Monday, 6 February 2017

SOUTH AFRICA: As Zuma readies State of the Nation speech, his would-be successors launch their campaigns

This week we start in Cape Town, which has temporarily become the crucible for South Africa's political fights as well as host to an international mining conference. Then we look at the warnings about Africa's growing indebtedness, the jitters in Nigeria about the President's health and we ask whether United States' President Donald Trump is preparing to back Russia's favoured rebel general in Libya. Finally, President José Eduardo dos Santos tells Angolans that he really is leaving after the August elections.


SOUTH AFRICA: As Zuma readies State of the Nation speech, his would-be successors launch their campaigns
The country's big political battles come to Cape Town this week as some of the world's biggest resource companies descend on the city for the annual Mining Indaba in search of new deals amid global economic wobbles.


Nkosazana Dlamini-Zuma, outgoing chairperson of the African Union Commission, kicked it off yesterday (5 February) at a church service organised by the Faith Ministry and the Women's League of the African National Congress which backs her campaign for the presidency. On Wednesday (8 February), she and former President Thabo Mbeki are due to talk to a select group of investors in Cape Town about South Africa's political future. Dlamini-Zuma was one of Mbeki's most trusted ministers when he ran the government.

Earlier that day, Mmusi Maimane, leader of the opposition Democratic Alliance, is due to speak to the media, outlining his 'Rescue mission for a lost generation' which is being billed as an alternative State of the Nation speech. Also speaking that day will be Sipho Pityana, chairman of AngloGold mining and the leader of the Save South Africa campaign, which is calling for President Jacob Zuma's exit.

Deputy President Cyril Ramaphosa, Dlamini-Zuma's chief rival for the top job, is to address the Progress Business Forum in Cape Town on Wednesday as part of his slow-motion election campaign. In recent weeks, Ramaphosa has become more critical of President Zuma's leadership of the government and party, which has been shaken by factional rivalries.

Zuma will be in the headlines on Thursday (9 February), when he makes his State of the Nation Address in parliament where he is likely to face a barracking from the opposition Economic Freedom Fighters (EFF). Indeed the ANC and the EFF seem to be spoiling for a test of strength on the streets of Cape Town. Zuma's aides have installed huge video screen on the city's Grand Parade and called the party faithful to a rally there.

After he finishes his speech in parliament, Zuma is due to address the rally in what is being seen as a direct appeal to the streets. Security is likely to be heavy, at least around the President and the party's top officials. That is unlikely to dissuade the militants of the EFF, led by Julius Malema, who have made it an annual ritual to disrupt Zuma's State of the Nation speech.


AFRICA'S DEBTS: Bankers sound alarms on the Mozambique syndrome
After Mozambique missed a US$60 million interest payment on its $727 million bonds last month, bankers are trying to work out whether it is a tactical move to press them to renegotiate or if it presages a deepening financial crisis across the region. The bonds are now trading on the secondary market for about half their face value.

But so far the bondholders have refused to renegotiate with Maputo until it publishes an independent audit of all its secret debts and reaches a deal with the International Monetary Fund. But the bondholders may be overtaken by events, such as tougher financial conditions in several other African economies.


John Ashbourne of London-based Capital Economics is quoted by Bloomberg News warning about repayment difficulties in several economies hit by falling prices for their commodity exports. Bloomberg labelled four countries – Senegal, Tunisia, Ghana and Zambia – as higher-risk economies, according to its own financial modelling.

Other economists and banks, such as Standard Chartered and Citi group, argue that the risks of default are being exaggerated. Although the ratio of debt to gross domestic product in all these economies has grown sharply over the past four years, two of the countries – Senegal and Ghana – are following programmes backed by the International Monetary Fund while Zambia has reopened negotiations with the Fund.

Perhaps the most vulnerable is Tunisia, given the high level of political risk it has as a neighbour of war-torn Libya. A string of terrorist attacks in Tunisia have badly damaged its tourism industry and youth unemployment is rising sharply despite government public commitments to economic reform.
Last week Ghana's new Finance Minister Ken Ofori-Atta saw the power of the markets after he announced that the outgoing government had left a US$1.6 billion hole in state finances which would push the country's budget deficit close to 10%, more than double its target. That pushed the yield on Ghana's 2023 bonds four basis points to 8.48%.

An IMF delegation is due in Accra this to discuss the country's $918 million programme and is expected to respond to Ofori-Atta's comment that the terms might require some adjustment. Because it approved the previous government's management of the programme, the IMF will be under pressure to offer some concessions to the new government.


NIGERIA: President Buhari's extended medical leave fuels health rumours
A lack of credible information and a storm of lurid stories on social media is turning President Muhammadu Buhari's medical leave in London into a political crisis. Claims that he had been incapacitated or worse accompanied his departure from Nigeria on 19 January for ten days' leave.

The announcement by the presidency on 5 February that Buhari was prolonging his leave in London for further tests but without setting a date for his return, seems to have further fuelled the rumours. The Presidency insists that Buhari's ailments – without naming them – are not serious.
That is convincing neither the country's feisty journalists nor the increasingly influential commentators on social media. Vice-President Yemi Osinbajo is operating as acting President until further notice.


LIBYA/UNITED STATES: Will Trump administration join Russia in backing Khalifa Haftar?
Libya's rumbling conflict offers the Trump administration a clear choice between supporting the European Union position, backing Prime Minister Fayez Mustafa al Serraj's government in Tripoli or siding with the Russian-backed rebel General Khalifa Haftar.

Meeting in Malta last Friday (3 February), European leaders reiterated their backing for the shaky Al Serraj government, which they see as key to the United Nations-backed peace process in the country. European leaders have also approved a $200 mn. scheme to pay Libya to build camps to discourage migrants from crossing the Mediterranean.

Yet Gen. Haftar has been sending envoys to Washington to win backing for his campaign to win control of the country and crush militant Islamist groups there. Egypt and United Arab Emirates are already giving Haftar military support, and we hear that Russia has found a way around the UN sanctions against arms shipments to Libyan militias.

If it chose to get behind Haftar, the US government could tilt the balance in the Libyan war, both militarily and diplomatically. Libyan activists call that policy 'Syria light'. They regard the new US government as giving tacit approval of the saturation bombing of opposition areas by the Damascus government and Russian air force. And they argue that such a policy would worsen rather than resolve Libya's civil war.


ANGOLA: No drama exit now possible for President Dos Santos this year
A quiet announcement from the Presidency in Luanda confirmed that José Eduardo dos Santos would not seek re-election in this year's polls. That leaves the field open for his preferred successor, Defence Minister João Lourenço, to become the flagbearer for the ruling MPLA. Although Dos Santos publicly endorsed Lourenço, a former soldier and Russian-trained engineer, as his successor last December, the mechanics of how that might happen remained unclear.

Now it seems likely that Dos Santos will step down after national elections planned for August. That will not immediately affect his family's substantial financial interests and role in the economy: his daughter Isabel runs the state oil company and his son Xenu runs the country's sovereign wealth fund.

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