African nations have mostly escaped the heavy death toll and hospital bed shortages faced by Western countries, but the COVID-19 pandemic has dealt a disproportionately severe blow to the continent’s economic ambitions. Fortunately, robust collaboration between African public and private sectors, and particularly innovative financing measures from African development institutions—including members of the Africa Center’s new Afro-Century Initiative, such as the Africa Finance Corporation and Trade and Development Bank—have helped to address what Kenyan President Uhuru Kenyatta described (in public remarks to an Atlantic Council audience in June) as an urgent need for fiscal space.
The Africa Center’s Coronavirus: Africa page documented the early impact of the pandemic, and our virtual convenings with the leadership of the Africa Centres for Disease Control and Prevention and the World Food Programme highlighted the early successes and agency of African stakeholders in combatting the crisis. The likelihood of greater pan-African collaboration in the wake of COVID-19 was a key finding of the Center’s report on great power competition in Africa in the post-COVID landscape. That report was the result of a newly-launched collaboration with the Policy Center for the New South, which seeks to explore and reframe perceptions of Africa through a series of paired research papers written from both North and South lenses.
COVID-19 did not slow the pace of political developments in Africa this year. Sudan’s transitional government achieved a watershed when the US State Sponsors of Terrorism (SST) designation was finally lifted and a massive aid package was bestowed on the nation in exchange for normalization of relations between Khartoum and Tel Aviv. The Africa Center’s convenings and analysis on this topic provided thought leadership across the political spectrum that helped steward the SST lifting to a successful conclusion. The Center’s robust analysis of the conflict in northern Ethiopia between the administration of Prime Minister Abiy Ahmed and members of the former authoritarian regime helped to shape perceptions of the dispute both regionally and in Washington, DC.
Looking ahead, it’s clear that in 2021 the new Biden administration will be challenged by the need to repair and reinvigorate key bilateral relationships on the continent (including Ethiopia, Nigeria, and South Africa), and there is a major question mark over how many of the former administration’s initiatives will be abandoned. Prosper Africa’s launch was problematic, but in concert with the launch of the new US International Development Finance Corporation (DFC) and its equity capability, it signaled a concrete shift in US priorities to “trade, not aid” that was long overdue. The Africa Center marked that transition with a summit-level conference hosted in cooperation with the DFC, which laid out the United States’ all-of-government approach to Africa policy and, importantly, underscored both the strong bipartisan support for Prosper Africa’s expanded toolkit and the essential role of African development finance institutions in the process.
An event under the auspices of our new Afro-Century Initiative—which unites a coalition of African development finance institutions in an effort to forge a more authentic, optimistic narrative on Africa—capped the Center’s year of programming. An esteemed panel of economists and business leaders offered the following observations and predictions for what 2021 has in store for Africa’s economies:
What to watch for in 2021:
- African markets have an advantage in 2021 and beyond, says Renaissance Capital’s Global Chief Economist Charlie Robertson, because the continent has been the least hurt by COVID-19 relative to other regions (a story similar to that of the 2008-2009 global financial crisis). Consequently, low interest rates in the West could push more institutional investors to chase high yields in Africa by increasing portfolio exposure in African fixed income and equities.
- Getting Africa to “catch up” is the wrong framing, says AfroChampions Co-Founder Edem Adzogenu. To him, the attitude must rather be: “can you turn in a completely different direction and perfect another model that passes the others but also learns from them.”
- The African Continental Free Trade Area (AfCFTA) can be a “game-changer,” says the Africa Finance Corporation’s Chief Economist Rita Babihuga-Nsanze, but there is still a lot of work that needs to be done to build an enabling environment, especially when it comes to infrastructure.
- While China will remain a key financing partner, the scaling back of Belt and Road Initiative lending will provide space for new international lenders and other financial institutions to support the continent’s growth ambitions, says Standard Chartered Bank’s Chief Economist for Africa Razia Khan. According to Babihuga-Nsanze, African development finance institutions can play a critical role in closing the financing gap that emerges.
- Chinese growth—not lending—is going to lift the whole continent, says Robertson, but African countries need to invest in the right infrastructure. China’s GDP is likely to grow about $2.3 trillion next year and another $2.3 trillion the year after: equaling the size of the entire African market. This growth could help drive commodity price increases and create a lever for wealth creation in Africa, lifting the whole continent. Yet, key to cashing in on this Chinese growth will be Africa’s ability to build infrastructure to enable it, while forgoing projects that do not.
- Value addition and industrialization are two critical trends, according to Babihuga-Nsanze. The post-COVID reset will provide a push to shore up local supply chains and double down on the building of local industrial parks, which can promote investment.
- Ghana is a market set for growth, Khan and Robertson agree. But Nigeria must make good on its diversification promises, while South Africa’s political reforms will have investors watching.
- Observers are missing the huge SME-driven informal sector, notes Adzogenu, as well as the huge creatives space. For African Development Bank Chief Economist and Vice President Rabah Arezki, the bottom-up wave of fintech and innovation will transform the continent, including in rural areas where growing digitization could be critical for improved agriculture. To Africa Center Senior Fellow Aubrey Hruby, digitization is the single most significant trend coming out of 2020 for Africa.
The last word:
- “For a continent that has the youngest population, [Africa] should be the center of the world. I mean this should be the center for the freshest ideas for innovation and everything, and the center for which people can come and bring their ideas to bring growth that will benefit the entire world as well.” –Edem Adzogenu, AfroChampions
Explore highlights from the Africa Center’s year of programming
New Atlanticist Oct 16, 2020
The US government makes its big push for investment in Africa
By David A. Wemer
Buoyed by bipartisan commitment and a new government agency, the United States has taken new and significant steps to help drive investment in Africa, strengthen the region’s dynamic economies, create lucrative opportunities for US and African businesses, and advance US foreign-policy goals in the region.
New Atlanticist Jun 18, 2020
Kenyan President Uhuru Kenyatta says his country needs ‘fiscal space’ amid the COVID-19 crisis
By Larry Luxner
“Coronavirus is mainly a health issue, and our key focus is ensuring that we keep our people safe,” Kenyatta said. “But this is also an economic crisis because it has resulted in some key sectors hugely affected by lockdowns. We were forced to close our airspace, which affected tourism, a very critical part of our economy.”
Report Nov 30, 2020
African agency in the new Cold War: Traditional power competition in the post-COVID-19 African landscape
By Bronwyn Bruton
In a resource-scarce post-COVID environment that will accelerate competition between traditional external powers on the African continent, some African nations will find themselves in the crosshairs of a new Cold War mentality that could threaten African agency, regionalization, and the blooming ethos of pan-Africanism. African leaders’ pursuit of collective interests will be decisive in setting the continent’s trajectory—toward a new African Century, or another period of thwarted ambitions.
AfricaSource Oct 16, 2020
Reducing Africa’s infrastructure deficit: An interview with AFC President & CEO Samaila Zubairu
By Africa Center
The Africa Finance Corporation (AFC), a pan-African development finance institution, has been developing and financing infrastructure, natural resources, and industrial assets to increase economic prosperity and growth across the continent since 2007. Watch Samaila Zubairu, president and chief executive officer of the Africa Finance Corporation, join Senior Fellow Aubrey Hruby for an interview to discuss AFC’s investment philosophy, innovation, and future growth, along with the critical role of African development finance institutions in improving economic prosperity.
AfricaSource Oct 15, 2020
An interview with US Assistant Secretary of State for African Affairs Tibor Nagy
By Africa Center
US Assistant Secretary of State for African Affairs, Ambassador Tibor Nagy, joins Atlantic Council Africa Center Director of Programs and Studies Ms. Bronwyn Bruton to discuss bipartisan support for increased US trade and investment in African countries.
AfricaSource Oct 16, 2020
Financing African trade and development: An interview with TDB Group President & CEO Admassu Tadesse
By Africa Center
The Eastern and Southern African Trade and Development Bank (TDB) has been financing trade and development projects and promoting economic integration and prosperity in the region since 1985. Watch an interview below between Mr. Admassu Tadesse, president and chief executive officer of TDB Group and Ms. Aubrey Hruby, senior fellow at the Atlantic Council’s Africa Center. Mr. Tadesse covers what makes TDB unique and different, the role African development finance institutions (DFIs) play in returning the African continent to economic growth post-COVID, how TDB can interface with US investors, and ways DFIs can be catalytic in increasing capital flows to African markets.
AfricaSource Dec 14, 2020
What Sudan’s terror delisting really means
By Cameron Hudson
The announcement today that the forty-five day notification period to Congress had elapsed and Sudan was finally off the US State Sponsors of Terrorism list is historic. It validates the new direction of the country, which it was set upon nearly two years ago by nationwide, peaceful street protests. More importantly, it represents a definitive break with Sudan’s troubled past—the true end of the Bashir era, which began more than thirty years ago—and holds out the hope for a more prosperous future for all Sudanese. The weight of the moment cannot be understated.
New Atlanticist May 8, 2020
WFP’s David Beasley warns of dire famines in Africa, Mideast if COVID-19 supply chains damage continues
By Larry Luxner
Up to 300,000 people could starve to death every day if the COVID-19 pandemic ruptures global food supply chains—even more than the roughly 275,000 people who have died of the disease worldwide so far.
AfricaSource Nov 13, 2020
Calls for negotiation are driving Ethiopia deeper into war
By Bronwyn Bruton
Ethiopian Prime Minister Abiy Ahmed, who won the Nobel Prize for his peacemaking with Eritrea, has confounded allies by resisting all attempts to dampen the ongoing military confrontation with a powerful northern insurgent group, the Tigray People’s Liberation Front (TPLF). The TPLF effectively controlled the Ethiopian government from 1991 until February 2018, when it was driven […]
New Atlanticist Apr 29, 2020
Africa still sees a massive pandemic in its future, but partnerships may lessen blow
By Katherine Walla
With an uncertain future for the pandemic that lies ahead, the Africa CDC is encouraging pivotal partnerships to act quickly to secure Africa amid haphazardly understood policies, little access to water and sanitation, and resource constraints.
New Atlanticist Dec 8, 2020
Mo Ibrahim: Why Africa must emerge more resilient from the COVID crisis
By David A. Wemer
A well-known Afro-optimist, Ibrahim has invested in the continent’s democratic progress and has focused on tackling practical governance issues. While the pandemic has exposed such problems across the world, he noted, one of its lessons is that Africa must be “more self-sufficient” and “resilient.”
Event Recap Jul 10, 2020
Dr. Dambisa Moyo, panel reinvigorate debate on a Marshall Plan for Africa
By Africa Center
On Friday, July 10, the Africa Center hosted a panel discussion on whether the time has come for a Marshall Plan for Africa. The panel featured Global Economist and Author Dr. Dambisa Moyo, former US Congressman Dr. David Brat, and Africa Center Senior Fellow Ms. Aubrey Hruby. The virtual conversation was moderated by Africa Center Senior Fellow Mr. Gabriel Negatu, with opening and concluding remarks given by the Center’s Director of Programs and Studies Ms. Bronwyn Bruton.
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