Tuesday, 19 October 2010


Africa Confidential looks at the week ahead

Africa gets dragged into the global money battles
Strong multilateral action on the worsening international currency crisis will top the list of demands from the African caucus at next month's meeting of the Group of 20 in Seoul on 11-12 November. Africa will be represented by Ethiopian Prime Minister Meles Zenawi and Malawian President Bingu wa Mutharika for the African Union and President Jacob Zuma for South Africa. The currency battles may quickly turn into a trade war, according to South Africa's Finance Minister Pravin Gordhan, which would slow Africa's recovery from the global financial crisis.

Although the main protagonists in the currency row are China and the United States, its shock waves are beginning to damage African trade. US officials complain that China's undervalued yuan currency gives its exports an unfair advantage, while Brazil and Japan are taking their own measures to tackle the effects.

Africa is caught in the middle and finance ministers from South Africa, Nigeria and Kenya voiced concerns at the effects on their export markets at the IMF and World Bank annual meetings on 8-10 October in Washington DC. South Africa's currency, according to Finance Minister Gordhan, is substantially overvalued; Nigeria's Central Bank Governor Lamido Sanusi says his country's exchange rate, which has been weakening against the US dollar, doesn't have to be maintained at all costs; and Kenya's Finance Minister Uhuru Kenyatta said the growth of regional trade within East Africa had fuelled hopes for a rebound of the national economy, although some bankers suggest that the Kenyan shilling might come under pressure again. The Governor of Kenya’s Central Bank, Njuguna Ndung’u, insisted that he has no intention of intervening to shore up the value of the shilling by buying dollars. Kenya currently has foreign exchange reserves of $3.49 billion, equivalent to mire than two months of imports.

This week Africa Confidential will publish a full analysis of how the currency battles affect Africa and the other key issues at last week's meeting, such as negotiations to secure more African seats on the World Bank and IMF's executive boards, the efforts by the Bank to secure a bigger replenishment of the International Development Association (50% of which goes to Africa), calls for multilateral action on food and fuel price rises, and plans for a tough new anti-corruption network backed by the former head of South Africa's prosecuting agency 'Scorpions', Leonard McCarthy. And we'll have a report on the IMF's latest forecasts for Africa's GDP growth, inflation and balance of payments for the next two years.

Nigeria: What a victory for Nigeria's determined new state governor means for national elections
The victory of Kayode Fayemi and his swearing in as Governor of Ekiti State on 16 October, after three years of intense courtroom battles and a rerun election, will send a strong message to election riggers in Nigeria that they can no longer rely on the acquiescence of the courts. Governorship candidate for the opposition Action Congress of Nigeria, Fayemi used every constitutional means to press his case that the Segun Oni, the candidate of the People's Democratic Party, had stolen the governorship in the state with a mixture of bribery, intimidation and violence against voters and independent monitors.

The Fayemi method – using documentary and forensic evidence, video and audio recordings – can be replicated elsewhere in the national elections due in 2011. The difference is that this time the head of the Independent National Electoral Commission, Attahiru Jega, appears determined to ensure that the electoral rules are adhered to and the riggers are punished. The next step in the Ekiti saga is likely to be an examination of the illegal Governor Oni's criminal liability in the matter of the stolen election.

Guinea: The final round of the US$6 billion election is due on Sunday as violence flares
After fighting in the streets of the capital Conakry on 18 October and a dispute over the neutrality of the head of the electoral commission, the omens are not good for the second round of Guinea's presidential election due on 24 October. The transitional government headed by General Sekouba Konaté promises not to interfere with the polls but politicians of all stripes claim that there have been attempts at high-level interference with the voters' register and election logistics.

One reason would be the high economic stakes involved. The incumbent regime under Gen. Konaté has signed several contested mining deals – one which strips the Rio Tinto conglomerate of half its concessions on the $6 billion Simandou iron ore project – with Israeli and Chinese companies with strong local political ties. The current beneficiaries are watching the pre-election developments like hawks, fearing that a new government might take away their new-found gains.

The first round of voting on June 27 saw no overall winner but left ex-Prime Minister Cellou Dalein Diallo favourite to win after he polled 44% of the vote. His main challenger, Alpha Condé, who took 18%, is joining forces with Lansana Kouyate, who won 7%. But Diallo has received the support of the third-placed candidate, Sidya Toure, who got 14%. The second round was originally scheduled for late September but was delayed after the head of the electoral commission was convicted of vote-tampering and sentenced to a year in gaol. However, his successor is accused by Diallo's supporters of favouring Condé, a claim which is adding to the tensions in the run up to Sunday's vote.

Niger Delta: Mystery and confusion surround the Independence Day bombings as new attacks threatened
There are new threats to public security in Nigeria this week as a militant group – claiming to be the Movement for Emancipation of the Niger Delta or at least a faction of it – threatens another bombing in Abuja. A emailed communiqué from the ubiquitous Jomo Gbomo (which usually serves as an internet pseudonym for the MEND leadership) says the President Goodluck Jonathan's government has been arresting the wrong people for the bomb blast in Abuja on 1 October and proclaims the innocence of MEND activist, Henry Okah, who is arguing his case against extradition to Nigeria in a South African courtroom this week.

Africa Confidential's correspondents in the Niger Delta have been investigating the claims and counter-claims surrounding the bombings and analysing the changing politics of the Delta as President Jonathan, the region's first head of state, launches his election campaign for 2011.

South Africa: Shutting down the arms probe will not be the end of the affair
The not entirely unexpected news that President Jacob Zuma's government has shut down the eleven-year long investigation into South Africa's US$6 billion arms deal will not end the many controversies surrounding the arms sales and purchases. President Zuma was implicated in the case against African National Congress politicians for taking bribes from international arms companies which supplied inappropriate equipment to South Africa's armed forces. Charges against Zuma were dropped last April, shortly before his election as President.

Campaigners say that there are other ways of pressing for action on the arms deals, and shareholder activists in the Western companies involved in the deals – BAE systems in Britain, ThyssenKrupp in Germany and Thalys in France – may still demand internal investigations. South Africa's decision to end the investigations into the arms deal follows similar decisions by the Serious Fraud Office in Britain and prosecuting authorities in Germany. Opposition parliamentarians in South Africa are complaining that procedures for monitoring arms sales and purchases are regularly flouted by government.

Sudan: Khartoum goes on the offensive in border row as independence vote looms
The ruling National Congress Party in Khartoum is stepping up the rhetoric ahead of the deadline next January for the referenda to decide the future of Southern Sudan and Abyei. Its latest target is the United Nations' decision to move its peacekeepers to the North-South border to act as a buffer between the two regions before the vote. This follows a tour by the UN Security Council of Sudan and Uganda to discuss arrangements for the referendum vote. During that tour, President of Southern Sudan, Salva Kiir Mayardit, had asked for a UN-administered buffer zone of about 15 kilometres wide along the North-South border.

UN peacekeeping chief Alan le Roy said a fully patrolled buffer zone would not be possible but he would be sending troops to the most volatile areas. This decision has prompted a torrent of vitriol from Khartoum whose army spokesman, Sawarmi Khalid, told the state news agency that the UN move reflected its ignorance and the harassment aimed at its integrity. Khartoum's Ambassador to London, Abdullah el Azrag, who has been enjoying a cosier relationship with Britain's new business-minded Africa Minister Henry Bellingham, said his government may not recognise the South's vote for independence if it appears there has been vote rigging. The national election of Omer Hassan Ahmed el Beshir as President of Sudan this year was widely criticised as fraudulent by independent monitoring groups.

Côte d'Ivoire: President Laurent Gbagbo launches his election campaign amid predictions of a close vote
The opposition's disorganisation will favour President Laurent Gbagbo ahead of the 31 October elections – but probably not enough for him to avoid a second round in the presidential election. Recent opinion polls show Gbagbo (65) as the most popular politician in the country compared to his rivals, Alassane Dramane Ouattara (68) and Henri Konan-Bédié (76), both of whom are associated with the ancien régime in the 1990s.

However, supporters of Bédié and Ouattara are confident that they can join forces in a second round – Bédié relies on the Baoulé vote in the south, centre and east of the country and Ouattara is popular in northern Côte d'Ivoire – against Gbagbo. Much will depend on how the Prime Minister, the mercurial, former rebel leader Guillaume Soro (38), who has turned his working relationship with Gbagbo to his political advantage. Too young to stand this time, Soro clearly has his eye on the prize next time.

Somalia: Another season opens for the pirates of the Horn
Somalia's piracy season is getting under way this month as the monsoon weather eases, with Western navies predicting fiercer fighting between the gangs and the crews they attack. Europe's naval force Navfor says it has foiled 90 hijackings this year, and estimated the pirates' success rate to have dropped to 20 – 30% from 50%. Estimates of the number of ships and sailors currently detained range from 10-20 to 200-400 respectively. Periods of detention are lengthening, Navfor says, and sums being demanded increasing. One South African report stated that 'panic rooms' within the vessels, where the crew can hide in security, disable the engine and maintain communications, are among the most effective anti-pirate measures currently being taken. Faced with an empty and immobile ship, the pirates have no option but to leave. A Taiwanese trawler is among the latest vessels to have been seized.

Angola: President Dos Santos takes economic policy very personally
President José Eduardo dos Santos has strengthened his control of economy policy with the creation of a new Economic Coordination Commission within the presidential office.
With the already highly centralised government, this will mean even less responsibility devolving to officials in the Economy and Finance Ministries. Angola has recently seen a reshuffle of top jobs affecting the Central Bank, the economic co-ordination ministry, the interior ministry and the army. The recent changes appears put the President even more firmly at the centre of economic and political strategy. The new office will manage relations with the IMF and handle overseas debt among other functions.

East Africa: Scepticism strong as a regional force takes on Kony and the Lord's Resistance Army
The African Union's plan – announced this week – to use the joint military strengths of the Central African Republic, Congo-Kinshasa, Uganda and Sudan to tackle the Lord's Resistance Army has been greeted with heavy scepticism in the region. Uganda, which is already overstretched as a contributor of peacekeeping forces to the AU mission in Somalia, is the only country with any record of effective action against the LRA, which massacres and tortures civilians and abducts children to serve in its militia.

The armed forces of both Congo and CAR have shown themselves unable to counter threats from home-grown militias, let alone foreign ones, and the Sudanese regime, which initially financed and trained the LRA, now has little incentive to rein it in. Indeed, some suspect that Khartoum may want to use the LRA again as a destabilising force in Southern Sudan and Northern Uganda ahead of the January referenda.

South Africa: The 'world's local bank' banks pulls out of African deal
Europe's largest bank, HSBC, has abandoned its attempt to buy a US$7 billion controlling stake in South Africa's Nedbank after two months of talks, having brushed rival bidder, Standard Chartered Bank, out of the way. HSBC, which insists it remains determined to bolster its operations in Africa where it lags behind many other big international institutions, says the failure of the talks speak more to its own concerns than problems with Nedbank.

Standard Chartered, which is planning to raise $5.2bn, seems likely to take another run at Nedbank, which hugely increase its presence in Africa. One official suggested that a Standard Chartered-Nedbank merger would boost the banks' Africa' operations by a third.

Meanwhile, Gill Marcus, the Governor of the SA Reserve Bank, has warned that the economy is at risk from surges of inward-flowing capital seeking higher returns than the near-zero interest rates in Europe, North America, Europe and the Far East. In its Financial Stability Review, the Bank said that measures should be considered for controlling the inflows, which are boosting the value of the Rand and increasing the vulnerability of the economy

Uganda: Oil tax troubles rumble on as parliament passes new bill
On 5 October, the Ugandan parliament passed a new law to tax oil companies with exploration and production licences. Petroleum assets that are transferred between companies will also be subject to tax. The new law follows the government's efforts to collect capital gains tax from Britain's Heritage Oil which sold its assets to Ireland's Tullow Oil for $1.45 billion. Heritage refused to pay and referred the dispute to international arbitration. Other oil companies operating in Uganda say the government case is strong and it should win the arbitration if it hires competent lawyers.

With national elections due in February 2011, the tax row comes at a politically sensitive time for President Yoweri Museveni's government which needs a capacious war chest to fight an invigorated opposition. Heritage has offered to pay the government $100mn on account without prejudice to the arbitration. Opposition parties say the row over petroleum tax shows the government's failure to properly regulate the developing oil and has sector. Tullow with its partners – France's Total and the China Offshore Oil Corporation – is due to start oil production by the end of 2011.

United States: Diplomatic influence from a finishing school for Africa's first ladies
China might be using its cheap yuan and low-cost manufactures to dominate international trade with Africa but the world's biggest economy, the United States of America, is fighting back with some innovative ideas. The latest scheme is to influence governments in Africa through the spouses – all women except one – of the heads of state. An American think-tank has created a 'First Ladies Fellowship Programme' designed to 'strengthen the capacity of Africa's first ladies and their offices to address health and social problems across Africa.'

The fellowship programme was launched by the non-profit think-tank, the Rand Corporation, at a week-long event in Arlington, Virginia in late September. Rand gathered up first ladies of from Angola, Burkina Faso, Kenya, Lesotho, Mozambique, Namibia, Sierra Leone, Tanzania and Zambia and put them together with top advisors to the First ladies Hillary Clinton, Laura Bush and Michelle Obama. One of the organisers of the Rand programme told reporters that first ladies in Africa 'are about the only people in the country apart from the president who can pick up the phone and talk to anybody'.

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