Wednesday, 4 May 2016

Warnings on economic slowdown and policy shifts

This week there are some sobering warnings from the IMF and some rambunctious election-campaign launches in South Africa. Pressure continues to increase on Nigeria's President Buhari to devalue the naira or set up a new exchange rate for specified transactions, while the UN Security Council votes to extend the troubled peacekeeping mission to the Western Sahara. Gambian President Yahya Jammeh's latest crackdown on his opponents, during which three militants have been killed in gaol, could prompt more serious external measures against his regime.

INTERNATIONAL MONETARY FUND: Warnings on economic slowdown and policy shifts
African countries should change their policies if they are to halt slowing economic growth, which could fall to an average of 3% this year, according to the latest World Economic Outlook from the International Monetary Fund published on 3 May. This is the lowest level of growth in Africa for nearly two decades.

Oil and minerals exporters, along with drought-hit countries in Eastern and Southern Africa, have been the hardest hit. An upturn to 4% is possible next year, says the Fund, if governments adopt some tough adjustment policies and the market for African commodities improves.

Only those spending heavily on infrastructure – such as Côte d'Ivoire, Kenya and Senegal – are bucking the trend with growth at over 5%.

SOUTH AFRICA: After the manifesto launches, the May Day rallies
The wave of election manifesto launches around May Day pointed to a changing political landscape as the governing African National Congress counted the cost of Jacob Zuma's leadership. Three weeks earlier, the ANC had launched its manifesto, at a poorly attended rally in Port Elizabeth, as it gears up for the local elections in August.

Left-wing organisations, led by the Economic Freedom Fighters and Zwelenzima Vavi's Workers' Summit, hope to take advantage of the ANC's falling support. More then 50,000 supporters, about double the number that turned out for the ANC manifesto launch, flocked to the EFF's campaign rally at Orlando stadium in Soweto. Vavi and fellow union leaders lambasted the pro-Zuma Congress of South African Trade Unions for betraying workers and failing to expose corruption.

And from the right, Mmusi Maimane's Democratic Alliance launched its manifesto – 'Moving South Africa Forward Again'- in Johannesburg with lots of respectful references to Nelson Mandela and disrespectful remarks about Zuma. As all three party leaders spelled out their policies, their advisors were telling journalists that the ANC will get a bad shock in the August local elections. But they are saying little about the backroom deals they will have to do if they are going to wrest control of some of the country's biggest municipalities from the ANC's still formidable grip.

MOROCCO/WESTERN SAHARA: Vote backs full restoration of UN mission on dispute
The blazing row between King Mohammed VI's government and UN Secretary General Ban Ki-moon is set to worsen after the UN Security Council voted on 29 April to renew its peacekeeping mission in Western Sahara for a year.

After Ban used the word 'occupation' to refer to Morocco's presence in the Western Sahara in March, Morocco launched a diplomatic offensive against him and expelled several UN personnel. The UNSC resolution was a messy compromise drafted by the United States. It fails to set out any penalties for Morocco if it does not rescind the expulsion of UN staff.

NIGERIA: Buhari to sign budget as currency pressure grows
After months of argument between the presidency and the National Assembly over the size and scope of the 2016 budget, President Muhammadu Buhari is due to sign it this week, and the government will start fresh disbursements to the cash-starved economy.

But Buhari can expect no respite on pressure for more flexibility on the exchange rate policy, if not a full devaluation. Repeating his earlier calls for a rethink on the exchange rate, Sanusi Lamido Sanusi, former Governor of the Central Bank of Nigeria and now Emir of Kano, told a group of diplomats, businesspeople and journalists in Paris on 2 May that the government should consider introducing a 'second tier' rate for the naira for non-essential imports.

The official exchange rate stays at N197=US$1 while the parallel market rate has been wavering around N320=$1 over the past week. The second-tier rate, a proposal backed by many bankers in Lagos, would set a new rate somewhere in between those two levels.

GAMBIA: More killings of oppositionists as regional pressure mounts
Might the latest round of killings, arbitrary detentions and provocations of neighbouring states finally trigger serious action against President Yahya Jammeh? Solo Sandeng, the leader of the youth wing of the United Democratic Party Opposition, was tortured and killed in custody last month and activists threaten to step up protests. Two other activists have died in custody, say the UDP, and the party's leader, Ousman Darboe, is still in detention without charge.

Belatedly, the political repression in Gambia is getting some foreign attention although Jammeh has fought off any attempt to raise the abuses at the African Union. That could change this year after relations with Senegal worsened. Jammeh's security men detained a group of Senegalese trade officials last month after sporadic closures of the border between the two countries over the past year. After diplomatic pressure Senegal's officials were released. Human rights activists in Accra and beyond are still demanding answers from Jammeh about the detention and murder of 44 Ghanaian fishermen in Gambia in 2005. So far they have been met with a deafening silence from Jammeh in Banjul.

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