Dominoes are starting to fall in Africa: Libya, Burundi, and South Sudan all on the verge of economic collapse

Africa Meldown
June 2015 AFRICAUN envoy warns Libya is close to economic collapse: Libya’s public finances, wracked by a dramatic loss in oil revenue that has been exacerbated by a power struggle between rival governments, are foundering. The crisis has prompted the authorities in Tripoli, who control much of western Libya, to plan cuts to petrol subsidies, to delay public salary payments and to ban on imports from cars to steel. And it has already been forcing the central bank – which is treading a fine line between rival governments and funds the whole country – to burn through its foreign reserves. Libya needs US$30 billion to fund imports annually and typically spends US$40 billion on its budget. “Libya is on the verge of economic and financial collapse,” U.N. Special Envoy Bernadino Leon, who has been trying to end a power struggle between the two governments, said last week. Since last year, the central bank has frozen year infrastructure projects, limited spending to basic public salaries and food and petrol subsidies.
This has led civil servants, the biggest workforce in Libya, now to say they have not been paid for at least two months and accuse the central bank if not providing local lenders with liquidity to issue paychecks. “We don’t have a budget,” said Colonel Abu Breeda, deputy head of Libya’s police unit combatting illegal immigration. “I am the head of the department but what’s the point? Salaries? Nothing. There are delays everywhere.” The economy is essentially being hit on two sides. The dinar currency has lost 35 percent of its value against the dollar since January alone. Oil production, meanwhile, has fallen to 400,000 barrels a day, or a quarter of what was the case before an uprising toppled Muammar Gaddafi in 2011. Libya has earned only US$5.5 billion so far in oil revenue fighting between the rival factions and Islamic State attacks have shut down major oilfields and ports, said Husni Bey, head of one of the biggest private firms and importers. But the country needs US$3.5 billion every month, he said. –Channel News Asia

Burundi is on the verge of economic collapse

During Monday’s truce in anti-government protests, Renovat Ndayizeye was quick to try to reopen his stall in Jabe market in Burundi’s capital. He has scarcely sold a single pair of shoes since demonstrations began weeks ago, and he is getting desperate. “I haven’t worked since the protests began, we are living on our savings, and now I have nothing,” said the 26-year old salesman, surrounded by others who had taken advantage of a pause in the protests to reopen their small wooden shack shops. Some customers did turn up to shop, but only for basic necessities like rice, meat, vegetables and soap. Across the Burundian capital, business has been paralyzed since demonstrators opposed to President Pierre Nkurunziza’s third term bid began street protests, leading to almost daily, violent clashes with police. For over a month, customers have deserted the market and traders have left their goods locked up in the once teeming alleys.
The consequences of the political crisis in Burundi, and the protests primarily in its capital, are dramatic for traders like Ndayizeye, but also potentially disastrous for the country’s already faltering economy. The tiny Great Lakes nation was ravaged by a 13-year civil war that ended in 2006 and today is one of the poorest countries on the planet: gross national income per capita is $260, 58% of the population suffers chronic malnutrition, it exports very little, produces too little to feed itself and is riddled with corruption. Many of the demonstrations have taken place on the outskirts of Bujumbura, fuelled by poverty and unemployment. This does not prevent them from playing the economic card, erecting barricades to prevent people from reaching their workplaces in order to hit the economy and force the president to abandon a third term bid they believe is unconstitutional. Protesters are seeking to “turn Bujumbura into a dead city”, fumed a senior official in the ruling CNDD-FDD party. “The impact of the demonstrations on the economy is real. It is a terrible weapon.”
Painful times ahead – Even before the announcement of Nkurunziza’s third term bid at the end of April, and the start of protests, the economy was suffering from a pre-election depression. Fears of a return to large-scale violence in a country – which has a bitter history of inter-ethnic massacres – has driven people to change their Burundian francs for dollars or euros, and shelter their savings in their homes or in neighboring Rwanda. April tax revenues, collected mainly in Bujumbura, dropped 18%. The shortfall was worse in May, which saw the closing of shops and banks, the blocking of roads into key areas of the capital and the fearful exodus of tens of thousands of Burundians to neighboring countries. The dire economic situation is compounded by the effect of the political crisis on vital foreign aid, which accounts for half the national budget. Insecurity directly affects projects financed by donors such as the World Bank, whose experts were evacuated amid the violence leading to a reduction in disbursements. –Mail and Guardian

South Sudan close to economic collapse, as famine fears resurface

South Sudan is on the verge of economic collapse, sparking renewed fears of famine as continued fighting takes a heavy toll on people’s livelihoods, a top UN official has warned. Toby Lanzer, the UN humanitarian coordinator in South Sudan, said there is a “very high probability” that soaring inflation will cause the South Sudanese pound to collapse. “It’s not only that South Sudan has some of the lowest human development indicators of anywhere. It’s not only that you’ve had 17 months of pretty brutal violence. It’s that we’re also in the midst of economic stress, which – to be clear – is on the verge of economic collapse,” said Lanzer. “That will add significant pressure to people who are trying to eke out a living, and it will certainly send some people who have managed to get by over the edge, and turn them to just about surviving. People will be spending 80-85% of what income they have on food.”
South Sudan slid into civil war in December 2013, when president Salva Kiir accused his former deputy, Riek Machar, of launching a rebellion. Fighting has mostly been waged across ethnic lines, pitting Kiir’s Dinka against Machar’s Nuer. About 3.5 million people – nearly 40% of South Sudan’s population – will require emergency food assistance by June, according to the famine early warning systems network (Fews Net). In March, fresh skirmishes broke out, putting 650,000 people beyond the reach of aid agencies. Recent fighting has prompted NGOs to evacuate their staff from Leer, Koch, Nyal, Ganyiel and Mayendit, according to the UN Office for the Coordination of Humanitarian Affairs (Ocha). –The Guardian
This entry was posted in Acts of Agression, Apathy, Anger, Mistrust, Disillusionment, Arms Race, Banking Crisis, Bankruptcy, Boom and Bust Cycles, Civil Unrest, Conflict Among Nations, Economic Collapse, Economic Hardship or Loss, Escalating hostilities, Ethnic tensions, Fiat Money Printing Fiasco, Flashpoint for war, Geopolitical Crisis, Greed and Corruption, Gun violence, Hierarchal Control, Immigration surge, Infrastructure collapse, Political Corruption, Political turmoil, Resource War, Social Meltdown, Squandered Resources, Struggle for Survival, The Pyramid Model, Unemployment rising, Unsustainable Debt Burden, Widening gap between rich and poor. Bookmark the permalink.

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