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The Africa Confidential Blog

  • 26th September 2017

GHANA/COTE D'IVOIRE: Accra wins oil border dispute but will step up economic cooperation with its neighbour

Patrick Smith

This week we follow on from developments at the United Nations General Assembly, which opened in New York last week and was attended by most African heads of state. Ghana's President Nana Addo Akufo-Addo had most to celebrate. Others were left bewildered after an encounter with United States President Donald Trump. Some investors are warning Tanzania that its nationalist economic policies could be counter-productive. The blowback from South Africa's Gupta-gate crisis continues to hit KPMG. And Congo-Kinshasa President Joseph Kabila's promise to investigate the murder of two UN officials leaves many unconvinced.

GHANA/CÔTE D'IVOIRE: Accra wins oil border dispute but will step up economic cooperation with its neighbour
Ghana is to step up production in the Tweneboa, Enyenra and Ntomme oilfields after an international ruling found in its favour and against Côte d'Ivoire in a dispute over their maritime border. Production is likely to increase to 80,000 barrels per day from the current level of 50,000 bpd.
The award of most of the disputed oil field by the Hamburg-based International Tribunal for the Law of the Sea to Ghana gave a fillip to its delegation at the UN General Assembly. It has also boosted the share price of Tullow Oil, the lead operator.

Along with Finance Minister Ken Ofori Atta, President Nana Addo Akufo-Addo made a strong pitch to US investors in the energy and financial services sectors. The message was that the economy is being revived and the debt burden is being reduced.

Diplomatic and commercial relations between Côte d'Ivoire and Ghana are likely to remain cordial despite the ruling. Earlier in the month Akufo-Addo and Ivorian President Alassane Ouattara, who have been personal friends for some years, announced plans for a joint-venture cocoa-processing factory and to set up a buffer stock of cocoa beans to stabilise prices. The two countries grow over half of the world's cocoa: global production is forecast at about 4.7 million tonnes for 2016-17. The buffer stock plan has been dubbed 'Chocpec' because it would involve voluntary curbs on production to maintain prices.

KENYA: Supreme Court calm as Kenyatta accuses it of judicial coup and opposition calls for new election officials
Multiple disputes are flaring up ahead of the planned rerun of the presidential election. Unconvinced by the Supreme Court's detailed ruling last week explaining its reasons for annulling the election, President Uhuru Kenyatta accused it of negating the will of the people and mounting a coup which could lead the country into 'judicial chaos'. The Court is standing by its 1 September ruling that the election didn't meet constitutional requirements.

Kenyatta's rival, opposition leader Raila Odinga, is focusing his fire on the Independent Electoral and Boundaries Commission, insisting that most of its top management be replaced before another round of elections can be held. This week Odinga's National Super Alliance (NASA) organisation is to launch a campaign of mass protests to force the commission's hand.

Already, the commission has postponed the planned date for the rerun to 27 October from 16 October after one of its IT providers said the earlier date would not leave enough time for preparations. As the political temperature heats up, Odinga has accused Kenyatta of steering the country into crisis, comparing his stance to that of the defeated President of Gambia, Yahya Jammeh.

TANZANIA: Magufuli's tough line on mining laws faces investment test as corporate grumblings increase
More and more mining companies are clashing with President John Magufuli's nationalist economic strategy to boost local processing and extract more taxes. Behind the scenes, the mining companies are saying there will be an investment strike if the government persists in this vein.

Yet there is no sign that Magufuli or his close circle is prepared to change course. Rather, they look set to double down on their main policy goal: to boost the government's share of revenue from mining. The government view was neatly summed up in an off-the-record comment by a senior official to Africa Confidential: 'Tanzania is now one of Africa's fastest-growing economies but we have seen little benefit from that in terms of revenues or jobs… and we have to change that balance.'

First came the government's demand that Acacia Mining, the London-listed subsidiary of Canada's Barrick Gold, should stop exports of ore until it built a local smelter. Then the government presented Acacia with a $190 billion bill for what it said was unpaid taxes, adding the under-reporting of exports to the charge sheet. Then the government pushed through new laws implementing yet more resource-nationalist measures, and then accused Petra Diamonds of under-reporting exports and avoiding taxes. Other mining companies fear they are in the firing line. The big test will be whether any of them shut up shop and walk away.

SOUTH AFRICA: Gordhan steps up pressure on KPMG to examine its suspect political and commercial links
The troubles of Dutch-based KPMG International and its South African affiliate are set to multiply after the company came under fire for auditing companies run by the Gupta family, who are accused of using their relations with President Jacob Zuma to win state contracts, for 15 years before dropping them last year.

There is also the charge that KPMG aided and lent respectability to a politically-motivated investigation into the South African Revenue Service whose findings were used to oust the respected Finance Minister Pravin Gordhan. Although KPMG has withdrawn the conclusions of its investigation, it has not apologised either to Gordhan or the many senior officials who lost their jobs as a result of the affair.

Two weeks ago KPMG International purged its local management in Johannesburg and issuing a qualified apology for work that fell below its usual standards (AC Vol 58 No 19, KPMG feels the Gupta heat). On 21 September, Gordhan met KPMGI Chairman John Veihmeyer and has called for 'full and proper disclosure' of the company's operations in South Africa. In turn, KPMG has agreed to an inquiry by the South African Institute of Chartered Accountants.

But this is unlikely to be enough. Gordhan has been speaking to his lawyers about the case; the opposition Democratic Alliance has announced that all local and provincial governments under its control would review their contracts with KPMG. The current Finance Minister Malusi Gigaba has also called for all national and local departments to review with contracts with KPMG.

Alongside that reputational damage in the public sector, the bigger financial threat to KPMG is whether or not the country's biggest companies and banks will also drop it. Already, several medium-size financial service companies have dropped the firm and three of the biggest banks are reviewing their contracts. The question that presumably motivated KPMGI Chairman Veihmeyer to travel to South Africa and apologise personally for the company's record is whether it can stop the contagion there. Or will KPMG's Gupta crisis wreck its business across Africa and beyond?

CONGO-KINSHASA: Kabila pledges full investigation into killing of UN experts but UN Secretary General favours independent probe
Demonstrators gathered on New York's First Avenue last week waving placards accusing President Joseph Kabila of killing oppositionists and trying to extend his term of office unconstitutionally while the target of their outrage was inside the UN headquarters addressing the assembly.

Kabila had nothing to say about his plans to prolong his tenure but did assure the assembly that his government would punish those responsible for the murder of two UN experts, Zaida Catalán and Michael J Sharp, in Kasaï in March. A UN Board of Inquiry report examining the circumstances of the murder has not satisfied relatives of the victims or other critics (AC Vol 58 No 19, Storm over probe into UN experts murder).

Among Congolese civic activists and many UN staff, there is extreme scepticism that the trial of nine murder-suspects by a Congolese military tribunal will uncover the truth. Facing pressure to commission an independent investigation, UN Secretary General Antonio Guterres has been talking about a 'follow-on mechanism', expressing hopes that 'independent experts' may be able to work alongside Congolese state investigators.

ZIMBABWE: Pastor Evan Mawariredue in court on subversion charges after he criticises government's economic record
RWANDA: Police have arrested activist Diane Rwigara and family for 'security offences'
LIBYA: US airstrike on Da'ishfighters points to growing cooperation with General Khalifa Haftar
MAURITIUS: Critic drops accusations of money laundering against Attorney-General, claiming he was manipulated by media