Are Defaults Imminent? And Other Major Developments from Across the Continent

COVID-19 Africa Watch curates a selection of the latest news and the best analysis of the pandemics impact on Africa. Here’s a roundup of what we’ve been following. If you want to get this weekly update straight in your inbox, subscribe here.

Top story: Are defaults imminent?

Fitch Ratings is warning that sovereign defaults could hit a record high in 2020, as the impact of COVID-19 continues to weigh on governments around the world. In Africa, four countries now have a CCC rating or worse: Gabon, Mozambique, Republic of Congo, and Zambia. According to Fitch, the average annual default rate for sovereigns with CCC/CC/C ratings for the past 25 years has been 26.5% and “the cumulative five-year default rate was 38.5%.” African Confidential is reporting that Zambia (downgraded to CC in April) is “set to default” on its US$3 billion Eurobonds.

Other major developments from across the continent

Burundi: Ahead of next week’s election, Burundi has expelled the representative of the World Health Organization and other senior health experts working in the capital. At the same time, the government is using COVID-19 as cover for its “enthusiasm for democratic authoritarianism.” This week the government warned it would quarantine in-bound election observers from East African Community for 14 days, meaning that if they came they would not be able to actually observe the elections. No data from the Africa CDC.

Lesotho: Lesotho has confirmed its first case of COVID-19, the final African country to do so. There was also important political news this week, as 80-year-old Prime Minister Motsoahae Thomas Thabane stepped down, marking the “end of an era.” 1 confirmed case as of May 15, 2020.

South Africa: Despite preparing to reduce restrictions across much of the country, South Africa’s major cities remain under strict lockdown conditions. In Cape Town, though, the shuttering of a temporary homeless shelter has sent many people back to the streets, a number of whom may be carrying the virus with them. 12,739 confirmed cases.

South Sudan: Health officials have confirmed at least two cases of COVID-19 in a civilian protection camp in Juba which shelters 30,000 people in crowded conditions. Both infected persons are in their 20s. This week also saw South Sudan’s first COVID-19 death. 203 confirmed cases.

Tanzania: As we highlighted as our top story last week, Tanzania’s official numbers appear increasingly questionable. There was new reporting this week to corroborate this, including reports of night burials of COVID-19 victims, while the U.S. Embassy issued an unusual health alert this week, saying, “The risk of contracting COVID-19 in Dar es Salaam is extremely high… Many hospitals in Dar es Salaam have been overwhelmed in recent weeks.” 509 confirmed cases (unchanged all week).

Tunisia: After three days straight of no new COVID-19 cases, the government is beginning to reduce lockdown restrictions. 1,032 confirmed cases.

Chart of the week

African startups were set to have a record year, but COVID-19 has changed that. AfricArena, which supports African tech ecosystems, has published startup investment projections for Africa for 2020-2022. In an optimistic projection, startup investment will fall by about 10% compared to last year. The pessimistic scenario projects a 40% drop.

Source: “The State of Tech Innovation in Africa 2020,” AfricArena, May 2020.

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