#14 Unlikely Levers

From forest credits to fiscal reform — the hidden levers of today’s economic playbook.

👋 Hello, and welcome to this week’s edition of The Policy Dispatch!

A lot is happening in Africa. The continent is hosting the UCI Road World Championships for the first time ever — in Kigali, Rwanda. It’s like the Tour de France came to Africa at long last. Protests erupted in Madagascar over repeated water and electricity outages — people are tired of promises; they want faucets that work and lights that stay on.

Of course, the past week has bee rhymed by world leaders meeting at the UN. While speaking at the U.N. General Assembly, South African President Cyril Ramaphosa said, “trade is now being used as a weapon” to describe how protectionism and tariff games hurt weaker nations. Many African leaders have again put the case forward for the continent to have a permanent seat at the Security Council. On Social Media though, the debate focused mainly about continent to exit the institution. Good or bad move ?

Geopolitics of Debt

🇿🇲 Where is Zambia Heading in the Chinese Debt Chess Game ?

As Zambia inches toward another debt milestone, China's behind-the-scenes role continues to baffle creditors and economists alike. Is this diplomacy or economic hegemony?

Zambia is at a critical juncture in its debt restructuring journey. After defaulting in 2020, Lusaka has tried balancing Chinese, Western, and multilateral interests. But new revelations about "parallel" negotiations led by China — outside the formal creditor framework — have sparked concern. According to insiders, Beijing has used its influence over key projects like the Kafue Gorge Lower hydro plant and TAZARA rail to extract economic concessions. These are not new loans, but hidden leverages.

Recent negotiations stalled again despite commitments under the Common Framework. While the IMF remains cautiously optimistic, the opacity of Chinese conditions — like resource-backed repayments — clouds future disbursements. With over 30% of Zambia’s debt owed to China, this isn’t just a bilateral issue — it’s a test case for African debt diplomacy.

Zambia’s fate will shape how China deals with distressed borrowers. If debt forgiveness is selective and strategic, expect rising political tensions in Africa over sovereignty and transparency.

Development vs Ethics

🇿🇦 What’s Fuelling South Africa’s Coal Dilemma Amidst Green Talk ?

South Africa’s coal exports are surging even as it champions climate pledges. Can Pretoria juggle revenue needs with net-zero commitments without losing credibility?

The country is battling blackouts, but coal exporters are rejoicing. South Africa’s coal shipments hit a record high this quarter, mainly to India and China. While President Ramaphosa reiterated net-zero targets at the UN General Assembly, local economic pressures tell another story.

The government’s $8.5 billion Just Energy Transition deal remains underfunded and politically contested. Meanwhile, private miners are ramping up output, taking advantage of high prices and improvement in rail and shipping infrastructure. Export-linked jobs are too politically valuable to cut right now.

The real conflict lies in policy incoherence: the Department of Mineral Resources still awards coal exploration permits while the Department of Environment promotes renewables.

South Africa’s energy dilemma is a case study in green double-speak. Without aligning its mining, trade, and energy ministries, the transition will remain symbolic rather than systemic.

On another note protests have taken place this week in the country calling for a ban of coal exports to Israel. This again highlights the delicate balance between economic stability and geopolitical posture.

Silent Reform
🇦🇴How Angola is Quietly Restructuring Its State Owned-Enterprises

Amid oil revenue slumps, Angola is launching a silent but ambitious plan to overhaul over 60 state-owned companies. But why the secrecy?

Angola’s public sector is bloated — with over 80 state-run entities from banks to logistics. The Ministry of Finance recently submitted a restructuring plan that could privatize or liquidate nearly 70% of these. Yet, the lack of public engagement or legislative oversight raises eyebrows.

INSIDERS suggest pressure from multilateral lenders like the World Bank, which has tied new disbursements to governance reforms. Oil revenue, which accounts for 90% of export earnings, has declined due to production lags and price swings.

Notably, the plan includes the reform of Sonangol, Angola’s flagship oil company, whose political entanglements have long hindered modernization. The biggest challenge? Institutional resistance from entrenched elites who benefit from inefficiency and opacity.

Angola’s economic future may depend less on oil than on whether it can slim down its bureaucratic giants — a silent revolution worth watching.

Monetary Policy Trouble
🇬🇭  Why Ghana’s Currency Woes Are More Than a Monetary Issue

The cedi’s depreciation isn’t just about central bank policy. It reveals a deeper structural trap in Ghana’s economic model reliant on imports and raw exports.

The Ghanaian cedi has depreciated over 18% this year, sparking alarm from importers and wage earners alike. While the central bank has intervened by raising rates, the core issue lies in the country’s over-reliance on imported consumer goods, coupled with its dependence on gold and cocoa exports.

The IMF deal has offered temporary relief, but structural reform — especially in manufacturing and value-addition — has lagged. Moreover, remittances are down, further weakening FX reserves.

A shadow issue is offshore capital flight through transfer pricing by multinationals, especially in mining and telecoms. New legislative efforts to tighten this are stalled in Parliament due to lobby pushback.

Ghana’s currency crisis is a window into deeper issues: under-industrialization, external dependence, and weak policy enforcement. Expect volatility unless fundamentals shift.

Bond Market

🇰🇪 When Will Kenya’s Sovereign Bonds Be Rated Less Toxic ?

Kenya's eurobonds are among Africa’s most volatile. Despite fiscal reforms, investors still demand high yields. What explains the skepticism?

After narrowly avoiding default in 2024, Kenya has tried to rebuild fiscal credibility. A recent Eurobond buyback and a new IMF tranche were seen as steps forward. But bond yields remain above 13%, and Fitch has yet to revise its rating.

The market is unconvinced by Nairobi’s revenue projections and questions over transparency in the supplementary budget. Tax resistance, especially among small businesses, has grown due to new digital levies.

Meanwhile, Chinese project creditors continue to demand off-budget repayments, complicating debt transparency. Domestic political unrest over fuel subsidies adds to perceived risk.

Kenya is paying the price of past opacity and over-borrowing. Investor trust is harder to win back than IMF deals are to sign.

Saving the Forest

🌴🌳🇧🇷 What Happens When Forests Become a Currency ? Brazil Has an Answer

Brazil has introduced a bold "forest credit" scheme — monetizing the carbon value of standing trees. Can conservation and capitalism finally align?

In a policy shift hailed by environmental economists, Brazil launched the "Verde+ Credits" this week, allowing landowners to sell preservation-based carbon credits directly to global buyers. Backed by satellite verification and blockchain recording, the system aims to monetize forest preservation — not just reforestation.

Unlike REDD+ schemes, which often suffer from measurement and leakage issues, Verde+ ties each credit to a hectare of untouched Amazon land. The government has onboarded 14 pilot municipalities, and early buyers include EU-based asset managers seeking ESG diversification.

Yet challenges loom. Indigenous groups are skeptical of private claims over ancestral lands. Critics also point to the risk of speculative buying or greenwashing if verification falters.

Still, the move signals Brazil’s shift under President Haddad from deforestation denialism to eco-financial innovation.

Brazil’s forest credit scheme may redefine conservation economics — if it scales fairly and transparently. It's a high-stakes experiment in turning nature into a negotiable asset.

Port Geopolitics

🇪🇬🇹🇷🚢 Who Benefits from Egypt-Turkey Naval Rapprochement ?

Egypt and Turkey are quietly reshaping the balance in the Eastern Mediterranean. After 13 years of estrangement, their navies have returned to joint drills. What’s behind the thaw?

This month, Egyptian naval forces joined Turkish counterparts in the “Sea of Friendship 2025” exercise — the first since relations soured during the Arab Spring. The drills, held off Turkey’s Mediterranean coast, were officially described as routine cooperation. But analysts note the broader significance: two rival powers are signaling a willingness to coordinate militarily at sea.

The timing is telling. Both countries face economic strain — Egypt from fiscal pressures, Turkey from currency woes — and are seeking to expand regional influence. Normalization may unlock future deals, from trade to energy, though no formal port-access arrangements have been announced.

Regional ripple effects are inevitable. Greece, Cyprus, and Israel — which had strengthened maritime coordination partly in response to Turkish assertiveness — will be watching closely. Gulf states, particularly the UAE and Saudi Arabia, may also weigh the implications of Ankara regaining influence in North Africa.

For now, the cooperation is cautious and symbolic. But in a region where port access and naval drills often precede deeper alignments, the Egypt–Turkey rapprochement could mark the start of a new maritime chapter.

Bitcoin Implications

🇸🇻 Once hailed as a crypto pioneer, El Salvador’s “Bitcoin Bond” experiment is stalling. Is this the end of a monetary populism ?

In 2021, President Nayib Bukele announced plans for “Volcano Bonds” — bitcoin-backed sovereign bonds intended to fund a crypto-powered city and bolster reserve holdings. But as of mid-2025, the scheme remains largely unissued and stalled.

While Bukele’s government has made bitcoin legal tender (a status rescinded in early 2025), adoption by Salvadorans has been limited. Meanwhile, fiscal strain and market risk have pressured the nation: the government holds ~6,070 BTC (worth a small share of GDP) under tight monitoring by the IMF. In recent reports, the IMF challenged claims that El Salvador is still actively accumulating bitcoin, suggesting instead that movements reflect internal wallet transfers, not fresh purchases.
The revision of the Bitcoin Law in January 2025 removed bitcoin’s mandatory status, making its use voluntary — a shift made under pressure from the IMF loan agreement.

If Volcano Bonds had succeeded, they would have represented one of the boldest crypto-sovereign experiments ever. But today, instead of a megacity financed by bitcoin, we see a project that exists mostly in proposals and fiscal tension.
El Salvador’s experiment warns that blending radical monetary populism with public finances can unravel — especially under the scrutiny of global lenders.

Hydrogen Geopolitics

🇩🇪 When Hydrogen Meets Geopolitics: Germany’s Green Detour

Germany is fast-tracking subsidies for hydrogen-based fuels to end reliance on Russian gas. But will global supply chains hold?

Berlin announced €2 billion in new subsidies for green hydrogen and its derivatives like ammonia and methanol, targeting heavy industry and transport. The plan includes import partnerships with Namibia, Australia, and Morocco.This week, steel giant ThyssenKrupp committed to hydrogen retrofits, while Lufthansa is piloting ammonia-fueled aircraft routes. Yet scaling remains a hurdle. Electrolyzer shortages and port retrofitting delays are slowing momentum.

Some experts question whether hydrogen is a distraction from more efficient renewable integration. Meanwhile, German policymakers face domestic backlash over costs, especially as inflation persists.But geopolitically, the plan is clear: reduce dependence on Russian gas by building an alternative network of energy partners aligned with EU norms.

Germany’s hydrogen push is more than green virtue — it’s energy security reimagined. But can it balance ambition with feasibility?

Elderly Economics

🇯🇵 How is Japan Monetizing Longevity in Its Economic Revival Plan ?

Every opportunity for this newsletter to talk about Japan is a good opportunity 😄 

FFacing an aging population, Japan is turning seniors into growth vectors. Could a “silver productivity” era reshape economic models?

With nearly 30 % of its population aged 65+ (some projections put it even higher) World Economic Forum, Japan is often held up as a cautionary demographic case. But Tokyo is now treating longevity as opportunity—not just burden.

This year, the government rolled out measures to encourage older workforce participation and senior entrepreneurship. Already, about one-third of Japanese aged 70–74 remain in the workforce. In 2022, 33.5 % of that cohort worked, and 50.8 % of those aged 65–69 were employed. Policies under discussion would give employers incentives to retain or rehire workers past 70, and offer tax breaks or startup funds to “seniorpreneurs” focused on longevity solutions (e.g. eldercare tech, cognitive training, mobility aids).

Housing and urban design are also shifting. Some municipalities now require or promote intergenerational co-living designs to reduce elder isolation and spark small-scale local economies.

Further, Japan is pushing its technological edge: robotics, AI, and automation are central parts of the silver-economy strategy. In fields from eldercare to mobility, Tokyo sees automation augmenting what human labor cannot supply.

Still, cultural and structural inertia remain. Many firms maintain seniority-based pay systems, limiting older workers’ opportunities. Training participation for older adults is lower than ideal. And immigration remains tightly controlled, constraining labor inflows.

Japan is staking its future on a shift: from viewing aging as drain, to treating longevity as an engine of innovation. If it pulls it off, the “silver economy” might become more than a national experiment—it may become a global blueprint.

The Influence of Japan is every where other be seen in Africa

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