Monday, 14 August 2017

KENYA: Questions remain over election but opposition challenge to Kenyatta win loses steam

We start this week with the smouldering aftermath of Kenya's elections last week, and then to moves by President Jacob Zuma and his allies in South Africa to hit back at dissidents in the governing party. A lethal attack on a restaurant in the capital of Burkina Faso is seen by some as a response to the G5 regional anti-terror force and Ethiopia's parliament has voted to lift its State of Emergency although few expect any easing of other constraints on the opposition.

KENYA: Questions remain over election but opposition challenge to Kenyatta win loses steamAfter a weekend of clashes between protestors and police, in which more than 25 people lost their lives, opposition leaders are struggling to mobilise their supporters for mass action against the disputed election result. A general strike called for today (14 August) has been greeted with a half-hearted response in the country's major cities, including the capital, Nairobi.

There are signs that opposition candidate Raila Odinga is losing the support of allies over his unyielding rejection of the official result, which gave President Uhuru Kenyatta a winning margin of about 11%. Opposition legal expert James Orengo says there would be no point in taking the commission to court over the results but said there were plenty of other constitutional options to pursue. Odinga is due to set out his strategy tomorrow (15 August).

Many activists and electoral experts have concerns about the official results and management of the poll, as well as the vulnerability of the electoral commission's database to hacking, and recommend an independent investigation. A parallel voter tabulation by the local independent Elections Observation Group (Elog) produced figures close to the officials results released on Friday.

There are also questions about the government's investigation into the torture and murder of Chris Msando, the top expert in information technology at the electoral commission. Kenyatta's government quickly rejected offers of help in the investigation from Britain and the United States and called on Kenyans not to speculate about the motives or identities of the killers.

SOUTH AFRICA: ANC dissidents face revenge after Zuma survives no-confidence vote but the Guptas could be dumpedSome of the strongest voices in the African National Congress against President Jacob Zuma will face disciplinary action after he defeated an embarrassing motion of no-confidence on 8 August. The most conspicuous rebels include former ministers of finance and agriculture Pravin Gordhan and Derek Hanekom as well as the outspoken Makhosi Khoza from KwaZulu-Natal.

After Zuma demanded the ANC dissidents face disciplinary action, his ex-wife and a candidate to succeed him as party president, Nkosazana Dlamini-Zuma, and ANC Women's League President Bathabile Dlamini, backed his call, even though their position is likely to exacerbate party divisions.
Over the weekend Deputy President Cyril Ramaphosa, Dlamini-Zuma's closest rival in this year's presidential race, said there should be far tougher action against corporate interests trying to capture the South African state. That is code for taking on the Gupta family, who have been Zuma's closest business allies.

As more details leak out about the relationship between Zuma and the Guptas, his ties to this wealthy Indian family have become one of the president's biggest political liabilities. Many business analysts think that he is looking for a way to sever all ties with the family in a bid to shut down further state investigations into his personal finances.

BURKINA FASO: 18 killed in suspected jihadist attack on restaurant in capitalThree men armed with machine-guns killed 18 people at a Turkish restaurant in Ouagadougou on Sunday evening (13 August) in the country's worst terror attack for a year and a half. No group has yet claimed responsibility but the tactics resemble those of jihadist attacks in the region.
The shootings may an attempt to weaken Burkina Faso's resolve to step up counter-terror operations as part of its membership of the French-backed G5 alliance with Mali, Niger, Chad and Mauritania, all of which have been targeted by Islamist militants.

ETHIOPIA: State of emergency lifted but grievances increasing over rights and resourcesThe vote by Ethiopia's parliament on 4 August to end the country's State of Emergency does not presage political liberalisation or the easing of restrictions on opposition groupings, according to local and international human rights organisations. After clashes with security forces last year, thousands of oppositionists remain in detention and none of their grievances have been addressed, according to the New York-based Human Rights Watch.

This formal vote to end the emergency by the parliament, which has no opposition members, could make it easier for the government to secure investment and trade deals with companies concerned about reputational and political risk.

Despite scepticism about its official economic data, Ethiopia is still one of Africa's fastest growing economies and biggest markets after Nigeria. Apart from a threat by Aliko Dangote's cement conglomerate to pull out of Ethiopia as a protest against bureaucratic constraints imposed by the regional government in Oromia, few big companies have responded publicly to political developments in the country.

IN VERY BRIEF

LIBYA: Oil exports fall dramatically after threats on Sharara fields and strikes close Zueitina oil port

EGYPT: Saudi Arabia's Prince Al Waleed bin Talal is to invest $800 million in tourism at Sharm el Sheikh amid rapid expansion of Cairo's stock market

AFRICA: Over 300 financial technology (fintech) companies have raised over $180 mn. in the past two years, says 'Disrupt Africa' report


Tuesday, 8 August 2017

KENYA: Family rivalries and a high-stakes election will test institutions and technology

We start this week with a couple of high-stakes votes – one in Kenya and one in South Africa. Then we have some insight on an impromptu secret meeting in Zimbabwe, some reservations about the grand pipeline plans in Uganda and Tanzania, and a look at economic arguments in Nigeria, pending President Muhammadu Buhari's return, expected later this month. The next edition of Africa Confidential will be published on 25 August but we will be posting major stories on Kenya's elections, migration and South Africa's leadership race in the meantime.

KENYA: Family rivalries and a high-stakes election will test institutions and technology
National elections today (8 August) will be the last episode – for this generation at least – in the historic struggle between the Kenyatta and Odinga dynasties for the country's presidency. Five decades ago, it was the fathers of today's rivals – President Uhuru Kenyatta and challenger Raila Odinga – who were battling it out for the right to lead Kenya.

Odinga has dramatically cut Kenyatta's lead in the opinion polls over the last month, and some reckon he is now ahead. That sense of a very tight race has ratcheted up tensions between rival bands of supporters. The torture and murder of Chris Msando, head of information technology at the electoral commission, and a companion a week ago pointed to just how high the electoral stakes had become (AC Vol 58 No 16, Murder most foul). It also sounded alarm bells about the possibility of a repeat of the post-election political violence in 2008 should either side feel cheated by the result.

The tangible ideological differences between the conservative pro-West Kenyatta family and the leftist traditions of the Odinga family of the 1960s have worn thin. Now, both families control vast business empires, although Kenyatta's is far larger than his rival's. Much of this election is about cash, resources and control of the tens of billions of dollars that the country is spending on roads, railways, airports and power stations.

It's also about state spending further down the food chain: the tens of millions of dollars that the 47 counties share out under the new constitution which devolves economic and political power. The idea behind the new constitution is that it would lessen the fierce competition for power at the centre by distributing power more evenly across the country. Yet the rivalries at the centre seem as fierce as ever while there is a new layer of political combat in the counties separate from the national issues.

At every level technology has played a far bigger role in these elections. Kenya is one of Africa's leaders in information technology and a global pioneer in mobile money systems. Telecoms companies say 90% of Kenyans have mobile phones, about half of which have internet access. Both sides have rushed to get their political messages across on social media, and have hired their own United States-based political technology companies to boost their campaigns.

Kenyatta's team hired Cambridge Analytica, which worked on Donald Trump's presidential run as well as the Brexit campaign in Britain. Odinga's team recruited advisers from Ghana, where the opposition's technological savvy helped it to defeat an incumbent president last year; and they hired the veteran campaign advisors, Aristotle in Washington DC.


SOUTH AFRICA: ANC divisions are set to deepen whatever happens to Zuma in the no-confidence vote but the economy will enjoy a fillip if he loses
The markets seem more excited than the public about Speaker Baleka Mbete's surprise decision to allow a secret ballot in the no-confidence motion on President Jacob Zuma today (8 August) in parliament. That's because many traders forecast a boost for the rand and inward flows of portfolio capital should Zuma be toppled and replaced with a more pro-business successor such as Deputy President Cyril Ramaphosa.

It is a big political risk for Mbete. If Zuma wins, he will try to purge the party and the cabinet of his foes, worsening the current rifts. If Zuma loses, Mbete would be interim President until the African National Congress chooses a successor while his supporters will demand vengeance on those they have already called traitors.

Some insiders suspect Mbete may have cut a deal with Ramaphosa or the ANC's National Treasurer Zweli Mkhize which would give her the party's deputy presidency. Seen as a close ally of Zuma's, Mbete was expected to protect her political mentor. But she may have calculated that Zuma will be in no position to make any guarantees by the end of this year, when he has to stand down as party president.

Zuma had already said that a secret ballot would give the opposition parties – who need the votes of just 50 ANC dissidents in parliament to win – an unfair advantage. The failure of efforts in the ANC's National Executive Committee to sack Zuma shows he still maintains majority support amongst the party's top officials.

There is another issue at stake: is the right to see how all the MPs vote in a parliamentary debate more important than seizing the chance to get rid of an unpopular President?  A bigger question is what difference all this manoeuvring at the top will make to the millions of jobless South Africans dealing with growing corruption and poor public services.


ZIMBABWE/SOUTH AFRICA: Financial backing from Pretoria mooted in Mbeki's secret talks with Mugabe
Former South African president Thabo Mbeki took a short break last weekend from his own country's political intrigues to discuss economic and political travails in neighbouring Zimbabwe. Top of the agenda in Mbeki's talks with President Robert Mugabe was a plan to shore up Zimbabwe's economy, which is gripped in a foreign exchange crisis.

Mbeki's plan, we hear, involves trying to bring Zimbabwe into the clearing system for South Africa's rand currency. Although the rand, like the US dollar, is legal tender in Zimbabwe, most of the country's formal trade with South Africa is still routed via the US dollar. With a strengthening US dollar and a weakening rand, that gives Zimbabwe the worst of both worlds.

If the rand became more widely used in Zimbabwe, that would lower the cost of trade between the two countries but it would give South Africa what some in Harare would see as an unacceptable level of control over its neighbour's economy.

South Africa, which is owed tens of millions of rand by Zimbabwe, may have a better chance of getting repaid if the two countries' currencies were more closely linked. Botswana's pula and Namibia's dollar offer a model that Zimbabwe could adopt.

But it is highly contentious politically. Vice-President Emmerson Mnangagwa, who is said to be close to Mbeki, favours such a deal, as does Finance Minister Patrick Chinamasa. But the generals in Harare and Mnangagwa's rivals, grouped around Grace Mugabe, are dead against it. President Mugabe is said to be wavering between the two camps.


UGANDA/TANZANIA: Work to start on $3.5 billion oil pipeline
In a grand ceremony, the foundation stone has been laid on the world's longest and most expensive heated oil pipeline – some 1,500 kilometres from Uganda's oilfields in its western region near Lake Albert to the port of Tanga on Tanzania's coast – with a completion deadline of 2020. Uganda has about 6 billion barrels of heavy crude oil in its reserves.

The pipeline deal has sealed the friendship between Presidents John Magufuli and Yoweri Museveni, who were both at the ceremony. They share an authoritarian governance style and resource nationalist views. Magufuli is also close to Kenya's presidential challenger Raila Odinga, much to the irritation of Uhuru Kenyatta's government.

But the success of the project, which includes Magufuli's insistence that the pipeline should be operating within three years, will depend critically on the two countries' ability to raise the necessary finance. Banks will carefully examine the commercial logic of the pipeline – initially planned to cross Kenya – and the policy record of both countries. Currently, Magufuli is embroiled in a battle with multinational companies over his proposed tougher mining laws.


NIGERIA: Growth edges upwards but IMF warns on rising debt, shaky banks and the forex system
The latest word from Abuja insiders is that President Muhammadu Buhari will return to Nigeria from his medical treatment in London by the end of this month. Local business people are debating how this will affect the economy.

For Buhari, the biggest concerns have been the rate of inflation and the strength of the naira. He staunchly opposed the hefty currency devaluations tried by other oil producers such as Egypt and Kazakhstan. During his absence, the rival factions in the government – the reformers under Vice-President Yemi Osinbajo and the exchange rate stalwarts under central bank governor Godwin Emefiele – have concocted a messy compromise between a fixed rate and a free float. The result is a multiplicity of rates.

The latest modification allows investors to quote the so-called Nafex rate, which more closely reflects the market demand for the naira than the central bank's official rate. The initial effect of the measure was a weakening of the naira but its proponents say it will encourage more capital to return to what is still Africa's biggest economy. Alongside these policy arguments, a visiting IMF team has warned there is a dangerous level of bad and doubtful debt in the banking sector. It also concluded that there was lack of political will or consensus to push through a plan to boost the country's economy as it recovers from its first recession for two decades.




THE WEEK AHEAD IN VERY BRIEF


EGYPT: El-Sisi target of $10 billion in fresh investments is working as he opens economy and clamps down on politics


GHANA: Record cocoa crop this year as Accra talks to Côte d'Ivoire about joint investments in chocolate manufacturing


SOUTH AFRICA/BRITAIN: MTN and Vodacom in bidding war for Japan's NTT internet operations in Africa


RWANDA: After 98.6% vote, Kagame will focus on slowing economy, navigating crises in Burundi and Congo-Kinshasa

Thursday, 3 August 2017

An August full of elections

As Americans and Europeans prepare for their holidays, tens of millions of Africans prepare for elections this month while hundreds of millions more watch closely. Without prejudging the outcomes, democrats and civil rights activists are coming under heavier fire.

The Senegalese voted in parliamentary elections on 30 July, in polls that were distinguished by a leading opposition figure, the Mayor of Dakar, Khalifa Sall, running his party's campaign from his gaol cell. Sall has been held without charge for six months. Senegal's stellar record for political pluralism, akin to Ghana's, is now in the balance.

Next up on 4 August is Rwanda's presidential election where Paul Kagame is assured of victory after another eerily quiet campaign. After last year's constitutional referendum, Kagame could stay in power, punctuated by sporadic elections, until 2034.

Angola's elections on 23 August, also fall into the category of a victory foretold: this time for the MPLA's presidential candidate João Lourenço, the armed service chiefs, and the family of outgoing President José Eduardo dos Santos, who will retain a grip over some most lucrative commercial operations in the land.

But for most political observers, Kenya's elections on 8 August are the most portentous. A clear margin of victory for either party in a contest generally judged free and fair would give progressive forces a huge boost. But as our reports suggest, that is increasingly unlikely.

Monday, 31 July 2017

KENYA: Security threats growing ahead of next week's election

We start in election land – namely Kenya and Rwanda, which are holding elections in the coming week, and Senegal, which held parliamentary elections on 30 July. Then to Ghana where the newish government of President Nana Addo Akufo-Addo has been chalking up some economic successes, and Tanzania where the dispute between President John Magufuli and the gold mining companies is escalating. Finally, to South Africa where Finance Minister Malusi Gigaba has been expressing some doubts about the Gupta family, close allies of his boss, President Jacob Zuma.

KENYA: Security threats growing ahead of next week's election
The discovery today (31 July) of the corpse of Christopher Chege Msando, a senior manager in information technology at the Independent Electoral and Boundaries Commission (IEBC), has shocked a country already apprehensive about possible interference in the 8 August elections. Msando had apparently been tortured before he died, people who saw the body said. He is thought to have had critical information about the mechanics of the IEBC’s plan to relay results across the country.

Earlier, Raila Odinga, NASA's presidential candidate, released what he said were secret documents detailing plans for a coup d'état by a section of the military if the IEBC announces an opposition victory. Jubilee has rubbished these claims, saying the documents are standard military contingency plans. Yesterday (30 July), a man wielding a machete injured a police officer guarding the home of Vice President William Ruto in Eldoret, in the Rift Valley before holing up in an outbuilding and being shot dead by police. Ruto was not in the house at the time and police are still trying to establish a motive for the attack.

RWANDA: Political focus goes elsewhere as forecast landslide due this week
In contrast to Kenya, preparations for the presidential election in Rwanda have been eerily calm apart from criticisms, mainly from international human rights organisations, of a what they call a climate of fear. Neither of the opposition candidates – Frank Habineza of the Democratic Green Party ticket and the independent Philippe Mpayimana – look set for more than 5% of the vote in next Friday's poll (4 August).

Foreign diplomats and international financial institutions are uneasy about the political process in Rwanda but unwilling to express their doubts in public. Beyond cursory tours of polling stations by diplomats there will be no formal international election monitoring effort.

President Paul Kagame, who is preparing for his third successive election win, has made it clear that he regards criticism of the country's political system as 'unwarranted foreign interference'.

SENEGAL: Messy parliamentary elections raise questions over detention of popular opposition leader
Voting in yesterday's (30 July) parliamentary elections was marred by poor organisation and widespread disqualification of people whose biometric identity cards were not recognised. Claims the government is responsible are mounting. Historically, elections in Senegal have been extremely well-run with defeated candidates accepting defeat gracefully.

Yet this time former President Abdoulaye Wade, now 91 and leading one of the main opposition groupings, accused President Macky Sall's government of interfering in the electoral process. Supporters of Khalifa Sall (no relation to the President), the Mayor of Dakar who was detained on corruption charges, accused the government of jailing its opponents to avoid a catastrophic electoral defeat.

President Sall's Benno Bokk Yakaar grouping is among the 47 rival parties vying for 165 elected seats in the national assembly. It currently holds 119 seats but could lose control of the assembly given rising grievances about economic hardship. These elections are critically important for President Sall's government, which faces national elections in two years' time and is proud of its reputation with international organisations for running an open, pluralistic political system.

GHANA: Growth up and prices down as government calls for end of IMF deal
When a team from the International Monetary Fund arrives in Accra next week to assess the government's implementation of its US$900 million programme, it will be walking into a noisy debate about the country's economic strategy.

Although the IMF has been advising the government to extend its economic adjustment programme until December 2018, President Nana Addo Akufo-Addo has said the programme should end, as scheduled, in April 2018. Several government officials, including Finance Minister Ken Ofori Atta, have echoed this view.

Behind what appears to be a narrow dispute over scheduling, there are bigger differences over economic strategy and the government's ability to enforce tough budgetary discipline. On 24 July, the Bank of Ghana cut its key interest rate to 21% from 22.5%. the biggest reduction for two years.
This follows the Bank's report that inflation had fallen to 12% in June and the cedi had strengthened by 7% since March to become Africa's best-performing currency. The wider economy has been growing too, expanding by 6.6% in the first quarter, boosted by higher oil and agricultural production.

TANZANIA: War of words escalates between President Magafuli and the gold miners
After a senior manager from the Acacia mining company was held on departure from Dar es Salaam airport on 24 July, a government official denied the company was being singled out. The company has just received a $190 billion tax demand from the government.

President John Magufuli has been leading a campaign to pressure the company to process minerals within the country and to meet what a government-appointed committee says are huge arrears in taxes and royalties. Last week Magufuli said he would close all the gold mines if mining companies delayed discussions on monies the government claims are owed.

The companies want to take the matter to international arbitration. Shares in Acacia, which is majority-owned by Canada's Barrick Gold, have lost more than half their value because of this dispute.

SOUTH AFRICA: Finance Minister Gigaba shares 'concerns' over influence of Gupta companies on the state
Although Finance Minister Malusi Gigaba was meant to have been a loyal ally of President Jacob Zuma and the Gupta family, he is beginning to stray from the script. Gigaba's acknowledgement of legitimate criticism of the Gupta family is another sign of Zuma's waning political power and his declining ability to protect his friends.

On 28 July, Gigaba told the Cape Talk radio station that he shared South Africans' concerns about the Guptas' influence over the government. He backed calls for a judicial commission of inquiry into allegations that the family had been using its influence improperly. 'I think we need to establish fact from allegation,' he told the station. '…the allegations are quite damaging to the investor perceptions, as well as the ratings agencies, of the governance of our state-owned companies.'

IN VERY BRIEF
NIGERIA: Big new developments expected soon in investigation of President Goodluck Jonathan's government and business allies
ANGOLA/CONGO-KINSHASA: More claims against Halliburton and Glencore in multi-million dollar natural resource deals
WORLD BANK: New report warns that robots will cause jobs losses in Africa's fragile manufacturing sector
ZIMBABWE: Mugabe says his ZANU-PF colleagues don't have the right stuff to fight the opposition

Monday, 24 July 2017

NIGERIA: Buhari is 'set to return home' after appearing in new pictures with State governors

This week we start in Abuja House – the one in London where President Muhammadu Buhari has been staying for the past two months. Then to Kinshasa where Congo's opposition is planning to step up protests against sit-tight President Joseph Kabila. And in Cape Town we take the temperature ahead of next month's confidence vote in President Jacob Zuma. This week Paris hosts key talks between Libya's Prime Minister Faiez el Serraj and rogue general Khalifa Haftar and the dispute between Tanzania's President John Magufuli and foreign mining companies shows sign of escalating. We round off with our In Very Brief section – three flashpoints for the week.

NIGERIA: Buhari is 'set to return home' after appearing in new pictures with State governorsA smiling President Muhammadu Buhari was pictured lunching with State governors in London yesterday (23 July). He will return to Nigeria as soon as 'the doctors give him the green light', said Presidential spokesman Femi Adesina.

The release of the picture may dampen down some of the more extreme speculation about Buhari's health but the lack of a precise date for his return will prompt his critics to demand more information about his condition. Although Vice-President Yemi Osinbajo has assumed the constitutional powers of Acting President in Buhari's absence, some insiders say that some areas of government remain off-limits.

Two major personnel decisions – the appointment of the Secretary to the Government and the director of the National Intelligence Agency – appear to be on hold pending Buhari's return (AC Vol 58 No 11, A date with destiny).

The photo of Buhari released by the Presidency, the first in over two months, shows him at a dining table chatting with top officials from the governing All Progressives Congress, including Imo State Governor Rochas Okorocha.

CONGO-KINSHASA: Opposition plans protests to oust Kabila as claims of grand corruption multiplyOn 8 August opposition leader Felix Tshisekedi launches a campaign of street protests and national strikes against President Joseph Kabila's rule. The opposition accuses him of reneging on his agreement to hold national elections this year and trying to extend his time in office illegally (AC Vol 58 No 11, Kabila thriving on chaos).

The protests are meant to culminate in mass demonstrations in Kinshasa and all 25 provinces on 20 August. A leading spokesman for the opposition alliance, François Muamba, says that unless President Kabila sets a date for the next presidential elections, he will cease to be recognised as head of state after 1 October.

After that date opposition activists will campaign for citizens to stop all payments to the state. Tshisekedi has also called on citizens not to accept 'bad orders' from the police and armed forces, especially from those groups that have been 'killing Congolese people'. This latest wave of opposition activism coincides with the release of several detailed reports accusing the Kabila family of gross enrichment through its grip on state power:
  • New York University's Center on International Cooperation, backed by the Pulitzer Center on Crisis Reporting, says the Kabila family owns – wholly or partially – 80 companies in Congo. President Kabila and his family now own, it says, more than 81,000 hectares of farmland in the country.
  • President Kabila's sister Jaynet has a stake in the country's biggest cellphone company.
  • Zoe Kabila, the President's brother, has extensive stakes in big mining ventures including a highly lucrative partnership with Robert Friedland's Ivanhoe company, according to a lengthy investigation by Bloomberg News. Both Jaynet and Zoe are members of parliament and senior members of the President's political alliance.
  • More than US$750 million of the country's mining revenue has gone missing in the last three years, according to a new report from the London-based Global Witness anti-corruption lobby, and is being distributed through political and business networks close to the Presidential family.
The Kabila family denies all wrongdoing and Ivanhoe's Friedland says it will be issuing a riposte to the Bloomberg investigation. However, these latest claims of grand corruption at the top will loom large in the opposition campaign in the coming weeks.
SOUTH AFRICA: Opposition divided over chance of  Zuma's defeat in confidence vote next monthWith parliamentary speaker Baleka Mbete yet to rule on whether the vote on the no-confidence motion on President Jacob Zuma due on 8 August will be by secret ballot or not, pressure is growing on African National Congress MPs (AC Vol 58 No 12,Zuma's chaos theory). Allies of Zuma in the intelligence services have stepped up surveillance on MPs they consider 'problematic'; some MPs say they are being threatened to vote in Zuma's favour while others claim they are being offered inducements.
Julius Malema, leader of the Economic Freedom Fighters and former President of the ANC's Youth League, forecasts that at least 60 of the governing party's MPs will vote against Zuma. That would mean a resounding defeat for the President if, as many suspect, all the opposition MPs vote against him.
Yet John Steenhuisen, Chief Whip of the Democratic Alliance, which filed the no-confidence motion in April, doubts it will pass. The ANC controls 62% of the seats in parliament and, unlike Malema, he thinks it would be expecting too much for so many ANC MPs to turn against Zuma. Steenhuisen believes the financial interests behind Zuma, who faces public attacks on probity from his own party and the opposition, are too entrenched to allow their man to be pushed out.

LIBYA: Rogue general Haftar to meet Premier Serraj in Paris this weekFrench officials are to broker a critical meeting in Paris tomorrow (25 July) between Prime Minister Faiez el Serraj, head of the United Nations-recognised government in Tripoli, and rogue general Khalifa Haftar, whose forces have been fighting along the coast towards Tripoli (AC Vol 58 No 12, States of failure). Haftar, who last month claimed to have won control of the eastern city of Benghazi, has the backing of regional powers Egypt and the United Arab Emirates.

Haftar, who does not recognise the legitimacy of the Tripoli government, has not met El Serraj for 18 months. France's President Emmanuel Macron wants to show his country's support for the UN's political strategy in Libya but also to push for a deal between Serraj and Haftar.

Given the Mediterranean crossing from Libya is the main route illegal migrants take into southern Europe, trying to shore up the Tripoli government has become a priority for French, German and Italian politicians. Even if there is some agreement between Serraj and Haftar, it could prove much tougher to broker some deals between the disparate militias fighting for control around the Tripoli and the rich oil reserves.

TANZANIA: Government's dispute with Acacia mining to drag on ahead of critical negotiationsAt a rally on 21 July, President John Magufuli upped the stakes in his battle with mining companies, threating to shut all gold mines in the country if he judges them to be delaying negotiations about the payment of back taxes.

Ahead of talks between the government and Acacia mining – which is accused of owing billions of dollars in back taxes – there are reports that senior managers of the company have been pulled in for questioning by state officials. Top officials at Acacia have told Africa Confidential that they are committed to cooperate with the government's investigations into their operations. The company wants to refer the tax dispute to independent arbitration although it's unclear whether the government wants to go that route.

Magufuli's latest statements show that the mining issue now tops the government's agenda, and may help boost his political base. It follows parliament's passing of a natural resources law this month which grants the government stakes of 16% in mining companies operating in the country and an option to buy up to 50%. It would also allow the state to renegotiate contracts with mining and energy companies (AC Vol 58 No 15, Magufuli's law).

IN VERY BRIEF:

SENEGAL: Government keeps leading oppositionist and Mayor of Dakar Khalifa Sall in gaol ahead of parliamentary elections  on 30 July.

ZAMBIA: Fitch ratings agency warns on growing political risk after President Edgar Lungu declares state of emergency.

ANGOLA: Security chiefs entrench position ahead of elections and the handover to new President.

Thursday, 20 July 2017

Holding companies to account

The list of international companies getting snarled in battles about fraud and politics in Africa has lengthened this year to include hitherto more pristine names, such as McKinsey, KPMG and Germany's SAP software company. They have all been named in the widening probes into the Gupta family's relations with South Africa's President Jacob Zuma.

Remarkably, the companies continued to work on Gupta-linked projects long after the family started attracting intense scrutiny from the media. At a minimum, the companies will have to review their due diligence procedures which seem, in many cases, elaborate box-ticking exercise. All three risk reputational damage, most seriously for McKinseys, which advises companies and governments on how to avoid such problems.

Other companies such as Credit Suisse and Russia's state bank VTB are in denial about corporate failings, such as their role in structuring the notorious tuna bond deals as part of a package of some US$2 billion of secret loans that nearly bankrupted Mozambique.

So what are the prospects of tougher government measures to hold companies to account in Africa and elsewhere? Not high, according to Hui Chen, who has resigned from a top fraud-busting post in the Department of Justice in Washington. She was going, she said, partly because of the 'cognitive dissonance' of 'trying to hold companies to standards that our current administration is not living up to'.

Monday, 17 July 2017

NIGERIA/UNITED STATES: US prosecutors accuse ex-oil minister of taking bribes for fraudulent contracts

Our tour this week starts in Houston, where an assets seizure case could invigorate Nigeria's anti-corruption investigations. Still on anti-corruption, the International Monetary Fund has arrived in Mozambique to assess the damage caused by the US$2 billion secret loan scheme; and in neighbouring South Africa, veteran anti-apartheid campaigner Lindiwe Sisulu joins the race to become leader of the governing African National Congress (ANC). In Bamako, protestors show what they think of President Ibrahim Boubacar Keïta's reform plans and the IMF makes a politically-charged reply to a loan request from Kinshasa.

NIGERIA/UNITED STATES: US prosecutors accuse ex-oil minister of taking bribes for fraudulent contracts
A bid by the United States' authorities to seize a $50 million apartment in Manhattan and an $80 mn. luxury yacht signals some critical advances in the investigations into about $30 bn. of swap deals backed by Nigeria's former Oil Minister, Diezani Allison-Madueke.

Last week, Ibrahim Magu, Acting Chairman of Nigeria's Economic and Financial Crimes Commission, told Africa Confidential that he expected to see substantial progress in the case against Allison-Madueke in the coming weeks. She has been in London since British police arrested her in October 2015, seizing her passport and over £30,000 ($39,000) in cash. Under English law, police have until October this year to charge her; if they fail to, they will have return her cash and papers and allow her to leave the country (AC Vol 58 No 7, The great oil chase).

The US Department of Justice's Kleptocracy Asset Recovery Initiative filed a suit in Houston, Texas, on 14 July claiming that oil traders Kolawole Akanni Aluko and Olajide Omokore paid substantial bribes to Allison-Madueke to approve their highly profitable deals, which swapped crude oil exports for imports of refined products. Some of the evidence cited includes covertly recorded conversations between Aluko and Allison-Madueke.

For now, the case is solely about the US authorities seizing control of the flat and the boat, which are held by companies linked to Aluko. But those involved in the case say the next stage will be to target individuals named in the asset recovery case for further investigation.

Much interest surrounds reports that some of Allison-Madueke's former associates have been cooperating with foreign prosecutors to identify corporate entities into which hundreds of millions of dollars from fraudulent deals were paid.

MOZAMBIQUE: IMF delegation arrives in Maputo as Russian state bank offers to restructure secret loan deal
Inch by inch, investigators are discovering the true cost to Mozambique of the $2 bn. of secret loans ostensibly extended for a tuna fishing fleet and maritime security. Sources close to an audit of the deal have told Africa Confidential that the overpricing could be more than $1bn. (AC Vol 58 No 14, Rock and Kroll).

A senior Swiss financial official described the role of foreign banks in the deal – Credit Suisse and Russian state bank VTB Group – as 'scandalous' and requiring 'full investigation'. This follows revelations in the audit that the two banks had extracted some $200 mn. in fees from Mozambique for structuring the deal.

Britain's Financial Conduct Authority would have to take a major role in this probe because the secret deal was structured by the VTB and Credit Suisse operations in London.

The IMF, whose officials arrived in Maputo last week, demanded an internationally credible audit of the $2 bn. deal.

The banks are questioning the audit's figures but VTB said last week that it was prepared to review Mozambique's financial obligations: 'We have proposed several different restructuring options to Mozambique. Currently the involved parties are waiting for IMF debt sustainability assessment.'
Any progress between the IMF and the Maputo government on fresh financing would depend on prising open many more secrets linked to the tuna bond scandal.

SOUTH AFRICA: Sisulu joins leadership race as the standing of Zuma and his wife heads downhillThe entry of a third heavyweight politician, Human Settlements Minister Lindiwe Sisulu, into the African National Congress leadership race complicates everybody's calculations. It may also prompt more public criticism of President Jacob Zuma, accused of damaging the ANC's standing.
Sisulu told the independent eNCA television channel that she wanted to undertake the 'daunting task' of restoring the 'dignity' of the ANC, an indirect criticism of Zuma's tenure under which corruption scandals have proliferated.

Until now the contest, to be decided at the party's elective conference in December, looked like a two-horse race between Deputy President Cyril Ramaphosa and the former Chairwoman of the African Union Commission, Nkosazana Dlamini-Zuma.

Party insiders say that President Zuma's efforts to back his ex-wife, Dlamini-Zuma, have proved counter-productive, partly because she is suspected of wanting to protect him from the numerous corruption charges he faces.

MALI: President Keïta looks weaker after mass protests against his bid to boost his powers and counter separatists
The standing of President Ibrahim Boubacar Keïta (IBK) suffered another blow on 15 July when thousands of Malians joined a demonstration in Bamako against his reform plan to strengthen the executive and establish new regions in the north.

Rattled by widespread opposition to his proposed constitutional reforms, IBK has abandoned plans for a referendum on them this month but his office says there will still be a constitutional referendum later this year.

The proposed reforms and redrawing of regional boundaries were part of peace talks with Tuareg separatists in the north two years ago but many in the south oppose any concessions on the issue. These proposed reforms and the stalling of the national peace process are understood to have been raised in talks between Keïta and France's President Emmanuel Macron last month.

SOMALIA: Communication crisis continues a month after Swiss-owned ship cuts underwater internet cableOfficials in Mogadishu says the country's businesses are daily losing more than a $10 mn. after MSC Alice, a Swiss-owned container ship, dropped anchor last month and cut the country's main underwater cable linking it to the internet. Now only the small group of Somalis who have access to satellite connections have been able to get out their messages.

Indeed, Africa Confidential's correspondents in the country have had to find new ways to file their stories. Most importantly, the internet crash is hampering the effort to provide relief to those Somalis hit by drought, food shortages and cholera.

CONGO-KINSHASA: IMF to set tough conditions for loans as political crisis worsens
Financial pressures are mounting on President Joseph Kabila's government as he seeks to extend his time in office. Despite his rhetoric against outside interference in the country's politics, his government is desperately seeking foreign aid after export earnings crashed and the Congolese franc lost 40% of its value this year.

After Prime Minister Bruno Tshibala wrote to the IMF last month, the Washington-based organisation said the government would have to show greater accountability in its financial operations and that it had established 'a credible path towards political stability'. That last comment is as overtly political as the IMF gets.

Relations between Kabila's government and most of the IMF's biggest shareholders are at an all-time low. In 2012, the Fund suspended a $560 mn. lending programme because of secret and highly lucrative deals in the mining sector.