It is a tipping point for Africa as a contagion of political upheaval rattles markets, increases risk premiums and tips already debt-burdened governments to a historic fiscal drought, market trends have shown.
This is as Gabon President, Ali Bongo, yesterday joined the list of ousted presidents in Africa after the military took over power in the Central African nation, making it the eighth since 2020.
Early yesterday, senior military officers appeared on national TV to say they had seized power, later adding that they had put the president under house arrest.
They also announced that they were annulling the results of Saturday’s election, in which President Bongo was declared the winner for his third term and closing the country’s borders.
Bongo, who appeared in a video at his home, called on his “friends all over the world” to “make noise” on his behalf. His son has also been arrested, and is among a group of people accused of treason and corruption.
Bongo’s overthrow would end his family’s 56-year hold on power in the former French colony. People have taken to the streets in many cities to celebrate.
Whereas Niger’s upheaval is still fresh after the July 26 coup in the West African country, the wave of political instability, especially among former French colonies, will create shocking reactions and cause severe economic consequences that will affect Foreign Direct Investment (FDI) inflow into the continent.
Before yesterday’s incident in Gabon and Niger’s occurrence last month, Burkina Faso had two coups in 2020. In January 2022, Lieutenant Colonel Paul-Henri Damiba ousted President Roch Kabore over failure to contain violence by Islamist militants. However, on September 30, 2022, Captain Ibrahim Traore seized power from Damiba to become the country’s new leader.
In Guinea, President Alpha Conde was overthrown in September 2021 by special forces leader, Colonel Mamady Doumbouya, after the former altered the Constitution in 2020 to get around restrictions that would have prohibited him from running for a third term, which had led to severe unrest.
In Chad, after President Idriss Deby was killed in combat while visiting forces engaged in fighting rebels in the north, the Chadian army seized control of the country in April 2021. The president’s son, General Mahamat Idriss Deby, was named interim president, which contravenes Chadian law, where the speaker of parliament should have become president. The unlawful transfer of power sparked rioting in N’Djamena, the country’s capital, which the military eventually put down.
In Mali, President Ibrahim Boubacar Keita was overthrown in August 2020 by a gang of Malian colonels under the command of Assimi Goita. The coup came after anti-government demonstrations about worsening security, contentious elections for the legislature, and corruption charges.
Following the gale of military incursion into politics, especially yesterday’s toppling of the 14-year-old Ali Bongo Ondimba’s leadership in Gabon, the market, instantaneously, started re-pricing risks of the Central African country with investors dumping their assets linked to the country, now embroiled in a political crisis.
According to market reports monitored by The Guardian, yields of Gabon-issued U.S. bonds maturing in 2031 spiked to close to 13 per cent and were still climbing at the time of filing this report.
The Wall Street Journal reported that investors were dumping assets linked to the Central African countries.
Beyond Gabon, there was a sell-off of emerging market assets as tension mounted over the aftermath of the Gabon crisis. But Bloomberg reported that Gabon’s international bonds sank the most while shares of foreign companies with operations in the country tumbled as the coup spooked investors.
According to reports, analysts predicted asset selloff may spill over to other African countries with rising political risk.
During an uncertain cycle like the one seen since the outbreak of COVID-19, assets of emerging markets, especially Africa, are traded cautiously with funds fleeing to a haven, mostly dollar-denominated assets.
With the anchor interest rate of the United States hitting 5.25 per cent, the highest in over two decades, international fund managers and investors have additional motivation to dump an increasingly unstable market that Africa has become. The latest coup in Gabon has alone turbocharged the tense atmosphere on the continent. Whereas there is nothing yet to establish any link among the random events, a section of the international community has already tagged the crises as a contagion, which could go around the region.
The Guardian had earlier reported that African countries were increasingly being locked out of the restrictive international monetary system. The infamous Ghanaian bond defunct and fear of debt distress in Nigeria, Kenya and other countries had reduced appetite for African government securities, a situation military incursion has even worsened.
Earlier in the year, the International Monetary Fund (IMF) warned that rising geopolitical tensions and the resulting fragmentation of the global economy could increase financial stability risks and reduce cross-border investments.
Political instability and its adverse relationship with funding has been a reoccurring advisory note on IMF Article IV Country Reports in recent months where African countries are involved.
The World Bank reports also call out the adverse impacts of political instability on capital inflows to sub-Saharan Africa (SSA).
From Europe to Asia and across Africa, yesterday, leaders warned of the dire consequences of escalating political instability with an emphasis on the need to halt the contagion.
And the consequences are already playing out. While trade between Niger and other West African countries has stalled, a planned $51m bond issuance planned for the West African regional debt market has been cancelled by the Central Bank of West African States (BCEAO).
From Kenya to Nigeria, national governments of Africa are battling with debt refinancing challenges, with reports of a handful of them negotiating support with the IMF. Some of the West African Economic and Monetary Union (WAEMU) had to suspend bond issuance plans in the face of demand for higher interest rates by increasingly cautious investors.
There are also fears that many of the countries would be paying a much higher cost to borrow from the international market as rising politics could trigger a downgrading of sovereign credit rating in the coming if the new monster is not tamed.
An economist, Dr Chiwuike Uba, admitted that the crisis would trigger a negative response from rating agencies “especially if it is being seen as a movement”. Apart from reducing African government access to credits, he said many investors would be “wary” of making final investment decisions (FIDs).
Uba said Nigeria, being the leader of the Economic Community of West African States (ECOWAS), is not isolated from the impacts of the crises rocking the continent.
Meanwhile, President Bola Tinubu, yesterday, declared that the rule of law and a faithful recourse to the constitutional resolutions as well as instruments of electoral dispute resolution must not be allowed to perish from the continent, in his reaction to the latest coup in Gabon, where President Ali Bongo was ousted and placed under house arrest.
Recall that some military personnel had hinged their plot to seize power from Bongo on what they termed as observed flaws in the recent general election in the central African country. The officers had also admitted that the organisation of the general elections of August 26 did not meet the conditions for a transparent, credible and inclusive ballot so much hoped for by the people of Gabon.
They had also cited irresponsible and unpredictable governance, resulting in a continuing deterioration in social cohesion, with the risk of leading the country into chaos.
But reacting on behalf of President Tinubu, the Special Adviser on Media and Publicity, Ajuri Ngelale, noted that the presidency is watching the unfolding developments in Gabon closely and with deep concern for the country’s social political stability and at the seeming autocratic contention apparently spreading across different regions of the continent.
Ngelale said the President, as a man who has made significant, personal sacrifices in his own life in the course of advancing and defending democracy, is of the unwavering belief that power belongs in the hands of Africa’s great people and not in the barrel of a loaded gun.
He said the rule of law and a faithful recourse to the constitutional resolutions and instruments of electoral dispute resolution must not at any time be allowed to perish from the great African continent.
In the same vein, Canadian Prime Minister, Justin Trudeau, yesterday spoke with President Tinubu on phone, saying the promotion and protection of constitutional democratic governance on the continent remains a paramount priority. Ngelale made the disclosure while addressing State House correspondents in Abuja.
According to Ngelale, the Canadian leader spoke with Tinubu on the crisis in Niger and the unfolding situation in Gabon. They also urged the global community to advance the cause of democracy on the continent for the sake of the economic prosperity of all Africans.
President Tinubu added that he would continue to engage with heads of state not just within the African Union, but also around the world. The two leaders noted that people of Africa living in the Diaspora around the world, were making a huge impact on the sociopolitical landscapes of countries around the world.
AU Commission Chairman, Moussa Faki Mahamat, has expressed concern over the situation, while strongly condemning the coup attempt in the country as a way to resolve its crisis post-election.
The statement also calls for the army and security forces to guarantee “the physical integrity of the president of the republic”, along with his relatives and other government officials.
The commissioner did not call for the president to be reinstated, rather, he encouraged all political, civilian and military players in Gabon to favor peaceful political paths leading to the rapid return to democratic constitutional order.
Security experts and analysts also said the latest coup in Gabon underscores France’s slippery influence in Africa. One of them, a former DSS boss, Dennis Amachree, however noted that the coup would not be described as a success yet.
According to him, “the situation in Libreville, Gabon is still very fluid. The coup could still be crushed. But coming up after the situation in Niger, this underscores the slippery nature of France’s influence on the African continent.”
Former President of Private Security Practitioners, Dr. Wilson Esangbedo, said: “The family of the deposed President has been in power for 56 years. This was the third tenure of the deposed president amid an election that is widely believed to have been rigged. The military came in to restore order amid plans by the people in that country to go out on mass protest. This is a trying time for the African Union as their reaction will determine whether incidents like this will reoccur.
The Economic Community of West African States (ECOWAS) has been urged to initiate a new economic roadmap on poverty, insecurity and youth unemployment that would address the skyrocketing prices of food and essentials of life, which threaten stability in one of the world’s poorest regional blocs.
The call was made by the Nigerian Working Group on Peace and Conflict Prevention, (WGPCP), yesterday, in a letter signed by its Chairman, Adewale Adeoye, and General Secretary, Digifa Werenipre, and addressed to the Chairman of ECOWAS, President Tinubu.
The body also urged ECOWAS to address human right violations arising from detention of political dissidents, religious intolerance and terrorism by state and non-state actors in the region.
According to the group, “Addressing economic inequalities, youth unemployment and fighting corruption in a honest and decisive manner is a major antidote to military coups, far more critical than threats of invasion of countries seized by soldiers at gunpoint.”
The group said coups in any form is condemnable adding that the people in West Africa should determine their future through fair, credible and transparent elections.
The Working Group however said preventing coups lay in good governance and placing the public interest at the front burner of government policies. The group also calls for the release of all political detainees.
The Working Group said with its population of 418,544,337, more than half of the citizens of West Africa are poor, forcing the mainly vulnerable youth population to embark on desperation to survive in Western world.