Is the Russian-South African Nuclear Deal at the Heart of the Zuma’s Political Crisis?

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Allister Sparks made some interesting observations in BusinessDay last week:

Last week, all four of SA’s big banks closed Oakbay’s accounts, KPMG announced it would no longer audit the company’s books, and the family’s stock exchange sponsor abandoned them.

This was followed by Atul and Varun Gupta resigning their directorships of Oakbay, and Duduzane Zuma, the president’s son, from his nonexecutive chairmanship of Shiva Uranium, an Oakbay subsidiary.

 

There is something fishy going on here. The critical thing is that Oakbay, and particularly Shiva, a uranium mine in the North West, is central to Zuma’s eagerness to do a deal with Russia to build and operate a series of nuclear plants capable of providing Eskom with 9,600MW of electricity.

 

It is a deal that would make both the Guptas and the Zuma family a fortune, since Duduzane Zuma owns a sizeable slice of Shiva’s shares.

 

But it is a deal two finance ministers, Pravin Gordhan and Nhlanhla Nene, have blocked because they deemed it unaffordable.

Sparks goes on to allege that it was Nene’s resistance to the nuclear deal prompted his sacking, directly contributing to South Africa’s current political crisis.

It is interesting to note that a few hours before firing Nene on that critical night, Zuma had persuaded the Cabinet to approve the 9,600MW deal — in itself an illustration of how he has packed his administration with toadies. He must have been furious when Nene refused to okay it, thus obstructing his grand plan.

I have always thought that investing in nuclear power was the worst idea ever for South Africa’s power sector. There is not a single nuclear power plant in the world that has ever been cost effective. Adjusted for government incentives, research and development and waste disposal, nuclear is way more expensive than large-scale solar or wind power, not to speak of hydro, all of which have substantial potential in South Africa and the wider region.

Is now the time for Vesuvius of Zupta scandals to erupt? via Martin Plaut

Trevor Noah on the Nkandla Scandal

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A Basic Income for Some Kenyans

Unconditional cash transfers are the New Hot Thing™ in development right now. I’m myself quite a fan of this idea and wish that it would be employed more broadly. Now one of the NGOs at the forefront of this particular movement is taking an even more radical step. In the words of Michael Faye and Paul Niehaus of GiveDirectly in Slate:

We’re planning to provide at least 6,000 Kenyans with a basic income for 10 to 15 years. These recipients are some of the most vulnerable people in the world, living on the U.S. equivalent of less than a dollar. And we’re going to work with leading academic researchers, including Abhijit Banerjee of MIT, to rigorously test the impacts.

An unconditional basic income happens to be another policy that I’m a huge fan of. Based on the limited evidence we have (nobody actually ever tried this on a national level), a basic income can have tremendous impacts on health and education, no matter if in developed or underdeveloped countries.

In the African context, there has been one similar project in Namibia in 2008 which showed promising early results, but which was not accompanied by adequate research and only lasted for a couple of years. Alaska has a very low basic income derived from oil profits and a German initiative doles out one-year basic incomes funded by donations. The idea is picking up steam, though, with Switzerland poised to hold a referendum on a national basic income, which would give all Swiss adults a basic income of about $1,650 per month, no questions asked. If you want a broad overview over the discussion about basic incomes (in industrialized nations), the current episode of popular radio show/podcast Freakonomics has you covered.

I really hope that GiveDirectly’s initiative in Kenya succeeds and produces reliable data on the effect of a guaranteed basic income in the setting of a developing economy (which is a slightly different proposition from a basic income in an industrialized rich country).

What If We Just Gave Poor People a Basic Income for Life? That’s What We’re About to Test. via Ken Opalo

Africa’s Industrialization Challenges

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On Brookings’ Africa in Focus blog, John Page touts his co-authored new book Made in Africa: Learning to Compete in Industry, criticizing the World Bank and other donors for their lack of support for the continent’s manufacturing sector:

In its January 2016 Global Economic Prospects report the World Bank proposes a policy solution to Africa’s continued vulnerability to commodities: “creating the conditions for a more competitive manufacturing sector.” Sadly, while advocating “structural reforms…to alleviate domestic impediments to growth [and] a major improvement in providing electricity,” the Bank is woefully short on specifics. This is hardly surprising. Beyond supporting improvements in the “investment climate”—structural reforms by another name—and pushing its Doing Business agenda, the Bank and the larger donor community have ignored Africa’s industrialization challenge for more than 20 years.

I would go even further. The World Bank and others have actively pushed resource-rich countries to prioritize developing an export economy and mega-projects like Congo’s Inga Dam to the detriment of investing in local value chains.

Sometimes this has been explicit, like when pressuring countries to sign up to a free trade agenda, even though this exposed local businesses to vastly more competitive competition from abroad. At other times, it has been more of a byproduct of how the system works, like how measuring economic success by GDP masks fundamental problems with equitable development.

Page rightly asks African governments to “address the objectives of boosting manufactured exports, supporting industrial agglomerations, and building firm capabilities”. I would add that these technocratic fixes must be accompanied by measures to ensure the equitable redistribution of the benefits garnered by both resource extraction and industrialization to have an actual positive impact on the lives of the majority.

Commodities, industry, and the African Growth Miracle via Africa in Focus

Africa’s Defense Industry Is the Most Corrupt in the World – In the worst cases, armies have in effect taken over their governments

Of the world’s inhabited continents, Africa has by no means the biggest defense sector. Fifty-four African states are responsible for less than three percent — or about $50 billion — of the world’s military expenditure. But the continent also has experienced the largest increase in military spending, an astronomical 90 percent since 2005.

This by itself isn’t surprising. Conflict in a number of North and Sahelian African countries, and a boom in commodity prices in the years after the financial crisis, swelled the war chests of many resource-dependent governments in the region.

Read more on War is Boring.

Nigeria Wants to Double the Size of Its Army – It’s probably a bad idea

The Nigerian ground forces wants to add 100,000 new officers and enlisted men to its ranks, doubling its size to 200,000 soldiers, Chief of Army Staff Lt. Gen. Yusuf Buratai announced in a lecture at the National Defense College in Abuja.

In most countries, this would be kind of a big deal, with media, pundits and politicians furiously debating the merits of such a dramatic step. But in Nigeria, only the initial report received some attention in various newspapers. The lack of critical debate around the planned expansion of the armed forces, which according to Buratai will take place over eight years, points to continued tensions between the military establishment and democratic institutions in Nigeria.

Read more on War is Boring.

Podcast: Africa’s Boom and Bust

Mansour Sy and Lorenzo Fioramonti join us to share some very different but equally thought-provoking visions on how Africa should approach falling commodities prices, a trend that has thrown many African economies into disarray.

Listen to Podcast on African Arguments.

The African Union Becomes a Dictator’s Best Friend – Annual summit decides to live with, not solve, the continent’s conflicts

“African Solutions to African Problems” has been a rallying cry for both African governments and citizens — for good reason. Western nations and international powers, disillusioned by the lack of progress managing conflict on the continent, make ill-informed decisions which affect millions of people.

But a more perverse meaning of this vision has begun to take shape — courtesy of the African Union and the current crop of geriatric would-be presidents-for-life running the show. The new cry is for keeping these leaders, many of them corrupt and authoritarian, in power for as long as possible…

Read more on War is Boring.

Der Traum der Goldgräber

Am Goldbergbau in Burkina Faso verdienen vor allem Minenbetreiber und große Handelshäuser. Die Bergleute dürfen dafür schuften – aber sie hoffen beharrlich auf den großen Fund.

Feiner grauer Staub durchsetzt die Luft in Alga. Wie Mehl legt er sich über Gebäude, Maschinen und Tausende von Menschen, die auf der Suche nach Gold einen Stollen nach dem anderen in den harten Fels treiben. Seit mindestens drei Jahrzehnten werde hier nach Gold gesucht, erzählt Elia Sawadogo, dessen Cousin einen der Schächte finanziert. Der richtige Boom kam vor ein paar Jahren, als ein großes Vorkommen des Edelmetalls gefunden wurde. „Jeden Tag kommen 40 neue Goldgräber“, sagt Sawadogo.

Read more on Weltsichten.

Podcast: On South Africa’s doom and gloom

In this podcast, we are joined by Martin Plaut and Gushwell Brooks to discuss the deplorable state of South African politics.