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The Africa Confidential Blog

  • 20th March 2018

SOUTH AFRICA: Ramaphosa reforms take off with Zuma's trial, Moyane suspended from tax authority and purge of state firms

Patrick Smith

This week we start with the prospects for President Cyril Ramaphosa's reforms in South Africa and then the chances of a deal between Mozambique and its commercial creditors. Still in Southern Africa, President Emmerson Mnangagwa's financial amnesty is proving a success ahead of elections in July and Angola's former President, José Eduardo Dos Santos, is trying to extend his term as head of the ruling party.

SOUTH AFRICA: Ramaphosa reforms take off with Zuma's trial, Moyane suspended from tax authority and purge of state firms
Step by step President Cyril Ramaphosa and his economic team – the Ministers for Finance and State Enterprises, respectively Nhlanhla Nene and Pravin Gordhan – are remaking the government and its administration. The decision last Friday (16 March) by Shaun Abrahams, Director of the National Prosecuting Authority, to prosecute ex-President Jacob Zuma on 16 charges of corruption, racketeering and money-laundering sends a powerful signal about the seriousness of the new order.
Although Abrahams, who is contesting a judicial order that he is unfit to run the NPA, had little choice in the matter, his decision is seen by the ex-President's allies as a betrayal. Other allies of Zuma are threatening to cause mayhem in the African National Congress in revenge but their power is waning.

The more robust Zuma supporters warn that South Africa could follow the example of Brazil, where the fall of a corruption-plagued leftist government led to the rise of a right-wing president implementing tough neo-liberal reforms. So far in South Africa, the centre-right Democratic Alliance has benefited little from the fall of Zuma.

This is where Ramaphosa's political skills come in. His strategy is to pull more supporters into the ANC from both right and left: with a combination of anti-corruption policies and sympathy for the landless and unemployed. His decision on 19 March to suspend Tom Moyane as director of the South African Revenue Services sent another powerful signal. Lambasted for sacking some of SARS's most effective officials, Moyane had refused all entreaties to resign. He is already under investigation.

State revenues are likely to grow sharply if some of the top professionals who sacked by Moyane are reinstated. That will help Nene who is trying to balance the budget as credit ratings agencies make their assessments of the early effects of the Ramaphosa era.

However, the most significant changes will follow Gordhan's efforts to restructure the state companies that have proved such a political and economic drain on the ANC government. Starting with the power utility Eskom and South African Airways, Gordhan is working his way through the companies that served as a political patronage machine for Zuma and allies.

MOZAMBIQUE: Secret loan saga to cast shadow over government meeting with creditors
Expectations of an agreement on debt-restructuring between Maputo and its commercial creditors were low ahead of today's talks (20 March). Banking sources say that the government had not proposed a new plan ahead of the meeting and that the creditors were divided in their approach.

According to the IMF, Mozambique's foreign debt was US$13.3 billion at the end of 2017 and its arrears are now over $700 million Most of the country's financing problems have been traced back to some $2 bn. in secret loans, organised in deals with Credit Suisse and Russia's VTB which are now under international scrutiny.

Some creditors, one banker said, may have been prepared to accept some form of write-down but others would refuse any such offer, preferring to wait for full repayment until gas exports start up around 2023.

ZIMBABWE: President Mnangagwa sets July as date for national elections as fresh investments arrive
A succession of announcements about fresh foreign investments are feeding a more optimistic view of the country under President Emmerson Mnangagwa's reshuffled government. Some $590 mn. in foreign exchange has been repatriated to Zimbabwe under Mnangagwa's financial amnesty programme. But officials say that at least another $800 mn. is due.

Emboldened by the flow of both new and old money coming in, Mnangagwa has announced that national elections will be held in July.

He added that election-monitoring organisations from across Africa and the European Union would be accredited for the vote. This is despite ousted President Robert Mugabe complaining at a press conference at his mansion in Harare in the week ending 17 March that he had been the victim of a coup d'état.

Insiders suggest that Mugabe's press conference may have badly misfired, partly because it showed the considerable luxury in which his family still live – despite his claims of persecution by the new government.

ANGOLA: Ex-President Dos Santos tries to control the ruling party for another year as his family face growing challenges
Contrary to expectations, the last six months have seen the family of President José Eduardo dos Santos lose power, influence and money at a dizzying rate as new President João Lourenço consolidates power. Dos Santos's daughter has been ousted as head of the state oil company and his son sacked as head of the sovereign wealth fund. Other children have lost lucrative state contracts and are said to be under investigation.

Yet ex-President Dos Santos has retained his position as head of the governing MPLA. That is about to change if many of the party militants have their way. They want to see Dos Santos out of the party leadership in the next few weeks, at most months.

Pushing back against this, Dos Santos says he wants to stay until December, if not April 2019. Some suspect that he wants to use that position as a shield against further investigations. The party politburo meets again next month.

News in very brief

NIGERIA: Row over super-salaries for Senators will be a campaigning issue in next year's election
EGYPT: Government cracks down harder on media but President El Sisi faces no serious challenger in the 26-28 March elections

BURUNDI: President Nkurunziza to hold referendum on 17 May which could give him another decade in power

CONGO-KINSHASA: Government stands firm on higher resource taxes against big mining companies as demand grows sharply for its cobalt