Monday, 31 July 2017

KENYA: Security threats growing ahead of next week's election

We start in election land – namely Kenya and Rwanda, which are holding elections in the coming week, and Senegal, which held parliamentary elections on 30 July. Then to Ghana where the newish government of President Nana Addo Akufo-Addo has been chalking up some economic successes, and Tanzania where the dispute between President John Magufuli and the gold mining companies is escalating. Finally, to South Africa where Finance Minister Malusi Gigaba has been expressing some doubts about the Gupta family, close allies of his boss, President Jacob Zuma.

KENYA: Security threats growing ahead of next week's election
The discovery today (31 July) of the corpse of Christopher Chege Msando, a senior manager in information technology at the Independent Electoral and Boundaries Commission (IEBC), has shocked a country already apprehensive about possible interference in the 8 August elections. Msando had apparently been tortured before he died, people who saw the body said. He is thought to have had critical information about the mechanics of the IEBC’s plan to relay results across the country.

Earlier, Raila Odinga, NASA's presidential candidate, released what he said were secret documents detailing plans for a coup d'état by a section of the military if the IEBC announces an opposition victory. Jubilee has rubbished these claims, saying the documents are standard military contingency plans. Yesterday (30 July), a man wielding a machete injured a police officer guarding the home of Vice President William Ruto in Eldoret, in the Rift Valley before holing up in an outbuilding and being shot dead by police. Ruto was not in the house at the time and police are still trying to establish a motive for the attack.

RWANDA: Political focus goes elsewhere as forecast landslide due this week
In contrast to Kenya, preparations for the presidential election in Rwanda have been eerily calm apart from criticisms, mainly from international human rights organisations, of a what they call a climate of fear. Neither of the opposition candidates – Frank Habineza of the Democratic Green Party ticket and the independent Philippe Mpayimana – look set for more than 5% of the vote in next Friday's poll (4 August).

Foreign diplomats and international financial institutions are uneasy about the political process in Rwanda but unwilling to express their doubts in public. Beyond cursory tours of polling stations by diplomats there will be no formal international election monitoring effort.

President Paul Kagame, who is preparing for his third successive election win, has made it clear that he regards criticism of the country's political system as 'unwarranted foreign interference'.

SENEGAL: Messy parliamentary elections raise questions over detention of popular opposition leader
Voting in yesterday's (30 July) parliamentary elections was marred by poor organisation and widespread disqualification of people whose biometric identity cards were not recognised. Claims the government is responsible are mounting. Historically, elections in Senegal have been extremely well-run with defeated candidates accepting defeat gracefully.

Yet this time former President Abdoulaye Wade, now 91 and leading one of the main opposition groupings, accused President Macky Sall's government of interfering in the electoral process. Supporters of Khalifa Sall (no relation to the President), the Mayor of Dakar who was detained on corruption charges, accused the government of jailing its opponents to avoid a catastrophic electoral defeat.

President Sall's Benno Bokk Yakaar grouping is among the 47 rival parties vying for 165 elected seats in the national assembly. It currently holds 119 seats but could lose control of the assembly given rising grievances about economic hardship. These elections are critically important for President Sall's government, which faces national elections in two years' time and is proud of its reputation with international organisations for running an open, pluralistic political system.

GHANA: Growth up and prices down as government calls for end of IMF deal
When a team from the International Monetary Fund arrives in Accra next week to assess the government's implementation of its US$900 million programme, it will be walking into a noisy debate about the country's economic strategy.

Although the IMF has been advising the government to extend its economic adjustment programme until December 2018, President Nana Addo Akufo-Addo has said the programme should end, as scheduled, in April 2018. Several government officials, including Finance Minister Ken Ofori Atta, have echoed this view.

Behind what appears to be a narrow dispute over scheduling, there are bigger differences over economic strategy and the government's ability to enforce tough budgetary discipline. On 24 July, the Bank of Ghana cut its key interest rate to 21% from 22.5%. the biggest reduction for two years.
This follows the Bank's report that inflation had fallen to 12% in June and the cedi had strengthened by 7% since March to become Africa's best-performing currency. The wider economy has been growing too, expanding by 6.6% in the first quarter, boosted by higher oil and agricultural production.

TANZANIA: War of words escalates between President Magafuli and the gold miners
After a senior manager from the Acacia mining company was held on departure from Dar es Salaam airport on 24 July, a government official denied the company was being singled out. The company has just received a $190 billion tax demand from the government.

President John Magufuli has been leading a campaign to pressure the company to process minerals within the country and to meet what a government-appointed committee says are huge arrears in taxes and royalties. Last week Magufuli said he would close all the gold mines if mining companies delayed discussions on monies the government claims are owed.

The companies want to take the matter to international arbitration. Shares in Acacia, which is majority-owned by Canada's Barrick Gold, have lost more than half their value because of this dispute.

SOUTH AFRICA: Finance Minister Gigaba shares 'concerns' over influence of Gupta companies on the state
Although Finance Minister Malusi Gigaba was meant to have been a loyal ally of President Jacob Zuma and the Gupta family, he is beginning to stray from the script. Gigaba's acknowledgement of legitimate criticism of the Gupta family is another sign of Zuma's waning political power and his declining ability to protect his friends.

On 28 July, Gigaba told the Cape Talk radio station that he shared South Africans' concerns about the Guptas' influence over the government. He backed calls for a judicial commission of inquiry into allegations that the family had been using its influence improperly. 'I think we need to establish fact from allegation,' he told the station. '…the allegations are quite damaging to the investor perceptions, as well as the ratings agencies, of the governance of our state-owned companies.'

NIGERIA: Big new developments expected soon in investigation of President Goodluck Jonathan's government and business allies
ANGOLA/CONGO-KINSHASA: More claims against Halliburton and Glencore in multi-million dollar natural resource deals
WORLD BANK: New report warns that robots will cause jobs losses in Africa's fragile manufacturing sector
ZIMBABWE: Mugabe says his ZANU-PF colleagues don't have the right stuff to fight the opposition

Monday, 24 July 2017

NIGERIA: Buhari is 'set to return home' after appearing in new pictures with State governors

This week we start in Abuja House – the one in London where President Muhammadu Buhari has been staying for the past two months. Then to Kinshasa where Congo's opposition is planning to step up protests against sit-tight President Joseph Kabila. And in Cape Town we take the temperature ahead of next month's confidence vote in President Jacob Zuma. This week Paris hosts key talks between Libya's Prime Minister Faiez el Serraj and rogue general Khalifa Haftar and the dispute between Tanzania's President John Magufuli and foreign mining companies shows sign of escalating. We round off with our In Very Brief section – three flashpoints for the week.

NIGERIA: Buhari is 'set to return home' after appearing in new pictures with State governorsA smiling President Muhammadu Buhari was pictured lunching with State governors in London yesterday (23 July). He will return to Nigeria as soon as 'the doctors give him the green light', said Presidential spokesman Femi Adesina.

The release of the picture may dampen down some of the more extreme speculation about Buhari's health but the lack of a precise date for his return will prompt his critics to demand more information about his condition. Although Vice-President Yemi Osinbajo has assumed the constitutional powers of Acting President in Buhari's absence, some insiders say that some areas of government remain off-limits.

Two major personnel decisions – the appointment of the Secretary to the Government and the director of the National Intelligence Agency – appear to be on hold pending Buhari's return (AC Vol 58 No 11, A date with destiny).

The photo of Buhari released by the Presidency, the first in over two months, shows him at a dining table chatting with top officials from the governing All Progressives Congress, including Imo State Governor Rochas Okorocha.

CONGO-KINSHASA: Opposition plans protests to oust Kabila as claims of grand corruption multiplyOn 8 August opposition leader Felix Tshisekedi launches a campaign of street protests and national strikes against President Joseph Kabila's rule. The opposition accuses him of reneging on his agreement to hold national elections this year and trying to extend his time in office illegally (AC Vol 58 No 11, Kabila thriving on chaos).

The protests are meant to culminate in mass demonstrations in Kinshasa and all 25 provinces on 20 August. A leading spokesman for the opposition alliance, François Muamba, says that unless President Kabila sets a date for the next presidential elections, he will cease to be recognised as head of state after 1 October.

After that date opposition activists will campaign for citizens to stop all payments to the state. Tshisekedi has also called on citizens not to accept 'bad orders' from the police and armed forces, especially from those groups that have been 'killing Congolese people'. This latest wave of opposition activism coincides with the release of several detailed reports accusing the Kabila family of gross enrichment through its grip on state power:
  • New York University's Center on International Cooperation, backed by the Pulitzer Center on Crisis Reporting, says the Kabila family owns – wholly or partially – 80 companies in Congo. President Kabila and his family now own, it says, more than 81,000 hectares of farmland in the country.
  • President Kabila's sister Jaynet has a stake in the country's biggest cellphone company.
  • Zoe Kabila, the President's brother, has extensive stakes in big mining ventures including a highly lucrative partnership with Robert Friedland's Ivanhoe company, according to a lengthy investigation by Bloomberg News. Both Jaynet and Zoe are members of parliament and senior members of the President's political alliance.
  • More than US$750 million of the country's mining revenue has gone missing in the last three years, according to a new report from the London-based Global Witness anti-corruption lobby, and is being distributed through political and business networks close to the Presidential family.
The Kabila family denies all wrongdoing and Ivanhoe's Friedland says it will be issuing a riposte to the Bloomberg investigation. However, these latest claims of grand corruption at the top will loom large in the opposition campaign in the coming weeks.
SOUTH AFRICA: Opposition divided over chance of  Zuma's defeat in confidence vote next monthWith parliamentary speaker Baleka Mbete yet to rule on whether the vote on the no-confidence motion on President Jacob Zuma due on 8 August will be by secret ballot or not, pressure is growing on African National Congress MPs (AC Vol 58 No 12,Zuma's chaos theory). Allies of Zuma in the intelligence services have stepped up surveillance on MPs they consider 'problematic'; some MPs say they are being threatened to vote in Zuma's favour while others claim they are being offered inducements.
Julius Malema, leader of the Economic Freedom Fighters and former President of the ANC's Youth League, forecasts that at least 60 of the governing party's MPs will vote against Zuma. That would mean a resounding defeat for the President if, as many suspect, all the opposition MPs vote against him.
Yet John Steenhuisen, Chief Whip of the Democratic Alliance, which filed the no-confidence motion in April, doubts it will pass. The ANC controls 62% of the seats in parliament and, unlike Malema, he thinks it would be expecting too much for so many ANC MPs to turn against Zuma. Steenhuisen believes the financial interests behind Zuma, who faces public attacks on probity from his own party and the opposition, are too entrenched to allow their man to be pushed out.

LIBYA: Rogue general Haftar to meet Premier Serraj in Paris this weekFrench officials are to broker a critical meeting in Paris tomorrow (25 July) between Prime Minister Faiez el Serraj, head of the United Nations-recognised government in Tripoli, and rogue general Khalifa Haftar, whose forces have been fighting along the coast towards Tripoli (AC Vol 58 No 12, States of failure). Haftar, who last month claimed to have won control of the eastern city of Benghazi, has the backing of regional powers Egypt and the United Arab Emirates.

Haftar, who does not recognise the legitimacy of the Tripoli government, has not met El Serraj for 18 months. France's President Emmanuel Macron wants to show his country's support for the UN's political strategy in Libya but also to push for a deal between Serraj and Haftar.

Given the Mediterranean crossing from Libya is the main route illegal migrants take into southern Europe, trying to shore up the Tripoli government has become a priority for French, German and Italian politicians. Even if there is some agreement between Serraj and Haftar, it could prove much tougher to broker some deals between the disparate militias fighting for control around the Tripoli and the rich oil reserves.

TANZANIA: Government's dispute with Acacia mining to drag on ahead of critical negotiationsAt a rally on 21 July, President John Magufuli upped the stakes in his battle with mining companies, threating to shut all gold mines in the country if he judges them to be delaying negotiations about the payment of back taxes.

Ahead of talks between the government and Acacia mining – which is accused of owing billions of dollars in back taxes – there are reports that senior managers of the company have been pulled in for questioning by state officials. Top officials at Acacia have told Africa Confidential that they are committed to cooperate with the government's investigations into their operations. The company wants to refer the tax dispute to independent arbitration although it's unclear whether the government wants to go that route.

Magufuli's latest statements show that the mining issue now tops the government's agenda, and may help boost his political base. It follows parliament's passing of a natural resources law this month which grants the government stakes of 16% in mining companies operating in the country and an option to buy up to 50%. It would also allow the state to renegotiate contracts with mining and energy companies (AC Vol 58 No 15, Magufuli's law).


SENEGAL: Government keeps leading oppositionist and Mayor of Dakar Khalifa Sall in gaol ahead of parliamentary elections  on 30 July.

ZAMBIA: Fitch ratings agency warns on growing political risk after President Edgar Lungu declares state of emergency.

ANGOLA: Security chiefs entrench position ahead of elections and the handover to new President.

Thursday, 20 July 2017

Holding companies to account

The list of international companies getting snarled in battles about fraud and politics in Africa has lengthened this year to include hitherto more pristine names, such as McKinsey, KPMG and Germany's SAP software company. They have all been named in the widening probes into the Gupta family's relations with South Africa's President Jacob Zuma.

Remarkably, the companies continued to work on Gupta-linked projects long after the family started attracting intense scrutiny from the media. At a minimum, the companies will have to review their due diligence procedures which seem, in many cases, elaborate box-ticking exercise. All three risk reputational damage, most seriously for McKinseys, which advises companies and governments on how to avoid such problems.

Other companies such as Credit Suisse and Russia's state bank VTB are in denial about corporate failings, such as their role in structuring the notorious tuna bond deals as part of a package of some US$2 billion of secret loans that nearly bankrupted Mozambique.

So what are the prospects of tougher government measures to hold companies to account in Africa and elsewhere? Not high, according to Hui Chen, who has resigned from a top fraud-busting post in the Department of Justice in Washington. She was going, she said, partly because of the 'cognitive dissonance' of 'trying to hold companies to standards that our current administration is not living up to'.

Monday, 17 July 2017

NIGERIA/UNITED STATES: US prosecutors accuse ex-oil minister of taking bribes for fraudulent contracts

Our tour this week starts in Houston, where an assets seizure case could invigorate Nigeria's anti-corruption investigations. Still on anti-corruption, the International Monetary Fund has arrived in Mozambique to assess the damage caused by the US$2 billion secret loan scheme; and in neighbouring South Africa, veteran anti-apartheid campaigner Lindiwe Sisulu joins the race to become leader of the governing African National Congress (ANC). In Bamako, protestors show what they think of President Ibrahim Boubacar Keïta's reform plans and the IMF makes a politically-charged reply to a loan request from Kinshasa.

NIGERIA/UNITED STATES: US prosecutors accuse ex-oil minister of taking bribes for fraudulent contracts
A bid by the United States' authorities to seize a $50 million apartment in Manhattan and an $80 mn. luxury yacht signals some critical advances in the investigations into about $30 bn. of swap deals backed by Nigeria's former Oil Minister, Diezani Allison-Madueke.

Last week, Ibrahim Magu, Acting Chairman of Nigeria's Economic and Financial Crimes Commission, told Africa Confidential that he expected to see substantial progress in the case against Allison-Madueke in the coming weeks. She has been in London since British police arrested her in October 2015, seizing her passport and over £30,000 ($39,000) in cash. Under English law, police have until October this year to charge her; if they fail to, they will have return her cash and papers and allow her to leave the country (AC Vol 58 No 7, The great oil chase).

The US Department of Justice's Kleptocracy Asset Recovery Initiative filed a suit in Houston, Texas, on 14 July claiming that oil traders Kolawole Akanni Aluko and Olajide Omokore paid substantial bribes to Allison-Madueke to approve their highly profitable deals, which swapped crude oil exports for imports of refined products. Some of the evidence cited includes covertly recorded conversations between Aluko and Allison-Madueke.

For now, the case is solely about the US authorities seizing control of the flat and the boat, which are held by companies linked to Aluko. But those involved in the case say the next stage will be to target individuals named in the asset recovery case for further investigation.

Much interest surrounds reports that some of Allison-Madueke's former associates have been cooperating with foreign prosecutors to identify corporate entities into which hundreds of millions of dollars from fraudulent deals were paid.

MOZAMBIQUE: IMF delegation arrives in Maputo as Russian state bank offers to restructure secret loan deal
Inch by inch, investigators are discovering the true cost to Mozambique of the $2 bn. of secret loans ostensibly extended for a tuna fishing fleet and maritime security. Sources close to an audit of the deal have told Africa Confidential that the overpricing could be more than $1bn. (AC Vol 58 No 14, Rock and Kroll).

A senior Swiss financial official described the role of foreign banks in the deal – Credit Suisse and Russian state bank VTB Group – as 'scandalous' and requiring 'full investigation'. This follows revelations in the audit that the two banks had extracted some $200 mn. in fees from Mozambique for structuring the deal.

Britain's Financial Conduct Authority would have to take a major role in this probe because the secret deal was structured by the VTB and Credit Suisse operations in London.

The IMF, whose officials arrived in Maputo last week, demanded an internationally credible audit of the $2 bn. deal.

The banks are questioning the audit's figures but VTB said last week that it was prepared to review Mozambique's financial obligations: 'We have proposed several different restructuring options to Mozambique. Currently the involved parties are waiting for IMF debt sustainability assessment.'
Any progress between the IMF and the Maputo government on fresh financing would depend on prising open many more secrets linked to the tuna bond scandal.

SOUTH AFRICA: Sisulu joins leadership race as the standing of Zuma and his wife heads downhillThe entry of a third heavyweight politician, Human Settlements Minister Lindiwe Sisulu, into the African National Congress leadership race complicates everybody's calculations. It may also prompt more public criticism of President Jacob Zuma, accused of damaging the ANC's standing.
Sisulu told the independent eNCA television channel that she wanted to undertake the 'daunting task' of restoring the 'dignity' of the ANC, an indirect criticism of Zuma's tenure under which corruption scandals have proliferated.

Until now the contest, to be decided at the party's elective conference in December, looked like a two-horse race between Deputy President Cyril Ramaphosa and the former Chairwoman of the African Union Commission, Nkosazana Dlamini-Zuma.

Party insiders say that President Zuma's efforts to back his ex-wife, Dlamini-Zuma, have proved counter-productive, partly because she is suspected of wanting to protect him from the numerous corruption charges he faces.

MALI: President Keïta looks weaker after mass protests against his bid to boost his powers and counter separatists
The standing of President Ibrahim Boubacar Keïta (IBK) suffered another blow on 15 July when thousands of Malians joined a demonstration in Bamako against his reform plan to strengthen the executive and establish new regions in the north.

Rattled by widespread opposition to his proposed constitutional reforms, IBK has abandoned plans for a referendum on them this month but his office says there will still be a constitutional referendum later this year.

The proposed reforms and redrawing of regional boundaries were part of peace talks with Tuareg separatists in the north two years ago but many in the south oppose any concessions on the issue. These proposed reforms and the stalling of the national peace process are understood to have been raised in talks between Keïta and France's President Emmanuel Macron last month.

SOMALIA: Communication crisis continues a month after Swiss-owned ship cuts underwater internet cableOfficials in Mogadishu says the country's businesses are daily losing more than a $10 mn. after MSC Alice, a Swiss-owned container ship, dropped anchor last month and cut the country's main underwater cable linking it to the internet. Now only the small group of Somalis who have access to satellite connections have been able to get out their messages.

Indeed, Africa Confidential's correspondents in the country have had to find new ways to file their stories. Most importantly, the internet crash is hampering the effort to provide relief to those Somalis hit by drought, food shortages and cholera.

CONGO-KINSHASA: IMF to set tough conditions for loans as political crisis worsens
Financial pressures are mounting on President Joseph Kabila's government as he seeks to extend his time in office. Despite his rhetoric against outside interference in the country's politics, his government is desperately seeking foreign aid after export earnings crashed and the Congolese franc lost 40% of its value this year.

After Prime Minister Bruno Tshibala wrote to the IMF last month, the Washington-based organisation said the government would have to show greater accountability in its financial operations and that it had established 'a credible path towards political stability'. That last comment is as overtly political as the IMF gets.

Relations between Kabila's government and most of the IMF's biggest shareholders are at an all-time low. In 2012, the Fund suspended a $560 mn. lending programme because of secret and highly lucrative deals in the mining sector.

Monday, 10 July 2017

KENYA: Row between President Kenyatta and judges heats up after election ballot ruling

We start with another election ruling by Kenya's High Court which is pitting the Chief Justice David Maraga against President Uhuru Kenyatta. Then we look at the row in Zimbabwe over a US$120 million maize subsidy scheme and the latest multinational company to get embroiled in scandals around President Jacob Zuma in South Africa. Finally, to Algiers where President Abdelaziz Bouteflika is trying to garner backing for economic reforms and Kinshasa where the head of the electoral commission says he thinks it will be impossible to organise presidential elections this year.

KENYA: Row between President Kenyatta and judges heats up after election ballot ruling
The governing Jubilee party has reacted with fury after the High Court in Nairobi's decision to 7 July to nullify the electoral commission's award of 2.5 billion-shilling ($24 million) contract to print ballot papers for next month's national elections to Dubai-based firm Al Ghurair. The court said the Independent Electoral and Boundaries Commission's (IEBC)'s award broke the new rules on contract transparency.

Complaining it was not consulted about the procurement of ballot papers for the 8 August elections, Raila Odinga's opposition National Super Alliance (Nasa) launched a legal case to block the contract award. Several newspapers claim that there are business links between President Uhuru Kenyatta's family and the Al Ghurair company. Websites which carried photographs of Al Ghurair officials visiting State House were told by government lawyers to remove them.

This is the second court major legal victory for the opposition in the past month and it leaves less than a month for the electoral commission to find a new supplier to print the ballots. Officials in the Jubilee government insist there is no question about delaying the election.

This latest court ruling prompted any angry outburst from President Kenyatta: 'I want to tell those in courts, we have respected you. But do not think respect is cowardice. And we will not allow our opponents to use the courts and to intimidate the IEBC, thinking they will win using the back door.' A few hours after Kenyatta spoke on 9 July, Chief Justice David Maraga shot back with a statement on the implications of the President's remarks: 'When political leaders cast aspersions on the administration of justice based on a misinterpretation of my statements, it has the potential to impair public confidence in our courts, and this concerns me a great deal.'

ZIMBABWE: Opposition lambasts government on Command Agriculture and maize subsidy scheme
A politically-loaded plan to subsidise the country's maize farmers could cost the treasury almost US$120 million, say independent agricultural experts and opposition politicians. President Robert Mugabe, currently in Singapore for medical treatment, says the scheme will make the country self-sufficient in its key staple and boost local farmers. Mugabe faces a tough election next year against the backdrop of mounting economic woes.

Opposition politicians argue that the subsidy scheme is a blatant attempt to shore up support for the ruling Zimbabwe African National Union-Patriotic Front from small-scale farmers, its key support base in the countryside. It adds that previous subsidy schemes have been undermined by corruption and turned into mechanisms to enrich local party officials.

SOUTH AFRICA: McKinsey is latest multinational to get embroiled Gupta saga
One by one, leading multinational companies have been dragged into the growing political scandal over the business  links between President Jacob Zuma and the Gupta family.
The pattern is similar each time. At first, there is a blanket denial of any wrongdoing or any improper dealings with Gupta family or Zuma's other allies.

Then the company expresses concern about the possibility that some mistakes were made, and accordingly launches an investigation. Details of the investigation then emerge in the media after which some of the multinational company's local directors are suspended or resign.
International lobbying firm Bell Pottinger, which had a contract with the Guptas has now made a formal apology for its operations in South Africa. International auditors KPMG, which had also been hired by the Guptas, are being probed by South African regulators for failing to sound warnings over the company's management of a massive agricultural subsidy from the Free State provincial government.

The latest company going through this drama is McKinsey, one of the most high-profile global consultancy companies, which has specialised in advising governments how to boost efficiency and cut corruption and mismanagement. The matter turns on McKinsey's relationship with the Trillian group of companies, which are in turn close to the Gupta family.

Outgoing Chairman of Trillian Tokyo Sexwale appointed top South African lawyer Geoff Budlender to look at whether Trillian may have commercially benefitted from insider information about government decisions, such as President Zuma's sacking of finance minister Nhlanhla Nene in December 2015. McKinsey was advising the state power company Eskom which had been paying tens of millions of rand to Trillian without following procurement rules. After Budlender concluded that McKinsey had made misleading statements about its dealings with Trillian, the consultancy company has launched its own investigation into the matter, helped by an outside law firm, Norton Rose Fuller.

ALGERIA: President Bouteflika tries to clear way for tough economic reforms and subsidy cuts
President Abdelaziz Bouteflika used his Independence Day speech on 6 July to try to rally support for economic reforms as the government tries to adjust to an era of lower oil and gas prices. In a rare public statement, the ailing 80-year-old whose current term expires in 2019, told Algerians that the reforms were not being imposed from outside but were in the country's 'sovereign interest'.

Until now the government has been using a system of social grants to help the poorest. It fears widespread unrest if subsidies on basic consumer products are cut back. The reform plan envisages a much closer targeting of the subsidies.

Over the past three years, the country's foreign reserves have dropped to $108 billion from $178 bn. and state officials said the government's current dependence on oil and gas exports for 60% of state revenues is unsustainable. Much of the implementation work for the reforms will be carried out by a team under Prime Minister Abdelmadjid Tebboune who plans a series of consultation meetings with local people and political parties.

CONGO-KINSHASA: Presidential vote not possible this year says election chief
Opposition parties in Kinshasa have denounced as a 'declaration of war' a statement from Chairman of the electoral commission Corneille Nangaa suggesting presidential elections cannot be held this year. Nangaa's statement flies in the face of an agreement signed between President Joseph Kabila's government and the opposition on 31 December.

Should the commission be unable to organise elections this year, this will add to the climate of crisis in the country. Opposition politicians believe there is a conspiracy between the commission and the government to find a way to extend President Kabila's term in office. His second term formally expired at the end of last year.

Thursday, 6 July 2017

Unanswered questions at the African Union

It was 'noises off' that dominated the first summit of the African Union under its new Commission Chairman, Moussa Faki Mahamat, on 3-4 July. As Chad's veteran Foreign Minister, it was hoped that he would be able to make progress on the continent's multiple conflicts, but sundry external political and financial quarrels overshadowed initiatives in the Sahel and the Horn of Africa. The looming crisis in AU operations in Somalia next year, when troops from Kenya, Ethiopia and Uganda could pull out and the European Union could end funding for the regional peacekeeping operation, was barely discussed.

The real work on the Sahel conflict was done when the leaders of Mali, Chad, Burkina Faso, Niger and Mauritania met in Bamako on 1-2 July and agreed to form a five-country force to fight terrorist groups in the region. Although the United Nations and the EU are backing it, the United States' refusal to contribute prompted a new panic about financing.

Conflicts such as the Kasai rebellion and the political deadlock in Congo-Kinshasa did not make the agenda. This was despite a strong warning to the AU from Kofi Annan, former UN Secretary General, and nine African former Presidents, that Congo was in grave danger unless a political agreement to hold elections this year was respected. Instead, President Joseph Kabila got the summit to back a resolution condemning 'outside interference' in Congo-K's politics, presumably a reference to European sanctions rather than African Presidents' warnings.

Monday, 3 July 2017

AFRICAN UNION: Money and peacekeepers top summit agenda

We start this week in Addis Ababa for an important but poorly attended summit of the African Union, then take stock of a regional security summit held over the weekend in Bamako. Looking at a big real estate foreclosure linked to a Nigerian oil baron in Manhattan, we ask what this might mean for the Abuja government's anti-graft campaign. Finally, we go to Johannesburg where an African National Congress policy conference is being dominated by the coming leadership contest.

AFRICAN UNION: Money and peacekeepers top summit agenda
A lengthening list of security crises and a shortening roster of funders for peacekeeping operations greet the new African Union Commission Chairman Moussa Faki Mahamat at his first summit in the post in Addis Ababa today and tomorrow (3-4 July). He will be presiding over some important debates at the summit but several of the continent's top leaders – Nigeria's Muhammadu Buhari, Algeria's Abdelaziz Bouteflika, Egypt's Abdel Fattah el Sisi and South Africa's Jacob Zuma – will not be attending.

There are also calls for the AU to take a far more robust approach to resolving the conflicts in Congo-Kinshasa and South Sudan, as well as ensuring that rumbling conflicts like those in Congo-Brazzaville and Mozambique are put on the official AU agenda.

Although there is consensus that African member states must pay more for peacekeeping operations on the continent and the upkeep of the AU, there is still no agreement on the system to be used. Last year, Donald Kaberuka, former President of the African Development Bank, proposed a 0.2% levy on all imports from outside Africa to cover the assessed contribution of member states. That was agreed in principle and would mean member states would pay a quarter of the cost of all peacekeeping operations on the continent. The goal is for the AU to secure some $400 mn. for peacekeeping operations by 2020.

Last month Kaberuka told the United Nations Security Council that more needed to be done to coordinate finance for peace and security operations in Africa. There is serious concern in the UN that United States' President Donald Trump's planned budget cuts will force the winding-up of several peacekeeping operations as well as block the start-up of new ones. The US is still the biggest funder of peacekeeping operations globally as UN rules link to contributions to the size of national economies.

Such rules are now being contested by US politicians close to Trump. There are also some policy shifts among Africa's other international partners. There are questions about whether Britain will fill the gap if the European Union pulls out of financing peacekeepers in Somalia next year. China and India want to do more business in Africa and are taking a bigger diplomatic and security role in the process.

Germany has also launched a well-financed Africa strategy, albeit without much consultation on the continent. Perhaps to rectify that, Chancellor Angela Merkel last month met with several leaders including Ghana's Nana Akufo-Addo, Rwanda's Paul Kagame and Guinea's Alpha Condé.

Other countries courting the AU include Brazil, Japan, Israel and Turkey: they want rights to attend all the meetings as observers in exchange for stepping up contributions. But some member states want tougher rules on this new wave of foreign friends: Kagame suggested that outside states should attend only those sessions on issues in which they have a direct interest.

AFRICA/FRANCE: Regional security forces goes ahead but US pulls back
Five West African states met in Bamako yesterday (2 July) to plan a new regional security force Despite the US withholding diplomatic support it secured backing from France and the European Union worth around €60 million. Leaders from Mali, Burkina Faso, Niger, Chad and Mauritania said their governments would pay €10 mn. each to the force.

Also at the summit was France's President Emmanuel Macron who pledged over 70 armoured vehicles and more troops to add to the 4,000 that France already has in the region. But Mali's President Ibrahim Keïta said there was still a shortfall of around €300 mn. of funding for the force.

NIGERIA: Government's anti-corruption drive surfaces in New York
After two years of tortuous investigations into claims that the previous government had improperly awarded tens of billions of dollars' worth of oil trading contracts to its business and political friends, there are signs that some have been making progress. However, the immediate beneficiaries are likely to be financing companies and others owed money by those under investigation by the Nigerian authorities. So far there has been little information about what funds have been recovered and on what terms.

Last year, Nigeria's Federal High Court announced a global freeze on assets tied to oil trader Kola Aluko which include luxury homes in New York, Los Angeles, and London as well as a mega-yacht called Galactica Star, which has been leased out to several international celebrities.

This month a $50 mn. apartment on Manhattan's so-called 'Billionaires' Row', which had been purchased by one of Aluko’s companies, is to be sold off at a foreclosure auction in New York on 17 July.  Aluko is accused by the Nigerian authorities of benefiting to the tune of some US1.8 billion from illicit oil trading contracts.

There is still no public information on Aluko's whereabouts or any contacts that he may have had with Nigeria's investigators. The British authorities, who have been holding the passport of former Oil Minister Diezani Alison-Madueke for about a year and a half, are due to announce within three months whether they will proceed with a criminal case against her. Much of Aluko's fortune was built up during her tenure as oil minister.

SOUTH AFRICA: More revelations on Zuma-Gupta links as ANC policy conference meets
The big political news in South Africa this week was meant to be the six-day policy conference of the African National Congress in Johannesburg but it is competing with the latest allegations against President Jacob Zuma and his business friends, the Guptas.

Both the debates over policy and arguments about Zuma's relations with the Guptas will shape preparations for the ANC's leadership elections at the end of the year. The two frontrunners to lead the ANC – Deputy President Cyril Ramaphosa and the former Chairwoman of the African Union and ex-wife of Jacob Zuma, Nkosazana Dlamini-Zuma – are using the policy conference to set out their differing ideas.

Dlamini-Zuma is echoing the talk of 'radical economic transformation' such as wide-ranging land and wealth distribution being pushed rhetorically by her husband, but her rival, Ramaphosa, talks more about 'inclusive growth' and cutting out corruption. How those debates play out at the conference will influence sentiment amongst the 4,000 or so ANC delegates voting for the party's new leadership in December.

Meanwhile, two new allegations are fuelling public concern about the Zuma-Gupta relations.  Firstly, senior ANC politician Tokyo Sexwale has called for a criminal investigation into whether local finance company, Trillian Capital Partners, was given an advance warning of Zuma's plan to sack finance minister Nhlanhla Nene in late 2015.

Sexwale, who is retiring as chairman of Trillian, said an internal investigation at the company highlighted concern about collusion with government officials.

The other development prompting interest is the claim that the South African affiliate of KPMG auditors did not raise concerns when its then clients, the Gupta family, diverted some 30 mn. rand (US$3 mn.) of public money to finance a family wedding in 2013. The money is said to have come from the Guptas' Estina agricultural project which is part-financed by the Free State provincial government. Those claims by the amaBhungane team of investigative journalists are based on financial spreadsheets found amongst the over 100,000 emails leaked from the Guptas' accounts.

The Independent Regulatory Board for Auditors in South Africa has announced a probe into KPMG's work with the Gupta companies on this period. When South Africa's Public Protector announced in 2016 that she would be investigating links between the Guptas and government officials, KPMG ended its 15-year long auditing contract with the family's companies.