2023 was tough. Inflation and currency depreciation causing a cost-of-living crisis across the continent. Debt crises, defaults and IMF programs that squeezed African governments who in turn squeezed citizens with taxes. Droughts and floods. Coups in the Sahel. Civil conflict in the horn of Africa. Despite these challenges African societies, and economies showed extraordinary resilience.

However, resilience while important is only part of what we want to see in Africa’s socio-economic story. We want dynamism, and growth as well, and tough times can be the perfect incubator of that. 2024 will be tough, looking at the year ahead the pressures we have already been experiencing will remain and new ones will emerge. To build greater resilience, drive growth and incubate dynamism we need good foresight from our policy makers and good policy, a lot to ask, but we live in hope.

1.    Debt, the IMF, and Delivering Growth

Debt distress was a key concern of 2023 with Zambia, Ghana and Ethiopia all defaulting on bond repayments. A number of other African countries continue to experience debt distress having taken on too much debt, which was not used for productive purposes, coupled with a strong dollar that has made those debts more expensive. Many countries have turned to the IMF for help which has come with structural adjustment conditionalities, increasing tax revenues, selling public assets, and slimming down public services. As our experiences in the 1990’s showed the neoliberal policies imposed by the IMF rarely have the effect they are intended to. Which means economic policy must focus on two things.

First (as I have written about in more detail here), Africa must get out of the IMF straitjacket, doing that will require prudence in spending by cutting spending on unnecessary and wasteful things. And prudent tax reform that looks to gain more from natural resources, target corporate tax avoidance and grow the tax base. The current IMF approach of simply squeezing existing narrow African tax bases harder is choking African economies to fund the debt repayment while services and public investment suffer.

Second, using the policy levers that are under IMF conditionalities. Tax and spending policy get most of the attention when it comes to economic policy but there is much more that impacts the costs and ease of doing business for small and large business. Makes it easier for African businesses to trade and do business across borders, unlocks native capital for investment. Creating linked economic policy where labour policy, agricultural policy, industrial policy, tech policy, and financial services policy are interlinked and mutually supportive, which in turn will stimulate and support the growth of the private sector.

2.    Painful medicine and hard recoveries

Of particular interest to me in 2024 will be the African countries that chose in 2023 to administer painful medicine on their economies to stop the malaise of recent years and set a new path to prosperity. In Kenya and Nigeria, new presidents facing dire economies chose to do this. Both President Tinubu of Nigeria and President Ruto of Kenya have done away with subsidies on fuel and food, looked reinvest and kickstart their productive sectors (agriculture in Kenya and Petroleum in Nigeria), allowed significant currency depreciations that fuelled inflation. Kenya (advised by the IMF) has gone a step further and imposed painful tax increases (with more planned in 2024), with the intent of keeping Kenya out of debt default and self-funding development. Though interestingly both countries have found themselves unable to make spending cuts.

2024 will be make or break for both countries. In 2024 the populations of both countries will need to see, at least, the beginning of a recovery. Otherwise, discontent may deepen, and the politics may get nasty as it did during Kenya’s opposition protests last year. 2024 will show if the tough medicine is working and give other African states confidence in following Kenya and Nigeria’s tough approach or if unsuccessful reason to explore alternatives.

3.    The Dollar and the Donald

After World War 2 there was a saying in economics. If the US sneezes the rest of the world catches a cold. In 2023 the US Federal reserve raised interest rates steeply to combat high inflation. These rate increases had a number of negative consequences for the continent. It made the Dollar stronger against African currencies fuelling an inflation crisis as imports from fuel to food got more expensive and made foreign currency denominated debt repayments more expensive and painful. In addition, it caused investors to pull funds from Africa as it made more sense to invest in US bonds with high returns. In 2024 the US Federal Reserve has indicated that it will start making interest rate cuts as inflation is under control. This should ease pressure on African currencies and help bring inflation in Africa under control. However, if the US doesn’t cut rates as fast or as far as expected the impact won’t be as great as hoped for, or even paused or reversed if US inflation returns. African policy makers, especially central bankers and finance ministers should be developing scenarios for 2024, looking at what happens to their economies under different US interest rate and Dollar scenarios and the policy responses they can put in place to take advantage or mitigate risks.

In 2024 more than 2 billion voters in 50 countries (including 18 in Africa) will be undergoing elections. The one overshadowing them all is the US election. Joe Biden has been a traditional US President when it comes to Africa, committing to AGOA, various aid and investment programs, and committing US resources to anti-terror/insurgency operations. If he wins re-election, we can expect more of the same. If Donald Trump returns, we can expect the return of his hands off (or disinterested) Africa policy which will see even greater interaction and influence from other non-traditional (US, EU, UK) powers on the continent. With trump in the white house expect China, India, Russia, Turkey the Middle Eastern Countries and Japan and Brazil to have more active Africa strategies. In addition, Trump will upend wider US economic and foreign policy as he did in 2016 creating not only uproar in the US but economic and geopolitical implications for the rest of the world. Again, having seen one Trump presidency, African policy makers must plan for that scenario, what do we need to protect against, and how can we take advantage of global context where US attention is either at home or ‘non-African’ parts of the world.

4.    The Black Swan

A black swan event is an unexpected and unforeseen event that has an enormous impact on the world. In 2020-21 we had the coronavirus pandemic. In 2022 Russia invaded Ukraine and in 2023 we got a global inflation crisis and new war in the Middle East. All of these have had significant socio-economic and political impacts on Africa and the world.

We are all praying for a (comparatively) quiet 2024, but if the last few years are any indication there will be something in 2024, we do not know what it will be but there will be something. Maintaining some flexibility and adaptability in policy approaches and plans are key if African countries are to continue to navigate these storms.

5.    Climate more hot air or action?

Over the last couple of years Africa has made a lot of noise on the global stage about climate change and had some victories such as the inclusion of a loss and damage fund at CoP-27 in Egypt, the development of South Africa’s Just Energy Transition Plan (JETP) and the 2023 Africa Climate Summit in Nairobi, the first of its kind that saw the first proper articulation of African Climate ambitions in the Nairobi Declaration.

In 2024 we must see progress and some action. Can South Africa’s JETP get off the ground and help abate the energy crisis or will it just be another talking point. Will the loss and damage fund get some honest to God funding, will some of the ambitions in the Nairobi declaration be on the table at CoP-29? If all we see is hot air at diplomatic discussions, the hot air of climate change will continue to disproportionally impact Africa, the continent least responsible for the problem.

6.    More continental trade (hopefully)

Trading under the Africa Continental Free Trade Area Agreement began on 1 January 2021. As of February 2022, eight countries representing the five regions of the continent – Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, and Tunisia – participated in the AfCFTA’s Guided Trade Initiative, which sought to facilitate trade among interested states that met the minimum requirements for trade, under the Agreement. The products earmarked for trade were limited and intended to lay the groundwork for future expansion. In 2024 our fingers are crossed that that expansion will come to fruition. The goal of policy makers and the ACFTA secretariat must be the operationalisation of key protocols and one of the aspects I’m most excited about the Pan African Payments and Settlement System PAPSS enabling countries to trade and pay for services across borders in local currencies rather than expensive currencies. Hopefully, African leaders truly get behind this agenda.

2024 tough but not disastrous

2024 will be a tough year for Africa, but it should not be disastrous (black swan events aside). If policy makers can identify and plan for various scenarios, we can better control the impact of global events and policy shifts on the continent. If policy makers can think outside the IMF box on how to increase revenues without hurting citizens and businesses as well as back the big bold policy initiatives on climate and trade, we could see the foundations laid for greater prosperity in the future.

2024 will be tough but manageable if our leaders and policy makers can focus……

On March 26th Kenya’s President announced yet another lockdown, prompting immediate outcry from wider public, because unlike the first lockdown in March 2020 there were no economic support measures announced to try and cushion people from the impacts of a lockdown. Around the world, including in Africa when lockdowns have been implemented governments have deployed a myriad of support measures to cushion their citizens. The USA has deployed trillion-dollar stimulus packages with cash handouts to its citizens. The UK rolled out a multi-billion-pound furlough program that gave money directly to employers to keep staff on payroll even though they were not working. Around the continent we saw new and expanded cash transfer programs, tax breaks, stimulus spending, food aid and a myriad of programs all deployed to cushion Africans from potentially devastating lockdowns. However, the impact of these programs is not nearly enough to offset the damage done to livelihoods.  

The data shows that in Africa, the measures implemented to control Covid has led to declining employment, livelihoods, food security, and human capital. And it is our poorest and most vulnerable, such as those self-employed in the informal sector. In one study of 6 African countries, up to 76% of people reported a fall in income as a direct result of the pandemic and the measures employed to control.  

Unlike the USA we do not have two trillion dollars to throw at the problem. Furthermore, Africa is particularly susceptible to disasters, both natural and man made in the last five years we have seen an Ebola epidemic, Covid-19, locust invasions, devastating tropical storms, drought, floods, and landslides This means we must become innovative This means we must put in place mechanisms and policies that can respond to a crisis effectively while minimising their impact on the livelihoods, health, and security of Africans. It should not be about saving something impersonal like the economy but ensuring that people are, as far as is possible, able to continue with their lives.  

Building crisis response systems  

What should these crisis response systems that we need to build look like.  

1. Starting from the bottom  

For any crisis whether it is a pandemic, flood, drought, locust invasion etc. Its epicentre will be at the grassroots and that is where a response mechanism must start. The foundation of a crisis response system will be a community level mechanism that is capable of three things. First, engaging with its community effectively this is critical where the public will need to be educated, informed, or alerted during a crisis. Second, it must be capable of keeping up to date information that can be utilised for informed discussion making. We all now know about test and trace, but being able to identify, track and record is critical for tracking disease outbreaks, victims of natural disasters, pests that decimate crops etc. Third they should be from the communities they are serving, ideally even chosen by those communities. Trust is critical in community engagement, if that engagement is to have any impact having people from those communities who understand the nuances and dynamics of those communities and can speak to local context is critical.  

2. Speaking to the public  

In a crisis effective communication to the public is critical. You need to impart information that explains what the crisis is and what to expect, what measures people need to take to protect themselves or others, what the government is doing to help, and how people can access that help. African governments are particularly bad at this. The tend to speak down to their people, condescendingly giving orders rather than explaining the issue and asking for cooperation. Furthermore, communication tends to be sporadic, uncoordinated, and confusing.  

Communications must be done in a way that engenders trust and encourages people to respond in a way that reinforces the public good (e.g., wearing a mask). To be prepared for the next crisis we must put in place communications systems that can meet these requirements. Assess how people get information during crises and identifying who they trust. Then putting in place systems that during a crisis can engage and inform people and institutions so that the information put to the public from the government via traditional (e.g., the official spokesperson) and non-traditional (community workers, religious institutions, schools, etc.) is one and the same and is given in as broad and often a manner as possible. These systems and processes can be activated during future crisis and emergencies to engage and inform in a timely and effective manner.  

3. Supporting livelihoods  

As the numbers show, the biggest impact of the pandemic on the continent has been on livelihoods, and many African governments have implemented measures aimed at cushioning their citizens. However, responding to the crisis after it has happened is often too little to late. What’s needed is the development of flexible livelihood support mechanisms and plans designed for the specific African context. This could consist of social safety nets which I have written about in detail here. But beyond that we must look at how our economies function and the critical activities that we must endeavour to keep running to preserve livelihoods. Which means looking at things like markets, transport and logistics, and informal trades, talking to the people who utilise and rely on those things and collaboratively developing plans that would enable them to stay open and function during crises. How do we keep markets open during a pandemic, do stall owners, sellers and buyers understand sanitation requirements and do they have access to water and sanitation supplies? In the event of floods, which roads are most likely to be washed out, what can we do now to mitigate that. When Malawi first introduced a lockdown in April 2020 they faced an immediate backlash and protests from informal traders precisely because they had not thought of these questions. This is not Europe; people cannot simply stay home when they and their families depend on their ability to leave the house and earn a living. This could have been avoided entirely if the government had rather than copy what everyone else was doing stopped to look at its own context, talk to its own people and produce a relevant solution. We can do this in advance, it wont cost much and resilience we build into our economies will save lives.  

4. Working together  

One of the things that I have been most proud of as an African during this crisis has been the way in which many African states and institutions have worked together. The AU and the Africa CDC have been at the forefront of this. Coordinating resources and expertise between states to improve testing and surveillance, developing a common procurement portal so that African states could pool resources and get the supplies they needed during those first critical months, and setting up the AU’s Vaccine Acquisition Task Team (AVATT) to acquire and distribute vaccines on the continent. The cooperation and African multilateralism has been fantastic, but it could and should have been better. How can the AU, Africa CDC, EAC, ECOWAS, SADC etc. learn from the coronavirus pandemic to set up mechanisms that can respond to future crises. This pandemic has shown us that when push comes to shove America, the UK, Europe, China etc. will put themselves first. Hoard vaccines, restrict exports of critical supplies, corner the market on PPE, testing reagents and pharmaceuticals. As I have written about before the charity of other is not something we can rely on in global crises We can only overcome that by working together, agreeing in advance that when the next pandemic, natural disaster, global financial crisis, famine, flood, or even massive solar flare happens this is how we will cooperate. Most critically, we must share information, coordinate actions, where possible pool scarce resources and most importantly act with one voice on the international stage.  

Conclusion  

The Coronavirus pandemic has taught Africa several things.  

First, we cannot rely on the rest of the world to help in a crisis especially when they too are affected. As Africa has struggled to acquire the resources to fight the pandemic and the vaccines to end it the developed world has hoarded them. As a result, Africa runs the risk of becoming the pandemic continent exposed to new strains ostracised by vaccine passports. 

Second, we cannot simply borrow response mechanisms from others and implement them without thinking about our own unique contexts. How does a lockdown work in a slum? How does the informal sector “work from home”? The answer is they do not. And we must develop mechanisms that work for us and do not do more harm than they are trying to prevent.  

At the start of May, Kenya’s president announced an easing of the lockdown as the 3rd wave of Covid-19 eased. Yet a couple of weeks later, the ministry of health is warning about a 4th wave of Covid-19 in July. Kenya’s cycle of outbreak spike, lockdown and economic pain is set to continue.  

As the Kenyan example shows, the most important lesson is that there is no substitute for preparation. The pandemic caught the entire world by surprise and Africa must ensure that it does not happen again. Africa will face many crises in the near future and the only way to make sure those crises do not endanger the development of our continent is to put in place policies that give us the tools to mitigate their impacts and bounce back stronger.