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Africa in the News: Ghana and Zambia Downgraded by Fitch, IMF Forecasts Increased Vulnerability for Sub-Saharan Africa, and Multinational Oil Companies Feel the Impact of Continued Conflict

A worker spreads coffee beans to dry at a factory in Karatina, 200 km (124 miles) north of Kenya's capital Nairobi July 23, 2010

Each Friday the Africa Growth Initiative brings you a collection of news stories related to Africa. This week’s edition covers the global ratings downgrades by Fitch, some media discussion about the International Monetary Fund’s most recent Regional Economic Outlook for sub-Saharan Africa, and recent reactions by multinational oil companies to continued conflict in the Niger Delta.

Recent Global Ratings Downgrades and the Takeaways from the IMF SSA Regional Outlook

 At the beginning of this week both Zambia and Ghana received downgrades from the global ratings agency Fitch. Both countries were downgraded from B-plus to B, primarily due to the growing sizes of their deficits. Zambia has responded by considering a sale of eurobonds to resolve its deficit problem; while President Mahama takes the heat for Ghana’s increasing economic fragility. South Africa is also at risk of a downgrade in regards to its sovereign credit rating. Striking workers and a slow economy are said to be the cause for heightened risk to investors. This Business Day editorial suggests that South Africa take a lesson from its neighbor, Zambia, when considering what course of action to take to stabilize the sovereign bond rating.

 In additional economic news for sub-Saharan Africa, the Financial Times reported some takeaways from the International Monetary Fund’s Regional Economic Outlook for sub-Saharan Africa. Importantly, the IMF report highlighted the increased vulnerability of economies in sub-Saharan Africa to global financial shocks.

The Oil Companies Feel the Impact of Continued Conflict

Multinational companies and the U.S. Navy in the Gulf of Guinea and the Niger Delta have experienced increased conflict with host communities. Last week pirates in the Gulf of Guinea attacked a U.S. Navy vessel near the Nigerian city of Brass, known for its oil resources. As of the latest report, the hijacked ship had been found, but the negotiations with the pirates continue. The constant insecurity and oil theft in the Delta region has spurred Shell to sell its Nembe Creek Trunk pipeline and several oil wells. The leakage from oil theft has caused expensive cleanups for Shell. Additionally, the Italian oil company ENI has listed conflict in the Niger Delta as a major reason that it will face reduce oil output this year.

Kenyatta ICC Trial Postponed and the Unofficial Abeyei Referendum Results Are In

Kenyan president Uhuru Kenyatta was granted a postponement by the International Criminal Court until February 5, 2014. This is the second postponement for the Kenyatta defense team as the trial was originally scheduled for July 2013. In other news, the Abeyei referendum vote shows an overwhelming majority of residents in Abeyei have elected to join South Sudan. However, the Misseriya nomadic group that favors a union with Sudan boycotted the vote.

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