After years of economic mismanagement a new, if restrained, sense of optimism has gripped Angola as the actions of the country’s fledgling president start to suggest that change may be possible.

Upon taking the helm of Africa’s second-largest oil producer, João Lourençosurprised many by immediately starting to dismantle the patronage networks of his predecessor, Eduardo dos Santos. Making it clear he is no puppet, he has also broken with a number of long-standing policies, especially with regard to economic and foreign policy.

A real change of direction would be a welcome in a country reeling in the wake of years of kleptocracy and suffering from high levels of public debt, unemployment and inflation. Yet politics and economics often go hand in hand in Angola and the real significance of Lourenço’s changes is not yet apparent.

“I think its unclear at present to what extent these are just moves against the dos Santos clique or if they are more substantive moves to diversify and open up the economy,” says Claudia Gastrow, Angola expert at the University of Johannesburg.

Reforms

A number of economic reforms and bold political manoeuvres suggest a change of course for Angola. Dismissals have come thick and fast since Lourenço entered office in late September, starting with the chief of police and the head of the intelligence service, and culminating with the dismissal of the former president’s daughter, Isabel dos Santos, as head of the national oil company, Sonangol.

Many of the new faces hail from the barracks. Lourenço served as defence minister and is heavily associated with the military. The overhaul, however, has not been absolute and his cabinet reflects the delicate tightrope Lourenço must walk between old dos Santos loyalists and his own cadres.

Perhaps his real focus is on the economy, as Lourenço himself has suggested. In the run-up to the election, he described himself to a local journalist not as the Gorbachev of Angola but as its Deng Xiaoping – an economic rather than a political reformer.

This statement certainly bears some weight in the current context. Lourenço has opened up the Angolan business space in a variety of ways that contrast starkly with Angola’s former isolationist policies. For example, Angola will allow a fourth mobile operator to enter its profitable telecoms sector.

“We are increasing competition to improve the service, and will work on pricing and quality of service,” says telecoms minister José Carvalho da Rocha.

Movicel and Unitel are currently the largest providers and both are partly state-owned. In another liberalising move, Lourenço quickly visited Jacob Zuma in South Africa in order to bolster bilateral cooperation, and the two countries have agreed to scrap visas for all passport holders.

“In the past there was almost a protectionist stance regarding South Africa and this has shifted,” says South African political analyst Paula Cristina Roque. “It’s unheard of and it’s going to bring incredible opportunities by increasing the possibility of regional trade.” Another inhibitor to inclusive Angolan growth is corruption, something that Lourenço took a hard line on during his electoral campaign.

In one of his boldest policy moves to date, the president has told Angolans they risk prosecution if they do not repatriate funds illegally held abroad within the coming months. Speaking at the end of a conference on corruption held by  his party, the ruling MPLA, he said a grace period would be announced during which money could be repatriated and invested in the Angolan economy with no questions asked – a thinly veiled warning to those who have plundered the country’s assets.

These reforms suggest a new economic path for Angola. It remains to be seen whether Lourenço can gather enough support from his party to properly implement them, or indeed if they are indicative of a long-term strategy rather than minor calibrations.

“If he tried to shake up the system too much he would lose his support base. I imagine it would be extremely difficult to totally abandon a system that has been steeped in corruption and patrimonialism, so I think there is a real concern that the initial symbolic move might eventually be replaced by another entrenched system,” says Gastrow.

Can oil save Angola?

After the dismissal of Isabel dos Santos, Angolans are looking to the state oil company, Sonangol, under its new head, Carlos Saturnino, to save the country from its economic woes. The World Bank estimates that public debt stood at 59.2% of GDP at the end of 2016. Net international reserves have deceased by 20.4% since the beginning of 2017.

Inflation now stands at around 27%. As oil accounts for a third of economic output in Angola and over 95% of exports it is clear the sector needs a revamp, irrespective of rising oil prices. According to the major oil companies, the Angolan oil sector is being devastated by delays in project approvals at Sonangol and a backlog of payments owed.

Roque cites the planned Lobito refinery as one such project – construction has been delayed for years due to irregularities in contracts and financing disagreements. The refinery would work wonders for downstream production in Angola, and it is yet to be seen how Saturnino will tackle the issue.

Sonangol owes huge sums to its biggest lenders – the Bank of China, Standard Bank and Standard Chartered – as well as $3bn to majors, contractors and traders. The government itself lent Sonangol $6.9bn in 2016, a sum procured from the China Development Bank.

That said, Lourenço remains optimistic about the company’s potential and described it as a “golden goose”, instructing the new board to “take good care of her.” His recent pragmatism suggests progress for the sector.

Roque points out that under Eduardo dos Santos, the French major Total was partially excluded from the local market due to strains with the French government. Total and Sonangol have now signed new project pipeline agreements to develop upstream and downstream projects, and this move seems to indicate Lourenço’s growing wish to open all areas of Angola to new players and investments.

“He is trying to signal there is an alternative,” says Gastrow. Whether or not any of these recent developments will come to define Lourenço’s administration will depend on how genuine the reforms are and how much his party allows. For now, the signs are good.

Source: Tom Collins, African Business Magazine

Confidence has been returning to Kenyan markets, with foreign investors taking the lead since the inauguration of Uhuru Kenyatta as president for a disputed second five-year term in November.

Although President Kenyatta won the October election rerun, which had been mandated by the Supreme Court, almost half of the voting public did not show up for the poll on the instructions of his rival, Raila Odinga, who boycotted the second poll. President Kenyatta had won the election held in August, but it was deemed to have been conducted improperly by the Supreme Court.

President Kenyatta may be forced to spend his second term in office trying to win over those who obeyed the other man. Probably in light of this, after his inauguration he quickly signed into law the County Allocation of Revenue Amendment Bill, which empowered the Treasury to disburse funds to the country’s 47 counties. Delay in release of the funds had been hampering the work of the devolved administrations in the counties.

But there are other problems he will have to contend with. Odinga plans to swear himself in as an alternative president. A planned oath-taking in December was shelved after pressure from local and international stakeholders. Such actions by the opposition are a headache President Kenyatta may have to contend with for his entire second term and almost certainly for all of 2018.

Renewed threat of secession

Unfortunately, President Kenyatta has ruled out dialogue with the opposition. He could come around on this, but the opposition may not be similarly obliging. The renewed threat of seccession in the coastal areas, which are also strongholds of the opposition, is another thorn in the president’s side. President Kenyatta will have a hard task changing sentiment in this regard.

Set for take-off

The economy should move faster in 2018 after slowing due to the impact of the prolonged election process on supply and demand and the effects of drought in the first half of the year.

Despite these troubles, Kenya managed to hold steady. And it maintained a stable exchange rate throughout the prolonged electioneering period, World Bank economist Allen Dennis remarked with admiration in December. This resilience is likely to keep investor sentiment positive in 2018.

Adewale Okunrinboye, FX specialist at Ecobank Transnational, believes growth in 2018 will be hinged on improvements in agricultural output (25% of GDP) as better rainfall drives a recovery from drought in the first half of 2017.

“Outside agriculture, growth prospects revolve around Kenya’s ability to unlock gains from improving transport links and construction of the SGR [standard gauge railway] extension”, he adds.

At a presentation in December, the governor of the Central Bank of Kenya (CBK), Patrick Njoroge, shed more light on this, asserting that Kenya’s SGR would not only hasten the transportation of freight offloaded from the ports to warehouses but also reduce costs by about 50%.

Ecobank believes that even though growth will probably accelerate in 2018, it is likely to be subdued and perhaps come out at about 5.2%. This could be improved if reforms on the growth-stifling interest rate caps are carried out. Financial sector GDP expanded at its slowest pace in six years in 2017 because of the caps.

And then there is oil. Production in the two blocks in Turkana County could start at about 2,000 barrels per day in 2018. Considering how little oil may be produced and the challenging logistics required to transport it by road and rail until a pipeline is constructed, its effect on economic growth is not likely to be significant.

Debt concerns

Monetary policy should be easier in 2018. “A high drought-induced base in the first half of 2017 implies that inflation is likely to decelerate strongly in the first half of 2018”, says Okunrinboye of Ecobank.

Consequently, the CBK will probably cut its benchmark interest rate from 10% at end-2017. However, there is a complication for the CBK in this regard. “Given the rate cap in place, such a move is likely to induce further bank demand for government securities, which has driven a compression in short-dated yields in 2017 despite the ‘tight’ monetary stance by the CBK,” says Okunrinboye.

This a scenario the CBK would be keen to avoid, so a rate move may be dependent on how much progress is made with the hoped-for legislative amendment of the interest rate cap law.

On the fiscal front, Kenya’s debt burden is concerning. It is expected to be almost 60% of GDP in 2017, with debt servicing expected to climb to about 35% of revenue, and likely higher in coming years, as the authorities plan to borrow even more. For instance, in late 2017, the authorities asked for bids for a proposed $2bn eurobond in early 2018.

With warnings coming from the World Bank, IMF, rating agencies and others, the authorities may do well to take heed.

Source: Rafiq Raji, African Business Magazine

Uganda is set to land two mega-million dealings in the course of the New Year that will arguably transform its economy. A crude oil refinery worth $500 million and oil export pipeline worth in the region of $200 million are the proposed projects for the sub-Saharan country that has already set its equity in making the project a success.

It is informed that the projects will cost the government a mammoth amount to be in the area of close to $7.5 billion.

The East African country is still I the search for an architectural designer, and as well an investor to inject the funds to ease the burden, which will as well set-up the phased 60,000 barrels daily refinery in a sought to be public-private partnership.

In return the African country will retain a 40% stake in the refinery, which is worth a cut for the state.

Two parties seem to be interested in the project and are believed to be on board already. There ongoing talks between the Intra-continental Asset Holdings venture that includes Yaatra Ventures LLC and General Electric (GE) Africa from America and Saipem SpA from Italy, and the DongSong venture from Asian country and powerhouse, China. The negotiations are to find a potential investor.

The refinery is a delicate project and the suitable investor would be needed to fulfill the passion of the government.

For the pipeline, the National Pipeline Company (NPC) is in check of the modalities. The subsidiary of the Uganda National Oil Company (Unoc) has been mandated to oversee and handle the government’s commercial interests as far as the petroleum sector is concerned.

The Energy and Finance Ministries have inspected the project and given a green light for it. The two projects have been approved avidly and will set to commence their construction in the near future.

Total E&P, the French company is monitoring the 1,445km pipeline which will have the capacity to feed neighbouring countries with oil.

The final investment decision on the pipeline is expected in the first quarter of 2018, while the engineering, procurement and construction contract will most likely be awarded in late 2018 or early 2019.

A modern maritime training facility has berthed in Liberia with a promise to address capital flight associated with overseas training of the manpower needs of the maritime industry.

The sate-of-the art training facility is situated in Marshall, lower Margibi County and boasts of modern training equipment that meets the requisite needs of maritime practitioners in line with the requirements of the global maritime watchdog, the International Maritime Organization (IMO).

President Yoweri Museveni’s determination to have Uganda enter the international oil market by 2020 is getting caught up in logistics, with preparatory work on the investment unlikely to be completed before the turn of the year.

Joint venture partners involved in the country’s oil sector said they were unlikely to complete the final technical study for the Buulisa oil blocks by the December 31 ultimatum.

The the study, called front end engineering design (FEED) which started in February this year usually takes between 12 and 18 months to complete. That places the completion date anywhere between March and August next year.

FEED focuses on technical specifications of the project and the cost estimates; initially put at $10 billion.

After it is completed, a detailed design will follow enabling partners Total E&P, Tullow Oil and China National Offshore Oil Company decide how much money they will put in the project. Fluor and CB&I are doing the study.

The 2020 evacuation target has gathered political undertones with President Museveni said to be keen to have the project running before the 2021 elections in which he is expected to contest, after Parliament last week voted to remove the age limit of 75 for presidential candidates. President Museveni is 73.

Ego trips for leaders

Big infrastructure projects in East Africa have recently become ego trips for leaders. Kenya’s President Uhuru Kenyatta was keen to have oil from Turkana hit the export market just before the general election in August this year.

His ambition came unstuck because of logistical challenges but he managed to pull through the standard gauge railway between Mombasa on the Coast and Nairobi.

Tanzania’s President John Magufuli has targeted the development of the Central Corridor — including the pipeline that will evacuate crude oil from Uganda — linking Dar es salaam to Bujumbura, Kigali and Kampala as one of his flagship projects.

President Paul Kagame targeted improvements in tourism and trade services leading to reforms that saw the Rwanda Convention Centre built and the country relax visa restrictions.

Oil prices

Although the delay in bringing oil to the ground could hold back revenues, it could turn out to be a blessing in disguise as international oil prices show signs of steady recovery from a trough that has persisted for more than three years. The partners, however, maintain the market entry target is still feasible.

“All parties are fully committed and are endeavouring to achieve the targeted date of end 2020,” said Total’s spokeswoman Ahlem Friga-Noy.

Fluor and CB&I are competing to be the contractor of the oil infrastructure after Technip was edged out in the first phase of the design completed in July.

“Fluor and CB&I have been selected to undertake the second phase of the front end engineering design. The best contractor at the end of the second phase will be selected to undertake the engineering, procurement and construction of the project,” said Ms Friga-Noy.

Thereafter the preferred contractor will again be selected to for remaining works, including establishing a 200,000 bop central processing facility.

In August 2016, the Energy Ministry issued eight production licences to Total E&P Uganda and Tullow Oil Uganda. The licences contain about 5.4 billion barrels of crude out of an estimated volume of 6.5 billion barrels.

“The companies are expected to work towards reaching final investment decisions within 18 months after issuance of the production licences and first oil in the year 2020,” energy and mineral development minister Irene Muloni said in February.

Source: By Halima Abdallah / allfrica.com

Eritrea has temporarily shut down nearly 450 private businesses, the latest in a series of moves that has sent shockwaves through the economy of the Red Sea nation.

The closures were a response to companies hoarding cash and “failing to do business through checks and other banking systems,” according to a Dec. 29 editorial published by Eritrea’s Ministry of Information on the state-run website Shabait.com.

Most of the affected businesses operate in the hospitality sector, according to the announcement, and they will remain closed for up to eight months, depending on the severity of the violations

About 58,000 private businesses operate across the country, according to the government; less than 1 percent was affected by the recent closures.

Replacing the currency

The government has taken other steps in recent years to reassert control over the economy.

In 2015, Eritrea mandated that citizens exchange all notes of the currency, the nakfa, for new notes. The government also imposed financial restrictions, including limits on the amount of cash that could be withdrawn from bank accounts or kept in private hands, according to multiple reports.

Business owners complained about the restrictions, and reports from inside the country indicate the rules have altered Eritrea’s black market exchange rate, which affects the price of many goods.

State control

Tesfa Mehari, a professor of economics in England, said the Eritrean government wants a state-owned economy. That’s a trap many other countries have fallen into that generally leads to economic failure, Mehari said.

“The government cannot develop the economy. Only the people can do that,” Mehari told VOA’s Tigrigna service. “The government can only be a facilitator. There hasn’t been a country in the world that developed because of government control.”

He also said that the closures harm people’s trust in the government and in banking institutions.

“At the end of the day, if the people of Eritrea want to develop the economy of the country, they can only work based on trust, especially with banks. What you have with banks is a matter of oath,” Mehari said.

Compounding this mistrust, he added, is that the government’s actions aren’t backed by a specific law or decree that is publicly available for all to read.

In a statement, the government also acknowledged shortcomings in modernizing its banking sector with up-to-date technology and relevant expertise, another potential impediment to confidence in the system.

Namibia has ceased the issuing of machine-readable passports and will start issuing biometric or electronic passports as from Monday, 8 January 2018.

This was announced by the Ministry of Home Affairs and Immigration’s director for immigration and border control, Nehemia Nghishekwa, on Friday at a media briefing in Windhoek.

Nghishekwa explained that electronic passports are highly secure travel documents with a chip which enhances security.

“The drive is to maintain the integrity of the Namibian travel document and to render it difficult to forge,” said Nghishekwa.

He said the move was in line with International Civil Aviation Organization (ICAO) requirements, which urge all UN member states to implement the electronic passports.

Nghishekwa explained that Namibia had an untainted reputation internationally, making it an ideal target for international travel document fraudsters.

He noted that the electronic passports come with general security features, compared to the previous passports, adding that the electronic passports contain 40 pages compared to the 32 pages of the old passports.

The electronic passport features include the Namibian map on the inside of the cover page, images of the Namibian Parliament, the national flower of Namibia, the welwitschia mirabilis, and a watermark on all pages.

He said the machine-readable passports currently in circulation, which include ordinary, diplomatic and official passports, will run concurrently with the new electronic passports until they outlive their lifespan of up to five years.

“The current machine-readable passports are still accepted in internationally, however, they are phasing out,” he said.

An electronic passport will cost N$160 and the waiting period will remain the same.

Source: allafrica

Lagos — Currently being constructed on a 2, 200 hectares at the Lekki Free Trade zone in Lagos, Dangote Refinery and Petrochemical is adjudged the single largest train petroleum refinery in the world and is being counted on by the federal government to nail the coffin on fuel scarcity in Nigeria.

With capacity to refine 650,000 barrels of crude per day, and a petrochemical plant of 750,000 metric tonnes of polypropylene per annum, it is 13 times bigger than the Indorama Eleme Petrochemicals Limited built by the federal government. Projected to be the biggest refinery in the world, it is also projected to have 1.5 times more capacity than the existing four oil refineries in the country, even if they are operating at 100 per cent.

With $14 billion loan from a consortium of local and international banks, Dangote refinery is expected to come on stream in the last quarter of next year.

According to the President of Dangote group, Aliko Dangote, the sum of $400 million was brought in for the construction of the refinery plant, out of which N16.3 billion had been paid for the acquisition of 2,200 hectares of land, with expectation of earning $5 billion annually from the export of surplus products.

All in all, projections about the plants are all optimistic at the moment.

“With the refinery, there will be no more importation of fuel,” an enthusiastic Dangote said, “Because 40% of our foreign exchange needs go into the importation of petroleum products. If we produce here and sell here, everything would be done in Naira and this creates jobs. We are stopping the exportation of jobs and the creation of poverty. We are doing this by extracting by-products from crude and some of these components are in high demand outside the country. It is the same thing with fertilizer,” he said

He estimates that the refinery can load 2,680 trucks per day, meaning about 10, 000 trucks in four days. Loading by sea and shipping to Calabar and other south-south states will also cut out the need for tank farms.

“A place like Apapa has tank farms in residential area which is dangerous for the residents,” Dangote said.

A well-known businessman, who is also the son of a late prominent anti-apartheid activist – is expected to appear in the Cape Town Magistrate’s Court on Thursday for allegedly assaulting his wife in Camps Bay, Cape Town earlier this week.Western Cape police spokesperson Captain FC van Wyk confirmed to News24 on Wednesday that a domestic violence-related assault charge was laid by the man’s 27-year-old wife on New Year’s Day at the Camps Bay police station and that it was under investigation.

Van Wyk said an investigating officer had met with the businessman and his legal representative on Wednesday and that the businessman was charged and informed to appear in court on Thursday.

Sources close to the case allege that a disagreement broke out between the businessman and his wife.

The man allegedly demanded his wedding ring from her and proceeded to assault her. The wife was allegedly assaulted “in full view and/or passive assistance” of a relative of his.

Source: News24 / allafrica