President Goodluck Jonathan has picked a battle that every Nigerian president, military and civilian in the past 20 years has fought and lost in one way or another.
With the cost of maintaining government now running at three quarters of the national budget, there is little room for investment in the infrastructure and services the country needs to continue growing. One obvious saving could be made if the state stopped subsidizing fuel – as cabinet ministers have hinted they will do in 2012.
Nigeria is on the verge of takeoff. So said Jeffrey Sachs, the development economist and advisor to the UN Secretary General Ban Ki-moon after a visit this week that coincided with the swearing in of President Goodluck Jonathan.
Sachs is not alone. Many foreign investors eyeing African growth see the continent’s most populous nation, with its market of over 150m people, its oil and gas supplies, human resources and vast unmet demand for goods and services as the greatest opportunity.
There were some doubting Thomases among the fund managers who were weighing up Nigeria’s debut eurobond last week – including at least five major financial institutions who either chose to shun Nigeria or cautioned clients likewise.
But by and large the international investment community gave Nigeria the thumbs up on Friday, when the bond was launched. The $500m issue was more than 2 times oversubscribed, and pricing, which translated into a yield of 7 per cent, was within government targets.
For those dragon slayers in constant search of evidence that China’s involvement in Africa is nothing less than a latter day attempt to re-colonize the continent, news from Zambia may be of interest.
Police have charged two Chinese mine managers there with attempted murder after live rounds were used last week to quell protests over pay and conditions at a coal mine south of the capital, Lusaka. Eleven miners were wounded in the incident, two of them are apparently in very bad shape.
The incident looks certain to raise new questions, at least in Zambia, about safety and conditions at mines run by the Chinese, who have become the biggest investors in the country’s copper industry. But will there be repercussions beyond the immediate court case?
Sir Bob Geldof – the Irish aid campaigner and former rock star – is preparing a foray into private equity in Africa, as the FT reports today. But why has he called the fund “8 Miles?” There are plenty of potential explanations.
Standard and Poor’s has created a stir by downgrading Ghana’s credit rating, only months before the country becomes a significant oil producer.
The timing of the downgrade looks odd – and has attracted scepticism from the IMF as well as seasoned analysts of Ghana’s economy. Ghanaian commentators have even suggested S&P may have got its figures in a mix.
Add another item to the agenda at this weekend’s G20 summit: African resource nationalism and the twin issue of security of mining contracts. That’s thanks to a burgeoning dispute between Canadian miners and the authorities in the Democratic Republic of Congo.
Canadian prime minister Stephen Harper, who is hosting the meeting, plans to raise concerns about the case, which Canada views as particularly egregious. Canadian authorities think they should play a part in a decision by the IMF and World Bank due next week on whether to conclude the write-off of $9bn of Congo’s historic foreign debt.
The 48 nations that make up sub-Saharan Africa are a very varied bunch. So the future looks wildly different depending where you are standing – in Zimbabwe, say, or Ghana.
Broadly, though, the shifting patterns of world trade, structural changes in the prices of commodities, and growing interest from around the world in the potential of sub-Saharan Africa’s poorly served markets, have offered an opportunity for the continent to turn the corner.
There have been false dawns in the past. This time it’s Africa’s to lose. Fortuitously the outlook has brightened just as the continent prepares to host the football World Cup for the first time.
African finance ministers and central bankers may still have plenty to grapple with, but as they arrive this week in Abidjan for the annual meeting of the African Development Bank, their books are looking better balanced than for many of their counterparts to the north.