Zambia – Media Repression

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As the government extends the state of emergency there are concerns that it is being used to stifle independent media. 

The Independent Press Institute (IPI) on July 5th expressed concern over the imposition of emergency powers and comments made by the Inspector-General of police, Kakoma Kanganja, that some media publications could be closed while the 90-day state of emergency was in place.

On July 5th, Zambian President Edgar Lungu initiated a “state of threatened public emergency” and indicated that he might declare a full state of emergency if the “existing situation” in the country is “allowed to continue.”

The move came amid a string of arson attacks, including one that burnt down Lusaka’s main market. Lungu alleged that supporters of the opposition United Party for National Development (UPND) were behind the attacks.

On July 11th the National Assembly approved emergency powers and extended the state of emergency for 90 days, although the vote was held without 48 UPND members who had been suspended after they reportedly boycotted an address by Lungu.

Inspector-General Kanganja said that some media publications could be shut down. “During this period, police will regulate and prohibit publication and dissemination of matters [that are] pre-judicial to public safety,” he said.

Others commentators have expressed concern that the emergency powers are politically motivated. IPI Director of Advocacy and Communication, Steven Ellis said, “the partial state of emergency would seem to be part of a broader effort that we have observed to silence critical voices, including the country’s remaining independent media outlets, and to step up the crackdown on the main opposition party, while at the same time fending off challenges from within his own party.”

“We fear that emergency rule could facilitate human rights violations and we call on Zambia’s government to respect the vital role of media freedom in a democracy and to refrain from exerting political pressure on the country’s media outlets,” Ellis continued.

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Edgar Lungu – Ventures Africa

Zambia has often been regarded a model for stability, democracy and human rights in Africa, but events surrounding the disputed August 2016 general elections, in which President Lungu was re-elected to a second term, have raised concerns about the state of democracy and media freedom.

UPND leader Hakainde Hichilema, who narrowly lost the 2016 presidential election to Lungu, has been arrested on treason charges after his motorcade allegedly blocked Lungu’s presidential motorcade in April 2017.

In worrying signs, the independent media has largely been suppressed. Tabloid newspaper The Post was closed in late 2016. In February 2017, a warrant was issued for the arrest of Post owner and Editor-in-Chief Fred M’membe.

In August 2016, the government also suspended the operating licences of the country’s largest privately-owned television channel, Muvi TV, and two private radio stations on “national security” grounds, although the suspensions were lifted after the broadcasters apologised.

The government later acknowledged that the broadcasters were targeted because of their perceived bias against Lungu’s Patriotic Front (PF) party before and after the elections, reported the Independent Press Institute.

Earlier in June African Arguments commented that with 48 opposition MPs suspended, an opposition leader in jail, and clear signs of growing authoritarianism, the International Monetary Fund (IMF) still decided to agree an aid package of US$1.2bn, only strengthening further Lungu’s position.

Some analysts have said that real debt in the country stands at around $30bn, in contrast to figures quoted by Finance Minister Felix Mutati of $7.2bn. Based on projections from current economic growth rates, some analysts claim that the country will not be able to pay off the debts in a sustainable way, according to Zambia Reports.

Find out more in the Africa Research Bulletin:

ZAMBIA: Slide To Dictatorship?
Political, Social & Cultural Series
Vol. 54, Issue. 6, Pp. 21465A–21466C

ZAMBIA: Hakainde Hichilema Arrested
Political, Social & Cultural Series
Vol. 54, Issue. 4, Pp. 21396C–21397A|

ZAMBIA: Re-Election Bid?
Political, Social & Cultural Series
Vol. 54, Issue. 1, Pp. 21287C–21288C

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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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Mozambique – Debt Troubles Continue

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The IMF commends recent efforts but states that financial support will not resume until debt levels are made sustainable.

The Deputy Director of the Africa Department of the International Monetary Fund (IMF), David Owen, said on November 14th that Mozambique had taken promising steps to deal with hidden debts that have impacted heavily on the economy.

The debts relate to loans of over US$1.1bn from Credit Suisse and Russian bank VTB to quasi-public firms Proindicus, Mozambique Asset Management (MAM) and the Mozambique Tuna Company (Ematum), under then President Armando Guebuza in 2013/14.

The IMF, during a mission visit from September 22-29th, praised the “significant tightening of macro-economic policy,” and the raise in interest rates announced by the Bank of Mozambique in October, which had led to the stabilisation of the exchange rate, reported AIM.

However the head of the mission Michel Lazare said that resumption of financial support was still a long way off.  “The authorities have requested the Fund to resume discussions on financial support as soon as possible. A solid track record of implementation of sound macroeconomic policies and an effective initiation of the audit process in the near term would help to create the conditions for a possible resumption of program discussions with the IMF,” Lazare said.

Lazare continued by stating that Mozambique “is facing a challenging economic environment”, with economic growth now in decline. The forecast growth for this year is 3.7% in 2016, down from 6.6% in 2015, which is “is significantly below levels observed in recent years.”

“At the same time, a significant decline in imports has been more than offset by a weakening of exports, foreign direct investment, and donor financing…This has maintained pressure on international reserves, which have continued to decline,” Lazare added, reported AIM.

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Ex-President Armando Guebuza – CC 2012

However more than half of the secret loans related to Ematum and maritime security have never been explained. According to Africa Confidential, around $900m was passed on to companies owned by the ruling Frelimo elite for the purchase of assault rifles, armoured cars and other weapons from Israel, for use in the war against Renamo, reported UK-based Mozambique News Reports.

There have also been accusations that Frelimo officials have wasted huge sums on setting up a shipbuilding industry, for which little work had been completed. Though many of the weapons seem to have been bought by companies owned by private individuals, these companies are linked to the three implicated in the debt scandal. Many of the funds were placed in offshore bank accounts to act as collateral for Frelimo-owned companies.

Two banks involved in the deals, Crédit Suisse and Russia’s VTB Group are under investigation by authorities in the UK and Switzerland.

The two main political parties remain at loggerheads as the country continues to be in crisis. Frelimo, which has held power since independence from Portugal in 1975, is fighting to maintain its grip on the country. In the wake of the scandal economic and political unrest troubles have only worsened, reported Africa Confidential.

Find out more in the Africa Research Bulletin:

Mozambique – Price Falls Lead To Closures
Economic, Financial & Technical Series
Vol.53, Issue. 8, Pp. 21404A

MOZAMBIQUE: Liquidity Problems
Economic, Financial & Technical Series
Vol.53, Issue. 5, Pp. 21289A–21290C

MOZAMBIQUE: Economic Update
Economic, Financial & Technical Series
Vol.53, Issue. 4, Pp. 21231A–21233C

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Egypt – Economic Situation Deteriorates

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The government devalues the currency in attempts to avoid an economic crisis, creating further worries for citizens.

As part of efforts to boost its ailing economy, Egypt has taken steps to devalue its currency, raised fuel prices and plans to cut customer subsidies, as part of conditions to receive an International Monetary Fund (IMF) loan of US$12bn.

While the IMF insists that floating the currency is a sensible long-term economic move and will attract foreign investment, many are concerned as inflation and unemployment are already high, and the price of food and services are also likely to rise, reported Al-Jazeera.

According to economists, any long term gains are going to be coupled with short-term hardships – the government hopes that attracting investment will end a hard-currency shortage. According to Reuters, wide-ranging economic problems will mean the huge volumes of hard currency required to stabilise the dollar will take a long time to arrive.

However, calls by some for protests were not supported by most opposition groups and activists; “At this point we find calls to protest scary. There is no political organisation, which means things can get out of hand. The country could burn,” said Malek Adly, a human rights lawyer with the Egyptian Centre for Economic and Social Rights, reported Reuters.

The IMF has delayed the approval of the loan until Egypt can meet the desired conditions – around $1bn had already be disbursed at the end of 15 but since then the flow of money has been halted. There have been shortages of goods such as wheat, baby milk, sugar, rice and cooking oil, reported Africa Confidential.

The decline in tourism revenues is also particularly damaging, now at around $3.8bn a year, which is less than one third of the levels before the 2011 uprising. The fears surrounding terrorism have furthered affected tourist numbers.

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Revenues from the Suez Canal have also fallen – CC

Another condition of the loan is that Egypt can secure co-financing of $5-6bn; in September the Egyptian Central Bank’s reserves went up by $3bn largely due to deposits from Saudi Arabia. However the support of Saudi Arabia has been in doubt after the Saudi Arabian Oil Company (Saudi Aramco) suspended deliveries of 700,000 tonnes per month of petroleum products – these supplies covered almost a third of Egypt’s import requirements of petroleum and natural gas. One suggestion is due to tensions of the Egyptian courts ruling against an agreement to give Saudi Arabia control over two Red Sea islands, reported Africa Confidential.

The consequences of these economic decisions are likely to be felt mainly by the poor and struggling middle class. Already at least 27% of the population live below the ‘poverty line’, and the political economic effects of structural adjustment are likely to exacerbate this further, reported Al Jazeera.

Already, Egyptians face capital controls, including limits on transferring currency abroad and the amount they can withdraw to travel overseas – this has particularly hit students studying abroad.

The focus of economic policy has largely been on grandiose projects that will take a long time for benefits to materialise. Little attention has been given to problems including massive levels of youth unemployment. Similarly Al Jazeera commented that the economic policy is entering the realm of the absurd, after President Abdel Fattah al-Sisi suggested funding for development projects could be garnered by collecting spare change.

Find out more in the Africa Research Bulletin:

EGYPT: Job Creation Boost
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21417A–21417C

Egypt – Development Policy Finance
Economic, Financial & Technical Series
Vol.53, Issue. 9, Pp. 21430A

EGYPT: Baby Formula Shortage Row
Economic, Financial & Technical Series
Vol. 53, Issue. 8, Pp. 21381C–21383C

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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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Africa – UN Economic Development Report

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Report highlights the potential for the service sector to catalyse growth but the Greek crisis harks back to African IMF-imposed structural reforms and the continents’ continued indebtedness. 

The United Nations (UN) Conference on Trade and Development (UNCTAD) report, ‘The Economic Development in Africa Report 2015: Unlocking the Potential of Africa´s Services Trade for Growth and Development’ (available here), launched on July 8th,  provides extensive analysis of different policy issues facing Africa’s service sector and recommendations to enhance regional integration and inclusive development on the continent.

Starting with the basis that the services sector is a “critical source of income and employment…and the most dominant sector” in 30 out of 53 African countries, contributing almost half of the country’s economic output and around a third of formal employment between 2009-2012.  The reports, however, also comments that such “dynamism…has failed to translate into structural transformation” necessary for developmental needs and is delivered at a high cost.

The report claims that the services sector has the “potential to become a significant driver of sustained economic growth and structural transformation” but that this would require policies to build bridges between the “services sector and other sectors of the economy, especially manufacturing”.

The report highlights some examples where African economies are tapping into opportunities in the services sector; examples of “emerging regional services” are financial and banking services industries in Mauritius and Nigeria, the commercial and cargo air transport industries in Ethiopia and South Africa, educational services industries in Uganda and Ghana, telecommunications services in Egypt and port service industries in Djibouti and Kenya.

However opportunities aside, many African countries are feeling serious economic and social strain; the Ebola-affected countries of West Africa, tourism-reliant countries such as Egypt and Tunisia suffering from recent terrorist attacks and mineral heavy economies affected by global price drops, alongside the many regional conflicts that are hampering economic and social development.

In Ghana, the Premium Times on July 3rd reported that sources were suggesting that public debt in the country could reach 70% of GDP by the end of this year, with the Ghana Cedi loosing 99% of its value against the US dollar and increasingly high inflation. Ghana has borrowed from the International Monetary Fund (IMF) 26 times since 1966, leading to the imposition of more and more conditions for the repayment of loans. The article concludes that the IMF and World Bank with extensive privatisation, foreign direct investments (FDI) and deregulations, have led to debt traps that have further encumbered and disregarded the poorest. Recently on July 7th, Ghana gave signs that it may  consider renegotiating its bailout terms with the IMF, viewed by some economists as unrealistic.

A recent commentary by Radio France Internationale draws parallels between the recent Greek economic crisis in Europe and similar actions by the IMF during the 1980-1990s in Africa. Greece, defaulting on its 1.5bn loan repayment, has felt the imposition of strict capital controls and the country is heading towards an exit from the Eurozone.

François Ndengwe from the African Advisory Board explained that “what is happening to Greece, happened to Africa for over three decades”. Dr Samuel Nyambi, Executive director of CAPDEV, a development company commented that “for myself and many other Africans, we feel a lot of sympathy with the Greeks and the reforms they’re having to swallow, because we went through the same thing with the IMF’s structural adjustment programs.”

During the 1980s-90s the IMF and the World Bank imposed a stringent set of structural reforms to repay debts owed; these reforms have been critiqued by many economists as seriously hindering economic and social development on the continent. According to GlobalInsolvency, reforms centred on the repayment of loans led to lay-offs, privatisation, salary cuts and reduced spending, that made the pursuit of long-term development agendas impossible, resulting in further indebtedness and increased poverty in almost every African country where the IMF structural reforms were implemented.

Find out more in the Africa Research Bulletin

Africa-IMF: Mission Visits and New Funding
Economic, Financial & Technical Series
Vol.52, Issue.5, Pp.20852B-20855A

Africa: Competitiveness Report
Economic, Financial & Technical Series
Vol.52, Issue.5, Pp.20841A-20842B

Africa -IMF/World Bank: Growth Remains Solid, but Slows
Economic, Financial & Technical Series
Vol.52, Issue.4, Pp.20815C-20818A

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