Thursday, 22 September 2016

Kinshasa on the brink

This week President Joseph Kabila's bid to hang on to power in Congo-Kinshasa has finally triggered the violent clashes that opposition parties had long predicted. At least 44 people are reported by Human Rights Watch to have been killed after police tried to stop a demonstration on 19 September calling for Kabila to leave office after his second constitutional term ends on 19 December. A week earlier, talks broke down between government officials and opposition groups about a schedule for electoral registration and elections. The government wants to delay the presidential poll – and Kabila's exit – until next July at least.

World leaders were gathering for the UN General Assembly in New York as news of the deaths in Kinshasa came through, prompting Ban Ki-moon to urge Congolese security officers to exercise restraint. Opposition groups say hundreds of their supporters have been seized.

Although the African Union has maintained radio silence about this latest effort by the President to extend his rule, France condemned the government's use of force against protestors and called on Kabila to leave power as scheduled. The United States threatened to impose sanctions.

While leaders in neighbouring Congo-Brazzaville, Burundi, and Rwanda have extended their tenure, foreign governments have stayed out of the debate. But in Congo-Kinshasa, one of Africa's biggest, most complex and mineral-rich economies, France and the USA want to wade in.

Tuesday, 13 September 2016

MOZAMBIQUE: Nyusi in the USA for tough meetings with IMF and investors

This week Mozambique's President arrives in the United States to placate creditors and woo investors while South Africa's opposition parties start to audit the African National Congress's management of local government finance. Public sector workers in Zimbabwe face an even tougher time according to the government's latest financial report and Ghana's latest Eurobond issue was five times over-subscribed. The UN Human Rights Council was due to discuss a report on the worsening situation in Burundi today.

MOZAMBIQUE: Nyusi in the USA for tough meetings with IMF and investors
Amid the worst economic crisis since the end of the civil war in 1992 President Filipe Nyusi arrives in Washington DC on Thursday (15 September) to address top US business people.
The trip is billed as a 'meet the investors' tour but it will be haunted by the country's financial meltdown after it emerged, during the International Monetary Fund's meeting in April, that the government had run up over US$1.4 billion in secret debt. Nyusi's first stop will be a meeting co-organised by the Mozambican Embassy and the Corporate Council on Africa to talk about investment opportunities in farming, power, and tourism.

We hear that Nyusi is also set to see IMF Managing Director Christine Lagarde in Washington for some difficult discussions over the organisation's conditions for resuming loans to Maputo. Nyusi's appointment last month of Rogerio Lucas Zandamela, who has worked at the IMF since 1988, as the new governor of Mozambique's central bank may help. On Friday (16 September), Nyusi is to travel to Houston, Texas, to talk to the big oil and gas companies headquartered there. After that he will go on to New York to attend the UN General Assembly.

SOUTH AFRICA: New Tshwane mayor will probe massive ANC contracts
The next battle between opposition parties and the African National Congress will be about money – specifically about more than R10 bn. ($710 million) in contracts awarded in the Tshwane municipality, which includes Pretoria, the national capital. Solly Msimanga, the newly-elected Democratic Alliance mayor who took over after the ANC's big losses in the 3 August local elections, says he has already identified payments of R100 mn. for a contract on which no work has been done. His team is probing other contracts awarded by the ANC. Malefactors, insists Msimanga, will have to repay the ill-gotten gains and will face prosecution.

ZIMBABWE: More misery for public sector workers, says Finance Minister
Civil servants, workers in state companies, teachers, nurses and police face more delays in salaries and possible job cuts, warned Finance Minister Patrick Chinamasa during his budget speech in parliament in Harare on 8 September. State salaries had consumed over 95% of all revenue collected in the first half of this year, he said.

Painting a gloomy picture of Zimbabwe's short-term prospects, Chinamasa said the country's debt had reached US$9.6 bn. He added that the government had failed to make a $1.8 bn. payment due in June, which was part of the arrears clearance programme agreed with the IMF. A board meeting of the IMF and World Bank was initially due next month to discuss an economic rescue plan. It is now likely to be postponed until the end of the year at least.

GHANA: Bankers queue up to buy bond as IMF mulls economic verdict
Finance Minister Seth Terkper has won a boost from the markets after Ghana's latest $750 mn. Eurobond was five times over-subscribed at an auction last week. The proceeds will used to refinance an existing bond and pay for capital investments, Terkper told Africa Confidential in Accra.
Ghana wanted to seize the opportunity of getting a better rate for its bond – the coupon rate on the latest issue will be 9.3% – ahead of any decision to raise US interest rates, Terkper added. IMF directors are due to meet next month in Washington to discuss Ghana's compliance with the conditions its three-year $920 mn. Extended Credit Facility.

BURUNDI: A nearly forgotten conflict
As regional concerns mount over the simmering conflicts in Congo-Kinshasa and South Sudan, governments and diplomats have been paying little attention to Burundi's violent political crisis.
The UN Human Rights Council in Geneva hopes to refocus concerns on the mounting death toll and the worsening conditions in Burundi at its meeting today (13 September) to discuss the findings of an independent probe into the killing and torturing of oppositionists. Last month, President Pierre Nkurunziza rejected a UN plan to send a police force there and political talks led by Benjamin Mkapa, Tanzania's former President, are making little headway.

Thursday, 8 September 2016

Nigeria: what price Fund finance?

Reports that Nigeria's economy shrank by 2% in the second quarter of the year and is officially in recession – its worst performance for 25 years – has fuelled speculation about negotiations between the government and the International Monetary Fund. Until now, President Muhammadu Buhari's government has insisted that while it will listen to policy advice from the IMF, it does not need to accept loans replete with a raft of macro-economic conditions.

In fact, by dropping fuel subsidies and floating the naira (which has depreciated to about N320=$1 on the foreign exchange market managed by the Central Bank), the government has met the two most onerous of the IMF's conditions. What would be the benefit of a loan? One is a massive and much needed cash injection. Egypt, whose economy is substantially smaller, has just secured a $12 billion loan from the Fund at well below commercial interest rates.

Nigeria seeks to raise almost a third of its 2016/17 budget – over $6 bn. – borrowing on the international and local money markets. It was planning to float a $1bn. eurobond in the coming weeks. Several banks are lining up to raise finance for what is still considered an under-borrowed economy. Discussions about pricing such a bond are well advanced. Almost certainly, Nigeria could get a better price and reduce its borrowing needs through an IMF deal. The big question is: is such a deal still politically unacceptable to the President and his top advisors?