THE recent "tuna fleet" scandal in Mozambique raises questions about whether another African success story might be heading for choppy waters, WRITES DIANNA GAMES.
The country is facing censure over evidence that the government may be using a big chunk of $850m raised on international capital markets three years ago to buy arms and not the large fleet of fishing boats the money was earmarked for.
Earlier this month, the International Monetary Fund (IMF) cancelled the second tranche of a $285m emergency loan it had granted at the end of last year and cancelled an IMF mission to the country scheduled for later this year.
Mozambique’s credit rating has also been cut in the wake of the evidence of misuse of the money.
The capital-raising exercise was initiated by the government, which said in its investment prospectus it wanted to raise money for the expansion of the country’s newly launched and totally unknown tuna fishing company, Ematum.
The deal immediately raised eyebrows, with donors asking questions about why a country with significant development challenges would raise its debt profile to this extent just for fishing boats.
The critics of the deal were proved right when it later emerged that most of the money was, in fact, spent on security.
Africa Confidential reported subsequently that the Mozambican government raised debt to the tune of closer to $1.5bn in a series of undisclosed deals — information that has apparently shocked the IMF, which has just lent Mozambique funds to help it with its current economic woes.
The evidence has come to light in the wake of Mozambique’s attempt to restructure the bond, which it is battling to repay.
This has raised fears of a default ahead of the seven-year payment term.Read more ...
- Published in Business Day SA, 25 April 2016. Picture: Jeremy Glynn.
THERE is no evidence to prove bilateral investment treaties signed by African countries have made them more attractive to foreign direct investment, despite it being the main reason to sign them, WRITES DIANNA GAMES.
The private sector tends to be the main beneficiary of treaties, with governments weakened by a lack of negotiating capacity.
These are among the findings of an Economic Commission for Africa report looking at issues about, and the consequences of, investment policies and bilateral investment treaties. The report was launched at the African Development Week in Addis Ababa. The decision to do the research was based partly on pressure from SA, which has terminated its bilateral investment treaties, replacing them with legislation that makes the government the guarantor of investments in the country.
SA came under fire from many of its key trading partners for the move but, going by the discussion at the report’s launch a fortnight ago, held under the auspices of the commission and African Union, there is wide support in Africa for a change in the terms of engagement with international investors.
Africans have, over many years, used these treaties to attract investors to opportunities in their countries in a move to counter perceptions of the risk they faced in these markets.
Collectively, Africa has the highest number of such treaties globally — more than 1,000 — mostly with non-African nations.
But the report suggests that Africa has been short-changed, exploited by more developed countries that have been able to influence bilateral terms of engagement by allowing their high-powered and experienced legal teams to outmanoeuvre their less experienced African counterparts easily.Read more ...
Toothpicks are on the list of more than 40 items for which the Central Bank of Nigeria has forbidden the sourcing of foreign currency through the formal banking system for spending on imports, writes DIANNA GAMES
Published in Business Day SA, 3 August 2015
THERE has been a lot of talk about toothpicks in Nigeria of late. The humble implement for removing elusive morsels of dinner is a culprit in Nigeria’s foreign exchange crisis. It is included in a list of more than 40 items for which the Central Bank of Nigeria has forbidden the sourcing of foreign currency through the formal banking system for spending on imports.
Other items on the list include private jets, tinned fish, vegetable oil, roofing sheets, cosmetics, soap, plastic and rubber products, Indian incense, steel pipes, plywood board, glassware and kitchen utensils.
Although the manufacturing sector’s contribution to Nigeria’s economy has grown from 1.9% in the early 1990s to 6.8%, the country has little to show for years of import bans designed to boost local manufacturing.
BURUNDI’s president goes to the polls this week to stand for president of his tiny nation for the third time, writes DIANNA GAMES.
Pierre Nkurunziza has not been dissuaded by violent protests in which many have died or been displaced. Nor has he been daunted by the African Union’s (AU’s) calls for the vote to be postponed because of the violence,
So, despite improvements in governance in some areas, it is business as usual for sub-Saharan Africa’s third-termers. There was a glimmer of hope late last year that change might be in the air when hundreds of protestors set fire to Burkina Faso’s parliament and forced their president, Blaise Compaore, out of power after 23 years. The president, who tried to try to get himself a third term, is in exile in Cote d’Ivoire.
In the Democratic Republic of Congo, there were protests in the streets when word got out that the president, Laurent Kabila, was considering running for a third term in next year’s election. He might still run, but the outcry has given him pause for thought.
It is rather different in Rwanda, where President Paul Kagame’s chances of a third term increased after legislators voted overwhelmingly in favour of changing the constitution to allow his extended rule after 2017. More than 3-million people have signed a petition calling for an amendment to the constitution to allow him to stand again.
WE CANNOT afford to disappoint Nigerians, President Muhammadu Buhari told his party leaders at the weekend, writes DIANNA GAMES.
Published in Business Day SA, 7 July 2015
Mr Buhari was responding to concerns from a nation impatient for signs that their new president has the will and capability to tackle corruption, fight insecurity and instill discipline into the polity.
Just a few weeks into the job, Mr Buhari is battling to get on top of an array of problems plaguing the country, despite bold promises made before the April election that he would move swiftly to build a better Nigeria. He has spent his early days in office fighting fires in his party and in the country.
Last week, it emerged that Mr Buhari may not announce his new cabinet before September — three months into his tenure and nearly six since his election as president.
CHAPTER: Africa’s FMCG & Retail Sectors in Africans Investing in Africa, produced by the Brenthurst Foundation (South Africa) and Tony Elumelu Foundation (Nigeria), published by Palgrave MacMillan (2015)
THE admission by Nestlé that it overestimated the size of Africa’s middle class has caused ripples in the "Africa rising" story. But it is also a much needed reality check for companies that have pinned their hopes — and their investments — on ambitious growth forecasts of the middle-class pot of gold, writes DIANNA GAMES
Pubished in Business Day SA, June 22 2015.
Last week, the multinational food producer said it was cutting 15% of its workforce across 21 African countries and reducing its product lines. In 2008, it decided to invest heavily in sub-Saharan Africa based on projections of rising middle-class demand. Last week, it said turnover was way short of growth forecasts.
Much new investment in Africa in recent years has been based on the potential of this rising middle class despite the fact that the size and actual spending capacity of this category of consumer is rather hazy.
The African Development Bank’s 2011 research estimated that 34% of Africa’s population — 313-million people — was middle class.