Today’s main economic and political developments across the continent

LAGOS (Capital Markets in Africa): Zambia’s new dawn has given way to a chilly and overcast day. The country has effectively been in debt restructuring talks since 2020, and even the Hichilema administration, with the backing of business and multilaterals, has been able to make real inroads in this regard. The next two weeks will bring some clarity regarding the state of affairs and the way forward. In neighbouring Angola, the central bank has cut interest rates for the second time this year amid ongoing disinflation. In Algeria, the walls are closing in on President Kaïs Saïed, with pressures building both domestically and abroad, and with close friends now seemingly abandoning ship.

Africa: Implications of carbon border tariffs for the continent
The European Union (EU) reached a provisional agreement in December 2022 to proceed with the phasing in of the EU Carbon Border Adjustment Mechanism (CBAM). The aim of the mechanism is to prevent the bloc from importing carbon-intensive goods that have not been subjected to the same environmental scrutiny as domestically produced goods. Other advanced economies are also considering instruments such as these to help accelerate the fight against climate change and protect their domestic industries. Carbon border tariffs have, however, raised concerns among trading partners in fear of losing out on the competitiveness of their exports, along with the medium- to long-term sustainability of their industries. In this Talking Point, we provide a perspective on the EU’s CBAM, its fairness from the perspective of African countries, how the mechanism would likely affect carbon-intensive economies, and whether it may offer any opportunities for Africa.

Angola: Policy rate reduced by 100 bps
The Bank of Angola lowered its policy interest rate for the second time this year amid continued disinflation in recent months. The decision was made against the backdrop of the central bank’s unchanged domestic growth and inflation expectations.

Côte d’Ivoire: The uncertain position of the leftist opposition
An appeals court in Abidjan has reduced harsh sentences earlier handed to members of ex-President Laurent Gbagbo’s party, the Party of African Peoples – Côte d’Ivoire (PPA-CI). The uncertain relationship between the PPA-CI and the bench reflects the equally unpredictable one between Mr Gbagbo and President Alassane Ouattara.

Democrtic Republic of Congo: Tshisekedi reshuffles Cabinet to improve electoral chances
Shortly after midnight on Friday, March 24, the lineup of DRC’s President Félix Tshisekedi’s new Cabinet was published. Many ministers retained their posts, and two political heavyweights made their way onto the list: former militia leader Jean-Pierre Bemba has been named as minister of defence, and Vital Kamerhe as minister of the economy. They are also two of five deputy prime ministers. The new appointments suggest that Mr Tshisekedi is covering his bases and trying to block potential competitors ahead of the December 20 general elections.

Ethiopia: PM Abiy appoints Getachew as Tigray regional leader
On Thursday, March 23, Prime Minister Abiy Ahmed approved the appointment of Getachew Reda, a senior member of the Tigray People’s Liberation Front (TPLF), as the head of the Interim Regional Authority (IRA) in Tigray. Establishing an IRA is one of the conditions of the Pretoria peace accord, and Mr Getachew’s appointment comes a day after the TPLF was removed from the country’s list of terrorist organisations.

Libya: IMF staff mission remarks
The IMF mission held discussions with a Libyan delegation in Tunis this month. The mere fact that engagement with the Fund has resumed after a decade-long interruption is positive.

Tunisia: Ever more isolated, Saïed shrugs off Western warnings
President Kaïs Saïed of Tunisia has lost one of his most loyal lieutenants, ex-Interior Minister Taoufik Charfeddine, and is coming in for ever more worried criticism from Europe and the US. He is more dismissive of the situation than we think wise.

Zambia: Debt uncertainty on the eve of ECF first review
At the time of its collapse into sovereign default in 2020, Zambia was the first Covid-19-era African country that entered debt restructuring negotiations. Claiming victory in August 2021, the New Dawn administration accepted the burden of responsibility for Zambia’s sizeable legacy debt issues and to restructure the sovereign balance sheet. At the time, the restructuring conversation was primarily limited to the external channel, but the build-up of the pipeline of fiscally fragile sovereigns in need of debt reprofiling has since introduced new risks. These risks extend to the inclusion of local-currency debt in a public debt restructuring exercise.

Source: Oxford Economics