| Author’s note: Not all African countries have been able to take advantage of the African Growth and Opportunity Act (Agoa) – a programme granting duty-free access to the world’s largest consumer market, the US. The programme has seen some criticism, ranging from the perceived lack of reciprocity from African nations to the US’ unilateral suspension of African countries, and the uncertainty this creates when making long-term investment decisions. However, at least one country, Cameroon, thinks that re-joining the programme could remedy two of its economic ills: external debt repayment pressures, and overdependence on the Chinese economy. Meanwhile, the latest from the Spring Meetings in Washington is that a planned workshop will direct the way out of the debt restructuring limbo that several African countries find themselves in.
Africa
GSDR stokes optimism for tangible results at upcoming workshop
The pressing need for a stronger global debt architecture is becoming more evident. A creditor-related impasse on debt resolution is standing in the way of Zambia accessing the second tranche disbursement under an IMF programme, but the copper producer is not the only African nation looking at debt restructuring as a critical component to restore sustainability. The Global Sovereign Debt Roundtable, which brings together an array of stakeholders including private sector creditors, official creditors, debtor nations, and multilateral organisations, convened this week. The post-meeting statement expressed optimism that an upcoming workshop will provide more clarity on “how to assess and enforce comparability of treatment” to ultimately speed up debt resolutions.
Cameroon: Negotiations to re-join Agoa initiated
Cameroon recently entered talks with the US over re-joining the Africa Growth and Opportunities Act (Agoa) initiative, which grants qualifying African countries tariff-free access to the US market. In late-2019, former US President Donald Trump suspended Cameroon from the initiative over “persistent gross violations of internationally recognised human rights” by Cameroonian security forces.
Ghana: Exchange rate passthrough quickens disinflation paceThe latest consumer price index (CPI) report from the Ghana Statistical Service (GSS) showed that the disinflation process quickened, as inflation fell to 45.0% y/y in March, from 52.8% y/y in February. Disinflation should continue, but the pace will moderate in the next couple of months due to the exchange rate weakness at the start of the year.
Mauritius: Services exports buoy current accounts
Higher tourism-related services exports supported Mauritius’s external balances towards the end of last year, as the current account deficit narrowed to $333m in Q4, from $399m in Q3. The external balances remain under notable pressure: rising imports continue to outpace exports, while most of the larger invisible account items deteriorated. Moderating global oil prices, recovering domestic industries, and a more stable exchange rate should support the trade and current accounts in 2023; however, the external balances are expected to stabilise near pre-pandemic levels in 2024 only.
South Africa: Mining production falters, dragged by coal and diamonds South Africa’s monthly mining output fell back in February (-4.9% m/m), and annual production (-5.0% y/y) shrunk for the 13th time in a row. Widespread logistical infrastructure failures mean that mineral producers are experiencing difficulty in getting their goods to local ports, which are constrained by backlogs and inefficiency. The knock-on effects are undermining industrial production which is already severely curtailed by scheduled power outages. |
