By Ivan Okuda

Kampala — The Bank of Uganda Governor, Mr Emmanuel Tumusiime-Mutebile, has revealed that President Museveni gave the “go ahead” to close Crane Bank whose management the central bank took over last October due to its under-capitalisation.

“You would be mad to do such a thing (closing a bank) without briefing him (the President) on such an important action. He (Museveni) said ‘go ahead’,” the governor told this newspaper in an interview on Sunday.

Crane Bank, which a forensic audit later found was wholly owned by businessman Sudhir Ruparelia, was Uganda’s fourth-largest commercial bank by the time of its dramatic collapse.

The central bank sold some of its assets and liabilities to dfcu Bank, but remained with the other liabilities the buyer could not take, and these developments culminated in Crane Bank and BoU jointly suing Mr Ruparelia.

The latter is yet to file his defence, although this newspaper understands that there are ongoing frantic informal efforts to delay the case, if not circumvent it altogether.

In the Sunday interview, Mr Mutebile said they discovered “too late” that Mr “Ruparelia had been involved in fraud, for lack of a better word, involving theft of depositors’ money”.

The BoU Governor said he was “sorry” and would take responsibility for “what went wrong” but added that “I am not criminally culpable”.

Asked who then is criminally culpable, he replied: “Ask the [BoU] Executive Director for Supervision [Ms Justine Bagyenda]”.

We were unable to reach Ms Bagyenda by press time.

Mr Mutebile declined to discuss if he had spoken to Ms Bagyenda about a supervision lapse that threatened to endanger Uganda’s entire financial sector. He said a decision about whether or not to shake up the central bank staff would depend on the outcome of the court process.

The BoU Governor said the internal fraud at Crane Bank was “well hidden”, explaining delays in detecting it, and he described as “nonsense” suggestion that the bank was too powerful and politically explosive for them to handle.

Full interview

On July 10, the media reported that Bank of Uganda which closed and sold Crane Bank in 2016 to dfcu Bank had sued its former proprietor Sudhir Ruparelia and his Meera Investments. In the suit still pending before the High Court, the central bank is seeking to recover Shs400 billion Mr Ruparelia allegedly stole from Crane Bank. BoU Governor Emmanuel Tumusiime-Mutebile, in this interview with Daily Monitor’s Ivan Okuda, opens up on the crisis.

The question on the lips of many Ugandans is, where was Bank of Uganda when the mess at Crane Bank Ltd happened?

We discovered too late that Sudhir Ruparelia had been involved in fraud, for lack of a better word, involving theft of depositors’ money.

How too late was this?

Recently. Late last year.

BoU licensed this bank in 1995 and for that long you only realised last year that something was amiss?

We had to have a forensic audit first which went behind the audits performed by the former auditors.

What did the forensic audit unearth?

It found out, among others, that some of the claimed shareholders were not shareholders and the bank was owned by Sudhir almost 100 per cent. As a result of that forensic audit, one of the claimed shareholders Kantaria paid $8 million.

Where and to who was this money paid?

It was paid by Kantaria to Bank of Uganda. I can always check the account to which it was paid and get back to you but it was paid to BoU.

You (BoU) have been sued by NBC, businessman Amos Nzeyi and another citizen for gross statutory negligence and collusion.

How could we have colluded if we didn’t know what was happening? How could we have been negligent if we didn’t know what was happening?

One would say you slept on the job or perhaps Sudhir gave you sleeping pills by way of inducements that got you sleeping on the job.

How then could Kantaria have paid [Bank of Uganda] if we were colluding? Kantaria was challenged on how he was receiving money from Sudhir when he was not a shareholder.

With the institutional machinery you have at your disposal, the explanation that you didn’t know what was happening just can’t fly!

It was hidden very well. Sudhir had been audited every year but the auditors failed to see this criminality. It was only discovered after a forensic audit.

Why did it have to take a forensic audit to discover this?

Because unlike ordinary audits, a forensic audit goes behind the figures, they work like Criminal Investigations Department (CID) of police.

BoU relies on these auditors to ascertain the health of commercial banks… . Am I correct to say these auditors who kept giving you a clean bill of health for Crane Bank are incompetent?

No. It wasn’t their job. Theirs is to study reports as given to them and ask if one and two add up. Forensic auditors on the other hand go behind those figures and that is how they uncover the theft.

Why aren’t forensic audits done often? How could Crane Bank and indeed any other bank, not have been forensically audited for more than 15 years?

It is costly and undermines confidence in institutions. We had never had a forensic audit on Crane Bank. A forensic audit is only put in place when and where there is a problem or suspicion of wrongdoing going underground.

Ordinary folks out there saw gaps in Crane Bank; how could BoU fail to smell a rat?

Nobody had ever found out how Sudhir owned the bank 100 per cent. How could they discover these irregularities without a forensic audit? No one ever came out to assert the issues raised in the forensic audit report.

The Internal Security Organisation has the Economic Monitoring Unit, there is the Financial Intelligence Authority, CMI, ESO, etc. How could they all fail to detect this and feed you?

I cannot answer for the intelligence services of Uganda but I don’t think it is their work to go and do a forensic audit on commercial banks. These audits are done occasionally when irregularities are discovered.

At what point did it occur to you that BoU needed to do a forensic audit on this bank?

When suddenly we realised Crane Bank was losing capital and it was not clear where that money was going. If for instance, today you have Shs400m and tomorrow you only have Shs300 million, it becomes important to query where the Shs100 million went so suddenly.

So for all these years the bank was doing just fine as not to raise your eyebrows to necessitate a forensic audit? The forensic audit report I read before this interview shows irregularities date so many years back.

According to their ordinary audits, yes. Those ordinary audits had been explaining the financial condition and performance of the bank.

In essence these auditors can be accused of misleading the central bank by painting a rosy picture whereas there was deep rooted rot?

These are different functions. Audit companies are not forensic auditors. Ordinary audits will check if the figures presented to them are consistent in themselves while forensic audits go beyond the figures. If for example, those figures show Crane Bank had Shs100 million and one month later they show that money is gone, the forensic auditors ask where did this money go?

Are you going to bring these auditors to book?

No. Why? We know the difference between ordinary and forensic audits. Except if there is evidence to show there was collusion between auditors and the shareholders.

There are allegations of collusion between BoU staff and Sudhir and your executive director for supervision has been named as having a conflict of interest in this matter.

I have not seen any evidence though I don’t categorically deny the possibility of collusion.

This must be a difficult time for you; being on the receiving end of this fire.

No. How? It is not the first time we are conducting a forensic audit. It is only being overplayed because of who Sudhir is.

There is the blockbuster question. Who is Sudhir in the grand scheme of things?

I used to think he is an ordinary businessman. I don’t think so now.

Why the change of opinion?

Just because he lost so much money in Crane Bank so quickly.

The International Monetary Fund issued a statement to the effect that the mess could have been avoided had the central bank been more vigilant and asked you to pull up your socks.

They should have said if the supervisors of the commercial banks were more vigilant. Who was doing the work of supervision? Okay it was Bank of Uganda staff but not the entire BoU. BoU has an executive director in charge of supervision.

Are you passing the blame to your junior now?

I am responsible for what went wrong but I am not criminally culpable.

So who is criminally culpable for this muddle?

Ask the executive director for Supervision [Ms Justine Bagyenda].

I am asking you as the chief executive. Have you asked her to explain what went wrong under her watch?

I can’t discuss that in public.

But you are the head prefect of this institution

Yes, I am the head prefect of the institution but I am not criminally culpable.

Your criminal culpability is for the police and DPP to tell us, but what action shall you take on her?

I shall decide after the courts have ruled.

It is said Crane Bank had become so big that even BoU couldn’t touch it.

That is absolute nonsense. How come we touched it?

It is even said Sudhir had become so close to the powers that be, including the President that you could only look on?

How come we touched the bank? Answer that!

Perhaps the President pressed the destruction button and said it is time to clip Sudhir’s wings and only then could you intervene.

No. We didn’t even ask him before closing Crane Bank. Of course he was briefed. You would be mad to do such a thing without briefing him on such an important action. He said go ahead.

How did he react to the information relayed in the forensic audit report?

Oh! He didn’t believe it till much later.

Did Sudhir try to get the President to stop you?

No. As far as we know he wasn’t involving State House on this matter till we briefed the President.

How difficult a step was this to take?

It wasn’t difficult. It is part of my job. I have to do it.

It is certainly not as easy as you make it appear given the political games and stakes.

Because I have to brief the President before I act doesn’t mean I got permission from him. It would be foolish for anyone to close a bank without briefing him, that is why he is the head of State.

How did Sudhir react to these issues raised in the audit report?

He was shocked and denied everything he was told.

Shadow finance minister Nandala Mafabi has been on TV saying you should be jailed for this negligence.

Let Mafabi go to jail first.

Why?

I can also claim he is a criminal. How is he claiming I am a criminal?

Why did you sue Sudhir?

We went to court because we failed to settle the matter when Sudhir failed to pay in accordance with the agreement.

The Independent of Mr Andrew Mwenda has accused BoU and dfcu of perpetrating one of the most open frauds in this country in this claim against Sudhir.

Does Mr Mwenda or his Independent magazine know what fraud means?

Part of the claim is that whereas dfcu is collecting loans from former Crane Bank borrowers and those loans had security, BoU is also harassing Sudhir for money, some of which is being cleared by former Crane Bank borrowers.

That argument confuses two things. The loans as they were at Crane Bank have been secured, Crane Bank failed. BoU sold assets and liabilities, some were bought by dfcu and others were not, those that weren’t bought are still under BoU. Those bought by dfcu belong to dfcu.

Can you say sorry to the country for this mess?

I would say sorry but I shall keep my position which is that I accept responsibility but I am not criminally culpable in as much as I am sorry for what happened.

Parliamentarians are moving a motion to have BoU investigated.

I shall not go there until the case has been disposed of by the courts.

The Swiss Ambassador to Zimbabwe, Ruth Huber, says investment in will remain stagnant as long as the Harare fails to compensate whites whose farms were forcibly taken without proper dialogue.

She was speaking during the Swiss National Day Tuesday.

Huber told journalists that although investment from Switzerland has slightly increased in Zimbabwe, the difficulty has been to attract new investment in the current political and economic environment.

The Swiss envoy described the political environment as polarized.

She said potential investors in Switzerland inquire about previous investors and they hear about Swiss agricultural farmers that have lost their farms without any compensation until today.

“As we all know the frame conditions are not very favourable for attracting new investment. Cases of previous investors in agricultural production are unresolved.

“The current economic environment in the country is not easy for the private sector. The loss of farms by white commercial farmers is an issue that makes new investors hesitate. They are not so sure if the law is sufficient enough to protect their businesses.

“As much as investors out there would want to come and invest, they want to see how the elections will go. Investors are closely looking at the political situation in Zimbabwe as the country gears up for the 2018 elections. They want to see if elections are going to be free and fair as well as peaceful.”

The Ambassador, however, expressed hope in the compensation issue which she said is on-going as the two countries are still engaging in dialogue to see how some of the farmers from her country could be paid.

Huber said it is therefore important to acknowledge the positive contribution and the continued commitment of Swiss companies present in the country and the impact they are making through their know-how, investment, production of quality products and job creation.

In year 2000, the government embarked on a countrywide offensive land reform programme where white commercial farmers were forcibly evicted from their farms and lost millions of dollars for developments made on the properties as well as for agricultural output which the government has not paid for.

The government insists that Britain is responsible for the compensation of the farmers through the agreements made during the Lancaster House Conference in 1979.

A fortnight ago, finance minister, Patrick Chinamasa, claimed that he had paid some white farmers. However, his claim appeared to have shocked the whites who said they had not seen a cent from government.

The Acting President, Yemi Osinbajo, will on Thursday inaugurate a new world-class fertilizer plant built by Indorama Eleme Fertilizer and Chemicals Limited in Port Harcourt.

Laolu Akande, the Senior Special Assistant to the Acting President on Media and Publicity, made the announcement in a statement issued in Abuja on Wednesday.

According to the presidential aide, the plant with production capacity of 1.5 million metric tons of Urea fertilizer is considered the world’s largest single-train Urea plant.

Eleme Petrochemicals Company Ltd, now Indorama Eleme Fertilizer and Chemicals Limited, was privatised in 2006 after the sale of the federal government’s 75 per cent shares to a core investor through competitive bidding process.

The statement said that the plant, with production capacity of 4,000 metric tons of nitrogenous fertilizer per day, was built with 1.5 billion dollars. It is supported by a port terminal at the nearby Onne Port Complex, and a Gas Pipeline of 83.5KM for gas supply

It said that the construction of the plant would lead to green revolution in the agriculture sector in Nigeria other parts of Africa and beyond, in line with the economic diversification policy of the Buhari administration.

The statement said that besides making fertilizer available to farmers nationwide at affordable cost, the plant will boost crop yield for farmers and help in minimizing food grain deficit in Nigeria.

(NAN)

By Xinhua

JUBA – South Sudan and Uganda have agreed on mechanisms to boost trade between the two countries through enhancing infrastructure development and cross-border trade electricity transmission.

South Sudan’s Minister for Energy and Dams, Dhieu Mathok, said the government concluded a two-day discussion with their Ugandan counterparts and the two countries have to cooperate in cross-border electrification and road connectivity.

He said Uganda has agreed to supply electricity to the South Sudan border towns of Nimule and Kaya, adding that a Memorandum of Understanding (MOU) has been developed and it will be signed after consultations with leaders of both countries.

“We have discussed the MOU and finalised the MOU, which is awaiting approval. Hopefully, we will be able to finish what we agreed by the second week of August,” Matok said while speaking on state-owned radio on Thursday,.

Simon D’Ujanga, Uganda’s State Minister for Energy, said his country will extend 400KW of power transmission line into South Sudan to ease trade.

The two countries also agreed to undertake road construction projects in the border town of Kaya aimed at opening up new trade corridor between Uganda, the Democratic Republic of Congo and South Sudan.

“We want our goods to move freely on the roads. So we have agreed to discuss how to work together so that we can give opportunity to the people of the two countries to enjoy the resources that we have,” said Rebecca Joshua, South Sudan’s Minister of Roads and Bridges.

Monica Azuba Ntege, Uganda’s Minister of Works and Transport said they agreed on technical cooperation on cross-border electrification and transport will promote trade and development through improved connectivity.

“This will help very much in integrating our countries and at the same time in the development of the areas in connectivity, tourism, trade and access to market,” Ntege said.

By Yasiin Mugerwa

Beijing — A consortium of eight Chinese enterprises yesterday signed agreements with Tian Tang Group to invest in Mbale Industrial Park, eastern Uganda.

Tian Tang Group was given the mandate to develop 619 acres of the industrial park in order to speed up job creation in the country.

The park, with a total investment of $600m (Shs2.2 trillion), is expected to house 30 enterprises and create 12,000 jobs for Ugandans.

“These agreements are an indication that we mean business and we are committed to this project,” Tian Tang Group chairman Paul Zhang, who is also the proprietor of Nanjing Hotel in Kampala said.

He added: “We would like to assure the government of Uganda that as a company, we are going to invest in the development of Tangshan Mbale Industrial Park and we will also attract investors to create the jobs for the people of Uganda.”

The eight companies are going to invest in; fruit processing and beverage production, rice processing and production, sanitation supplies manufacturing, wood processing and furniture manufacturing, glass manufacturing, household appliances manufacturing and solar pumping system, among others.

The investors led by Tian Tang Group and Sinoma, a company that is going to establish a cement factory also in Mbale are expected to visit the country in August on a fact-finding mission.

Tian Tang Group is working with the Finance ministry to bring investors to Uganda.

The signing of the agreements in Tangshan City, a largely industrial city on the eastern coast of China, was at the climax of the First Tangshan Mbale Industrial Park Investment Promotion Conference that was witnessed by more than 200 Chinese entrepreneurs and officials.

Tangshan, home to China’s five pillar industries, namely fine iron and steel, basic energy, high quality building materials, equipment manufacturing and chemical industry is 154km from the Chinese capital, Beijing.

Unlike other companies, Daily Monitor understands that CCCC Tianjin Dredging Co. Ltd, a wholly-owned subsidiary of China Communications Construction Company (CCCC) has signed a cooperation agreement with Tian Tang Group to jointly develop Tangshan Mbale Industrial Park.

The ceremony was also attended by State minister for Privatisation and Investment Evelyn Anite, State minister for Trade Micheal Werikhe, the area mayor Li Qinfeng and former Ambassador to Uganda Zhao Yali, among others. The mayor later held bilateral talks with Ms Anite.

Talking about the agreements, Mr Li promised to market Uganda’s investment opportunities under Tian Tang Group’s initiatives in Uganda framed as “the belt and road”.

He said the investment agreement with the eight enterprises will actively guide competitive industrial capacity to invest in Uganda and help the Ugandan government to create jobs for the people.

“Development is the permanent theme while cooperation is the tide of the area,” Mr Qinfeng said, adding: “The agreement provides a platform for mutual understanding and bilateral exchanges for common development. We wish that Tangshan Mbale Industrial Park and enterprises from Tangshan jointly create a brilliant future for mutual benefit.”

Speaking at the Tangshan Mbale Industrial Park conference, Ms Anite and her counterpart Mr Werikhe wooed Chinese investors and highlighted the country’s investment opportunities.

“The people of Uganda cannot wait to receive more and more investors from China,” Ms Anite said,

She added: “We appreciate your willingness to be part of the drive to transform the Ugandan economy and create the employment opportunities that are badly needed in our country.”

While Uganda is a very rich and naturally endowed country with abundant natural resources, Ms Anite said, less has been done to exploit the available opportunities. She reiterated that Uganda presents a huge business potential for investors.

This potential exists in infrastructure (especially in energy, roads and railway, ICT and oil and gas).

“We are here to indicate to you some of the potential areas through which you can intervene and reverse this situation so that as a country we are able to enjoy the benefits from these natural resources that continue to remain below the surface,” she said.

She listed the key natural resources that need urgent exploitation as oil & gas, limestone, gold, sand, water resources, phosphate, copper, iron ore; investment in Standard Gauge Railway and Uganda Airlines projects.

On his part, Mr Werikhe he asked Chinese investors to take advantage of the new agreements to invest in agro-processing businesses and help Ugandan government create jobs.

“We have several varieties of bananas, fruits, good soils, good political and stable macro-economic environment and the market is available. We also provide land and other incentives to investors who come to do business in our country across all sectors of our economy,” he said.

Background

On July 7, 2017, the ministry of Finance signed an agreement with Tian Tang Group for development of an industrial park and Free Zone in Mbale, eastern Uganda. The ministry promised government support and asked Tian Tang Group and other Chinese investors who signed the investment agreement to use the opportunity to promote value addition in Uganda and create jobs for the people of Uganda.

By By Alex Malanga

The government has unveiled measures aimed at preventing the total collapse of privatised factories.

A 19-day ultimatum was issued yesterday to investors running non-performing privatised firms to kick-start production or risk losing the factories.

Other measures announced by Industry, Trade and Investment minister Charles Mwijage include controlling sub-standard and counterfeit products and curbing under-valuation and under-declaration of goods.

The two measures are expected to enhance fair competition in the market.

Mr Mwijage said a team comprising officials from his ministry and the Home Affairs and Finance and Planning ministries had been formed to ensure the initiative was implemented as planned.

The government admitted making mistakes in the past, noting, however, that everything was now under control and that Tanzania was on track as far as the industrialisation goal was concerned.

Some of the mistakes made in the past include failure to make follow-ups on privatised companies and protect local industries from unfair business practices.

An assistant director for investment and research in the Ministry of Industry, Trade and Investment, Ms Elli Pallangyo, said out of 156 industries which were privatised between 1992 and 2004, a total of 54 were inoperative.

Mr Mwijage said the government would repossess all idle privatised factories after next month’s deadline expires.

“We will have to repossess former state-owned industries sold to private investors who have failed to run them after August 15, this year,” he told reporters.

“The government sold these factories to private investors on the understanding that they develop them. We won’t tolerate those who would not have abided by what we agreed.”

Mr Mwijage said dormant factories would be repossessed and handed over to serious investors, adding that leaving them idle would be contrary to the government’s industrialisation agenda.

Since the Fifth Phase government took over in November 2015, industries valued at Sh5.2 trillion had been set up.

A total of 224 manufacturing projects valued at $822.2 million were registered by the Tanzania Investment Centre (TIC) from November 2015 to March 2017. The investments created 19,935 jobs.

A total of 128 projects worth $1436.9 million and employing 13,120 people were registered by the Business Registration and Licensing Agency (Brela) .

Forty-one projects were registered under the External Processing Zone Authority (EPZA).

Mr Mwijage said three teams had been formed to make follow-ups on privatised industries, with the first one consisting of experts and regional commissioners.

The second team comprises experts, regional commissioners and permanent secretaries from his ministry and the Home Affairs and Finance and Planning dockets.

The third team comprises experts, ministers and permanent secretaries from the three ministries.

Regional commissioners, Mr Mwijage said, would visit all privatised factories to establish whether they were operating or not.

“Feedback will then be forwarded to me for action after the August 15 deadline,” he said.

Mr Mwijage urged those who had failed to run privatised factories to hand them back voluntarily instead of waiting for the government to forcibly repossess them.

“We harbour no malice. We only want to ensure that all dormant factories resume production.”

The government, Mr Mwijage said, was committed to generating more foreign currency and jobs for the youth through industries, adding that 65 per cent of Tanzanian youth aged up to 35 were unemployed.

In November 2015, the government summoned investors who had bought public farms and factories in a new move to review failed privatisation.

The government said in a statement that some of the investors had not developed the privatised firms as agreed, lacked investment plans or changed them without permission.

President John Magufuli yesterday said investors who had bought former state-owned manufacturing firms should surrender them to the government if they were unable to run them profitably.

“I repeat my call to those who have failed to run privatised factories, including the CCM MP here in Morogoro, to return them to the government,” Dr Magufuli said in Morogoro as he was returning to Dar es Salaam from a tour of Kagera, Kigoma, Tabora and Singida regions.

“It is time we handed the factories over to those who can run them effectively and employ our people,” he said.

ANALYSISBy Murray Hunter and Alison Tilley

It also has a sinister provision that will make it easier for State Security to undermine privacy and freedom

This is the second part of a two-part series on the problems with the Cybercrimes and Cybersecurity Bill. Parliament has given the public until 10 August to comment on the Bill. Read Part One Cybercrimes Bill threatens our freedom if you missed it.

The government says that the Cybercrimes and Cybersecurity Bill is needed to help fight cybercrime and to make South Africa’s cyberspace more secure against attempted crimes. But some of the provisions it puts in place could make us less secure.

This is important, because we all have the right to cybersecurity. When we use computers or phones, and send messages on WhatsApp or Facebook, or browse websites, we need protection for our right to privacy, our right to freedom of expression and our right to access information.

But sometimes when it comes to your cybersecurity, the government agency is not just the protector – but also the threat.

Does the Bill protect our information?

The Bill tries to protect us from people who want unauthorised access to our devices. Section 2 creates a new crime in this regard, which is intended to criminalise people who get access to your data without your permission.

Sound good, right? Unfortunately not, because this provision is so broad that it criminalises people who may mishandle other people’s personal data through carelessness, not through deliberate hacking attempts.

South Africa already has a pretty good, pretty new data protection law – the Protection of Personal Information Act, which exists to protect your data and make sure companies and individuals who handle other people’s personal data don’t misuse that information or violate their privacy. But POPI, which was signed in 2015, has not yet been fully rolled out.

The new Cybercrimes Bill will tread all over POPI’s legal territory. The state should put resources into making POPI work. Instead it is creating a law that overlaps with and undermines our new data protection law. This makes us less secure.

Does it secure our devices?

The Bill tries to make sure that people who have the technology to break into our devices are stopped. Section 4 of the Bill, titled Unlawful acts in respect of software or hardware tool, makes it a crime to have any software that is used to overcome the security measures of a person’s device.

Sounds good, right? Unfortunately not, because this misunderstands the nature of providing internet security. This provision is the same as making it illegal to have a set of lockpicks or a crowbar. The people who test the security of our systems do so by trying to break those systems from the outside, using software that could now be criminalised by this Bill. Many times, they do so without the authorisation of the owner of that network or software, because it’s usually a company or government institution that thinks it knows better. This kind of security testing has made us safer, and prevented many acts of cybercrime. Because this Bill can’t tell the difference between actual cybercriminals and security testers, it will discourage people from testing internet security systems, and ultimately make the internet less safe.

Does it secure our networks?

What the Cybercrimes Bill doesn’t do, and can’t do, is develop the expertise inside the police to detect and solve cybercrimes, and the expertise in the state to create better defenses to cybercrime.

Nonetheless, the legislation tries to ensure that the private sector secures its networks, and that where it does not, the state can step in. One way the Bill tries to do this is by giving State Security structures the power to declare any device, network, database or other infrastructure a “critical information infrastructure” and put legal obligations on these entities (including private companies) to meet government security standards and submit to security audits.

Once an entity has been declared “critical information infrastructure”, the State Security Minister can issue directives on the classification of data held by that entity, the storing and archiving of that data, physical and technical security standards, and “any other relevant matter which is necessary or expedient in order to promote cybersecurity”.

There’s a lot of devil in this detail. Among other things, it could mean that information held by the company that connects you to the internet could now become classified as a national security secret. The “any other matter” provision could mask serious misdeeds that undermine privacy and internet freedom: most notably, the risk that State Security could grant itself backdoor access to private networks or give itself new surveillance and monitoring powers.

One red flag: this provision bears some resemblance to the ‘critical information infrastructure’ policy in article 31 of China’s new cybercrimes law.

Does it protect against surveillance abuses?

Right2Know has shown the widespread abuse of communications surveillance in South Africa: the state is spying on its own citizens and failing to respect people’s privacy. Our main surveillance law, RICA, is meant to ensure that state surveillance operations only happen with the approval of a specially appointed judge. But Right2Know has criticised RICA for lacking transparency, having faulty oversight, requiring the storage of everyone’s communications metadata for years, and, most importantly, enabling a number of very dodgy surveillance operations that targeted journalists and other individuals.

The Cybercrimes Bill tries to do one thing that makes us safer from surveillance abuses: it closes a loophole in RICA that has allowed magistrates to authorise interceptions of thousands of people’s cell phone records, bypassing the specially appointed RICA judge. This form of surveillance happens many thousands of times a year. The Cybercrimes Bill tries to close the loophole to ensure the protections in RICA, however weak, apply to all the information that your network provider has about you, including who you called and messaged as well as what you said in the call or message. But because tens of thousands of surveillance warrants are issued by magistrates every year, compared to just a few hundred a year by the RICA judge, the Bill will simply result in swamping the RICA judge and undermining his or her oversight.

The Cybercrimes Bill fails to take other meaningful steps to fix the loopholes in RICA and other harmful provisions that have enabled the state to spy on its citizens and use surveillance as a tool for repression. Until it does that – it does not protect us against surveillance abuses.

No public interest defence

There are some “cybercrimes” that make society better: the leaking of secret government information that exposes human rights abuses, or the leaking of the Panama Papers that exposed money laundering and tax evasion, are clearly in the public interest. Any cybercrimes law should also have a public interest defence, to protect those who breach systems in order to serve the public, expose wrongdoing, or challenge abuse of power.

South Africa needs policies, laws and practice that actively promote cybersecurity, protecting ordinary internet users against both private cybercriminals and state-sponsored surveillance programmes. This Bill may have some of the right intentions, but it doesn’t get us there.

Hunter is with Right2Know. Tilley is with the Open Democracy Advice Centre.

By Kayode Tokede

Lagos — The nation’s foreign reserves reached U.S.$30.5 billion last week as a result of increased global oil prices, checks by LEADERSHIP on the Central Bank of Nigeria’s website have revealed.

Data from Organization of Petroleum Exporting Countries (OPEC) revealed that basket of 14 crudes stood at $47.48 per barrel last week from $45.21 a barrel it opened in July.

Experts said world economic growth in 2018 is forecast at 3.4 per cent, the same level of growth forecast for 2017.

“This reflects a continued strengthening of the global recovery which is becoming more balanced, with stability in the oil market remaining a key determinant. Global growth in 2017 is expected to be around 1.27 million barrel per day, broadly unchanged from previous month, average 96.4 million barrel per day”, they said.

According to report, Nigeria’s crude oil production had been stuck on 1.8 million barrel per day and has now recorded an additional 200,000 barrels per day.

In June, the foreign reserves dropped by $41 million or 0.13 per cent to $30.29 billion when it opened in June to close at $30.33 billion.

Analysts had attributed the steady fall in the foreign reserves to CBN’s aggressive interventions in the foreign exchange market aimed at boosting naira and stabilizing the exchange rate.

The CBN in April opened a new special foreign exchange window dedicated to investors, exporters and end users.

According to analysts, external reserves of $30.5 billion will cover imports for a period of over six months.

In a circular entitled, ‘Establishment of Investors and Exporters Window’, the CBN claimed this new window was introduced to boost liquidity in the foreign exchange market and ensure timely execution and settlement of eligible transactions.

In its economic report for May, CBN said the external sector weakened in the month under review due to the decline in crude oil prices from an average of $52.90 per barrel in April 2017 to $51.04 per barrel.

Increased shale oil production in the United States and supply by non-members of the OPEC both contributed to the fall in crude oil prices.

The report said, “Consequently, foreign exchange inflow through the CBN, at $2.26 billion, declined by 21.4 per cent below the level in the preceding month, but was 27 per cent above the level in the corresponding period of 2016. The decline relative to the level in the preceding month was driven by fall in both oil and non-oil proceeds.

“Overall, the net outflow through the Bank in the month of May 2017 was $0.76 billion, in contrast to a net inflow of $0.71 billion and $0.09 billion recorded in the preceding month and the corresponding period of 2016, respectively”.

It noted that aggregate foreign exchange inflow into the economy amounted to $5.78 billion, representing five per cent decline below the level in the preceding month, but showed an increase of 30.8 per cent above the level in the corresponding period of 2016.

The report further noted: “The development relative to the preceding month reflected the fall in inflow through the Bank. Inflow through autonomous sources and the Bank were $3.52 billion and $2.26 billion and, accounted for 60.9 per cent and 39.1 per cent of the total, respectively.

“Non-oil sector inflow, at $1.39 billion (23.1 per cent of the total), fell by 30.2 per cent, below the level in the preceding month. Autonomous inflow rose by 9.8 per cent, above the level in April 2017.

“Aggregate foreign exchange outflow from the economy, at $3.18 billion, rose by 38.8 per cent and 70.4 per cent, above the levels in the preceding month and the corresponding month of 2016, respectively.

“Thus, foreign exchange flows through the economy, resulted in a net inflow of $2.60 billion in the review month, compared with $3.79 billion and $2.55 billion, in April 2017 and the corresponding month of 2016, respectively,” it added.

ANALYSISBy Zachary Donnenfeld

The government of Ethiopia is currently constructing the Grand Ethiopian Renaissance Dam (GERD). Once complete, the GERD will be the largest hydropower facility in Africa (about 6 000 MW) – nearly triple the country’s current electricity generation capacity – and represent a potential economic windfall for the government.

The benefits for Ethiopia and for many electricity-importing countries in East Africa are clear. However the implications for downstream countries aren’t all positive – and need to be better understood.

In 2016, about 30% of Ethiopia’s population had access to electricity and more than 90% of households continued to rely on traditional fuels for cooking. Traditional fuels can cause respiratory infections, and according to the World Health Organisation, acute lower respiratory infection is the leading cause of death in Ethiopia.

So the benefits of better access to electricity in Ethiopia are clear. But creating a larger supply doesn’t mean demand will automatically follow. In Ethiopia, where 70% of the population lives in rural areas and relies on subsistence agriculture, the government must also invest in developing human capital to increase incomes and stimulate the demand for services. The standard of living needs to improve before Ethiopians can consume additional electricity – unless it’s completely subsidised by the government.

The government may also anticipate a boost to revenues through electricity exports from the dam. Several power purchase agreements have already been signed with neighbouring countries, including Djibouti, Kenya, Rwanda, Sudan and Tanzania.

There is a need for more rapid progress along various dimensions of human development in Ethiopia, as highlighted in a recent ISS report produced for the United States Agency for International Development. But there are concerns about how this dam will affect downstream states, particularly Sudan and Egypt.

Although Sudan was initially opposed to the dam’s construction, the country has recently warmed to the idea. This could be because Sudan has agreed to purchase electricity from the dam, while the two countries have also agreed to collaborate on a ‘free economic zone’. While bilateralism has proved effective with Sudan, multilateral negotiations haven’t been particularly fruitful.

Signed in 2015, the Khartoum Agreement ostensibly mapped out a way forward, but implementation of the deal hasn’t been easy, and cracks are starting to show. In May this year, the Middle East Monitor concluded that Egypt, Ethiopia and Sudan had just finished their 14th round of unsuccessful discussions about how to manage the Nile River.

At that 2015 meeting, officials from the three countries agreed to proceed with an impact assessment that was to be completed within 15 months. After 17 months, the report has yet to be publicly released. There is still no independent feasibility study, cost-benefit analysis or environmental impact assessment.

This is worrying since Ethiopia could begin filling the dam at any time. The Ethiopian government expects it will take roughly five or six years to fill the GERD reservoir. However, Diaa Al-Din Al-Qousi from Egypt’s Ministry of Water Resources and Irrigation believes that a period of 12 to 18 years is needed to guarantee water security for Egypt. This is quite a discrepancy.

A recent report from the Geological Society of America said a period of between five and 15 years seemed reasonable, apparently giving credibility to both sides. But the same report noted that the ‘Nile’s fresh water flow to Egypt may be cut by as much as 25%, with a loss of a third of the electricity generated by the Aswan High Dam’, which would be bad news for Egyptians.

Also, many Egyptian officials fear that the increased evaporation from the sheer size of the dam could affect water security in the country – already one of the most water-stressed in the world.

Ethiopia maintains that the GERD project has been conducted with adequate transparency and involvement from the relevant stakeholders. It also highlights that Egypt hasn’t signed the Cooperative Framework Agreement (CFA) of the Nile Basin States, whereas Ethiopia has.

Since Ethiopia announced it would go ahead with construction of the dam in 2011, Cairo has voiced disapproval. At various stages, Egypt has demanded that Ethiopia cease construction, threatened action at the United Nations Security Council, and claimed that it is protected by a 1959 treaty, even though Ethiopia didn’t sign the treaty. The treaty essentially divides the river between Sudan and Egypt, leaving nothing for Ethiopia, where more than 60% of the Nile’s water originates.

With its national livelihood depending on the Nile, it’s difficult to anticipate what Egypt’s reaction might be should Ethiopia proceed with its plan to fill the dam. Egyptian Foreign Ministry spokesman Badr Abdelatty recently told Reuters that Egypt had ‘no other resources … we will not allow our national interests, our national security to be endangered’. This brings back memories of former president Mohamed Morsi’s ominous 2013 speech, in which he declared that if the Nile ‘loses one drop, our blood is the alternative’.

Analysts at the Texas-based consulting group Stratfor have concluded that Egypt’s reaction will, in part, be determined by its political leadership. But they also stress that ‘whatever its political inclination, a large-scale reduction in water from the Nile would be intolerable to any Egyptian government’.

Ethiopia has a right to exploit its own natural resources to support much-needed human development projects, but can it afford to compromise its relationship with downstream states, particularly Egypt? The government of Ethiopia has done well to finance and promote this project. The question now is how best to manage the possible implications with downstream states.