Our Africa experts consider the top 10 key trends and topics likely to shape the political environment in Sub-Saharan Africa in 2023.
- Global macroeconomic uncertainty will translate into tough fiscal positions for many African governments, but progress on debt negotiations will offer optimism in some jurisdictions.
- Political transitions in key markets, including in Nigeria, will likely be volatile, with political leaders unlikely to appease populations’ growing socioeconomic concerns.
- Militant groups will continue to expand their activities in the Sahel, while governments in the Horn of Africa and central Africa will struggle to contain insecurity.
- Although shifting geopolitical dynamics will be difficult to navigate, African governments will likely benefit from sustained international interest and financing for renewable energy initiatives.
1. Debt clouds economic prospects
Top of mind for many African governments will be the economic uncertainty pervading international markets. The IMF in October warned of a gloomier outlook: global economic growth is forecast to slow from 3.2% in 2022 to 2.7% in 2023. While global inflation is forecast to slowly decelerate from 8.8% in 2022 to 6.5% in 2023, it remains higher than pre-COVID levels. As governments globally remain poised to maintain high interest rates to curb inflation and some international investors retreat to the perceived safe havens in advanced economies, Africa’s public debt burden will remain expensive.
This comes at a time when administrations have already been struggling to service external debt due to challenging global conditions and their weakening currencies. For instance, Kenya’s sovereign risk rating was downgraded on 14 December, with ratings agencies highlighting the risk posed by its foreign-currency denominated debt. This follows a similar downgrade of Nigeria’s debt in November as debt servicing costs exceeded government revenues in 2022 amid the naira’s (local currency) decline against the US dollar. Other countries including Ethiopia and Mozambique will likely find themselves in similar positions – as the cost of debt remains high, the room for governments to make strategic and social investments will reduce, likely increasing popular dissatisfaction.
2. Ghana’s uncertain outlook
Long seen as a bastion of political and economic stability in West Africa, the past year’s economic crisis has undermined international investor confidence in the country. Ghana on 13 December successfully secured a staff level agreement with the IMF to provide it with access to USD 3bn to address its debt crisis. While this is an important first step to enable it to manage its expensive debt repayments, the government will still need to restructure its debt. The perceived economic mismanagement will continue to undermine President Nana Akufo-Addo’s position and exacerbate socioeconomic unrest in the year ahead.
3. Zambia’s recovery prospects
Zambia has made significant progress with its creditors following a sovereign default in 2020 and is likely to reach an agreement on restructuring its debt in the first half of 2023. This, combined with President Hakainde Hichilema’s bid to attract foreign investment – by reducing mining royalties and bolstering anti-corruption efforts – will likely make Zambia one of the brighter spots for investment in 2023. As other countries such as Ethiopia and Ghana also look to engage with their creditors on debt restructuring in the year ahead, Zambia could also provide a positive example on how to navigate debt distress.
4. Nigeria’s pivotal election
Nigeria’s general elections scheduled for February and gubernatorial polls in March will take place amid high levels of insecurity. While we anticipate that Bola Tinubu of the ruling All Progressives Congress (APC) will win the presidential race, the incoming administration will face some daunting challenges. In addition to rising insecurity, pledges to reorient the economy away from its reliance on oil and gas will be tough to fulfil as Nigeria hopes to benefit from European attempts to shift from a reliance on Russian gas supplies. Public coffers will also likely be stretched after the election, and businesses will likely find themselves under regulatory scrutiny from government agencies keen to increase their revenues through taxes and fines for non-compliance with local legislation.
5. Congo (DRC)’s election anxiety
The electoral commission (CENI) set the date for general elections on 20 December 2023. President Félix Tshisekedi will be the clear frontrunner: he has gradually taken full control of state institutions since 2019. As the incumbent, he will start the race with vastly superior campaign resources, and his political network of parties from the Sacred Union coalition will likely deliver votes for the president across the country. However, insecurity in eastern regions, the threat of a boycott of the polls by the opposition and the major logistical and financial challenges facing CENI will make the polls and their results controversial. Congo’s diplomatic crisis with Rwanda against the backdrop of its current conflict with the M23 rebellion will also loom large over the elections. We believe that the elections are likely to take place on time, but a last-minute delay into 2024 cannot be ruled out if voter registration fails to make sufficient progress at the start of the year.
6. Military regimes enter a critical period
Outside of key electoral processes, military-led administrations will be under international pressure to hand over executive authority to civilian administration. Some regimes have in the past year extended their transition timelines, including Sudan in December and Chad in October, while others such as Burkina Faso and Guinea have recently recommitted to two-year transitions ending in 2024. It is likely that some military elites, for example in Guinea, will seek to extend their authority while others will have to contend with rising insecurity and popular dissatisfaction. Consequently, 2023 will be crucial for these regimes to organise orderly handovers of power to civilians – for example through elections – by their looming 2024 deadlines.
7. South Africa’s changing political landscape
President Cyril Ramaphosa was meant to face a relatively straightforward internal re-election as head of the ruling African National Congress (ANC). But allegations of impropriety after he allegedly concealed a robbery at his private farm in February 2020 have undermined his standing. Although he was on 19 December re-elected as ANC president, the party’s reputation has been damaged at a time when its electoral support is in decline. Ahead of the 2024 general elections, the ruling party will therefore need to restore its reputation while opposition parties will look to galvanise support using the ANC’s poor track record on issues such as corruption and energy supply shortfalls.
8. Militancy spreads with implications for commercial operators
Countries in the Sahel will contend with rising threats from Islamist militant groups. Following the end of the French-led Barkhane counter-terrorism operation in August, domestic and regional military initiatives to combat the spread of militancy have yet to fill the security vacuum left by the French-led operation. Islamist militants will continue to expand southwards from Mali, Niger and Burkina Faso, capitalising on the structural vulnerabilities of countries such as Benin, Côte d’Ivoire and Togo. Of more concern will be the tendency of these groups to target commercial operators, particularly gold mining companies, as they seek to generate revenues amid a growing illicit trade in the region.
Islamist militants have also expanded into Nigeria’s Middle Belt region since April. They will likely continue to primarily target government security forces and places of worship – mirroring their targeting patterns in their north-eastern strongholds – but will likely see international businesses as attractive targets given the growing commercial presence in the region.
Although groups in Somalia and Mozambique have been slightly weakened by sustained domestic and regional military campaigns against them in the past year, Somali Islamist group al-Shabab and the Mozambican al-Sunnah will retain the intent and capability to carry out attacks in their respective areas of operation. Telecoms infrastructure in Somalia and the operations of oil and gas companies in Mozambique will be attractive targets, but the groups’ ability to conduct sustained campaign attacks against commercial targets will be limited.
9. Shifting geopolitics…
2022 saw a marked increase in anti-French sentiment in West Africa, with a commensurate increase in attempts by Russia to steady its foothold in the region. Countries such as Mali and the Central African Republic (CAR) have relied on the latter rather than their former colonial power. However, despite Mali’s overt anti-French stance, we do not expect a radical change in African countries’ alignments, or lack thereof, with global geopolitical powers in the year ahead. Instead, Africa will continue with its pragmatic engagement with global geopolitical powers. Indeed, many countries will seek to capitalise on pledges of investment and security cooperation from Western countries and multilaterals including the US, the UK, France and the EU, especially as China re-evaluates is financing for projects on the continent.
10. …and the energy opportunity
The shifting geopolitical context will work to boost the prospects for the energy sector. 2023 is likely to see a resurgence in interest in offshore gas sectors to fill gaps in global energy supplies; Senegal, Mozambique, Angola and Tanzania are likely to benefit most from international interest. In addition, building on the momentum from COP 27 in November, many countries will be keen to capitalise on newly pledged financing for their energy transitions. Namibia and South Africa will benefit from their first-mover advantage, having made strategic energy sector deals with Western countries in recent months. In addition, the pursuit of rare earth minerals which are key for the global energy transition will see a sustained interest in mining sectors across the continent, providing much-needed revenue for governments in the year ahead.
"This article is based on online analysis provided by Control Risks exclusively to Seerist. Find out more about Seerist – the only augmented analytics solution for risk and intelligence professionals."