Equatorial Guinea – Persistent Poverty

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Despite high per captia income and oil wealth the country is performing poorly in wider social development.

Comparatively, across the African continent, Equatorial Guinea boasts some of the highest levels of per capita income, and with a largely oil dependent economy, it has often escaped mention in discussions of poverty. However, Foreign Minister Agapito Mba Mokuy said despite wealth the country was performing poorly at social development.

According to reports from 2015 still around half of the country’s population lacks access to clean water, and life expectancy and infant mortality are below the average for sub-Saharan Africa. Similarly, half of the children who start primary school never end up finishing.

The problems in part stem from the fact that much of the wealth has been accumulated by senior government officials and a lack of investment in the country, as many officials have turned to overseas investments, drawing allegations of money laundering.

There seems to be, following investigations, systemic corruption at the highest levels of government. Through infrastructure projects the government pours huge amounts of oil money into construction projects, with contracts awarded to companies often owned or closely associated with high-level government officials.

International Monetary Fund (IMF) reports and high-level interviews show that the conflicts of interest allegedly lead to inflated contract prices and dubious investments in “white elephant” projects. The government does not make public its budgets, or track health and education spending, so the only data available is that collected by the IMF and World Bank.

Between 2009 and 2013, Equatorial Guinea took in an average of US$4 billion annually in oil revenue, and spent $4.2bn on infrastructure such as roads, buildings, and airports. However in 2011 the country only spent $140m on education and $92m on health, while the only other year for which data is available, 2008, $60m was spent on education and $90m on health, reported All Africa.

In comparison Uganda and Tanzania spend around a third of their budgets on education each year, while Ghana spends around a quarter, according to the World Bank.

Despite efforts to eradicate poverty and promote inclusive growth, these principles of the African Union (AU) Agenda 2063, are fruitless without efforts to tackle corruption.

The oil reserves in Equatorial Guinea, which have supplied billions of dollars in revenue over the last three decades are expected to run out by 2035, which will only deepen the crisis in the country.

In a recent case the eldest son of President Teodoro Obiang Nguema is facing an ongoing trial after accusations of plundering money from government funds to buy a mansion in Paris, France, allegedly embezzling around Euro 100m, according to Deutschewelle.

Teodorin Obiang is also a vice-president of the small oil-rich state on the African west coast. However his trial was recently postponed giving Obiang an additional six month to prepare his defence. According to Transparency International, this was a delay tactic.

Human rights groups have long bemoaned Equatorial Guinea for its record on civil liberties, unlawful killings and torture, alongside allegations of bribery and corruption.

Find out more in the Africa Research Bulletin:

EQUATORIAL GUINEA – FRANCE: President’s Son on Trial
Economic, Financial & Technical Series
Vol. 53, Issue. 12, Pp. 21521C–21522B

EQUATORIAL GUINEA: Weak Performance
Economic, Financial & Technical Series
Vol. 52, Issue. 7, Pp. 20926A–20926C

EQUATORIAL GUINEA: Co-Investment Fund
Economic, Financial & Technical Series
Vol. 51, Issue. 1, Pp. 20278B–20278C

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Angola – Sonangol Reshuffle

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President Dos Santos makes his daughter the head of the state oil company as a group of lawyers seek to block the move.

According to National State Radio (RNA) President Jose Eduardo Dos Santos has appointed a new board of directors for state oil firm Sonangol, placing his daughter, Isabel dos Santos, as the head of the firm.

Already Isabel dos Santos has wealth estimated at US$3.3 billion, making her the richest woman in Africa. Her own company, GALP, is Portugal‘s largest in the oil and gas sector, reported AllAfrica.

However according to a report by Maka Angola, an investigation has “unmasked Isabel dos Santos and proves that – contrary to her assertions – her Galp shares were obtained via Sonangol in a business deal paid for by state money and public funds”.

Maka claimed that Angola is already one of Africa’s worst “kleptocracies”, and the revelations reveal that Isabel dos Santos was only able to amass her fortune by diverting funds from Sonangol. Maka ask, “Should Angola now expect Isabel to repay Sonangol the seed money funnelled through front companies Exem Africa and Esperaza Holdings?

The Angolan regime has seen many billions in revenue disappear during the Presidency of dos Santos, with much of the benefits going to the Presidential family and a small circle of elites.

For around four decades President Santos has ruled the oil-dependent nation, and senior members of the ruling People’s Movement for the Liberation of Angola (MPLA) have talked of Isobel’s eventual succession. The recent appointment sees her placed at the “apex of the money tree that has for so long funded the Dos Santos endeavours,” reported Maka Angola.

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President Jose Eduardo Dos Santos – CC

However, the Daily Nation, on June 5th reported that twelve Angolan lawyers had decided to attempt to block the appointment of Isabel as head of Sonangol. The lawyers are to submit a complaint against the ruling regime for breaking public probity laws.

Spokesperson for the group, David Mendes, said, “the law says a public agent must not nominate or allow nominations and agreements when there is an intervention of his wife or his first degree relatives…the appointment is illegal and the law is in on our side to halt the nomination”.

The main opposition party, the Union for the Total Independence of Angola (Unita), said that the appointment is a clear demonstration of favouritism and corruption inside the ruling party.

The Presidential family has large stakes in most of Angola’s strategic industries, including diamonds, the banking sector, media and telecommunications, and Isobel has much of her business empire located in Portugal.

Given Angola’s dependence of oil, being the head of the state oil company is “next to the presidency… the most powerful position in the country,” Angola analyst Aslak Orre told the BBC, reported the Daily Nation.

President Dos Santos is the second longest serving African leader after Teodoro Obiang Nguema Mbasogo of Equatorial Guinea. In March this year he said that he would step down in 2018, although similar promises made in the past have not been fulfilled.

New board of Sonangol:

– Isabel dos Santos – non-Executive Administrator and President the Board of Directors.
– Paulino Fernando de Carvalho Gerónimo – Director and chairman of the Executive Committee.
– Caesar Paxi Manuel João Pedro – Executive Director.
– Eunice Paula Figueiredo Carvalho – Executive Administrator.
– Manuel Luís Carvalho de Lemos – Executive Director.
– John Pedro de Freitas Saraiva dos Santos – Executive Director.
– Jorge de Abreu – non – Executive Director.
– Jose Gime – non – Executive Director.
– André Lelo -. non – Executive Director
– Sarju Raikundalia – non – Executive Director

Find out more in the Africa Research Bulletin:

POWER: Angola
Economic, Financial & Technical Series
Vol.53, Issue.4, Pp.21263B–21264C

OIL AND GAS: Angola
Economic, Financial & Technical Series
Vol.53, Issue.4, Pp.21260A–21261C

ANGOLA: Economy in Crisis
Economic, Financial & Technical Series
Vol.53, Issue.1, Pp.21134B–21135A

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Mozambique – Secret Debts

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International financial support for the national budget is suspended after revelations that the government failed to disclose substantial debts.

Recent findings have revealed that the government of Armando Guebuza, who was President from 2005-2015, managed to take on more than US$2 billion in secret debts, prompting an economic crisis in the country. The Group of 14 (G14) support donors suspended their contributions on May 4th and the International Monetary Fund (IMF) has also stated that it will not release any more funds aside from standby credit.

Following these decisions the Economic and Finance Minister Adriano Maleiane on May 4th announced the first cuts including a hiring freeze, although Maleiane guaranteed that health and education would not be affected. Total donor support amounts to $467m annually, around 12% of the state budget.

The debts were caused by at least three parastatal loans to companies in 2013, including the Mozambique Tuna Company (EMATUM) for $850m, Proindicus for maritime security at $622m and the Mozambique Asset Management (MAM) for $535m. In total an estimated $321m in debt repayments will be due in 2017, adding to other government debt; it is widely feared that there are further unrevealed debts.

The government has also admitted to secret loans to the Ministry of the Interior, including $221m between 2009-2014 for armoured vehicles and riot police equipment used in fighting against the Renamo rebel group, reported Mozambique News Reports.

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Ex-President Armando Guebuza

The Mozambican Debt Group (GMD) has claimed that the debt levels in the country are unsustainable, despite government claims to the contrary. In 2015 debt had reached 39.9% of Gross Domestic Product (GDP), just 0.1% away from unsustainable levels above 40%, although the figures were calculated before these recent revelations. According to reports from state-owned AIM the debt now stood at 69% of GDP, although rating agency Fitch put the amount higher at 83% of GDP with the possibility of rising to over 100% by 2017.

The GMD warned that this level of debt would have adverse impacts of the poorest strata of the population, leading to a substantial reduction in public funds.

Prime Minister Carlos Agostinho do Rosario had flown to Washington, United States, to meet the IMF Managing Director Christine Lagarde to confess the secret loans. An IMF statement read, “following a meeting held earlier this week…a technical team led by the Vice-Minister of Finance, Ms. Isaltina Lucas, worked intensively with the IMF Mozambique staff team.”

“Looking ahead, the Fund and Mozambique will continue to work together constructively to evaluate the macroeconomic implications of this disclosure of information and identify steps to consolidate financial stability, debt sustainability and enhance governance and oversight of public enterprises,” reported AllAfrica.

Workers have stated that they do not want to be forced to pay for the commercial debts, said General Secretary of the Organisation of Mozambican Workers Union (OTM) Alexandre Munguambe, speaking during May Day celebrations, reported AIM.

Already counted as one of the ten poorest countries in the world, Mozambique has been hit hard by falling commodity prices, ongoing drought and a recent flare up in violence between the ruling Frelimo party and the Renamo rebel group; these further debt burdens on the economy are likely to place increasing strain on the poorest and most vulnerable segments of the population.

Find out more in the Africa Research Bulletin:

MOZAMBIQUE – EU: Budgetary Support
Economic, Financial & Technical Series
Vol.53, Issue.1, Pp.21129A.

MOZAMBIQUE: Budget 2016
Economic, Financial & Technical Series
Vol.52, Issue.12, Pp.21102c-21103A.

Mozambique – Interest Rates Raised (Free to Read)
Economic, Financial & Technical Series
Vol.52, Issue.11, Pp.21070C.

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Zimbabwe – Corruption in the Diamond Fields

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The government puts a stop to diamond mining and mulls nationalisation as it emerges that billions in revenue has been lost.

On February 22nd diamond miners in Marange were given a 90-day ultimatum to end operations, due to their rejection of proposals to amalgamate the industry. Mines Minister Walter Chidhakwa said in March that all mining operations would be placed under a single company, in which the state would have a 50% share.

The latest move comes after President Robert Mugabe publicly acknowledged US$15bn in lost revenue from the mines, and has declared a nationalisation plan for the industry, although opposition groups and others have called for his resignation, reported NewZimbabwe. 

Already, in Marange, the government owns a 50% stake in six firms; Anjin Investments, Diamond Mining Company, Jinan, Kusena, Marange Resources and Mbada Diamonds. The new entity, Zimbabwe Consolidates Diamond Company (ZCDC), is expected to embark on underground mining operations once fully capitalised, reported the Zimbabwe Independent.

The Marange diamond fields are a widespread area of small-scale production in Chiadzwa, Mutare West. Chiadzwa was the controversial scene of operations to drive out 50,000 illegal diamond panners in 2010. This time as many as 5000 formal employees have lost their jobs and security forces have been deployed to clear those who refuse to leave.

Despite a security presence, looting continues to be rife and there is an ongoing legal battle with some miners who are resisting expulsion. In some areas a new form of business is emerging where those with connections to security personnel are charging others for “protected” access to the fields. Some of these diamond panners are arrested but the majority of them evade the authorities, reported the Financial Gazette.

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Screenshot from VOAvideo

There have been widespread allegations of a lack of transparency within the Zimbabwean diamond sector. Analysts believe that much of the potential revenue has been siphoned off by elite individuals; in 2014 4.7m carats were extracted but only $23m received in revenue.

In 2012 output from diamond mines reportedly rose by 500% to 12m carats, and revenues were expected to follow, instead however they declined, with royalties decreasing to $22.5m in 2011 from $34m in 2010.

A report entitled “Tracking the Trends: An assessment of diamond mining sector tax contributions to Treasury with particular reference to Marange diamond fields,” warned of extensive pillaging through the manipulation of taxes and related fees.

On March 6th sacked former Vice-President and now leader of the opposition Zimbabwe People First (ZPF), Joice Mujuru, caused uproar after he melodramatically claimed that India has built a whole town from smuggled Marange diamonds; Surat in Gujarat, India, is considered the world’s largest diamond cutting and polishing centre. The flow of cheap illegal diamonds was crucial due to a 20% price hike through formal channels.

The opposition Movement for Democratic Change (MDC) has demanded that Minister Chidhakwa must publish figures justifying the closure of the mines. “It is illogical for a government to close down mines and throw people into the streets without a convincing explanation,” said MDC spokesperson Kurauone Chihwayi.

“We are very much disturbed by the lack of transparency and accountability in the administration of natural resources by the Zanu PF government which has a bad tendency of prevaricating when caught engaging in criminal activities,” said Chihwayi.

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VOAnews

Activists and the opposition accuse the Zanu PF government of channelling resources towards the elite and its internal political fights. New Zimbabwe cited figures that claimed that the country earned $60m from 960,000 carats sold in Dubai, whereas Angola earned $117m from 780,000 carats.

According to the Zimbabwe Independent, the fact that President Mugabe has declared $15bn in potential losses, is the “clearest indication yet” that he does have the interest of the country and people at the centre. In 2008 Finance Minister Tendai Biti repeatedly warned over the looting of diamond revenue.

In 2009 a Human Rights Watch (HRW) report, ‘Diamonds in the Rough: Human Rights Abuses in the Marange Diamond Fields of Zimbabwe‘, the group accused the Zimbabwean regime of abetting illegal mining, with the Minerals Marketing Corporation of Zimbabwe (MMCZ), encouraging toleration if illegal activities.

Finance Minister Patrick Chinamasa, commenting on the proposed nationalisation, stated that all revenue will now go straight to the treasury. However the plans has been noted to likely put off many investors; with such a poor record of managing parastatal enterprises, very few would be happy to partner with the government, reported the Financial Gazette.

For a country with a budget of $4bn, of which 30% comes from diamond mining, the proposed move to nationalisation has important economic significance. However, the concerns are that it is largely the regime itself that is responsible for the corruption, both directly, and in driving the incentives that encourage citizens to seek risky, precarious, informal and often illegal employment. The Zimbabwean even commented that nationalisation plan could be understood as the next stage in Mugabe’s utilisation of corruption in the mines for his own gain.

Find out more in the Africa Research Bulletin

ZIMBABWE: Deflation Fears
Economic, Financial & Technical Series
Vol.52, Issue.12, Pp.21100C–21102A

COMPANY BRIEF: Mining
Economic, Financial & Technical Series
Vol.52, Issue.6, Pp.20901A–20901C

DIAMONDS: Zimbabwe
Economic, Financial & Technical Series
Vol.51, Issue.12, Pp.20685B–20685C

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Nigeria – Oil Thefts on an Unprecedented Scale

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As the army begins operations to combat oil theft in southern states, the scale of corruption in the industry and its impact on the economy, become clear.

On September 2nd the Nigerian army uncovered a large-scale illegal bunkering site in Makoba beach, around a mile from the Rivers Port Complex in Port Harcourt, the capital of southern oil-producing Rivers State. According to Commander of the 2nd Brigade, Brigadier-General Stevenson Olabanji, 13 suspects were arrested, reported Nigerian daily Leadership.

“At the site, we found over 5,000 drums loaded with illegally refined diesel; four tanker trucks containing 132,000 litres of diesel combined, and a badge with 165,000 litres of stolen diesel. This discovery is unprecedented because since we started our operations 10 days ago, this is about the biggest that we have uncovered”, Olabanji commented.

Olabanji explained that the illegal bunkering site has not yet been destroyed in accordance with the Joint Task Force (JTF) mandate because of its close proximity to residential buildings and the port complex; “we cannot do this because it will degrade the environment and affect residents as it is situated in the heart of Port Harcourt. Our plan is to move them to a safe location for destruction”, he said.

Also on September 2nd, the Chief of Naval Staff (CNS), Vice Admiral Ibok Ibas, issued a statement warning of “stiff penalties” for ship owners involved in crude oil theft. Speaking to the Nigerian Ship Owners Association he said that the vessels involved in the criminal activities would be treated as saboteurs, reported Nigerian daily This Day.

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Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Kachikwu, cited by Vanguard on September 2nd, issued an ultimatum, setting an eight-month deadline for the eradication of oil theft, with measures including the introduction of drones to monitor pipelines and patrol coastal areas, enhancing the capabilities of security services.

“Oil theft is a major issue for us. We lose on average of about 50,000 barrels of oil. We lose about US$3-4bn of revenue and that is just in terms of crude oil itself. When you get to pipelines, most of our pipelines are ruptured and attacked fairly frequently. Last year alone, between June 2014 and June 2015, we recorded between 3,400 to 4,000 attacks on the various pipelines in the country. The effect is a shut-in of about 250,000 barrels a day (bpd) and when you calculate that, you have a net loss of over $7bn”, said Kachikwu.

“The pipelines that traverse our country which are supposed to carry crude into our refineries are perpetually harassed and the net effect is that we resorted to using marines to carry cargoes into our refineries….In the last one year, we have lost about 350 lives – NNPC staff, policemen, community members – as a result of attempts to breach these pipelines”, he continued.

The Daily Trust newspaper documents the story of a man known as Okon Mbom, in Orika local government area in Rivers State, who receives Naira 10,000 from operatives deep in the forests, although he is aware that his employers were not government officials, he does not mind as long as he receives a fee at the end of the day.

Thieves use a variety of methods; one method, hot tapping, involves drilling and clamping a valve to avoid spills and explosions, creating a diversion from the main pipeline. Another method involves hand drills and soldering, working while pumping is stopped by pumping station personnel. Another, the “Cock and Shop” method,  is a slow method of corroding the pipeline by using concentrated acid, when the pipeline is corroded a spike is used to burst the pipeline, which sometimes results in an explosion.

On July 29th the Nigeria Extractive Industries Transparency Initiative (NEITI) declared that about US$25.3bn of the nation’s oil money had gone missing over the last eight years, reported Leadership. Oil thieves in the Niger Delta, taking an estimated 180,000bpd, constitute the 12th largest oil producing group in Africa, generating revenue that exceeds the GDP of 15 different African countries. UK-based think-tank Chatham House said that “oil is being stolen on an ‘industrial scale’ in Nigeria and the country’s politicians and security officials are among those profiting”.

A 2014 report by oilprice.com, cited by Leadership, stated that Nigeria tops the list of countries plagued by oil theft, with around 7.7% of GDP vanishing each year, more than the country spends on education and healthcare combined;”The numbers paint a harsh picture about the inability of the Nigerian government, and the multinational oil companies in the Niger Delta, to do anything about this rampant theft” the report said.

Petroleum thefts are a huge issue for Nigeria and one that newly elected Muhammadu Buhari has vowed to combat, a feat his predecessor Goodluck Jonathan failed to achieve; with corruption rife and many officials themselves benefiting, it does not seem like it will be an easy task.

Find out more in the Africa Research Bulletin

NIGERIA: Fighting Graft, Buhari-Style
Economic, Financial & Technical Series
Volume 52, Issue 7, Pp.20919C–20921C

NIGERIA: Oil Sector Under Spotlight
Economic, Financial & Technical Series
Volume.52, Issue.6, Pp.20883B–20884B
Nigeria – Deadly Pipeline Blast
Economic, Financial & Technical Series
Volume.52, Issue.6, Pp.20884B
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Benin – Important Political Juncture

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Accusations of corruption are increasingly levied against the West African nation in a period of important democratic elections.

On April 26th parliamentary elections took place in Benin with President Thomas Boni Yayi‘s ruling Cowrie Forces for an Emergent Benin (FCBE) gaining a narrow victory of 33 out of 83 seats at the National Assembly, a drop of 8 seats from the previously held parliament.

The FCBE were followed by the Unite the Nation party at 13 seats, the Democratic Renewal Party (PRD) at 10 seats, the Alliance of the Benin-Renaissance and Revival Party (RB-PR) at 7 seats, alongside many other smaller parties.

As voting went under-way President Yayi insisted that he would leave after his mandate expires next year and he has completed his second term, although opponents have alleged a secret attempt to reform the constitution and remove presidential term limits, report Reuters. In 2008, Yayi appointed a technical committee to review the country’s 1990 constitution and presented the Constitutional Amendment Bill to parliament for debate one year later.

The president claims that the amendment will “restore the rule of law, reinforce Benin’s democracy, and solidify the country’s economic development” while opponents claim that it is part of his bid to break the presidential term limits, reported Xinhua news service.

A survey carried out by the AfroBarometer Research Network postulated that three out of four Benin nationals were opposed to the proposed constitutional amendments, showing that the majority (90%) of the public felt the review should not touch on presidential terms and age, but should rather strengthen parliament’s role to check the executive.

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(CC US Department of Agriculture 18/5/2012)

According to the Institute for Security Studies (ISS) Benin is currently in an important political period, with parliamentary elections already held, upcoming local, municipal and communal elections, and  presidential elections scheduled for 2016.

However the postponement of municipal, communal and local elections has been extended to June 28th, originally scheduled for May 31st after a lengthy delay since 2013. According to President of the National Electoral Commission Emmanuel Tiando,  this was in order to correct some irregularities in the April 26th parliamentary elections.

Following independence Benin, then called Dahomey, experienced a unstable period of military Marxist rule between 1972-1990 until in 1990 a ‘Democratic Renewal’ process was put into place and a constitution was established. An ISS report on Benin identified some issues hanging over the elections, such as the postponement of local and municipal elections from 2013, socio-political tensions and President’s Yayi’s possible bid for a third term.

Other recent events have added to the pressure and scrutiny mounted on President Yayi in recent months; on May 14th Benin’s Minister for Energy and Water, Bethelemy Kassa, resigned over an ongoing corruption scandal involving millions of dollars of Dutch financial aid going missing, leading to the suspension of aid by the Netherlands.

Dutch Ambassador Jos Van Aggelen said that “the Dutch government is aware of the consequences that this decision will have on the population in Benin given the progress made in recent years…but we cannot tolerate resources being made available to Benin being managed in this way”, reported Reuters.

Money has also been spent on projects that were not part of the agreement; the Netherlands government stated that they “would like to offer the people of Benin a better future by carrying out effective programmes…but if it transpires that government institutions are seriously failing, then we have to take steps” quoted Dutch News.

Meanwhile, on May 6th Benin security forces surrounded the Canal 3 television station in Cotonou, the commercial capital, as opposition members including Candide Azannai, a prominant critic of President Yayi, tried to deliver televised statements, according to Bloomberg Business.

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Benin is often held as an example of democratic progress in Africa and in 2014 the World Bank cited a “robust” growth rate of 5.5% in 2014, largely due to the efficiency of Cotonou port and a rise in crop production.

During the 2014/15 season cotton output rose by 28% to 393,000 tonnes and it is forecast to reach 500,000 tonnes next season. Cotton is one of Benin’s top exports, employs around 70% of its 10 million population, and has contributed some CFA Francs 200 billion to state revenue according to Agriculture Minister Issa El Hadj Azizou, cited by Reuters.

However despite this the World Bank claims poverty levels have not decreased significantly and there are risks of protest and violence in the wake to the proposed  constitutional arrangements.

In  a relevant comparison, Blaise Compaoré, ex-President of Burkina Faso, called for a presidential term limit referendum in 2014, spurring protesters onto the streets. Before the vote on October 30th 2014 protesters stormed the National Assembly and called for Compaoré’s resignation, who subsequently fled to Cote D’Ivoire, and protesters refused to leave the streets until a civilian leader was installed.

Find out more in the Africa Research Bulletin:

Benin: Coup Arrests
Political, Social & Cultural Series
Vol.50, Issue.3, Pp.19633A-19633C

Benin: Cabinet Dismissed
Political, Social & Cultural Series
Vol.50, Issue.8, Pp.19805A-19806B

Benin: Presidential Poll
Political, Social & Cultural Series
Vol.43, Issue.3, Pp.16570A-16571C

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