Since COVID-19, African economies have muddled through a series of internal and external shocks. While some moved swiftly to arrest the rut, others have done little to avert the corrosion of internal and external balances. Despite recent market improvements, the prospects of disorderly defaults and messy elections continue to linger for investors.
African policymakers are partly to blame. Macroeconomic fundamentals have been weakened by bond splurges at the end of the financial and oil crises, failure to diversify and solidify growth bases, complacency due to a benign interest rate environment, and fiscal ill-discipline for the sake of political expedience.
That said, the continent’s plight has been compounded by exogenous circumstances it has had little control over. In 2020 Africa saw its worst growth in 25 years, says the United Nations Economic Commission for Africa. It suffered the triple blow of capital flight, commodity price declines and COVID-19 effects. Just as market conditions started improving later in 2021, prospects were punctured by Russia’s invasion of Ukraine, which triggered a wave of risk aversion.
