confidentially speaking
The Africa Confidential Blog
NIGERIA: After the budget is signed, better news about the numbers
Patrick Smith
We start in Nigeria
on a rare
high note – at least on the economic plane – and then go to Tanzania, where President John Magufuli's government is
stepping up his campaign of resource nationalism. In South Africa, President Jacob Zuma is also playing the
resource nationalist card while in Germany,
Chancellor Angela Merkel sees
great potential for a more constructive relationship between Europe and
Africa.
NIGERIA: After the budget is
signed,
better news about the numbers
In stark contrast to the febrile political climate, the economic data
in Nigeria are looking at their most positive since President Muhammadu Buhari came to office two
years ago. Some of that is due to longer-term trends: oil prices have
strengthened and production is up while investment in farming and
agro-processing is beginning to pay off.
Shorter term factors are also helping. Vice-President Yemi Osinbajo signed the 7.44
trillion naira (US$23.6 billion) budget for 2017 on 12 June and that
will release disbursements from the government's capital spending
programme of N2.2 trn., a record figure. As those disbursements – many
on roads, power stations and social investment – sluice through the
system, they should create jobs and boost incomes, giving a much-needed
lift to local economies across the federation. Of course, much will
depend on how the spending is managed.
Both international and Lagos-based market analysts are putting
out
increasingly upbeat analyses of the country's economic prospects, much
of them based around the combined effects of more spending on
infrastructure, far higher agricultural production and the launching of
Aliko Dangote's 500,000
barrel-a-day oil refinery and petrochemical
plant next year. After 18 months in the doldrums, the Nigerian Stock
Exchange is bouncing back, registering gains week after week.
Yet there are plenty of questions about the better data. For
example,
inflation fell to 16.25% in May, its lowest figure for a year. Food
prices, however, remain extremely high across the country and are
rising at a faster rate than the baseline inflation figure.
This matters because for many families, food is the biggest
item of
expenditure. Higher local food prices seem to be linked with the
growing volumes of food that is being exported to Nigeria's neighbours,
which has created some local shortages. In the medium term, higher food
prices could encourage more people to go into farming.
Another concern is what happens to the naira-dollar exchange
rate. As
better economic news trickles out, along with big government
disbursements, the naira has strengthened: the parallel market rate is
currently N367=US$1. It remains an open question whether the
strengthening of the currency reflects the more positive economic mood
or is just a function of the government's releasing hundreds of
millions of dollars. For now, officials in Abuja say their much
criticised exchange rate policy has been vindicated.
TANZANIA: President Magufuli's new claims against Acacia Mining presage
tougher
resource nationalist measures
After giving full support to a committee which claims that the state
has been losing hundreds of millions of dollars in mining taxes and
royalties, President Magufuli is set to extend the scope of his
campaign of resource nationalism to the oil and gas sector.
This follows the release of a government committee report on
12 June
concluding that Acacia Mining had failed to declare some 40% of its
production to the authorities. 'These people are ruthless,' Magufuli
said in a live broadcast of the release of the report, '…They have
taken all the gold and other minerals but revenues, taxes, they didn't
pay.' The committee's conclusions extend across the entire mining
sector, although Acacia is in the government's sights in the short term.
The report recommends that Acacia and the government should
open
arbitration on what it says are outstanding dues; this should be
handled by Tanzania's courts, it adds.
For its part, Acacia denies all wrongdoing but is taking the
report
extremely seriously. 'Acacia remains open to further dialogue with the
government regarding these issues and continues to assess all its
options.' Top company officials met with Magufuli's team after the
report came out last week and talks are continuing.
SOUTH AFRICA: Nationalist
Mining Charter draws fire from the companies
With his new mining charter, Mines Minister Mosebenzi Zwane, a close
ally of President Jacob Zuma, is trying out a similar blend of local
politics and resource nationalism in South Africa.
Launched on 15 June, the Charter stipulates that all mining
companies
in the country should ensure that 30% of their shares are held by black
South Africans (that's up from current threshold of 26%), and they
should award 80% of their spending on services to black-owned companies
and ensure that over half their top management are black. It would also
end the 'once-empowered, always-empowered' principle that allows a
mainly white-owned company to comply with ownership rules by selling
its equity to black investors, even if they later sell it on to other
white investors.
Zwane's Charter has predictably prompted loud criticism from
the big
mining companies, which say they will challenge it in court. No one
expects it to get passed into law in the short-term but it could prove
smart politics for Zuma's allies, who are under pressure to put their
'radical economic transformation' agenda into practice.
For Zuma, the spectacle of his ministers battling with big
mining
companies might – temporarily – distract attention from the legions of
corruption allegations that he faces in connection with his own
business friends. The row over the Mining Charter is surfacing just as
the African National Congress prepares for its big policy conference
next month.
And in December, the ANC will hold its leadership elections.
The two
frontrunners for the party presidency are Zuma's ex-wife, Nkosazana
Dlamini-Zuma, and Deputy President Cyril Ramaphosa. And every ANC
member knows that Ramaphosa made his fortune from astute investments in
the mining sector during the first round of black economic empowerment,
which is now seen as having done little more than enrich a small elite.
AFRICA/GERMANY: Chancellor
Merkel calls for revisions to EU-Africa trade deals
The Afro-German partnership is going from strength to strength after a
conference and a series of bilateral meetings in Hamburg earlier this
month. As host of the Group of 20 most industrialised countries next
month, Germany wants to push Africa up the agenda. In fact, only one
African state, South Africa, is a member of the G-20.
Trade and investment, not aid, dominate Germany's revived
relations
with Africa, although by some measures, Berlin is also the biggest
giver of non-tied development assistance to Africa.
The Africa push is led by Merkel, who has already established
a
reputation for a more open-minded view on migration than many of her
European counterparts. Cynics says this is more about Germany's
requirements for labour than high moral principle.
Now Merkel has joined the two issues: she is calling for more
focus on
trade and development in Africa as a means to reduce the numbers of
people trying to navigate the perilous waters of the Mediterranean
between Libya and southern
Europe. Last week, Merkel told fair-trade
campaigners in Hamburg that she understood their complaints about the
trade treaties between the European Union and Africa. She said the
EU-Africa summit due to be held later this year should discuss how to
renegotiate them.
In London last week, Ghana's
Finance Minister Ken Ofori-Atta
said that
his country had been given fast-track membership of the Germany-Africa
trade partnership scheme and would be accessing over $200 million in
trade development credits. He said that Germany's apprenticeship
programmes for high-level technical education offered a viable solution
to the skills mismatch in his country.
