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The Africa Confidential Blog

  • 15th November 2016

UNITED STATES/AFRICA: Tougher trade deals and isolationism threaten after Trump's win

Patrick Smith

This week we start again in the United States in search of the implications, direct and indirect, of Donald Trump's shock victory in the presidential election. In South Africa the African National Congress starts its run-up this week to picking its presidential candidate for the 2019 elections.
The legal battle over Guinea's iron ore reserves takes a new turn after it emerged that Rio Tinto has suspended its top executive working on the project. Akinwunmi Ambode, the governor of Lagos, is making himself unpopular with the denizens of Nigeria's commercial capital, just as his ally and political godfather Bola Tinubu appears to be breaking ties with President Muhammadu Buhari.
Although Kenya's economy looks relatively strong as President Uhuru Kenyatta prepares for elections next year, he is pulling the country out of regional security missions in South Sudan and Somalia. Any downgrading of Kenya's security role, amid signs that Uganda might follow suit, poses a serious challenge to the military balance in East Africa and the Horn.

UNITED STATES/AFRICA: Tougher trade deals and isolationism threaten after Trump's winAs the first shockwaves after Donald Trump's presidential election victory on 8 November subside, African policy-makers are looking at three areas of possible disruption this week: capital flows and trade, security, and climate change. Expectations of any economic gains for Africa from a Trump presidency are almost universally low. Africa was scarcely mentioned during the election campaign.

After a period of strong economic growth from 2005-2015, Africa has been slipping down the league table of US commercial interests over the past year. In a world of oversupply of oil and gas and historically low commodity prices, there is unlikely to be any upturn in US investment in Africa, which lags behind that of China and Europe.

Some US economists predict that Trump's planned corporate tax changes and trade protectionism will spook the US markets leading to a crisis as bad as the 2008 financial slowdown. If Trump sharply cuts imports of Chinese and Indian manufactures, that will mean lower demand for the African metals and ores that feed Asia's factories.

African officials fear that Trump will restrict or abolish the African Growth and Opportunity Act (AGOA), the US-Africa trade deal which offers duty-free access to the US market for about US$4 billion of African exports each year. There might also be a review of the Power Africa programme, which is meant to encourage US investment in Africa's electricity industry. However, those big US corporations which benefit from these arrangements will lobby for their survival. African exports to the US are a fraction of the volume of Asian exports, and have little effect on US jobs. But organisations such as the US Agency for International Development will worry about cuts in their programmes to meet Trump's ambitious targets to limit state spending.

There are also concerns that a Trump administration might launch heavy-handed military interventions in Africa – in a new phase of the USA's war on terror – that could exacerbate Africa's mounting security problems.

More effective US diplomatic engagement in Africa looks unlikely if cuts continue in the State Department, which has been losing out to the Department of Defense in recent years. The same can be said of most Western governments whose diplomatic profile in Africa is in retreat in relation to countries such as China, India, Russia and Turkey.

Finally, Trump's rubbishing of the science behind climate change has big implications for Africa. He has pledged to pull the US out of last year's climate change treaty in Paris; that will substantially cut the pot of money available to those countries, many in Africa, hardest hit by global warming.

SOUTH AFRICA: ANC prepares for the post-Zuma worldDespite the storm of corruption allegations, the African National Congress circled the wagons and fought off yet another no-confidence motion against President Jacob Zuma in Parliament on 9 November. Zuma's top aides are resigned to their man facing months of legal battles following outgoing Public Protector Thuli Madonsela's report on improper corporate influence on government.*

This week, at least one state-owned company plans to launch a judicial review of the Madonsela report as part of Zuma's fightback. There are also efforts by opposition parties and civic groups to reinstate the 783 corruption charges against Zuma which were dropped in 2009. In the coming weeks, the government will focus mainly on shoring up economic policy and boosting growth to stop South Africa's creditworthiness being downgraded to junk status by the ratings agencies – a move that would trigger substantial outflows of capital.

And this week ANC will start preparing for a policy conference due in six months and its elective conference to be held before the end of 2017. Given the ANC's continued political dominance in South Africa, the choice of leaders at that conference will be of critical importance. There are at least five contenders to succeed Jacob Zuma, and discreet electioneering is already under way.

Top officials will be talking to the ANC's branches in the provinces, perhaps to influence their choices but also to limit the factionalism that has been scarring the party in recent months. That's a tall order given the high stakes in the coming leadership contest.

GUINEA/MINING: Steinmetz cheered by disarray at rivals in Rio TintoRio Tinto's sale of its 46.6% stake in the giant Simandou iron ore mine to Chinalco for an estimated US$1.3 billion, reported last week, may have looked like a skilful exit from Guinea's troubled mining industry by the world's second biggest mining company. But it hasn't ended the four-sided legal wrangling over the mine's future.

Beny Steinmetz, whose Swiss-based company has been hit by law suits from corporate rivals Rio Tinto and Brazil's Vale, told Bloomberg News last week that the suspension of Alan Davies, who ran Rio's operations in Guinea, would have serious implications. Rio made payments of $10.5 million to consultant François de Combret, a former employee of Lazard Bank in Paris.

'We are the good guys,' Steinmetz told Bloomberg News after hearing of Davies' suspension. So far, neither Rio nor the Guinea government, which stripped Beny Steinmetz's company of its stake in Simandou, has made any public comments about these latest developments in the saga.

NIGERIA: Lagos Governor Ambode makes more enemies as rumblings of discontent grow louder in the south-westThe rumbustious mega-city of Lagos, home to over 20 million people, has been hit by the worsening recession in the country which has brought much of the business in the commercial capital to a grinding halt. Another reason for the malaise in Lagos is the fractious politics. The godfather of the south-west, Bola Tinubu, has been struggling to shore up his influence since Muhammadu Buhari won the national presidency on the ticket of the All Progressives Congress last April.

Although Tinubu's patronage extended to the appointment of some top officials such as the Governor of Lagos State, Akinwunmi Ambode, he is at odds with stars from the south-west such as Power Minister Babatunde Fashola and Mines Minister Kayode Fayemi. Tinubu's relations with President Buhari are also said to be nearing breaking point.

But Tinubu's protégé in Lagos, Ambode, is proving extremely unpopular in the city. Compared with Fashola, the previous Lagos Governor, Ambode's record on service delivery and security is well below standard. At the same time, Ambode has a predilection for bulldozing what he defines as 'illegal structures'. Having ordered the demolition of several buildings housing small businesses and cafés in Ikoyi, Ambode is now targeting the slum areas around the Lagos lagoon which house as many as 300,000 people. Ambode's programme to demolish these areas started last month but is now gathering momentum and could hit serious opposition in the coming weeks.

KENYA: Military starts to withdraw from regional forces ahead of next year's tough electionEast Africa's biggest economy, Kenya, is defying the negative growth trends of much of the rest of the continent – it is projected to grow at an average of 6-8% over the next three years – but it is reining in its military forces in the region. Last month, President Uhuru Kenyatta's government announced it would be pulling Kenyan troops out of neighbouring Somalia as part of a review of the country's security strategy.

And then in the wake of the stern criticism last week of the Kenyan commander of the United Nations peacekeeping force in Juba, Kenyatta's government has announced that it is pulling its troops out of South Sudan.

UN Secretary General Ban Ki-moon had called for the immediate replacement of Lieutenant General Johnson Mogoa Kimani Ondieki, the Kenyan officer who had been commanding the UN peacekeeping force in South Sudan, following a devastating report on the soldiers' failures to protect civilians from attack by rampaging government soldiers.

In a series of attacks in July by soldiers loyal to the South Sudan government, two Chinese peacekeepers were killed and several wounded, several aid workers were raped and a South Sudanese journalist was shot dead. Over 180 buildings in the United Nations compound were hit by shells and rocket-propelled grenades fired by forces loyal to President Salva Kiir. Those targeted by these attacks said the Kenyan-led UN force was missing in action.

Kenya rejected the criticism of Lt Gen Ondieki, arguing that there were organisational problems with the mission beyond the control of the force commander. The troops from China, Ethiopia, Nepal and India were not operating under a unified command.