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The Africa Confidential Blog

  • 21st May 2019

SOUTH AFRICA: The politics of graft is centre-stage with ex-President Zuma back in court as chief of new anti-corruption force is appointed

Patrick Smith

We start in Pretoria where newly-elected President Cyril Ramaphosa is due to announce his cabinet but to the north, the forex crisis in Zimbabweis getting worse. Incumbent President Peter Mutharika is facing the fight of his life in Malawi's elections and Algeria is set to delay its presidential poll. Kenya's economic team has issued another Eurobond and political sparring partners are limbering up ahead of elections in 2021.

SOUTH AFRICA: The politics of graft is centre-stage with ex-President Zuma back in court as chief of new anti-corruption force is appointed
The timing was so convenient. Five days before Cyril Ramaphosa is due to be inaugurated as President on 25 May, his vilified predecessor Jacob Zuma, 77, goes back to court in Durban to face multiple charges of racketeering and money laundering around the government's US$6billion arms deal with Western companies two decades ago.

It fitted well into Ramaphosa's choreographed campaign to convince South Africans that he is serious about fighting the graft and patronage that has so damaged the economy and social services. He says he has heard the voice of the electorate whose support for the African National Congress slipped to 57%, its lowest level since the first free elections.

On 17 May, Ramaphosa appointed veteran lawyer Hermione Cronje to run the Investigative Directorate, a part of the National Director of Public Prosecutions' office, which is to take on cases of 'complex corruption'. Its first priority will be to take on the many cases arising out of the Zondo commission on state capture which is hearing testimony on how local and foreign companies used political connections under Zuma's presidency to extract billions of rands from state coffers.

To make this work, Ramaphosa will still have to push through changes at the DPP's office, which had been hollowed out and find a way to replace the Public Protector, Busisiwe Mkhwebane, who is a staunch Zuma loyalist. Insiders say that Ramaphosa will purge some of the ousted leader's closest allies from government.

The first two names on the list of departing ministers are Bathabile Dlamini, Women's Minister, and Nomvula Mokonyane, Environment Minister. Both have been accused of corruption in public testimony but deny all wrongdoing.

The trade unions and the Communist Party, which backed Ramaphosa's bid for the ANC leadership two years ago are telling him to cut the cabinet by a third and sack anyone accused of corruption. More delicate for Ramaphosa is their demand that Finance Minister Tito Mboweni and Public Enterprise Minister Pravin Gordhan should be kept out of the new cabinet due to their pro-market policies.

ZIMBABWE: Inflation hits 75% as foreign exchange crisis bites despite government claims of a $500 million inflow
The price of basic commodities is skyrocketing, the government's surrogate currency – the bond note – is crashing against the US dollar and the hoped-for new investors remain elusive.

Two big consequences are set to follow. Opposition groups and trade unions are gearing up for more protests over the rising cost of living and worsening unemployment.

Investors will stay away until President Emmerson Mnangagwa's government does more to reassure them on market transparency or commitments on structural economic reforms. A case in point is Reserve Bank governor John Mangudya's announcement that an 'international bank' was lending the country '$500 million' to staunch the foreign exchange crisis.

No further details have been given about the source of the funds. So far, the most helpful lender to Zimbabwe this year has been the Cairo-based Afreximbank but market sources say it is not linked to this latest loan. Neither is China, the sources say, which has been taking an increasingly tough line on bail-outs for Zimbabwe.

The bigger point is the opacity of the issuance and management of Zimbabwe's bond notes which have depreciated by over a third this month. They are currently trading at seven to the US dollar on the parallel market; less than half the official rate.

There are widespread suspicions that officials with privileged access to US dollars are doing roundtripping currency deals:  buying at one rate and selling at the other.

MALAWI: Mutharika's uphill battle in the presidential elections
Peter Mutharika faces an uphill battle to win another presidential term in elections on 21 May after a bitter campaign in which all parties have accused their rivals of corruption, and planning electoral fraud.

Yet the rhetoric – and the lingering fights over responsibility for the 'Cashgate' scandal – has masked the lack of policy differences between the parties.

Mutharika's poor governance record and deepening unpopularity are a key factor. Divisions caused by Vice-President Saulos Chilima's decision to run against his boss have split the ruling party. They have also handed Malawi Congress Party candidate Lazarus Chakwera the best chance of taking the presidency in 25 years.

ALGERIA: The transition may stretch out for another six months as protestors call for political reforms and more sackings
Although presidential elections had been pencilled in for 4 July, with a deadline of 25 May for would-be presidential candidates to collect and submit the 60,000 signatures needed to stand, many are calling for more extended interregnum after President Abdelaziz Bouteflikawas pushed out of power.

The latest reports suggest that national elections could be delayed until the end of the year. Protestors are continuing their protests each Friday and are demanding that top officials be sacked from government and face trial if there are credible accusations of misconduct.

Among the names proposed for the transitional government until elections are: conservative former minister Ahmed Taleb Ibrahimi and technocrat former prime minister Ahmed Benbitour.

ZAMBIA: Thousands of jobs and billions of dollars at stake as President Lungu steps up fights over taxes and royalties with mining giant
Faced with ebbing political support and a debt service crisis threatening to spin out of control, President Edgar Lunguis taking on foreign mining companies with an economic nationalist policy stance. It looks like a replay of tactics used with some success by Tanzania's John Magufuli.

Lungu's recent broadsides against foreign mining firms have ended in his government announcing plans to take over Vedanta Resources Ltd.'s domestic copper assets.

Having long complained that mining firms weren't paying enough tax, and increasing royalties for the mining sector, Lungu's administration threatened to 'divorce' Vedanta and Glencore, two of the biggest employers in Africa's second-largest copper producer.

The Copperbelt region is vital to Lungu's hopes of retaining power. It was the scene of a damaging by-election defeat in April of the ruling Patriotic Front by the National Democratic Congress set up by Chishimba Kambwili, a former minister and erstwhile Lungu ally.

Last month, Glencore announced it would be closing two shafts at the Nkani mine in Kitwe at a cost of over 2,000 jobs as they had reached 'the end of their economic life'.

KENYA: After China rejects fresh finance deal and unfazed by galloping levels of debt service obligations, President Kenyatta issues another Eurobond
The government's unheralded issuance of another $2.1 billion Eurobond in the week ending 17 May amplifies growing concerns about the government's finance gamble.

Priding itself on a tradition of financial expertise and the country's strong and diversified economic growth, Kenya's Treasury rejects criticism over mounting debt levels.

It seems the latest bond issue is partly in response to the government's failure at April's Belt and Road Forum to secure new Chinese loans for the next stage of the Standard Gauge Railway taking its line out to Narok and Kisumu.

The bond issue had mixed reactions in Nairobi. The 7% and 8% interest rates on $900 million worth of seven-year bonds and $1.2 billion of 12-year paper are better than expected as the government has not resolved its differences with the IMF. It looks like the markets are less worried about Kenya's financing strategy than oppositionists or the IMF.

UGANDA: Opposition music star Bobi Wine accuses the government of 'financial strangulation' ahead of elections
It may be two years away but the next election has triggered campaigning and accusations on all sides. Opposition MP Robert Kyagulanyi, known as Bobi Wine, says government forces have cancelled over 100 of his concerts since his election to Parliament in 2017. Now, the popular musician, whose rap and reggae concerts were pulling tens of thousands, claims that officials are intimidating his business partners to bankrupt him.

Wine is determined to stand against President Yoweri Museveni, 74, whose National Resistance Movement in February endorsed him to stand for a seventh term in 2021. Wine's People Power movement has suggested that it has opened talks with the Forum for Democratic Change, Uganda's largest opposition party, in the hope that the FDC will agree to back his candidacy.

It has already won backing from a group of smaller parties. But agreeing a deal between Wine and veteran oppositionist Kizza Besigye, who leads the FDC, will be difficult, not least because of the bad blood between their respective supporters.


THE WEEK AHEAD IN BRIEF

NIGERIA: After fighting with government over disputed back taxes, MTN races to second biggest company slot when it floats on Nigeria's Stock Exchange

GUINEA: Veteran investor Friedland said to be near taking over the fabled Nimba ore deposit as government tries to resolve legal tangles