Hi, Quartz Africa readers!
Who’s next?
“Things will begin to get very difficult from here on,” worries Monica Musonda, founder of Java Foods in Lusaka, Zambia.
For Musonda and owners of businesses like hers which rely on a variety of imported inputs, the fallout from Zambia’s debt default this month is about the broader economic environment, in particular the weakening Zambian kwacha, which has halved in value against the US dollar since the start of the year.
Zambia’s debt crisis has captured global attention because it is seen as the first of a likely steady stream of Covid-era sovereign debt defaults, with several candidates in Africa.
To recap, over the last decade Zambia had run up a large amount of debt to China (around $6 billion) for “build-operate-transfer” infrastructure projects. Zambia also owes around $2 billion to the World Bank. But it was the eurobond debt, another $3 billion, which has been the more pressing issue. In October, as many had predicted, Zambia missed a $42.5 million interest payment to the bondholders. The grace period on that payment expired on Nov. 13.
There has been some discussion about the unwillingness of bondholders to negotiate a favorable deal with Zambia because of uncertainty about what deals were being cut for the Chinese, but for Zambians they look to their own government.
“Our challenges are less of external factors than internal, it’s around governance, mismanagement of resources,” says Trevor Hambayi, an analyst based in Lusaka, who has written presciently about Africa’s ticking debt time bomb for Quartz Africa. While some of these infrastructure projects looked progressive on the face of it, few had any hope of helping the country pay back what it now owed. “We had these brand new roads, hospitals, and airports but they were not commercially viable,” says Hambayi.
Much of the coverage about Zambia’s debt crisis has not explored the reality for ordinary Zambians. “The country is being used as fodder in a geopolitical battle raging between the West and China,” writes Grieve Chelwa, a Zambian economist at University of Cape Town. He’s worried about Zambians becoming the “proverbial grass in the big ideological tussle of our times.”
Your question might be, who’s next? There have been concerns about Angola but more eyes are turning to Ghana. The West African country is arguably better positioned than Zambia, but things look dicey. “Ghana is closer to the edge, in our view,” writes Charles Robertson, chief economist at Renaissance Capital. But while Robertson is concerned he also sees some upside for investors. “Ghana’s external debt today is probably the riskiest bond we would still recommend investors to hold.”
— Yinka Adegoke, Quartz Africa editor
Stories this week
Covid-19’s fatal link to Africa’s rising diabetes. Nearly one in five Covid-19 deaths in Africa have been linked to diabetes, according to WHO analysis, Uwagbale Edward-Ekpu reports. It’s the latest marker of the alarming rise in noncommunicable diseases across the continent.
Nigerians’ rising asylum claims in Canada. Nigeria is set to end 2020 with the highest number of finalized asylum claims in Canada for the fourth straight year after overtaking China back in 2016.
An African island is breaking up. 88 million years after it split off from the Indian subcontinent, Madagascar, scientists have found, is breaking up again, this time into smaller islands.
Electoral violence in Uganda. More than a month before its national elections, the arrest of leading opposition candidates has sparked mass protests in Uganda leaving 37 people dead and several dozen more injured.
What Africans think of China. A review of a pan-African survey into how Africans think about China’s role in Africa is much more nuanced than many typical discussions on the subject are framed, find Folashade Soule and Edem E. Selormey.
Chart of the Week
Nigeria’s food crisis. Food prices have been spiking in Nigeria for several months and now the country has tipped into recession for a second time in four years. Yomi Kazeem illustrates the situation using the cost of Jollof rice, arguably Nigeria’s favorite dish, as a proxy for measuring inflation.
Dealmaker
Jeff Bezos backs an African fintech startup. Peer to peer payments service Chipper Cash, raised $30 million in a Series B funding led by Ribbit Capital with a debut participation from Bezos Expeditions in an African startup.
•Autochek, a Nigerian auto-startup, raised $3.4 million in a pre-seed funding co-led by TLcom Capital and 4DX Ventures, with Golden Palm Investments, Lateral Capital, Kepple Africa Ventures, and MSA Capital.
•The Student Hub, a South African edtech startup, raised $2.9 million in funding from Naspers Foundry, the investment arm of Naspers.
•Private equity firm Africa Capital Alliance has invested $20 million in Accelerex, the Nigeria-focused payments terminal provider.
Quartz gems: The business of “cool”
Very few brands manage to navigate coolness alongside an extreme rise in popularity, and two have done it more successfully than anyone else: Nike and Apple. Both maintain their credibility by preserving some of what originally earned them acolytes, while constantly tinkering with new ideas to stay relevant.
Read how these two titans have kept their edge for decades, and what other companies might learn from them, in our latest field guide on the new meaning of cool.
Other things we liked
Building the “Palantir of Africa”. David Edoja, founder of Analytics Intelligence, likely doesn’t want the controversy of Silicon Valley’s Palantir. In this TechCabal profile by Alexander Onukwue, he says he wants to help governments and companies understand the troves of data available to them.
From the Niger to the Nile. In the late 1890s and early 1900s, a number of West African Muslims migrated eastwards, settling in Sudan and Mecca, to escape from European colonization. For Africa is a Country, Madina Thiam tells their story.
The benefits of African leader US tours. In the early1960s it wasn’t unusual for African leaders to be feted by the US and taken on a national tour to get to know more than Washington DC. CSIS’ Judd Devermont and Catherine Chiang argue there are forgotten benefits for the US with this approach.
ICYMI
African Union Kwame Nkrumah Awards for Scientific Excellence. Outstanding African scientists with discoveries in science, technology and innovation can apply for this $100,000 award. (Nov. 25)
GSK Scholarships for Future Health Leaders. A scholarship for a one-year Masters program at the London School of Hygiene & Tropical Medicine. (Feb. 28)
*This brief was produced while listening to Valleys by Nérija (UK)
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