2021 outlook for Africa: Things fall apart?

Côte d’Ivoire’s commercial capital Abidjan.

By Richard Li

During the first decade of this century, Africa seized many opportunities brought about by globalisation. The opening of global markets and increasing global trade resulted in high growth rates for many African economies. While the global financial crisis (GFC) in 2008 battered the developed countries, Africa barely felt its effects. Even if its global trade was mainly commodity-based, it brought about much needed economic development in the continent and pulled many Africans out of poverty. There was so much optimism that the narrative “Africa rising” gained traction.

However, in the second decade, the multiple effects of the American shale revolution, the economic and debt crisis within the Eurozone countries, as well as the declining growth rate in China, started to have an economic impact on Africa. To make matters worse, the economic stagnation in Nigeria and South Africa, coupled with the Arab Spring affecting the Northern African countries, dented the overall growth of the African continent. Now, going into the third decade, not only has the coronavirus pandemic upended the “Africa rising” narrative, but it has exposed all the major vulnerabilities of African economies. There are ominous signs; and what Nigerian writer Chinua Achebe wrote in 1958 seems appropriate to describe the situation: Things fall apart.

Relentless spread of coronavirus

More than a year has passed since the discovery of the coronavirus Covid-19. An analysis of the Covid-19 data from the World Health Organisation (WHO) shows that for the whole of 2020, there were 82,367,516 infection cases and 1,800,405 deaths recorded globally. As for Africa, there were 2,727,770 cases and 64,822 deaths. However, for the first month of 2021 (till 31 January 2021), there was a massive increase of 19,772,255 cases (an increase of +24%) with 411,357 deaths (+22.8%) globally, including 825,868 cases (+30.3%) and 25,618 deaths (+39.5%) in Africa. This means that despite the low testing rate in Africa, the statistics show that the infection and mortality rate are increasing rapidly. Dr John Nkengasong, the head of Africa Centres for Disease Control and Prevention (Africa CDC) is very concerned about the situation. The top five African countries with the most Covid-19 deaths are South Africa, Egypt, Morocco, Tunisia and Algeria.

The availability of potential vaccines has now provided hope in the fight against the coronavirus. However, vaccine nationalism among Western countries has become a major challenge. Dr Tedros Ghebreyesus, the head of WHO, expressed his dissatisfaction and criticised the hoarding of Covid-19 vaccines by rich developed countries. Almost all of the 2021 vaccine production from Pfizer-BioNTech and Moderna has been reserved for the populations in rich countries. This means that for African countries, they will not only have to wait for a few years for the Western vaccines, while the coronavirus keeps spreading, but they will also be last in the queue. Luckily, there are other alternatives from the Chinese, Indian and Russian pharmaceutical companies. It is also very encouraging to note that the African Union has been able to secure 270 million vaccines and another 600 million will be obtained via the Covax initiative, a global collaboration to find solutions against the pandemic.

The Unoka character, the father of Okonkwo, in Chinua Achebe’s story perhaps describes well the situation. Unoka is an adept of carpe diem. He is unable to think of the future and only likes drinking palm-wine and playing the flute. In the village of Unuofia, he is considered lazy and unable to provide for his family. From HIV/AIDS to cholera, ebola and malaria, the outbreak and spread of highly infectious diseases are not unknown to Africa. Unfortunately, African countries have not learnt their lessons and have done little to prepare for future health crises. At each and every disease outbreak, the poor healthcare and medical infrastructure as well as the lack of investment in human development greatly hamper their ability to respond. And the coronavirus Covid-19 is no exception.

Economic and debt crisis

According to the latest World Bank data, the global economy contracted by 5.2% in 2020, but is forecast to rebound at 4.2% in 2021. As for the sub-Saharan African region, it contracted by a lesser extent at 2.8% in 2020 and its economic recovery in 2021 is foreseen to be at only 3.1%. A deeper analysis of the economic data reveals that mainly smaller African economies will grow strongly in 2021 with Djibouti and Côte d’Ivoire having the highest growth rate at 9.2% and 8.7% respectively. Some 16 small African economies are expected to grow by at least 5% in 2021. Comparatively, in 2019, 20 of the fastest-growing African economies grew by at least 5%, with Rwanda and Ethiopia at the top with a 9.4% and 9% growth rate respectively. And only seven countries had negative growth with Zimbabwe performing the worst at -8.1%.

However, the situation in 2020 has been completely turned upside down. Thirty-one African economies had negative growth with tiny island Seychelles contracting the most by a massive 11.1%. Among the major African economies, only Egypt managed to eke out a positive growth of 3% in 2020, while South Africa was at the other extreme, with a negative growth of 7.1%. Looking further in the future, the overall growth of the African economies looks uncertain. From 2001 till 2010, the sub-Saharan Africa region enjoyed a relatively robust growth with an average annual growth rate of 5.4%, outperforming the world economy every year. Subsequently, in the next decade till 2020, average growth has more than halved at an annual average of 2.6%. In fact, since 2015, the sub-Saharan Africa growth has been underperforming the global growth and this underperformance is forecast to continue this year.

In addition to all the economic woes, the debt crisis in many African countries will exacerbate the situation. Many African countries seem to be like Unoka in Chinua Achebe’s novel and have been accumulating debt upon debt. The reality is that a debt will always remain a debt and needs to be repaid. An analysis of the World Bank data shows that the external debt to gross national income (GNI) for many African countries has been increasing. In 2000, 17 African countries had an external debt to GNI ratio of above 100% with Liberia at 367.1%. In 2005, under the Multilateral Debt Relief Initiative (MDRI), many poor African countries received financial support. However, from 2010 till 2019, the external debt to GNI of 33 African countries has been increasing with Zambia, Mozambique, Sudan, Tunisia and Rwanda having the biggest increase. By 2019, there are 10 countries whose external debt to GNI is above 60%. The top five most indebted African countries are Mozambique (external debt to GNI of 140.8%), Sudan (121.8%), Zambia (120.1%), Tunisia (101%) and Cabo Verde (93.9%).

Okonkwo, Unoka’s son, worked very hard to seize various opportunities and overcome adversities to become a wealthy man with title. From a very poor start in life, Okonkwo sought help from Nwakibie, a wealthy man from the Umuofia village. After being sent in exile, he again sought help from his uncle Uchendu. In both instances, he received generous help and worked very hard to overcome many difficulties and rise to the occasion to become wealthy. Likewise, from 2001 till 2010, after their debt were written off, many African economies were able to capture various opportunities and thrived. However, the lack of economic reform and fiscal discipline as well as the habit of taking on excessive debt, like Unoka, are now dragging down growth and economic prosperity in many African countries, particularly those large economies and petrostates.

Political and social unrest

Despite the frustration and dissatisfaction of young Africans, many African strongmen are showing that they remain strong and powerful. Similarly, Okonkwo has this strong inner fear of appearing weak. That is why when the village elders decided that it was time to sacrifice Ikemefuna, the boy from the village of Mbaino, who not only stayed with Okonkwo’s family for three years, but also called him father, Okonkwo insisted on participating in the execution. In the end, Okonkwo himself struck the fatal blow to Ikemefuna with his machete. In these times of crisis, many African strongmen are imposing their rule and even deploying the military to control the people.

However, this is causing a lot of protests and social unrest so much so that a few of these strongmen were removed recently. The Hirak movement in Algeria prevented Abdelaziz Bouteflika, who ruled for nearly 20 years, from taking on a fifth presidential term, whereas in Sudan, mass protests and the military stopped the 30-year rule of Omar al-Bashir. In Mali, the military also took control and removed Ibrahim Boubacar Keita. In spite of the mass protests and demonstrations, Alpha Condé in Guinea and Alassane Ouattara in Côte d’Ivoire managed to remain in power last year, while Yoweri Museveni in Uganda fought young pop star Bobi Wine to win a sixth term at the beginning of this year.

Nwoye, Okonkwo’s son, looked up to Ikemefuna and considered him like an elder brother. Upon learning that Ikemefuna was dead, he changed and started resenting his father Okonkwo. Likewise, amidst high youth unemployment and lack of economic opportunities, the young Africans are getting restless and the coronavirus situation is making the situation worse. According to Statistics South Africa, the youth unemployment reached 43.2% in the first quarter of 2020. In Nigeria, despite the oil wealth, 40% of the population lives in poverty. Feeling desperate and hopeless, many young Africans are going out in the streets to make their voice heard. From Algeria and Tunisia to South Africa, from Kenya and Ethiopia to the Democratic Republic of the Congo, there are increasing political and social unrest. Even in tiny island of Mauritius, the population is venting out against the government and the militarised police had to be deployed.

The pandemic situation will exacerbate the social inequality and increase poverty in Africa. This may eventually lead to more violence, radicalisation and extremism among young Africans. Okonkwo was unable to deal with change and this eventually leads to his demise. His son, Nwoye, embrace change and eventually left him. The future of Africa is in its youth and they are bringing change. African leaders need to listen and be open to the aspiration of their young. Unless African governments take action now to control the spread of the coronavirus, rectify the economic situation and provide a conducive environment for the African youth to thrive, there is the real possibility that things fall apart ultimately.

Richard Li is a Partner with STEEL Advisory Partners, a management consulting firm that serves clients across industries. Having spent his working career in strategy consulting, he worked with various global clients and covers themes such as corporate strategy, transformation, digital innovation and risk management. He is an avid observer of world affairs and emerging markets, particularly the African continent.