2019 Global Risk Forecast - Sub-Saharan Africa
Sub-Saharan - Protectionism, transition and elections
- Increasing protectionism worldwide, fuels currency volatility and hampers African resource-rich countries revenue-generating capabilities
- The intense competition between China and the United States will intensify in Sub-Saharan, while smaller challengers in Europe and the Gulf could add to the disruption
- Political uncertainty and probable conflict will result from political transitions in the DRC and Ethiopia, potentially spilling over to their neighbouring countries
- The two largest economies Nigeria and South Africa head to the polls, raising the risk of civil unrest which will hamper travel and see security provisions deteriorate
- Elections in frontier markets such as Cote d'Ivoire and Senegal, as well as in Chad, will present similar risks
Executive Summary In 2019, Sub-Saharan will see political transitions undermine security and increase travel risks in the two largest economies Nigeria and South Africa as well as in the frontier markets of Cote d'Ivoire and Senegal. Unfinished or long-delayed political transitions in the Democratic Republic of the Congo (DRC) and Ethiopia will present stability risks for those governments, while also raising the risk of conflicts escalating in their surrounding neighbourhoods. Meanwhile, the spill-over effects from increasingly protectionist stances in the two global economic centres China and the United States will damage the macro-economic outlooks of many economies in the region, particularly those that are heavily indebted or rich in crude oil.
Read more:�Ethiopia's restart after period of grace Increasing protectionism and continental shakeups The increasing protectionism between China and the United States is having serious implications on African economies. It is driving an intensification in currency volatility of the South African rand, and it is slowing demand for oil and mining commodities, which are key revenue earners for many African governments. With many of them still reeling from the 2014 commodity price-crash, which forced them to subscribe to new debt and increase the public deficit, higher interest rates in the U.S. will seriously challenge the ability of many heavily indebted countries, such as Ghana, Kenya, or Zambia, to manage their respective debt burdens. A risk of default is therefore elevated in several parts of Sub-Saharan.
Read more: Ghana, the spending spree continues The growing friction between global powers China, Russia, and the United States, as well as the European Union countries, will continue intensifying through proxies on the African continent. A case in point is Djibouti, but competition over the development of critical infrastructure is also likely to grow in Angola, the DRC, Ghana, Kenya, or Guinea. In addition, the number of spooks on the continent will almost certainly grow. Transitions: Unfinished business Political transitions across the continent will reach critical inflection points in 2019. In the DRC a sleeping giant voters elected their next president in December. To many observers surprise, the new leader was not Emmanuel Ramazani Shadary, the anointed successor of outgoing President Joseph Kabila. Instead, the electoral commission, CENI, on 10 January 2019 announced Felix Tshisekedi the leader of opposition party Union pour la Democratie et le Progres Social (UDPS) as the next president. But suspicion of a negotiated 'coup' between Kabila and the president-elect quickly grew, locally and abroad. The national episcopal council, CENCO, questioned the veracity of CENI's vote-tally, while opposition leader Martin Fayulu alleged fraud, saying he had won with 60 per cent of the vote, and entered a legal challenge at the constitutional court. Given Kabila's support at the court, Fayulu's challenge faces serious obstacles. Personality politics dominated the presidential election campaign, which has raised the risk of violence continuing in the first quarter of 2019. Fayulu's supporters are unlikely to recognise the results, while Tshisekedi's supporters are unlikely to accept their candidate's victory being taken taken away from them; especially from a candidate, Tshisekedi's supporters argue, who does not have the same wide-ranging support as the UDPS. This was their reason given after abandoning the opposition coalition, Lamuka, approximately 24 hours after having agreed to Fayulu as their candidate. Should the unrest drag on, it will certainly divide the opposition further, providing little room for the prospect of change over the coming term. In the face of a legislature that is widely controlled by Kabila loyalists, Tshisekedi's promises including to review a mining code that was adopted last year look very slim, and continuity is likely to be the adopted approach during the next five-year term. In response, opposition groups will continue to mobilise their supporters to protest in major cities. In the longer term, and should no solution to the current unrest be found, more extremist potentially armed responses are probable, particularly in the north-eastern provinces of Ituri, Maniema, North-Kivu, and South-Kivu where numerous non-state armed groups already operate and opposition to Kabila's rule continues to be strong. The reshaping of geopolitics in the Horn of Africa, will gain more international attention in 2019 as new and old investors are scrambling to get a piece of the cake. However, the stability of the region is contingent on the situation in Ethiopia, a regional powerhouse, where the new and young prime minister, Abiy Ahmed, is leading an ambitious reform programme that is upsetting some within the old guard. Although widespread violent protests in Amhara and Oromo kililoch (regional states) have largely subsided, inter-communal clashes have mushroomed in other parts of the country instead. Unless Abiy is able to turn the tide on the mounting grievances in the traditional power centre among the Tigrayans. Externally, regional stability is challenged by state elections in Somalia where the federal and federated governments are in open conflict over turf, not least in relation to the signature of offshore oil and gas concessions, or infrastructure development projects. Competition between global infrastructure providers in China, France, or the Gulf will fuel further distrust between regional players and present medium-term investment risks to foreign financiers.
Read more: Puntland's growing importance, a destabilising factor for Somalia Elections to watch: Two heavyweights and the West African frontiers Africa's two largest economies are electing their next president in February. In Nigeria, the incumbent president, Muhammadu Buhari, is running for re-election on 16 February on a similar platform as he did in 2015: fight corruption, revive the economy and destroy Islamist insurgencies in the north-east. Added to that is rampant inter-ethnic hostilities in the Middle Belt states between farmers and herders. His main contender, Atiku Abubakar, is campaigning on similar promises. In essence, neither candidate's campaign programme stands out and it will ultimately come down to their own personalities and ability to form strategic alliances ahead of the vote. In addition to the president, Nigerian voters will also pick 29 governors of a total 36 states.