On December 13, John Bolton, National Security Advisor to the President of the United States, announced the Trump administration’s New Africa Strategy. It is aimed at furthering US priorities, which he identified as: advancing USA trade and commercial ties in Africa, countering the threat from radical Islamic terrorism, and ensuring taxpayer dollars for aid are used efficiently and effectively.
However, a significant portion of his announcement was focused on primarily attacking China and secondarily Russia. He stated China employs bribes, opaque agreements and the strategic use of debt to hold states in Africa captive to Beijing’s wishes, and that China employs predatory actions to advance Chinese global dominance.
The focus of this article will be on the economic and political economy elements of the announcement. There are both positive and negative elements in the outlined strategy.
In terms of the positives, the US seems to have woken up to the reality that economic and commercial ties between the US and Africa can be significantly strengthened. The strategy will focus on new bilateral trade agreements and ensure that economic ties apply positive pressure towards improving governance and business practices in Africa. This is welcome.
It recently announced the establishment of the International Development Finance Corporation which has new finance capabilities and higher lending limits than its predecessor OPIC. While financing will target US entities, the reality is that this can have a positive knock-on effect on providing creative financing options for the African private sector and thus positively inform its development in Africa. However, there were many problematic elements to the announcement.
The first is that it was made by the National Security Advisor, not the State Department. The contextualisation of the Africa strategy in this manner insinuates that US National Security priorities are the primary motivation of the strategy.
Secondly, the content and tone of Bolton’s speech used such biased language against China in particular that it made it seem as though the US administration views Africa as a pawn in its larger anti-China global strategy.
The speech left the feeling that the US wants African governments to choose between Washington and Beijing, and that if the latter is chosen, retaliatory action should be expected. Such simplistic binary thinking is out of place in a complex multipolar world where Africa has numerous economic and development partners from all over the world.
Indeed, the editorial board of the Financial Times picked up on this and stated that, “It is unlikely many Africans will welcome the prospect of returning to the era of “us or them” depicted in this vision, or feel much sympathy if America is the one left behind”. Africans are already linking the speech to the dark days of the Cold War where millions of Africans suffered and died in proxy wars on the continent. But the world has changed since the Cold War, the speech seemed to miss that point.
Finally, the announcement unnecessarily underplayed significant strengths the US has in Africa. At the moment, the US is the top foreign direct investment (FDI) player in Africa, way ahead of China for example. The US government and private sector have significant experience in Africa and working with African private sector in truly creative and useful ways. This should have been highlighted and strengthened under the new strategy. Further, where is AGOA in all this?
In short, the new strategy doesn’t even try and pretend to have African welfare as a key consideration. In fact, it seems as though it is America first, China second and Africa last.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.