confidentially speaking

The Africa Confidential Blog

• 25th March 2019

ANGOLA: The freeing of detained financiers sends mixed signals on the President's corruption fight

Patrick Smith

This week we look at a surprising legal deal in Luanda, the power crisis that could shape South Africa's elections, how politics and climate change worsened the Mozambique disaster, a personal post-election battle in Nigeria and the unravelling of Kenya's tax treaty with Mauritius.

ANGOLA: The freeing of detained financiers sends mixed signals on President Lourenço's corruption fight

A deal which resulted in the release of Quantum Global CEO Jean-Claude Bastos de Morais, a Swiss-Angolan financier, from custody on 22 March in exchange for US$3.5 billion of funds claimed by Fundo Soberano de Angola (sovereign wealth fund) has prompted fierce debate in Luanda. Two days later José Filomeno 'Zenú' dos Santos, son of the former president, José Eduardo dos Santos, was also released.

Some in Luanda are speculating that these developments, combined with the reappointment of Isabel dos Santos, billionaire daughter of the former president, to the board of Unitel, the biggest telecoms company in Angola, suggest that President João Lourenço's promised fight to retrieve over $20bn of fugitive capital may be running out of steam.

Both Zenú dos Santos and De Morais were detained last October after Angolan investigators said they had found serious malfeasance in the management of the sovereign wealth fund. Until his dismissal earlier last year, Zenú dos Santos was chair of the fund, and De Morais played a leading role in managing its investment strategy.

Now, the government says it has control of 'all financial and non-financial' assets belonging to the fund. That includes some $2.35bn of financial assets held in banks in London and Port Louis, Mauritius, and $1bn in property and mineral assets. De Morais says he is innocent of all wrongdoing and that the government has dropped all criminal charges against him. Anti-corruption campaigners are complaining about the lack of transparency in the process and are demanding to see full accounting for the assets of the fund and a detailed explanation for the government's about-turn.

MOZAMBIQUE/MALAWI/ZIMBABWE: How climate change, bad politics and corruption worsened Cyclone Idai

'No-one in the region and in the world could predict a disaster of this size,' Mozambique's Land and Environment Minister Celso Correia said on 23 March. He was referring to Cyclone Idai which is reckoned to have taken 750 lives already and displaced over a million people.

Up to a point he was right. The last catastrophic storm to hit the region was in 2000, when the combination of strong civil society groups, more effective government agencies in Mozambique and a heroic role by the South African National Defence Force, rescued tens of thousands of marooned people.

This time, the response from the Mozambique government, weakened by the scandal over the $2bn in secret loans, has been slower and less coordinated. International agencies were also slower out of the blocks.

But the devastation of the five tropical storms making landfall in the form of Cyclone Idai have been compounded by neglect of infrastructure, the lack of flood defences, of dykes, of effective drainage systems in low-lying cities and towns such as Beira in central Mozambique, which has seen the worst of the crisis.

As the rains subside, emergency workers have to restore electricity and water and prevent an outbreak of cholera. More than 100,000 people are living in camps.

There is a longer-term lesson. Massive funding for climate resilience and mitigation was at the heart of the Paris climate change agreement in 2015. Although Africa is the continent most affected by the depredations of extreme weather, drought and desertification, it is not in the forefront of international attention on climate change. At least the destruction wrought by Cyclone Idai should concentrate minds on the need for a far more determined mitigation and protection strategy.

SOUTH AFRICA: The Eskom crisis is forcing President Ramaphosa into tough choices

How to tackle the crisis engulfing Eskom, the debt-laden state power-company, is at the heart of President Cyril Ramaphosa's calculations ahead of the 8 May election.  Fixing Eskom is the most urgent policy task facing the African National Congress government.

A new report by Goldman Sachs calculates that if the Eskom programme of rolling power cuts and load-shedding continues, it could lop off as much as 0.9% from South Africa's GDP this year. That means cutting growth to about 1%, less than the birth rate.

Ramaphosa and his tough-talking finance minister Tito Mboweni want to change Eskom by unbundling the component parts of the colossal company into transmission, generation and distribution units. Hobbled by commitments to build uneconomic coal-fired power stations, Eskom owes over $30bn.

On Saturday (23 March) Democratic Alliance leader Mmusi Maimane described Eskom's plight as a 'national crisis', and lamented the economic damage caused by the power cuts. He pins all the blame on the ANC.

But Ramaphosa has responded with caution. He can't ignore the effects of the Eskom crisis but he has said nothing about how planned cost-cutting will affect its employees. Some talk of a third of the workforce being made redundant.

Ramaphosa knows that if his government starts any radical surgery to Eskom before the elections, it could cost him the backing of his support base in the trade unions. With ex-President Jacob Zuma plotting a comeback to the leadership, that is a risk he can't afford to run.

NIGERIA: Presidential challenger Atiku's electoral petition gets personal

The accusations in Atiku Abubakar's petition alleging that the 23 February presidential election was stolen range from accusing the electoral commission of inflating the ruling All Progressives Congress's scores and deflating the People's Democratic Party's to claiming that the schools which President Muhammadu Buhari claims to have attended did not exist at the time.

Over the next week, the PDP promises to produce copies of tally sheets showing faults in the collation process and contradictions in the electoral commission's own figures. A High Court ruling on 22 March overturning the ruling APC's victory in the governorship elections in Osun state has given the opposition a tactical boost.

KENYA/MAURITIUS: The taxman cometh – in Nairobi and Port Louis

Many internationally-minded Kenyans were surprised when the Nairobi High Court ruled on 18 March that the country's Double Taxation Agreement (DTA) with Mauritius was unconstitutional, declaring it null and void.

The ruling cited the failure by the National Assembly to ratify the DTA. It could trigger a judicial review of DTAs across Africa. Few have been subjected to close scrutiny in national parliaments.
Hundreds of DTAs between African states and their European and south east Asian counterparts are being re-negotiated.  With some exceptions, such as Rwanda and Tanzania, few governments have tried to strike a tough bargain.  That could still change amid the growing popularity of nationalist economic strategies.