African Union Meetings Focus on Gender, Security, Financing and Trade
African leaders gathered for the two-day annual African Union (AU) Summit on Friday, January 30, in Addis Ababa. The summit’s theme of “Women’s Empowerment,” will serve to highlight the crucial issue of improving women’s economic, political and social participation across the continent—a core priority of the AU’s 2063 Development Agenda. As the summit got underway, Zimbabwean President Robert Mugabe was confirmed as the new AU Commission chairperson, amid some controversial comments on gender parity. Several highlights from the pre-meetings throughout the week include: the formation of a 7,500-strong regional force to combat Boko Haram, the development of an African Union Foundation to help finance the AU’s growing budget, and the announcement of a new launch date (May 2015) for the Tripartite Free Trade Agreement, which will unify and integrate three regional trading blocs in sub-Saharan Africa.
ODI Report Estimates African Losses from Sovereign Bonds
On Wednesday, January 28, the U.K.-based Overseas Development Institute (ODI) released a new report entitled, “Sub-Saharan Africa’s International Sovereign Bonds,” which revealed that African governments may experience up to $10.8 billion in losses (equivalent to 1.1 percent of the region’s GDP) on sovereign bonds that they issued in 2013 and 2014, due largely to exchange rate risks. Last year, low borrowing costs prompted African governments to issue more than $16 billion in sovereign bonds, in order to finance a multitude of major infrastructure projects. Sovereign bonds are issued and repaid in U.S. dollars so the value of the U.S. dollar (relative to other international currencies) plays a crucial role in determining how much it will cost countries to repay their debt. According to Bloomberg, which tracks 24 African currencies, 20 of these currencies depreciated against the dollar in 2014, increasing their sovereign debt repayments and their risk of default. Moreover, declining commodity prices have reduced economic growth, further undercutting the abilities of these countries to repay the debt. To reduce the likelihood of default and to support economic growth in the affected countries, ODI recommends that national development agencies and international investors hold governments accountable for the responsible use of funds in line with development priorities.
African Trade Ministers Lobby for AGOA Renewal
As a new Congress has convened in Washington D.C., proponents of stronger U.S.-Africa trade relations are intensifying their efforts to lobby for the swift renewal of the African Growth and Opportunity Act, a trade preference scheme that allows African countries duty-free access to U.S. markets. This week, African trade ministers met with their U.S. counterparts in Washington, DC to advocate for the seamless renewal of AGOA, stressing that although the deadline for AGOA’s renewal is set for September 2015, there is an urgent need to renew it before then, as many companies that import African goods must place their orders several months ahead of time to ensure that their goods can be shipped to stores according to schedule. Capitol Hill also served as a forum for discussions on AGOA and the future of U.S.-African trade relations as Rep. Karen Bass (D-CA) hosted an event on AGOA Today and Beyond: The Future of the US-Africa Commercial Relationship.
In other news, the U.S. Trade Representative Michael Froman appeared before the House Ways and Means Committee on Tuesday to discuss the current priorities of the U.S. international trade agenda. Although Ambassador Froman did not specifically address the AGOA renewal in his statements, committee chairman Rep. Paul Ryan (R-WI) reaffirmed his commitment to “ensuring a seamless and timely renewal of the African Growth and Opportunity Act as soon as possible” in the hearing’s opening remarks.