Tuesday, 8 August 2017

KENYA: Family rivalries and a high-stakes election will test institutions and technology

We start this week with a couple of high-stakes votes – one in Kenya and one in South Africa. Then we have some insight on an impromptu secret meeting in Zimbabwe, some reservations about the grand pipeline plans in Uganda and Tanzania, and a look at economic arguments in Nigeria, pending President Muhammadu Buhari's return, expected later this month. The next edition of Africa Confidential will be published on 25 August but we will be posting major stories on Kenya's elections, migration and South Africa's leadership race in the meantime.

KENYA: Family rivalries and a high-stakes election will test institutions and technology
National elections today (8 August) will be the last episode – for this generation at least – in the historic struggle between the Kenyatta and Odinga dynasties for the country's presidency. Five decades ago, it was the fathers of today's rivals – President Uhuru Kenyatta and challenger Raila Odinga – who were battling it out for the right to lead Kenya.

Odinga has dramatically cut Kenyatta's lead in the opinion polls over the last month, and some reckon he is now ahead. That sense of a very tight race has ratcheted up tensions between rival bands of supporters. The torture and murder of Chris Msando, head of information technology at the electoral commission, and a companion a week ago pointed to just how high the electoral stakes had become (AC Vol 58 No 16, Murder most foul). It also sounded alarm bells about the possibility of a repeat of the post-election political violence in 2008 should either side feel cheated by the result.

The tangible ideological differences between the conservative pro-West Kenyatta family and the leftist traditions of the Odinga family of the 1960s have worn thin. Now, both families control vast business empires, although Kenyatta's is far larger than his rival's. Much of this election is about cash, resources and control of the tens of billions of dollars that the country is spending on roads, railways, airports and power stations.

It's also about state spending further down the food chain: the tens of millions of dollars that the 47 counties share out under the new constitution which devolves economic and political power. The idea behind the new constitution is that it would lessen the fierce competition for power at the centre by distributing power more evenly across the country. Yet the rivalries at the centre seem as fierce as ever while there is a new layer of political combat in the counties separate from the national issues.

At every level technology has played a far bigger role in these elections. Kenya is one of Africa's leaders in information technology and a global pioneer in mobile money systems. Telecoms companies say 90% of Kenyans have mobile phones, about half of which have internet access. Both sides have rushed to get their political messages across on social media, and have hired their own United States-based political technology companies to boost their campaigns.

Kenyatta's team hired Cambridge Analytica, which worked on Donald Trump's presidential run as well as the Brexit campaign in Britain. Odinga's team recruited advisers from Ghana, where the opposition's technological savvy helped it to defeat an incumbent president last year; and they hired the veteran campaign advisors, Aristotle in Washington DC.


SOUTH AFRICA: ANC divisions are set to deepen whatever happens to Zuma in the no-confidence vote but the economy will enjoy a fillip if he loses
The markets seem more excited than the public about Speaker Baleka Mbete's surprise decision to allow a secret ballot in the no-confidence motion on President Jacob Zuma today (8 August) in parliament. That's because many traders forecast a boost for the rand and inward flows of portfolio capital should Zuma be toppled and replaced with a more pro-business successor such as Deputy President Cyril Ramaphosa.

It is a big political risk for Mbete. If Zuma wins, he will try to purge the party and the cabinet of his foes, worsening the current rifts. If Zuma loses, Mbete would be interim President until the African National Congress chooses a successor while his supporters will demand vengeance on those they have already called traitors.

Some insiders suspect Mbete may have cut a deal with Ramaphosa or the ANC's National Treasurer Zweli Mkhize which would give her the party's deputy presidency. Seen as a close ally of Zuma's, Mbete was expected to protect her political mentor. But she may have calculated that Zuma will be in no position to make any guarantees by the end of this year, when he has to stand down as party president.

Zuma had already said that a secret ballot would give the opposition parties – who need the votes of just 50 ANC dissidents in parliament to win – an unfair advantage. The failure of efforts in the ANC's National Executive Committee to sack Zuma shows he still maintains majority support amongst the party's top officials.

There is another issue at stake: is the right to see how all the MPs vote in a parliamentary debate more important than seizing the chance to get rid of an unpopular President?  A bigger question is what difference all this manoeuvring at the top will make to the millions of jobless South Africans dealing with growing corruption and poor public services.


ZIMBABWE/SOUTH AFRICA: Financial backing from Pretoria mooted in Mbeki's secret talks with Mugabe
Former South African president Thabo Mbeki took a short break last weekend from his own country's political intrigues to discuss economic and political travails in neighbouring Zimbabwe. Top of the agenda in Mbeki's talks with President Robert Mugabe was a plan to shore up Zimbabwe's economy, which is gripped in a foreign exchange crisis.

Mbeki's plan, we hear, involves trying to bring Zimbabwe into the clearing system for South Africa's rand currency. Although the rand, like the US dollar, is legal tender in Zimbabwe, most of the country's formal trade with South Africa is still routed via the US dollar. With a strengthening US dollar and a weakening rand, that gives Zimbabwe the worst of both worlds.

If the rand became more widely used in Zimbabwe, that would lower the cost of trade between the two countries but it would give South Africa what some in Harare would see as an unacceptable level of control over its neighbour's economy.

South Africa, which is owed tens of millions of rand by Zimbabwe, may have a better chance of getting repaid if the two countries' currencies were more closely linked. Botswana's pula and Namibia's dollar offer a model that Zimbabwe could adopt.

But it is highly contentious politically. Vice-President Emmerson Mnangagwa, who is said to be close to Mbeki, favours such a deal, as does Finance Minister Patrick Chinamasa. But the generals in Harare and Mnangagwa's rivals, grouped around Grace Mugabe, are dead against it. President Mugabe is said to be wavering between the two camps.


UGANDA/TANZANIA: Work to start on $3.5 billion oil pipeline
In a grand ceremony, the foundation stone has been laid on the world's longest and most expensive heated oil pipeline – some 1,500 kilometres from Uganda's oilfields in its western region near Lake Albert to the port of Tanga on Tanzania's coast – with a completion deadline of 2020. Uganda has about 6 billion barrels of heavy crude oil in its reserves.

The pipeline deal has sealed the friendship between Presidents John Magufuli and Yoweri Museveni, who were both at the ceremony. They share an authoritarian governance style and resource nationalist views. Magufuli is also close to Kenya's presidential challenger Raila Odinga, much to the irritation of Uhuru Kenyatta's government.

But the success of the project, which includes Magufuli's insistence that the pipeline should be operating within three years, will depend critically on the two countries' ability to raise the necessary finance. Banks will carefully examine the commercial logic of the pipeline – initially planned to cross Kenya – and the policy record of both countries. Currently, Magufuli is embroiled in a battle with multinational companies over his proposed tougher mining laws.


NIGERIA: Growth edges upwards but IMF warns on rising debt, shaky banks and the forex system
The latest word from Abuja insiders is that President Muhammadu Buhari will return to Nigeria from his medical treatment in London by the end of this month. Local business people are debating how this will affect the economy.

For Buhari, the biggest concerns have been the rate of inflation and the strength of the naira. He staunchly opposed the hefty currency devaluations tried by other oil producers such as Egypt and Kazakhstan. During his absence, the rival factions in the government – the reformers under Vice-President Yemi Osinbajo and the exchange rate stalwarts under central bank governor Godwin Emefiele – have concocted a messy compromise between a fixed rate and a free float. The result is a multiplicity of rates.

The latest modification allows investors to quote the so-called Nafex rate, which more closely reflects the market demand for the naira than the central bank's official rate. The initial effect of the measure was a weakening of the naira but its proponents say it will encourage more capital to return to what is still Africa's biggest economy. Alongside these policy arguments, a visiting IMF team has warned there is a dangerous level of bad and doubtful debt in the banking sector. It also concluded that there was lack of political will or consensus to push through a plan to boost the country's economy as it recovers from its first recession for two decades.




THE WEEK AHEAD IN VERY BRIEF


EGYPT: El-Sisi target of $10 billion in fresh investments is working as he opens economy and clamps down on politics


GHANA: Record cocoa crop this year as Accra talks to Côte d'Ivoire about joint investments in chocolate manufacturing


SOUTH AFRICA/BRITAIN: MTN and Vodacom in bidding war for Japan's NTT internet operations in Africa


RWANDA: After 98.6% vote, Kagame will focus on slowing economy, navigating crises in Burundi and Congo-Kinshasa

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