Thursday, 22 June 2017

Grave danger in Congo

The storm in Congo-Kinshasa has been gathering for a year and the next six months are likely to prove critical. Warning of grave danger, the former Secretary General of the United Nations, Kofi Annan, together with former presidents of South Africa and Nigeria, Thabo Mbeki and Olusegun Obasanjo, and seven other former Presidents, has called for credible elections as soon as possible.

Annan, Mbeki and Obasanjo have a special interest in Congo-K's stability: they played a key role in brokering and guaranteeing the pact in 2002 that set up a power-sharing government in Kinshasa, which was headed by Joseph Kabila. Now, he refuses to listen to them. However, African Union leaders have, so far, failed to register even mild concern about Congo's mounting chaos. Political dialogue has ground to a halt with the opposition accusing Kabila of sabotaging the election calendar.

Now there are signs that Angola's government is losing patience. Luanda's veteran foreign minister Georges Chikoti has openly criticised Kabila's handling of the rebellion in Kasai, which is driving refugees across the border into Angola. In December, Angola withdrew its military trainers from Congo, sending a signal it was no longer willing to prop up Kabila militarily. Sindika Dokolo, a Congolese businessman and President José Eduardo dos Santos's son-in-law, went further still, urging demonstrations against Kabila and openly backing Moïse Katumbi, the exiled Congolese opposition leader.

Tuesday, 20 June 2017

NIGERIA: After the budget is signed, better news about the numbers

We start in Nigeria on a rare high note – at least on the economic plane – and then go to Tanzania, where President John Magufuli's government is stepping up his campaign of resource nationalism. In South Africa, President Jacob Zuma is also playing the resource nationalist card while in Germany, Chancellor Angela Merkel sees great potential for a more constructive relationship between Europe and Africa.

NIGERIA: After the budget is signed, better news about the numbers
In stark contrast to the febrile political climate, the economic data in Nigeria are looking at their most positive since President Muhammadu Buhari came to office two years ago. Some of that is due to longer-term trends: oil prices have strengthened and production is up while investment in farming and agro-processing is beginning to pay off.

Shorter term factors are also helping. Vice-President Yemi Osinbajo signed the 7.44 trillion naira (US$23.6 billion) budget for 2017 on 12 June and that will release disbursements from the government's capital spending programme of N2.2 trn., a record figure. As those disbursements – many on roads, power stations and social investment – sluice through the system, they should create jobs and boost incomes, giving a much-needed lift to local economies across the federation. Of course, much will depend on how the spending is managed.

Both international and Lagos-based market analysts are putting out increasingly upbeat analyses of the country's economic prospects, much of them based around the combined effects of more spending on infrastructure, far higher agricultural production and the launching of Aliko Dangote's 500,000 barrel-a-day oil refinery and petrochemical plant next year. After 18 months in the doldrums, the Nigerian Stock Exchange is bouncing back, registering gains week after week.

Yet there are plenty of questions about the better data. For example, inflation fell to 16.25% in May, its lowest figure for a year. Food prices, however, remain extremely high across the country and are rising at a faster rate than the baseline inflation figure.

This matters because for many families, food is the biggest item of expenditure. Higher local food prices seem to be linked with the growing volumes of food that is being exported to Nigeria's neighbours, which has created some local shortages. In the medium term, higher food prices could encourage more people to go into farming.

Another concern is what happens to the naira-dollar exchange rate. As better economic news trickles out, along with big government disbursements, the naira has strengthened: the parallel market rate is currently N367=US$1. It remains an open question whether the strengthening of the currency reflects the more positive economic mood or is just a function of the government's releasing hundreds of millions of dollars. For now, officials in Abuja say their much criticised exchange rate policy has been vindicated.

TANZANIA: President Magufuli's new claims against Acacia Mining presage tougher resource nationalist measures
After giving full support to a committee which claims that the state has been losing hundreds of millions of dollars in mining taxes and royalties, President Magufuli is set to extend the scope of his campaign of resource nationalism to the oil and gas sector.

This follows the release of a government committee report on 12 June concluding that Acacia Mining had failed to declare some 40% of its production to the authorities. 'These people are ruthless,' Magufuli said in a live broadcast of the release of the report, '…They have taken all the gold and other minerals but revenues, taxes, they didn't pay.' The committee's conclusions extend across the entire mining sector, although Acacia is in the government's sights in the short term.

The report recommends that Acacia and the government should open arbitration on what it says are outstanding dues; this should be handled by Tanzania's courts, it adds.

For its part, Acacia denies all wrongdoing but is taking the report extremely seriously. 'Acacia remains open to further dialogue with the government regarding these issues and continues to assess all its options.' Top company officials met with Magufuli's team after the report came out last week and talks are continuing.

SOUTH AFRICA: Nationalist Mining Charter draws fire from the companies
With his new mining charter, Mines Minister Mosebenzi Zwane, a close ally of President Jacob Zuma, is trying out a similar blend of local politics and resource nationalism in South Africa.

Launched on 15 June, the Charter stipulates that all mining companies in the country should ensure that 30% of their shares are held by black South Africans (that's up from current threshold of 26%), and they should award 80% of their spending on services to black-owned companies and ensure that over half their top management are black. It would also end the 'once-empowered, always-empowered' principle that allows a mainly white-owned company to comply with ownership rules by selling its equity to black investors, even if they later sell it on to other white investors.

Zwane's Charter has predictably prompted loud criticism from the big mining companies, which say they will challenge it in court. No one expects it to get passed into law in the short-term but it could prove smart politics for Zuma's allies, who are under pressure to put their 'radical economic transformation' agenda into practice.

For Zuma, the spectacle of his ministers battling with big mining companies might – temporarily – distract attention from the legions of corruption allegations that he faces in connection with his own business friends. The row over the Mining Charter is surfacing just as the African National Congress prepares for its big policy conference next month.

And in December, the ANC will hold its leadership elections. The two frontrunners for the party presidency are Zuma's ex-wife, Nkosazana Dlamini-Zuma, and Deputy President Cyril Ramaphosa. And every ANC member knows that Ramaphosa made his fortune from astute investments in the mining sector during the first round of black economic empowerment, which is now seen as having done little more than enrich a small elite.

AFRICA/GERMANY: Chancellor Merkel calls for revisions to EU-Africa trade deals
The Afro-German partnership is going from strength to strength after a conference and a series of bilateral meetings in Hamburg earlier this month. As host of the Group of 20 most industrialised countries next month, Germany wants to push Africa up the agenda. In fact, only one African state, South Africa, is a member of the G-20.

Trade and investment, not aid, dominate Germany's revived relations with Africa, although by some measures, Berlin is also the biggest giver of non-tied development assistance to Africa.

The Africa push is led by Merkel, who has already established a reputation for a more open-minded view on migration than many of her European counterparts. Cynics says this is more about Germany's requirements for labour than high moral principle.

Now Merkel has joined the two issues: she is calling for more focus on trade and development in Africa as a means to reduce the numbers of people trying to navigate the perilous waters of the Mediterranean between Libya and southern Europe. Last week, Merkel told fair-trade campaigners in Hamburg that she understood their complaints about the trade treaties between the European Union and Africa. She said the EU-Africa summit due to be held later this year should discuss how to renegotiate them.

In London last week, Ghana's Finance Minister Ken Ofori-Atta said that his country had been given fast-track membership of the Germany-Africa trade partnership scheme and would be accessing over $200 million in trade development credits. He said that Germany's apprenticeship programmes for high-level technical education offered a viable solution to the skills mismatch in his country.

Monday, 12 June 2017

AFRICA/EUROPE: After political shocks, a new diplomatic order starts work

Political changes in Europe – and their effects on Africa – start the ball rolling this week. And then it's off to Lusaka where the Zambian government is about to ink a new deal with the IMF. In Nigeria, Vice-President Yemi Osinbajo's profile could rise higher still should he sign the 2017 budget while his boss, President Muhammadu Buhari, stays on medical leave. There are more warnings about election clashes in Kenya, and Ethiopia needs another billion dollars of emergency food to stave off a disaster, following the recent drought.

AFRICA/EUROPE: After political shocks, a new diplomatic order starts work
As the slings and arrows of voter sentiment hit Europe's populist movements, the continent's diplomacy is adapting, particularly in Africa. This week Germany is convening several special meetings on economic and security policy in Africa ahead of its G-20 summit.

The immediate winners in these diplomatic shifts are the centrist governments that are running Germany and France. Both Chancellor Angela Merkel and newly-elected French President Emmanuel Macron are espousing a more robust and internationalist approach, which they contrast to the more nationalist and inward-looking ideas espoused in the United States under President Donald Trump and Britain under Theresa May.

Last week's national election and political meltdown in Britain after the governing Conservative Party lost its majority in Parliament is likely to reinforce this trend. With Prime Minister Theresa May's position gravely weakened, there is still more confusion about the government's plans for leaving the European Union and promised reformulation of its trade and diplomatic strategy.

By contrast, Germany is leading a new generation of trade and investment pacts which Côte d'Ivoire, Morocco, Rwanda, Senegal and Tunisia have already signed. Chancellor Merkel is calling for a Marshall Fund to accelerate economic growth and development in Africa. Her Development Minister Gerd Mueller is calling on the United Nations this week to establish a €10 billion (US $11.2 bn.) fund to respond to the chronic food shortages and crop failures, which have worsened as a result of climate change.

France's President Macron, further strengthened by the victory of his En Marche! party in the first round of legislative elections on 11 June, has already signaled his strong support for a stronger European security policy in the Sahel, where French special forces have been deployed to fight jihadist groups. Some big funding battles loom over how the regional security budgets are divided: France and Germany have concentrated funding and projects in the Sahel; Britain has focused its efforts in Somalia.

ZAMBIA: Lusaka prepares for IMF deal after mining rows
With its financial engineers returning to Lusaka this week, the International Monetary Fund says it could conclude a US$1.3 bn. adjustment loan deal with the government in the coming days. The government has pledged to halve its budget deficit to 4% by 2019 but the deal still has to be approved formally by the IMF board in August.

These negotiations come amid continuing political turmoil, during which challenges to last year's national elections have escalated with the detention of opposition leader Hakainde Hichilema on treason charges.

Some of the political rows have spilled into the country's mining industry as the government has struck an increasingly nationalist posture as local economic pressures mount. Earlier this year a dispute over taxes and royalties prompted a public spat between President Edgar Lungu's government and the Canadian-listed First Quantum Mining. After much bluster, Lungu opted for discreet private negotiations to settle the row. But last week, local police arrested 31 Chinese citizens accused of illegal mining; Chinese mining companies, like their Western and Indian counterparts in Zambia, have been accused of financial malpractice by successive governments over the past 15 years.

NIGERIA: Why the signature on the 2017 budget is so politically important
Will he or won't he? That's the unresolved question in Nigeria about whether President Muhammadu Buhari, on medical leave in London since 7 May, will make it back to Abuja to sign this year's budget. Some staffers in Aso Rock started talking up the President's imminent return.

Such speculation about Buhari has now been formally squashed with one of his aides telling journalists that he was undergoing further tests on 12 June; the results of which would determine the date of his return to Nigeria.

Two officials in the presidency and Speaker of the House of Representatives, Yakubu Dogara, insist the 2017 budget will be signed this week, having been approved by both houses of the National Assembly after a six-month delay. This means Vice-President Yemi Osinbajo would sign the bill, a move which many would see as increasing his standing in the political system. It would also unblock most of the pipelines of government spending, both to ministries and to the politically important 36 states in the federation.

However, some of Buhari's allies are getting wary about Osinbajo's political profile. No longer seen as the apolitical technocrat, Osinbajo's role as stand-in for Buhari, deal-maker in the Delta, and now presiding over the 2017 budget, positions him clearly in the front line of politics. And that means getting into the starting blocks for the 2019 elections.

KENYA: Fears mount after Odinga warns on election trickery and violence
There is a worrying sense of déjà vu about national elections in August with politicians making public condemnations of violence but saying they will not be able to hold back their supporters if there is provocation. That was the line both sides adopted in the 2007 elections and their violent aftermath. Politicians generally reined in the rhetoric in 2013 because the horror of the 2007 elections was fresh in people's minds.

Political speeches have been far less constrained this year. The latest top politician to sound such harrowing warnings is Raila Odinga, presidential candidate of the opposition National Super Alliance. In a series of press briefings, Odinga has said he thought something sinister was afoot at the Independent Electoral and Boundaries Commission where two senior officials were dismissed this month.

One of them headed the procurement office which organises the production of some 130 million ballot papers for national, provincial and local government elections.

ETHIOPIA: Despite economic successes, desperate food shortages in drought hit areas
The government's food stocks are running dangerously low, it has warned this week, with people in the Ogaden areas neighbouring Somalia facing a 'food and nutritional' disaster next month without fresh supplies. After 15 years of high growth and talk of a long-term economic turnaround, the crisis is a blow to the government's efforts to forge a new image for the country. Officials in Addis Ababa reject any insinuation that the food crisis, which affects almost 8 million people or a tenth of the country, is in any way a replay of the famines that plagued the country in the 1980s.

Although climate change and the drought are the main causes of the current food crisis, tens of thousands of migrants trying to escape the continuing conflict in Somalia are putting added pressure on Ethiopia's state system. Mitiku Kassa, head of disaster relief in the Addis Ababa government, says the country needs at least a billion dollars worth of emergency food aid.

Thursday, 8 June 2017

Grey skies for green energy

Extreme weather amid this week's storms in Western Cape in South Africa and the continuing drought in north-east Africa remind us of the realities of climate change. Cape Town hovers between devastating storms one month and worsening water shortages for the rest of the year. Drought has knocked off one per cent of growth from East Africa's economies. Fights over land and water in the Sahel, Nigeria and Côte d’Ivoire pit farmers against herders in clashes in which thousands of people have died in recent years.

Even before the United States government pulled out of the Paris climate treaty on 2 June, few funds for climate adaptation were reaching Africa.

Africa would benefit from a better coordinated approach on climate and environment policy, perhaps using the research capacity of the Economic Commission for Africa and the convening power of the African Development Bank. Political backing from the African Union would also help. More detailed reporting on the Sahel and the Horn should prompt research into ways to ameliorate or adapt to the environmental devastation. Some pioneering projects for local meteorological centres, assets for international climate research, struggle for funding. There is a direct link between plans for a green energy corridor up the spine of Africa, running on renewables, and tackling climate change. Africa's massive expansion of agricultural production and processing, together with its solar power farms, depend on tackling the threat of climate change.

Monday, 5 June 2017

After global protests over Washington's withdrawal from the Paris climate treaty, how will Africa react?

We start with the aftermath of the United States' withdrawal from the Paris climate accord and its implications for Africa. Then we go to Morocco, where protests are spreading. In South Africa, the relentless drip of information and claims about President Jacob Zuma's relations with the Gupta family continues while there are some glimmers of positive economic news in Nigeria. Finally, there's more news on the prospects for testing negotiations between Tanzanian President John Magufuli's team and the country's biggest gold miner.

AFRICA/UNITED STATES: After global protests over Washington's withdrawal from the Paris climate treaty, how will Africa react?European and Asian countries responded quickly and critically to US President Donald Trump's pull-out from the 2015 climate treaty on 2 June but the African response has been muted so far. This is despite the fact that seven of the ten countries most damaged by global warming are in Africa.
Africa produces just 3.8% of the world's greenhouse gas emissions, mainly from its oil and coal industries. This compares with China's production of 23% emissions, while the US produces 19%. China now leads the global solar power industry in terms of units produced and is matching the US research effort. Africa is a key market for solar power projects from both Chinese and US companies – regardless of the politics over the Paris deal.

Some African politicians say discreet lobbying to persuade the USA to contribute to the proposed US$100 billion climate change adaptation fund would be of more use than joining the public criticism of the Trump government over its pull-out from the COP22 treaty. They say that they could get backing from US green energy companies.

Kofi Annan, the former Secretary General of the United Nations, has called for much more determined action by African governments to promote the continent's 'Energy for all' campaign which aims for a 'low carbon' transition to a power sector that provides economical and sustainable electricity for most of the continent. With its 1.1 billion people and the fast rising demand for power, Africa's plans for a green electricity industry should become a showcase for the Paris accords, says Annan.

But little of the climate adaptation funding has been released to Africa so far, says Annan. This is due mainly to a lack of integrated plans and policies for the rapid expansion of energy provision on the continent, he adds. Those countries that have pressed ahead with sustainable energy projects – such as Côte d'Ivoire, Ethiopia, Morocco and South Africa – are already bringing in substantial outside finance.

A big weakness is the paucity of regional and cross-border power projects, says Annan. Less than 8% of power is currently traded across borders in Africa. That, he argues, means a big boost to regional transmission lines, new power trading accords and a harmonisation of national grids.a
MOROCCO: Escalating street protests test King Mohammed VI's resolve a week after the arrest of dissident in El Hoceima.

The protestors are not going away in El Hoceima in the northern Rif region, a week after the arrest of activist Nasser Zefzafi. This dissident mobilisation, extremely rare in Morocco, represents a growing challenge to the new Prime Minister and the Makhzen, the royal establishment around King Mohammed VI.

It was the death of a fishmonger, Mouhcine Fikri, in clashes with security forces last October that triggered the latest round of mass protests in the area. Then the government stepped up security but made some concessions to local people.

Dissident leader Zefzafi and his allies have been lambasting the regional authorities for poor services and corruption. People were enraged when the government failed to address the complaints and instead sent in security forces to put down the protests and arrest Zefzafi. In neighbouring Imzouren, police fired water cannon to break up fresh protests.

SOUTH AFRICA: Deluge of leaked emails points to the huge influence of the Gupta businesses over President Zuma and his ministersA week ago, President Jacob Zuma survived yet another bid by the National Executive Committee of the governing African National Congress (ANC) to sack him over his family's ties to the Gupta family's conglomerates. This week, the campaign to oust him continues, with the release of some 200,000 emails from the Guptas' companies purporting to show their influence on Zuma and other top politicians.

This deluge of secret emails from the company, uncovered by the amaBhungane Centre for Investigative Journalism and the Daily Maverick, adds more weight to claims of impropriety at the highest levels of government. The Johannesburg Sunday Times, one of the best-selling papers in the country, says it has evidence that the Gupta family has bought Zuma a US$25 million mansion in the United Arab Emirates. It said the story had been corroborated by local business people and senior officials in the ANC.

It follows allegations last week that the Guptas were arranging UAE nationality for the Zuma family. This claim about the Dubai mansion elicited a rare response from the Presidency, which comprehensively denied the allegation, insisting that Zuma owns no properties outside South Africa. But the ANC has called for an investigation into the credibility and origins of the leaked emails.
All of this material could become legally important if the call for a judicial probe into relations between the Guptas and government officials is heeded. The Public Protector, the country's top anti-corruption body, demanded the probe but Zuma has challenged the proposal in court. He may be fighting a losing battle. Although the NEC declined to debate a call for his removal, it agreed that there should be a judicial enquiry into links between the Guptas and his family and senior officials.

NIGERIA: New data signals some economic respite as President extends London medical tripVice-President Yemi Osinbajo is making halting progress on the economic front while President Muhammadu Buhari stays on in London for medical attention. At the end of May, the National Assembly passed the 2017 budget, after long delays, and the Senate passed a new version of the Petroleum Industry Bill. After Nigeria's share index rose 12% over the past month, local bankers forecast that it could be the start of a stronger recovery.

The next key step is for the Presidency to sign the budget and trigger the distribution of ministerial and state allocations. It's unclear whether Osinbajo will do so this week or wait until Buhari's return. Meanwhile, the National Statistics Agency is due to release key figures on exports, imports and unemployment on 6 June which should give a clearer picture of economic progress.

TANZANIA: Mining company talks with top government officials will wait for report on second presidential probeCritical negotiations between Acacia Mining, majority owned by Barrick Gold, and top state officials over tax levels, royalties and local processing will not start before the release of a second presidential report into the industry. The first presidential report accused Acacia of massively under-declaring its production, a claim that pushed down the value of its shares by 30%. Due to the robust resource nationalist position of President John Magufuli, the dispute with Acacia has taken on strong political overtones.

Officials at Acacia, led by its Chief Executive Officer Brad Gordon, met top government officials in Dar es Salaam last week and deny all wrongdoing. However, Gordon says the company is willing to discuss plans for increasing processing in the country and would finance a study in the commercial viability of establishing a local smelter plant. 

Tuesday, 30 May 2017

TANZANIA: The next test for Magufuli's resource nationalism

We start this week with another high-stakes battle between a multinational mining company and an African government, this time in Tanzania. The Ethiopian government is celebrating Tedros Adhanom winning the leadership of the World Health Organisation; and Nigeria's Vice-President Yemi Osinbajo has delivered a low-key State of the Nation address while President Muhammadu Buhari remains in London for medical treatment. President Jacob Zuma has survived one challenge to his leadership from within the African National Congress but faces another in parliament next month. Côte d'Ivoire is to float a US$1 billion Eurobond to compensate for cocoa losses and pay off mutinous soldiers. Kenya's election is looking tighter.

TANZANIA: The next test for Magufuli's resource nationalismCanada's Acacia Mining, majority-owned by Barrick Gold, is to respond in detail this week to claims by President John Magufuli on 24 May that the company had been declaring less than a tenth of the value of its gold exports. Living up to his 'Bulldozer' sobriquet, Magufuli sacked Energy and Mines Minister Sospeter Muhongo, his departmental permanent secretary Justin Ntalikwa, and the head of the Tanzania Minerals Audit Agency Dominic Rwekaza all on the same day.

Although Acacia disputes Magufuli's claims, which are based on findings from two investigative committees set up by the presidency, the share price plummeted in London. 'We do not understand the findings of the [investigation] committee and believe that they contain significant discrepancies compared to all previous data analysed,' said a company statement released on 26 May.

Senior management at Acacia, we hear, are seeking to discuss the matter with the government this week but have said they will have to consider 'all options' – which could include leaving Tanzania. Last year, gold exports earned the country around US$1.5 billion and mining accounts for 3-4% of gross domestic product.

ETHIOPIA: Tedros triumphs at WHO but tough questions lurkThe election of Ethiopia's one-time health minister, also a former foreign minister, Tedros Adhanom Ghebreyesus as the first African director-general of the World Health Organisation was an important diplomatic victory for Addis Ababa after months of tough campaigning.

However, Tedros faced protests from Ethiopian oppositionists outside WHO headquarters in Geneva. An advisor linked to his British rival for the job, Dr David Nabarro, accused Tedros of covering up cholera epidemics in Ethiopia in 2006, 2009 and 2011 when he was health minister. Known for his robust rhetoric, Tedros dismissed the British claims as 'a typical colonial mindset …and discrediting a candidate from a developing country.'

But the bigger question facing Tedros is whether he can lead a substantial reform of the WHO, which came under fire over its handling of the Ebola outbreak in Liberia, Sierra Leone and Guinea.
NIGERIA: Mid-term economic warnings and political doubtsWith President Muhammadu Buhari receiving treatment in London, it fell to Vice-President Yemi Osinbajo to deliver the government's mid-term report to Nigerians on 29 May, exactly two years since it took office.

Osinbajo emphasised that the country's underperforming economy, slowly recovering from falling into recession last year for the first time in two decades, was the 'biggest challenge' as he sketched out the government's strategy.

After a succession of warnings about a coup plotters and arms caches from the Army Chief of Staff General Tukur Buratai and the former governor of Lagos State Bola Tinubu, Osinbajo kept his comments on Nigeria's febrile political scene to a minimum. Political insiders noted that Osinbajo pared down his trip to the G7 meeting in Italy last week to avoid being out of the country for more than a day.

SOUTH AFRICA: After surviving no confidence debate in ANC's top committee, Zuma is likely to win parliamentary test next monthIt was the strongest attack yet on President Jacob Zuma by senior members of the African National Congress. The National Executive Committee's 70 members debated last Sunday and Monday (28-29 May) whether he should be forced out but his opponents lacked the numbers to force a vote against him and he survived with ease.

However, it's evident that Zuma's support within the party is gradually leaching away. The publication in several newspapers today (30 May) of emails purporting to show that Zuma and his family were planning to set up a 'second home' in Dubai further poisoned the atmosphere against him. The NEC backed the call for a judicial inquiry into the close links between Zuma and businesses owned by the Gupta family which was called for by the Public Protector's report on 'state capture'.
That will create further problems for him ahead of the ANC leadership elections in December. Early next month Zuma faces another no-confidence motion in parliament. Dissident ANC MPs have been told they face tough sanctions if they vote against him.

ANGOLA: President Dos Santos's medical checks in Spain trigger more speculationVeteran Foreign Minister Georges Chikoti has dampened reports that the 74-year-old President José Eduardo dos Santos was critically ill in Spain after it was claimed he had suffered a stroke a month ago. Dos Santos's daughter Isabel posted on her Facebook page a denial that her father had passed away.

Although Defence Minister João Lourenço is due to take over the leadership of the governing MPLA after national presidential and parliamentary elections on 23 August, a sudden exit by Dos Santos could destabilise the transition. The MPLA is set to win the elections comfortably but there has been mounting criticism of the influence of the president's family over state institutions.

CÔTE D'IVOIRE: US$1 billion bond to fix budget hole and pay off mutineersAfter a 40% drop in international cocoa prices and several mutinies this year from disgruntled soldiers demanding bonus payments, President Alassane Ouattara's government has announced it will float a US$1 billion Eurobond next month. Despite security worries after protests and clashes involving government soldiers, the government enjoys a better credit rating than most of its quieter neighbours such as Ghana. Finance Minister Adama Kone said the country is also negotiating more credits from the World Bank and the International Monetary Fund.

KENYA: Latest polls put Kenyatta and Odinga neck and neck as tensions riseAssumptions that President Uhuru Kenyatta and his Jubilee coalition would score an easy victory in presidential and parliamentary elections due in August are questioned in the latest analysis by the Ipsos marketing group and other consultancies.

Most analysts say the gap between Kenyatta and his presidential rival Raila Odinga has narrowed appreciably this year mainly because of tougher economic conditions. Odinga's chances will be critically dependent, they say, on his ability to inspire a high turnout in his strongholds in Nyanza, Western Kenya and the Coast.

Thursday, 25 May 2017

America's new African insiders

The appointment of regional security specialist Peter Pham as the United States' Assistant Secretary of State for African Affairs has been welcomed by African diplomats in Washington. 'We have an appointee with knowledge and a certain affinity with Africa,' said one insider. Pham has been a director of the Atlantic Council and at his confirmation hearings he may face questioning about its strong support for Morocco's position on the Western Sahara. Former US Air Force officer Rudolph Atallah, appointed last month as Africa advisor on the US National Security Council, was also a fellow at the Council.

The two appointments fit with the administration's emphasis on counter-terrorism and security. But Pham is also a doughty defender of the soft power exercised by the US Agency for International Development, which is under threat in the administration's budget plans. The recent decision by Congress to maintain support for assistance programmes was an important pushback against the more swingeing cuts being planned.

Pham also believes it's in his country's own commercial interests to step up US diplomacy and assistance in Africa, given the continent's over US$2 trillion market. Africa lobbyists in DC have also been urging White House officials to look at how Germany and Japan have been stepping up their Africa programmes. They argue it would be counter-productive for the US to withdraw from Africa or rely purely on a security-led strategy.

Monday, 22 May 2017

ZAMBIA: Mixed messages on copper confrontation with First Quantum

This week we start in Lusaka where the dispute between the government and First Quantum Minerals is still simmering. And then to Mali, where French President Emmanuel Macron has been outlining a tougher military policy. In South Africa, President Jacob Zuma faces an ever-louder chorus of criticism over his links to the Gupta family and another key vote this week. Finally, in the new axis of nationalists Presidents Donald Trump and Abdel Fattah el Sisi hit it off at a meeting in Riyadh.

ZAMBIA: Mixed messages on copper confrontation with First Quantum
Both the government of President Edgar Lungu and the management of First Quantum Minerals have tamped down the rhetoric in their public confrontation over claims that the Canadian-listed mining company was liable for US$1.4 billion for having allegedly broken regulations governing company borrowing. The dispute went nuclear after government officials said that FQM directors could be arrested if they entered the country and be charged with fraud (AC Vol 58 No 10, Spat with FQM continues). FQM has denied any wrongdoing.

Since then President Lungu has sent out his Finance Minister, Felix Mutati, with a more conciliatory message: talks between government negotiators and the company would begin on 30 May and should be over within a week. There has been no further mention of arrest warrants.

All this comes as Zambia is also negotiating a balance of payments facility of at least $1.2 bn. from the International Monetary Fund. Last week World Bank Vice-President for Africa, Mahktar Diop, was in Lusaka and agreed new development financing of $600 million. Although the two Washington financial institutions have not commented publicly on the FQM affair, their officials and United States diplomats are known to be extremely concerned about the Lungu government's direction of travel. On 21 May, opposition leader Hakainde Hichilema's wife, Mutinta, launched an international appeal on behalf of her husband, who has been in prison for over five weeks for supposed treason. Officials say that some of Hichilema's foreign backers have also been lobbying on behalf of FQM.

AFRICA/FRANCE: President Macron draws Germany closer in anti-terror alliance
In a strong statement about his commitment to fighting terrorism, France's new President, Emmanuel Macron, flew to Mali on 19 May for talks with President Ibrahim Boubacar Keïta and to meet the 1,600 French troops stationed there. Although one of the main impediments facing the United Nations and regional forces in Mali appears to be a failure of negotiations between the Bamako government and Tuareg nationalists, little of substance emerged about the discussions between the two presidents. Keïta's officials have been increasingly critical of French policy in the Sahel under Macron's predecessor François Hollande.

Macron made much of the need to speed up the tempo of the international military operation 'to secure the Sahel' – an area bigger than Europe. Greater collaboration with Germany in that anti-terror campaign would be critical, said Macron, which would be providing more advanced attack helicopters and armoured cars.

SOUTH AFRICA: What next after ANC rejects return of Zuma ally to run state power company?
After another daring round of appointments and subterranean moves against his opponents, President Jacob Zuma faces yet more tests this week with a key vote on his presidency at the National Executive Committee of the governing African National Congress. In past debates, Zuma has circled the wagons, drawn enough loyalists from his home province of kwaZulu-Natal and from the so-called premier league of provincial premiers to see off any serious threats.

Last month, an attempt to sanction Zuma for his sacking of Finance Minister Pravin Gordhan at the ANC's National Working Committee ended in ignominy for some of his main foes as they publicly withdrew their criticism. Since then sentiment in the ANC has moved further against Zuma.
A key point of contention has been the state power utility Eskom's decision to reappoint Brian Molefe, a Zuma ally, as its chief executive. Molefe resigned from the post last year after a report by the Public Protector, Thuli Madonsela, suggested the close relations between Molefe and the Guptas had a hugely negative effect on Eskom's policy-making and finances.

Several senior ANC officials have called on Zuma to reverse Molefe's reappointment and the issue looks certain to be raised at the NEC. On 21 May, Vice-President Cyril Ramaphosa made a strident call for the ANC to stop South Africa being turned into a mafia state. He also called for a judicial inquiry to investigate Madonsela's reports on the influence of private business interests on the Zuma presidency.

EGYPT/UNITED STATES: Mutual admiration society on the Trump-Sisi axis
On the first foreign tour of his presidency, Donald Trump lavished praise on Egypt's President Abdel Fattah el Sisi after a meeting in Riyadh, Saudi Arabia. Telling journalists that 'safety seems to be very strong in Egypt', Trump said that he has been having 'very important talks' with President el Sisi. He also admired El Sisi's shiny black shoes.

In turn El Sisi described Trump as a 'unique personality capable of doing the impossible'. Trump shot back, 'I agree.' Last November, El Sisi was the first foreign leader to congratulate Trump on his election victory. The two men shored up US-Egypt government relations, lubricated by $1.4 bn. a year in military aid and a common opposition to militant Islamist groups in the region. There is some speculation that Trump will support Egypt's role in neighbouring Libya, where El Sisi backs the hardline nationalist leader Khalifa Haftar. But no details emerged of any policy  change.

Tuesday, 16 May 2017

UN's new Africa economy chief to open international financial parley

This week we start in Addis Ababa for an international conference on development finance. And then to Côte d'Ivoire where the government is insisting the army mutiny is over. In South Africa, the African National Congress is divided over the reappointment of Brian Molefe, a presidential ally, to run the national power company. There are signs of scepticism about Western policy on Somalia as well as doubts about the ability of the new government there to deliver. Finally, Nigerian officials are to resume negotiations this week with representatives of Boko Haram to free more of the abducted Chibok schoolgirls.

AFRICA/UNITED NATIONS: UN's new Africa economy chief to open international financial parley
Vera Songwe, the highly-regarded new executive secretary of the UN's Economic Commission for Africa, will preside over the continent's biggest financing conference, the Africa Regional Forum, in Addis Ababa, which starts tomorrow (17 May). Its aim is to finalise the continent's strategy and list of priorities ahead of the UN's High-Level Political Forum on sustainable development in September, which is to be attended by over 180 governments and funding agencies.

The starting point for the discussions in Addis Ababa will be growing inequality across Africa and the failure of its economies to generate more jobs after a decade of economic growth averaging 5%. Songwe has said one of her main concerns will be policies and projects that work for the more than 70% of Africans currently dependent on seasonal, rain-fed agriculture.

After the forum ends, many of the delegates will travel to Ahmedabad, Gujarat, India where the African Development Bank is holding its annual meeting this year on 22-25 May.

SOUTH AFRICA: Molefe returns to Eskom as Zuma tries to keep Russian nuclear deal on track
African National Congress dissidents and anti-corruption activists are railing against Public Enterprises Minister Lynne Brown's reappointment of Brian Molefe as chief executive officer of Eskom. A group of senior figures in the party have called on Brown to reverse the decision immediately.

Molefe resigned as head of Eskom last November after a report by the office of the Public Protector, an official anti-corruption body, found mismanagement and fraud at the highest level in the company. It also pointed to the heavy influence of the Gupta family, business associates of President Jacob Zuma, on Molefe. In particular, it found that Molefe didn't follow company's rules when awarding a lucrative coal supply contract to the Guptas.

Last month, the High Court in the Western Cape ordered Eskom to abandon a planned US$70 billion deal with Russia to build nuclear power stations because parliament had not been consulted. The government said it won't appeal against the ruling but it will reopen negotiations with Russian nuclear power companies. Overseeing those talks would be one of Molefe's first tasks if he stays in the job.

COTE D'IVOIRE: Mutineers deny minister's claim of a deal on pay arrears
There are doubts about government claims of a deal over soldiers' pay after mutineers insisted early today (16 May) that they would continue with the protests which have shut down the commercial capital Abidjan and the northern town of Bouaké in the north since the end of last week.

The rebel soldiers, who fought for President Alassane Ouattara during his confrontation with ex-President Laurent Gbagbo, had been offered bonuses of CFA12 million (US$20,000) after protests in January. But most of them have received just CFA5 mn. because the state treasury has been hit by the precipitate fall in revenues from cocoa exports.

AFRICA/UNITED STATES: Washington's new Africa policy chief to face critics over Somalia policy shift
One of the first tasks facing Peter Pham, who we understand has been appointed Assistant Secretary of State for African Affairs, will be to explain President Donald Trump's more militarised policy, which has removed some safeguards designed to keep civilian casualties to a minimum.

Critics say the new rules enable US officers to kill Somalis 'perceived' as terrorists but without clear information that they specifically threaten Americans and this targeting would permit the killing of civilian bystanders if deemed 'necessary and proportionate'.

Coming alongside the Trump administration's plans to cut budgets in the US Agency for International Development, which has been financing urgent drought and famine relief, there are concerns the new policy will exacerbate Somalia's crisis. Critics add that the combination of higher risks to civilians from military attacks and worsening social conditions is likely to strengthen Al Shabaab's position.

SOMALIA/BRITAIN: Grave doubts despite promises over money and military at London conference
One of British Prime Minister Theresa May's few foreign policy outings was her opening of the latest London conference on Somalia on 11 May but despite the upbeat talk, the plans to defeat the insurgency in two years and deal with the effects of drought lacked credibility.

Critical shortages of food and water amid attacks by the Al Shabaab militia have driven over one million Somalis from their homes and another 600,000 into neighbouring countries. Somalia's new President Mohamed Abdullah Mohamed 'Farmajo' set out his goverment's National Security Plan which is to boost the strength of the national army to 18,000 and guarantee regular pay. Al Shabaab would be defeated within two years, insisted Farmajo, and the government would restart national reconciliation efforts.

Britain's Foreign Secretary Boris Johnson promised a boost in support for Farmajo's government but not the extra weaponry, including attack helicopters, requested by Somalia and its neighbours in the regional intervention force against Al Shabaab.

NIGERIA: Security services push ahead with Boko Haram talks to free more abducted schoolgirls
Fresh negotiations are due this week between Abuja's security officials and representatives of the Islamist militia Boko Haram to secure the release of more of the kidnapped Chibok schoolgirls. By most counts the militia still holds at least 150 of the girls.

Shehu Sani, a senator who has been involved in the negotiations, says the government had preferred to trade some of the militia's captured commanders for the release of the schoolgirls rather than pay ransoms. Some government officials believe the latest round of negotiations could broaden out to other matters. Security conditions in north-eastern Nigeria remain precarious.

Getting aid to the estimated 4.7 million Nigerians in the area who are desperately in need of food and water has been complicated by military threats and bureaucracy, according to United Nations officials. Aid organisations there say they will run out of money by the end of June unless donors honour the pledges they made at a special conference in Oslo in February.

Thursday, 11 May 2017

Cyberwar goes to the polls

Data-mining is coming to an African election near you. President Uhuru Kenyatta's re-election campaign has contracted Cambridge Analytica, the data company widely credited with having swung last year's United States' presidential poll for Donald Trump and Britain's European Union referendum for 'Leave' with its digital targeting campaigns on social media.

Owned by American Robert Mercer, a billionaire hedge fund owner and biggest donor to the Trump campaign, Cambridge Analytica paid Facebook and other third-party data companies for information about potential voters in the USA and Britain. It then bombarded voters with social media posts, adverts and news snippets of varying degrees of veracity. In Kenya, where internet and Facebook use is high, such tactics would hugely help the Jubilee party.

In countries such as Russia, Iran and Moldova, Cambridge Analytica's operations have proved highly successful. With some staff drawn from military intelligence, it is also expert in psychological warfare. The spectre of a highly secretive data mining company using such techniques is raising serious concern among Kenyan activists. They point out that wounds have barely healed from the 2007 post-election violence. Electoral regulations are yet to catch up with the data-mining age: a new report describes Britain's electoral laws as 'weak and helpless' in the face of such cyber techniques. The same would apply in Kenya.

Tuesday, 9 May 2017

FRANCE/AFRICA: President-elect Emmanuel Macron set to fly to Mali in first Africa trip after inauguration

This week we start with the celebrations greeting the newly-elected President of France and look at some implications for Africa. Nigeria's President Muhammadu Buhari is back in London for more medical treatment as his deputy puts the finishing touches on this year's budget and a couple of security deals. Another tough few weeks face South Africa's President Jacob Zuma as his support dwindles and he prepares for a no-confidence motion in parliament. Algeria's parliamentary elections have done little to settle the country's biggest economic and political questions. Finally, a new cooperation pact on cocoa between Ghana and Côte d'Ivoire could offer some ideas to Africa's hard-pressed commodity producers.

FRANCE/AFRICA: President-elect Emmanuel Macron set to fly to Mali in first Africa trip after inaugurationAlthough the technocrat and political centrist Emmanuel Macron, who won 66% of the votes in France's presidential elections on Sunday (7 May), will focus heavily on economic restructuring at home and reforming the European Union his government is set to make some shifts in Africa policy. Expect to see further efforts to shut down the old Françafrique networks – which had sustained the Gaullist and Socialist political parties – if Macron's En Marche party wins substantial support in next month's parliamentary elections.

One of the candidates that Macron is considering as Prime Minister is Pascal Lamy, the former director general of the World Trade Organisation, who takes a keen interest in African economic development. Lamy is on the board of the Mo Ibrahim Foundation, set up by the Sudanese telecoms billionaire, in London.

Macron's first port of call in Africa is likely to be Mali, where a French military contingent is working alongside United Nations peacekeepers in one of the most dangerous international missions. Last week, a group of insurgents fired rocket-propelled grenades into a UN camp on the outskirts of Timbuktu, killing about five soldiers.

An early priority for Macron's team will be to improve relations between Paris and President Ibrahim Boubacar Keïta's government in Bamako. Security specialists in Paris say the Keïta government's policies in Mali's northern regions have been sending recruits into the arms of the jihadists.

Macron may also choose to work more closely with Algeria, which remains a key player in Sahelian security matters. Earlier this year, Macron went to Algiers and had some substantive discussions Foreign Minister Ramtane Lamamra.

Macron's other significant African interest is Nigeria where he worked as an intern in the French Embassy about 16 years ago. A French businessman told Africa Confidential that Macron had turned down a job in the United States for a temporary post in Nigeria on the basis that its mixture of cultures, religious faiths, and oil-fired politics would tell him more about new global trends than a stint in Washington DC. Friends joke that Macron speaks English with a uniquely French-Nigerian accent.

Macron is still fondly remembered by some Lagosians, we are told, some of whom have closely followed the latest step in his career after he launched his new political movement just a year ago. At Macron's victory party at the Louvre museum in Paris, his African credentials were further burnished when the Ivorian band Magic System, which pioneered the Zouglou sound, topped the list of artists entertaining the crowds.

NIGERIA: New security strategy emerges as President Buhari returns to London for more treatmentTwo big security initiatives – one in the Niger Delta and the other with the Boko Haram militia in the north-east – are taking shape as President Buhari receives yet more medical treatment in London. Officials didn't release any further information about the nature of his ailments or the expected length of his stay in London, but Buhari has notified the National Assembly that Vice-President Yemi Osinbajo will take over again as acting President in what is set to be a busy period, with negotiations over the 2017 budget, new financing arrangements, and some important changes in security policy.
The government's latest deal with Boko Haram, announced just before Buhari's departure for London last Sunday (7 May), secured the release of 82 of the 200 Chibok schoolgirls abducted three years ago in return for the release of some militants detained by the army.

About 20 of the Chibok schoolgirls were released last October in a deal organised by the Red Cross. President Buhari has confirmed that his government is talking to Boko Haram about the release of all the abductees but officials won't give details.

Boko Haram has been pushed out of much of the territory it controlled in north-east Nigeria since Buhari took over, but remains a powerful threat in the area, launching cross-border suicide bombing missions from north-western Cameroon.

The government is also changing its policy in the Niger Delta, tripling its budget for the amnesty programme for former militants to 30 billion naira (US$95 million) for this year, with a further N5 bn. in prospect. Initially, the Buhari government's plan was to wind down the Niger Delta amnesty, replacing it with a more wide-ranging development strategy for the region. But the government's priority now is oil production. Militant attacks had cut it to 1.2 million barrels a day last year amid concerns that the amnesty programme was going to be stopped and militant leaders would be arrested. This year, under the direction of Vice-President Osinbajo, a new policy of dialogue with local groups in the Delta appears to be bearing fruit, although six soldiers were killed in clashes with militants in Ondo state, west of the Niger Delta, last weekend. The military said the soldiers were breaking up gangs involved in stealing oil and kidnappings but the Ijaw Youth Council, one of the key groups in the Delta, said the violence was the result of local resistance to the army acting an occupying force.

SOUTH AFRICA: New court challenge to President Zuma ahead of confidence voteIt has been an exceptionally bad week for President Jacob Zuma as he prepares for another motion of no confidence in parliament. It threatens to be the closest yet. He was chased from yet another public meeting, at Vuwani, Limpopo province on Sunday (7 May). Also, he must shortly respond to a North Gauteng High Court demand that he explain why he sacked Finance Minister Pravin Gordhan.
Initially, Zuma claimed he was acting on an intelligence report that Gordhan and his Deputy Mcebisi Jonas were plotting against the government. Once these reports were discredited by top African National Congress figures, Zuma then claimed he had sacked Gordhan to inject 'young blood' into the government. Since Gordhan's departure, three international ratings agencies have downgraded South Africa's credit status, which is likely to prompt further capital outflows.

ALGERIA: Small election win for FLN doesn't allay fears over oil cash and ailing President BouteflikaThe governing Front de Libération Nationale (FLN) can take little solace from the results of the parliamentary election on 4 May. The FLN's strength in the 462-seat Assemblée Nationale is down to 164 from 221 seats in the elections five years ago. Turnout at 38.25%, down from 43% in 2012, was one of the lowest ever in Algerian elections, although the real figure is believed to be far lower, reflecting widespread alienation from the mainstream political process. Indeed, many believe that political change – when it comes – is likely to be led by the military or the powerful security services.
The biggest party in a very divided opposition, the Rassemblement national démocratique (RND) won 97 seats, up from 70 in the last election. A coalition of Islamist parties won 30 seats.

GHANA/COTE D'IVOIRE: New plan to tackle fall-out from cocoa crashNeighbours Ghana and Côte d'Ivoire are discussing a common response to the 40% crash in cocoa bean prices over the past year. Côte d'Ivoire and Ghana are respectively the world's biggest and second-biggest cocoa bean producers. Their governments' discussion on joint investments to process more beans locally and create economies of scale have been helped by good personal relations between President Alassane Ouattara and Ghana's new President Nana Addo Akufo-Addo. They are asking the African Development Bank to draw up plans to boost regional capacity to process cocoa, and boost to the local manufacture of chocolate.

They are also discussing ways to coordinate production and marketing; last year Ouattara joked that what Africa needed was a 'Chocpec', which like the Organisation of Petroleum Exporting Countries would coordinate production levels among member states. The possibility of such coordination among producers outside Africa looks remote.

One of the main problems for Africa's cocoa producers has been the high volume but low-quality cocoa producers of countries like Malaysia and Indonesia, which sell into the expanding Asian market.

Tuesday, 2 May 2017

SOUTH AFRICA: President Zuma chased from May Day rally as no-confidence vote looms

It was a harsh May Day for South Africa's beleaguered President Jacob Zuma, who was chased off the podium by an angry crowd in the Free State. From the UN in New York, there are signs of movement in the deadlocked Western Sahara dispute. In Zambia, President Edgar Lungu faces a raft of political and economic problems. The still ailing President Muhammadu Buhari in Abuja hopes to push his budget through the National Assembly this week. Finally, the formal end of the search for Uganda's veteran warlord Joseph Kony raises major questions about responsibility for the more than 100,000 killed in this brutal conflict.

SOUTH AFRICA: President Zuma chased from May Day rally as no-confidence vote looms
Another humiliation has hit President Jacob Zuma at a May Day rally just days before he is due to face a motion of no-confidence in parliament. After an angry crowd booed and heckled Zuma at a Congress of South African Trades Unions (Cosatu) rally in Bloemfontein, he and his entourage were rushed from the stage before he could speak. Zuma's key allies – parliamentary speaker Baleka Mbete and deputy Secretary General of the African National Congress, Jesse Duarte, were also booed off May Day podiums in Durban and Limpopo.

It was especially humiliating that Zuma should suffer this blow in Bloemfontein, capital of the Free State, which is meant to be one of his strongest areas of support outside KwaZulu-Natal. As a sign of Zuma's falling popularity, the debacle in Bloemfontein is far more significant than the mass public rallies against him in the major cities last month.

Zuma's latest setback follows the South African Communist Party's and Cosatu's call for his immediate resignation. As Deputy President Cyril Ramaphosa is ramping up his campaign for the ANC Presidency, another party veteran, Matthews Phosa, has announced his candidacy for the post. We also hear that support is building for a bid for the presidency by Lindiwe Sisulu, daughter of the late, much-revered, Walter Sisulu, a long-time friend of Nelson Mandela.

Meanwhile, Nkosazana Dlamini-Zuma, Zuma's ex-wife and his preferred candidate to succeed him, has disappeared from public view. Zuma's granting of a state security detail and government vehicles to her – apparently on security grounds – has been criticised as an abuse of state resources.


WESTERN SAHARA/MOROCCO: Fresh talks over the conflict are likely after UN extends mission there
Hopes for a fresh round of negotiations between the Polisario Front and Morocco are looking up after the UN Security Council passed a resolution on 28 April extending the UN peacekeeping mission in Western Sahara for another year. The cleverly-crafted resolution refers both to Polisario's proposal, a referendum on the status of the territory, and Rabat's, which is to grant it political autonomy under Moroccan sovereignty.


The new Secretary General of the UN, Antonio Guterres, last month called for the two sides to reopen talks. There has been no serious movement on the crisis since 1991, but Morocco's withdrawal of forces from a buffer zone and Polisario's matching pullback of fighters last week is a positive sign. A statement from Algeria's Foreign Minister Ramtane Lamamra backing the UN resolution also augurs well. Algeria has been the principal backer of Polisario. The issue has caused a cold war between Algiers and Rabat for three decades.


ZAMBIA: Opposition leader's detention continues as the IMF is due in Lusaka for difficult talks
Hakainde Hichilema, leader of the opposition United Party for National Development (UPND), remains in custody and is expected to appear in court again on Thursday (4 May) while prosecutors work on the charge of treason against him. Hichilema was arrested on 11 April after his motorcade clashed with President Edgar Lungu's en route to a Lozi traditional ceremony three days before.
Lungu claims he wants to let ‘the law take its course' although he is widely believed to have inspired the prosecution. The controversy complicates the already difficult negotiations between the government and the International Monetary Fund over a US$1.6 billion loan.

Finance Minister Felix Mutati says the government needs the funds to bolster foreign reserves which have shrunk following an expensive election campaign last year, ballooning budget deficits and undulating prices for the country's copper and cobalt exports. The economy is growing at its lowest rate since 1998.

NIGERIA: National Assembly to debate record $23 billion budget after government liberalises forex rules
The 2017 budget – which plans record spending of N23 trillion (US$23 billion) – could be approved this week by the National Assembly after a tortuous review which was almost derailed when police raided the home of Senator Danjuma Goje, chairman of the Appropriations Committee last week. Goje is subject of a corruption investigation, which he says has been orchestrated by his enemies. The budget includes plans to borrow $7 billion from China's Eximbank, the African Development Bank and the World Bank over the next year.

Relations between the Senate and the presidency oscillate between very difficult and utterly poisonous. The Senate has rejected several government nominations in recent months, the most important being its candidate to chair the Economic and Financial Crimes Commission, Ibrahim Magu. The presidency won't back down, so Magu is likely to remain acting chairman of the EFCC for the remainder of Buhari's presidency. The fact that Magu has been investigating several top politicians, including Senate President Bukola Saraki, has not endeared him to powerful members of the National Assembly.

Ahead of the budget debate, the government has announced a new foreign exchange regime. It is another partial liberalisation of exchange controls through a complex system of new rules. Known as the Investors' and Exporters' FX window, it should allow traders more access to foreign exchange at competitive prices through the official market. Central bank governor Godwin Emefiele thinks the new system will bring enough dollars in to the system without forcing a full-scale devaluation, and all its inflationary consequences.

It should work like this: each morning, authorised foreign exchange dealers are to submit bids through a system backed by the central bank known as the Nigerian Autonomous Foreign Exchange Rate Fixing (Nafex). Then, at midday, the trading exchange rate would be announced for the day. That would be the benchmark for all future trading contracts agreed that day.

For now, the formal exchange rate would stay at US$1=N315, and the central bank would release foreign exchange at that highly preferential rate for specific transactions. The lack of transparency from the central bank over who gets access to foreign exchange at that rate suggests to some analysts that it could be open to major abuse.


UGANDA: The US abandons the hunt for warlord Joseph Kony in face of President Museveni's indifference
This month, the mission to capture veteran warlord Joseph Kony is effectively being called off. The United States is to speed up the withdrawal of the 250 Special Forces troops and Air Force personnel it had deployed to hunt for Kony, after reportedly spending US$780 million on the mission, according to security experts AC Vol 58 No 9, Concealing disappointment). Uganda has long given up any serious effort to find and arrest Kony, leader of the Lord's Resistance Army.

Set up as a rebel force in the late 1980s in northern Uganda, the LRA has murdered over 100,000 civilians and abducted tens of thousands of people. At first, President Yoweri Museveni prosecuted the war against Kony and the LRA vigorously, and he became one of the strongest advocates for the International Criminal Court, whose help he wanted in capturing Kony.

Ugandan oppositionists dismissed all this as posturing and lambasted Museveni for using the war on Kony to gain credibility in the West. They argued that Museveni's forces were subjugating northern Ugandans, including holding hundreds of thousands of civilians in appalling conditions in camps 'for their own protection', and had no interest in pursuing the LRA.

By the early 1990s, Kony became a regional threat after the government of Sudan gave him arms, money and training to create mayhem in southern Sudan and the region. It was then that an unwieldy coalition of local and international non-government organisations joined with regional and western militaries to pursue Kony. Neither Kony, nor his backers in Khartoum and elsewhere, have been brought to account let alone faced any sanction for their murderous campaign.

The sole LRA fighter to be put on trial at the ICC in the Hague is Dominic Ongwen, a lieutenant of Kony's and former child soldier. This abandoning of the hunt for Kony, together with the lack of any restitution for the victims of the long war in northern Uganda, means its bitter aftermath will haunt the country for years to come.

Thursday, 27 April 2017

In search of green shoots

Caught between a more slowly growing China and the nationalist and protectionist reflexes of President Donald Trump's United States government, Africa is in pressing need of an economic boost. Last year marked a harsh coda to the commodity boom, with the continent's biggest economies treading water or in recession. Initially, the international financial institutions forecast a turnaround starting in 2017 after average growth rates of 1.3%, the lowest for two decades. Already they are qualifying their optimism.

Both the International Monetary Fund and World Bank have cut their average African growth forecasts to 2.6% this year, down from January’s 2.9%. They have also cut Africa growth forecasts by four percentage points for 2018. Four key factors inform the grimmer predictions: continuing weakness in the four biggest economies (Nigeria, South Africa, Egypt and Algeria) which make up almost two-thirds of African output; continuing low foreign and local investment; shrinking access to international finance for companies and governments; and heightened political risks, such as the lack of effective policies in South Africa or Nigeria, prospects of difficult elections and transitions in Kenya and Angola, and conflict in Congo-Kinshasa.

Again, impressive growth is forecast in the brightest economic spots, such as Ethiopia, Senegal and Tanzania, but their economies are still not big enough to power a more generalised regional recovery.

Wednesday, 19 April 2017

WORLD BANK/IMF: African finance chiefs fly to Washington DC for tough summit

This week we have a whistle-stop tour of international meetings, negotiations and even court cases. We start with the spring meetings of the Bretton Woods institutions in Washington, and then on to South Africa, reeling from a ratings agency downgrade. Our correspondents are monitoring the economic travails in Zambia and Kenya, both struggling with mounting debts and deficits. Finally, a battle of the titans – Beny Steinmetz is suing George Soros for defamation in a New York court over the Guinea mining saga.

WORLD BANK/IMF: African finance chiefs fly to Washington DC for tough summit
Over 100 African finance ministers and central bank governors are due in Washington DC for a particularly contentious series of meetings of the World Bank and the International Monetary Fund on 20-23 April. The crossfire has already started with Wilburn Ross, the United States’s new Commerce Secretary, already dismissing IMF warnings about US protectionism as ‘rubbish’. A few days earlier, Christine Lagarde, the IMF Managing Director, had reported that growth in rich and developing economies should average 3.4% this year but were threatened by the ‘sword of protectionism’.

Lagarde warned that any shift to restrict trade would undermine growth all round, as would efforts to take apart the international institutions – such as the IMF, World Bank and UN – that have tried to manage the global economy over the past 70 years. US President Donald Trump has promised sharp cuts to the US trade deficit with Asia and Europe and to slash funding to international institutions, particularly in areas such as projects to adapt to climate change.

The Trump administration is yet to spell out its planned cuts to the IMF and World Bank budgets but the organisations are in ‘defence mode’ at this year’s spring meetings, say officials. A sign of this is that the Bank has postponed discussions about a capital increase, fearing that the US would simply veto it. However, there is a surge of demand for Bank lending, particularly from commodity dependent economies in Africa and Asia, which are struggling to balance budgets as revenues fall. Ghana, Kenya, Nigeria and Tanzania are all in line for big World Bank loans to finance new road, power and agriculture projects.

Last year, Bank lending soared to nearly US$30 billion but such levels will not be sustainable in the coming years without a capital increase. As the biggest shareholder in the Bank, the US position on this will be critical. A senior US Treasury official, Adam Lerrick, has called for the Bank to stop lending to middle-income countries, which he argues should rely on commercial finance.

Responding to such calls, Bank President Jim Yong Kim has promised much higher priority will be given to mobilising commercial finance, through guarantees, and finding ways for new public-private partnerships.

A new idea for a ‘Big Bond’ for Africa, proposed by Nancy Birdsall of the Center for Global Development in Washington DC and Nigeria’s former Finance Minister Ngozi Okonjo-Iweala, could raise as much as $100 bn for an African infrastructure fund by using international capital markets to leverage foreign aid funds.

Under the scheme, donor countries would borrow in the markets against future aid flows taking advantage of the current low interest rates in Western economies. Donor countries would pass on the interest costs to African economies but the loans would be much cheaper and have far longer maturities than the Eurobonds that many countries have been issuing to pay for big infrastructure projects.

This week Senegal announced it will be floating another Eurobond to finance roads and railways linked to its new international airport and Nigeria is also planning to issue another $500 mn bond.

SOUTH AFRICA: Dlamini-Zuma throws her hat in the ring
In the rituals of leadership contests in the African National Congress, the speech by Nkosazana Dlamini-Zuma to the ANC cadres forum on 13 April was as close it gets to a campaign launch. Speaking in the Free State, alongside the Premier Ace Magashule, a ultra-loyal supporter of President Jacob Zuma, Dlamini-Zuma pushed the new line on radical economic transformation.

She upped the partisan rhetoric accusing ‘untransformed schools’ – ANC speak for white-dominated – of teaching pupils to hate the ANC and lambasted banks for closing on 7 April to allow their employees to join marches against the Zuma presidency. ANC dissidents and opposition supporters say both claims are demonstrably false. The fact that Dlamini-Zuma bothers to make them suggests the ANC will see a hard-fought campaign ahead of leadership elections in December.

In contrast, Vice-President Cyril Ramaphosa, the main rival to Dlamini-Zuma in the race for the ANC Presidency, has been saying the government should listen to the message of the mass street protests seen in Johannesburg, Pretoria and Cape Town in recent weeks. Other ANC figures such as former Presidents Thabo Mbeki and Kgalema Motlanthe are urging all MPs to vote according to their conscience in the forthcoming motion of no confidence in President Zuma.

That parliamentary vote has been postponed until early May while the Constitutional Court considers an application to allow MPs a secret ballot. Those backing the application hope that if it succeeds, it emboldens enough MPs from the ANC caucus (it would take about 70) to back the opposition motion against Zuma.

ZAMBIA: Lungu’s government seeks IMF loan as opposition leader is detained
Government officials are trying to dampen down worries of a synchronized meltdown of politics and the economy in the country following the detention of opposition leader Hakainde Hichilema and mounting state arrears to international institutions.  On 14 April, President Edgar Lungu insisted he would not intervene in the prosecution of Hichelema on treason charges, which carry the death sentence.

State prosecutors launched the case against Hichilema after clashes between his supporters and those of Lungu as they drove towards Western Province on 8 April for the Kuomboka celebrations. The day after the clashes, police raided Hichilema’s home in Lusaka, arresting him and many of his party workers (AC Vol 58 No 8, Lungu’s way and the highway). The planned prosecution of Hichilema rapidly generated protests from sundry rights groups.

Yet government officials insist the controversy will not affect Finance Minister Felix Mutati’s application for a US$1.6 bn. loan from the International Monetary Fund this month. Although the IMF desperately tries to stay clear of partisan politics, it could come under serious pressure if the political climate in Zambia continues to deteriorate. Lungu’s spokesman Amos Chanda says if the IMF raises any questions about the country’s political conditions the government will simply walk away and won’t tolerate any external interference.

As the government’s debt and fiscal deficit balloon, foreign reserves have been falling despite stronger copper and cobalt prices. Economic growth is at its lowest since 1998.

KENYA: Economy under strain ahead of election
Hit by drought and a bank lending squeeze, Kenya’s growth is now forecast at 5.5% this year by the World Bank which has cut its earlier estimates by 0.5%. Last year Kenya’s economy grew 5.9% and the Bank had expected further expansion this year.

Central bank governor Patrick Njoroge blames the poor rains for much of the economic slowdown but others say the cap on interest rates is cutting bank lending and generally slowing down business. This scarcity of loans is hitting industries and construction particularly hard.

Others are sounding warnings about the rising national debt as well as more non-performing loans in the commercial banks. However, the government is planning to borrow another US$1 bn. on the international markets to plug its budget deficit.
Treasury Secretary Henry Rotich had aimed to cut the deficit to 6% of gross domestic product this year, down from 9% in 2016. But that would entail some harsh curbs on state spending which would do nothing to help President Uhuru Kenyatta’s campaign for re-election in August.

GUINEA: Beny Steinmetz sues George Soros for mining losses at Simandou
The bonanza for top law firms of lengthy and complex cases surrounding Guinea’s mega iron-ore project is in no danger of ending. The latest twist is a defamation case seeking US$10 bn. damages brought by mining magnate Beny Steinmetz against billionaire financier George Soros for losses caused by the protracted legal row over the legitimacy of contracts to exploit the Simandou mine.

For a flavour of the case to be heard in the Southern District Court of New York, the plaintiff’s statement opens with this assertion: ‘Soros has spent untold millions fabricating a positive public image of himself and the organisations he controls. Yet in reality Soros is a racketeer billionaire who acts in utter disregard of the rule of law and the rights of others.’

In what could be the most comprehensive effort to put civic society organisations on trial, Steinmetz claims that Soros funded law firms, anti-corruption groups, private investigators and officials in Guinea to strip his company of its mining licences at Simandou. Soros was motivated by personal animus, rivalries over a business deal in Russia and hostility to the state of Israel, claims Steinmetz.

But Soros spokesman Michael Vachon dismissed Steinmetz’s claims as ‘frivolous’ and ‘entirely false’. The case was a public relations stunt, said Vachon, ‘to deflect attention from Beny Steinmetz Group Resources’ mounting legal problems across multiple jurisdictions.’  This latest case will join an epic catalogue of litigation over the Simandou project which has seen the three major mining companies involved – BSGR, Anglo-Australian Rio Tinto and Brazil’s Vale – all try to sue each other as the legal disputes multiply.

Sadly, this latest case will do little to bring forward production at Simandou or raise the $20 bn. needed to start mining the massive reserves of iron ore there.

Thursday, 13 April 2017

More credit lines needed now

Among the most stubborn collateral damage wrought by the West's financial crisis of 2008 was the cutting of international credit lines to Africa. The initial rationale for severing the lines was knee-jerk and computational: if Western banks and ratings agencies had failed so badly, African banks would probably have made the same errors. In fact, some African financial institutions have demonstrated much higher prudential standards than their Western counterparts. Doubtless the cumulative effects of the 2008 crisis were to push down commodity prices and with them, the revenue of many African governments.

A boost for African banks has been the fast-growing relationship between them and the private and state financial institutions in Asia's key economies, such as China, India, Japan and South Korea. Along with higher foreign reserves and more robust monetary policies, that provided Africa's state treasuries and banks with something of a cushion.

But the failure to resolve many shortcomings in the West, together with the slowdown in emerging markets, is redoubling their impact on Africa's banks. Most of all, this is felt in more sharp cuts to the number of international credit lines that African banks can access. This quickly hits the local economies, particularly in East Africa currently, slowing down trade and production. The credit line crunch should be a leading topic at the African Development Bank's annual meeting next month.

Monday, 10 April 2017

NIGERIA: Police raids, intercepts and careless whispers in latest twist in Shell and ENI's secret deal saga

This week we start in Milan, Italy, where the state prosecutor is to open preliminary hearings on two multinational oil companies accused of massive corporate fraud in Nigeria's oil industry. Then to Nairobi where a committee of the opposition alliance has just recommended former Prime Minister Raila Odinga as its presidential candidate in August's elections. In South Africa, there are renewed rumblings about President Jacob Zuma's efforts to push through a mega-deal on nuclear power with Russia. In Kinshasa, the opposition is fuming at President Joseph Kabila's choice of Prime Minister and is planning a mass protest next week.


NIGERIA: Police raids, intercepts and careless whispers in latest twist in Shell and ENI's secret deal saga
The probe into how Royal Dutch Shell and Italy's ENI came to buy the OPL 245 oil concession – one of the biggest in the Gulf of Guinea – takes on a new lease of life when court hearings open in Italy this week. The companies face claims that they connived with former oil minister Dan Etete to pay bribes to secure the rights to buy the block for US$1.1 billion, seen as a bargain basement price at the time of the deal in 2011. Officials at Shell and ENI have repeatedly insisted they broke no laws.
The office of Fabio de Pasquale, the state prosecutor in Milan, set out the timetable to Africa Confidential. Preliminary hearings will consider the case against ENI and Shell this month and could continue until June.

Should Italy's prosecutors proceed against the companies, the main case will open in September and October. Although the Italian case will focus on the role of ENI and Shell, several business people and former officials are also under investigation by Nigeria's Economic and Financial Crimes Commission. Alongside these state investigations, a cache of Shell emails was leaked to the press and made headlines today (10 April) for the online news service Buzzfeed and the Italian newspaper Il Sole 24 Ore while the anti-corruption lobbying organisation Global Witness also published today a major report analysing much of the same material.

The deluge of new material raises the question as to whether the authorities in Britain and the United States – Shell and ENI are publicly listed in both countries – will launch their own investigations. Cases involving multinational companies accused of corporate fraud are rarely prosecuted in those jurisdictions. Instead, they tend to be settled by hugely costly Deferred Prosecution Agreements, essentially a corporate plea bargain. Many anti-corruption lawyers do not believe these deals deter fraud and corporations come to see them as yet another 'cost of doing business'. The fines, however, can be a substantial source of income for budget-strapped state prosecutors.


KENYA: Which is the biggest electoral threat to President Kenyatta  – economic woes or Raila Odinga?
News that a technical committee of the opposition National Super Alliance (Nasa) has picked former Prime Minister Raila Odinga as the coalition's presidential candidate has deeply divided activists ahead of national elections on 8 August. The committee assessed the candidates' qualities and Odinga came first, but the final decision is in the hands of the leaders of the four coalition partners.
Some see the choice of Odinga, 72, as inevitable given his high national profile and long experience. Others argue that his candidacy will encourage voters in Central Province, the base of President Uhuru Kenyatta and where Odinga has many political foes, to come out strongly against him. Insiders say it is likely that Kalonzo Musyoka, another senior figure in Nasa, will become Odinga's running mate.

One problem with a Odinga-Musyoka ticket is that it leaves Musalia Mudavadi, an architect of the opposition alliance and a former Vice-President, out in the cold. In the 2013 elections, he ran his own presidential campaign, rejecting offers to join one of the rival alliances headed by Odinga and Kenyatta.

If the tricky choice of the presidential ticket puts pressure on the opposition and boosts President Kenyatta's chances of a second term, the country's economic woes could still tell against him. Bankers in Nairobi are warning about the government's rising indebtedness and criticising what they see as heavy-handed regulation of the financial sector. They also point to a 45% loss in the value of equities on the Kenya Stock Exchange over the last two years and the effects on the local economy of the appalling drought in the Horn of Africa.

The government's cap on interest rates has sharply cut the profits of Kenya Commercial Bank but, more importantly, has led to a credit squeeze and a block on growth. Should the economy suffer further hits, the opposition could benefit despite reservations about its candidates.


SOUTH AFRICA: Claims that the Russian nuclear deal is reviving follow Gordhan's sacking
After a torrid week of national protests and ratings agency downgrades in the wake of President Jacob Zuma's midnight sacking of Finance Minister Pravin Gordhan on 30 March, there are reports that the government is seeking to revive the controversial $72 billion nuclear power deal with Russia. Also, there is speculation that Zuma may be planning to bring back his close ally, Brian Molefe, the disgraced former head of state power company Eskom into government.
Last month Molefe was made a member of parliament for the African National Congress and some sources in the Treasury suggest he could be appointed Director General there after Lungisa Fuzile resigned the post following Gordhan's sacking. That could give Molefe a decisive role in the management of the nuclear deal.

The independent Johannesburg-based weekly City Press reported on Sunday (9 April) that it had seen internal documents from Eskom that indicated discussions had been reopened on the Russian deal in recent weeks. A final decision could be taken by Zuma prior to national elections scheduled for April 2019.

The role of the Treasury and new Finance Minister Malusi Gigaba would be critical in the negotiations. Gordhan strongly opposed the deal, raising questions about its value for money and financial risk. Ratings agencies Fitch and Standard & Poor's, which downgraded South Africa's debt to junk status after the sacking of Gordhan, have raised their own concerns about the financial viability of the nuclear deal.


CONGO-KINSHASA: Kabila tests opposition with unilateral appointment of new Prime Minister
President Joseph Kabila's choice of a new Prime Minister Bruno Tshibala last Friday (7 April) broke the rules agreed between the government and the political parties and looks aimed at dividing the opposition. Kabila announced his choice ten days ahead of a scheduled demonstration by the opposition against what they describe of the government's repeated violation of political agreements on the running of national elections, which are due by the end of this year.

Tshibala, formerly a top figure in the main opposition Union pour la démocratie et le progrès social (UDPS), was expelled from the party during a dispute about who would succeed its historic leader Etienne Tshisekedi, who died in February. After some manoeuvring, Tshisekedi's son Félix emerged as the new leader of the UDPS and of the national opposition coalition.

Another challenge for the opposition is the organisation of a funeral in Kinshasa for Etienne Tshisekedi. It is likely to be a massive rallying point for oppositionists but the government may again use deadly force to shut down such an event, hugely inflaming local opinion. Organising such a memorial would require cooperation and negotiation between Kabila and the UDPS: something which looks out of the question for now. Today the police banned all gatherings of more than ten people as security forces deployed in strength on the streets of the capital.