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The Africa Confidential Blog

  • 21st February 2017

SOUTH AFRICA: Zuma positions his money man ahead of budget speech

Patrick Smith

This week we start in Cape Town with renewed speculation about a cabinet reshuffle as Finance Minister Pravin Gordhan prepares to read his budget and then to Somalia where the IMF has promised the new government it will back a debt relief scheme. In Gambia, jubilation at President Adama Barrow's inauguration was tinged with some concern about the stability of the transition and a third high-ranking member of the South Sudan government has quit in a week, alleging ethnic bias. Finally, Nigeria's government gets a vote of confidence from investors despite the month-long absence of President Muhammadu Buhari.

SOUTH AFRICA: Zuma positions his money man ahead of budget speechFor political insiders the news that Brian Molefe, the disgraced former head of the state power company Eskom, has been 'deployed to parliament' could mean only one thing: President Jacob Zuma wants to appoint his friend as a minister or deputy minister.

Under the country's proportional representation system, party leaders can choose whom they send to parliament as MPs at will. The word for months has been that President Zuma wants to sack Finance Minister Pravin Gordhan, who is due to read the budget tomorrow (22 February), and replace him with someone more pliable, or to find a way to rein him in.

Molefe fits the bill. He wept at a briefing at Eskom after he was named in a report on state capture by Public Protector Thuli Madonsela. She had revealed that there were 58 phone calls between Molefe and the Gupta family when their company Tegeta was buying the Optimum Coal mine, which had a lucrative supply contract with the state utility.

Molefe's defenders say at least he had the decency to resign after Madonsela had pointed to the conflict of interest. Now, he is back in the game, courtesy of Zuma's plans for another cabinet reshuffle.

Although Zuma has the constitutional right to sack Gordhan and replace him directly with Molefe such a move could provoke strong opposition from other senior ministers and figures in the African National Congress.

A plausible alternative for Zuma would be to replace the current Deputy Finance Minister, Mcebisi Jonas, with Molefe, who could act as a brake on Gordhan or at least report on what he is doing. Jonas could then be moved to the currently vacant spot of Deputy Trade Minister. That could still panic the markets, pushing down the rand against the dollar again and forcing up interest rates – to say nothing of prompting a ratings downgrade later this year.

In terms of economic rationality, this makes no sense when Finance Minister Gordhan is due to read the budget under some of the toughest financial conditions for more than a decade. Yet according to the dictates of the power game now being played at the top levels of government it is just part of the political calculus.

SOMALIA: The IMF talks debt relief and new currency notesAfter his surprise selection by parliament, new President Mohamed Abdullah Mohamed 'Farmajo' has received another endorsement from a more unexpected quarter – the International Monetary Fund. Not only is the IMF willing to back the introduction of new Somali shilling notes, due to come into circulation this year alongside the US dollar, it is also willing to help the country negotiate a deal to get relief on some of the US$5.3 billion it owes to major creditors.

Remonetising the national currency – almost all the Somali banknotes in circulation are counterfeit – would be an important step towards economic normalisation for President Mohamed's new government. The Kenya Commercial Bank has already applied to set up in Mogadishu. Somalia currently receives about $2.5 billion a year in remittances from its highly entrepreneurial diaspora, dotted around Africa, Europe and North America.

THE GAMBIA: Mass arrests of Jammeh supportersThe formal inauguration of President Adama Barrow at Banjul's Independence Stadium last Saturday (18 February) to popular acclaim has not calmed concerns about the stability of the regime and its relations with its neighbours. The guest of honour was Senegal's President Macky Sall, who has been asked to keep some of his soldiers in Gambia to consolidate the transition after the departure of defeated President Yahya Jammeh.

The European Union has already announced an aid package worth $80 million for Barrow's government; some French officials have long suggested that a closer union between Senegal and Gambia would make sense. Yet four days before Barrow's inauguration, Britain's passionately anti-EU Foreign Minister Boris Johnson turned up in Banjul to fete the new government. Johnson said Britain would fast-track Gambia's return to the Commonwealth; Jammeh had taken Gambia out of the organisation labelling it 'colonialist'.

And there are residual supporters of Jammeh and his Alliance for Patriotic Reorientation and Construction. Police arrested about 50 of Jammeh's supporters in Kafenda, one of his strongholds, after violent arguments with a contingent returning from the inauguration.

SOUTH SUDAN: More senior officers quit Salva's government claiming discriminationThe resignation of Khalid Ono Loki claiming ethnic bias is the third top-level departure from President Salva Kiir's government in the past week. It follows the resignations of General Thomas Cirillo Swaka and Minister of Labour Gabriel Duop Lam. Their common complaint is that Salva's government is blatantly biased in favour of his own Dinka people. Khalid Ono, who headed the military court system, extended this criticism to the head of South Sudan's army, General Paul Malong, accusing him of covering up crimes such as murder, rape and theft.

This comes at a time of chronic economic difficulties for the Juba government: it has lost almost all its oil revenues due to the resurgence of conflict last June. Drought and war have hit food supply and the UN has officially declared famine in parts of the country. Inflation was reckoned to have hit over 800% last year.

More than three mn. of the country's 11 mn. people were forced from their homes by fighting last year; 100,000 face starvation and 1 mn. are on the brink of famine, says the World Food Programme. Up to 400,000 have fled across the border to Uganda whose government says it's struggling to cope.

NIGERIA: Vice-President Osinbajo reaches out as Buhari's health worries continueSeveral investors who last week snapped up a billion-dollar Eurobond launched by Nigeria told Africa Confidential last Friday (17 February) that they were unfazed by the month-long absence of President Muhammadu Buhari from his country on medical grounds. They pointed to the orderly transfer of power, during Buhari's absence, to Vice-President Yemi Osinbajo.

A consummate technocrat and part-time pastor with no independent political base, Osinbajo has pressed ahead with the business of government. Last week his team was preparing the launch of an economic recovery plan and he led a delegation to the Niger Delta to reinforce a government agreement with local militant groups.

However, Osinbajo is treading a fine line between assuring Nigerians and outsiders that there is no power vacuum during Buhari's absence and overplaying his hand politically. Some investors say the financial team launching the bond had suggested that further exchange rate reforms were likely to be announced later in the month, probably as part of the recovery plan. So far, President Buhari has shown no sign of resiling from his long-held opposition to a sharp devaluation of depreciation of the Naira.