Mugabe wins chairmanship

via Mugabe wins chairmanship – The Zimbabwean 3 February 2015

After several days of high-power diplomacy, the African Union Summit in Addis Ababa ended on 31 January leaving several major financial and security questions unanswered.

So, there are plenty of developments to watch, among them the prospects for a multinational force to fight Boko Haram in north-east Nigeria and efforts to get the two warring sides in South Sudan to agree a power-sharing deal ahead of national elections. Finally, development experts are sounding alarms about the cost of servicing Africa’s sovereign bonds when most of the region’s currencies are depreciating against a resurgent US dollar.

AFRICAN UNION: Mugabe wins chairmanship

A veteran of the theatre of international diplomacy, Zimbabwe’s President Robert Mugabe now has what might be a final chance to thumb his nose at Western detractors after winning the African Union chairmanship at the AU’s Summit in Addis Ababa on 29 January. The post is more symbolic than powerful but signals the continuing respect in which Mugabe is held by his counterparts in Southern Africa, who said he was their overwhelming favourite for the post. Zimbabwe’s economy may be the weakest in the region and the ruling party may be locked in brutal internal battles but Mugabe, in power for three decades, still commands a heady mixture of fear and admiration from other leaders in the region.

The key job at the pan-African body is the chair of the AU Commission, a full-time executive post, currently held by South Africa’s Nkosazana Dlamini-Zuma, whose term expires in 2016.

Within minutes of the news breaking, opposition activists in Zimbabwe such as Nelson Chamisa of the Movement for Democratic Change issued condemnations. Others argued, informed more by hope than experience, that giving Mugabe the job could offer him a platform from which he could make a dignified exit into retirement next year. Western diplomats were privately critical but non-committal in public. It won’t change the West’s relationship with the AU. Although Dlamini-Zuma has railed against the AU’s dependence on external funding for its bureaucracy and programmes, she has made little progress in finding new finance from within the continent. That problem is more political than economic, it seems.

Africa’s biggest economies – Algeria, Egypt, Nigeria and South Africa – would happily step up their contributions to the AU but smaller countries are uneasy about the greater sway over the organisation the big four would exercise as a result. A committee led by Nigeria’s former President Olusegun Obasanjo has been investigating alternative sources of finance such as an aviation levy or a tax on foreign exchange transactions but no acceptable formula has yet emerged. Yet there are options. The initiative of Zimbabwe’s Strive Masiyiwa and his Econet company, together with other leading African business people and the AU, to raise money to fight Ebola in Guinea, Liberia and Sierra Leone could be a model.

Now, the main challenge for the Ebola-hit countries is the rebuilding of their economies. An early step would be some form of debt relief, which last week’s AU Summit backed strongly. Just as critically, these countries have to get productive investment flowing again and funds to rehabilitate their battered health and education systems – against an unpromising background of poor international market prices for their main exports.

Traditionally, AU officials tell journalists that the real focus of the summit should be economic and social development and this year was no exception but, as ever, the headlines were grabbed by the security problems: peace negotiations in South Sudan, an assessment of the performance of the AU Mission in Somalia (Amisom), progress towards the return of civil society in Central African Republic, and various plans for multinational cooperation against jihadist militias in West Africa. One major issue is the AU’s own role in these pan-African security crises. The organisation still has two plans in the offing: the African Standby Force, first mooted a decade ago, and the African Capacity for Immediate Response to Crises, proposed by South Africa in 2013.

Although both have their detractors, the South Africa/Tanzania-led force in eastern Congo-Kinshasa has a reasonable track record. More arguably, Amisom has chalked up some military, if few political, gains. Much more problematic is the record of multinational cooperation in CAR, Mali and now Nigeria. That consumed many hours of summit talk but produced little real progress.

NIGERIA | AFRICAN UNION: Backing for anti-Boko Haram force

The grand plan for a multinational force from West and Central Africa to tackle the Islamist Boko Haram militia topped the agenda of the Peace and Security Council meeting at the AU Summit on 29 January. This followed rising concern about the cross-border threat of the militia, not only to north-eastern Nigeria but to Chad, Niger and Cameroon.

It was Ghana’s President John Mahama, who as Chairman of the Economic Community of West African States (Ecowas), raised the issue, as diplomatically as possible, of how to help Nigeria in the fight against Boko Haram. Mahama’s concerns are as practical as they are Pan-Africanist and altruistic. Ghana and other countries in the region fear that without a robust military and political response, the Boko Haram insurgency could spread still further.

Two decades ago, Liberia and Sierra Leone saw brutal insurgencies led by Charles Taylor (now gaoled for war crimes) and the late Foday Sankoh backed by Burkina Faso’s Blaise Compaoré and Libya’s Moammar el Gadaffi. Then, Nigeria was at the forefront of the regional response. Now, Nigeria is battling its own insurgency, the most serious in the region, while other jihadist movements still threaten Mali and Niger. Hiroute Guebre Sellassie, the United Nations Envoy to the Sahel, has warned that the tens of thousands of refugees from the fighting in north-east Nigeria are already causing regional security and political problems.

In principle, Nigeria wants multinational cooperation to fight Boko Haram but to keep overall control of any force, a position its diplomats successfully argued at the AU summit. The plan for a multinational force, with backing from the AU and UN, was watered down to a 7,500-strong force under the auspices of the Lake Chad Basin Initiative. The countries contributing troops would be Nigeria (5,000), Chad (1,000) and the other member states – Cameroon and Niger and Benin – the rest. The generals from each country are due to meet this week, probably in Ndjamena, which will be the operational headquarters. On his return from the summit, Mahama told Africa Confidential that the Lake Chad plan had broad support and was an important step forward. There would be no question of Ghanaian troops joining the force, he emphasised, at least in the short term.

SOUTH SUDAN: Questions remain after Riek Machar signs another ceasefire

President Salva Kiir Mayardit and his rival Riek Machar Teny Dhurgon agreed yet another ceasefire in the early hours of 2 February, officials at the Intergovernmental Authority on Development (IGAD) have confirmed. The deal is premised on a power-sharing plan. But the details are yet to be agreed and that critical omission has fuelled scepticism about the value of the ceasefire and fears of yet another false dawn, following as it does the illusory relief of the pact the two men signed in Arusha on 21 January. Yet the main mediator, Ethiopia’s former Foreign Minister Seyoum Mesfin, told journalists that the ceasefire should go into operation by the end of 2 February.

The latest plan – backed by Kenya’s President Uhuru Kenyatta and Uganda’s President Yoweri Museveni – is for the sacked Vice-President Riek Machar to return to his old post in a transitional administration ahead of fresh national elections this year. Salva Kiir and his allies would hold 60-70% of cabinet posts and the remaining positions would be offered to Riek and his Sudan People’s Liberation Movement–In Opposition (SPLM-IO).

Initially, Riek’s side appeared to reject the plan as ‘imposed by regional leaders’ brandishing the threat of sanctions. They added that the plan ignored the 21 January Arusha agreement to reunify the SPLM and agree a political settlement as a prelude to tackling the security issues (AC Vol 56 No 2, Long tunnel, glimmer of light). However, IGAD was preparing to impose sanctions on whichever side was deemed to be obstructing peace in South Sudan. That pushed the negotiations to a conclusion.

A concession to Riek was the provision agreed by IGAD that the two sides would restart detailed negotiations on the power-sharing formula on 19 February with a fresh deadline for completion of 5 March. Both sides would then form a power-sharing transitional government in early April. Given the succession of failed ceasefires, it will be hard for many South Sudanese – a million of whom have been displaced by the fighting – and regional diplomats to believe in this latest plan. The situation is not helped by the delay in publishing the AU’s report on the causes of the crisis. Although Peace & Security Commissioner Smail Chergui insisted the report was not being suppressed, AU insiders say it contains some damning information about the behaviour of Salva’s allies, as well as the more widely reported claims of atrocities committed by Riek’s allies.

DEBT AND INFRASTRUCTURE: After the financing party, the hangover

If 2014 was a boom year for African sovereign bonds, then 2015 is the year of reckoning. In 2014, African states floated some US$16 billion in sovereign bonds taking advantage of low global interest rates and the eagerness of investors to find new territories. The bond-issuers included Ethiopia, Kenya, Ghana, Senegal and Zambia. The bonds were competitively priced, equivalent to or sometimes cheaper than those of Eastern European and Asian countries. That was then but this year the stronger US dollar and surging optimism of United States companies have changed the financial landscape and the interest rates on those bonds are climbing again, pushing up repayment costs.

At the same time, most African currencies have depreciated against the dollar, Zambia’s kwacha by 13% and Ghana’s cedi by 26%. Given that the Eurobonds are issued and repaid in US dollars, the cost of servicing those loans will go up in tandem with the strengthening US dollar.

According to a new report by the London-based Overseas Development Institute (ODI), the cost of servicing these bonds, combined with rising internal debt obligations, could create serious financing difficulties in several countries. Already Ghana and Zambia are in tough negotiations with the International Monetary Fund about a new generation of structural adjustment programmes. The coming hump in repayments on the sovereign bonds could amount to over $10 bn., according to the ODI’s Judith Tyson, who has been sounding the alarm on the sustainability of this form of credit for some time.

Another question of money arose at the AU Summit when several officials asked about the effects of the sovereign-bond financing on Africa’s ability to raise funds for much-needed investments in infrastructure. Officials at the Summit agreed an investment programme worth some $70 bn. across Africa over the next five years. It included the Ruzizi III hydropower project between Congo-Kinshasa and Rwanda; a gas pipeline from Nigeria to Algeria; upgrading the railway line from Mali to Senegal; expansion of Tanzania’s port at Dar es Salaam; and a new national highway in Zambia.

Although China emerged at the AU summit as a major financier of these projects, much detailed work remains to be done on how the loans might be secured and how that would affect Africa’s other commitments. These plans will be high up in the order of business at the Forum on China-Africa Cooperation, due to be held in South Africa later this year.