Wednesday, 13 April 2016

Buhari's team gets US$6 billion loan for infrastructure and boosts use of yuan

This week, there is some better economic news for Nigeria after President Buhari's trip to Beijing but more worries about pressure on banks in Kenya. Although Chadian President Déby looks confident of victory after general elections on 10 April, another long-time leader in an oil-fuelled state – President Dos Santos in Angola – faces deepening opposition in the face of sharp cut backs in state spending prompted by crashing oil revenue.

NIGERIA/CHINA: Buhari's team gets US$6 billion loan for infrastructure and boosts use of yuan
In Beijing to meet with President Xi Jinping and other top officials, President Muhammadu Buhari's economic team has secured some important agreements for Nigeria's ailing economy.

The first is a currency swap deal: Nigeria is to diversify its foreign reserves away from its heavy use of the US dollar and will increase the volume of Chinese renminbi (yuan) in the basket of international currencies in the reserve. Currently about 10% of its reserves are in yuan.

The second was to open negotiations for a Panda Bond, that is, a hard currency bond denominated in yuan, which Nigerian officials say will be cheaper to access than a Eurobond, denominated in US dollars. The third big deal was a $2 billion loan for Aliko Dangote, travelling alongside the government delegation, from the Industrial and Commercial Bank of China to build two new cement plants.

KENYA: Growing unease about banking ructions
What's behind the deepening troubles of the financial sector in Nairobi? Some critics point to a more cavalier attitude to risk management but some official regulators are blaming reckless journalism and reports on social media. A well informed investigation of problems in Kenyan banks at seems to have worried some top officials.

On 6 April, the third Kenyan bank to hit trouble in nine months, Chase Bank, was put under the receivership of the regulator for a year. It follows Dubai Bank and Imperial Bank, which were put under receivership late last year. This month, the Chief Executive of National Bank was put on leave after it sharply increased its provision for bad loans. Over 20 banks have collapsed or been placed under receivership in Kenya since the so-called 'political banks' scandal under President Daniel arap Moi, two decades ago.

CHAD: Incumbent Déby waits for election victory sign
Running for a fifth term, President Idriss Déby Itno seems supremely confident of victory after the first round of voting on 10 April. But Déby could struggle in the unlikely event that he fails to get more than 50% of the vote, leading to a second round of voting. Whatever the case, it will be a long wait as the electoral commission doesn't have to announce the results until 23 April.

Within hours of the close of voting, Déby's campaign manager, Mahamat Zene Bada, announced the elections as a 'victory for democracy'. However, opposition leader and former Prime Minister Joseph Djimrangar Dadnaji, denounced what he called vote rigging and the targeted disruption of the cellphone networks and internet connections by loyalists of President Déby Itno.

After the barring of Ngarléjy Yorongar and five other contenders from contesting the presidential election, the opposition ranks are much depleted. Because of Déby's key security role in the region, sending his military to fight alongside French troops in Mali, the Ndjamena government is unlikely to face much serious criticism of the elections from European governments.

ANGOLA: Government cracks down after it asks IMF for loan
The political climate is heating up in Luanda as the government slashes spending and international companies close operations and lay off workers in response to the crash in world oil prices. So weak are the government's finances that it has done a U-turn on its refusal to borrow from the International Monetary Fund. This was partly because the IMF is likely to insist on much greater accountability in public finances – that's something that the growing band of activists in Luanda have been demanding.

On 9 April, police detained and beat up youths trying to organise a protest march against the gaoling of 17 activists in March with sentences of up to eight and a half years. Those detained include the sons of some prominent figures from the ruling party and their trial over the past year has exacerbated political tension in the capital. President José Eduardo dos Santos has promised to step down in two years but there is no sign that he is grooming a successor.

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