The death of South Sudan’s economy won’t end its civil war

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Ever since early 2012, South Sudan’s imminent economic collapse has been routinely predicted. Impressions from a recent visit to Juba indicate that this time around it might be more to these divinations than before.  The economic crisis is compounded by a de facto break-down in peace negotiations and South Sudan faces a formidable threat to its existence as an independent state.

This is an interesting blog post by Øystein Rolandsen on the economic situation of South Sudan (spoiler: its bad). But I don’t agree with some of its conclusions and observations.

First of all, I don’t think that South Sudan’s “existence as an independent state” is threatened. The country’s independence in 2011 was the result of several decades of civil war and intense international negotiations. There are many people, including all parties of South Sudan’s civil war that would in no way accept the integration of  the country back into North Sudan (assuming Khartoum would even want that) or into another of its neighbors.

Due to the civil war and the government’s inability to foster a national cohesion (which is strongly related to the economic problems), South Sudan might follow the trajectory of Somalia and fracture into smaller fiefdoms that act with autonomy from each other. But statehood is still a very entrenched concept and the state of South Sudan will continue to exist for decades, if only as a mostly empty shell (like the state of Somalia has, for more than two decades).

I’m also pessimistic about Rolandsen’s hope that “the crisis might generate enough momentum for Juba and SPLM-IO to reach a compromise […].”

South Sudan’s civil war is not about financial resources per se, but about who controls access to them. This is a function of South Sudan’s “winner takes all” political system. All resources are worthless, unless your faction controls the presidency and therefore the power to distribute those resources. In that sense the economic crisis contributed to the outbreak of the conflict (because president Kiir had less money to pay off rivaling factions) but will do little to increase the will to compromise of any of the parties involved no that the war is in full swing.

Lastly, I should note that Rolandsen’s assumption that “neighbouring countries appear to have no appetite for external military intervention” is not accurate. Uganda has committed substantial military resources, including ground troops and its modern aircraft fleet, to keep the government from being overrun. The government of president Kiir is also leaning on support from rebels from North Sudan, making an overt or covert intervention of the regime in Khartoum only a question of time.

South Sudan’s economy has already collapsed. Waiting for it to collapse further in the hope that it will take the civil war with it into the grave will be fruitless. Instead, mediators and third parties should focus on the roots of the war that predate the country’s economic woes (and its very existence): Its centralized, top-heavy political system; low levels of trust between political actors; the abysmal failure of DDR (Disarmament, Demobilization, Reintegration) after the civil war; military and political interventions of neighboring states (not only North Sudan); and the incapability of unwillingness of central political actors (including Kiir and his direct opponent Makar) to put the interest of their country and their people before their own.

 

Source: Dead economy walking in South Sudan

German company buys into Burundian rare earths

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Only days before his announcement to run for an unconstitutional third term led to violent demonstrations and an enduring political crisis, Burundian President Pierre Nkrununziza sold the rights to the Gakra rare earth deposit to a Guernsey-based shell company that will resell the minerals to ThyssenKrupp:

.The signature of the decree follows an offtake agreement signed on 14 April by another company of the same group, Rainbow Rare Earths Limited, withThyssenKrupp Metallurgical Products GmbH, part of the German ThyssenKrupp group. According to the deal, the German firm will purchase 5,000 tonnes per annum (“tpa”) of Rare Earth concentrate or downstream products resulting from this concentrate. Besides, Rainbow appointed ThyssenKrupp Metallurgical Products as its exclusive agent for sale worldwide. Production should begin during the last quarter of 2015, says Rainbow’s Managing Director, Martin Eales.

We’ll see how ThyssenKrupp will position itself, should the political crisis in Burundi continue.

Source: German firm to sell Burundi’s rare earths | Kongo-Echo

The shenanigans of the 88 Queensway Group

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Looking forward to reading this report in more detail:

This report examines these linkages by tracking the practices of one group of investors that has been particularly active on the continent since the early 2000s: a Hong Kong-based consortium known as the 88 Queensway Group. Cultivating relationships with high-level government officials in politically isolated resource-rich states through infusions of cash, promises of billions of dollars in infrastructural development, and support for the security sector, Queensway has been able to gain access to major oil and mining concessions across Africa. Starting in Angola in 2003, Queensway has been engaged in the extractive industries in at least nine African countries, including Guinea, Madagascar, Tanzania, and Zimbabwe.

Source: The Anatomy of the Resource Curse: Predatory Investment in Africa’s Extractive Industries | Africa Center for Strategic Studies

Poverty in Africa rising despite economic growth

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2015 marks the 20th year since sub-Saharan Africa started on a path of faster economic growth. During that period, growth has averaged 5.2 percent per year. Meanwhile, the number of people on the continent reportedly living under $1.25 a day has continued to creep upwards from 358 million in 1996 to 415 million in 2011—the most recent year for which official estimates exist.

The article goes on to look in detail at the trend of increasing poverty numbers and why economic growth has not diminished poverty across Africa. This includes a very interesting discussion of the effects of inequality. While the available data does not indicate that inequality is rising,

inequality is already at unusually high levels. Where initial inequality is high, it is to be expected that economic growth delivers less poverty reduction, since the absolute increases in income associated with rising average incomes will be that much smaller for the have-nots versus the haves. Moreover, the degree of inequality that exists on the continent is worse than it looks. The fact that Africa is divided into so many countries masks big differences in income between them. If Africa were a single country, its inequality would look much worse—worse even than Latin America. Since incomes across African people vary so widely, only a fraction of people are likely to cross the poverty line at any one time. That contrasts with India where a concentration of people immediately below the $1.25 mark means that even a small increase in incomes can result in a sudden flood of people moving above the poverty line.

Another important factor: Many of the poorest countries are not benefiting from the continent-wide growth trend. This is due to conflict (DR Congo) or bad governance (Madagascar).

Source: Why is the number of poor people in Africa increasing when Africa’s economies are growing? | Brookings Institution

Voter turnout and disillusionment in Sudan

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Over at African Arguments, James Copnall makes some important observations about the recent elections in Sudan:

The result everyone was waiting for did, however, come with a turnout figure few expected. 46% of the electorate marked their ballot papers, according to the National Elections Commission. This figure will be received with some scepticism.

SPLM-North’s Yassir Arman estimated the real number at no more than 15%, while even the African Union monitors called the turnout ‘low’. Olusegun Obasanjo, the head of the monitoring team, said he thought 30-35% sounded about right, and certainly no more than 40%. Mahjoub Mohamed Salih, the legendary journalist who covered his first Sudanese election in 1953, also guessed the figure would be in the 30s.

The numbers matter. Bashir was certain to win, but large crowds of voters would have given greater legitimacy to his victory. Instead, there were widespread reports of low turnout and the polls had to be extended into a fourth day to encourage more people to vote.

Copnall goes on to estimate that not even all of the ruling parties official members could be bothered to vote. If so, this is a real problem for (reelected) President Bashir and the (largely military) leadership of the regime.

Sudan is in a deep economic crisis that has severely impacted the regime’s ability to spread wealth around, while simultaneously waging several civil wars. Instead of focussing on a political settlement and developing alternative income streams to oil rents, the regime has opted to seek a military solution to the various conflicts. This chicken has now come home to roost in a big way.

With its core base obviously disillusioned, it is more and more only military might and suppression that holds Bashir and his team in power. They will probably be able to sustain this for a while, maybe even several years, but not indefinitely.

Bashir probably knows this, which is why the Sudanese government has lobbied hard for debt relief with western governments. Hopefully this relief will only be granted after the regime has addressed some of the democratic deficiencies of the state.

Source: Sudan 2015: After the elections, time for new ideas – By James Copnall | African Arguments

European Union set to adopt incredibly weak conflict minerals code

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From Africa Confidential:

The EU’s legislation sets up a self-certification system. It will require large companies with more than 500 employees to disclose information on supply-chain due diligence. It will establish an approved list of ‘responsible’ smelters and refiners which can assure transparency and certainty to downstream companies as to the ethical origins of the minerals. The new system will only come into force after a transitional two-year period in order to allow time to set up a third-party audit system and for importers to become familiar with their obligations.

In my opinion every “voluntary” regulation is not worth the paper its written on. Due diligence should be a matter of course, be it when it comes to conflict minerals or social and environmental protection standards. That the E.U. is buckling before the before the lobbyists in this regard is shameful.

Source: EU adopts ‘weak’ code | Article | Africa Confidential

Grand corruption: Nigeria’s oil revenues

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The Nigerian government just released a Pricewaterhouse Coopers auditing report on one of Nigeria’s biggest corruption scandals of the past decade. Feyi Fawehinmi takes it apart:

So what did it find? That the total revenues for the period in question were $69bn and not $67bn as stated by SLS. It had also remitted $50.8bn and not $47bn as initially thought. So, there was still a gap of roughly $20bn to be explained as before.

[…]

But who or what gives NNPC the right to withhold nearly 30% of the money it receives on behalf of Nigeria and then spend it as it wishes? Here we have a goat locked in a room alone with a yam and no one to supervise what’s going on.

PwC’s opinion is that this practice of withholding money and then spending as it sees fit is highly dubious and that the NNPC act needs a legal opinion to determine whether it has the right to do this. What stops NNPC (the goat) from withholding 50% of revenues (the yam) and then telling us later that it spent it on one thing or the other? Based on this, nothing.

If you are interested at all in the political economy of Nigeria, be sure to read the whole piece, its great. Hat tip goes out to Alex Thurston of the Sahel Blog who has collected several other great resources on the scandal, if you are not up to date on it.

Source: This Yam, This Goat, This Country: PwC and NNPC – Part 1 | Agùntáṣǫólò

[Update]

Alex Thurston also just published a piece looking at the balancing act Nigeria’s incoming president, Muhammadu Buhari, will have to perform regarding corruption:

It has been to the APC’s political advantage to build a diverse coalition – it helped enable Buhari’s victory this year (whereas in 2011, he won only the far northern states). But when it comes to fighting corruption, the coalition will complicate matters, because some people have joined the APC expecting to profit, both politically and financially. If those people don’t get the rewards they expect, that could cause political problems for Buhari, whether in the legislature, with the states, or on the road to 2019.

Again, well worth your time.

Germany’s foreign aid minister: “Europe relies on the exploitation of Africa for its prosperity”

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A very interesting interview with Germany’s foreign aid minister Gerd Müller (not to be confused with Germany’s iconic soccer player of the same name). Some very progressive discourse under the impression of the refugee crisis.

Viel zu lange hat Europa den afrikanischen Kontinent mit ausgebeutet. Wir Europäer haben wertvolle Ressourcen zu Niedrigstpreisen bekommen und den Arbeitskräften Sklavenlöhne gezahlt. Auch auf dieser Ausbeutung gründen wir in Europa unseren Wohlstand. Nun wundern wir uns, wenn die Menschen in Afrika keine Chancen mehr für sich sehen und zu uns kommen wollen. Wir senden ihnen ja auch täglich das Signal von Reichtum.

It remains to be seen if he follows up with any actual change in policy. So far, the current German government has not displayed anything even approaching “innovation” in its relationship with African states.

Source: “Europa hat Afrika ausgebeutet”

The Sahel Blog on a possible shift in Nigeria’s economic policy

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Interesting insight into possible economic policies of Nigeria’s incoming government, as well as some more general points on the perception of African policy making in the West by Alex Thurston:

So again, Tinubu comes out against austerity and in favor of using infrastructure projects to create jobs. The APC’s political survival may ultimately depend on its ability to alleviate poverty, so it will important to see whether and how these ideas translate into policies and projects after Buhari’s inauguration on May 29.

The speech, and the reference to the manifesto, bring up another important point. The trope of “African politics is not about issues” is so deeply entrenched in international media coverage that you can frequently watch Western journalists reflexively assume that Buhari and the APC have only vague policies, despite evidence to the contrary.

Source: More on the Economic Vision of Nigeria’s All Progressives Congress | Sahel Blog

Gulf of Guinea: who will win the oil battle?

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The disagreement began in 2007, when Ghana discovered the so-called Jubilee oil field located on the shared border. To avert any trouble, the Ivorian and Ghanaian authorities created a joint commission in 2008. However, this did not stop Ghana from continuing its offshore exploration and allowing Tullow Oil, a British company, to develop Jubilee in 2010. In 2013, Côte d’Ivoire responded by awarding French oil company, Total, a licence to operate in an oil field in the same zone.

[…]

The disputed maritime space could have been transformed into an area of common interest if the countries had signed a petroleum product-sharing contract with an agreed allocation, as Nigeria and São Tomé and Príncipe had done in 2001. The former received 60% of the production and the latter 40%. They could also have created a joint operating company like Libyan-Tunisian Joint Oil, which was founded in 1988 by Tunisia and Libya to resolve their maritime border dispute, and whose profits are divided equally between the two countries.

[…]

It is unfortunate that these two member countries of the Economic Community of West African States (ECOWAS) have instead chosen to confront each other in an international court. But the process is not irreversible, as Ivorian and Ghanaian authorities could still withdraw their requests and return to the negotiating table. If not, they are heading towards a sentence that could damage their peaceful history.

[…]

Source: ISS Africa | Gulf of Guinea: who will win the oil battle?