A Look Ahead to June 2018

The Beautiful Game Turns Ugly in Ghana

On 6th June, renowned undercover investigative journalist – Anas Aremeyaw Anas – will premier his new documentary in Accra entitled ‘Number 12’. After previously exposing corruption in Ghana’s police service, passport office and, most famously, the judiciary, Anas has turned his attention to the Ghana Football Association (GFA). Anas has said that he hopes that ‘Number 12’ will provide a “fresh start” for Ghana’s “tainted football system” and, given the fallout from his last exposé, it is likely that June will be an eventful month for the GFA. In the wake of his documentary on the judiciary in 2015, scores of judges and magistrates were suspended or sacked, and similar actions are expected at the GFA. Moreover, there are rumours that politicians and other government officials may be implicated in the documentary.

Given that President Nana Akufo-Addo was elected on an anti-corruption platform, ‘Number 12’ is seen as an important test of the administration’s commitment to this. And, thus far, it appears that the government is passing the test. After reportedly viewing part of the documentary in late May, Akufo-Addo called for the arrest of the GFA’s president – Kwesi Nyantakyi – on the grounds of “defrauding by false pretences”. It was reported that Nyantakyi allegedly offered access to the president and other senior government officials, in return for money. Akufo-Addo’s quick response was likely a reaction to the potential damage such an allegation could do to his anti-corruption credentials. However, it remains to be seen whether he will adopt this uncompromising approach to other individuals identified in the documentary, especially those with closer links to his party. Akufo-Addo has been praised for appointing a senior opposition figure in the newly created role of Special Prosecutor and it is hoped that this will prevent the government from adopting a politically partisan approach to anti-corruption, of which other governments in the region have been accused. Consequently, there are strong signs that those that are implicated will be properly investigated, no matter their political allegiance.

While ‘Number 12’ is set to reveal the ugly side of football in Ghana, its release further demonstrates the vibrancy of investigative journalism and anti-corruption activism in the country, which is seemingly supported by a government that is committed to improving Ghana’s international image.

Will Guinea-Bissau cope without ECOWAS’s guiding hand?

For the last three years, Guinea-Bissau’s government has been prevented from serving its purpose by a continuation of political crises. These were sparked by President Jose Mario Vaz’s decision to remove Domingos Pereira as prime minister in August 2015, which was opposed by the majority of the ruling party – Partido Africano da Independência da Guiné e Cabo Verde (PAIGC). Vaz and the rest of his party (PAIGC) were unable to agree on a new prime minister and, given Guinea-Bissau’s tumultuous history, the Economic Community of West African States (ECOWAS) quickly assumed the role of regional arbitrator, brokering a deal between the two sides. While this deal looked promising, it was broken by Vaz in December 2017, which led to ECOWAS imposing sanctions on individuals connected to the president, including his son. This was evidently an effective tactic as, following the imposition of sanctions, there was a breakthrough in negotiations and, on 17th April, Aristides Gomes was appointed prime minister and the government resumed its activities.

This was another success for ECOWAS, which is becoming increasingly effective at upholding democracy in the region. However, as Guinea-Bissau looks ahead to its legislative election in November 2018, it is slightly concerning that the ECOWAS Mission in Guinea Bissau (ECOMIB) will be withdrawn before the end of June. As voter registration has already started, it is likely that the coming months will experience an increase in political tension and the divide in the ruling party will be tested further. Considering the country’s recent experiences of political violence, the lack of ECOWAS’s presence in the country may see a resurgence in instability ahead of the election. An extension of ECOMIB’s mandate would allay these fears and help to create an environment which is conducive for a peaceful election. Without ECOMIB, the lead up to the election will be an important test of the resilience of Guinea-Bissau’s democratic system.

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Elections in 2016

There are a number of important elections across Africa scheduled for 2016 and over the next year, Africa Integrity Insights will examine a selection of these. As an introduction to the upcoming publications we have compiled a list of countries where elections are set to take place in 2016, including the scheduled date (when available) and the type of election.

  • Benin: Presidential (28th February)
  • Burkina Faso: Municipal (31st January)
  • Cape Verde: Parliamentary and Presidential (February & August)
  • Central African Republic: Parliamentary and Presidential Run-off (31st January)
  • Chad: Presidential (April)
  • Côte d’Ivoire: Parliamentary (December)
  • Comoros: Presidential (21st February)
  • Congo-Brazzaville: Presidential (20th March)
  • Democratic Republic of Congo: Legislative and Presidential (27th November)
  • Djibouti: Presidential (April)
  • Equatorial Guinea: Presidential (November)
  • Gabon: Parliamentary and Presidential (December)
  • Gambia: Presidential (1st December)
  • Ghana: Parliamentary and Presidential (7th November)
  • Niger: Parliamentary & Presidential and Local (21st February & 9th May)
  • Rwanda: Local Government (8th, 22nd & 27th February and 22nd March)
  • Sao Tome and Principe: Presidential (July)
  • Senegal: Constitutional Referendum (May)
  • South Africa: Municipal (May-August)
  • Sudan: Darfur Referendum (11th April)
  • Tanzania: Zanzibar Re-run (20th March)
  • Tunisia: Municipal and Regional (30th October)
  • Uganda: General (18th February)
  • Zambia: Legislative and Presidential (11th August)

Ghana: The IMF, Trade Unions and Mahama

Ghana Lighthouse

On 31st August 2015, the International Monetary Fund (IMF) approved a second aid disbursement to Ghana worth $116.6 million in accordance with a three year aid deal agreed in April 2015. This followed a review of Ghana’s economic performance, conducted by the IMF’s Executive Board, which found that Ghana’s progress “has been broadly satisfactory, despite an unfavourable environment”. Nevertheless, the IMF made it clear that the continuation of its aid program rests upon the government of Ghana’s adherence to terms set out in the April agreement. As the Acting Chair of the Executive Board – Min Zhu – stated “the government should firmly continue with its fiscal consolidation efforts to fully restore macroeconomic stability and mitigate financial risk”.

Although the second disbursement was undoubtedly welcomed by President John Mahama’s administration, the continuation of “fiscal consolidation” policies advocated by the IMF could cause serious political problems for the government. Ghana’s trade unions have been highly critical of the IMF bailout and many have vowed to oppose the austerity policies connected to it. Although the Trade Union Congress (TUC) backed down from its outright opposition to a deal in March 2015, its Secretary General – Kofi Asamoah – noted that the organisation “will resist anything that will be done to worsen the plight of the workers”.

The first example of trade union opposition to austerity policies came from the Ghana Medical Association. Around 2,800 public sector doctors went on strike in early August 2015, first withdrawing their services to out-patient departments before extending the strike to include emergency services. However, the strike only lasted three weeks and was suspended on 21st August 2015. This was undeniably a significant victory for Mahama’s administration, which had fought an intense public relations battle with the union throughout the strike. It not only demonstrated to the IMF that the government is committed to the policies outlined in the April agreement but also acts as a warning to other unions which are planning strike action.

Nonetheless, this victory could be short-lived. Despite the fragmented nature of trade unions in Ghana, with many industries home to competing unions, it seems highly likely that more strikes are to come. Unions argue that their current salaries are being undermined by inflation, which is nearly at 18 percent, whilst the IMF insists that “it is crucial to continue the policy of controlling the wage bill”.  Such contradictory views will surely come to a head and the government of Ghana will face the brunt of it.

Furthermore, following the announcement from The Electricity Company of Ghana (ECG) that it wants tariffs to increase from 44 pesewas to 1 cedi per unit, it’s possible that Ghana’s unions could attract widespread popular support. On 31st August 2015, the ECG, along with Ghana’s Water Company, put forward the case for tariff increases to the Public Utilities Regulatory Commission (PURC). This is in line with policies supported by the IMF, which has backed the government’s plans to remove energy subsidies. Although the ECG is expected to meet other interested parties, including the TUC, to discuss the proposed increases, if the tariff increment is accepted by the PURC it is expected to take effect from 1st October 2015. Due to Ghana’s erratic power supply, such a policy could prove to be extremely unpopular unless the ECG can guarantee a more consistent service. Thus, the unions’ focus on the undermining of salaries by inflation could strike a chord amongst a population already dissatisfied with the country’s poor, and possibly soon expensive, electricity supply.

With an election next year and most commentators predicting another tight race (Mahama won in 2012 by less than 3 percent of the vote), such opposition from trade unions could be problematic for Mahama. If the unions are able to garner the support of other sections of society, particularly youth groups, it’s likely that Ghana will witness an increasing number of strikes and demonstrations during the lead up to the election. This will be a major test for Mahama’s support of IMF-backed policies, as greater social unrest will affect his electoral chances, especially if the opposition choose to support the unions. Thus, it is possible that Mahama may look to soften some of the policies as the election approaches.

As a number of teachers’ unions have already stated that they are planning a strike at the start of the new term, it seems that Mahama is set to face another test very soon. If these strikes go ahead, it’s possible that they may coincide with the proposed electricity tariff increases, which could spark demonstrations of their own. This would put Mahama under significant pressure to capitulate to at least some demands, particularly as he will have an eye on next year’s election. Although it is unlikely that Mahama’s administration will perform a U-turn on the IMF-backed policies, greater social unrest will put pressure on him to do so. As the election approaches such pressure will increase and it’s likely that Mahama will look to at least soften the effect of austerity policies in order to improve his political position. However, this could be a risky strategy as Ghana’s economy, particularly in light of the low oil price, is likely to continue to need IMF financial support and a failure to implement their “fiscal consolidation” policies could mean that later disbursements are not approved.

Francophone Africa Revisited

Artist's Map of Africa

On 17th March 2015 we published an article entitled “Troubles en Afrique Francophonie” which discussed increasing anti-government protests across Francophone Africa, not seen in either Anglophone or Lusophone regions. We assessed that in our globalised world it appears that language still has an important influence on the contagion effect of political protest. The countries we identified as experiencing unrest over the past year were Burkina Faso, Burundi, Chad, Cote d’Ivoire, the Democratic Republic of the Congo (DRC), Niger and Togo. Since then: unrest has intensified in Burundi leading to an attempted coup on 13th May 2015; Gabon has been beset by a series of protests and strikes; and violent clashes have erupted between opposition supporters and the security forces in Guinea’s capital Conakry.

In stark contrast, unrest and political protests have been muted in Anglophone and Lusophone Africa. Despite deteriorating economic conditions in Ghana, allegations of mass killings by the security forces in Angola, and the continuation of the rule of two of Africa’s longest serving ‘Strongmen’ in Uganda and Zimbabwe, these countries have largely avoided anti-government protests like those seen in Francophone Africa. Although South Africa experienced unrest caused by xenophobic, or ‘afrophobic’, riots in April 2015, these were not protests aimed at the government and therefore less dangerous to the ruling ANC.

The unrest seen in Francophone Africa over the past year is particularly anti-government in nature. Protestors have called for greater democracy, criticising long term rulers and those who they believe are exploiting their positions of power in order to prolong their rule. The protests appear to be well co-ordinated by highly active civil society groups and opposition parties which possess clear aims. This is therefore much more of a threat to ruling parties and presidents.

It is not clear why this unrest has been a particular feature of Francophone Africa but it seems that different movements have taken inspiration from each other. It is possible that this has spread through the reporting of events on social or conventional media, which has been expedited by a shared language. However, it is also possible that it has been caused by increased co-operation between different civil society groups. There was an indication that this could be the case in March 2015, when 40 pro-democracy activists were arrested in the DRC, including members of Senegalese and Burkinabe civil society groups. Thus, it could be that civil society groups in Francophone Africa are beginning to operate transnationally; sharing ideas, experiences and acting as inspirations for movements in other countries.

Nonetheless, whatever the reason behind the increasing unrest it appears that Francophone Africa’s autocratic leaders are going to face continued protests in 2015.

A Tough Year Ahead for Africa’s Oil Exporters

Although the world oil price has partially recovered since hitting a six year low in January 2015, last year’s fall in price will continue to have an effect on Africa’s oil exporters throughout this year. The impact of the fall is likely to be compounded by respective governments’ previous overestimation of the price of oil in their budget predictions. The effect of this can already be seen in Ghana, where the government borrowed heavily based on expected oil earnings, and was subsequently forced to seek a bailout from the International Monetary Fund (IMF).

In April 2015, the Brent Crude oil price rallied and increased by 20 percent. In early May 2015, it reached a high for this year, trading at over $67 a barrel, and at the time of writing it is trading at $66.66 per barrel. Although this is a significant improvement, it is far from the average price of May 2014 ($109.41 per barrel). Furthermore, analysts are wary about labelling this increase in price a recovery. A top commodities official at Commerzbank told CNBC that the price rise is “premature” and that it could soon fall back below $50 a barrel. The increase in price has primarily been attributed to conflict in Libya and Yemen, which has disrupted supply and created fear of further disruptions. However, since Libya’s descent into civil war its oil production and exports have been volatile, so it is possible that they could pick up again very soon. Furthermore, the Iran Nuclear Deal could also spell the end of international sanctions opening the market to another supplier. Thus, the recent increase in price should be viewed cautiously. This is reflected in Société Générale’s recent 2015 average Brent price forecast of $59.54 per barrel. Moreover, in more broader terms, the Organisation of Petroleum Exporting Countries (OPEC) have predicted that oil prices will stay below $100 per barrel for the next decade.

If the recent recovery of oil prices is “premature” and another slump appears, this will put a strain on Africa’s oil exporters’ relationship with OPEC. In November 2014, OPEC decided to maintain production levels agreed upon in December 2011, meaning that prices continued to fall. This policy particularly hit countries with relatively high production costs such as Nigeria, where it costs $20-$40 per barrel compared to $4-$10 per barrel in Saudi Arabia. Although Nigeria did not publicly criticise this strategy like Algeria and Iran, a continuation of it after OPEC’s next conference in June 2015 could create greater opposition amongst Africa’s oil exporters.

Nonetheless, even after the recent recovery, Africa’s major oil exporters are still struggling. It has been calculated by the IMF and Deutsche Bank that Algeria, Libya and Nigeria all require oil prices of over $120 per barrel to balance their budgets, while Angola requires a price of $98 per barrel. This has unsurprisingly put pressure on these countries’ finances. In Nigeria, it was projected that even if the oil price averages at $70 a barrel for 2015, the expenditure levels outlined in the Medium Term Expenditure Framework from November 2014 would leave the country with a fiscal deficit of 1.3 trillion Naira. As a result, governments have reassessed their expected oil earnings and their budgets. As the IMF noted in April 2015 for Africa’s oil exporters the fall in price “will pose a formidable challenge” and it will “require them to undertake significant fiscal adjustment”.

In Nigeria the government has changed its benchmark price for crude oil to $53 per barrel and in Angola it is now $40 per barrel. The IMF has projected that in both of these countries GDP growth will be hit, with Nigeria’s growth falling by 2.5 percent from expectations in October 2014. This decrease in government revenue is reflected in the countries’ budgets. In Angola, the government cut spending by 1.8 trillion Kwacha in its revised budget in February 2015, and still predicted a budget deficit of 7 percent of GDP. Although Nigeria is not looking to cut its budget – which is waiting to be finalised – and are predicting a lower deficit of 1.12 percent of GDP, the House of Representatives have controversially proposed to remove the fuel subsidy and reduce capital expenditure to 21 percent of the budget. This increases the likelihood of popular unrest like that seen in January 2012 after the government first attempted to remove the subsidy. Due to the unreliable electricity supply provided by Nigeria’s national grid, a large proportion of citizens and businesses rely on subsidised fuel to power electricity generators. Thus, this will have a disproportionate impact on less well-off Nigerians and small businesses. The effect of the proposal to remove the subsidy is already being felt in Nigeria through fuel shortages which are set to worsen as marketers restrict imports over fears of the subsidy removal. Furthermore, with a restricted capital expenditure budget it is unlikely that the new All Progressives Congress (APC) government – under the leadership of President-elect Muhammadu Buhari – will be able to make the infrastructural investment needed to significantly improve the national electricity supply. Thus, in Nigeria and across Africa’s oil exporters societal tension and popular unrest are likely to increase as a result of governments’ attempts to restrict spending.

For Africa’s oil exporters, 2015 is likely to be an extremely tough year if prices stay at their current level or drop once more. Although Nigeria’s finance minister – Ngozi Okonjo-Iweala – pronounced last year that “we no longer want to be known as this oil economy”, Africa’s oil exporters have not been able to significantly reduce their reliance on oil. In Angola, Nigeria, Equatorial Guinea and the Republic of the Congo oil represents over 70 percent of government revenue, and in Gabon and Algeria it represents over 50 percent. In pre-civil war Libya it even reached over 90 percent of the government’s revenue. It also accounts for a large proportion of foreign exchange earnings, with Angola owing 90 percent of its earnings to oil. This dependence has been reflected in depreciating exchange rates, as illustrated by the Naira, which reached a record low against the dollar in February 2015. As a result, governments have not only looked to cut public spending but also increase borrowing. For example, in Nigeria the government have already used over half of its projected borrowing allowance of 882 billion Naira to meet recurrent expenses, such as government employee salaries.

The outlook for 2015 in Africa’s oil exporters remains bleak. Governments are likely to increase debt considerably while depleting their foreign exchange reserves and sovereign wealth funds. Cuts in public spending are likely to cause significant social unrest and it is highly unlikely that companies will pursue new projects due to their loss of revenue. This was indicated by Shell’s and Total’s decisions to delay offshore projects in West Africa in April 2015. Africa’s oil exporters’ dependence on oil has made the impact of the fall in prices particularly acute. Only through significant restructuring of their economies will they be able to avoid such shocks in the future and adapt to OPEC’s predicted long-term slump in prices.

Dispatches From Africa

Ghana Lighthouse2

Ghana: Could Power Cuts “Put-Off” Mahama Next Year?

Julian Fisher writes from Accra:

One of Accra’s main landmarks is a lighthouse: ironic since the city is now often in darkness.  Its residents have become so accustomed to power cuts over the past year that a new composite word has entered the local lexicon. Dumsor is a rendering of two Twi words meaning put on and put off.  As the weather is to conversations in England, dumsor is to conversations in Accra.  It is hard to escape it.  Even state television carries broadcasts dubbed “Safety Measures During Dumsor”: unplug electrical items when a power-cut strikes and don’t leave candles or kerosene lamps unattended, is the gist.  So all-encompassing is the problem that it is hard to believe that it won’t be a determining factor in next year’s presidential election.

Aside from the personal nuisances of ruined fridge and freezer contents, appliances blown up by power-surges, and half-cooked meals, dumsor is having a significant impact on the economy.  An official in one of Ghana’s leading think-tanks told me that, three years ago, the usual ratio was 24 hours of light to 12 hours of darkness.  Now, that has been reversed.  Assuming that periods of energy provision coincide with working hours, this approximates to a three-day week for those businesses that are unable to afford generators.  And this is not the only economic problem that Ghana faces currently.  Others include:

  • Falling oil prices: yes, the country remains a net importer of refined petroleum products, so should benefit from falling prices, but the national budget has certainly taken a hit from the drop in revenue from crude sales;
  • Poor fiscal control: with the public sector wage bill ballooning, subsidies draining the national coffers and interest payments rising as the country’s credit rating falls, most of the budget is recurrent expenditure. Last year, capital expenditure was equivalent to only some 5% of GDP, compared to 25% for recurrent expenditure;
  • Currency depreciation: as a net importer, Ghana can ill afford the recent sharp fall in the cedi’s value – a depreciation that has offset much of the potential advantage from cheaper refined oil products.

In the circumstances, Ghana had little option but to approach the IMF for help.  It has been a long time in the coming, but a package of financial assistance has finally been agreed.  I am told that the funds to be made available direct from the IMF will be limited in the first of a three year programme, but the government hopes the agreement will bolster confidence in the country, encourage donors to resume programme-funding and halt the slide in the currency.  The political problem posed by all this is that the IMF is imposing a series of austerity conditions, including a freeze on public sector employment, a reduction in subsidies and heightened efficiencies in tax collection.  As a leading trades unionist told me this week, “the IMF” and “the World Bank” are “scary words” for Ghana’s workers, given the effects of previous IMF programmes, which led to wholesale lay-offs.  This interlocutor would not rule out civil unrest in response to similar developments in the coming year.

But the government has over eighteen months to deal with this fall-out.  Punchy rhetoric about the need for IMF support and commitment to austerity this far away from elections is one thing.  It may be a very different matter in twelve months, by which time the government calculates that the IMF programme will have restored stability to the economy and it will no longer need the IFIs.

Maybe so, but it is by no means clear that a sufficiently strong economic turnaround will arrive in time to get the lights back on for elections.  And no matter what the national statistics say, households are unlikely to feel positive towards President Mahama if, in late 2016, they are still coming home to ruined freezers-full of food and blown appliances.  So it seems likely that, next year, the key to power in Ghana will be energy.