confidentially speaking
The Africa Confidential Blog
CHINA/AFRICA: President Xi Jinping wins battle of the suitors with his second pledge of US$60 billion funding package this year
Patrick Smith
We start at the Africa mega-summit in Beijing before moving
swiftly onto the contest for Nigeria's presidency
next year. In Uganda, opposition to President Yoweri
Museveni is growing after two opposition MPs claim they were
tortured by state security. And land reform demands will test President
Cyril Ramaphosa's ability to balance
politics and the markets.
CHINA/AFRICA: President Xi Jinping wins battle of the
suitors with his second pledge of US$60 billion funding package this
year
With its hosting of the summit on Africa today and tomorrow (4-5
September), attended by all but a handful of Africa's heads of state,
Beijing burnished its credentials as the leading supplier of finance to
the continent, ahead of the World Bank and IMF as well as Europe and
the United States.
If Beijing goes ahead with both the $60 bn. financing package
offered in South Africa in July as well as this
latest tranche, which is a mixture of loans, aid and trade and project
finance, it would add about $100 bn. to Africa's debts to China on top of what regional experts calculate to be existing liabilities of
over $120 bn.
The new offer comes as Western countries, especially the
United States, accuse Beijing of 'debt-trap diplomacy'. Even some Asian
leaders, such as Malaysia's Prime Minister Mahathir
Mohammed, who has long-established ties with Africa, has
accused Beijing of following a 'neo-colonial' economic strategy. Others
point to what happened when Sri Lanka defaulted on a
loan to China. Citing the terms of the financing agreement, Beijing
immediately claimed ownership of the port.
Many of Beijing's loans to African states are secured on the
borrowing country's natural resources. In almost as many cases,
repayments are made directly from revenues from commodity exports to
China or other markets.
For many African governments, facing tougher conditions in the
international markets and the prospects of rising interest rates, the
'China price' for finance is one worth paying. Apart from the volume of
cash in the Beijing-Africa pipeline, no countries or institutions seem
able to match China's refusal to attach political or governance
conditions on its massive lending programme.
The downside is that borrowing countries sometimes complain
that they are obliged to work with certain contractors or accept
projects that don't fit with their national priorities. Today (4
September), President Xi pushed back a little, insisting that Beijing
would not finance 'vanity projects'. He also responded to criticism
that some projects had damaged the environment and employed and trained
too few African workers by urging Chinese companies to raise their
standards.
More widely, Beijing's profession of 'developing country
solidarity' is about to be tested in Africa with at least 15 countries
facing debt distress, according to the IMF. If repayments come under
pressure, so will Beijing's carefully formulated Africa strategy.
NIGERIA: Promises galore and administrative doubts as
main parties pick presidential candidates next month
Senate President Bukola Saraki and former
Vice-President Atiku Abubakar have emerged as
frontrunners in the race for the presidential nomination of the
opposition People's Democratic Party which is due to hold its primary
elections on 5-6 October.
Both Saraki and Abubakar present themselves as
business-friendly candidates committed to wide-ranging economic reform.
A bill to reform the oil and gas sector, piloted by Saraki through the
National Assembly, has just been rejected by President Muhammadu Buhari (AC Vol 59 No 17, Blame
game scuppers reform). Atiku has promised to end multiple exchange
rates for the naira but he remains unclear about whether he would
countenance a devaluation of the national currency.
Two other candidates in the PDP, former governor of Kano Rabiu
Kwankwaso, and the current governor of Sokoto, Aminu
Tambuwal, are also vying for the nomination, albeit with less
cash at their disposal. The big question is whether the PDP can hold
together after the primaries or whether disappointed contenders will
quit the party in protest. For that reason, the party's managers have
scheduled the primaries just one day before the national electoral body
requires all presidential nominations to be submitted.
In the ruling All Progressives' Congress, President Buhari
will have an easier run to the nomination, with no serious candidates
willing to put their heads above the parapet. The APC primaries are due
on 24 September, followed by primaries for the National Assembly and
state governorships. That may give Buhari greater powers of patronage
to ensure that his faction within the party gets the bulk of
nominations. The opposition hopes that if Buhari is nominated it could
trigger another round of defections from the ruling party.
UGANDA: Criticism mounts of Museveni's crackdown after
two opposition MPs seek medical treatment after detention
The political crisis facing President Yoweri Museveni, in power for 32
years, is intensifying – both within his own party and from a new
grassroots protest movement working with the established opposition.
Despite Museveni's reputation for ruthless crackdowns on his
opponents, his long-time rival Kizza Besigye in
particular, the government blinked on 31 August after it had arrested
two opposition MPs trying to fly out of the country for medical
treatment.
The two men – Robert Kyagulanyi, better
known as the singer Bobi Wine, and Francis
Zaake – say they were beaten and tortured by state security
officials while in detention with three other opposition MPs. It seems
the government decided to release the two after their arrest sparked
widespread protests across Kampala. Some demonstrators were burning
tyres and building barricades across the city.
Out of the country, Kyagulanyi and Zaake, are winning more
support for their campaign against Museveni, 73, who has just won a
court battle on ending age restrictions on presidential candidates.
Unwilling to name a successor, Museveni appears to plan to stay in the
presidency for another six years at least – despite mounting protests
against corruption, economic mismanagement and political repression.
SOUTH AFRICA: Long, hard road to land reform to
dominate political scene and investor views ahead of 2019 elections
Fluctuations in the value of the rand and investor sentiment suggest
that President Ramaphosa's plan to redistribute land away from the
white minority, reckoned to possess about 72% of commercial farmland,
will be tortuous on both the financial and political campaigning level.
Although Ramaphosa, a rand billionaire with extensive
livestock holdings, insists there will be no land grab or attacks on
private property, steadying the markets and sounding politically
credible at the same time will demand much of him on the road to
elections early next year.
Much is riding on those elections for Ramaphosa. To
consolidate his leadership of the African National Congress he has to
reverse the decline in the party's share of the national vote under his
predecessor, Jacob Zuma.
Without a firm stand on land reform, the ANC could lose
substantial votes to the radical Economic Freedom Fighters, who are
demanding land seizures without compensation. At the same time, the
plan to get a land reform bill through parliament before the elections
is looking increasingly improbable.
The week ahead in brief
ETHIOPIA: Prime Minister Abiy announces US$ 1 billion of new financing from World Bank after his July
trip to Washington
GERMANY/AFRICA: Berlin leads fund-raising
drive in Lake Chad region at centre of Boko Haram and Da'ish insurgency
BRITAIN/AFRICA: In wake of her trip to Kenya,
Nigeria and South Africa, Premier May promises Britain will become top Western investor in Africa within five years
