By Amandeep Ahuja
Africa will be an interesting space in 2023. On the one hand, traditional threats like conflicts, social instability, poor governance and deteriorating economic indices will continue. These will be exacerbated by global events like Russia’s war on Ukraine, inflation and disruption of supply chains and the regional landscape of 23 continent-wide general elections in 2023-24. On the other side, the weakening of France and global power rivalries will open up new spaces for competing influence through investments – especially in energy, digital services and infrastructure.
Businesses can take advantage of the investment opportunities in particular African countries and segments through a localised template. The plan should incorporate local needs, maneuver the space between the rivalries and top-level governance and be based on a robust risk mitigation plan.
The interplay of three factors will shape Africa in 2023:
Global Events Stirring the Pot of Internal Conflict and Socio-Political Instability
A key area of focus in 2023 will be the continued impact of external events on the political fragility of key countries. With Nigeria facing a cost-of-living crisis, an inflation rate of 54.1% in Ghana in January, along with currency fluctuations and grain shortages and dropping forex reserves in Egypt – protests and civil unrest cannot be ruled out.
In other parts – conflicts will continue destabilizing the region – particularly in Somalia and Ethiopia- countries described as the biggest worry points in Africa. Somalia, dubbed ‘the failed state,’ has been facing a food crisis for many years, and almost half of Somalia’s population faces acute food shortages. Coupled with a corrupt government and terror group -al Shabab occupying parts of the country, the internal conflict will continue to be problematic for the country in 2023.
In Ethiopia, a ‘fragile’ peace was restored in November 2022, and Eritrean forces departed from the conflict-ridden Northern Ethiopian region of Tigray in January. However, prospects of renewed and solid stability seem bleak with refugees fleeing into Sudan and the country still facing the worst drought in Eastern Africa. Conflict will continue in the Democratic Republic of Congo as over a hundred groups battle to seize power and gain control. In January 2023, an attempted military coup in Gabon is another signal towards regional instability.
In Burkina Faso, where members of the armed forces seized power twice in 2022 and elsewhere like Mali, global superpower rivalries have complicated conflicts and political instability, as discussed in the next section.
France’s weakening/exit from the political-security and the economic space in countries like Burkina Faso, Mali and Central African Republic (CAR) will continue in 2023, opening up space for new players. The security space has primarily been filled by Russia and the Wagner group (a private military group supported by the Kremlin) that France holds responsible for meddling in the internal battles in Africa, especially in Burkina Faso. In return, Russia has blamed France for supporting terrorist groups in Libya, which has led to destabilization in the larger region. France is also attempting to hold on to influence in Algeria – with a security and military cooperation deal, primarily to secure gas provisions to replace Russian energy. Either way, proxy conflicts will continue to create friction and instability in the region.
Power rivalries will also govern the economic and investment space – the Chinese are most entrenched, the U.S. is playing catch up and European economies, notably Germany are looking to step up investments. The Saudis, Turkish and, to a limited extent, Egyptians are also vying for influence.
In 2023 the Chinese are expected to step up their economic involvement after two years of hiatus/slow growth due to its COVID distractions. Despite this, in 2022, the Chinese completed some key projects for infrastructure development in Nigeria, the DRC, Tanzania, Chad and Sudan. The U.S. is also attempting to emerge from the ‘diplomatic neglect’ and vye for regional influence. The first of these investment efforts have been granting the go-ahead to a rural electrification project in Senegal, bringing reliable power to 350,000 people. The renewed U.S. interest is also visible in the US-Africa leaders summit in Washington in December 2022 and the pledging of billions of dollars in aid and investment.
The U.S. will have to play catch up, as Russia and China have had years of investment and resultant influence in the region. Chinese trade in Africa is four times that of the United States, and efforts will be put in place through 2023 to counter that gap. Additionally, Russia continues to build ties with South Africa, which has little trade with Russia but continues to support its presence to reduce the U.S. hegemonic role. Together the West will have to watch the Russian-Chinese fit as security/economic guarantors closely.
Germany has also promised large amounts pledged towards green energy initiatives, including hydrogen and Liquified Natural Gas. The E.U. has also earmarked 150 billion Euros to be invested in research and innovation.
In North Africa, Egypt and Morocco are expected to be large beneficiaries of FDI in 2023. This investment in Egypt will come from the US, France, the UAE and Saudi Arabia. The funds from Emirati and Saudi investments are to stabilise Egyptian ports, infrastructure projects and real estate ventures. Morocco in early 2023, is already seeing a shift in investment dynamic where the U.S. has taken over France as the top investor.
Political Campaigns in 2023
2023 is a busy year for African elections, with Sierra Leone, Zimbabwe, Liberia, Gabon, DR Congo, Madagascar and Nigeria set to elect their Heads of State. The multiple events will test the democratic strengths of African nations amid the many crises impacting the region. The Nigerian elections will attract the most scrutiny, with more engagement seen amongst the nation’s youth, expected to shift the balance of power amongst the different political parties. Another election likely to attract the public’s eye is in Zimbabwe, which has been struggling with hyperinflation for years.