MENU

Politics
Category

South African assets sink after police summon finance minister

24 August 2016 Comments (0) Economy, Latest Updates from Reuters, Politics

By Joe Brock and Mfuneko Toyana

JOHANNESBURG (Reuters) – South African assets slumped on Wednesday after an elite police unit summoned Finance Minister Pravin Gordhan over an investigation into a suspected rogue spy unit in the tax service, fuelling speculation that there was a plot to oust him.

Gordhan and other former officials at the South African Revenue Service (SARS) must report to the Hawks on Thursday morning in relation to contravention of surveillance regulations, a source close to the matter told Reuters.

The announcement added to investors’ worries about leadership at the finance ministry as Africa’s most developed economy teeters on the edge of recession and credit rating agencies consider downgrading it to “junk” status by year-end.

Shadow finance minister David Maynier urged authorities not to take any more formal steps against Gordhan.

“The arrest of the finance minister would shatter investor confidence, risk a sovereign ratings downgrade and be a disaster for the already fragile zero growth, zero jobs economy in South Africa,” the member of the opposition Democratic Alliance said in a statement.

The Treasury confirmed the Hawks had contacted Gordhan and that he was seeking legal advice, but declined to go into further details.

Gordhan is due to speak at a debate in Cape Town at 7 p.m. (1700 GMT). Hawks spokesman Hangwani Mulaudzi said it did not comment on ongoing investigations.

The rand extended losses after dropping 3 percent the previous session when the news about Gordhan emerged.

Bonds also slumped with the yield on benchmark 2026 issue rising 46 basis points to 8.935 percent. South Africa’s stock market banking index opened almost four percent down.

 

“PLOT TO OUST GORDHAN”

A Zuma-backed plan to build a fleet of nuclear power plants, at a cost of as much as $60 billion, has been a cause of tension with the Treasury for months and is likely adding to pressure on Gordhan’s position, analysts say.

Russian state-backed companies are the favourites to win the nuclear bid, industry sources say.

“This is all part of a plot to oust Gordhan,” political analyst Prince Mashele said. “Gordhan refuses to sign-off on the Russian nuclear deal.”

Gordhan has refused to be drawn publicly on whether he supports the nuclear project but has said South Africa will only enter agreements it can afford.

Presidency spokesman Bongani Majola did not respond to requests for comment.

Local media reports in May said Gordhan may face arrest on espionage charges for setting up the unit to spy on politicians including President Jacob Zuma.

Zuma has rejected allegations by opposition parties that he has failed to publicly back Gordhan, saying that the law should take its course.

Zuma spooked investors in December by replacing then finance minister Nhlanhla Nene with relatively unknown lawmaker David van Rooyen. After markets tumbled, Zuma demoted van Rooyen and appointed Gordhan, in his second stint in the job.

Nene’s refusal to sign-off on the nuclear deal contributed to his downfall, government sources said at the time.

 

(Additional reporting by Nqobile Dludla and Ed Stoddard; Editing by Andrew Heavens)

tagreuters.com2016binary_LYNXNPEC7N0J3-VIEWIMAGE

Read more

Tanzania extends its e-tax system to cut fraud

21 August 2016 Comments (0) Africa, Featured, Politics

John Magufuli

Tanzania’s president, John Magufuli, has extended the e-tax system to all government bodies as he bids to slash fraud.

Tanzania’s president, John Magufuli, has been in office for less than a year, but he is already making a name for himself as a staunch opponent of fraud and corruption. Magufuli has attacked tax evasion and corruption, in a bid to ensure that the government no longer loses billions of dollars in unpaid funds. One of the most significant measures taken in this battle with tax evasion has been the announcement that the nation’s e-tax system will now apply to all government departments and bodies.

The e-tax system

It was 6 years ago that Tanzania first introduced its e-tax system, but it has taken until now for the system to be applied to government positions and departments.

The e-tax system involved the distribution of Electronic Fiscal Devices (EFDs) by the Tanzania Revenue Authority (TRA) to Tanzanian businesses. The EFD is an advanced version of a traditional cash register that records all transactions, and provides the TRA with an easily processed record of the tax owed.

Prior to this point, businesses recorded sales in hand written books, which not only allowed much easier deceit, but ensured that the TRA’s job was far more difficult. Director of Education and Taxpayer Services Richard Kayombo said that businesses would claim to have sold less, and that the old system was practically “worthless” in terms of stopping tax fraud.

In contrast, EFDs are compatible with the TRA’s own Electronic Fiscal Device Management (EFDM), which provides the government with real-time sales information. Kayombo said, “The system enables us to get information directly from a trader when they make business transactions.”

An Electronic Fiscal Device (EFD)

An Electronic Fiscal Device (EFD)

While the system was initially rolled out to large scale traders in 2010, a second drive in 2013 saw it become compulsory for mid-sized traders too. However, it has taken President Magufuli until now to extend this measure to governmental departments and bodies too.

Magufuli not only feels that it will be a huge financial boon for government coffers, but that it is also a matter of principle. Magufuli explained, “We forced entrepreneurs to capitalize on the electronics tax collection while we, in government, have not resorted to the same thing, which is a total contradiction.”

The increased reach of Tanzania’s e-tax system ensures that the government cannot be accused of hypocrisy in regards to its stance on corruption, and it also means that taxation revenue is expected to exceed the government’s original target for the financial year. The commissioner general of the TRA, Alphayo Kidata, predicted that takings would surpass “the collection target of 15.5 trillion Tanzanian shillings during the 2016/2017 fiscal year.”

This is a figure akin to more than $7 billion.

Looking to reap the rewards

In the first 2 months of Magufuli’s crackdown on taxes last year, the TRA collected around $700 million in taxes. However, while some of this was achieved by targeting corrupt officials and business owners, the true impact of the president’s policy will not be seen until the end of the financial year.

The rollout of e-taxes to all government bodies was announced only last month, after Magufuli met with the Rwandan president, Paul Kagame, who has successfully implemented a similar system in his nation. Rwanda has offered to send IT experts to assist Mr. Magufuli’s government in the implementation of the technology, and the announcement was greeted with widespread approval by Tanzanian commentators and experts. If the move is as successful as hoped, Magufuli’s government will be in a strong position to build the economy and social infrastructure.

In 2014, tax collections covered 75% of government expenditure, but universal e-taxation could make a dramatic difference to this. Mr Kayombo confirmed that in the first year of commercial businesses using EFDs, tax revenue rose by 23%, and by 27% in the second year. A similar success within government institutions would provide Tanzania with a huge influx of revenue.

Professor George Shumbusho, Senior Lecturer at Mzumbe University, felt that it was an excellent move from the government, and one that could have a massive impact, exclaiming, “This is a commendable decision given the fact that the country has been losing a lot of money to unscrupulous public officials…With this system, the government may be able to fund its budgets by 100 per cent.”

Read more

Can Morocco rejoin the AU?

18 August 2016 Comments (1) Africa, Featured, Politics

African Union

Morocco seeks to return to the African Union, but the issue of Western Sahara remains unresolved.       

After 30 years on the outside, Morocco is seeking a return to the African Union, a body that it dramatically left in 1984. As of 2002 this body is called the African Union, previously known as The Organization of African Unity (OAU). Some see this move as long overdue while critics see it as an insidious maneuver to further Moroccan agendas. The controversial and complex situation revolves around Morocco’s disputed ownership of the Western Sahara in North-West Africa. Much has changed since Morocco’s departure, including the AU itself.

The ghosts of the past are not easily dispelled. Regional entities remain distrustful towards Morocco after the nation claimed ownership of the Western Sahara region in the wake of the Spanish withdrawal in 1975. Critics condemned the action as an illegal annexation and an opportunistic land-grab: the region contains vast phosphate resources, abundant fisheries and large untapped oil potential. Morocco however believes that the Western Sahara has always been part of Greater Morocco’s true borders. This annexation for them was merely a return of the Sahara to the “motherland,” and not an aggressive power play. The Western Sahara’s partially recognized ruling body, the SADR (Sahrawi Arab Democratic Republic), severely contest these historical claims to ownership.

History of Morocco’s relationship with the AU

When the independence of the Western Sahara was recognized by the OAU, Morocco immediately exited the union and has been on the outside ever since. So the question is: what has changed? In recent years Morocco has been fostering closer relations with its regional neighbors. This may just be the next step in the process of strengthening its African ties, with a desire to become a key economic and political player in the continent. “For a long time our friends have been asking us to return to them so that Morocco can take up its natural place within its institutional family,” King Mohammed VI said in a speech to African leaders. Morocco claims the motives are entirely separate from its stance on the Western Sahara, and wishes to rejoin solely from an economic standpoint.

A more cynical reasoning is that after many years of diminished regional influence due to its absence from the AU, Morocco will be in a stronger position to undermine the legitimacy of the Western Sahara once inside the organization. An official from the AU speaking with anonymity said, “The AU general secretariat is concerned that Morocco wants to return in order to argue the SADR issue from within the AU.”

Issue of Western Sahara remains

Western Sahara

Western Sahara

Morocco is unlikely to concede any significant points over their occupation of the Western Sahara. Some commentators feel that it is likely that they will continue some form of hostilities towards the SADR whether inside or outside the AU. The rest of the union needs to carefully consider whether it can better manage the outcome of disagreement with Morocco inside or outside the union. Morocco’s return to the organization will undoubtedly cause conflicts. The nations of the AU and beyond are already taking sides. Despite Egypt and Tunisia’s links to Morocco via their common cultural identity and geographic locations, they have not issued statements or official comments supporting Morocco’s potential re-entry. Mona Omar, an assistant to the Egyptian foreign minister said, “Egypt is committed to taking neutral positions when it comes to Algeria and Morocco.”

Realistically, 30 years ago when Morocco left, the union was a far less influential and interventionist body. If it returns, it will be to an entity that is far more prepared and capable to intercede in conflict. It will not sit back and watch Morocco bully the Western Sahara, even if it re-enters with no restrictions on its actions.

The African Union’s evolution

Today, the AU is a pan-African organization designed to promote peace and prosperity throughout the continent of Africa. It is quite different to the OAU in that it can and does intervene in conflict and is not just advisory in nature. Its Peace and Security Council can deploy military forces and initiate peacekeeping missions throughout Africa, while also suspending memberships if countries abandon democratic practices, excluding them from trade relations and intercontinental funds. The AU will not play placid spectator to Morocco’s intimidation. Morocco will be required to make some concessions to its diplomatic relations if it wants to play a central role within the African Union.

The circumstances surrounding Morocco’s departure remain unchanged, so critics have questioned Morocco’s timing and motives. The dispute over the Western Sahara is unresolved, causing tension throughout the whole of North Africa. For all parties to be duly satisfied it will take delicate diplomacy and Morocco would undoubtedly need to meet certain stipulations laid out by the union. Both parties have made it clear that they will not be compromising on their standpoint on the SADR; whether this will be a sticking point over Morocco’s membership remains to be seen.

Read more

Ghana says on track to halve budget deficit after IMF deal

18 August 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

ACCRA (Reuters) – Ghana is on target to halve its fiscal deficit this year after its $918-million aid deal with the International Monetary Fund, Finance Minister Seth Terkper said on Wednesday.

His comments appeared designed to allay uncertainty over the deal that emerged this month when parliament rejected a key component that was designed to promote fiscal discipline. The following day the government suspended a planned Eurobond issue.

The government issued a bill to eliminate central bank financing of the budget deficit in line with the requirements of the deal but on Aug. 2 parliament passed the bill with an amendment allowing financing of up to 5 percent.

Ghana’s public debt eased to 63 percent of GDP in May from 72 percent at the end of 2015, while consumer inflation dropped to 16.7 percent in July from 19 percent in January, Terkper said, citing the impact of the deal that began in April 2015.

The central bank expects inflation to slow to 8 percent, plus or minus two, by September 2017.

“We are set to halve the deficit from 12 percent in 2012, and we have also started stemming the rate of growth of the public debt,” he told a meeting of private businesses in Accra.

Ghana, which exports cocoa, gold and oil, signed the assistance programme to bring down inflation and the budget deficit and stabilize the currency.

Terkper said the debt stock could rise marginally to 65-66 percent of GDP on planned disbursements towards the end of the year but will remain below 70 percent.

Ghana pulled out of a planned five-year $500 million amortising Eurobond this month because investors demanded a yield higher than the single digits the government had expected.

Terkper led the government finance team on the deal and said his team only suspended pricing of bids.

“We did not call off the 2016 bond …. What we did was to suspend pricing …. We must sometimes hold our nerves when we’re in the capital market to look for the right window before we strike in order to get the best results,” he said.

Ghana will on Thursday begin pumping oil from a second offshore oil field, Tweneboa-Enyenra-Ntomme or TEN, in addition to its flagship Jubilee production which began in late 2010.

 

(By Kwasi Kpodo. Editing by Matthew Mpoke Bigg)

Read more

Nigeria plans capital spending of $312 million in coming days: VP

11 August 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

By Chijioke Ohuocha

LAGOS (Reuters) – Nigeria will spend 100 billion naira ($312.50 million) on capital projects in the coming days as part of the 2016 budget, Vice President Yemi Osinbajo said on Thursday, as the country tries to inject life into an economy facing recession.

Africa’s largest economy is in the middle of its worst crisis in decades, as a slump in oil revenues hammers public finances and the naira. Gross domestic product shrank 0.36 percent in the first quarter and the central bank governor has said recession is likely.

Government capital spending so far has reached 332 billion naira, Osinbajo said. The record budget has been held up for months by wrangling between President Muhammadu Buhari and parliament.

Another 100 billion naira will be released in the next few days to fund power, housing, transport, agricultural and defence projects, Osinbajo said.

“We have pledged to keep capital spending at a minimum of 30 percent (of the 6.06 trillion naira budget),” he told a business forum in Lagos.

But Osinbajo also said many of Nigeria’s 36 federal states were still struggling to pay the salaries of civil servants, despite assistance from the federal government.

He said a float of the naira and more flexible foreign currency regime in June had eased pressure on foreign reserves, without giving details. The naira has lost some 40 pecent since then.

“I believe … there will be an increase in supply of foreign exchange,” he said.

He also said Nigeria had saved 1.4 trillion naira by ending fuel subsidies and increasing fuel prices in May. “Fuel consumption is down 800 trucks per day from 1,600 trucks per day before the price increase,” he said.

Publication of GDP data for the second quarter will be delayed until Aug 31, the head of the statistics office said on twitter.

With oil prices dropping, the government has struggled to fund the budget. It is seeking advisers and bookrunners to manage a planned $1 billion eurobond it intends to offer this year.

($1 = 320.0000 naira)

(Reporting by Chijioke Ohuocha; Writing by Ulf Laessing; Editing by Larry King)

tagreuters.com2016binary_LYNXNPEC7A0LS-VIEWIMAGE

Read more

Cash-starved Burundi reports stronger inflow from domestic taxes

8 August 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

KIGALI (Reuters) – Tax revenues in Burundi rose by almost 13 percent last month compared with a year ago, official data showed on Monday, a boost for the economy following a year of unrest linked to the re-election of President Pierre Nkurunziza.

More than 450 people have been killed in violence and more than a quarter of a million people have fled to neighbouring countries since Nkurunziza was re-elected for a third term in the small east African country in what the opposition said was a violation of the constitution.

A strong inflow from domestic taxes as well as modest revenue from coffee and tea exports have become vital for the aid-dependent country, particularly since Belgium and the European Union, key donors, cut external aid over the past year.

Tax collection rose to 50.2 billion francs ($30.32 million), up from 44.7 billion francs collected in July 2015 and well up on the target of 47.1 billion francs, the semi-autonomous revenue authority (OBR) said in a report.

Political unrest held back tax collection last year. Recovery of tax arrears had helped tax collection this year and the fight against tax evasion had been more effective, officials said.

Cumulative tax receipts from January to July jumped to 355.9 billion francs versus 333.03 billion francs the same period last year.

“The OBR reiterates its commitment to continue its mission of maximizing tax collection to support the country’s economy,” it said.

In the 2016 budget, the government foresaw grants falling by almost 50 percent compared to 2015.

($1 = 1,655.9000 Burundi francs)

 

(Reporting by Patrick Nduwimana; Editing by George Obulutsa and Richard Balmforth)

Read more

Is time the only thing that Buhari needs to rebuild Nigeria?

1 August 2016 Comments (0) Africa, Featured, Politics

Muhammadu Buhari

Nigeria’s president inherited a multitude of problems from the previous administration. Does he have what it takes to overcome them?

Nigeria’s President, former military ruler Muhammadu Buhari calls for time and space to achieve the objectives he laid out upon his election last year.

Buhari has openly declared his intentions for Nigeria’s future. He wants to build a country that future generations will be proud to inherit. This is rare in a continent where leaders frequently think in the short term – often selling off natural resources for instant personal gain, rather than investing in long-term solutions for Africa’s economic problems. Buhari’s Nigeria, he claims, is “for its children.” Whether these promises will materialize will depend on his ability to identify and build upon his past mistakes, and those of his predecessor.

Muhammadu Buhari comes from a large family; he was his father’s 23rd child, born in 1942 in Daura, Katsina state. He ruled Nigeria for 20 months in 1985 and has since lost three general elections to the People’s Democratic Party, which has dominated the political landscape in Nigeria since the end of military rule in 1999.

Winds of Change for Nigeria

Buhari’s perseverance has paid off and after waning public support for Goodluck Jonathan, he became the first opposition candidate to de-throne an incumbent leader in Nigeria. The issues inherited from previous governments will not be easy to overcome however, and continuing President Jonathan’s battle to contain the Islamic militants in the north will be Buhari’s biggest challenge.

Originally from Nigeria’s Islamic North, Buhari has alienated many from the mainly Christian south of the country by giving his support to Sharia law. Subsequently, he has had to strongly deny having a radical Islamist agenda. Deep-seated suspicion regarding his religious background and suggested support of Boko Haram has been quelled by a recent failed assassination attempt that left 82 dead, apparently orchestrated by Boko Haram forces.

Boko Haram, unemployment and rampant corruption to fight

Boko Haram

Boko Haram

He was previously mistrusted by the voting populace in the south, but President Jonathan’s failure to overcome the jihadi militia left Buhari with an opportunity to exploit. The 276 Chibok girls missing since 2014 have piled local and international pressure upon Nigeria’s administration. The Boko Haram crisis has left more than 20,000 dead and over 2 million displaced since 2009. Since his inauguration there has been a lot of posturing and even claims to have “defeated” the militant group, but terror attacks, kidnappings and suicide bombings are still rife, particularly in the North of the country. With an agenda to meet, but what appears to be little structural planning, it will take more than time or crude military suppression to overcome “the most deadly terrorist group in the world.”

Boko Haram is unfortunately not Nigeria’s only crisis. Buhari will also have to tackle large scale unemployment and rampant corruption. Buhari’s Deputy Prime Minster estimated that 110 million of Nigeria’s 170 million inhabitants are living in extreme poverty. He also noted that the majority of the wealth is going into the pockets of the nation’s privileged few. For Africa’s most populous nation, these economic issues add stress to the fractures caused by religious extremism and recent spates of violence. Making progress with these issues may also be the key to undermining the militant support among the population, with rampant unemployment being a key factor in their recruitment campaigns.

Buhari: an incorruptible and converted democrat for Nigeria

His biggest election promise is to tackle the fuel shortages that have blighted the population and stagnated the economy over the last several years. His plans are to increase production and improve distribution, while renegotiating terms with the rebel forces. In 2009 President Jonathan’s government agreed to pay militants $400 per month to stop their attacks on the fuel supplies. Once the money inevitably dried up, the attacks recommenced and the supply problems are now worse than ever. On paper, Buhari seems to be well placed to handle this crisis: he was the Minister for Petroleum and Natural Resources in 1976 and during his tenure heavily invested in pipelines and created 21 new petroleum storage units across the country. But his ability to negotiate with the Nigeria Delta Avengers is in contention; his rigidity and stubbornness are well known within the administration and beyond. Striking a balance between tackling the underlying issues, negotiations and strategic military moves will be key to eradicating the extremist violence that have dominated the political horizon in Nigeria.

Buhari claims to be a “changed man” and a “converted democrat,” taking full responsibility for all that happened during his short military rule in the mid-80s, and the part he played in the military coup that overthrew the democratically elected leader, President Shehu Shegari. If Buhari’s “incorruptible” and rare reputation for honesty holds true, he may be able to usher in a wave of change, washing away the culture of injustice and corruption, both in businesses and in government. He has appealed for time and patience, but will this be enough, or will the multitude of problems he faces just be too much to overcome?

Read more

South Africa leads university rankings

20 July 2016 Comments (0) Africa, Featured, Politics

University of Cape Town, in South Africa

Eight of the top 10 institutions of higher education in sub-Saharan Africa are located in a single country, according to new rankings.

South Africa wins the university sweepstakes according to new rankings: Eight of the top 10 institutions of higher education in sub-Saharan Africa are in that country while the other two are located in Kenya and Tanzania.

According to the 2016 University Web Rankings & Reviews by 4International Colleges & Universities, the University of Cape Town is the top university in Africa.

The 187-year-old public institution in the suburbs of Cape Town has an enrollment of more than 20,000 students.

Second in the rankings is the University of South Africa, in Pretoria with an enrollment of more than 45,000 students, followed by the Universiteit Stellenbosch (enrollment 25,000) and the University of Pretoria (enrollment 60,000), with the University of Witwatersrand in Johannesburg (enrollment 25,000) rounding out the top five.

The other South African universities on the list are: Rhodes University in Grahamstown with an enrollment of 7,000-8,000, the University of the Western Cape in Bellville with more than 15,000 students, and the University of KwaZulu-Natal in Durban with more than 40,000 students.

In Tanzania, the University of Dar es Salaam in that city also made the top 10 list. It has an enrollment of more than 15,000 students.

The University of Nairobi in Kenya rounded out the top rankings for the southern continent. With more than 45,000 students, the university also has branch campuses in Kikuyu, Parklands, Lower Kabete, Upper Kabete, Chiromo and Kismu.

Ratings favor graduate, research programs

Experts said South African Universities tend to do well on university rankings because the ratings tend to favor institutions that have significant numbers of doctoral students and faculty with doctoral degrees, and are recognized research centers.

University of Cape Town, for example, has made a point of becoming a “research-led flagship” university, according to Nico Cloete, director of the Centre for Higher Education Trust and coordinator of the Higher Education Research and Advocacy Network in Africa.

Students in a classroom at University of Cape Town

Students in a classroom at University of Cape Town

In a 2014 study, Cloete found that nearly a third of all students at the University of Cape Town in 2011 were postgraduate students and nearly two-thirds of the faculty had doctoral degrees.

In contrast, he found that institutions of higher education outside South Africa typically had low enrollments of graduate students and operated professional master’s degree programs rather than developing potential research leaders.

South African universities torn by protests

While South Africa’s universities receive high academic ratings, they have come under fire in recent years with students and faculty complaining about high fees and predominantly white faculties.

Violence erupted at several South African universities, including the University of Cape Town, earlier this year as students protested housing conditions and complained that white international students were given preference in accommodations. Several Cape Town students were arrested after protesters torched vehicles, burned artwork, invaded residences and petrol-bombed a vice chancellor’s office.

Leaders seek to increase participation

The rankings come against the backdrop of efforts to improve participation in higher education in Africa.

Higher education leaders have set a goal of 50% enrollment by 2063, the same level that is projected globally.

Currently, only 8% of sub-Saharan Africans of college age are enrolled, compared to 26% in the Middle East and 32% globally. In the developed world, the rate is more than 75%, according to 2012 data.

In setting the 50% target last year, the African Higher Education Summit called for a large increase in African investment in university education, greater research spending and stronger links to scholars in the African diaspora.

Read more

Is there hope for Eritrea?

5 July 2016 Comments (0) Africa, Featured, Politics

Eritrean refugees

Can Eritrea shake its reputation and get a handle on its migration problem?

Is Africa’s youngest country also its most repressive state? The labels it has carried for the past decade have become the lens through which the international community views it, but how fair is the reputation it has developed? Eritrea gained independence in 1993, nearly 30 years after Emperor Haile Selassie seized the land for Ethiopia in 1962. It has never held elections, has no free press and has a mandatory and indefinite national service. However, this oppressive picture seems to be at odds with the experiences of recent visitors, journalists and diplomats who have reported the country to be clean, relaxed and relatively advanced. People can be seen enjoying bars, restaurants and cinemas while going about their day under no obvious restrictions. The issues contributing to its high levels of emigration are unique. Can the problems be reversed and stability returned to this troubled nation?

Eritrea’s Troubled Past

The UN has repeatedly criticized the government for its lack of democracy and suspected human rights abuses. For over a decade, journalists have been barred from entering the country and in 2001, the government shut all down all free press houses. International sanctions placed over its alleged support of Al Shaabab Islamists in Somalia have further damaged Eritrea’s economy and deepened its isolation on the world stage.

Modern Eritrea has faced a number of crises in its young life. After just a few years of independence, a two-year war broke out in 1998-2000 that left tens of thousands dead. After 15 years of tentative peace, there has been a recent resurgence of violence. Details have been vague, with 200 Ethiopian troops reportedly killed, and both sides accusing the other of re-starting the hostilities.

Europe Watches On

Eritrea’s problems have been compounded by severe droughts and the nation’s heavy reliance on agriculture. A revival of the conflict with Ethiopia would be nothing short of catastrophic, inevitably forcing more people to flee the nation, adding to an already alarming exodus from the troubled country.

Migration from Eritrea hit new highs in 2015, with Eritreans being the largest contingent of Africans to arrive in Europe. This migration, although detrimental, is forcing the international community to take notice of the problems faced in Eritrea, driving change.

Mass Migration 

Eritrean refugee camp

Eritrean refugee camp

Due to this influx of migrants reaching Europe’s shores, the EU has recently announced a $227m “development fund” for Eritrea and has opened access to a number of emergency finance mechanisms. There is a growing perception that sanctions and further isolation are far less effective than engagement with these problematic countries; an increased amount of communication, research and aid has proven to be a more valuable strategy. It has been suggested that international isolation and hostilities with Ethiopia would only force it closer to its Somali and Sudanese neighbors, something unlikely to elicit the reforms that the UN has demanded.

The development fund, which is due to run from 2016-2020, as well as collaboration with the government to improve democratic and human rights, is expected to reduce the number of Eritreans leaving the country. The effectiveness of this campaign will depend on the government following through with reform. They claim the restrictive state has been a necessity due to a “no war, no peace” policy towards Ethiopia, and a need to be vigilant and prepared for further confrontation.

Looking Forwards

Alongside fresh UN aid, additional money is finding its way into the country through private investment in industry, particularly in the mining sector as Eritrea boasts strong mineral resources. The conflict in Yemen has also led to a fortuitous collaboration with the United Arab Emirates, with Eritrea providing “logistical facilities” from its southern port of Assab. Commentators feel that this foreign capital and cooperation is critical in paving the way to improved conditions and stability within the nation.

Despite its troubles, Eritrea has made some meaningful progress on its own. Since its independence from Ethiopia and subsequent war in 1998-2000, the country has posted promising health statistics. Under-five mortality has decreased by two thirds, due in part to successful vaccination programs that have saved thousands of lives. AIDS has long been a scourge upon Africa, with the continental infection rate standing at 5% today. Defiantly, Eritrea has bucked the trend by bringing its infection rates down to a comparatively low 0.8%.

Eritrea’s mass-migration problem is unlike those of Syria, Iraq, Afghanistan and Somalia. It has relatively low rates of corruption, it is not currently at war, and is not a hotbed of religious extremism or persecution. The problems its citizens face are related to democracy and a lack of rights, decisions the government claims are to protect the country’s future. Can this government be persuaded to work with the international community and democratize the country? The issues it faces are unique, but with an international focus on decreasing migration, coupled with foreign investment, its future could be promising.

Read more

South African black lobby disappointed by MTN’s new white CEO

23 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa’s Black Management Forum (BMF) said it was disappointed by the appointment of white South African Rob Shuter as MTN Group’s new CEO and viewed it as a serious blow to giving blacks a larger role in business.

The forum, which lobbies for black rights, criticised the mobile phone operator’s decision saying it was retrogressive to plans for the inclusion of blacks in corporate boardrooms in Africa’s most industrialised country.

Shuter was named on Monday as the replacement for Sifiso Dabengwa, a black executive who resigned last November after Nigeria imposed a fine on MTN for failing to deactivate more than five million unregistered SIM cards.

“There is a general unwillingness for transformation at top management level which has resulted in the decline in the number of black South African CEOs,” BMF President Mncane Mthunzi said in a statement. “These companies are owned by the public and yet they don’t reflect the demographics of our society.”

MTN spokesman Chris Maroleng had no immediate comment but said the company would respond later via an emailed statement.

Founded with the government’s help after the end of apartheid in 1994, MTN has been touted as one of South Africa’s biggest corporate success stories with operations in more than 20 countries in the Middle East and Africa.

Since coming to power at the end of white minority rule, the African National Congress party has pushed for change in the complexion of the civil service, the military and state-owned firms, as well national sports teams and private businesses.

The push has helped many South Africans who were excluded from the mainstream economy under apartheid and created a solid black middle class.

MTN executive Phuthuma Nhleko, also black, was appointed interim executive chairman following Dabengwa’s resignation, with an eye to renegotiating the Nigerian fine which was initially set at $5.2 billion.

In the end, MTN agreed this month to pay a 330 billion naira fine ($1.2 billion) and to list its local business on the Nigerian Stock Exchange. MTN is the largest mobile phone operator in Nigeria with 62 million subscribers and the country accounts for about a third of its revenue.

Nhleko will revert to his role as non-executive chairman when Shuter starts as CEO, which is expected to be by July next year at the latest. Shuter, who has a background in risk management, will be joining MTN from rival mobile operator Vodafone, where he is currently head of Vodafone Europe.

($1 = 283.0000 naira)

 

(Reporting by Tanisha Heiberg; editing by James Macharia and David Clarke)

Read more