Rwanda’s former minister of finance Claver Gatete takes over as the executive secretary of the UN Economic Commission of Africa at a time of great change for the continent.
Claver Gatete takes over the leadership of the United Nations’ Economic Commission for Africa (ECA) at a pivotal juncture, as we approach the halfway stage of the UN Sustainable Development Goals (SDGs) and as Africa enters the second decade of its development blueprint Agenda 2063.
The long shadow of Covid-19 still hangs over the global economy with countries around the world, but especially in Africa, trying to recover from the supply chain shocks, sky-high inflation and the subsequent interest rate hikes. Adding to the current instability is the war in Ukraine – arguably a symptom of a re-ordering in the 70-year old rules-based, neoliberal order that had, seemingly, been entrenched in the wake of the last major disruption, the Second World War.
Into the mix comes the latest, harrowing manifestation of the long running conflict in the Middle East and its potential to spill over with incalculable consequences for the world. The need for finance Also on the table is the stark fact what while Western countries, especially in America and Europe, have been able to run large deficits and inject large amounts of cash to kick-start growth, those in Africa and the wider developing world continue to be bogged down by a lack of concessional or affordable financing.
To add to their woes they also face existential threats from climate-related events, hence the urgent demand for a greater say in the global economic and political structures that do not serve them fairly. This is the maelstrom that Gatete steps into as executive secretary of the UN agency, which wasspecifically set up to “promote the economic and social development of its member states, foster intraregional integration, and promote international cooperation for Africa’s development”.
In pursuit of this mandate, the Commission offers advice to member states, helps to strengthen macroeconomic policy and supports efforts towards regional and sub-regional integration. Perhaps the best summary of what the ECA has been responsible for was provided by the late Professor Adebayo Adedeji, the celebrated former head of the organisation, in his presentation – History and Prospects for Regional Integration in Africa” in 2002. He said that the ECA had been involved in “the establishment of virtually all the major existing African regional integration arrangements (ARIA) namely, the Economic Community of West African States (ECOWAS, 1975), the Preferential Trade Area for Eastern and Southern Africa (PTA, 1981) which was subsequently transformed into COMESA, the Central African Economic Community (CAEC, 1983) and the African Economic Community (AEC, 1991)”.
When we met Gatete in Victoria Falls, Zimbabwe, he offered a practical assessment of what the ECA’s role should be during this dramatic moment in the history of the continent. Its more routine task is to support macroeconomic management, which he explains includes fiscal management, supporting the real productive sectors and fostering a balance between payments and monetary policy.
“Everything you do has an implication on the monetary side. Whatever decision you take definitely has an implication because if you have to accumulate more debt or more deficit, it has implications. So we help countries to manage their own macroeconomic situation, because that’s what is going to actually stabilise the country,” he says. Continue reading ECA executive secretary Claver Gatete: Only a regional approach can deliver fast development→
By Vuyani Ndaba
February 23, 20245:37 PM GMT+1Updated 20 hours ago
JOHANNESBURG, Feb 23 (Reuters) – Nigeria is set for two aggressive interest rate hikes within a little over a month to subdue inflation and boost the naira after a couple of missed monetary policy meetings, a Reuters poll found on Friday.
A survey taken in the past week suggests that Nigeria’s monetary policy rate will be hiked 225 basis points to 21.00% on Feb. 27, in Governor Olayemi Cardoso’s first monetary policy meeting since he took office a couple of months ago.
There was no clear majority in the sample of 15 analysts, with one expecting a 50 bps hike to 19.25% and one a 1,000 bps increase to 28.75%.
That sets the stage for Cardoso to possibly act aggressively, though some doubt authorities have the appetite.
“We expect significant policy tightening and the announcement of de facto system-wide tightening measures,” wrote Razia Khan at Standard Chartered.
“We think both steps are needed to attract greater foreign portfolio investment and anchor inflation expectations,” she added.
A 175 bps jump to 22.75% is expected in March.
Consumer inflation in Africa’s biggest economy quickened for the 13th straight month in January to 29.90%, raising the cost of living to unbearable levels for many in the continent’s most populous nation.
The Central Bank of Nigeria (CBN) has not had a policy meeting since July, putting it out of kilter with the rest of the continent’s key central banks that hold meetings almost every second month.
“Reassuringly, the CBN has announced that it will hold its first two MPC meetings of the year in quick succession, on February 27 and March 26,” wrote analysts at Barclays.
“This suggests to us that it is aware it is well behind the policy curve, and will need to deliver at least two strong doses of policy tightening.”
The naira fell to its weakest level at 1,680.5 per dollar on Wednesday in the official spot market amidst a chronic shortage of the U.S. currency.
David Omojomolo, Africa economist at Capital Economics, wrote that the latest devaluation may be enough to put the balance of payments on a stable footing, though as things stand the currency has continued to weaken on the parallel market.
A poll last month suggested economic growth in Nigeria would be 3.0% this year and 3.7% next.
“Nigeria needs to take a leaf out of Kenya or Zambia’s book – and ‘tighten’ monetary policy with rate hikes,” said Charlie Robertson, head of macro strategy at FIM Partners.
Stabilising the naira is probably the most pro-growth move the CBN could make, so interest rate hikes would benefit Nigeria more than harm it, he added.
PUBLISHED: Wed, 21 Feb 2024 08:13:09 GMT
Elliot Smith
CNBC
With inflation nearing 30% and its currency hitting an all-time low, Nigeria is facing one of its worst economic crises in years.
The latest data from the National Bureau of Statistics on Thursday showed that the headline consumer price index (CPI) rose to 29.9% year-on-year in January, its highest level since 1996.
The surging cost of living and economic hardship sparked protests across the country over the weekend.
With annual inflation nearing 30% and a currency in freefall, Nigeria is facing one of its worst economic crises in years, provoking nationwide outrage and protests.
The Nigerian naira hit a new all-time low against the U.S. dollar on both the official and parallel foreign exchange markets on Monday, sliding to almost 1,600 against the greenback on the official market from around 900 at the start of the year.
President Bola Tinubu announced Tuesday that the federal government plans to raise at least $10 billion to boost foreign exchange liquidity and stabilize the naira, according to multiple local media reports.
The currency is down around 70% since May 2023 when Tinubu took office, inheriting a struggling economy and promising a raft of reforms aimed at steadying the ship.
In a bid to fix the beleaguered economy and attract international investment, Tinubu unified Nigeria’s multiple exchange rates and enabled market forces to set the exchange rate, sending the currency plunging. In January, the market regulator also changed how it calculates the currency’s closing rate, resulting in another de facto devaluation.
Years of foreign exchange controls have also generated enormous pent-up demand for U.S. dollars at a time when overseas investment and crude oil exports have declined.
“The weakened exchange rate should increase imported inflation, which will exacerbate price pressures in Nigeria,” Pieter Scribante, senior political economist at Oxford Economics, said in a note Friday.
The country is Africa’s largest economy and has a population of more than 210 million people, but relies heavily on imports to meet the needs of its rapidly growing population.
“Shrinking disposable incomes and worsening cost-of-living pressures should remain concerns throughout 2024, further stifling consumer spending and private sector growth,” Scribante added.
Inflation, meanwhile, continues to soar, with the headline consumer price index hitting 29.9% year-on-year in January, its highest level since 1996. The increase is being driven by a persistent rise in food prices which jumped by 35.4% last month compared to the year before.
The surging cost of living and economic hardship prompted protests across the country over the weekend. The plummeting currency has added to the negative impact of government reforms such as the removal of gas subsidies, which tripled gas prices.
President Tinubu said in late July that the government had already saved more than 1 trillion naira ($666.4 million) from removing the subsidies, which it will redirect into infrastructure investment.
Alongside soaring inflation and a plunging currency, Nigeria is also battling record levels of government debt, high unemployment, power shortages and declining oil production — its main export. These economic pressures are compounded by violence and insecurity in many rural areas.
“Excess market liquidity, exchange rate pressures, and food and fuel shortages threaten price stability, while inflation risks rising out of the government’s control,” Oxford Economics’ Scribante added.
“Robust import demand could force the Central Bank of Nigeria (CBN) to reimpose import bans and FX restrictions to lessen the burden on the balance of payments. This could exacerbate domestic product shortages and increase inflation further.”
Inflation is expected to peak at nearly 33% year-on-year in the second quarter of 2024, according to Oxford Economics, and could stay higher for longer given the plethora of economic risks ahead.
“Furthermore, rising inflation and increased hawkishness by the CBN indicate that the policy rate could be raised this quarter,” Scribante said. The policy rate currently sits at 18.75%.
“We expect a combined 200 bps in rate hikes at the next two MPC meetings, scheduled for end-February and end-March this year; however, we think that more hikes are needed to stem rising inflation,” Scribante added.
Jason Tuvey, deputy chief emerging markets economist at Capital Economics, sees the CBN opting for a bigger interest rate bazooka when policymakers meet on Feb. 26 and 27.
“The meeting will be a key test of whether the policy shift under President Tinubu is truly regaining some momentum,” Tuvey said in a note Thursday.
“We expect that the MPC will try to restore some of its inflation-fighting credibility by delivering a large interest rate of 400bp, to 22.75%.”
Mali’s exit from the bloc comes as citizens complain about fallout of regions sanctions imposed following the two coups
By Hannane Ferdjani
Published On 8 Feb 2024
Bamako, Mali – It’s been a week since Mali’s military government announced its decision to withdraw from the Economic Community of West African States (ECOWAS) but Bamako, the country’s capital, is still buzzing with energy.
In the early hours of the morning, the roads are bustling with city buses pushing through traffic jams, while market vendors walk hastily to their stalls to get the day started. But beneath that layer of normality are mounting concerns about leaving the 15-member regional bloc which Mali joined in 1975.
“It has become harder to get by and provide for my family,” Djadjie Camara, a shopkeeper in the city told Al Jazeera. “ECOWAS is the organisation who started all of this and made our lives harder. Life is hard for us, but I trust that leaving ECOWAS will benefit us in the end.”
After back-to-back coups in Mali within a year led to Colonel Assimi Goita becoming head of state in May 2021, the bloc slapped economic sanctions on the landlocked nation to push the transitional government to hold elections within a reasonable timeframe.
But that hit an economy grappling with blows from the COVID-19 pandemic and shocks from Russia’s war in Ukraine, hard. Inflation rose, with the cost of basic items like oil and sugar more than doubling. Since then, many Malians, including Camara, have embraced the government’s gradual distancing from the regional entity.
This was the main argument presented by the newly formed Alliance of Sahel States (l’Alliance des Etats du Sahel or AES), including Mali, Niger, and Burkina Faso, in a January 28th joint statement announcing their withdrawal from the bloc, which they said had imposed “illegal, illegitimate, inhumane, and irresponsible sanctions”.
The second point of contention is ECOWAS’s perceived failure to aid their “essential battle against terrorism and insecurity”.
Diverging visions of pan-Africanism
When ECOWAS was established by the Treaty of Lagos on May 28, 1975, its primary focus was economics, aiming to create a West African market encompassing several neighbours.
A few years in, African leaders concluded that without political stability, they could not achieve their ultimate goal: a free market operating under a single currency. Hence, the birth of the Economic Community of West African States Cease-fire Monitoring Group (ECOMOG) in 1990. To foster regional integration, ECOWAS intermittently uses its authority to enforce trade sanctions and intervene militarily under specific conditions.
In their joint statement in January, AES also said ECOWAS had strayed from those original pan-African principles and was now under the influence of external forces.
Former colonial masters France, the European Union, the United Kingdom and the United States have sided with ECOWAS’s anti-coup stance, cutting off military aid and other forms of funding to the trio. Consequently, many now see the bloc as a puppet of the West with new ideas about regional identity.
“Pan Africanism today is about realising the United States of Africa,” former Malian Prime Minister Moussa Mara told Al Jazeera. “Strategically, this move is a mistake. It would translate into departing further away from the African integration goal whereby regional economic communities are integral.”
“Let us push back against that from within but leaving is not the solution,” he added. “The entire African continent accounts for 3 percent of the global GDP. West Africa represents less than 1 percent of that. We should consolidate these shares rather than disintegrating them.”
Together, the three exiting Sahel states in the AES represent just 8 percent of ECOWAS’s gross domestic product (GDP), which amounts to $761bn.
A withdrawal from the bloc could affect economic operators in AES who have benefitted from a regional free market where goods are exempt from tariffs and people travel as they please without visas.
Already, transport carriers are aware of what may change if the government sticks with the move.
“Things have changed in the last three years,” Tijani Mahamoudou, a truck driver from Niger, told Al Jazeera at a truck and trans-border bus station in Bamako. “We used to drive up and down to Senegal or Ivory Coast. Some of us carry merchandise. Others carry passengers. But since the coup, the border police going into these countries have become tougher. They check people’s IDs and our cargo. They make us waste time and money on these roads.”
“Even the way they talk to us and perceive us has changed. I know that if the AES leaves ECOWAS, things will only get worse for us who are always on the road,” he added.
‘We don’t know what to believe any more’
On Thursday, several hundred people demonstrated in Bamako in support of the government’s decision to withdraw from ECOWAS. Other rallies were held in towns, such as Kayes and Sikasso in the west and south of the country respectively.
The gatherings were in response to the transitional government’s call for people to take to the streets as they have routinely done so in the past three years. However, observers have argued that support for the state is on a decline unlike at the beginning of the transition.
“They had told school directors to let kids leave early to partake in the march, but even that didn’t happen,” a politician’s attaché who chose to remain anonymous told Al Jazeera about the last rally. “People have bigger problems … a regular Malian man wants to be able to provide for his family but with the electricity crisis that we’ve had, it’s become nearly impossible.”
From Bamako to Gao, power outages have become a persistent issue plaguing the entire country. Frustration has been mounting not only towards the national electricity provider, Energie du Mali (EDM) but also towards the transitional government.
And Malians have said the lack of proper governance is taking a toll on their source of livelihoods.
“We marched to chase IBK [former President Ibrahim Boubacar Keita] away [in 2020]. We marched to support the military, who helped us finish the job. They’ve been saying that our lives would get better, but we still haven’t seen it. I have a shop where I can’t sell cold drinks any more … We don’t know what to believe any more,” another shopkeeper told Al Jazeera anonymously.
Coup plotters cited deteriorating security as one of the reasons for taking over. Authorities have since signed off on the end of a UN peacekeeping mission and seen off French troops. The state has also instituted an arrangement with Russian military instructors believed to be mercenaries within the ranks of Moscow-linked private military contractor, Wagner.
But violence by armed groups is still on the rise. Data from the Armed Conflict Location & Event Data Project (ACLED) shows that there was a 38 percent increase in attacks in 2023 alone.
The renewed antirebellion effort has come with allegations of serial human rights violations.
“We’ve been sinking deeper and deeper and continue to do so,” Moussa Kondo, executive director at the Bamako-based think tank, Sahel Institute, told Al Jazeera.
Kondo, a former journalist, was appointed a presidential adviser on governance, democracy, and rule of law in October 2021. He resigned from his post a year later citing personal reasons and resumed his work in civil society.
“We’ve rejected everything that we consider to be aligned with Western interests. But that doesn’t mean we should put all our eggs in one basket with Russia. It’s not about saying no to one foreign power only to say yes to everything another foreign power proposes … Our leaders have to remain transparent and keep away from manipulating the people with rhetoric,” Kondo said.
Under Article 91 of the ECOWAS Treaty, a state can only withdraw membership after giving a written one-year notice and abiding by its provisions during that period. If after a year, the AES states do not withdraw their notification, they will effectively no longer be part of the bloc.
Some believe reunification in the region is still possible before then.
“I think there’s still time to backpedal … we can sit at a table and negotiate,” Mara told Al Jazeera. “That is what I wish for and appeal to our authorities to do, especially as ECOWAS have said they are willing to find a negotiated path forward and the AU has pledged to mediate those talks. I’m still optimistic.”
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