Thursday, 30 June 2016

Brexit storm hits markets and trade everywhere

A Brexit-dominated blog this week as Africa's economies count the cost of the turmoil in Europe. In Zambia, President Edgar Lungu's government cracks down on the independent media and Mozambique's finance troubles escalate after the secret loan scandal. Finally, Algeria's reforming bureaucrats make optimistic noises about oil and gas production.

AFRICA/EUROPE: Brexit storm hits markets and trade everywhere
African finance officials are preparing for more shockwaves after the United Kingdom's vote last week to leave the European Union upset the markets, wiping some two trillion dollars off the capital markets and pushing sterling to its lowest level for 30 years. Analysts expect Africa's biggest economies – Nigeria, South Africa, Egypt and Kenya – to be the worst hit, as they were following the global credit crunch in 2008. This time, the effects could be harsher.

On the first day after the Brexit vote, South Africa's rand fell by 7% and Finance Minister Pravin Gordhan warned that inward investment could slow this year. For Nigeria, whose trade with the UK is worth some US$8.5 billion and was due to double in the next five years, the uncertainty around Brexit complicates an already poor outlook with low oil prices and falling capital inflows.

Egypt's economy, already rocked by regional instability and falling tourism revenues, will take another hit from Brexit. Kenyan officials worry that the already difficult trade negotiations between the East African Community and the EU could be held up further by the decision to leave the union.

Treasuries in Africa already have much lower reserves because of lower state revenues in the wake of China's slowdown and the commodity price slump. Optimistic forecasts on the Brexit effect for Africa are thin on the ground.

One, not entirely dispassionate voice, that of James Duddridge, Britain's pro-Brexit Minister for Africa, has pledged that the UK's relations with Africa would expand after it left the EU. Others, including Duddridge's colleagues in government, don't share his optimism, at least in the short term. They predict at least two years of uncertainty as the UK tries to disentangle itself from Europe and re-negotiate new trade deals in its own right.

For decades, the UK's trade relations with Africa have been governed by rules negotiated by the EU under a succession of treaties such as the Lomé Treaty or the Cotonou Agreement. It's unclear whether Britain would offer tougher or better terms, once it leaves the EU. In the meantime, much of London's diplomatic and negotiating skills will be consumed by the tortuous process of extricating itself from Europe. Consequently, London's already over-stretched expertise on Africa will come under further strain.

As Europe dives into a period of infighting, according to a veteran diplomat in London, African governments may see their best course of action would be to reinforce relations with Asia's big economies, China, India and Japan.

ZAMBIA: Editor arrested in pre-election crackdown on the media
A week after tax collection officials closed down Zambia's leading independent daily newspaper, The Post, police arrested the paper's publisher and veteran editor-in-chief, Fred M'membe, his wife Mutinta and deputy managing editor Joseph Mwenda on 28 June. Although President Edgar Lungu defended the actions of the Zambia Revenue Authority against the newspaper, a court ruled it should be allowed to resume full operations while it negotiates the size of its tax bill with the government.

Under fire from journalists' unions in the region as well the Committee to Protect Journalists, the government's actions are widely seen as a bid to silence critics ahead of the general election on 4 August. The Post had started to run a series of stories about how the electoral commission was registering foreigners to vote.

MOZAMBIQUE: Growth slowing as IMF talks tough to Maputo
There was tough talking between President Filipe Nyusi's government in Maputo and a visiting delegation from the International Monetary Fund as the row over the government's secret security loans of over $1.4 billion rumbles on.

There have been calls from the United States and United Kingdom for an international audit of the loan deals set up by Credit Suisse and Russia's VTB Bank.

The Fund has warned that Mozambique's growth this year may fall to 4.5%, compared with 6.6% last year. Michel Lazare, who led the IMF delegation, welcomed the decision by state prosecutors to investigate the state firms linked to the secret loans but announced the country's total debt stock was now 86% of GDP.

ALGERIA: Energy production to rise after reshuffle
Oil and gas production are due to soar over the next five years, according to Amine Mazouzi, the new chief executive of state oil company Sonatrach. Mazouzi is one of a group of technocrats promoted by President Abdelaziz Bouteflika's government in what some optimistic commentators see as a wave of economic reform.

Mazouzi forecast that oil and gas production would rise by over 5% this year and by as much as a third by 2020 as new fields come on stream. It was demand-driven, he argued: Sonatrach reported that Italy's ENI doubled its gas imports from Algeria last year, compared with its purchases in 2014.

Thursday, 23 June 2016

Testing times for Zuma

From the start of the year, it's been clear that South Africa's local elections on 3 August would be a critical test of President Jacob Zuma's survival skills. There have been contradictory signs: it looked increasingly likely that Zuma would be pushed to resign before his second term ends in 2019. Then last month, the National Executive Committee (NEC) of the governing African National Congress gave Zuma a resounding endorsement and wound up an investigation into some of his business allies.

Whether it was Zuma's charm and charisma, which shouldn't be underrated, or the ANC's instinct for self-preservation before tough elections, it seemed the activists were closing ranks. Far from it. The trouble started in Gauteng, when the NEC tried to impose its choice of Thoko Didiza, a Zuma ally and former Agriculture Minister, as the ANC's candidate for Mayor of the Tshwane municipality, which includes Pretoria, and push out the incumbent mayor Kgosientso Ramokgopa.

Protestors clashed with police in several townships around Pretoria; two people were shot dead in Mamelodi township on 20 June. There are similar disputes between the NEC and local ANC branches about the choice of candidates in the municipalities of Johannesburg, also in Gauteng, and Nelson Mandela Bay in Eastern Cape Province. The latest Ipsos opinion poll suggests that the ANC will lose overall control of all three councils to resurgent opposition parties, led by the Democratic Alliance and the Economic Freedom Fighters.

Wednesday, 15 June 2016

ETHIOPIA | ERITREA: From jaw-jaw to war-war

Over the weekend there were disturbing reports of fresh fighting in the border war between Eritrea and Ethiopia which ended with a peace treaty some 16 years ago. Ugandan security officials say they have been busy in the last few days rounding up military personnel they accuse of plotting to oust President Yoweri Museveni. Finally, a couple of media and courtroom-related spats: firstly there are reports about the considerable wealth of Nigeria's former President Goodluck Jonathan and his oil minister Diezani Allison-Madueke; secondly, a Liberia Grand Jury has issued an indictment against Andrew Groves, the chief executive officer of Sable Mining.

ETHIOPIA | ERITREA: From jaw-jaw to war-war
As fears mount that the border war between Eritrea and Ethiopia could be about to restart, most accounts of the latest clashes on 12 June say they happened in the area between Zalambessa in Ethiopia and Tsorona in Eritrea. Local people have been telling journalists that they could hear shelling in the area for most of 12 June into the morning of the next day and some accounts speak of Ethiopian military vehicles having been spotted. Within hours of the first reports emerging, both governments put forward their versions.  

Asmara went first, claiming that Tsorona came under attack from Ethiopian troops. The area saw some of the heaviest fighting during the 1998-2000 war in which 70,000 lost their lives. Within hours on 13 June, Getachew Reda, Ethiopia's Communications Minister, accused Eritrea of launching an unprovoked attack and said Ethiopian troops counter-attacked. United Nations Secretary General Ban Ki-moon's office called on both sides to exercise maximum restraint and respect the peace treaty. This latest clash follows a rare public condemnation by the UN of Eritrea for human rights abuses linked to its compulsory national service regime. One of the reasons for national service, insists the Eritrean government, is a continuing threat from Addis Ababa.

UGANDA: Crackdown amid coup claims
Security officials in Kampala have been rounding up military officers they suspect of plotting against President Yoweri Museveni, according to a statement from army spokesman Lieutenant Colonel Paddy Ankunda on 12 June. Ankunda linked the plotters, said to be in both the army and the air force, to Michael Kabaziguruka, an opposition politician who backs Kizza Besigye, who was defeated in this year's presidential elections and was recently detained on a charge of treason.

Once Museveni's personal doctor and a former officer, Besigye has retained strong links to Uganda's military. News of the arrests coincides with a call by Amnesty International for the Uganda Police Force to investigate complaints that it has been harassing 31 local and international human rights organisations based in Uganda.

NIGERIA: Foreign press wades in and woes multiply
The aftermath of former President Goodluck Jonathan's first public speech after conceding defeat in last year's national elections has seen him dragged into what could become an ugly war in the foreign media. Britain's biggest-selling daily newspaper, The Sun, reported on 14 June that Jonathan has just bought a house in the exclusive St George's Hill area of Weybridge, Surrey, just outside London.
Although The Sun is 'sure he gained his wealth legitimately', it invited him to explain how he was able to pay for a mansion which could have cost up to £15 million. The report comes close on the heels of the Qatari-owned Al Jazeera satellite channel's report that Nigeria's Economic and Financial Crimes Commission has seized a home worth US$18 million belonging to Diezani Allison-Madueke, Jonathan's oil minister. She called the report a 'propaganda attack' and 'journalistic brigandage' and denied any wrongdoing. She is under investigation by the British authorities for corruption and malfeasance. The Al Jazeera programme broadcast photographs of some of what it claimed was Allison-Madueke's collection of gold jewellery, furniture and a bulletproof gym. 

None of this appears to be related to an opinion piece by President Muhammadu Buhari explaining Nigeria's multiplying woes to an international investor audience. However, the timing of the three stories is curious, to say the least. It may also be a sign that the government's defenders are finally going over to the offensive.

LIBERIA: Sable Mining rejects state indictment
Andrew Groves, CEO of Sable Mining, is decrying an indictment in a corruption case by a Grand Jury in Liberia. This latest move was linked to a political effort to block some candidates who had been intending to stand for senior posts in national elections due next year, according to Groves, who denies the bribery claim.

It follows earlier indictments of some of the country's top officials for alleged malfeasance in the award of an iron ore concession to Sable. The affair was reported at length by Africa Confidential and the London-based anti-corruption lobby, Global Witness.

Last month the Grand Jury indicted: Varney Sherman, chairman of Ellen Johnson-Sirleaf's Unity Party; Alex Tyler, Speaker of parliament; and Ernest C. B. Jones, deputy minister of Lands, Mines and Energy. The indictment states that Tyler was paid $75,000 to amend the mining concession law. Both Sherman and Jones were planning to launch their political campaigns in the coming weeks, said Groves. 

Thursday, 9 June 2016

The general in his labyrinth

If he's looking for evocative literature as well as a break from Nigerian politics during his ten-day visit to London, President Muhammadu Buhari should read 'The General in His Labyrinth' by Gabriel Garcia Márquez. One of the late Colombian writer's most political novels, it tells the story of General Simón Bolívar's efforts to unite South America. Márquez retells how Bolívar gets trapped in the labyrinth of sectional and regional interests.

Almost two hundred years on, there are some important parallels with contemporary Nigeria. Many had hoped that Buhari's epic journey from stern general to born-again democrat and finally presidential election winner last year with a massive popular mandate would open a new chapter for Nigeria.

Goodluck Jonathan, the defeated incumbent, was also in London this week hosted by Bloomberg News, arguing for a Bill of Rights for all Nigerians. Yet when Africa Confidential asked him for his views on Buhari's anti-corruption campaign, he demurred and aides whisked him into another room. A few days earlier, Jonathan and another ex-President, Olusegun Obasanjo, had met Buhari in Abuja to discuss the increasingly fractious political climate.

Continuing clashes in the north-east and Middle Belt, and a determined campaign by militants known as the Niger Delta Avengers to close down the oil industry are undermining Buhari's mandate. Uniting the country again has become top priority if this general is to break out of his labyrinth.

Tuesday, 7 June 2016

KENYA: Election Commission protests escalate

This week, the political developments start in Kenya, with mounting protests for electoral reform, then to the story of why some senior Nigerians are spending the week in London and the private reactions to the appointment of the president's daughter to head the state oil company of Angola. And then in Kinshasa, a close political ally announces that a referendum may be organised to allow President Kabila another term, while there are some prickly exchanges between Western and South African officials over a warning about terrorism threats.

KENYA: Election Commission protests escalate
At least one person was killed and another twelve suffering from bullet wounds were taken into the Jaramogi Odinga Teaching Hospital in Kisumu after clashes between protestors and police on 6 June.

Protestors are stepping up their campaign for the reform of the Independent Electoral and Boundaries Commission by organising street demonstrations every Monday.

Three people were killed in clashes after demonstrations last month in Western Kenya, which is an important opposition base. An opposition protest in Nairobi went off peacefully on 6 June.

Opposition leader Raila Odinga last met President Uhuru Kenyatta at the end of May but the two failed to agree on substantive changes to the Electoral Commission. Now oppositionists say they will organise more protests to press the government to negotiate.

NIGERIA: Two Presidents and Finance team land in London
It is a big week for Nigeria in London this week, with two Presidents and a Finance Minister arriving in the British capital. First to arrive was former President Goodluck Jonathan, who gave his first major speech since losing national elections a year ago.

Jonathan used the platform, provided by Bloomberg News and Invest Africa, to call for a Bill of Rights which would establish the same rights of citizenship for all of Nigeria's 180 million people.

'Civus nigerianus sum,' ('I am a Nigerian citizen'), said Jonathan, arguing that Cicero's definition of citizenship in ancient Rome should apply in contemporary Nigeria. Discrimination against 'settlers' by 'indigenes' should be prohibited by the constitution, he said.

President Muhammadu Buhari arrived in London on the morning of 6 June for a ten-day holiday and a medical consultation for a persistent ear infection, his office announced.

Buhari's government is struggling with multiple security threats in the Niger Delta, the north-east and the Middle Belt, as well as financial pressures from the tumbling price of oil and, more recently, the disabling of oil production by Delta militant attacks.

That is a major reason why Finance Minister Kemi Adeosun also arrived in London: she was due to address investors at the Corinthia Hotel, near Trafalgar Square, on the government's strategy and to win support for a Eurobond issue. Many of the investors will be asking the government to drop capital controls and allow the naira to float against the dollar. Both policies are anathema to President Buhari, who will be just a few miles down the road at the time.

ANGOLA: Business reacts as presidential daughter takes helm of state oil company
A hardened Western banker in Luanda told Africa Confidential that he had never taken any notice of politics in Angola – until a year ago, when the oil price started to crash and the country's financial woes began to multiply.

The writ of President José Eduardo dos Santos was assumed to run supreme, across the military, the central bank and of course, the parliament. Even so, the President's decision to name his billionaire daughter Isabel as the new chief executive of state oil company Sonangol and sack the rest of the board provoked uncharacteristic gasps across the corporate landscape.

Bankers, all insisting on anonymity and discretion, said Isabel's appointment would create difficulties for the company for 'reputational' and 'risk' reasons when it goes to the market for funds. Others suggested it could undermine Angola's attempted rapprochement with the International Monetary Fund and the World Bank.

So far only one business leader, John Baltz who is managing director of Chevron's affiliate in Angola, Cabinda Gulf Oil Company, has publicly endorsed Isabel's new job. 'The government has acted. I am always optimistic. I certainly support the direction Sonangol is taking,' Baltz told Reuters news agency.

SOUTH AFRICA: US and now Britain warn on terror attacks
First the United States, and now Britain, have publicly warned President Jacob Zuma's government that they have intelligence on possible Islamist attacks on shopping malls and Western installations in South Africa. That's not so extraordinary as there have been such warnings before but this time there is a certain tetchiness in the official exchanges. Already, Security Minister David Mahlobo, a close ally of President Zuma, has provoked criticism from local and foreign intelligence professionals.

Western intelligence agencies have long complained about a lack of cooperation from their South African counterparts on counter-terrorism. Some South African officials say they find their Western counterparts tend to hector or patronise them and are not always well-informed about local political realities.

After the latest warnings, an official from South Africa's Department of International Affairs and Cooperation said the country's security services were absolutely capable of confronting any threat.

CONGO-KINSHASA: Presidential ally hints at referendum to extend Kabila term
As the presidential contender and former governor of Katanga province Moïse Katumbi recuperates in Europe after his latest clash with Congolese security, an ally of President Joseph Kabila has floated the idea of a referendum to allow the incumbent to stand for another term.

Until now, it seemed that Kabila's strategy to was to find a formula to extend his second term in office by claiming that the government wasn't able to hold elections this November as scheduled. The speculation was that Kabila and his aides could secure another two years in power without a vote.

This was strongly challenged by Moïse Katumbi and other leading opposition contenders who have been insisting that Kabila must respect the two-term limit in the constitution.

But Henri Mova Sakanyi, the Secretary General of the ruling PPRD, told a rally in Kinshasa to celebrate the President's 45th birthday that his supporters would find a way to organise a referendum on term limits.

Sakanyi quoted approvingly the example of Rwanda, where Paul Kagame has banished such limits. He made no reference to Burundi, where the death toll has been mounting after President Pierre Nkurunziza pressed ahead with his plan for an unconstitutional third term in the teeth of staunch local opposition.