Hi, Quartz Africa readers!
Oil for debt
Last month, World Bank’s managing director David Malpass expressed concern about the amount of debt some of Africa’s economies were piling on. In particular, he worried about the lack of transparency in some of the loan deals being struck with China.
Africa’s debt load has soared some 150% to over $583 billion in 2018 from $236 billion 10 years earlier, according to World Bank data.
A sizable chunk of that debt in Africa is made up of resource-backed loans which are struck between the resource producer and the lender—usually China in recent years. A resource-backed loan is defined as a borrowing mechanism by which a country gets finance in exchange for, or collateralized by, future streams of income from its natural resources, such as oil or minerals.
A recent report from the Natural Resource Governance Institute (NRGI) examined 52 resource-backed loans made between 2004 and 2018, with a total value of more than $164 billion—30 of them, with a combined value of $65.8 billion, were made to Sub-Saharan African countries.
More than half the total amount of loans to Sub-Saharan African countries examined in the report came from China Development Bank and China Eximbank to Angola ($21.4 billion); Ghana ($3 billion); Niger ($1 billion) and Sudan ($3 billion). The remainder was mostly provided by international commodity traders to oil producers Chad ($2 billion), Congo Brazzaville ($5.1 billion) and South Sudan ($1.3 billion).
“African leaders have often taken out these loans to help with their own short-term political ambitions, but their countries have ended up severely indebted and with the risk of losing collateral worth more than the value of the loan itself,” says Evelyne Tsague, an NRGI Africa co-director.
To be clear, resource-backed loans need not be a bad thing, far from it. Most of these deals are linked to specific infrastructure projects for example, so if executed as laid out on paper they could help shorten the path to closing the African infrastructure gap you often read about.
But it is the lack of transparency with these bilateral deals that worries bodies like NRGI and the World Bank, particularly with oil producers. “These deals, sometimes labeled as oil advances, often resemble pay-day loans,” says David Mihalyi, co-author of the report and senior economic analyst with NRGI. “They have short maturities, high interest rates and fees, and no commitments on how the money will be used.”
And if you needed any more evidence of the risk of bad deals, the imminent global economic crisis prompted by the coronavirus pandemic should be enough. The downturn in Chinese demand and subsequent machinations of Saudi Arabia in the oil markets has seen prices drop to levels that will disrupt the budget plans of major oil producers in Africa. It could have even more significant impact for countries whose loans were inked at the higher prices. But, of course, we can’t be sure.
— Yinka Adegoke, Quartz Africa editor
Five stories from this week
TikTok is quietly snapping up creatives from YouTube and Instagram for a full Africa roll-out. The fast-growing social media app is making a big play for Africa’s youthful market. China’s TikTok has been luring influencers and creatives in Africa’s largest internet markets, explains Alexandria Williams in Nairobi.
The complicated history of why Africans use skin lightening products. Even in pre-colonial times some Africans used lightening products to brighten their hair or skin, but for black and brown consumers in places like the United States and South Africa over the last 200 years as racism and colorism flourished, even slight differences in skin tone could carry political and social consequences.
Researchers are trying to transform trees into power generators. As researchers dig into clean energy opportunities to cut emissions and pollution, trees are becoming a subject of interest. As Anne Quito reports from Design Indaba in Cape Town, a team of researchers are trying to harvest electricity from plants by experimenting with the “triboelectric” effect in tree foliage.
Scientists say rainforests are losing their power to remove carbon dioxide from the atmosphere. Research scientists tracked 300,000 trees in rainforests mostly across Central Africa and learned intact tropical forests are removing far less carbon dioxide than they once did over the span of a decade.
Côte d’Ivoire’s president rules out a third term, but it’s no guarantee elections won’t get messy. President Alassane Ouattara says he won’t be seeking a third term but the likely presidential bids of civil-war era heavyweights threaten a return of destructive winner-takes-all mentality in national politics, writes David Bruckmeier.
Coronavirus and Africa
Ethiopian Airlines was set to recover from its worst tragedy—then coronavirus hit. As it marked the first anniversary of the tragic Boeing 737 Max crash that killed 157 people, Ethiopian Airlines has had to consider new existential challenges at home and abroad as coronavirus ravages the airline industry, reports Samuel Getachew from Addis Ababa.
The coronavirus outbreak and tumbling oil prices are triggering a dollar shortage in Nigeria. With oil prices tanking and China focused on stemming the coronavirus outbreak, Nigeria’s economy is being caught in the cross-hairs. In Lagos, Yomi Kazeem finds the perennial problem with import-dependent Nigeria is showing up with a shortage of foreign exchange.
A Senegalese innovation lab is helping the UK develop a 10-minute coronavirus test kit. The UK government awarded a £1 million grant to a British biotech firm to develop test kits that diagnose coronavirus much faster. The manufacturing of the test kits will happen in a Senegalese lab that’s custom-built for epidemics-related innovation.
South Africans are divided over the return of over 100 students from Wuhan. Politicians and everyday citizens aren’t vociferously supportive of president Cyril Ramaphosa’s decision to bring home 114 students from the coronavirus epicenter of Wuhan in China’s Hubei province, writes Norma Young from Johannesburg.
The growing rate of coronavirus cases in Africa. This week, Kenya, Ghana and Ethiopia confirmed their first coronavirus cases as have Rwanda, Namibia, Equatorial Guinea and Mauritania. With index cases frequently being identified as travelers from Europe, more governments might soon tow Uganda’s line by placing travel restrictions on some Western countries. As well as the countries in the table below, 10 other countries have confirmed one case each, bringing the total count as of press time to 271 in Africa.
The Dealmaker
•Field Intelligence, a Nigerian health-tech startup raised $3.6 million in a Series A round led by Blue Haven Initiative with participation from the Imperial Venture Fund and Accion Venture Lab.
•Youverify, a Nigerian identity verification startup, raised a $1.5 million seed round led by Orange Digital Ventures Africa, the investment arm of telecoms giant, Orange.
•Fuzu, the Kenyan recruitment startup, raised $3.8 million in a Series A funding round from investors including Sparkmind, Finnfund, Cornerstone Enterprises, Aucfan Incubate, Seedstars International, Kepple Africa Ventures, and Barona.
Quartz Membership
AI can be prejudiced, just like people. Quartz contributor Helen Edwards reports on how human biases get imported into AI—and how lawmakers and the tech industry are trying to course-correct.
Other things we liked
Can Africa ever get its own West Point? Last month when US secretary of state Mike Pompeo was visiting Addis Ababa he was asked, “Should Africa have its own West Point?” While it might be complicated for Africa’s 54 countries to overcome historical colonial ties, borders, funding and other barriers, Zain Verjee explains in The National why the pay-off for continent-wide military cooperation and training would be worth it.
Mozambique is a failed state. The West isn’t helping it. Some observers have seen it as an African success story but Mozambique has become a borderline failed state, writes Dennis Jett for Foreign Policy. The corruption of Mozambique’s government and its sham democracy mean despite its energy riches there’s little guarantee its security or governance will improve in the future, writes Jett.
Finding a place for Africa’s languages in modern African fiction. Nearly 60 years ago when the first African Writers Conference was held at Uganda’s Makarere University, there was undoubtedly a focus on, perhaps even a preference for. writing in the English language. But as Adipo Sidang explores for The Elephant, fiction writing in indigenous African languages has never been more important especially as many languages become endangered.
ICYMI
African Leadership University Female Leaders Scholarship. The inaugural award will see 50 female candidates who have “demonstrated impact in their communities” to join the university’s Rwanda and Mauritius campuses. (Apr. 20)
The Orange Social Venture Prize in Africa and the Middle East. The 10th year of the prize will reward the best technological projects with a positive impact in both regions. (Jun. 5)
*This brief was produced while listening to Sielumuka Ngwasuma by Zaïko Langa Langa (DR Congo).
**Correction: Last week we identified kora player Seckou Keita as being from Mali. He’s from Senegal. Apologies!
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