Monday, 13 March 2017

NIGERIA: Buhari returns from sick leave to raging battles on economic policy

This week has more than its fair share of policy announcements as governments do battle with the effects of the sluggish global economy.  We start with the homecoming of President Muhammadu Buhari to Abuja via Kaduna air base and expectations that he will weigh in quickly on the economic policy debates. And then to Nairobi where some see a distancing between Kenya and the United States, and on to Ghana where the new government has discovered some US$1.5 billion in undisclosed liabilities left by its predecessor. Arguments have started early ahead of the June policy conference of the African National Congress in South Africa. And finally, President Paul Biya's record of corruption and repression in Cameroon may be coming under growing scrutiny but he is confident enough to call in the International Monetary Fund to help rescue the flailing economy

NIGERIA: Buhari returns from sick leave to raging battles on economic policyThe biggest policy questions – on rampant inflation, job losses, the shaky naira and new borrowing – confront President Muhammadu Buhari, who returned to Abuja on 10 March after seven weeks in London for medical reasons. There's still little clarity about how far and fast the government will go with a raft of mooted reforms.

Vice-President Yemi Osinbajo, after well-timed trips to the oil-producing Niger Delta and some incremental reforms, has won praise for his management skills in Buhari's absence. A less heralded part of Osinbajo's workload has been finalising the government's strategy to relaunch the economy, which is to be formally announced this month.

Yet the government has not reached agreement on the timing and phasing of that strategy's components such as liberalising the exchange rate and selling off some of the state's equity in oil production.

In a sign that the battle over the exchange rate is still raging, central bank governor Godwin Emefilie came out over the weekend to defend his exchange rate policy and ban on foreign currency allocations, at the official rate, for 700 imports. This strategy was already boosting local production of rice and other staples, Emefiele insisted, and would lead to nationally sustainable growth.
Comparison between Egypt, which secured a US$12 billion deal with the IMF after floating its currency, and Nigeria were not useful, according to Emefiele. Inflation was now running at over 30% in Egypt, said Emefiele, and the government was determined to avoid that in Nigeria. An average of banking and official estimates put inflation in Nigeria at around 18.5%: most sources agree it is at its highest for a decade, and has increased each month in the past year.

KENYA/UNITED STATES: Political and economic travails multiply in era of 'new nationalism'President Uhuru Kenyatta got his phone call with US President Donald J Trump on 7 March, a month after his Nigerian and South African counterparts, leading some critics in East Africa to ponder the health of Kenya-US relations. They're in poor shape was the conclusion despite Kenya's role as an economic hub in East Africa and its previously close collaboration with the US on regional counter-terrorism operations. But Kenya is threatening to pull its troops out of Somalia, the target of much of Washington's security interest, and shut down the Dadaab refugee camp, which holds over half a million Somalis.

There was no chance that Trump could match his predecessor, Barack Obama's calling card, his Kenyan father. However, the Trump administration has shown little interest in Africa in general, and Kenya in particular.

This year, Kenya faces a succession of political and economic hurdles. Violent clashes are multiplying in the Rift Valley as farms and houses are being burned down by militants whom opposition groups link to Vice President William Ruto. With an eye on the 2022 elections, Ruto wants to push his opponents out of the Rift Valley region. If Ruto can get a landslide vote in the Rift in this year's elections, he will be in pole position to succeed Uhuru Kenyatta in five years' time.
Kenya's central bank governor Patrick Njoroge, a devout Christian and former senior IMF official, has also warned that nationalism and protectionism could seriously slow investment in Kenya which promotes itself as the most business-friendly country in the region.

GHANA: Finance minister steps ups audits and investigations ahead of fresh talks with the IMFAn IMF team is due in Ghana in the first week of April to discuss evidence that the previous government had racked up about 7 billion cedis ($1.5 bn.) in undisclosed payments arrears which has thrown the economic stabilisation programme off course. Although the IMF had set a budget deficit target of 5.5% of GDP for 2016,  the latest figures show that the deficit was running at over 10% by December.

The question is how did the IMF miss this when it concluded in September 2016 that Ghana's programme was 'broadly on track.' This lack of an accurate economic prognosis less than three months before national elections last year has angered many officials: some are calling for a break with the IMF, others want a radical renegotiation.

However, Finance Minister Ken Ofori-Atta told Africa Confidential that the government's focus would be on 'confronting the financial realities' and working out a way to promote growth and jobs. Although this could involve a review of the performance targets on the IMF's $920 million deal due to wind-up in mid-2018 Ofori-Atta saw no need for a radical redrawing of the programme as he sees possibilities for growth in several economic sectors this year.

However, there is little enthusiasm in government for a successor IMF programme next year. Instead, top officials have been talking to the World Bank about the formalisation and digitisation of the economy, a comprehensive national identity card scheme which would bring most people into the tax system.

SOUTH AFRICA: ANC faction wants more power for president to boost economy and end party riftsAfter a year of political turmoil, factional divides and accusations of top-level corruption, policy-makers in the governing African National Congress argued for more power for the presidency. That is one of the conclusions in an internal discussion paper produced by the party ahead of its policy conference from 30 June-5 July.


'The presidency must be strengthened as the strategic centre of power in the state,' the paper argues. The presidency should also push forward 'planning and policy, resource allocation and enforcement', it adds. Although some interpret this proposal as a boost for incumbent party leader Jacob Zuma, insiders say it's unlikely to take effect before he steps down at the end of this year.

Rather, the proposals seem part of a wider trade-off between stronger central control of the party and more radical policies that will win support at the grass-roots. Many of its ideas have been floated by Deputy President Cyril Ramaphosa and ANC Secretary General Gwede Mantashe.

These included stronger checks on fraud in internal party elections; tougher regulations on monopolistic pricing practices; stronger support for apprenticeships; stepped up investment and management of social services; and launching an ethics and governance office to scrutinise all state activities.

CAMEROON: President Biya calls in the IMF and steps up repressionAfter achieving notoriety as the leader of one of the few governments to shut down the internet in the 21st century, President Paul Biya has opened negotiations for a two-year financing programme with the IMF. Under Biya's leadership, Cameroon has established a reputation as one of the most authoritarian and corrupt regimes in the region, and also as one of the poorest performing economies.
To that menu of mis-governance has been added growing attacks by Boko Haram's Islamist militants in the north-west region and a new wave of protests against the dominant use of French in courts and schools in English-speaking areas. Despite the government shutting down the internet in opposition areas, protests have continued. Now, the security services have stepped up abductions of activists they consider to be ringleaders.

Biya is due to leave office next year after 30 years in power but tensions are heating up and he has no plan for a successor.

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