confidentially speaking
The Africa Confidential Blog
SOUTH AFRICA: Reshuffle could become reality as Zuma recalls Finance Minister from investment tour
Patrick Smith
We start in Pretoria, from where South
Africa's Finance Minister Pravin
Gordhan has just been summoned to return from London, sparking
more speculation
that President Jacob Zuma is
about to sack him. And then to Zimbabwe
which
is, despite the political ructions in South Africa, considering
adopting the rand as its currency. And in neighbouring Zambia, the
plumbers of the International Monetary Fund are due in Lusaka to start
negotiations on a new stabilisation programme. Financial matters are
also to the fore in Ghana,
where the Governor of the central bank has
to make an important decision on interest rates but faces growing
opposition from officials in the new government. And finally to the
Confederation of African Football, where the compelling defeat of its
long-time President, Issa Hayatou,
is likely to presage reform and more
opportunities for the continent's young footballing talents.
SOUTH AFRICA: Reshuffle could
become reality as Zuma recalls Finance Minister from investment tour
A cabinet reshuffle could be in preparation following the confirmation
by a Treasury official on 27 March that President Zuma has
rescinded permission for Finance Minister Gordhan to host
investment roadshows in Europe and the United
States. It is an open
secret in the top echelons of the governing African National Congress
that Zuma wants to push Gordhan and his deputy, Mcebisi Jonas, out from
the Treasury. Treasury Director General Lungiza Fuzile, also seen as a
Gordhan ally, has also been ordered to return from London.
Political insiders have been predicting that Zuma might choose the
second half of March for his long-mooted reshuffle. Various pieces in
the jigsaw are now in place. Zuma's close ally Brian Molefe, the
disgraced Chief Executive Officer of state utility Eskom, has been
sworn in as an ANC member of parliament. Many expect him to be given a
top economic ministry to run.
Zuma's ex-wife and favoured candidate for the ANC presidency in party
elections at the end of this year, Nkosazana
Dlamini-Zuma, finally left
her position as Chairwoman of the African Union Commission in Addis
Ababa on 14 March. Dlamini-Zuma is also expected to be given a top
ministry in an effort to boost her credentials in what is increasingly
looking to be a very bruising competition with Deputy President Cyril
Ramaphosa for the top job in the ANC.
ZIMBABWE: Adopt the rand and
drop the dollar, says top bank official
Whatever the political ructions in South Africa's Treasury department,
neighbouring Zimbabwe still sees the country – especially its currency,
the rand – as an anchor in uncertain times. That seems to have informed
the call from Kupukile Mlambo,
Deputy Governor of Zimbabwe's Reserve
Bank, for his country to adopt the rand rather than the US dollar as
its main currency.
Mlambo's argument is economically convincing. Most of Zimbabwe's
imports come through South Africa and are originally priced in rand.
But because of its weakness against the US dollar, the price of these
imports rises sharply when their prices are converted into US dollars.
Politically, adopting the rand could prove more problematic for
President Robert Mugabe's
government. It would mean that South Africa's
economic policies – on interest rates, inflation and money supply –
would directly affect policy-making in Zimbabwe.
For now, that might not seem to matter much as the South African
government does not appear to be very exercised about Zimbabwe's
internal politics. But should that stance change with new leadership at
the top of the governing ANC, South Africa's influence on its northern
neighbour could prove decisive.
ZAMBIA: Slow growth and
ballooning debts prompt Lungu to call in the IMF
After the high-octane spending spree in the run-up to elections last
August, it had seemed likely that President Edgar Lungu's government
would bring in the IMF to help stabilise the economy. It was his plan
to delay bringing in the Fund that allowed him to turn on the spending
taps and tell electors that his government represented high economic
growth and investment. His opponent Hakainde
Hichilema, the businessman who leads the United
Party for National Development, argued that many of Lungu's
pre-election contracts were terribly over-priced or awarded to bogus
companies. If the IMF demands, as many activists hope, forensic audits
of state procurement over the last couple of years, it may be possible
to work out whether Lungu or Hichilema is right.
Lungu's government says it will reach agreement with the IMF by
mid-year, which will involve reining in state spending and cutting the
budget deficit. Despite a boom in the price of copper and cobalt, among
Zambia's main exports, the Fund forecasts that economic growth will
rise about half a point to 3.5% this year.
GHANA: Central bank may cut
rates as Governor fights off pressure over job
Although many senior officials in President Nana Addo Akufo-Addo's
government are keen to see the exit of Central bank Governor
Abdul-Nashiru Issahaku,
regarded as a close ally of defeated President
John Mahama, he is
showing considerable tenacity as he hangs on to his
job.
According to the constitution, Issahaku has tenure and could be
dismissed only by a special vote in Parliament or if the Attorney
General authorised criminal charges against him. For now, it seems the
new government's economic departments have chosen to work closely with
the Governor on key policy matters.
A case in point is this week's decision on interest rates. Local
banking analysts argue that Governor Issahaku should cut rates on 27
March by at least 1%. The cedi has gained over 6% against the dollar
since Finance Minister Ken Ofori-Atta's
well received budget on 2
March, which set out plans to promote private sector growth, cut some
taxes and cap state spending.
But Governor Issahaku will remain haunted by what is known at the Bank
of Ghana as the 'Sibton Switch Affair'. That is the award of a
contract, which would have been worth US$1.4 billion over 20 years, to
a little known local company to set up an 'inter-operable’ electronic
payments system. That means that the system would allow people to make
transfers on their mobile phones and on the internet to all banks
participating in the scheme.
The size of the contract award astonished the incoming government,
particularly when it discovered the competing bids, from more
established local companies, were priced at $8-$15 million to provide
essentially the same service. Although we understand the Sibton Switch
contract has now been suspended, questions are being asked about
Issahaku's role and why he didn't act sooner.
AFRICAN FOOTBALL: What changes
after the fall of Hayatou?
The defeat of Issa Hayatou, the long-time head of the Confederation of
African Football, at the elections in Addis Ababa last week was
something of a metaphor for the continent's politics and it presages
sweeping changes in Africa's most important sport. Hayatou was also
seen as a key ally of the disgraced President of the Fédération
Internationale de Football Association, Sepp Blatter, who has now been
barred from holding any office in FIFA after dominating the
organisation for three decades.
Together, Blatter and Hayatou reinforced each other's dominance of
international football organisations and their courting of political
support in Africa as a key part of their modus operandi. With Blatter
and now Hayatou out of the way, that era has finally gone.
The victory of the head of Madagascar's
Football Association, Ahmad
(who is known by this single name), was convincing enough – he won by
34 votes to 20 – to represent a mandate for reform of the financing of
the continent's national soccer organisations.
It could also mean an end to the weight of corruption that has stolen
resources from much-needed efforts to promote training and development
on the continent of some of its talented youth, many of whom are
snapped up by European and Asian football teams.
That has led to the phenomenon known as 'football trafficking', which
apart from the suffering it may inflict on individual players, also
undermines efforts to establish a much stronger culture of sporting
skills development within Africa.
