2023 was an interesting year for Africa, marked by a series of challenges that tested the resilience of economies across the continent. Nations such as Nigeria, Ghana, and Egypt grappled with formidable economic headwinds, notably high inflation and currency devaluation, exacerbating the already challenging living conditions for their citizens.
Amidst these economic struggles, two nations, Niger and Gabon, joined the expanding list of francophone countries that experienced coup d’état, eliciting economic sanctions from Western blocs. This political upheaval added a layer of complexity to the economic landscape, further impacting the stability of the affected nations.
Beyond political disruptions, natural disasters wreaked havoc on certain economies. Morocco and Libya bore the brunt of a natural disaster and the escalating impacts of climate change.
This year, the continent navigated a diverse array of challenges, requiring adaptability and strategic policymaking to address the multifaceted issues confronting its nations.
January – The beginning of Nigeria’s cash crisis
January 2023 was a dynamic month globally, with events such as Cristiano Ronaldo’s transfer to a Saudi Arabian club for the biggest salary ever in football and the World Bank’s warning of a looming global recession. This dynamism was also evident on the African continent, where different countries faced different economic prospects. The World Bank projected that all western and central economies, except Nigeria, would expand in 2023.
However, what the Apex bank did not project was Nigeria facing a cash crisis at the beginning of the year. The Central Bank of Nigeria had announced late last year, that it would be redesigning new naira notes (of certain denominations) primarily to manage the unhealthily large volumes of cash stashed outside banks, most of which were illegally acquired. By January, the old notes were deemed illegal and the CBN commenced the new notes rollout. Yet, the move only pushed Nigeria into a cash crisis as the CBN had not printed enough new notes. The cash shortage had a far-reaching ripple effect. It mostly affected the informal sector, which represents about 58% of the economy, disrupted transportation, and increased the cost of living. Nigerian Breweries experienced its worst revenue drop in 15 years due to the cash scarcity crisis. Nigeria was also experiencing fuel scarcity and power cuts at the time, which disrupted transportation and increased the cost of living. On the positive side, the CBN launched its card payment scheme, in other to push towards a cashless society and a disruption of the Nigerian financial ecosystem.
February – Nigeria’s presidential election takes over the news
The most anticipated event in February was Nigeria’s presidential election, which was widely covered by local and international media, as well as by social media users and influencers. The BBC, for example, had a special page dedicated to the Nigeria elections in 2023, where it provided live updates, analysis, and charts. The election was particularly anticipated and observed by many for diverse reasons. For one, all eyes were on Nigeria to see if democracy would be undermined. It was also the first election to use the Bimodal Voter Accreditation System (BVAS), which had 93.46 million eligible voters, an 11.26% increase from the 84 million voters in 2019.
The election also had significant implications for the Nigerian economy. Nigeria is the continent’s most populous country, and because of its size, its election could have significant implications for the continent and beyond. The election influenced investor confidence, policy continuity, and reform prospects. That month, the stock market recorded a decline of 2.14% as investors adopted a wait-and-see approach amid the uncertainty. The election was also marred by violence, delays, and allegations of rigging, which led to legal disputes and protests. Amidst all these, Nigeria’s cash situation deteriorated, its reinforced cashless policy failed to take off, and its fuel shortage reached a critical level. The naira also depreciated against the dollar, as the CBN struggled to maintain its exchange rate regime and foreign reserves.
March- Nigeria became the first African country to implement open banking regulations.
The month of March kicked off with layoffs in the tech ecosystem, as 138,652 employees were laid off from 490 tech companies from January to March, following the trend that started in 2022. As if that was not enough, there were rumours of Flutterwave, one of Nigeria’s leading fintech startups, being hit by a security breach that led to claims that they lost $2.9 billion to hackers. Flutterwave refuted the claims, stating that there was no loss of funds and that none of their customers was affected.
Yet the main economic event was Nigeria becoming the first African country to implement open banking regulations, a policy that allows third-party financial service providers to access bank data and use it to develop innovative financial products and services. With the regulations in place, banks were required to provide access to customer data to licensed third-party providers who meet certain criteria.
The policy was put in place to facilitate the development of new products that meet the needs of consumers and businesses and promote financial inclusion by providing access to financial services to more people. The Nigeria Inter-Bank Settlement System Plc (NIBSS) was to act as the central switch for data sharing and transactions between banks and third-party providers.
April: Kenya owed its ministers’ salaries
For the first time since its independence, Kenya’s government failed to pay its employees. On the 9th of April, Rigathi Gachagua, the Deputy President, admitted that the country had been owing salaries since January. This happened less than a year after William Ruto resumed office as Kenya’s president.
Kenya’s national treasury needs an average of Sh50 billion and Sh8 billion to pay salaries and pensions, respectively, every month. But the country was caught between underperforming revenues, high debt servicing and limited access to finance. According to the National Treasury Principal Secretary, Dr Chris Kiptoo, the Kenyan Revenue Authority had missed its income target by Sh67 billion. He also said the Treasury spent Sh150 billion repaying public debt in March alone. Kenya’s debt stock crossed the Sh9 trillion mark last December, and the government had (and still has) plans to borrow more.
May: Nigeria inaugurated a new president
On the 29th of May, Bola Ahmed Tinubu officially became Nigeria’s president. Three months before this, he was declared the winner of the nation’s deeply controversial elections. It was Nigeria’s first-ever three-horse race, where Tinubu, a former governor of Lagos State and political godfather, was up against Atiku Abubakar —a former Vice President— and Peter Obi, a former governor of Anambra State.
Tinubu resumed office while his opponents were still challenging him in court. Both of them claimed he was not the rightful winner of the February elections. They said Tinubu was unqualified to run, that the polls were marred by malpractice and that the electoral commission INEC failed to follow laws mandating it to transmit and publish results electronically. These court cases carried on until September when the Supreme Court upheld Tinubu’s victory. However, the controversies still linger.
Ahead of the elections, the idea to electronically transmit results from over 177,000 voting units and publish them online for real-time viewing was to help preserve the integrity of results as declared before voters at each unit. A new law and INEC’s guidelines codified the intent and stipulated the process for using a biometric device for voter verification and results transmission (BVAS), and uploading result sheets to a dedicated website (IReV). Mahmood Yakubu, chair of INEC, promoted both new platforms during his talk at the London-based think tank Chatham House in January.
June: Nigeria’s fuel prices tripled and the transport sector collapsed
During his inaugural speech, Bola Tinubu sparked a nationwide hysteria when he declared an end to fuel subsidies. His statement on subsidies came earlier than expected, causing vendors to hoard their petrol stock while awaiting new prices.
Then in June, petrol prices (more than) tripled from an average of N180/litre to N557/litre. The immediate impact was on the transport sector, whose lifeblood is cheap fuel. Commercial buses doubled or tripled rates, crushing daily commuters and grinding intra-city movement to a halt. Truckers also idled their vehicles, disrupting food and goods distribution and firing up inflation. By the end of the second quarter, the transport sector had shrunk by 50.6%.
Removing petrol subsidies was always going to be a tough call. Nigerians rely heavily on this fuel for transport and energy. But the country now struggles to afford it because revenues are declining and debts are rising. The Nigerian National Petroleum Corporation (NNPC) spent 4.39 trillion naira ($9.7 billion) on petrol subsidies in 2022.
July: Africa wins big at the Russia-Africa Summit in St Petersburg.
On July 27 and 28, the second Russia-Africa Summit took place in St. Petersburg, Russia. Delegates from 49 African countries attended, with 17 heads of state among them. In contrast to the 2019 inaugural summit, the 2023 gathering saw a decrease in the number of attending heads of state and governments, which numbered 43 previously.
Despite the reduced attendance, the summit yielded favourable outcomes for Africa, with Moscow committing to erasing $23 billion in debts and announcing military cooperation agreements with over 40 African nations. Additionally, participants agreed to establish a new permanent Russian-African security mechanism focused on combating terrorism and extremism, ensuring food security, and preventing the deployment of weapons in space.
At the summit’s conclusion, four declarations were adopted, addressing the prevention of an arms race in space, cooperation in informational security, strengthening efforts against terrorism, and the action plan for the Russia-Africa Partnership, which will implement summit decisions.
August: Egypt and Ethiopia became permanent members of BRICS
On August 24th, during the 15th annual BRICS summit, a historic moment unfolded as leaders made a landmark decision following a year of careful deliberation. The summit marked a turning point by welcoming six new permanent members – Egypt, Ethiopia, Argentina, Iran, Saudi Arabia, and the United Arab Emirates – into the group. This significant expansion emerged in response to a proposal from global south leaders, aiming to chart a strategic course for their inclusion.
For Egypt and Ethiopia, this inclusion brings the promise of unlocking unprecedented trade opportunities, fostering engagements with some of the world’s largest and fastest-growing economies. Yet, the impact extends beyond economics, as these nations gain elevated political influence, enabling strategic partnerships on critical global issues. Together, these countries stand poised to contribute substantially to the collective advancement of BRICS summit objectives and the resolution of complex global challenges.
September: Morocco was struck by a magnitude 6.8 earthquake
On the evening of Friday, the 8th of September, Morocco experienced a seismic event with a magnitude 6.8 earthquake striking that left thousands dead and injured countless people. The epicentre was 72km (45 miles) southwest of Marrakesh, the country’s fourth-largest city. While Ighil, a mountainous rural commune near the Oukaimeden ski resort, bore the brunt, the powerful tremors reverberated across Morocco, impacting provinces such as Ouarzazate, Marrakesh, Azilal, Chichaoua, and Taroudant. The U.S. Geological Survey estimates potential losses from the disaster ranging from as low as $1 billion to as high as 8% of Morocco’s GDP.
Despite this tragic event, Morocco demonstrated resilience by successfully hosting the annual meeting of the World Bank Group (WBG) and the International Monetary Fund (IMF) in Marrakech from October 9th to 15th, 2023. The Boards of Governors of the IMF and WBG convene annually to discuss their institutions’ work. Traditionally held in Washington for two consecutive years and in another member country in the third year, Morocco’s ability to carry out the meeting amid the aftermath of the earthquake showcases its commitment to international collaboration despite adversity.
October: Moody’s and S&P downgraded Egypt’s economy to junk rating
Egypt experienced a significant economic setback in October as Moody’s and S&P, two major credit rating agencies, downgraded the country’s status. Moody’s lowered Egypt’s credit rating deeper into the ‘Caa1’ category from ‘B3,’ emphasizing the growing challenges associated with the country’s ability to manage its mounting debt. Simultaneously, S&P took a similar action, downgrading Egypt’s economy further into junk territory. The specific reason cited by S&P was a “Currency Squeeze,” indicating pressures on Egypt’s currency that contributed to the economic downgrade.
Moody’s earlier downgrade in early October to Caa1 triggered a negative market reaction, leading to a sell-off of Egyptian bonds. The subsequent move by S&P highlighted a consistent concern shared by multiple rating agencies about the economic conditions in Egypt. Notably, S&P’s rating for Egypt now stands just a notch above Moody’s, signalling a shared scepticism about the country’s current economic stability and raising questions about its financial resilience in the face of emerging challenges.
November: Rwanda becomes the 4th African country to implement a visa-free policy for all Africans
On the 2nd of November, Rwanda marked a significant milestone by launching a visa-free entry policy for all Africans, solidifying its position as the fourth country on the continent to adopt such an inclusive approach. Beyond this progressive move, Rwanda serves as an economic development exemplar, with its visa leniency contributing to its model status. President Paul made this groundbreaking announcement in Kigali, the capital, during the 23rd global summit of the World Travel and Tourism Council (WTTC), strategically positioning Rwanda as an inviting tourist destination. With a remarkable visa openness score of 0.95, Rwanda has been a trailblazer since 2013, introducing a visa-on-arrival policy for all African citizens.
Moreover, Rwanda has fostered international collaborations, exemplified by an agreement with the United Arab Emirates, exempting citizens from visa requirements for short-term visits. This collaboration extends across diverse sectors, including trade, investment, agriculture, health, education, and tourism, showcasing Rwanda’s commitment to global engagement and development.
December: The NIBSS bars banks from transferring to non-deposit institutions
On Thursday, 7th of December, the Nigerian Inter-Bank Settlement System (NIBSS) issued a directive instructing banks to exclude non-deposit payment service providers from the instant payment (NIP) outward transfer channels. The state-owned payment infrastructure entity emphasized that including non-deposit-taking financial institutions, such as Switching Companies, Payment Solution Service Providers (PSSP), and Super Agents (SA), as beneficiaries on NIP funds transfer channels contravenes the Central Bank of Nigeria (CBN) Guidelines on Electronic Payment of Salaries, Pensions, Suppliers, and Taxes in Nigeria, dating back to February 2014.
This move by NIBSS aims to align with regulatory guidelines, ensuring the integrity and adherence to established protocols in the electronic payment ecosystem. By restricting non-deposit payment service providers from NIP channels, the financial landscape seeks to maintain compliance with the CBN’s directives, promoting a secure and regulated environment for electronic financial transactions in Nigeria.