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The Africa Confidential Blog

  • 1st April 2019

ALGERIA: Big questions about the shape of the transition as Bouteflika prepares to depart

Patrick Smith

This week our correspondents file from the slow-motion exit of President Bouteflika in Algiers, the chances of a long-awaited cabinet reshuffle in Nairobi, news about more ambitious borrowing and spending plans from the re-elected President Buhari in Abuja and a tough choice between power cuts or a sharp hike to electricity prices in Zimbabwe.

ALGERIA: Big questions about the shape of the transition as Bouteflika prepares to depart
After the military establishment finally added its voice to the calls by hundreds of thousands of demonstrators for ailing President Abdelaziz Bouteflika to step down, activists and mainstream politicians are preparing for the next contest: how to organise the transition.

Although top officials in Algiers have been briefing journalists that Bouteflika is about to step down, they have been less forthcoming about who or what might replace him, and with what policy agenda. Some of them have suggested a national conference to draw up a new constitution ahead of elections by the end of the year. Today (1 April), state media announced that Bouteflika would leave office by 28 April.

That would depend on a degree of trust and consensus that has been lacking so far in this political crisis. Bouteflika has already named a caretaker cabinet, with the central bank governor Mohamed Loukal being appointed as interim finance minister.

Prime minister Noureddine Bedoui is to lead the new cabinet. General Ahmed Gaïd Salah, the regime loyalist who last week called for Bouteflika to step down, is to stay on as deputy defence minister. One of the most internationally-experienced politicians, Ramtane Lamamra, has stepped down as foreign minister, a post he had held for less than a month.

KENYA: New graft scandal threatens to divide Jubilee
President Uhuru Kenyatta's planned headlining of his anti-corruption campaign in his state of the nation speech could worsen tensions in the ruling party.

The rumbling scandal over the contracts to build the Arror and Kimwarer dams is likely to surface when Kenyatta makes his address on Thursday (4 April). This focus on the scandal, which many have interpreted as an attack on the allies of Deputy President William Ruto, could include an announcement that some of the top officials questioned by police will have to step down pending completion of the probe.

Kenyatta could also use a long-awaited government reshuffle to remove other officials linked to the dam scandal. Investigations centre on 21 billion shillings ($200 million) paid to a cash-strapped Italian firm, CMC di Ravenna, as part of a tender to build two dams in Elgeyo-Marakwet County, in the Rift Valley. That work has never begun.

The scandal goes to the heart of two of Kenyatta's second-term priorities: infrastructure projects lie at the heart of his 'Big Four' agenda, and the President has angrily defended his record on tackling graft.

Anti-graft has divided the ruling Jubilee party. Opposition leader Raila Odinga, given a hybrid government role last year, is exploiting the campaign to undermine Ruto. Supporters of Ruto's campaign for the presidency in 2021 are hitting back, testing the coherence of the ruling party to the limit.

NIGERIA: Still celebrating his re-election, President Buhari seeks cheaper money for his infrastructure spending plan
Conscious of the sharply rising cost of debt-servicing, the government is to widen the scope of its financing operations to borrow more from the World Bank and other development institutions that offer loans at below commercial terms. Buhari's ministers are to spell out the details of the $20 billion plan to invest in infrastructure over the next decade. Most of the contracts will be awarded early in Buhari's second term.

The scale of the plan would give the economy a much-needed boost as it slowly recovers from the 2016 recession. It chimes with the medium-term growth and diversification plan announced by Vice-President Yemi Osinbajo two years ago. Progress on the plan has been stymied by the lack of funds.

The ten-year spending plan will be part financed by an infrastructure bond to be launched later this year, says Finance Minister Zainab Ahmed. Buhari's 2019 budget, which still has to win approval in the National Assembly, includes 1.65 trillion naira ($4.6 bn) of new borrowing. It's unclear how much of that will be raised on the international markets.

ZIMBABWE: Plan to raise electricity prices risks new protests as surrogate currency falls further against the US dollar
A proposal from Zimbabwe's state power company to raise electricity tariffs by 30% is set to generate fierce debate within the government. Patrick Chivaura, acting chief of the power company, said there would be more power cuts if the government regulator refused to sanction the price increase.

The decision will come down to politics as much as finance. More cautious ministers fear the political consequences at a time when Zimbabweans are trying to adjust to rising prices caused by the continuing devaluation of the country's surrogate currency. It is also the weakening currency that has been pushing up the costs of coal and diesel to run the country's power stations.

When the government tripled fuel prices at the beginning of the year, it triggered mass demonstrations in the country's cities with several protesters being killed in clashes with security forces.

In February, the Reserve Bank of Zimbabwe conceded that its surrogate currency, variously known as bond notes, electronic or RTG dollars, were not trading at parity with the US dollar. It has devalued the official rate for the national currency to 3 for a US dollar, which still implies a currency subsidy. Bond notes still trade at around 25 cents on the parallel market.

Dollars worth $45m have been traded on the parallel market in recent weeks. Reserve Bank governor John Mangudya's plan to set up an interbank foreign exchange market set up to price the bond notes has received a sceptical response thus far.