Britain Dances Around Relations with Africa

Africa Integrity finds it remarkable that five years elapsed between former prime minister David Cameron’s attendance at Nelson Mandela’s funeral in 2013 and prime minister Theresa May’s official visit to Africa in August this year. The most recent previous prime ministerial trade mission was in 2011. Quite apart from a tendency to treat the entire continent as one country, it is also striking how limited both leaders have been in their continental ambitions. In 2011, Cameron had intended to spend five days on the continent, visiting South Africa, Nigeria, Rwanda and the then-newly formed South Sudan.  In the event, he cut the visit to just two days and then slashed that paltry window of time by seven hours to return home for domestic political reasons.  He managed to make flying visits only to South Africa and Nigeria, both pretty obvious destinations that already enjoy reasonably cordial trade relations with Britain.

In August, Theresa May did slightly better, calling again on South Africa and Nigeria, and adding Kenya to her itinerary, where she showed off her dance moves and extolled a bright trading future between Britain and Africa.  If this is what she intends, her actions don’t match her rhetoric. A whirlwind tour of the three anglophone giants among the African economies is simply not good enough.  Where is the engagement with francophone economies, some of which (such as Rwanda and Gabon) have made symbolic overtures to the UK by bringing the English language to the centre of their political and commercial spheres? Why are Britain’s diplomats and politicians hesitant to engage meaningfully with the francophone bloc, which – with its currencies tied to the Euro – is increasingly keen to break free of the constraints put on it by the European Central Bank and reduce its dependency on the former colonial power?

Where is the engagement with Angola, an oil-economy to rival Nigeria that has recently embarked on an exciting new post-dos Santos era?  Why did Zimbabwe, historically so close to the UK and now struggling to free itself from the mire of the Mugabe-era, not merit a supportive visit?  And, as for South Sudan – which so badly needs friends in the west – and Somaliland – which wishes to establish itself as independent from Somalia – they might as well not exist.

Africa is a mighty continent, with a young, generally well-educated population that is as hungry for political change as it is for consumer goods. Whether or not Brexit is the right choice for Britain, it is looming large.  And, in Africa Integrity’s experience, many Africans embrace Brexit. They see opportunities for post-Brexit Britain to adopt a more inclusive global immigration policy.  And they are optimistic about the advantages that potentially freer trade with Britain – still held in such high regard and affection by many Africans – will bring.  The youth of Africa no longer see themselves as supplicants for aid but as potential partners to a more globally-orientated Britain after its departure from the EU.  The response from Britain’s political leaders to date has been woefully inadequate, if not insultingly dismissive, and will only weaken its relationship with the continent as other international players increase their engagement.

This article originally featured in Africa Integrity’s October 2018 Newsletter. To join our newsletter mailing list, please contact us.

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Taxing Questions

In 2018, there has been a growing trend of African government’s trying to tax, and in some instances restrict, the internet usage of their citizens. While governments see this as a way of strengthening their positions by raising much-needed funds, protecting state-owned telecom companies and reducing online criticism, it appears they have overlooked the long-term effects of such policies and their potential for provoking unrest.  

It has long been recognised that East Africa has led the way with respect to internet and mobile money innovations on the continent; as illustrated by the growth of platforms such as M-Pesa. It is therefore unsurprising that governments in East Africa have similarly been at the forefront of taxing and restricting internet usage and mobile money transactions. As user-bases have rapidly grown and opposition groups have increasingly used online forums, governments have simultaneously looked at the potential tax revenue provided by such users and the ability to which they can restrict opposition activities online. In the past year, the governments of Kenya, Tanzania and Uganda have imposed taxes on internet and mobile money usage. In Kenya and Uganda, the focus has been on mobile money payments and data usage, particularly in relation to social media, while in Tanzania the government imposed a so-called ‘blogger tax’, which required online bloggers to purchase a license that costs the equivalent of the country’s average annual income.

Although it can be argued that taxes on internet and mobile money usage help to broaden the narrow tax base that exists in most African countries, such taxes tend to be regressive. While Ugandan President Yoweri Museveni considers mobile money and social media platforms as “luxury items”, he overlooks their broad user-bases and the increasingly important role they play in Uganda’s economy and society. In Kenya in particular, where over 93 percent of the population have mobile money accounts, taxes on mobile money transactions are likely to affect disproportionately the poorer in society, who do not have bank accounts and have become reliant on such platforms.

The imposition of taxes on internet usage and mobile money is not limited to East Africa and it seems that governments across the continent are increasingly examining the viability of such taxes. Since August 2018, the governments of Benin, Zambia and Zimbabwe have announced similar taxes on internet usage and mobile money. In Zimbabwe, this has had a had a damaging effect on the economy, where mobile money was one of the very few economic successes of recent years.

In Benin, the tax was so unpopular that the #TaxePasMesMo [Don’t Tax My Megabytes] protest movement managed to force the government to overturn its decision within less than a month. Similar protests have been seen elsewhere, not least Uganda, where Museveni was forced to halve the levy on mobile money following protests. It is likely that such protests will continue and intensify as people increasingly feel the everyday cost of such taxes.

Much has been written about the role of the internet in protest movements and, at least in the African context, commentators have tended to exaggerate its influence. That said, although it has not been particularly effective at strengthening the organisation of opposition groups, the restriction of access to internet and mobile money platforms is likely to become an important catalyst for protests and social unrest across the continent. The direct implications of such taxes can be easily exploited by opposition groups and, due to broad user-bases, it is possible that protest movements that coalesce around such issues could cut across traditional political divisions. Accordingly, African governments should think twice before following Kenya, Uganda and Tanzania’s examples.

This article originally featured in Africa Integrity’s October 2018 Newsletter. To join our newsletter mailing list, please contact us.

Bridging Nations

On 21st March 2018, 44 African heads of state signed the African Continental Free Trade Agreement (AfCFTA), which seeks to remove tariffs on 90 percent of continental trade. For many years, experts have recognised that increasing intra-African trade is key to economic development; however, this has been hindered, not only by tariffs, but also by Africa’s infrastructure deficit. Nevertheless, there are recent encouraging signs of improvement, particularly in the south and east, which should complement AfCFTA.

Infrastructure Deficit

In March 2018, the Export-Import Bank of India claimed in a study that inadequate transport infrastructure adds 30 to 40 percent to the cost of goods traded among African countries. In May 2017, the African Development Bank (AfDB) claimed in a report that, although intra-African trade has increased, transport and communication infrastructure is less developed between countries on the continent than it is between Africa and the rest of the world. Given this situation, it is unsurprising that intra-African trade continues to struggle.

However, there are signs of change. In Southern and Eastern Africa there are many transport infrastructure projects in development, seeking to build economic (as well as literal) bridges between nations and open the interior to international trade.

Port Expansion

International trade in Southern and Eastern Africa has been through a small number of ports, many of them in need of development. In the past year, improvements have started to be made. In July 2017, the World Bank approved a $345 million loan for the expansion of the Port of Dar es Salaam in Tanzania and in October 2017, it was announced that the Japanese government would provide a loan worth close to $350 million for the second phase of expansion at the Port of Mombasa in Kenya. Even Africa’s largest and most developed port – the Port of Durban in South Africa – commenced an upgrade and expansion project in 2017.

There has also been a growing number of rehabilitation projects at undeveloped ports along the eastern seaboard. Nacala in northern Mozambique, the mega-port at Bagamoyo in Tanzania and Berbera in Somaliland are three examples of such projects. These projects are vital to landlocked countries, which are often over-reliant on a specific transport route for exports. For example, nearly 95 percent of Ethiopia’s foreign trade is through the Port of Djibouti; a dependency that should be alleviated by rehabilitation of the Port of Berbera.

Opening the Interior

It is recognised that developments on the coast must be matched by infrastructure projects inland. The development of the Port of Nacala is part of a wider Nacala Corridor project, which includes a railway line to link north western Mozambique and Malawi to the coast. There are plans for this line to be extended into Zambia. Similarly, the expansion of the Port of Mombasa was preceded by the development of a new railway between Mombasa and Nairobi. This railway is part of an ambitious East African Railway Network, which will link Kenya, Uganda, Rwanda, Burundi and Tanzania. The second phase is currently under construction and the line should reach Uganda’s border by 2021.

Rail and Road Regeneration

In recent years, there has been investment in railway infrastructure across Southern and Eastern Africa which not only links the interior to ports but also facilitates intra-African trade. Projects in the region include: Addis Ababa-Djibouti Railway between Ethiopia and Djibouti; Tazara Railway between Zambia and Tanzania; Lobito-Luau Railway between Angola and the Democratic Republic of the Congo (DRC); and Trans-Kalahari Railway between Namibia and Botswana. While such projects have progressed at different paces, governments in the region have at least acknowledged the importance of modernising railway infrastructure: an important step to increasing intra-African trade.

There has also been increased investment in road infrastructure. The LAPSSET Corridor project in Kenya seeks to strengthen transport links between Kenya, Ethiopia and South Sudan. Although this project’s progress has been sluggish, new highways have greatly reduced travel time between Nairobi and the Ethiopian border, suggesting strong potential for the rest of the project. Another example of reducing travel time through improved road infrastructure is the Kazungula Bridge, which is set to be completed by March 2019. The road and rail bridge will link Zambia and Botswana and create a one-stop border post between the two countries. It is estimated that this will reduce the time crossing the border from 30 hours to 6 hours. This will greatly improve transport along the North-South Corridor from the Port of Durban to the Copperbelt in the DRC and Zambia. Zimbabwe also joined the Kazungula Bridge project in March 2018. Although there are concerns that it could divert business away from Zimbabwe, the country’s road network will be linked to the project and it may encourage the government to upgrade its current road infrastructure to remain competitive.

Foundation for the Future

While many of the transport infrastructure projects in Southern and Eastern Africa have been slow-moving and have suffered from bureaucratic inefficiency, and in some instances corruption, improvements are evidently being made. This will not only open the interior to a growing number of international ports, but also increase intra-African trade. While established sectors such as mining will be the primary beneficiaries in the short-term, it should also contribute to the development of a range of sectors in the medium to long-term. Such development will be aided by the AfCFTA, which, although still to be ratified by each country’s government and lacking the support of important economies like Nigeria, will further reduce barriers to intra-African trade. The combination of the AfCFTA and improvements to transport infrastructure in Southern and Eastern Africa is providing a strong foundation for local economies.  This will doubtless present a range of investment opportunities in the coming years.

This article originally featured in Africa Integrity’s April 2018 Newsletter. To join our newsletter mailing list, please contact us.

Prepare 4 Africa

Nairobi Cityscape

Culture Shock!

Habari yako? – your news? Habari za familia? – news of your family?  Habari za leo? – news of your day.  Za kazi? – of work?  Za safari – of your journey? And it goes on.  When will the questions end?

You are in Kenya, negotiating an oil concession.  You don’t have time for these extended niceties.  And, anyway, you don’t know how to respond.  In a hurry, you move on to business, ignoring the bafflement on the ministry official’s face.

As you leave, your host walks you to the car park.  He takes your hand in his and won’t let go.  This is unexpected.  You withdraw your hand, as tactfully as possible.  Your host again looks offended.

Your driver talks incessantly about “tribes”.  Why the obsession? Who cares about a person’s background?  What relevance is it to an oil company in Kenya?  This sounds like prejudice to your ears.

A policeman pulls you over and leans into the passenger side window.  “Habari?”, he smiles.  Here we go again – but he quickly gets to the point.  He’d like a “soda”, or some “chai”.  Why is he telling you?  Your driver is nervous,– he hands the policeman something and whispers “I will add it to the fare”.  Has something wrong just happened?

In your hotel room, you relax – until the phone rings.  The man who sold you air-time on the street this morning has just come by to “greet you”.  Habari!  How does he know where you are staying? What does he want? How do you respond?

You haven’t made time to see the baby elephants or the giraffe centre on the outskirts of town.  Or to visit the new Caramel Restaurant that everyone was talking about.  Despite this, you were pleased to leave Nairobi.  The problem is that the man from the ministry now refuses to take your calls.  Maybe you should have held his hand?

Find out with our Prepare 4 Africa (P4A) training courses.  Designed for first-time business visitors to Africa, P4A is a hands-on, practical one-day course that will help ensure your business trip to Africa is pleasurable and profitable.  You will learn about, amongst other things: the protocol of business meetings; the importance of greetings; recognition and mitigation of corruption; personal security; the best places to stay, visit and eat in your chosen destination; how to get about safely and quickly; and the language of negotiation.  Courses can cater for one to ten people and are delivered by experienced lecturers in African cultures.  Please contact us on enquiries@prepare4africa.com or visit our website www.prepare4africa.com for further details.

Dispatches From Africa

Nairobi City2

Kenya: Illusions of Progress

Julian Fisher writes from Nairobi:

Eating at the self-consciously up-market Caramel restaurant in Nairobi, one could easily forget the deadly siege that took place a little over a year ago at the nearby Westgate Centre.  And that Nairobi has suffered a series of bomb attacks by the al-Shabaab terror group since Kenya launched Operation Linda Nchi in Somalia a little over three years ago.  Forget the inter-ethnic violence of 2007-08; forget the fact that the country’s president is still on trial at the International Criminal Court for his alleged role in that violence; order another bottle of wine from the reserve list, try to forget the exorbitant cost, and relax.  For this city is as much in bloom as the jacaranda trees that momentarily glorify its streets at this time of year.

In recent years, new hotels have sprung up in Nairobi to rival up-market joints in London or New York, while the number of new shopping malls completed, under construction or planned is bewildering.  Carrefour reportedly plans to open a chain of supermarkets, many of which will probably be located in these malls.  The city is littered with bill-boards for luxury apartment blocks.  Constant construction of new roads seems only to compound the problem of traffic congestion.  Surely, Kenya’s businessmen, politicians and sprawling corps of diplomats and aid workers are not sufficient in numbers and wealth to support several replicas of the now-destroyed Westgate mall and to live in an apparently never-ending supply of exclusive apartments served by the new roads?  What is the international investor community thinking?

At least part of the answer is that Nairobi’s current growth-spurt is not driven primarily by international thinking.  Much of the investment is underpinned by local entrepreneurial spirit.  Many of the new restaurants are locally-owned: it is rumoured here that the Nairobi franchise of the Emirati Caramel restaurant is owned by a well-known Kikuyu businessman from a political family.  Hence the rather odd geographical tag-line for the chain of ‘Dubai, Abu Dhabi, Nairobi’, which is vaguely reminiscent of Trotters Independent Trading Co’s ‘New York, Paris, Peckham’.  A source close to Uhuru Kenyatta tells me that the latter is dedicated to the cause of locally-driven growth.  His attempts to nurture such growth are evidently bearing fruit, but it is not without its problems.

Much of the investment is in vanity projects.  As my Kenyan taxi-driver put it to me, ‘the politicians want to have their own street stalls, like wananchi [the common man], but they want them in the form of expensive restaurants and hotels.  They want their own bomas [residential and livestock enclosures], but in the form of apartment blocks’.  This is all readily understandable and not a phenomenon unique to Kenya or Africa.  But it is crowding out badly needed investment in agriculture, extractive industries and manufacturing, from which further wealth could be created and economic growth sustained.  Some investors seem to have decided to skip the primary and secondary stages of economic evolution and leap to the tertiary.  This will not tackle high rates of unemployment, turn Kenya from a recipient of food aid to a major food exporter, or curb the cringing prevalence of poverty even in the city centres.

Make no mistake: Kenya’s problems have not been spirited away by its economic resurgence.  The street-kids – that unlovely remnant of the Moi years, more or less eradicated in the Kibaki years – are making a comeback.  The gap is ever-widening between the haves and the have-nots in Kenya.  And ethnic resentment against the joint-ruling Kikuyu and Kalenjin is deep-seated and growing.  It is whispered, but it is there, with who knows what potential for future conflict.  The international oil companies have made their bids for oil-blocks on the border with Somalia but are reluctant to commence drilling for fear of the prevalent insecurity.  And al-Shabaab has not gone away, albeit that it has been relatively dormant in recent months.

Such problems might be addressed in part by a ripple-effect from growth.  But the most immediate ripple-effect of the current wave of investment in the superficial is likely to favour the country’s rapidly growing man-guarding industry.  Let’s hope the service provision from the numerous security companies is improving just as rapidly.  Otherwise, all those shiny new restaurants, hotels and apartment blocks may be little more than so many new potential terrorist targets. The jacaranda’s bloom is very short-lived.