2024: Year in Review
African countries weathered ongoing fiscal squeeze better than expected, with emerging shoots of economic recovery. Electoral jamboree delivered mixed results, while weak state capacity endures.
Thank you for reading An Africanist Perspective. If you haven’t done so yet, please hit subscribe to receive timely updates.
I: African economies continued to slowly claw their way (in varied ways and rates) out of crises caused by recent global shocks.
The biggest economic issue at the start of 2024 was the fiscal squeeze facing African economies. As shown below, 2024 was a peak year in debt service obligations across the region and started with Ethiopia, Ghana, and Zambia already belly up and unable to service their debt. Notably, Kenya successfully avoided default despite its lumpy payment schedule — although not without going through a severe domestic political backlash. The best signal of recovery this year was that a number of countries (for example Benin, Cote d’Ivoire, Kenya, and Nigeria) issued bonds that were oversubscribed and at tolerable sub 10% interest rates (even though still unreasonably high given their credit history). Overall, the crisis period appears to be over. Despite all the catastrophizing about African economies out there, we are not going to see a repeat of the dreadful long decade that lasted between 1980-1994.
From a policy standpoint, the most-debated issue related to debt was how global credit rating agencies’ biases unnecessarily increase the cost of borrowing for African countries. While that debate is legitimate and worth having, it is also true that (1) African states have a long way to go in cleaning up their public finance management (PFM) practices to get the most out of their spending; and (2) the current system of global finance for LMIC sovereigns has lots of moral hazard built into it. For example, the only reason a firm like Glencore lent Chad $1.5b in 2014 is because of implied guarantees from European governments that in case of default they would lean on the International Monetary Fund (IMF) to bail out Chad so they can recover their money (Glencore allegedly paid a $14.5m bribe to secure the deal). Chad, too, knew that the Europeans wouldn’t let their firms take onerous haircuts in case of sovereign defaults (despite the sky-high rates they already charge) and so it could make promises it had no intention of honoring because an IMF program would always be on the table. With this in mind, any reform of the global sovereign credit system should involve more than just fixing the quality of information provided by credit rating agencies or curing lenders of their Africa bias (both of which are important, for the record).
More important should be a complete removal of the signaling roles of both the World Bank and IMF. To be blunt, the twin institutions are a source of indiscipline among sovereigns and lenders alike; and are one of the leading reasons why private markets have failed to discipline PFM practices across Africa (as happened elsewhere). It is also worth noting that the Continent’s bad PFM habits will only worsen on account of new debt products related to climate finance and sovereign-to-sovereign lending by Gulf states.
II: Attempts at structural economic reforms across the region yielded mixed results, primarily because policymakers mostly viewed reforms as ends in themselves and not as means to create economic value for specific interests.
Starting with Nigeria, in 2024 Bola “T-Pain” Tinubu’s administration upped the ante on inflicting maximum pain on Nigerian households in the name of reforms. Though bold in content, the fundamental flaw in Nigeria’s reforms were that they lacked coherence and were poorly sequenced. Furthermore, the Nigerian administrative-bureaucratic state simply lacked the capacity to implement all the reforms at once. And so devaluing the Naira in the quest for a unified exchange rate crushed household spending power, which in turn crushed consumer spending, which in turn heightened incidences of business failures and multinational exits from the Nigerian market, which in turn compounded the problems of joblessness.
Meanwhile, the government struggled to reform the crucial energy and transportation sectors. The mixed messaging was best illustrated this year by the federal government’s fights with Dangote Petroleum. On paper, Dangote’s $20b bet on the Nigerian economic ought to have been celebrated as a means to finally fixing the country’s political economy and energy issues. Yet Abuja just couldn’t resist its bad old habits, with connected elites working to undercut the operational success of the national champion.
Further afield, one of South Africa’s biggest economic achievements in 2024 was that by December 23, it had clocked 272 days without rolling blackouts — the longest such stretch in five years. South African power plants ended the year with an energy availability factor of 62.5%, which is projected to hit 70% in 2025. Notably, South Africa intends to increase its power generation capacity from 66GW to about 107GW over the next decade — a process that will appreciably decrease its reliance on coal (to be replaced by gas).
Overall, the South African economy benefitted from a vibe shift following the May elections which forced the African National Congress (ANC) to form a coalition government for the first time since 1994:
There have been some key, postelection gains in financial markets. Between the end of February and the end of September 2024, the country’s sovereign risk premium improved from 327 to 240 basis points. South Africa’s 10-year bond yield dropped to below 10%—its lowest in almost three years. The rand appreciated to its strongest level against the US dollar in almost two years in September 2024 (although it lost some of these gains on account of the US dollar strengthening, post US elections), while stocks listed on the Johannesburg Stock Exchange had their strongest third quarter in over a decade.
Inflation is expected to come down to the policy targeting midpoint (4.5%) in the medium term. Consumer sentiment is trending upwards. And the membership of the coalition government has given the ANC added credibility (and urgency?) to pursue structural reforms — including in the sectors (electricity, water, logistics, digital communications, and visa regime) under the Operation Vulindela delivery agenda. That said, growth has is projected to remain anaemic (below 2%) over the medium term. South Africa’s rate of investment remains woefully low. The legacy of apartheid remains strong not only in persistently high levels of economic inequality, but also in the overall low quality of human capital. There is also high variability in the quality of subnational government (in the provinces and municipalities), which limits the capacity to effectively transmit national policies to the local level.
In general, Africa as a region returned to its 25-year growth path that was interrupted by COVID. Rates of economic expansion varied, with Eastern Africa (especially Kenya, Rwanda, and Tanzania) serving as the Continental growth engine. In West Africa, Cote d’Ivoire was the star performer with Senegal, Liberia, Benin, and Togo not too far behind. Among the high-growth countries, Rwanda and Senegal are arguably the most ambitious reformers (more on them in the New Year). Despite the moderately impressive growth numbers, African countries are still far from being able to consistently turn growth into human development.
III: The 2024 electoral jamboree delivered a split screen, but democracy is still massively under-delivering across the Continent (and greater urgency is needed to address this problem).
This year’s elections exposed the divergent patterns of political development and institutionalization across Africa. Incumbent parties lost power in Botswana, Ghana, Mauritius, Somaliland, and Senegal. In South Africa, the ANC lost its majority for the first time since 1994. A notable demonstration of incumbent resiliency was Namibia’s SWAPO, whose victory elevated the country’s first female president, Netumbo Nandi-Ndaitwah. In Mauritania, President Mohamed Ould Ghazouani was reelected.
On balance, these elections revealed popular dissatisfaction with incumbents and frustration at electoralism’s failure to deliver improvements in human welfare. This has been true since about 2014-15 when Africans surveyed by Afrobarometer were more likely to express dissatisfaction with democracy.
As I keep saying, the best way to protect Africa’s fledgling democracies is to make them deliver material improvements in people’s lives. If they perennially fail in this regard — as is the case in nearly all of Africa’s electoral democracies — majorities of people will try (ruinous) alternatives. Again, you cannot eat democracy.
Elections in Guinea, Guinea-Bissau, South Sudan, Mali, and Burkina Faso were postponed. It’s not readily clear how these countries can elect their way out of their current crises.
Elsewhere, incumbents were reelected in non-competitive elections. Among these countries, Mozambique deservers a special mention — since it has implications for electoral politics in Angola and Tanzania, two countries that are still led by hegemonic liberation parties (Zimbabwe is in its own category).
According to Afrobarometer, reported party affiliation by Mozambicans has steadily declined over the last two decades. Round 9 also showed an uptick in those refusing to reveal their partisanship affiliation. Given these trends, and in light of the scale of ongoing protests following the October elections, it is fair to conclude that FRELIMO is in serious trouble. The leading opposition candidate, Venâncio Mondlane, claims that he won 53% of the vote, even though the National Election Commission (CNE) declared for FRELIMO’s Daniel Chapo with 65.2%. Mondlane’s party also claims it won 138 legislative seats against the 43 announced by the CNE.
How do hegemonic (liberation) parties like FRELIMO, CCM or MPLA leave power via the ballot? The empirical evidence suggests that they do so either through elite splits and defections or via processes of “managed democracy” that gradually cultivate acceptable opposition candidates that don’t threaten the interests of incumbents after they leave office.
Neither appears to be on the cards in Mozambique (or for that matter, in Angola and Tanzania). While factionalism has increased within FRELIMO over the last two presidencies, the party has done fairly well in maintaining a facade of coherence and avoiding prominent defections. Going by the reckless assassination of two opposition leaders over the elections, FRELIMO is certainly not interested in a managed democratic transition either. Perhaps more than the specifics of the electoral outcome (which FRELIMO probably won by a much smaller margin), the brutal assassination of two opposition leaders and the casual dismissal of the same by authorities as crimes of passion pushed supporters of Mondlane’s Optimistic Party for the Development of Mozambique (PODEMOS) into the streets. All hegemonic parties always run the risk of overreach in deploying violence or election rigging. One hopes that FRELIMO’s overreach this time won’t bring the whole house tumbling down.
The next few weeks will be crucial. If urban violence spirals out of control, it might trigger a split within the FRELIMO structure (including civ-mil relations). That would be unfortunate. It would be ideal if Mozambique found a civilian resolution to the current political crisis so that it can focus its attention on the security threat to its North. More broadly, Mozambique is a warning to CCM and MPLA that time is running out fast. Tanzania goes to the polls in late 2025.
IV: Weak state capacity and endemic insecurity persisted in 2024 across much of the Continent.
2024 saw a deterioration of the fundamental problem faced by African countries: weak state capacity. Everyone focuses on mis-governance in the region (for good reason). Yet the costs of under-government are significantly higher and growing.
Consider Nigeria. In December the National Bureau of Statistics released some astonishing figures regarding insecurity in the country (there will be time to interrogate the figures in the New Year — they seem rather high, and NBS quickly poured cold water on the summaries). Suffice to say, though, that they are likely a good signal of facts on the ground. According to the now discredited report, between May 2023 and April 2024 a staggering 614,937 murders and 2.2 million kidnappings were reported. 46% of the murders were suspected to arise from botched kidnappings (12.8% of kidnap victims get killed). Kidnappers are also suspected to have extracted about $1.4b in ransom payments. Meanwhile, more than 1.3m Nigerians are internally displaced; and the country will soon be home to more people living in extreme poverty than India (more than 6X larger). The majority of the reported kidnappings and murders occurred in the rural north, where the state is relatively scarce (local elite politics also plays a role in fueling insecurity).
The mind-blowing numbers from a Nigeria speak to a range of countries on the Continent (see above) whose states cannot deliver on the barest of functions: security. As a result, the same countries have also seen a marked rise in the number of internally displaced people due to insecurity and conflict and high levels of food insecurity. The total number of forcibly displaced people on the Continent rose to over 45m in 2024, up for the 13th year in a row.
It goes without saying that very little political or economic development can take place amidst systemic insecurity. I should also add that insecurity and generalized state weakness are not just problems in autocracies (and not limited to the Sahel or other conflict-affected states). Nearly all countries in the region are affected in one shape or form. Those not experiencing conflict face elevated risk of popular protests against government failures (2024 saw several popular protests across the Continent). It’s high time African leaders realized the grave threat this situation poses. The number of challenges that require state-directed collective action will only keep growing. Continued weakness will invite unimaginable disasters all over the place.
Weak state capacity deprives Africans not just of personal safety but also reliable livelihoods. It’s therefore not surprising that, according to Pew Research, Africans report the highest rates (37%) of respondents who want to move permanently to another country. The mix of horrendous push factors and Africa’s youthful population means that thousands of people lose their lives each year in the quest for better lives elsewhere (see above).
Finally, state weakness across the Continent opens up the region to wanton predation by outside powers. Multiple times this year harrowing images from Congolese mines went viral, a reminder of the blindingly high cost of integration into the global economy without any protections from capable states. While the DRC is a clear outlier in this regard, milder variations of the same exist in most of the better run countries across the Continent. This must change. There will be no leapfrogging high state capacity.
Thank you for reading An Africanist Perspective in 2024. It’s been a wonderful two years of sharing and learning on this forum. Looking forward to more of the same in 2025.
Happy New Year!
Great piece as usual Ken and a very useful review of the year gone by. Please could you explain a bit more what you mean by the 'signalling roles of the World Bank and the IMF'?
Great read thank you, and I am really hooked on the concept of under-governance and how its enabling some of the exploitation in the mineral sector in the continent, contributing to human rights abuses, environmental degradation and poor development.