for many African states, with increased unemployment and growing debts and reduced liquidity to provide public services. A few countries are likely to particularly struggle, such as Zambia – which in November became the first sovereign-debt defaulter of the COVID-19 era – Angola, and Namibia which are all badly exposed. Zimbabwe is already in debt arrears to the Bretton Woods institutions and rejected being an LDC so is not eligible for DSSI debt relief.

A number of eligible African states, such as Angola, Congo-Brazzaville, and Equatorial Guinea have entered into programmes with the International Monetary Fund (IMF). For such countries, hit by a sharp downturn in commodity demand, overdependence on raw material exports has once again exposed their debt sustainability – Angola will in 2020 have reached a debt to GDP ratio of just short of 120 per cent.

The DSSI also has a key flaw. It treats debt as a liquidity issue, yet for many African countries it is a solvency crisis. More African states will turn to the IMF or have existing programmes extended to keep afloat, so expect a strong call from Africa and from concerned rich countries for a round of bilateral debt cancellation in 2021.

African debt forgiveness could become a key agenda item for the Italian presidency of the G20 and the UK presidency of G7 in 2021. France and Germany have already signalled they would consider this. This will not be simple, given that over the past decade African borrowing has expanded significantly to a constellation of private actors, but it is urgent.

2021 will also see increased geopolitical rivalry for influence in Africa. This will include competition over generosity, ranging from positioning over debt cancellation to providing COVID-19 vaccines. China has its Sinopharm vaccine and has already signed up to Covax, the international initiative aimed at ensuring equitable global access. The Russians have their Sputnik V vaccine, the UK has its AstraZeneca and University of Oxford vaccine, and the US the Moderna and Pfizer-BioNTech (with Germany) vaccines.

Africa will also be of greater American focus under a Joe Biden administration, assisting in the COVID-19 recovery but also containing Russian and Chinese advances on the continent. This will also be reflected via the international summits currently scheduled for 2021 with the second UK-Africa Investment Summit in January (this time a virtual affair), the eighth Forum for China Africa Cooperation in Dakar, the sixth EU-AU summit in Brussels (postponed from 2020), and possibly a fourth India-Africa Forum Summit (also postponed from 2020).

These international summits will focus on trade and investment but should also focus on combating poverty as the economic impact of COVID-19 has significantly slowed down poverty reduction in Africa. Already flatlining because of unequal and patchy economic growth coupled with continued demographic growth, it remains a key challenge for Africa in coming years to unlock economies that can provide sufficient and equitable growth for a youthful continent of 1.2 billion people.

Democratic development – and stagnation

Prior to COVID-19, sub-Saharan Africa’s 48 countries featured several of the world’s fastest-growing economies and a burgeoning middle class, but some regions also remained mired in debt, conflict, and protests, plagued by elites clinging to power.

Civilian-led reform movements toppled regimes in Algeria and Sudan in 2019, paving the way for ongoing messy transitions. Youth-led protests have clashed with government security forces in pushing for accountable government such as the #EndSARS Movement in Lagos or the 11 November (Independence Day) demonstrations in Luanda.

More protests should be expected in 2021, but there have been democratic advances in 2020. An independent court in Malawi overturned fraudulent presidential elections, resulting in a rerun that brought opposition leader Lazarus Chakwera to power. And the Seychelles electorate voted for an opposition candidate for the first time since independence in 1976.

These positive developments, along with smooth but fiercely contested elections in Ghana resulting in the re-election of incumbent Nana Akufo-Addo to the presidency, offer hope for the health of democracy in Africa. A smooth transfer of power in early 2021 in Niger will also hopefully occur as President Mahamadou Issoufou steps down having served two terms, following presidential and legislative elections.

In total, fourteen presidential or legislative elections are scheduled for 2021, but there will be a few democratic advances in these, and many setbacks where fiercely contested elections are heavily skewed in favour of incumbents.

Some such as Chad, Congo-Brazzaville, Djibouti and Uganda are expected to see the return of their long-standing leaders, while others such as Cape Verde and São Tomé e Principe will be freely contested – and Zambia’s elections will be fiercely contested.

2021’s elections will continue to show a continental trend of mostly democratic stagnation. Incumbents were re-elected in Guinea and Côte d’Ivoire in 2020 following controversial redrafting of constitutions, while elections in Tanzania were overtly oppressive and fraudulent. Flawed electoral practice in Mali contributed to a military coup in August, which toppled an unpopular government and introduced an 18-month transitional process.

A year ago, Ethiopia’s prime minister Abiy Ahmed was being lauded as a Nobel Prize winner and a reformer, but his military action against the leaders of the Tigray region in November has unlocked a regional conflict that also involves Eritrea and will not be resolved militarily.

Conflict resolution and counterterrorism

Resolving persistent conflicts continues to be a top priority for African security in 2021, whether in South Sudan, the Central African Republic, the Democratic Republic of the Congo or elsewhere. COVID-19 may have encouraged exploratory peace talks with Anglophone separatists in Cameroon but divisions within Cameroon’s regime appear to have since undermined progress.

In 2020, countering Islamist-linked terrorism increasingly dominated Africa’s security agenda and will do so again in 2021, from established networks such as al-Shabab in Somalia and Boko Haram in West Africa to widening threats in the Sahel and the emboldened Islamic State-affiliated efforts in northern Mozambique, also now spilling over into Tanzania. Meanwhile, long-standing violence between nomadic herders and sedentary farmers in West Africa and the Sahel continues to be largely overlooked.

African leaders are set to elect a new African Union Commission at the continental body’s next ordinary summit early in 2021. This new commission will have plenty on its plate with COVID-19 recovery, peace and security, and navigating geopolitics and economic recovery.

Kickstarting the African Continental Free Trade Area (AfCFTA) which starts trading on 1 January 2021 needs to be a priority. This is an internationally significant moment for Africa and, although a long-term project, provides Africa an economic pathway for internal growth which is not entirely dependent on foreign direct investment or the export of commodities. The economic effects of COVID-19 on African economies is a reminder of why the success of the AfCFTA is strategic for Africa’s future.

Despite these challenges, 2021 could be an important moment for a fresh start, from providing debt cancellation to recrafting Africa’s economic relationship with the global economy for greater pan-African prosperity and resilience for future generations.

This article was originally published in the Mail and Guardian.