Thursday, 31 March 2016

Engines of development

Despite pressure from the doom-sayers amid the commodity price crash, some big battalions in Africa are fighting back with ambitious new projects that could create growth and jobs – if they go ahead. Most significant is the US$5.42 billion deal between Kenya and the China Communications Construction Company (CCCC) to extend the railway from Naivasha to Malaba on the Ugandan border. In December, China had agreed to lend Kenya $1.5 bn. for a new railway from Nairobi to Naivasha in the fertile Rift Valley.

China's support for regional power and transport projects, such as the Kenya-Uganda railway, points to a change of strategy: as an increasingly diversified economy and at the centre of the region's economic integration plans, Kenya could become a major hub for Chinese trade with Africa. The project follows China’s big investment in Ethiopia's power sector. Both initiatives are establishing China as a builder of much needed infrastructure rather than just a neo-colonial buyer of primary commodities.

Another project announcement this week is more off-piste: the embattled commodity giant Glencore promises to invest $1.1 billion in its Mopani copper mine in northern Zambia over the next two years, despite cutting back production across the region as prices fell. Like Beijing’s railway, there is a commercial logic to Glencore’s plans: it has already invested $3 bn. in the mine and to mothball it indefinitely would represent an unsustainable loss.

Thursday, 17 March 2016

Time to make the corruption crackdowns pay

It was Kenya's graft-buster-in-chief in 2002, John Githongo, who observed that anti-corruption was good politics. And so it proved until he stumbled on the wrong political skeletons in the closet. President Mwai Kibaki did nothing to defend Githongo, who fled abroad. Today, he is back home, promoting grassroots political organisations while his old enemies have faded into the shadows. Just as Githongo was chasing down bribe-givers and takers and assorted contract ten-percenters, Nuhu Ribadu was doing the same in Nigeria and also winning plaudits. He also had to leave the country in a hurry but is now back home with a political career.

One big difference between Nigeria and Kenya is that President Muhammadu Buhari was elected because people thought him honest and tough enough to tackle corruption; few Kenyans saw Uhuru Kenyatta as leading a serious anti-corruption campaign. Now the two presidents' legacy will depend on some success in stopping the rampant criminalisation of the states over which they preside. Buhari still scores highly in opinion polls for tackling corruption but is losing support on other fronts because of fuel and power shortages and the tumbling value of the naira. As the Auditor General in Abuja announces that another US$16 billion is missing from the state oil company's accounts, Buhari's government is under pressure to extract some politically positive news from its crackdown on ill-gotten gains.

Tuesday, 8 March 2016

Finance Minister Gordhan on mission to London and New York

We have commercial and political diplomacy in Nigeria and South Africa, a crowded field of presidential hopefuls in Benin, and a last and very ambitious bid at conflict resolution by UN Secretary General Ban Ki-moon.

SOUTH AFRICA: Finance Minister Gordhan on mission to London and New York
Determined to get South Africa's case across to the international markets, Finance Minister Pravin Gordhan arrived in London yesterday (7 March) to meet investors who have been rattled by the country's recent political shenanigans. The London leg of the trip is being managed by Deutsche Bank and Investec. After London, Gordhan flies to New York for more investor meetings.
We hear that Gordhan is to meet senior officials in the London offices of Old Mutual, South Africa's US$9 billion financial services group. Over the weekend, details were emerging of Old Mutual's plans to break up the group, sell some assets and restructure some its holdings such as its stake in the leading South African Bank, Nedbank.

This follows the decision, announced last week, of Britain's Barclays Bank to sell much of its stake in its African banking operations, expanded in the wake of its takeover South Africa's ABSA investment bank a decade ago.

NIGERIA/SOUTH AFRICA: President Zuma in Abuja to repair frayed ties
The agenda is likely to be packed when South Africa's President Jacob Zuma arrives with a full retinue of ministers and business leaders for a two-day state visit starting today (8 March). Zuma and his foreign minister, Maite Nkoana-Mashabane, are scheduled to meet top officials in Abuja including President Muhammadu Buhari and Vice-President Yemi Osinbajo, and Zuma will address the National Assembly.

Relations between Nigeria and South Africa in recent years have been what one diplomat in Abuja described as 'unnecessarily bad', shaped as they are by petty consular disputes rather than big issues. Both countries have been badly hit by the fall in commodity prices and are looking for ways to diversify their economies and promote more intra-African trade.

The biggest outstanding dispute between the two countries is the Nigerian telecoms regulator's decision to fine South Africa's MTN some $5.7 bn. for failing to re-register all its SIM cards in line with new security procedures. Although the fine was subsequently reduced to $3.2 bn., MTN wants a further reduction and the South African delegation will almost certainly raise the issue in Abuja. But to make progress, the MTN team will have to offer some more serious concessions on their side about paying local corporation tax and more technology transfer.

BENIN: Results due after 33 candidates contest for presidency
Prime Minister and former investment banker Lionel Zinsou heads a crowded field of 33 candidates after Benin's presidential election on Monday (6 March). Other front-runners include another former premier, Pascal Koupaki, and a former top official at the International Monetary Fund, Abdoulaye Bio Tchané.

Although many of the candidates are technocrats offering ambitious programmes to restart economic growth in the country, the elections were hit by serious administrative shortcomings. There is also suspicion that the departing President, Thomas Boni Yayi, may have too much influence over the favourite to win, Zinsou. If, as seems likely, no single candidate gains more than 50% of the vote, the top two candidates will fight a second round, probably on 20 March.

MOROCCO/WESTERN SAHARA: UN chief tries to restart talks on territory 
Notwithstanding the fact that his tenure has been marked by horrific chaos and terror in the Middle East and parts of Africa, outgoing Secretary General of the United Nations, Ban Ki-moon, is evidently looking for new challenges in his remaining months in the job. He has announced the restarting of negotiations between Morocco and the Polisario Front to end the four-decade long war over the Western Sahara.

After the Israeli-Palestinian conflict, the issue of the Western Sahara's sovereignty is generally thought to be the dispute on which least progress has been made. Rabat's offer to Saharawi nationalists of autonomy within a Moroccan confederation has been roundly rejected.

Visiting the Saharawi camps in Algeria's Tindouf region on 5-6 March, Ban said he wanted to relaunch negotiations so the tens of thousands of refugees can return home. Given France's and the United States's unrelenting support for Morocco's position it will prove extremely difficult, even for the head of the UN, to produce a practical basis for resolving the conflict.

Thursday, 3 March 2016

Mujuru's move

Zimbabwe's political scene has opened up this week as former Vice-President Joice Mujuru launched her new party, Zimbabwe People First. ZANU-PF is riven by factionalism as the race to succeed President Mugabe intensifies. Mujuru's new party is the most important new contender since Morgan Tsvangirai launched the MDC in 2000, a party which has all but fallen apart from internal divisions. She could bring across strong support from the beleaguered ZANU-PF.

But what, her enemies still in ZANU-PF ask, can Mujuru can offer that she could not over the last 35 years of working under Mugabe? Courage is one answer. She has broken with Mugabe, and then shrugged off bizarre accusations of plotting against him. Her ZANU-PF supporters have long outnumbered those of Vice-President Emmerson Mnangagwa. Already, a group of youngish Turks around Grace Mugabe has launched its own plot to scupper Mnangagwa's ambitions to succeed Mugabe. Now Mnangagwa could be caught between Grace and Joice.

Mujuru is the first ZANU-PF insider with clout and liberation-war credibility to break ranks and offer an alternative to Mugabe. Indeed, Mnangagwa may find that the casting out of Mujuru from ZANU-PF could have been the end, not the beginning, of his chances of succeeding Mugabe. The sight of four former ZANU-PF ministers, and ambassadors from Western countries, on the podium at Mujuru's launch event cannot have encouraged him.