GENERAL NEWS

Sinking currencies reflect grim African prospects

OPINION

Source: Reuters

By Ed Cropley

9 September 2015 - A slump in commodity prices and flight by global investors from risky "frontier" markets has hammered currencies and state budgets across Africa, increasing dollar borrowing costs and raising the prospect of political instability.

From Nigeria and Ghana in the west to Kenya in the east and South Africa and Zambia in the south, currencies have all fallen against the dollar, and in many cases crashed through historic lows plumbed in the 2008-09 financial crisis.

Things took a turn for the worse in mid-2014 when prices of oil and other commodities, the export mainstay of many African economies, dived largely due to a sharp slowdown in one of the biggest consuming countries, China.

This accelerated a flow of funds out of frontier markets, a less developed set of emerging markets, as investors anticipated a rise in U.S. interest rates which has yet to happen.

Although the decline in prices and prospects has been less precipitous than during the global crisis, the fallout from China could be even worse for Africa since state finances have failed to recover from the last upheaval.

African budgets were broadly in balance before the crisis but this year governments are on track for an average fiscal deficit of 4.2 percent of GDP, almost twice the shortfall in 2010, according to Barclays Africa.

As such, they have no scope to boost spending to counteract slowing growth. "The economic fundamentals of the region are much weaker than back in 2008, which makes riding this current storm so much more challenging," said Barclays Africa regional economist Ridle Markus.

Africa's growth era of the 2000s, fuelled by high commodity prices, improved governance and the spread of technology such as the mobile phones, is fading fast. The IMF now predicts average sub-Saharan economic growth of 4.4 percent for 2015, down from the 5.8 percent forecast a year ago.

South Africa's rand, Zambia's kwacha, Uganda's shilling, Tanzania's shilling and Ghana's cedi have all set record lows in the last three months.

Nigeria, Africa's biggest economy and top oil producer, has limited the naira's losses only by freezing its foreign exchange market, a move that cost it inclusion this week in an influential JP Morgan bond index.

RISING DEBT

More worryingly, government debt is climbing steeply, threatening another driver of growth: the debt forgiveness a decade ago which freed up funds for social and infrastructure investment, rather than interest payments.

Although domestic capital markets have been slowly deepening, much of the growth in borrowing has been in dollars as African governments tapped Eurobond markets awash with cash printed by the U.S. and European central banks.

Ghana, a Eurobond trailblazer in 2007, has issued two more dollar bonds since then. It has plans for another $1.5 billion issue this year, putting its public debt at around two thirds of annual gross domestic product - well above levels before Nelson Mandela and anti-poverty activists Bono and Bob Geldof persuaded the rich world to forgive Africa's crushing debts.

Zambia, until recently Africa's top copper producer, has also been piling into the Eurobond market, most recently in July when it had to pay a hefty 9.375 percent for a $1.25 billion bond earmarked to finance a yawning deficit.

With the kwacha down more than 20 percent since the bond was issued, the effective local cost of servicing that debt is now over 30 percent, squeezing out other spending in a budget already under pressure from the collapse in copper prices.

BAD HABITS

Elections are due in both Zambia and Ghana next year, raising suspicions that some African countries are slipping back into the bad old habits of borrowing to fund vanity projects and political ambition rather than long-term growth.

"There is a concern with a lot of the African dollar debt market," said Anders Faergemann, senior sovereign portfolio manager at PineBridge Investments. "We have this return of original sin with potential for sharp devaluation in local currencies and the governments still having to pay back in dollars."

With African populations growing faster than their economies can create jobs, analysts expect the squeeze on state spending to spill over into political unrest at some point.

New York-based DaMina Advisors has even developed an African "Commodity Price Collapse Instability Index" - nicknamed Hades - based on its estimate that 87 percent of African government revenues are directly or indirectly linked to commodities.

DaMina lists three states - South Sudan, Libya and Central African Republic - as being at "extremely" or "very" high risk of collapse, and a further five - Equatorial Guinea, Chad, Democratic Republic of Congo, Lesotho and Guinea - as high risk.

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DRC

UN says rights violations escalating in Congo ahead of elections

NEWS STORY

Source: Reuters

By Aaron Ross

Kinshasa, 9 September 2015 - The United Nations said on Wednesday human rights violations by authorities in Democratic Republic of Congo are escalating ahead of a round of elections during which President Joseph Kabila is set to step down.

The U.N. Joint Human Rights Office (UNJHRO) documented 24 election-related violations in August, including arbitrary arrests and threats, compared with 14 such incidents in July, said the director of the office Jose Maria Aranaz.

Journalists were targeted in eight cases while the same number involved activists, the U.N. body said, without giving details on the remainder.

"This has a negative impact on the credibility of elections ... and it confirms a worrying trend," Aranaz told Reuters after a news conference.

"The UNJHRO remains deeply concerned about the restrictions on liberty of expression in the country and the security of those who express criticisms of the government and its actions," he said.

Political tensions in Congo are rising before local, provincial and national elections over the next 14 months, meant to culminate in a presidential vote in Nov. 2016.

Kabila, who took power after his father's assassination in 2001, is required by the constitution to stand down, but critics accuse him of trying to hold onto power. At least 40 people were killed in anti-government protests in January.

Kabila has refused to comment on his political future, although a spokesman has said he intends to respect the constitution.

Aranaz said he was alarmed by abuses by Congo's intelligence agency, which was responsible for nine of the 24 violations.

Domestic and international rights groups have accused the government of using the intelligence service to jail and intimidate political opponents and young activists.

Four young activists in the eastern city of Goma could be sentenced to three years each in prison on Friday after they were arrested in April for encouraging local residents to protest the detentions of fellow activists.

The government did not comment on the U.N. statement but has previously said that law enforcement only targets people who break the country's laws and that any arrests are not politically motivated.

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RWANDA

Rwanda court agrees to hear case to block president's third term

NEWS STORY

Source: Reuters

By Clement Uwiringiyimana

Kigali, 9 September 2015 - Rwanda's Supreme Court said it would hear a case brought by the main opposition party that aims to block changing the constitution to allow President Paul Kagame to run for a third, seven-year term.

The debate about term limits has flared in several countries in Africa. The United States, a major donor to Rwanda, said last week it was concerned by the country's decision to set up a commission that could lead to changing the constitution.

Judge Immaculee Nyirinkwaya, who heads a panel of eight judges, said the Supreme Court rejected the government attorney's argument that the case should be thrown out and the next hearing was set for Sept. 23.

The Democratic Green Party, the tiny but main political opposition group in a nation where rights groups and activists say opponents of the ruling Rwandan Patriotic Front are stifled.

Officials dismiss such charges, saying the government guarantees free speech.

Kagame, a rebel leader-turned-statesmen, has won international praise and local popularity for rebuilding the small nation after it was shattered by genocide in 1994, when 800,000 mostly Tutsis and also moderate Hutus were massacred.

But Washington and other donors have voiced concerns about moves to change the constitution, pointing to the political crisis that rumbles on in neighboring Burundi after President Pierre Nkurunziza secured a third term in a disputed election.

The U.S. State Department said in a statement on Sept. 4, "We do not support those in positions of power changing constitutions solely for their political self-interest."

Rwanda's parliament, controlled by Kagame's supporters, backed a motion in July to let Kagame run again, a move expected to lead to a referendum on the constitution.

That decision followed the submission to parliament of a petition supporting a change signed by 3.8 million people in the country whose population is about 12 million.

Kagame has not directly said he wants to run again but has said he was open to persuasion about changing the constitution.

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BURUNDI

Two killed in Burundi army clashes

NEWS STORY

Source: AFP

9 September 2015 - Burundi troops have killed two gunmen in separate clashes in recent days, the army said Wednesday, the latest unrest following the president's controversial re-election.

Army spokesman Gaspard Baratuza said that "unidentified criminals" had staged attacks on military posts, including on Tuesday night, when one gunman was killed in the rural district of Buringa some eight kilometres (five miles) southeast of the capital Bujumbura.

Tensions remain high following President Pierre Nkurunziza's successful bid for a third term in power in July.

Gunmen also attacked a military post in Gihanga, some 15 kilometres (nine miles) northeast of Bujumbura overnight Sunday.

"There was an exchange of fire as a criminal group wanted to rob the people, a criminal was killed," Baratuza added.

Witnesses, who asked not to be named, said that in both attacks the gunmen were well armed and dressed in military uniforms.

Nkurunziza won a highly-controversial third term in July in polls the United Nations said were not free or fair. His bid sparked an attempted coup and months of civil unrest led by opposition groups, who condemned his re-election bid as unconstitutional.

There has also been a string of killings since his re-election, including the assassination of his top security chief in a rocket attack last month.

Many have raised alarm bells at the risk of renewed conflict in Burundi, which lies in the heart of central Africa's troubled Great Lakes region. At least 300,000 people were killed in a civil war there which ran from 1993-2006.

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UGANDA

Opposition says Uganda government trains militias to harass them

NEWS STORY

Source: Reuters

By Elias Biryabarema

Kampala, 8 September 2015 - Uganda's opposition and rights groups on Tuesday accused President Yoweri Museveni's government of training militias to intimidate opposition supporters during next year's elections, a claim denied by the government.

In recent weeks, Ugandan police have been training thousands of civilian youths across the country as "crime preventers" to help with intelligence gathering and security among the local population.

Shaban Bantariza, deputy government spokesperson, said the young men being trained were part of community policing efforts, adding: "There's no militia either existing or being trained anywhere in Uganda".

But the opposition fears the newly-trained contingents could be used to prop up veteran leader Museveni, who is seeking another five-year term in the polls due to be held between February and March 2016.

"Museveni wants to use these militias as a weapon of terror to coerce opposition people into submission," opposition legislator Medard Lubega Sseggona told Reuters. "Whenever Museveni feels threatened he resorts to violence."

Nicholas Opio, executive director of the Chapter Four group that champions civil liberties, said Museveni was creating a civilian "parallel force" that has no hierarchy or clear command to be used in elections.

"They can commit crimes and they can't attributed to the government," he added.

Last month, NTV Uganda local television carried a report in which retired major and presidential advisor Kakoza Mutale was shown training hundreds of youths at a camp in central Uganda.

Mutale said in the report the youths would ensure Museveni wins in the coming election.