Next Africa: Ethiopia’s Fall From Africa’s Darling to Pariah

It wasn’t long ago that Ethiopia was being hailed as an African economic miracle. That’s rapidly unraveling.

What happened?

Prime Minister Abiy Ahmed’s decision to retaliate against political opponents in the northern Tigray region in November has locked him into an intractable civil war, Eritrean forces have been reluctant to leave Ethiopian territory and U.S. sanctions threaten to complicate a plan to roll out modern mobile telecommunication services across Africa’s second-most populous nation.

Adding to that is increasing pressure from Sudan and Egypt for Ethiopia to desist from filling a giant reservoir that they say will impede the flow of the Nile. The Grand Ethiopian Renaissance Dam was meant to transform the nation into a regional power producer. While trying to handle the crisis in Tigray, Abiy is facing community strife in other areas that threaten to tear apart a nation of more than 90 different ethnicities.

That’s quite a fall from grace for a man who in 2019 won a Nobel Peace Prize and was being hailed as one of Africa’s youngest and most progressive leaders.

What may particularly pain the 44-year-old is that his plans to transform the economy may be unraveling. Civil conflict and cross-border tensions are rarely a recipe for investment appetite.

While a Vodafone consortium bid of $850 million for a 15-year license to operate was successful, that offer is way off what the government expected to receive, and it postponed awarding a second license. A $500 million loan from the U.S. Development Finance Corp. in that bid may be under threat, along with funding for the government from the World Bank and International Monetary Fund because of the U.S. sanctions.

Still, with 112 million people, Ethiopia remains a tantalizing prospect for many investors. But Abiy is finding that economics may not trump politics.

News & Opinion

Another Coup | Mali’s interim president resigned a day after his deputy seized power in the West African nation’s second coup in less than a year, and in a week in which the leader and his prime minister were detained by soldiers. The United Nations, France and the U.S. were quick to condemn the move that puts plans for elections in February at risk. The military was angered by the naming of a new cabinet that sidelined army officials that took over the government last year from key posts.

Solar Seizure | Lesotho, a tiny mountainous nation encircled by South Africa, is facing the loss of revenue from water and power sales and may see its share of an undersea communications cable seized after it allegedly breached the terms of a contract with Frazer Solar. The German company won a 50 million euro arbitration case and is taking legal action to appropriate royalties the country receives from its neighbor.

Unlocking Loans | The World Bank may provide as much as $3 billion to the Democratic Republic of Congo as the country emerges from a power struggle in which supporters of President Felix Tshisekedi took control of the government from allies of his predecessor, Joseph Kabila. The Washington-based lender has withheld approval for the funds as it waits for the government to implement agreed-upon policy changes. Meanwhile, the IMF has reached a staff-level agreement with Congo for a $1.5 billion package.

Vaccine Dilemma | A surge in Covid-19 cases in Seychelles, the most vaccinated nation, has presented a test case for two of the world’s most widely used vaccines. With about 65% of the population of almost 100,000 people having been vaccinated, a surge in cases surprised virologists and dismayed the government that was trying to lure back tourists to the palm-fringed Indian Ocean archipelago. Still, few people are becoming seriously ill and those who aren’t vaccinated are six times more likely to contract the disease, the government says.

Trademark Debate | A battle over the ownership of the name of an Nigerian ethnic group is stirring debate about cultural appropriation. The word ‘Yoruba’ was trademarked and owned for nearly six years by a British retail clothing firm. It’s also the name of an ethnic group that makes up about 21% of the people in Africa’s most populous nation. The company recently tried to prevent British-Nigerian citizen Gbemisola Isimi from using it to name her culture program, Yoruba Stars, sparking a wave of online protests.

Past & Prologue

Data Watch

• Nigeria devalued the naira rate used for official transactions by 7.6% against the dollar as it migrates toward a single exchange-rate system. Also, the West African nation’s central bank left its benchmark rate unchanged at 11.5% after data showed the economy expanded just 0.5% in the first quarter.
• Eskom, South Africa’s struggling power utility, cut debt by almost a fifth in its 2020-21 financial year, to 401 billion rand.
• Zambia’s inflation rate jumped to 23.2% in May, the highest level in 18 years, pushed up by surging meat and fish costs. The measure has been above the central bank’s 6% to 8% target for more than two years.

Coming Up 

• May 31 Ghana interest-rate decision, South African money supply, credit extension & trade data for April, Kenya and Uganda inflation for May
• June 1 South Africa unemployment, manufacturing PMI and new vehicle sales data, Nigeria first-quarter trade balance
• June 2 Mauritius interest-rate decision
• June 3 PMIs for Mozambique, Zambia, Nigeria, Ghana and whole-economy PMI for South Africa
• June 4 PMIs for Kenya & Uganda

Last Word

Researchers in South Africa are considering a program to inject rhino horns with radioactive material to help discourage consumption and make it easier to deter illegal trade. Thousands of existing sensors along international borders could be used to detect a small quantity of radioactive material inserted into the horns, according to James Larkin, a professor at the University of Witwatersrand in Johannesburg. Known as The Rhisotope Project, the new anti-poaching initiative backed by Russia’s Rosatom started this month with the injection of an amino acid into two rhinos’ horns to see whether it will move into the animals’ bodies. More studies using computer modeling and a replica rhino head will also be done to determine a safe dose of radioactive material. Although rhino killings have declined in South Africa, illegal hunting remains the biggest threat to about 20,000 of the animals in the country — the world’s biggest population.