Comesa risks bulletin#27


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AFRIKASOURCES delivers its COMESA Risks Assessment Bulletin for July 2010 #27.

▪ A Contested President in Burundi
▪ Djibouti solve its Border conflict with Eritrea
▪ 50th Anniversary of Independence of DR Congo
▪ Egypt looking for FDI, preferably from Asia
▪ Kenya: Country divided between YES/NO
▪ Libya: Border tensions with Sudan
▪ Referendum postponed in Madagascar
▪ Seychelles: Presidential Mission to India
▪ IMF positive Evaluation for Zambia

and much more….

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Comesa risks bulletin#27

  1. 1. A F R I K A S O U R C E S COMESA RISKS ASSESSMENT BULLETIN A monthly publication" Issue no 27 - JULY 2010 Burundi's incumbent president Pierre Nkurunziza has been re-elected with 91.62% of the vote, following polls in which he was the only candidate. Renate Weber, head of the European Union mission, praised Burundi for holding a peaceful presidential election but criticised the government for limits on political expression. Several grenade attacks blasted the capital, Bujumbura, days before the polls. At least 12 people have been killed and more than 60 injured. A few weeks before the election kicked off, five of the six parties that had previously indicated they would contest the presidential election said they would boycott it. According to the national electoral commission (CENI), the turnout was 76.9 %, lower than the 91.7 % recorded during district polls on May 24. Opposition parties say the turnout was between 30 and 40 %. A spokesman for 13 opposition parties said the presidential election had contravened the constitution Contested President and they would not recognize Nkurunziza as president. Qatar's Prime Minister Hamad bin al-Thani announced an agreement between Djibouti and Eritrea implies a withdrawal of Eritrean and Djiboutian troops from the disputed Ras Doumeira area while Qatar leads a mediation process. The border area meanwhile will be patrolled by "a few hundred soldiers" from the Qatari army operating as a peacekeeping force. Beside the withdrawing of their forces from the disputed border areas, the Eritrean government has agreed to compensate Djibouti for the damages it caused and it has also agreed to stop its activities of organizing and using Djiboutian opposition elements. Eritrean troops have been stationed in Ras Doumeira since they launched a surprise attack on the border area in April 2008, causing a shorter border war and massive condemnation from the UN Security Council. In December 2009, a Resolution of the UN Security Council sanctioned Eritrea for not withdrawing from Border solution with Eritrea the border areas it occupied and for its role in assisting the Al-Shabab Organization of Somalia. Download a copy of the Agreement - Population from DR Congo experiment mixed feelings as the country celebrates 50th anniversary. Indeed, more than 50% of DR Congolese were born after 1960, the year of independence from Belgium. The country has changed its official name 4 times, starting with the Republic of Congo, then to the Democratic Republic of Congo during Kasavubu’s rule, then to the Republic of Zaire during the Mobutu regime, and then back again to the Democratic Republic of Congo following the coming to power of Laurent Kabila the father of the current president]. The country remains a veritable scandal of un-exploited and mismanaged natural resources. Worse, it has been home to civil wars and rebellions that are largely ignited because of these same natural resources. In a statement, President Joseph Kabila called congolese to put an end to "attacks on human life and dignity" and in particular the widespread rape that has become a feature of the guerrilla 50th Anniversary of Independence conflicts racking the vast nation. Kabila also singled out "tribalism, regionalism, favouritism, irresponsibility, theft, embezzlement of public property and everything else contrary to values." Official statistics issued by the ministry of Investment revealed that Egypt attracted foreign direct investment of about $4 billion during the first nine months of the 2009/2010 fiscal year, while the government had announced its target to attract foreign investment to about $10 billion during the next fiscal year. A significant decline as the country is affected by the global financial crisis and its consequences. Egypt still aims to attract about $8 billion in foreign direct investment (FDI) and boost economic growth to 5.8 percent in the fiscal year that begins July 2010, the Economic Development Ministry said. In April 2010, the United States and Egypt announced a plan to double trade and direct investment in the next five years. The country is also targeting investments from China as expressed during the visit of the chairman of China's sovereign wealth fund - China Investment Corp (CIC). Looking for FDI, preferably from Asia Foreign direct investment is one of Egypt's main sources of foreign currency, along with tourism, oil and gas exports and remittances from Egyptians living abroad. Edited by AFRIKASOURCES – Author: Jean Philippe PAYET [Senior analyst] The content of this publication is based on a selection of information browsed by our services. Request for a more detailed analysis at – © Afrikasources Consult Ltd – Port-Louis [Mauritius]! 1
  2. 2. A F R I K A S O U R C E S Kenya's economic outlook is mixed but most analysts agree the Aug. 4 constitutional referendum will affect the economy regardless of its outcome. While adopting a new charter is widely expected, a grenade attack at a political rally earlier in the month, killing six, was a reminder that polls in Kenya are often marred by violence. The draft constitution curbs the president's powers, beefs up civil liberties, reforms land ownership laws and gives regions more control over their affairs -- all to reduce ethnic tensions and shield east Africa's biggest economy from a repeat of violence that followed Kenya's presidential election in late 2007. The text is the centrepiece of the deal signed to end the violence which killed at least 1,300 people, scared off investors and tourists and sent growth rates plummeting. Country divided between YES/NO The August poll is seen as a test of the uneasy partnership between President Mwai Kibaki and Prime Minister Raila Odinga, who are both campaigning across the country for a "yes" vote. Sudan has closed its border with Libya because Darfur rebels operate in the area. Sudanese Interior Minister Ibrahim Mahmud Hamid issued the order with the "aim of reorganising" police along the border, according to a statement on the ministry's website. The decision to close the border comes amid worsening tensions between Sudan and Libya, which is harbouring a rebel leader wanted by Khartoum. Sudan’s government recently has asked Libya to expel Mr Ibrahim, the leader of the opposition movement in Darfur named Justice and Equality Movement (JEM). The Sudan-Libya border includes the Darfur region, where the UN estimates that 300,000 people have died since fighting broke out between Sudanese government forces and rebels in 2003. The Sudanese Media Centre [], a news website with links to Sudan's government quoted the head of Sudan's national security service Muhammad Atta al-Mawla Abbas saying Libya Border tensions with Sudan was preparing to expel Ibrahim. Libya denied but said it understood the decision, given the upheaval in Darfur. Madagascar has postponed indefinitely a referendum on a new constitution because the charter has not yet been completed, the head of the election commission said. The referendum is seen as a first concrete step towards holding elections aimed at ending a leadership battle that has paralysed the Indian Ocean island since Andry Rajoelina toppled former leader Marc Ravalomanana with the help of dissident troops in March 2009. The new charter has not been completed as a national conference to draft the document itself has not taken place. Indeed, Rajoelina has tasked a coalition of civil society groups with organising the conference but the president of these groups warned against announcing a date for the meeting that would not be met. European Union has extended its suspension of 600 million euros of development aid for another year Referendum postponed as a result of the lack of progress in restoring democracy. Political turmoil has hammered the island's tourism sector and analysts expect foreign investment to slow sharply. Following the 7th Meeting of the Indo- Seychelles Joint Commission, which was held in Seychelles from May 10-11, 2010, President James Michel traveled to India. Security and defense collaboration were a key focus area of discussions as the Indian Ocean archipelago faces persistent threat of piracy that has adversely affected its tourism-centric economy. India has therefore gifted Coast Guard vessels and deputed experts to help Seychelles counter the threat of piracy, revealed Gurjit Singh, joint secretary (East and South Africa). India and Seychelles signed a Bilateral Investment Promotion and Protection Agreement and Seychelles expects better air connectivity with India to improve economic ties and promote tourism via a future Bilateral Air Services Agreement. India is also in the process of setting an IT centre, costing around $1 million, and the country approved Mission to India a credit line of $10 million to finance small business start-ups plus the writing off 1.375 million US dollar debt which Seychelles owes to the Exim Bank (Export Import) of India. The International Monetary Fund (IMF) has completed its 4th review of Zambia's economic performance under the Extended Credit Facility (ECF) arrangement which allows the southern African country to draw 27.1 million U.S dollars, bringing total disbursements under the arrangement to 270.5 million dollars. According to the IMF, the key macroeconomic challenge for Zambia is for the government to create fiscal space for spending to enhance economic diversification and reduce dependence on a narrow export base. IMF Deputy Managing Director and acting Chair Naoyuki Shinohara called on Zambia's central bank to tighten its monetary policy stance if broad money grows faster than assumed. He further said the government needs to contain current spending on wage bill and improve overall spending efficiency. Indeed, the electricity sector requires cost-recovery tariffs to encourage private sector IMF Evaluation participation in electricity generation and distribution projects. Currently the major export for Zambia is copper and the country is still struggling to diversify to non- traditional exports. Edited by AFRIKASOURCES – Author: Jean Philippe PAYET [Senior analyst] The content of this publication is based on a selection of information browsed by our services. Request for a more detailed analysis at – © Afrikasources Consult Ltd – Port-Louis [Mauritius]! 2
  3. 3. A F R I K A S O U R C E S Quote The rate of return on foreign investment is higher in Africa than in any other developing region. Africa’s economic pulse has quickened, infusing the continent with a new commercial vibrancy. Real GDP rose by 4.9 percent a year from 2000 through 2008, more than twice its pace in the 1980s and ’90s. Telecommunications, banking, and retailing are flourishing. Construction is booming. Private- investment inflows are surging.level” -McKinsey Global Institute Climate change and MDG unemployment in Lesotho shot up from a high Global Peace Index 2010 The chronic droughts that seem to signal the 23% in 2008 to 29.4% in 2009. The 2010 Report explores the relationships impact of climate change in Lesotho are projected Read the report: What will it take to! achieve the between peace and economic wealth and brings to become more severe, and could squeeze Millennium Development Goals? a fact-based approach to establishing the cultivable land from an already slim 10% to a conditions and causes of peace while analysing mere 3% in 25 years. Diabetes cases to double by 2030 in Africa trends in peacefulness over the last four years. "While other factors contribute to droughts and Without a major breakthrough in preventing and The Global Peace Index is the first study ever to the shrinking of cultivable land, climate change treating diabetes, the number of cases in sub- rank the nations of the world by their exacerbates the situation", said a UN Saharan Africa is projected to double, reaching peacefulness. Development Programme (UNDP) assessment of 24 million by 2030, according to the Brussels- Once again Botswana is ranked as one of the countries' progress towards achieving the eight based International Diabetes Federation (IDF). world's most peaceful countries, as well as the UN Millennium Development Goals (MDGs), Read the report published by The Lancet most peaceful country in Africa with an improved which range from halving extreme poverty to overall ranking. Botswana's worldwide ranking in halting the spread of HIV/AIDS and providing AFRICA is not spending enough on food the 2010 Index was 33 out of the 149 countries universal primary education by 2015. "Africa is now facing the same type of long-term measured in the survey, placing it just behind Also, in 2009 the global recession took out more food deficit problem that India faced in the early Singapore, France and the UK and otherwise well than a million jobs in neighbouring South Africa, 1960s", says a paper by the International Food ahead of most European countries as well as the especially in the mining sector, a traditional Policy Research Institute (IFPRI), a US-based United States (85). source of work and income. Therefore, think-tank. Read Public Spending for Agriculture in Africa: Source - Vision of Humanity Trends and Composition. The case for investing in Africa - McKinsey AFRIKASOURCES CONSULT Ltd is a multiservice The July 2010 McKinsey Quarterly featured articles by McKinsey consultants development consulting firm that provides tailor- and outside experts on the future of Africa, as well as interviews with made expertise and services to governments, international organizations, private companies and prominent Africans. projects managers... Africa was among the fastest-growing parts of the world between 2001 and We offer independent expert advices and practical 2008, with average growth of 5.6 percent a year. While the commodity boom support services in the effective implementation of played a role, stable macroeconomic conditions coupled with structural development strategy, helping our clients identify reforms—including the privatization of state-owned enterprises and lowered best value, manage risk, and realize higher levels of success from their programme and initiatives. barriers to competition—underpinned the impressive growth. It was accompanied by large amounts Our capabilities are grouped into the following of foreign direct investment (which more than tripled during these years), including inflows from the areas, which run horizontally throughout our Gulf countries and from emerging Asia (China and India). market sectors: Africa’s economic growth is creating substantial new business opportunities that multinational • Consulting - Advising clients on the practical implementation of development strategy from companies often overlook. New projections from the McKinsey Global Institute (MGI) show at least the earliest stages of project lifecycles. four categories that together could be worth $2.6 trillion in annual revenues by 2020 (exhibit). In • Managed Solutions - Providing teams of Lions on the move: The progress and potential of African economies, MGI reviews the prospects of experienced, specialist practitioners to manage the continent’s consumer-facing sectors (retailing, telecommunications, and banking, among others), and implement client project. agriculture, natural resources, and infrastructure. • Monitoring and evaluation, planning at regional, national and local level, logical Consumer sectors—the largest opportunity—are already growing two to three times as fast as those framework analysis, training and workshop in the countries belonging to the Organisation for Economic Co-operation and Development facilitation, project management (OECD). This growth will create more consumer markets large enough to attract multinational • Lobbying, “spin doctor”, “image building” companies. Africa’s agriculture holds enormous potential for companies across the value chain. With 60 percent of the world’s uncultivated arable land and low crop yields, Africa is ripe for a “green revolution” like those that transformed agriculture in Asia and Brazil. The barriers to raising production in Africa are well-known and complex, but if they could be overcome, MGI estimates that the continent’s agricultural output could increase from $280 billion a year today to $500 billion by 2020 and as much as $880 billion by 2030. But most international businesses are still not very aware of Africa’s investment opportunities. is Advisor in Investment Strategy, Sustainable Information costs are high: Africa is fragmented into many different countries, and even in aggregate d e ve l o p m e n t p o l i c i e s a n d S t ra t e g i c R i s k the continent is a fairly small economy. For several decades, investor ignorance did not matter: with management. few exceptions Africa’s economies were too badly run for there to be many opportunities for firms of He has worked on investment strategies and integrity. But there has been a sea change—Africa is on the move. There will be ups and downs, but strategic risk evaluation in France and Africa for the investors from the countries of the OECD who remain set in their ways may be missing a giant last 10 years. He’s been involved in various projects in India, China, Zambia, Djibouti, Egypt, Senegal business opportunity if they fail to pay attention to the changes afoot. and has worked for COMESA on conflicts prevention Explore the complete package online at He’s based in Cairo [EGYPT]. Afrikasources advises on strategic risk management in Africa! 3