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The Africa Confidential Blog

  • 28th October 2019

The week ahead: Action demanded by voters and bankers in President Ramaphosa's crunch week

Patrick Smith

This week we are covering South Africa's budget, Botswana's election, the repercussions of the killing of the Islamic State leader, a mooted referendum in Kenya, talks on the dam on the Nile between Egypt and Ethiopia and the World Bank's Doing Business rankings.

IMPATIENT SOUTH AFRICA: Action demanded by voters and bankers in President Ramaphosa's crunch week

Bankers want spending cuts and a restructuring plan for the Eskom power utility while angry voters want prosecutions of officials accused of malfeasance during Jacob Zuma's presidency which cost the country at least $30 billion, according to President Cyril Ramaphosa.

They also want to see the extradition of some of Zuma's business allies, the Gupta brothers, currently domiciled in Dubai. Ramaphosa insists that talks on the Guptas' extradition are 'ongoing' with several countries.

It looks like the bankers are first in the queue. Tough-talking Finance Minister Tito Mboweni will read his medium-term budget in parliament on Wednesday (30 October) and has already warned of harsh measures ahead. Two days later Moody's rating agency will announce whether it is to downgrade South Africa to negative. Should Moody's follow the lead of Fitch and Standard & Poors, which downgraded the country's ratings to junk in 2017, there would a rapid outflow of as much as $1.5 bn, according to the International Monetary Fund and Bloomberg News. The bigger hit could come later – the scuppering of President Ramaphosa's campaign to pull in $100 bn in investment to rebuild the economy and create jobs.

NORTH AFRICA REBOUND: Warnings on vengeance attacks in Africa and Europe after death of Islamic State commander at hands of US Special Forces

The killing of Abu Bakr al Baghdadi, commander of the Islamic State (IS or Da'ish) in north-east Syria in the early hours of Sunday (27 October) could trigger reprisals by militants, according to security experts in Paris and the Sahel. Since its military defeat in Iraq and Syria, IS has been focusing on insurgencies in North Africa, especially Libya, the Sahel and Nigeria.

Western embassies and corporations are reported to have tightened security in those areas in recent months. On Friday (25 October), Morocco's security agency said that it had arrested seven jihadist fighters planning to attack the port at Casablanca and whose leader had been trying to join IS's affiliate in the Sahel.

A combination of powerful weapons, more effective training and operational coordination has allowed IS affiliates in the region to overwhelm government soldiers in a spate of recent attacks.

KENYA'S NEW REFERENDUM PLAN: Plans agreed under the 'handshake' alliance between President Kenyatta and erstwhile oppositionist Raila Odinga may be put to popular vote

The report by the Building Bridges Initiative task force is complete but political leaders are yet to see it. Drafted after 18 months of the post-election 'handshake' politics between President Uhuru Kenyatta and Raila Odinga, the BBI report is expected to propose a Bill of Rights, better representation for minority groups and the return of the office of prime minister, which Odinga held during the second term of Mwai Kibaki's presidency.

Kenyatta and Odinga are trying to rally their allies behind the plan. The most important decision will be whether the BBI's constitutional change recommendations go to a referendum.

That decision is likely to be left to Kenyatta and Odinga. The biggest loser from a referendum would be Deputy President William Ruto, who fears that it would re-draw the political map that has seen Ruto's Kalenjin and Kenyatta's Kikuyu supporters produce an election-winning alliance in two elections.

RUSSIA'S SOCHI SUMMIT: With over 40 African leaders in Russia, President Putin's grand gathering is long on symbolism and geopolitics but short on big economic wins

The first Russia-Africa summit in Sochi last week 'opened up a new page in the history of Russia's relations with African countries', claimed President Vladimir Putin. Yet it was a shadow of the old ties between the Soviet Union and Africa at the height of the Cold War.

Back then Africa had to choose between Moscow and Washington. Now, the biggest single player on the continent is China – Washington and Moscow are also-rans.

Yet the Russian Federation has carved out a niche in defence and military pacts with African countries, but in trade terms, Russia is light years behind Europe and China. It wants to double its trade with Africa to $40 bn by 2025. China-Africa trade is worth $200 bn per year.

As competition for African business heats up, the United Kingdom, still trying to leave the European Union, will host its own African trade and investment forum in January as it seeks to establish new trade and political ties.

The EU has plans to improve its offer to Africa. The annual EU-Africa business summit hosted by Morocco at the end of November will be one of the first opportunities for the new European Commission, led by Germany's Ursula von der Leyen, to persuade African counterparts. The new EU executive focuses on 'partnerships' with Africa, rather than old-style 'development' policies and programmes.

NILE TALKS FOR ETHIOPIA AND EGYPT: Tough questions remain about the environmental effects of the Grand Ethiopian Renaissance Dam after signs that Addis Ababa and Cairo could resume talks

A meeting on the margins of the Russia-Africa summit in Sochi between Egypt's President Abdel Fattah el Sisi, a co-chair of the meeting, and Ethiopia's Prime Minister Abiy Ahmed raised hopes that the two leaders would restart the work of a joint committee on the GERD after some bellicose pronouncements from both sides.

The timetable for filling the dam reservoir has triggered bitter recriminations after years of disagreement between regional states over access to the Nile. Ethiopia sees the dam as critical to its plans for economic growth, modernisation and an electricity industry that will export to the region. But the Nile provides 90% of Egypt's irrigation and drinking water, and the country fears the consequences of a neighbour building one of the biggest hydroelectric plants in the world on its lifeline.

WORLD BANK LEAGUE TABLES: How the 'Doing Business' rankings have become big business

The release of the World Bank's 'Ease of Doing Business' rankings last week underscores the challenges facing signatory states if they are going to make a success of the African Continental Free Trade Area.

Togo, Kenya and Nigeria are the continent's big risers in the rankings while Rwanda, though still the best in class, has fallen from 29th to 38th place. Indeed, Togo has sent a series of delegations to Kigali in recent years to pick up tips.

However, only two countries – Rwanda and Mauritius – are in the global top 50 and 12 of the countries in the bottom 20 are in Africa.

Digital technology is driving improvements to the business environment, according to the World Bank index. Countries that have online business incorporation processes, electronic tax-filing platforms and online services for property transfers climb up the index. A rapid adoption of such digital technologies will be critical to setting up the regulatory systems that will govern the continental trade area.


BOTSWANA'S RULING PARTY WIN: Incumbent President Mokgweetsi Masisi defeats opposition party challenge backed by his predecessor Ian Khama

DEBT DOUBTS: Kenyan and Nigerian finance ministries put international borrowing plans on hold amid doubts on sustainability.

ETHIOPIA'S OROMIA CRISIS: Nobel laureate Abiy Ahmed's peacemaking skills tested again as 67 killed in regional clashes around Dire Dawa and Adama

CONGO-KINSHASA'S MEGA BUDGET: Prospect of IMF deal as Tshisekedi government announces 60% boost to spending plan but fresh doubts surface on Inga power project