Africa in 2023: Continuing political and economic volatility
Despite few African trade and financial links with Russia and Ukraine, the war in Ukraine will cause civil strife in Africa due to food and energy inflation.
Africa’s economy was recovering from the COVID-19 pandemic in 2022 when a range of internal and external shocks struck such as adverse weather conditions, a devastating locust invasion, and the Russian invasion of Ukraine – all of which worsened already rapidly-rising rates of inflation and borrowing costs.
Although the direct trade and financial linkages of Africa with Russia and Ukraine are small, the war has damaged the continent’s economies through higher commodity prices, higher food, fuel, and headline inflation.
The main impact is on the increasing likelihood of civil strife because of food and energy-fuelled inflation amid an environment of heightened political instability.
Key African economies such as South Africa and Nigeria were already stuck with low growth and many African governments have seen their debt burdens increase – some such as Ethiopia and Ghana now have dollar debt trading at distressed levels – and more countries will follow in 2023.
On average the public sector debt-to-GDP ratio of African countries stood at above 60 per cent in 2022. The era of Chinese state-backed big loans and mega-projects which started 20 years ago in Angola after the end of its civil war may be coming to an end but Chinese private sector investments on the continent will continue through its Belt and Road Initiative and dual circulation model of development.
Great and middle powers building influence
Geopolitical competition in Africa has intensified in 2022, particularly among great powers such as China, Russia, the US, and the EU but also by middle powers such as Turkey, Japan, and the Gulf states.
The sixth AU-EU summit held in Brussels in February 2022 agreed on the principles for a new partnership, although the Russian invasion of Ukraine which followed disrupted these ambitions. Japan’s pledge of $30 billion in aid for Africa at TICAD 8 in August 2022 was clearly made due to the $40 billion pledged at the China–Africa summit in November 2021.
