- Published: 17th Jan, 2024
The year 2023 was a pivotal one for Africa, marked by significant breakthroughs and challenges that shaped the continent’s socio-economic landscape. From the removal of oil and petrol subsidies in Nigeria, Angola, and Ghana, to the launch of Africa’s biggest refinery in Nigeria, valued at $19 billion, the energy sector saw substantial changes.
However, the continent also grappled with rising costs of living, with food insecurity becoming a pressing issue. Inflation soared in several countries, with Congo, Sierra Leone, and Egypt experiencing the highest rates. Furthermore, food shortages were reported in 41 African countries, affecting a significant portion of the Sub-Saharan African population and the Middle East and North Africa population.
Political instability was another challenge, with coups occurring in Niger and Gabon, and attempted coups in Sierra Leone and Guinea-Bissau. Despite these challenges, there were strides in intra-regional movement, with countries like Benin, Rwanda, Gambia, and Seychelles offering visa-free waivers to all African countries.
In the face of climate change, the African region received pledges amounting to $792 million at COP28 to combat the effects of this global crisis. The UAE also made significant carbon investments in Zimbabwe, Kenya, Liberia, Tanzania, and Zambia.
As we look forward to 2024, the lessons and experiences of the past year will undoubtedly shape the expectations and strategies for the coming year. This article aims to delve into these highlights, exploring the implications and potential for Africa’s future.
Subsidy Removal amongst Africa’s largest producers
In 2023, a significant shift occurred in the energy sector of Africa. Three major African countries - Nigeria, Angola, and Ghana – took the bold step of removing oil and energy subsidies. This policy change had a profound impact on their economies and societies, marking a significant milestone in their economic reform journey.
In Nigeria, the largest oil-producing nation in Africa, the decision to end fuel subsidies led to an immediate surge in fuel prices, causing public outcry and panic-buying. While the initial turmoil occurred, the intention was to allocate funds to vital sectors like education, healthcare, and infrastructure. Concerns were raised about potential cost increases for vulnerable populations, emphasizing the need for robust social protection measures. It is believed that addressing long-standing demands to investigate irregularities within the fuel market is vital for transparency and accountability.
For Angola which is also the second-largest crude oil producer in Africa, the goal was to reduce spending on petrol subsidies as part of its strategy to drive economic growth. This bold decision, implemented in June 2023, had the consequence of an 87.5% increase in petrol prices. While this reduction may have seemed drastic, it was deemed necessary to ease the financial burden on the government and lay the foundation for long-term economic stability.
In similar vein, Ghana's NPA made significant regulatory moves in March 2023, removing fuel subsidies, and introducing fuel caps to stabilize the downstream sector. This proactive response aimed to manage market volatility caused by the Russian-Ukraine conflict and energy transition policies. The country pursued this policy to ensure market competitiveness and attract private sector investments.
The Birth of Africa's Biggest Refinery
In the same year, Nigeria launched Africa's biggest refinery, valued at $19 billion. This refinery, built by Aliko Dangote, Africa's wealthiest man, in Lagos, has a capacity of 650,000 barrels per day. It is expected to help Nigeria achieve self-sufficiency and become a net exporter of refined petroleum products. The refinery is also expected to boost fuel supplies across Africa at a time when some of its refineries are operating far below capacity.
These developments in the energy sector represent a significant breakthrough for Africa. However, they also pose challenges, especially for the vulnerable populations who are likely to be affected by the increased costs of living following the removal of subsidies. As we move into 2024, it will be crucial to monitor how these countries navigate these challenges and leverage these changes for sustainable development.
Africa’s Worrisome Cost of Living Crisis
In 2023, the cost of living in Africa was a significant concern, with several countries experiencing high inflation rates. The Democratic Republic of Congo had the highest upward change in inflation rate reaching a 26.22% increase from its January rate to its lastly publicized rate in October. Sierra Leone followed with an upward change of 15.72%, and Egypt had a change of 7.9% from January to November. In Nigeria, January to November revealed an upward change of 6.38%. These high inflation rates significantly impacted the cost of essential goods and services, making it difficult for many individuals and families to meet their basic needs.
Food insecurity was another major challenge in Africa in 2023. Prolonged drought and extreme weather events caused by the climate crisis led to acute food insecurity for around 23 million people in the eastern Horn of Africa, Ethiopia, Kenya, and Somalia. Additionally, the rising food prices exacerbated the situation, with food price inflation exceeding overall inflation in 74% of the 167 countries where data was available.
Looking ahead to 2024, there are expectations for improvements in both the cost of living and food security in Africa. For one, the average inflation rate in Sierra Leone is forecasted to decrease, which could potentially ease the cost of living. On the food security front, small and medium agricultural enterprises (agri-SMEs) are seen as key to transforming food systems and improving food security in Africa. However, these enterprises often struggle to access formal bank financing, highlighting the need for innovative financing solutions and better support for agri-SMEs.
Africa’s Daunting Coup Saga
In July 2023, a coup took place in Niger as the Presidential Guard seized power, detaining President Mohamed Bazoum and his family. The coup was led by senior officers from different branches of the defense and security forces who formed a junta called the National Council for the Safeguarding of the Homeland (CNSP). Initial support for Bazoum was dispersed by mutinous soldiers, and subsequent demonstrations emerged in favor of the CNSP. On the following day, the Nigerien Armed Forces joined the junta, aiming to avoid violence and protect the president and his family.
The international community, including the United States, France, the European Union, and the Economic Community of West African States (ECOWAS), condemned the coup. During an ECOWAS summit in Nigeria, military intervention was considered, and a one-week ultimatum was given to the junta to reinstate Bazoum, threatening sanctions. The West African Economic and Monetary Union (UEMOA) promptly imposed sanctions and froze Nigerien state assets. However, Burkina Faso, Guinea, and Mali expressed support for the junta and refused to apply any imposed sanctions. Burkina Faso and Mali further warned that an intervention in Niger would be seen as a declaration of war. These differing reactions have led to a potential division and possible breakup of the West African bloc.
The aftermath of the coup carries risks such as domestic unrest, regional conflicts, increased militant activities, democratic setbacks, restrictions on civil liberties, and severe socio-economic consequences due to sanctions. Additionally, the junta is facing strong opposition from international stakeholders, while Bazoum continues to enjoy support from both the international community and a significant portion of the population in Niger. There are indications that supporters of Bazoum are mobilizing for mass demonstrations against the junta.
A similar event took place in Gabon when on August 30, 2023, the country was rocked by a dramatic coup attempt following the disputed re-election of President Ali Bongo Ondimba. Soldiers of the elite Republican Guard stormed state media headquarters and declared the dissolution of the government, citing rampant corruption and a rigged election as their motive. This bold move reignited long-simmering frustrations about the Bongo family's 56-year rule, sparking both celebrations and apprehension in the Gabonese capital.
While the coup ultimately failed, its reverberations continue to be felt across the nation. The deposed president remains under arrest, and uncertainty shrouds the political future. Fears of further unrest and potential regional instability linger, while questions about democracy and transparency remain unanswered. The international community has swiftly condemned the coup, urging a peaceful resolution and upholding the rule of law.
This attempted power grab serves as a stark reminder of the fragility of democracy in Africa and the vulnerability of long-standing regimes to popular discontent. Whether this event marks a turning point for Gabon or a temporary lapse in its fragile democratic journey remains to be seen. However, one thing is certain: the echoes of this audacious coup are likely to resonate for years to come, prompting crucial conversations about democratic legitimacy and the fight against corruption in the volatile landscape of African politics.
Gabon's attempted coup wasn't the only one to unsettle West Africa in 2023, just months earlier, both Sierra Leone and Guinea-Bissau experienced their own dramatic power grabs, highlighting the region's persistent vulnerability to political instability.
In Sierra Leone, on February 11th, the Special Tactical Unit (STU) – an elite security force – detained several government officials, including President Julius Maada Bio's younger brother, sparking fears of a coup. Though quickly quashed, the incident exposed fissures within the military and concerns about Bio's increasingly centralized power. The Sierra Leonean government attributed the incident to "rogue elements" within the STU, but questions lingered about potential political motivations.
Across the border in Guinea-Bissau, November 30th saw a more coordinated attempt at regime change. National Guard units freed two ministers from detention, triggering clashes with government forces that left two dead. President Umaro Sissoco Embaló labeled it a "coup attempt" and dissolved the opposition-dominated parliament. Tensions simmered as regional bloc ECOWAS condemned the violence and issued a one-week ultimatum for Bazoum's reinstatement (The Africa Report, 2023). While calm eventually returned, the incident revealed deep political divisions and fragile security, further destabilizing the already volatile nation.
These near-misses raise crucial questions about the future of West Africa's democracies. Persistent economic hardship, corruption, and political marginalization create fertile ground for discontent and military intervention. Additionally, the growing trend of "hybrid regimes" blending democratic facades with authoritarian practices weakens institutions and undermines public trust.
Addressing these underlying issues is crucial to prevent future coups. Strengthening democratic institutions, tackling corruption, and promoting inclusive governance are essential steps towards a more stable and prosperous West Africa. Only then can the region overcome the shadow of attempted coups and build a durable, democratic future.
Intra-regional movement set to aid Trade on the Continent
Four African nations are leading the charge in promoting intra-regional movement and fostering a more interconnected continent. Benin, Rwanda, Gambia, and Seychelles have all embraced visa-free entry for citizens of all African countries, removing bureaucratic hurdles and encouraging travel, trade, and cultural exchange. This bold move opens doors for countless possibilities. Businesspeople can now explore new markets with ease, students can pursue educational opportunities across borders, and families can reconnect with loved ones without the hassle of visa applications. Tourism flourishes as travelers discover the diverse landscapes, vibrant cultures, and rich history of their neighboring countries.
These visa-free policies are not just about convenience; they represent a commitment to Pan-Africanism and a vision for a more united continent. By dismantling barriers to movement, these countries are fostering a sense of shared identity and fostering stronger regional cooperation. The increased flow of people and ideas promises to ignite innovation, economic growth, and a deeper understanding between African nations.
Of course, challenges remain. Concerns about security and managing immigration flows need to be addressed. However, the potential benefits of visa-free travel are undeniable. By taking this bold step, Benin, Rwanda, Gambia, and Seychelles are paving the way for a more connected, prosperous, and united Africa.
Climate change fund
News emerged at COP28 that the African region has received $792 million in pledges towards mitigating the brunt of climate change. This significant funding, while still shy of the estimated $2.8 trillion needed for the continent's climate action plans over the next decade, represents a crucial step in the right direction.
The pledges come from various sources, including developed nations, international organizations, and private investors. This diversity in funding sources highlights the growing recognition of Africa's vulnerability to climate change and the need for global collaboration to address it.
Adding further momentum, the United Arab Emirates (UAE) announced a $6 billion carbon investment plan for African countries, with $1.5 billion allocated to Zimbabwe and $4.5 billion earmarked for Kenya, Liberia, Tanzania, and Zambia. This targeted investment focuses on carbon capture and storage projects, aimed at reducing emissions and accelerating the transition to cleaner energy sources in these nations.
These pledges and investments offer a glimmer of hope for African countries grappling with the devastating consequences of climate change, from rising sea levels and droughts to extreme weather events. The funds will be crucial for strengthening climate resilience, building adaptation infrastructure, and promoting sustainable development.
However, it's important to note that challenges remaining ensuring equitable distribution of funds, transparent implementation of projects, and long-term sustainability. Continued international cooperation and accountability will be vital to ensure these pledges translate into tangible benefits for African communities on the frontlines of climate change.
In Conclusion: 2023 presented Africa with a stark picture of its complexities – soaring prices, political upheaval, and the ever-present shadow of climate change. Yet, it also unveiled stories of resilience, innovation, and a growing regional consciousness. As we turn the page to 2024, the question remains: will we choose to focus on the vulnerabilities or on the vast potential for collaboration and advancement? The answer lies not just with leaders, but with each and every African, united in the pursuit of a brighter future.