confidentially speaking

The Africa Confidential Blog

• 27th May 2019

SOUTH AFRICA: A double reshuffle for Ramaphosa this week - in the cabinet and the state power company

Patrick Smith

This week the focus is on Pretoria on the next moves for the newly-inaugurated President Cyril Ramaphosa and then to Malawi where the courts have given President Mutharika election victory. Moscow has been hosting Denis Sassou-Nguesso, the veteran leader of Congo-Brazzaville. Then, a couple of resource-nationalism dramas – in the copper mines of Zambia and the gold mines of Tanzania.

SOUTH AFRICA: A double reshuffle for Ramaphosa this week – in the cabinet and the state power company
Choosing his new cabinet will take up much of President Cyril Ramaphosa's time this week, following his inauguration on Saturday (25 May). And he is running a tight enough ship to ensure that leaks of who is on the list have not surfaced in the media. The best guess is that his allies Lindiwe Sisulu, Pravin Gordhan and Tito Mboweni will be on it, the last two in economic posts again.

The constitution gives the President five days after the inauguration to name his ministers. One of Ramaphosa's main aims is to exclude all those linked to corruption and state capture claims.

Last week, it emerged that the African National Congress's Deputy President David Mabuza would not be inaugurated as Deputy President of the country until he had appeared before the party's Integrity Committee. Now, we understand, over 20 top ANC officials are due to appear before the commission to try to clear their names.

The government is not the only institution facing a reshuffle. Troubled parastatal Eskom will need a new CEO after announcing that Phakamani Hadebe will step down at the end of July on health grounds. The company's debts topped US$30 billion by the end of March.

Although Hadebe, a veteran banker, had made some progress in dealing with the company's financing crisis, he had not been able to stop another round of ruinous power cuts. Eskom is 'too big to fail', said Ramaphosa: now he has to choose the chief executive who can stop that happening.

MALAWI: Post-election tensions rise after claims of rigging as President Mutharika is confirmed as winner
After a bitter campaign in which the big parties accused each other of plotting to steal votes, President Peter Mutharika was finally declared the winner with a narrow victory over his rivals after a challenge in the courts.

Malawi's electoral commission (MEC) had said the presidential poll was too close to call, and that results could not be updated until 147 complaints had been resolved. The opposition Malawi Congress Party of Lazarus Chakwera had sought to delay the announcement, citing allegations of voting irregularities. The courts have now cut short that process as unrest was widely reported from activists angry at Mutharika's re-election.

CONGO-BRAZZAVILLE: Russia to send military mission
President Denis Sassou-Nguesso went back to his Cold War roots for a four-day visit to Russia last week. Having persuaded China to restructure his country's debts, Sassou signed a military co-operation pact with his counterpart President Vladimir Putin.

If cutting deals with Putin helps Sassou down the line, it is also useful for Russia, which wants to beef up its military presence in Africa. It has signed military co-operation pacts with African countries such as Sudan, Zimbabwe, and Djibouti.

The Brazzaville deal will strengthen Russia's position in the Central African Republic, which Congo-B borders, and where Russia runs a 'military stabilisation' mission, endorsed by the UN.

ZAMBIA: Vedanta goes to court fight against the government's plan to take back Konkola copper mine
After being threatened with the liquidation of its copper assets in Zambia by President Edgar Lungu's government, Vedanta is preparing for a court hearing over the control of Konkola Copper Mine which will reconvene on 4 June.

In what could become a landmark case for Lungu's cash-strapped government, Vedanta has left the door open for compromise. 'While Vedanta intends to fully defend its legal rights, we remain open to dialogue,' chief executive Srinivasan Venkatakrishnan said in a statement on Monday (27 May).

Lungu's government announced plans to take over Vedanta Resources' domestic copper assets earlier this month, complaining that mining firms weren't paying enough tax.

Vedanta says that the Lungu government is abusing corporate law by demanding the winding up of KCM on the basis of 'fairness and equity' rather than on grounds of insolvency.

TANZANIA: Magufuli's bulldozer tactics on mining taxes may work against Barrick Gold
It may be the quantity or quality of the gold ore in Tanzania or a host of political factors but Canadian-based Barrick Gold is making a last-ditch attempt to resolve its two-year dispute tax dispute with the Tanzanian government. Whatever the case, it could provide President John Magufuli with a rhetorical victory for his resource-nationalist strategy.

Now, Barrick is bidding to buy out Acacia, its local subsidiary in Tanzania. It seems the two company's management teams have been at odds on how to handle the crisis triggered by a $190 billion tax demand from President Magufuli's government two years ago.

Barrick already owns 63.9% of Acacia whose share price has fallen by more than 70% since the demand. The government's tax bill has now been cut to $300 million.

Barrick chief executive, Mark Bristow, seen as one of the hard men of African mining, says the low-ball bid of $787 million for the remaining shares in Acacia is its last offer due to the company's risk exposure in Tanzania.


THE WEEK AHEAD IN BRIEF

NIGERIA: Ahead of his inauguration on 29 may, President Muhammadu Buhari signs US$29 billion budget based on an average $60 a barrel oil price

SUDAN: Junta leaders fly to Egypt and UAE for urgent meetings as negotiations on the transition remain deadlocked amid calls for more protests

ZIMBABWE: Concerns about monetary stability grow as finance officials accuse exporters of hoarding $400 million overseas