Brexit, the EU and Africa: The Ghost of the Future

Comments (0) Africa, Featured, Politics, UK

The news of the United Kingdom’s decision to leave the European Union in June shocked the world, sending several currencies into turmoil, including some in Africa. Immediately following the announcement, the already tumultuous South African rand plummeted by 8% against the US dollar, the fastest drop since the 2008 financial meltdown. The decision, deemed the ‘Brexit’, is expected to have long term impacts upon Africa’s stance within the European Union: for decades, the UK has been Africa’s greatest ally, but with the imminent departure of the UK, Africans are worried they may be left stranded.

The relationship between the UK and Africa is complex and laden with colonial history: the legacy of the UK’s decades of imperialism is still felt in the deep racial tensions in Southern Africa, and in the education systems of West Africa. This is demonstrated through the Commonwealth, where member countries (states that were at one point occupied during British imperialism) enjoy fewer trade restrictions, trade preference and/or free trade. Without the UK negotiating and handling imports from these countries, many African countries stand to lose their beneficial relationship with the EU.

Broken Words: Trade Agreements between Africa and the EU

Of primary concern to many African leaders and business people is the future of existing contracts between their respective countries and the EU. Just one example of the potential impact of Brexit is the impending Economic Partnership Agreement between the East African Community and the EU set to take place later this month. The Kenya Flowers Association is concerned that the Economic Partnerships Agreement may not extend its current easy access to the UK, one of Kenya’s biggest flower export markets. The UK currently imports the majority of its flowers from Kenya thanks to a deal negotiate through the EU. This, and many other contracts, would have to be re-negotiated with the UK following the Brexit, which could result in less beneficial contracts for African industries.

Realistically, the EU is not Africa’s biggest trading partner– China is. Some critics say the weight being given to the potential impact of Brexit on African trade is unwarranted. Sangu Delle, a Ghanaian entrepreneur and pan-African macro-finance specialist, said that the United Kingdom has been a major supporter of Africa in EU and G8 negotiations, and has a history of pushing for deals that benefit the continent. “It was instrumental in supporting development aid being allocated to Africa,” he said, bringing up the other major concern regarding Brexit and Africa.

The End of Aid?

The UK is one of the biggest contributors to the European Development Fund, the EU’s international aid and development branch. Without the weight of the UK, many fears, the EU’s development funds may be re-directed to other African states where other members, such as the Dutch and French, have colonial-era obligations. Furthermore, without the contribution of the UK, the European Development Fund may be forced to scale-down its overall funding.

Not only would a Brexit diminish the European Development Fund’s coffers, but it would deplete Britain’s influence on global development. According to DevEx, the EU is the world’s single largest donor organization: the 28 (soon to be 27) member group provides more than half of the world’s international aid total, around 30 billion euros. Without the weight of the EU, the UK will have much less sway in terms of ‘pet projects’, or specific areas it wants to develop both in Africa and beyond.

Potential for a post-UK EU

Not all are pessimistic about what this means for the continent. Delle was quoted saying “Brexit, to me, is a warning to us all…it wasn’t about racism. A substantial segment of UK citizens feel disenfranchised– that they are not stakeholders in the new economic order. As we go about creating new African economies, we have to make sure that the economic systems we put in place don’t just create economic growth, but create shared economic prosperity.” This epitomizes the optimism that is needed to move the continent forward– both in terms of economic prosperity, and in building cohesive societies.

Delle is optimistic that whatever the outcome, African’s will prevail– they are, after all, best suited to find context-appropriate solutions. “I’ve now spent time in 43 countries across Africa. The one thing I’ve seen in every one is resiliency. No matter what the socio-economic situation, whatever hand they’re dealt, people move forward.” In a time when the world seems to be unraveling, this type of level-headed analysis and faith in one’s own people is vital. Because, no matter what the outcome of Brexit, humans will move forward as they have done for tens of thousands of years.

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No place to hide: Nigerian government cracks down on corruption.

Comments (0) Africa, Featured, Politics

Earlier this month, several of Nigeria’s top judges were arrested in a stunning sting operation. Since the arrests, details have come to light that hold major implications for Nigeria and the direction that the country is headed.

Nigeria’s Department of State Service (DSS) stormed the homes of some of the country’s top judicial figures. The DSS found significant sums of foreign and domestic currency, alongside evidence of bribery. Alarmingly, two of the arrested judges are from The Supreme Court, the country’s highest judicial office.

The two Supreme Court judges have been named as Sylvester Ngwuta and John Okoro. It has since come to light that the DSS seized close to US$ 900,000 from their homes. The investigation has also allegedly uncovered that Ngwuta, Okoro, and others hold hidden properties, which should be beyond their means as judicial officials.

Corruption an obstacle to progress

Nigeria has long been renowned for systemic corruption. This unfavorable reputation has naturally been a source of concern in the international community. Economically, the perception of corruption has deterred foreign investment. Normal Nigerians, frustrated by corruption and unscrupulous official practices, have been clamoring for change

 Last year, Muhammad Buhari ascended to the presidency, promising to root out corruption in all its forms. His administration has made good on its pledge by bringing charges against leading businessmen and politicians. However, many of these cases have stalled in court, and critics have suggested that rampant corruption within the judiciary makes it exceedingly difficult to actually convict powerful individuals.

Arrests uncover web of conspiracy

The recent arrests of these senior judges represent an attempt to deal with the judiciary and pave the way for further anti-corruption measures.

In the case of Ngwuta and Okoro, the allegations are particularly serious. It is alleged that Ngwuta traveled to the Middle East to obtain a substantial bribe, which he then shared with Okoro and others. The plot becomes even more insidious, as recent information obtained by Sahara Reporters links the bribe to State Governor Nyesom Wike.

Allegedly Wike paid the bribe in order to obtain a favorable verdict in his election case, which is currently under review by the Supreme Court. It would appear that the State Governor is at least involved in some capacity. He swiftly appeared with his staff at the scene of one of the DSS raids and argued with officials. In the commotion, an unnamed judge was said to have escaped.

Applause and tenuous protestations 

It is interesting to note that Wike is a prominent member of the People’s Democratic Party, the official opposition. Critics have said that corruption cases are only being wielded against those who are out of favor with, or in direct opposition to the administration.

The judiciary itself has argued that the DSS doesn’t have the authority to carry out raids and that investigations into the judiciary are fundamentally unconstitutional. However, such grievances are ringing hollow in the ears of most Nigerians, who are glad to see decisive action being taken. The protests sound more like the desperate cries of an archaic and self-serving class, which has realized it is under bitter siege.

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Ngozi Okonjo-Iweala: An economist, a global leader and a policy maker

Comments (0) Africa, Politics

Ngozi Okonjo-Iweala has come from humble beginnings to serve two terms as Nigeria’s finance minister, and has been within a hare’s breath of becoming president of the World Bank. The “Iron Lady” of Nigeria is credited with the emergence of Nigeria as Africa’s largest economy and her work in office and in the humanitarian spheres have been greatly celebrated. She has been described as a “triple threat” with strong experience in economics, finance as well as development and governance.

She was born in 1954, in a village in the south of Nigeria when the country was still a jewel in the heart of the British Empire. She reportedly perfected her English reading Louis Stevenson and Enid Blyton and had a charmed, “wonderful” childhood. She credits her early upbringing with her later tenacity: “I learned real life, fetching wood, water. At five I could cook. This life has given me strength and a strong character.” When she was 15, she carried her Malaria stricken three-year old sister on her back for 10 miles to reach a doctor, and then insisted on her treatment, ultimately saving her life. Her sister is now herself a physician, and a rock of support to Okonjo.

Nigeria’s civil war and the end of her childhood years 

Her childhood ended in 1967 when the civil war broke out, and her father was called away to fight in the army. She explained that her parents lost “everything” and she learned what it was to have nothing. They moved frequently and often survived on one meal a day; resilience and tenacity became essential to survival. These early experiences crafted Okonjo into the woman she is today. Interestingly, she describes her humble beginnings and later greatness as similar to that of her country, Nigeria.

Her escape came at 18, when she left her warring Nigeria to study at Harvard University, followed by a Phd in Regional Economics at MIT. A prodigious talent, she was headhunted for the World Bank and spent the next 21 years here as a development economist.

Her financial experience with the World Bank

After a strong and steady tenure at the World Bank, she was elected to serve as Finance Minister in her homeland. This began her defining years. She served two terms between 2003-2006 and 2011- 2015, punctuated by four years as a Managing Director at the World Bank. During her tenure, she also held the post of Minister of Foreign affairs. Okonjo was the first female to hold either position.

Although she didn’t act alone, Okonjo is credited with being an instrumental figure in shaping Nigeria’s modern economy, bringing in necessary reforms and increasing governmental transparency. Her biggest achievements include targeting Nigeria’s rampant corruption by identifying and eliminating 5000 fake civil servants on the payroll. She also fastidiously cracked down on political and military leaders who were stealing crude oil. For this, she received death threats, her addresses were published in the media and her mother was kidnapped. She told the Observer: “Fighting corruption, corruption tends to fight back”. She did not falter and in the end, succeeded in her war against the insidious nature of Nigeria’s administration.

Shaping Nigeria’s future by fixing its economic deficit

Her economic background was showcased by her greatest achievement in office: securing a cancellation of $30bn debt from Nigeria’s name. She also added strength and stability to the country’s public finance systems by obtaining its first sovereign debt ranking in 2006. She later established the Mortgage Refinance Corporation which stimulated Nigeria’s housing market and was involved in numerous gender and youth empowerment schemes. The most recognized, the Youth Prize with Innovation, which supports young entrepreneurs and has created thousands of jobs, was evaluated by the World Bank to be one of the most successful of its kind globally.

During her time as finance minister, Nigeria emerged as the largest economy in Africa with a GDP of $481bn in 2015. After stepping down last year, she has dedicated her time to humanitarian causes. She currently chairs the board of the Global Alliance of Vaccines and Immunizations and the African Risk Capacity, a weather based insurance for African countries. Still regularly leading “top 100” lists of the world’s most influential people, it’s clear that Okonjo is still a force to be reckoned with, both in Nigeria and worldwide.

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Angolan President fires finance minister Manuel

Comments (0) Africa, Latest Updates from Reuters, Politics

LUANDA (Reuters) – Angolan President José Eduardo dos Santos fired Finance Minister Armando Manuel on Monday two months after the government of Africa’s biggest oil producer broke off talks with the IMF over emergency funding.

In a cabinet reshuffle, dos Santos also replaced his agriculture minister and dropped the powerful Chief of Staff in the presidency, Edeltrudes da Costa, who was implicated in a recent land eviction.

A statement said Manuel, who was appointed in 2013 and whose term had been due to run to 2017, would be replaced by capital markets commission head Augusto Archer de Sousa Hose, more commonly known as Archer Mangueira.

Over the last two years, Manuel had presided over an economic slump caused by a sharp drop in oil prices that sapped dollar inflows, hammered the kwanza and prompted heavy government borrowing.

The kwanza slid more than 30 percent against the dollar in 2015, and in January the central bank allowed for another 15 percent weakening to 155 against the dollar.

The currency was bid at 165/dollar on Monday, according to Thomson Reuters data. On the black market, it has been trading as low as 600.

The weaker currency has seen inflation soar to 35 percent from 10 percent a year ago, forcing the central bank to hike interest rates by 675 basis points since June 2015.

However, it said on Monday it had kept its benchmark rate unchanged at 16 percent at its latest policy meeting.

Before his appointment, 53-year-old Mangueira was President of Angola’s Capital Markets Commission, making him a familiar face to foreign investors, and had recently been brought onto the central committee of the ruling MPLA party.

Diplomats said his promotion was not a major surprise, especially in the wake of the government’s decision in late June to end emergency financing talks, supported by Manuel, with the International Monetary Fund (IMF).

Angola’s economic slump has fuelled opposition to dos Santos’ 36-year rule, although the MPLA re-elected him as its leader last month ahead parliamentary elections in 2017.


(Reporting by Herculano Coroado; Writing by Stella Mapenzauswa; Editing by Ed Cropley)


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The Workers Strike Back: Unions Take Action in South Africa

Comments (0) Latest Updates from Reuters, Politics

Image: Striking miners dance and cheer after they were informed of a 22 percent wage increase offer outside Lonmin's Marikana mine

In mid-August, an estimated 15,000 workers for the South African power company went on an illegal strike after weeks of wage increase negotiations. Employed by Eskom, South Africa’s largest electricity company, nearly one third of the work force protested the wage ceiling and inadequate housing allowances. Eskom had pre-emptively obtained a court interdict banning employees from striking after negotiations with major unions turned sour. The unions that represent Eskom employees had demanded their wages be increased by 12-13%, but Eskom refused to budge above 7-9%, and claimed wage discrimination as a hangover from apartheid. Workers felt that their grievances warranted more than negotiations, and thus went on strike.

Unpopular Policies

Eskom was established in 1923 and generates approximately 95% of the country’s electricity. Over the past seventy-odd years, Eskom has been the center of a variety of dramatic incidents, but perhaps the most pertinent is their policy of “load shedding.” Beginning in response to inadequate power supplies starting in 2007, Eskom began the practice of load shedding, or regular, scheduled blackouts to reduce the stress upon the electricity grid, turbines and power sources. In order to meet the demand of South Africans with an inadequate supply, different regions are purposely deprived of electricity so that it can be directed elsewhere on a complex schedule. The vast majority of South Africa’s energy comes from aging coal-fired power stations. In what can only be a planned irony, the strike came on the one-year anniversary of “no shedding,” or an entire year without planned power cuts. Eskom had been looking forward to publicizing their success but were instead faced with the possibility of a black-out due to a shortage of workers.

Workers Unite

As South Africa’s largest producer of energy, Eskom is considered a vital service company. In South Africa, workers in vital service industries can be prevented from striking despite their constitutional right to do so. After weeks of negotiations with workers and their unions (primarily the NUM and Numsa, or National Union of Metalworkers of South Africa), Eskom realized workers were likely to strike regardless of the preventative law. They then applied for and were granted an interdict, opening up any workers who did strike for legal action by the company. Eskom’s national spokesman, Khulu Phasiwe, said that workers who did not show up to work because they were striking would have to account managers the reasons for to their absence without leave. 15,000 workers, or about one third of Eskom’s total employee base, considered the strike worth the risk. Workers demonstrated outside power stations in the eastern provinces, while others went on strike across the country.

Eskom workers demanded that their wages be increased incrementally, starting with a “10% increase of the lowest salaries, 8.5% of the highest income and housing allowance of 3,000 rand,” approximately $222 USD. Prior to the strike, the company refused to budge above a 9% increase. According to the country’s largest union, National Union of Mineworkers (NUM), the lowest paid Eskom worker earns about 9,000 rand, or $666 per month. While cost of living in South Africa is lower than in, say, the United States, $666 is not enough to live on, particularly if one is supporting a family.

NUM released a bold statement saying that “the NUM members are very angry at the attitude of Eskom refuses to end the wage system of apartheid.” In various interviews, several workers claimed racial discrimination, and some women claimed gender bias as well. Under apartheid, white South Africans were paid a higher wage for the same job than black South Africans. This legalised and codified racism ended in name with the collapse of apartheid in 1994, but continues in practice to this day in every sector of South African life. All of NUM’s members at Eskom went on strike. It is not just the racially-based wage discrimination that drove workers to strike, but also the unlivable wages they receive for their labor.

The Enemy of My Enemy…

Prior to the strikes, the NUM and Numsa had been bitterly divided over their ideologies and desires. This strike, however, has brought them together: a spokesperson from NUM said “whatever differences we may have with Numsa, we have a common enemy now, which is Eskom.” Eskom ensured the public that negotiations are underway to bring an end to the civil action, but it seems unlikely the issue will be put to rest any time soon.


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Election spells more economic trouble for South Africa

Comments (0) Africa, Economy, Politics


South Africa has reclaimed its spot as Africa’s largest economy, but fallout from recent elections threatens to exacerbate the country’s economic difficulties.

Frustration with the nation’s struggling economy prompted many voters in Aug. 3 municipal elections to turn away from the African National Congress (ANC), the storied party of Nelson Mandela which has led the country since the end of apartheid more than two decades go.

In the face of high unemployment and slow growth, voters in several major cities, including Pretoria and Johannesburg, turned to the Economic Freedom Fighters party on the left or the Democratic Alliance on the right.

Those parties, far apart on economic and other policies, have nevertheless  informally agreed to band together in order to shut out the ANC. EFF leader Julius Malema rebuffed ANC overtures to form a coalition in Johannesburg, calling the party “corrupt to the core.”

ANC loses support in cities

In elections that are widely seen as a vote on the performance of the national government, the ANC received 54 percent of the vote, compared to 62 percent just two years earlier.

However, the party saw steeper declines in the nation’s urban areas, where middle class voters rejected ANC appeals based on the historic role of the party. For example, in Johannesburg, South Africa’s largest city, the ANC received only 44 percent of the vote, while only 41 percent of voters in the capital of Pretoria favored the ANC. Even in Nelson Mandela Bay metro area, which is mostly black, voters elected a white commercial farmer, Athol Trollip, as mayor.

The party went into the election with considerable baggage, including a sluggish economy and a spate of corruption scandals in the administration of President Jacob Zuma.

Last spring, a South African  court rebuked Zuma, saying that he violated the constitution when he used millions in government funds for improvements at his home in rural , They included a swimming pool, visitor center, and an amphitheater, which he said were necessary for his security. The court ordered Zuma to pay more than $16 million back to the state.

Economy reels under Zuma

Zuma sent South Africa’s economy into a tailspin last December after he abruptly fired a respected finance minister and then was forced to sack an inexperienced replacement only four days later amid protests.

The value of the rand plummeted but a measure of order returned with the appointment of a third finance minister, Pravin Gordhan.

At the same time, the nation’s economy has not rebounded from the 2007-08 financial crisis, and experts predict little growth in the coming years.

The South African Reserve Bank has forecast that the country will record no  growth this year and less than 2 percent annually in 2017, 2018 and 2019.

The nation’s unemployment rate tops 25 percent and it is more than double that among young people.

Major reforms needed

Experts suggest major economic reforms will be required to fuel the growth the country needs and to avoid cuts in government spending and a credit downgrade.

“South Africa’s public purse has come under pressure. At the same time the country faces the danger of a credit risk downgrade by international credit rating agencies,” said Jannie Rossouw, head of the School of Economic & Business Sciences at the University of Witwatersrand.

Rossouw said the government might have to give away some state-owned enterprises, such as South African Airways, that are unprofitable and a drain on tax coffers.  South African should also cut bureaucratic red tape to stimulate economic activity.

However, Rossouw said he did not see a way forward for reform in the near term unless the anti-Zuma faction within the ANC can take control from the president’s faction.

At the same time, he said, planning and implementation of reforms could be slowed by the fact that a growing number of municipalities have coalition governments, some of which are unfriendly to the ANC.

Currency values drive economic rankings

Meanwhile, South Africa’s hold on the title of Africa’s largest economy may be tenuous.

The country reclaimed the top spot this summer after trailing Nigeria and Egypt.

However, the ranking is based primarily on the gross national product as measured by the value of a nation’s currency against the U.S. dollar. The increase in the dollar value of the South African rand outpaced that of the two other countries even though the nation’s GDP decreased to $312.8 billion in 2015, according to World Bank data.

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Egypt’s government complicit in wheat corruption -parliamentary report

Comments (0) Latest Updates from Reuters, Politics

By Eric Knecht and Maha El Dahan

CAIRO/ABU DHABI (Reuters) – A parliamentary fact-finding commission’s report into corruption in Egypt’s wheat industry finds that the government played a key role in “wasting public funds” in its costly food subsidy programme.

Reuters reviewed a copy of the report that will be presented in parliament on Monday. It states that government entities neglected their own storage facilities in favour of less regulated private sites, made contracts with “fake entities,” and oversaw flawed reforms that caused subsidy spending to increase rather than decrease as publicly stated.

From silo contracts to budgetary analysis to testimony from industry officials, the more than 500-page fact-finding report into wheat corruption points to government involvement in mismanaging, and at times facilitating graft in, subsidies intended to encourage agriculture and feed tens of millions.

“There are obvious flaws that rise to the level of complicity in the supply ministry and all of its bodies supervising the wheat procurement system,” the report said.

The supply ministry spokesman said he had resigned from his post and could no longer comment on the issue when contacted by Reuters.

Egypt, the world’s largest importer of wheat, has been mired in controversy in recent months over whether much of the roughly 5 million tonnes of grain the government said it procured in this harvest exists only on paper, the result of local suppliers falsifying receipts to boost government payments.

Industry officials have estimated that upward of 2 million tonnes could be missing from silos, a deficit that could force Egypt to import large quantities of additional grains to meet local demand even as it faces an acute hard currency shortage.

A Reuters special report earlier this year detailed how the government’s wheat supply chain was riddled with corruption – from fraudulent wheat purchases by local suppliers to hacked smart cards that allowed bakers to steal flour – that has cost the country hundreds of millions of dollars per year.



The parliamentary report provides new insight into how government bodies may have played a direct role in many of the corrupt practices, particularly by awarding contracts to private suppliers who had lax oversight of their storage facilities, while leaving government sites unused.

The supply ministry’s Holding Company for Silos housed over 1 million tonnes of wheat in less-regulated private sector storage this season while leaving 700,000 tonnes of its own storage capacity unutilised – a violation of regulations that require government spaces to take priority, the report found.

The holding company used just 29.7 percent of the silo capacity it had available, it said.

“Despite that (unused storage), the company contracted with private sector companies to rent 16 silos and 35 shounas (open air sites) to store a total of 1,147,319 tonnes of wheat.”

“Not using the full storage capacity owned by the (government) company caused it to bear huge losses…and made it take on the cost of paying to rent from the private sector.”

The report also called into question the legality of many of the contracts made with the private sector sites.

Government firms contracted with “storage sites that had legal actions taken against them previously but which had since changed their commercial names”, and with those that “did not have a commercial registration or a tax identification.”

“This means that contracting was done with fake entities,” the report stated.

Last week Supplies Minister Khaled Hanafi resigned amid growing criticism of his management of the subsidies. His exit was the biggest fallout from the wheat scandal to date.

Hanafi repeatedly said that bread system reforms introduced under his watch in 2014 have saved Egypt in terms of both money and strategic commodities, an assertion the report undermines.

He was not immediately available for comment about the parliamentary report when contacted by Reuters.

Government spending on bread subsidies rose by 3.91 billion Egyptian pounds ($440.32 million), or 15.9 percent, in the 2014-15 financial year, and by an additional 1.89 billion ($212.84 million), or 6.6 percent, in 2015-16, the report states, citing Finance Ministry documents.

“Subsidies increased, and did not decrease as a result of the bread system as the supply ministry continuously claims.”

($1 = 8.8799 Egyptian pounds)


(Editing by Mark Heinrich)


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Tanzania’s President Magufuli orders officials to speed up LNG project

Comments (0) Africa, Latest Updates from Reuters, Politics

By Fumbuka Ng’wanakilala

DAR ES SALAAM (Reuters) – Tanzanian president John Magufuli ordered officials on Monday to speed up long-delayed work on a planned liquefied natural gas (LNG) plant, saying implementation of the project had taken too long.

BG Group, recently acquired by Royal Dutch Shell, alongside Statoil, Exxon Mobil and Ophir Energy, plan to build a $30 billion-onshore LNG export terminal in partnership with the state-run Tanzania Petroleum Development Corporation (TPDC) by the early 2020s.

But a final investment decision has been held up by government delays in finalising issues relating to acquisition of land at the site and establishing a legal framework for the nascent hydrocarbon industry.

“I want to see this plant being built, we are taking too long. Sort out all the remaining issues so investors can start construction work immediately,” the presidency quoted Magufuli as saying in a statement.

Magufuli, a reformist who took office in November, has sacked several senior officials for graft and cut spending he deemed wasteful, such as curbing foreign travel by public officials.

The president’s office said Magufuli issued the instructions for the LNG project to be fast-tracked during talks with Oystein Michelsen, Statoil’s Tanzania country manager, and senior Tanzanian government energy officials.

The Tanzanian presidency did not give the construction schedule for the project, but said once completed the LNG plant would have an expected economic lifespan of more than 40 years.

The government said it has acquired over 2,000 hectares of land for the construction of the planned two-train LNG terminal at Likong’o village in the southern Tanzanian town of Lindi.

Tanzania discovered an additional 2.17 trillion cubic feet of possible natural gas deposits in February, raising the east African nation’s total estimated recoverable natural gas reserves to more than 57 trillion cubic feet.

East Africa is a new hotspot in hydrocarbon exploration after substantial deposits of crude oil were found in Uganda and major gas reserves discovered in Tanzania and Mozambique.



(Editing by Aaron Maasho and Richard Balmforth)


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Egypt’s supply minister resigns amid corruption probe

Comments (0) Latest Updates from Reuters, Leaders, Politics

CAIRO/ABU DHABI (Reuters) – Egyptian Minister of Supply Khaled Hanafi resigned from his post on Thursday, the highest level fallout from a corruption probe into whether millions of dollars intended to subsidise farmers were used to purchase wheat that did not exist.

“I announce leaving my post so that the state can choose who will bear and continue this path of giving,” Khaled Hanafi said on state television.

Egypt, the world’s largest importer of wheat, has been mired in controversy over whether much of the roughly 5 million tonnes of grain the government said it procured in this year’s harvest exists only on paper, the result of local suppliers falsifying receipts to boost government payments.

If Egypt’s local wheat procurement figures were misrepresented, it may have to spend more on foreign wheat purchases to meet local demand – even as it faces a dollar shortage that has sapped its ability to import.

Egypt’s supply ministry is in charge of a massive food subsidy programme and the main state grain buyer, the General Authority for Supply Commodities (GASC).

Parliamentarians who formed a fact-finding commission to investigate the fraud have said upwards of 2 million tonnes, or 40 percent of the locally procured crop, may be missing.

The general prosecutor has ordered arrests, travel bans, and asset freezes for several private silo owners and others allegedly involved in the scandal.

While Hanafi has not been accused of directly profiting from misallocated subsidies, parliamentarians, industry officials, and media commentators have in recent weeks pinned blame for the crisis squarely on his shoulders.

The prospect of hundreds of millions of dollars in squandered government subsidies comes as Egypt gears up for a raft of austerity measures, including various subsidy cuts agreed to as part of a $12 billion IMF programme that could bring pain for its poorest.


(Reporting by Eric Knecht and Maha El Dahan; additional reporting by Asma Alsharif; editing by William Hardy)


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Zuma says backs South Africa finmin but can’t stop probe

Comments (0) Latest Updates from Reuters, Politics

By Mfuneko Toyana

PRETORIA (Reuters) – South African President Jacob Zuma said on Thursday he backs Finance Minister Pravin Gordhan but cannot intervene in a police investigation over a suspected spy unit at the tax service, signalling a prolonged tussle that could rock markets further.

Gordhan said on Wednesday he had done nothing wrong and had no legal obligation to obey a police summons linked to an investigation into whether he used the South African Revenue Service to spy on politicians including Zuma.

The rand, which had tumbled 5 percent since Tuesday in response to the investigation, picked up on Thursday and gained further ground after Zuma’s statement, while government bonds also firmed, even though analysts said the president had offered only qualified support.

News of Gordhan’s summons this week compounded investors’ worries about a power struggle between Zuma and Gordhan as Africa’s most industrialised economy teeters near recession and credit rating agencies consider downgrading it to “junk”.

The main opposition party called on Thursday for a parliamentary debate into what it called a “witch-hunt” against Gordhan, who was in charge of the tax service when the unit under investigation was set up.

Investors and rating agencies back Gordhan’s plans to rein in government spending in an economy that has been forecast by the central bank to register no growth this year.

In his first public comments on the matter since it surfaced late on Tuesday, Zuma said he had noted the concerns by individuals and various organisations over the investigation.

“President Jacob Zuma wishes to express his full support and confidence in the Minister of Finance and emphasises the fact that the minister has not been found guilty of any wrong doing,” the presidency said in a statement.

“The Presidency wishes to also emphasise that President Zuma does not have powers to stop any investigations into any individual/s,” it said, adding that Zuma could not bring a halt to the probe even if it was negatively affecting the economy.



A Zuma-backed plan to build a series of nuclear power plants, at a cost of as much as $60 billion, has caused tension with the Treasury for months and is likely adding to pressure on Gordhan’s position, analysts say. The presidency said in May that Zuma was not warring with Gordhan.

On Thursday, the presidency defended plans by cabinet to give Zuma supervision over state-owned firms after Gordhan’s allies said this would limit the finance minister’s control.

Zuma’s team and the Treasury under Gordhan have disagreed about government spending, including at loss-making state companies like South African Airways, analysts say. [nL8N1B6328]

Analysts also questioned the extent of Zuma’s stated support for his finance minister.

“It was an ambiguous vote of confidence in Pravin Gordhan which would suggest that the agencies supposedly investigating in Pravin Gordhan will be given relatively free rein to continue these investigations,” said Daniel Silke, a director at Political Futures Consultancy.

NKC African Economics analyst Gary van Staden concurred.

“Anybody who watches English football can tell you when the owner says he has confidence in the manager, the manager is out of there in a week,” he said.

Political activists protested outside the offices of the Hawks, the elite police unit that is investigating Gordhan, in solidarity with the minister, where two former officials of the tax service presented themselves to the police.

Hawks spokesman Hangwani Mulaudzi declined to comment.

A former finance minister, Trevor Manuel, said on Wednesday the economy would be “destroyed” if Zuma fired Gordhan, after he changed finance ministers twice in one week in December.


(Additional reporting by Joe Brock, James Macharia and Tanisha Heiberg; Writing by James Macharia; editing by Dominic Evans)


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