Sub Sahara Africa: Country Risk Ratings

Angola (AGO)

Angola’s overall risk level remains high. João Lourenço, chairman of the People’s Movement for the Liberation of Angola remains president of the country. Political violence remains medium high, with legal & regulatory risk at a very high and political interference at a high. Corruption continues to exist at great levels, with the government not managing to control the issue. For instance, Isabel dos Santos, who has been described as Africa’s richest woman and daughter of former president José Eduardo dos Santos is now being charged for 12 crimes, including fraud and embezzlement. The government of Angola has decided to leave the Opec oil club, after Opec’s efforts to reduce the quota for oil production. Angola would be able to produce only 1.1 million barrels per day under Opec’s production quotas. Elsewhere, Angola and 5 other African have come to an agreement with China to export goods into the Chinese market without any tariffs. Finally, more than 130 protestors were arrested in October for taking part in a march, which was in favour of the autonomy for the northern region. Supply chain disruption remains medium high. Angola’s growth is expected to rise in 2024 to 3.3%, according to the IMF. The economy of Angola continues to highly depend on the production of oil, which accounts for about 50% of the country’s GDP and 90% of the exports. CPI inflation is expected to pick up to a very high 22.3% in 2024, but decline to 9.1% by 2028. The high cost of living and the high degree of poverty have had a significant impact to the living standards of Angolan citizens. Angola’s current account surplus is forecast to rise to 3.7% of GDP in 2024. Sovereign non-payment remains high, with exchange transfer at a medium. The Angolan kwanza, the domestic currency, has been stable since July 2023 after the 65% devaluation. The risk of doing business remains high, with banking sector vulnerability at a medium low.

Benin (BEN)

Benin’s overall risk level remains medium high. Patrice Talon remains president of the country. Parliamentary elections were held in 2023 in Benin, with only 27% of the eligible voters voting, with the Progressive Union party and the Republican Bloc party, who are in favour of president Talon, gaining 81 out of the total of 109 seats. Political violence remains medium, with legal & regulatory risk and political interference at a medium high rating. President Talon hopes to rebuild relations with their military-run neighbouring countries, despite condemning the seizure of power by the military. Supply chain disruption remains medium. Benin’s growth is expected to rise to 6.3% in 2024, according to the IMF. Benin’s economy depends highly on the production of unprocessed agricultural products, such as cotton which accounts for 40% of the country’s exports. The agricultural sector employs more than 48% of the population of Benin. Due to the lack of diversification in the country, bad weather conditions can have a great effect to the economy of Benin and lead to price fluctuations. CPI is forecast to drop to 2.5% in 2024, a 2.5% decrease from 2023. The current account deficit is projected to decline to -5.7% of GDP in 2024, with a government debt/GDP ratio of 52.4%. Benin is aiming to raise USD 750 million, by introducing US dollar-denominated bonds, which will have a 14-year final maturity. Benin, as of now only had euro-denominated bonds, as the West African CFA Franc, the currency utilised in the country is pegged to the euro. Sovereign non-payment and exchange transfer remain medium high, given the current account deficit. The risk of doing business remains medium high, with corruption continuing to be a great challenge for businesses in the country, as well as its lack of diversification. Banking sector vulnerability remains medium low, with inability of government to provide fiscal stimulus at a medium high.

Botswana (BWA)

Botswana’s overall risk level remains medium low. Mokgweetsi Masisi, member of the Botswana Democratic Party (BDP), remains president of Botswana and will be running for re-election in October. Political violence and legal & regulatory risk remain medium low, with political interference at a medium. Duma Boko and his alliance, the Umbrella for Democratic change is considered BDP’s greatest competitor. Umbrella for Democratic Change includes three parties, the Botswana National Front, the Botswana Congress Party and Botswana’s People’s party. BDP’s support has been reportedly hurt, due to a personal feud between Masisi and former president Ian Khama. The election is expected to be one of the most competitive in the nation’s history. Supply chain disruption remains medium low. Botswana’s growth is expected to rise to 4.1% in 2024, according to the IMF. The nation depends highly on the production of diamonds, which account for 30% of its revenue and 70% of its foreign exchange earnings. The Group of Seven has imposed a ban on Russian diamonds, which will lead to the increase demand for African diamonds. Russia is considered the world’s biggest producer of diamonds and this is an act to decrease their funding towards their war in Ukraine. De Beers, one of the largest firms in the diamond industry has decided to invest USD 1 billion to their mine in Botswana to extend its lifespan, despite the recent declines in demand for diamonds. Meanwhile, Botswana has decided to impose import restrictions on some food products, trying to become a self-sufficient country in the industry, such as tomatoes and potatoes. CPI is forecast to drop to 4.7% in 2024, which falls within the country’s target range and led to the Central Bank dropping the key interest rate by 25 basis points to 2.4%. Botswana’s current account surplus is projected to rise to 1.5% of GDP in 2024, with a low government debt/GDP ratio of 18.1%. Sovereign non-payment remains medium, as exchange transfer remains medium low. The Botswanan Pula, the domestic currency, has only depreciated by about 4% in the past 12 months against the US dollar. Banking sector vulnerability and the inability of government to provide fiscal stimulus remain medium low and the risk of doing business remains medium.                       

Congo (COG)

Congo’s overall risk level remains high. Denis Sassou Nguesso, leader of the Congolese Party of Labour, remains president of the country. Political violence remains medium high, with political interference and legal & regulatory risk very high. Corruption is considered to be at great levels in Congo Brazzaville. The UN also allocated USD 100 mln for the deployment of first responders in Congo, after it suffered one of the worst floods in decades. The floods have reportedly affected more than 336,000 people, 34 health facilities and more than 2,200 hectares of farmland and led to the death of more than 300 people. 31 people were also found dead in a stampede at a stadium where a recruitment process for the army was happening. Elsewhere, Congo has come to an agreement with the UAE for a bilateral trade agreement. Supply chain disruption remains high. Growth is expected to rise to 4.4% in 2024, according to the IMF. The hydrocarbon sector has dominated Congo’s economy, accounting for 42% of the GDP and 80% of the total exports. CPI is forecast to drop to 3.2% in 2024. Congo’s current account surplus is projected to decline in 2024 reaching 2.1% of GDP and eventually a deficit in the next five years, with a very high government debt/GDP ratio equal to 91%. Sovereign non-payment thus remains high, as exchange transfer remains medium high. The currency utilised in Congo is the Central African CFA franc, which is pegged to the Euro. The risk of doing business remains very high. The challenges for a business operating in Congo are several, such as corruption, poor infrastructure, a weak judicial system and lack of skilled labour. Banking sector vulnerability remains medium low, while the inability of government to provide fiscal stimulus remains high.

Congo Dem. Republic (COD)

DRC’s overall risk level remains very high. Felix Tshisekedi, member of the Union for Democracy and Social Progress party, will remain president of the country for a 2nd term after being re-elected in December 2023, receiving 73% of the vote. Political violence, political interference and legal & regulatory risk remain very high. After Thisekedi’s re-election, opposition supporters clashed with the police, demanding a rerun of the election. The Constitutional Court in DRC has rejected two challenges that have been made by oppositional parties and said that the results were valid. The resurgent M23 rebel group continues to create problems to the government, which has been led to the East African force to leave (The East African force consisted of troops from Kenya, Uganda, Burundi and South Sudan).  A 6-month truce was agreed in March between the M23 and the government, however both sides accused each other of breaking the truce which led to the resumption of the fighting. The M23 group has captured areas in North Kivu, an area known to be rich in minerals, over the past months, such as Kitshanga. President Tshisekedi in his final campaign rally threatened Rwanda with a declaration of war in case Rwanda continues to support the M23 group, a claim that Rwanda has denied multiple times. Supply chain disruption also remains very high. Growth is expected to slow in 2024 to 4.7%, compared to 6.7% in 2023, according to the IMF. Congo’s economy highly depends on the production of minerals, such as copper. The DRC, is considered as one of the 5 poorest countries in the world, with 62% of the population living on less than 2.15 USD per day. CPI is forecast to drop by 8.5% in 2024 reaching 10.6% and is forecast to decline to 7.0% by 2028. DRC’s current account deficit is forecast to drop to -5.3% of GDP in 2024 and reach -3% by 2028. Sovereign non-payment remains medium, as exchange transfer remains medium. The currency utilised in DRC is the Congolese France, which has depreciated by 25% against the US dollar over the past 12 months. The risk of doing business remains high, due to the current war between M23 and the government, the level of corruption and the lack of access to finance, with banking sector vulnerability medium low.

Djibouti (DJI)

Djibouti’s overall risk level has increased from medium high to high. Ismail Omar Guelleh remains president of the country since 1999. Political violence remains medium high, political interference remains high and legal & regulatory risk remains very high. A container ship on its way to Djibouti was hit by a missile by the Yemeni Houthi forces without any casualties. Two more vessels were hit by a drone just north of Djibouti in February. Following recent events in the area, Maersk, a shipping giant from Denmark has decided to suspend any trips to Djibouti, due to high security risk. President Guelleh mentioned during the IGAD summit that the challenges that Sudan is facing but also the conflict between Somalia and Ethiopia require bold leadership and a vision that transcends borders and ideologies. Guelleh also emphasized on the importance and the effects of climate change, but also the need to act immediately with determination and ambition to build a sustainable future, during UN’s Environment Assembly in Kenya. Supply chain disruption remains medium high. Growth is expected to rise to 6% in 2024, according to the IMF. Djibouti’s economy depends on the service activities related to its location as a port on the Red Sea. The services sector in Djibouti accounts for 80.2% of the GDP. CPI is forecast to rise by 0.6% in 2024 to 1.8%. Djibouti’s current account deficit is projected to decline to -1.2% of GDP in 2024 and eventually become a surplus in the following years, with a government debt/GDP ratio of 41.9%. Sovereign non-payment remains medium high, whilst exchange transfer increased from medium low to medium. The Djibouti franc, is pegged to the US dollar at a rate of 177.721 DJF for 1 USD. The risk of doing business remains high. Challenges that businesses operating in Djibouti have to face include poor infrastructure, high levels of corruption and lack of access to finance. Banking sector vulnerability has declined from medium to medium low.

Ethiopia (ETH)

Ethiopia overall country risk rating remains high.  Internal instability has taken a turn for the worst with more clashes in 2024 in Amhara between Fano militia and Federal troops, including allegations of civilians being killed by government forces – U.S. and EU have protested.  Separately, drought in Tigray is increasing risks to the fragile peace in the North. Meanwhile, tensions have been rising with the Somalian government after Ethiopia signed an MOU with Somaliland to lease a port and build a military facility on the Red Sea.  Tensions also simmer with Egypt over the Grand Ethiopia Renaissance Dam that could slow the flow of water to Egypt. These regional tensions need to be followed closely in 2024.  This means the political violence measure remains very high, while political interference and supply chain disruption measures are high. On the economic front, the broader picture is that the government wants to get growth back to around 6% per annum in a post Tigray recovery, which is feasible given the population dividend is also a big tailwind.  Even so, Ethiopia still needs to also bring inflation under control (projected to be 20.4% by the IMF in 2024), both for domestic macroeconomic stability but also to slow the currency depreciation and as FX reserves remain poor. Meanwhile, Ethiopia default on a coupon payment in December 2023 does not stop a debt restructuring or Ethiopia request for up to USD 3.5 bln from the IMF, but other issues continue to stall progress. A further complexity for Ethiopia is that the U.S. has previously pushed for transitional justice for victims of the recent war in Tigray to come first, before support for IMF and U.S. bilateral aid are forthcoming.  This all keeps a floor under the sovereign nonpayment risk at medium-high and risks a rise in this rating. One major improvement has been the surprise BRICS membership from January 2024 for Ethiopia, which will benefit external trade long-term and could also bring soft loans from the BRICS development bank.

Libya (LBY)

Libya’s overall risk level remains very high. Abdul Hamid Dbeibeh remains prime minister of Libya under the Government National Unity. Political violence, political interference and legal & regulatory risk remain very high. Corruption is presumed to be at great levels in Libya, and it is believed that the situation has worsened compared to Gaddafi’s era. The split between east and western Libyan government is also to be resolved and political instability remains high.  Protests also occurred out of Libya’s state owned energy firm, and a force majeure was declared by the firm. Meanwhile, deadly floods occurred in Libya September 2023, leading to 4000 confirmed deaths and 8,500 people missing, which led to the arrest of the mayor and frustrated individuals burning his house. Many Libyan citizens choose to seek asylum in European countries, by travelling with small boats through the Mediterranean. In recent events, a small boat carrying 86 people sank off Libya’s coast, due to very high waves. Italy has come to an agreement with the UN’s refugee agency to take in 1,500 refugees from Libya over the next three years. Supply chain disruption remains very high. Growth is expected to slow in 2024 to 7.5% and be at 2.3% by 2028, according to the IMF. The economy of Libya is highly dependent on the production of oil, which accounts for 95% of its exports and 60% of its GDP. CPI is forecast to decline to 2.9% in 2024 and reach 2.5% by 2028. Libya’s current account surplus is projected to rise to 26.5% of GDP in 2024. However, the government debt/GDP ratio is estimated to be very high, at 83%. Sovereign non-payment remains medium, with exchange transfer at a very high. The Libyan Dinar, is pegged to the Special Drawing Rights, which is a value based on five currencies, the Euro, the US dollar, the Chinese Yuan, the Japanese Yen and the Pound Sterling. The risk of doing business remains very high, due to the high levels of corruption and poor infrastructure, as banking sector vulnerability remains medium.

Mali (MLI)

Mali’s overall risk level remains high. Assimi Goïta remains interim president of Mali, after gaining power in the 2021 coup. Political violence remains very high, as legal & regulatory risk and political interference remain high. More than 136,000 people are trapped in Timbuktu a city that has been under siege by al-Qaeda linked jihadists and are reportedly running out of essential items, but the armed groups surrounding the city won’t allow anyone to come in. Meanwhile, Mali’s junta is planning to end a tax agreement with France, which has been in place since 1972, along with Nigeria. Moreover, Mali is one of the 6 African countries that will export most goods into China, without any tariffs. Russia has reportedly been accused of laundering a total of USD 2.5 billion, through illegal gold trade in Mali by the Wagner group. Mali’s junta has also decided to end a peace deal with the Tuareg rebels, a deal which has been in place since 2015. Moreover, Mali will not be a member of the West African regional bloc, Ecowas anymore, despite being a founding member. It accused, the 50-year-old bloc of providing a threat to the country’s sovereignty. Supply chain disruption remains very high. Growth is expected to increase to 4.8%, according to the IMF. Mali’s economy highly depends on the agricultural sector which accounts for 36.4% of the country’s GDP and employs 65% of the total population. CPI is forecast to drop to 2.8% in 2024. Mali’s current account deficit is projected to decline to -5.7% of GDP in 2024 and a government debt/GDP ratio of 52.6%. Sovereign non-payment remains high, as exchange transfer remains medium high. Mali operates under the West African CFA franc, which is pegged to the Euro. The risk of doing business remains medium high and the inability of government to provide fiscal stimulus remains high.

Madagascar (MDG)

Madagascar’s overall risk level remains medium high. Andy Rajoelina will remain president of the country, after being re-elected in November 2023, with a 59% of the vote. The election recorded a turnover of just 46%, the lowest in the country’s history. Rajoelina’s opposition boycotted parliament over the credibility of the elections after the results. Political violence remains medium high, political interference remains high and legal & regulatory risk remains very high. Corruption remains a great issue in Madagascar and has not been resolved. President Rajoelina proposed an amendment of the penal code that includes the chemical and surgical castration for those found guilty of rape against minors, which has been agreed by MPs and will be reviewed by the Supreme Constitutional Court. Meanwhile, Romy Adrianarisoa who is Rajoelina’s ex-chief of staff, was convicted in a court in London for taking bribes by Gemfields in exchange for mining rights. Supply chain disruption also remains medium high. Growth is expected to rise by 0.8% in 2024 to 4.8%, according to the IMF. Madagascar’s economy continues to depend on the agriculture industry, which account for about 22% of the GDP and employs 80% of the country’s workforce. CPI is forecast to be relatively high in 2024, at 8.8%, though a modest decline from 2023. The current account deficit is projected to increase by 0.8% in 2024 to -4.8% of GDP, with a government debt/GDP ratio of 53.5%. Sovereign non-payment and exchange transfer thus remain medium high, due to the current account deficit. The domestic currency, the Malagasy Ariary has declined by about 4% over the past 12 months against the US dollar. The risk of doing business remains high, due to the high degree of corruption, limited infrastructure, but also the lack of diversification in the economy. Banking sector vulnerability remains medium low and the inability of government to provide fiscal stimulus remains medium high. 

Mauritania (MRT)

Mauritania’s overall risk level remains high. Mohamed Ould Cheikh Ghazouani remains president of the country and will be running for re-election in June, for his second and final 5-year term. Ghazouani’s party El Insaf won the parliamentary elections in 2023 with an overwhelming 35.25% of the votes against 10.24% of the Tewassoul party. Political violence and political interference remain high and legal & regulatory risk remains very high. The head of the European Commission, Ursula von der Leyden and the Spanish prime minister met with Ghazouani in February to discuss a partnership. This is a result of a significant rise of smuggling individuals by 300% in January from Africa to the Canary Islands of Spain. The Spanish government along with the EU are willing to offer EUR 210 million o Mauritania to limit irregular migration. These funds will be used to build a new high voltage power line between the capital and the south-east of the country, humanitarian aid to 150,000 refugees, better roads, but also military training to have a secure border with Mali. Ghazouani also came to a free-trade agreement with the president of Algeria to open a gate at the border which would boost trade between the countries. Supply chain disruption remains medium high. Growth is expected to rise to 5.3% in 2024, according to the IMF. CPI is forecast to drop by 3.5% in 2024 to 4%. Mauritania’s current account deficit is projected to increase to -11.1% of GDP in 2024, with a government debt/GDP ratio of 48.2%. Sovereign non-payment remains medium, as exchange transfer has declined from high to medium high. The Mauritanian Ouguiya has depreciated by about 10.3% against the U.S. dollar over the past 6 months. Meanwhile, the risk of doing business remains high. Businesses in Mauritania have to face challenges, such as corruption, poor infrastructure and lack of access to finance. Banking sector vulnerability remains medium low and the inability of government to provide fiscal stimulus remains medium high.

Mozambique (MOZ)

Mozambique’s overall risk level remains high. Filipe Nyusi, member of the FRELIMO party is currently president of the country, but will not remain for long, with the presidential elections in October. Nyusi won’t be able to run for the presidency, as he will have reached the maximum of 2 presidential 5-year terms. Frelimo’s Central Committee is expected to elect a new leader by March, through, who will lead Frelimo into the general elections. The current favourite for the FRELIMO leadership is Celso Correia, current agriculture minister, who also appears to have Nyusi’s full support. Political violence remains very high, with legal & regulatory risk and political interference at a high rating. 8 people were killed in Islamist militant attacks in the Cabo Delgado province. Supply chain disruption remains very high. The Mozambique government is accusing Privinvest of paying bribes to government officials and Credit Suisse Bankers in lawsuit worth USD 3.2 billion. Growth is expected to slow in 2024 to 5%, according to the IMF. Mozambique depends highly on the agricultural sector, which accounts for about 24% of GDP and employs over 70% of the population. Meanwhile, Mozambique has agreed to build a new USD 5 billion hydropower project, led by the French power giant EDF. Mozambique also has also approved a plan until 2050, to raise USD 80 billion, in order to increase the capacity of renewable energy production and increase the availability of electricity. CPI is forecast to drop by 0.9% in 2024 to 6.5%. However, Mozambique’s current account deficit is projected to increase significantly in 2024 from -16% of GDP to -39.3%, with a government debt/GDP ratio equal to 92.4%. Sovereign non-payment thus remains high and exchange transfer remains medium high. The Mozambican metical operates under a free-floating exchange rate system and its value has remained relatively stagnant over the past 12 months against the USD. The risk of doing business remains high, due to high degree of corruption. Banking sector vulnerability and the inability of government to provide fiscal stimulus remain medium.

Nigeria (NGA)

Nigeria has a very high overall risk. The country contends with security issues, including terrorism in the north-east, separatist movements in the south-east, and kidnappings of students in the Kaduna and Sokoto states. By the end of 2023, governorship elections in critical Nigerian states were marred by hostility, contributing to a very high risk of political violence. Insecurity is fueled by the cost of living crisis, which emerged as a consequence of the removal of petrol subsidies and liberalization of foreign exchange controls, with trucks transporting food and warehouses being threatened of being attacked. In addition, companies face challenges stemming from frequent power outages, port congestion, infrastructure gaps, cumbersome customs procedures, and exposure to natural disasters; thus, the supply chain disruption risk is very high. The government has undertaken some measures to improve the business environment, but these remain overshadowed by corruption scandals, which make the legal and regulatory a high risk. Efforts have come in the line of expediting permit processes, digitalizing document registration, and simplifying tax payments. Likewise, President Tinubu set up the Presidential Economic Coordination Council (PECC) and Economic Management Team Emergency Taskforce (EET) to re-engineer the nation’s economic governance framework and to deal with immediate economic challenges, respectively. Added to the legal risks, obtaining foreign currency to operate effectively is also a significant hurdle reported by businesses; in this vein, the country’s central bank restricted foreign currency transfers by international oil companies and has devaluated the naira twice – making it one of the worst performing currencies; hence, the overall risks associated with doing business and exchange transfer are high. In the banking sector, vulnerability is deemed at medium-low; while credit growth remains healthy, the Central Bank decided to increase the minimum cash reserve ratio for the industry to 45% from 32.5% which could weaken its growth pace. The risk associated with the government’s inability to provide stimulus is medium. On the one hand, Nigeria approved the resumption of cash transfers to 12 million vulnerable households, in which each person will receive 25,000 naira (USD 20) monthly for three months. On the other hand, the government plans to axe an electricity subsidy for 15% of consumers to reduce its 3.3 trillion naira (USD 2.6 billion) cost. In terms of economic developments, the IMF expects Nigeria’s economy to grow 3.2% in 2024. In this regard, the World Bank expects that following the initial shock from the reforms implemented by President Tinubu, economic growth will be slow in the non-oil sector and stable in the oil sector. The Fund foresees Nigeria’s general government gross debt (as % of GDP) at 41.3% in 2024 and 40.3% in 2025, a notable increase from 27.7% in 2018.

Sao Tome & Principe (STP)

Sao Tome’s overall risk has increased from medium to medium high. Carlos Vila Nova has remained president of the country, since 2021. Political violence remains medium, with political interference and legal & regulatory risk remaining medium high. The four labour unions of teachers have begun an indefinite strike in Sao Tome, after the failure of reaching an agreement with the government for a pay rise from 100 euro to 400 euro. Meanwhile, prime minister Patrice Trovoada has chosen to introduce to 3 more ministries and the entry of 5 new ministers, which has received criticism from the opposition parties. Trovoada was recently re-elected president of the Independent Democratic Action party and asked its members to work harder towards its development strategy, otherwise they would be fired. Sao Tome broke an all-time record of tourist arrivals in 2023 with 35,817 registered visitors, with 50% of them being Portuguese. Supply chain disruption remains medium high. Growth is expected to rise to 2.4% in 2024, a 1.9% increase from 2023. CPI is forecast to drop by 8.9% in 2024 to 11.9%. The current account deficit is projected to decline to -10% of GDP in 2024, with a government debt/GDP ratio of 54.4%. The World Bank has approved a new cooperation with Sao Tome to fight the energy crisis, that includes 10 projects valued at more than 225 million dollars over the next 5 years. Sovereign non-payment remains medium, whilst exchange transfer has increased from medium low to medium. The São Tomé and Príncipe dobra has slightly appreciated against the US dollar over the past few months. Meanwhile, the risk of doing business remains high. Challenges that businesses in Sao Tome face include lack of diversification and limited institutional capacity. Banking sector vulnerability and the inability of government to provide fiscal stimulus remain medium.

Senegal (SEN)

Senegal’s overall risk level remains medium high. Macky Sall is currently president of the country but will not participate in the 2024 presidential elections. The elections were originally scheduled for the 25th of February, but will be postponed indefinitely by order of the current president for the 15th of December. Violent protests have occurred in Senegal leaving 3 people dead after this decision by Sall, a decision that has been characterised antidemocratic or an “institutional coup”. The president claims that the reason for this delay is a dispute over the eligibility of the presidential candidates. Ousmane Sonko member of the PASTEF party and Karim Wade were not on the presidential candidate list, as the first is facing a 6 month-prison sentence and the latter had a dual citizenship when he officially announced his presidential candidacy. Marius Sagna, opposition lawmaker has threatened the government to create a parallel government of national unity, if power has not restored to them by the 4th of April. Amadou Ba, current prime minister is the favourite to win the presidential elections and has Sall’s full support. Supply chain disruption remains medium. Senegal’s economy is expected to grow by 8.8% in 2024 and is expected to rebound in the next few years. CPI is forecast to drop to 3.3% in 2024 and experience disinflation in the following years. However, the current account deficit is projected to still be high in 2024 at -7.9% of GDP, with a government debt/GDP ratio of 72.1%. Senegal has agreed to a loan worth USD 1.9 billion USD with the IMF to help finance the current account deficit. Sovereign non-payment and exchange transfer remain medium high. Senegal operates under the West African CFA franc, which is pegged to the euro. The risk of doing business and the inability of government to provide fiscal stimulus remain medium high. 

South Africa (ZAF)

South Africa’s overall risk score is at medium, while the risk of political violence remains high mostly due to income inequality and poverty. The political interference risk is now at medium-high ahead of the approaching general and presidential elections on May 29. The ruling African National Congress (ANC) is at the risk of losing its majority as the recent polls suggest support for the ANC has dipped below 50%. Unless something unforeseen occurs, it appears the ANC will likely remain below the absolute majority, and a coalition will have to be formed, either with Democratic Alliance (DA) or with other smaller parties. A small ANC majority or coalition government could slow decision making on dealing with the power cuts, while a surprise healthy ANC victory could allow the ANC to continue focusing on reducing power cuts and lowering the adverse growth and inflation impacts. On the political front, the risk of political violence also remains high, as the left wing Economic Freedom Fighters agitate for radical change. We see some moderate and temporary political volatility during and after the elections. The accelerated pace of electricity shutdowns (load shedding), particularly in February coupled with logistic and transport crisis keep social tensions high. The ease of doing business, which remains at medium-high, will not be helped by the election, as the government will likely be weak and unable to accelerate the reform process or quickly fix the electricity problem in the country.  Another major economic issue to be solved is putting the government debt/GDP ratio on a downward path, but this will have to wait until after the 2024 election. Apart from the economic matters, legal and regulatory risks and supply chain disruption remain medium. On the economic front, risks to the inflation outlook are still assessed to the upside as acceleration in food, fuel and electricity prices continue to present inflationary risks, along with logistical constraints. The weakening currency is another risk factor for the inflation outlook. Despite hurdles, the economy is still supported by a trade surplus in 2024 coupled with probable Fed and ECB easing pressure on the South African Rand (ZAR), which can increase investor’s appetite for South Africa. The banking sector vulnerability in South Africa remains at medium-low, showing the relative strength of the financial sector despite macroeconomic problems.

Sudan (SDN)

Sudan’s overall risk level remains very high. Abdel Fattah al-Burnan remains the de facto leader of Sudan, after gaining power during the coup in 2019. Political violence, political interference and legal & regulatory risk remain very high. Corruption continues to exist at great levels in Sudan, with the new de facto government not managing to improve the situation. The war between Sudan and South Sudan resumes in the oil-rich region of Abyei, has led to displacement of many people and the death of around 100 UN peacekeepers. The United States have decided to impose sanction on 3 Sudanese companies that are believed to be funding the war. The European Union has also imposed sanctions to 6 firms that have reportedly funded the war. The war between the Sudanese armed forces and the paramilitary Rapid Support Forces (RSF) has led to more than 12,000 deaths and the displacement of nearly 8,000,000 individuals. The RSF claim to have seized a town and a military base in Gezira state, but also a military base in Wad Madani. The UN is appealing for USD 4 billion to help the Sudanese civilians, who are still in Sudan or are refugees to neighbouring countries. Supply chain disruption remains very high. Growth is expected to be positive in 2024, at 0.3% compared to -18.3% in 2023 due to the war. Sudan’s economy continues to highly depend on the production of oil. CPI remains at extremely high levels, with a 2024 forecast of 152% compared to 256.2% in 2023. Sudan’s current account deficit is also projected to rise to -7.4% of GDP in 2024 with a debt/GDP ratio of 256%. Thus sovereign non-payment and exchange transfer remains very high. The Sudanese pound operates under a free floating exchange rate system, and is currently valued at 1 Sudanese Pound for about 0.0017 USD. The risk of doing business remains very high, due to the current war, the poor economy and infrastructure and the high degree of corruption. Banking sector vulnerability remains medium high, as the inability of government to provide fiscal stimulus remains very high.

Tanzania (TZA)

Tanzania’s overall risk level remains medium high. Samia Suluhu Hassan, leader of the Cham Cha Mapinduzi party remains president of the country. Political violence remains medium, with legal & regulatory risk at a medium high and political interference at a high rating. Cham Cha Mapinduzi’s opposition Chadema held protests, due to the high cost of living, but also because the president has delayed constitutional changes that would reduce her power. The protestors also demand of an electorate system reform ahead of next year’s general elections. Floods that took place in the country’s capital Dar es Salaam have destroyed many houses and roads and have led to an unspecified number of people dying. Meanwhile, the European Parliament condemned the action of the Tanzanian authorities of trying to evict the Masai people in the name of conservation. The Tanzanian government has denied these allegations and has noted that the Masai people have been moving voluntarily. Supply chain disruption remains medium. Growth is forecast to rise in 2024 to 6.1% in 2024 and reach 7% by 2024, according to the IMF. The economy of Tanzania highly depends on the agricultural sector, which accounts for about 28% of the total GDP. CPI is forecast to stay stagnant at 4% 2024. Tanzania’s current account deficit is projected to drop to -4.2% in 2024 and -2.7% by 2028. Sovereign non-payment remains medium high, with exchange transfer at a medium. The World Bank has approved of a USD 1.14 billion loan to Tanzania, to improve its private sector and fight climate change. The Tanzanian Shilling, the domestic currency is a relatively weak currency given the current account deficit and has depreciated by about 9% against the US dollar over the past 12 months. The risk of doing business remains very high, due to the levels of corruption that the government has not managed to resolve, but also the poor access to finance and the low level of infrastructure in Tanzania. Banking sector vulnerability remains medium low, as the inability of the government to provide fiscal stimulus remains medium.

Tunisia (TUN)

Tunisia’s overall risk level remains medium high. Karis Seid is currently the first president of the country’s history, with Ahmed Hachani as prime minister, since August 2023, with the previous Prime Minister, Najla Bouden, being fired. Political violence, legal & regulatory risk and political interference remain medium high. A Tunisian judge has sentenced opposition leader, of the Ennahda party, Rached Ghannouchi, over charges of accepting external financing. Ghannouchi has already spent 1 year in jail, since last April, on charges of incitement against police. Additionally, a controversial law was approved by the cabinet in January allowing the Central Bank to finance the treasury, in order to finance the budget deficit. Elsewhere, the Freedoms Committee in the Tunisian Parliament proposed a law which criminalizes relations with Israel. After the president allowed the bill to pass through the committee stage, he then decided that the country should not proceed with this law, as he argued that it was counter-productive to criminalize relations with a state that Tunisia does not recognise, but also that any collaboration with Israel would be considered “high treason”, which leads to the death penalty. Supply chain disruption remains medium. Growth is expected to rise to 1.9% in 2024, according to the IMF. CPI is forecast to reach a 30-year peak of 9.8% in 2024, but drop to 5.6% until 2028. The government of Tunisia is planning to continue subsidising fuel, electricity and food, and to increase taxes on hotels, banks and liquor firms in 2024. The current account deficit is projected to drop to -5.4% of GDP in 2024 and further decline up to 2028 to -4.6%. Tunisia has reportedly succeeded to repay all its maturing 2023 external and internal debts, according to Finance Minister Sihem Boughdiri, though the government expects the debt/GDP ratio to be at 79.8% in 2024. Sovereign non-payment thus remains medium high, with exchange transfer at a high. The Tunisian dinar, the domestic currency operates under a fixed exchange rate system, but high inflation and the current account deficit could put it under pressure. The risk of doing business and banking sector vulnerability remain medium, as the inability of government to provide fiscal stimulus remains high.

Western Sahara (ESH)

Western Sahara’s overall risk level remains medium high. Brahim Ghali remains president of the Sahrawi Arab Democratic Republic. Morocco controls nearly 80% of Western Sahara, whilst the Sahrawi Arab Democratic Republic Polisario front controls 20%. Political violence and legal & regulatory risk remain medium high, as exchange transfer remains high. The Polisario is currently facing pressure by Morocco, which claims that Western Sahara is part of its own territory. Artillery fire has regularly been exchanged between the two countries after Western Sahara ended a ceasefire agreement which was held from 1991. Algeria has always backed the independence of the Polisario Front. Algeria recently cancelled a meeting with the Spanish Foreign Minister, after he requested that the topic of Western Sahara will not be discussed. On the other hand, Spain, the U.S. and other countries have recognised Morocco’s sovereignty over Western Sahara. France also supports Morocco’s autonomy plan over Western Sahara. The Polisario Front demands a referendum on self-determination, which was provided for by the UN when the ceasefire was signed in 1991 but was never put into practice.  A Spanish human rights organisation is accusing the Polisario of violations of human rights, by recruiting children for military purposes. Spain and Morocco have reportedly been secretly meeting to discuss the Western Sahara airspace, which is under Spanish control.  The economy of the Western Sahara is impacted by the ongoing dispute, which has curtailed oil exploration.  However, phosphate mining is a source of income and exports in the Morocco controlled part of Western Sahara.