15 June 2016.
Memo on Southern Africa: RSA, Angola, Mozambique and Zambia.
Summary of items in this issue:
1. Angolan President’s daughter appointed to head state oil company caused controversy.
2. ANC under pressure from different directions: workers and IMF.
3. Uncertainty in Zambian presidential election due for August amidst floundering economy.
4. Mozambiquean economy struggles due to hidden debt, corruption and terrorism.
1. The President dos Santos of Angola appointed his daughter as chairwoman of the state oil company. Miss dos Santos already has a $3 Bn fortune. This move has sparked outrage in the blogosphere. There is no free press. A legal challenge will be mounted. It is unlikely that the decision will be reversed. The courts are not in the habit of issuing rulings that displease the president. Dos Santos has been in office since 1979 and is the second longest serving president in Africa. He shows no signs of being willing to loosen control. He is possibly grooming his daughter to succeed him. His party – the MPLA – has a firm grasp on power. The major opposition party UNITA – is unlikely to win office any time soon.
The recent rise in oil prices is one of the few pieces of good news on the horizon for Angola.
2. Local elections are coming in South Africa in August. The economy is tanking and the country is in need of a loan from the IMF. The deeply unpopular Finance Minister may be compelled to make further cutbacks. The ruling party (the ANC) is facing demands from workers for better pay and job security. There is a law requiring that 25% of all mines must be black owned. This deters foreign investment. The ANC might wish to change the law but fears a backlash from the black working class which is a loyal ANC constituency.
The ANC is being outflanked on the left by the Economic Freedom Fighter (EFF). The EFF is led by a populust former ANC youth leader Julius Malema. The ANC also faces a challenge from the Democratic Alliance (DA). The DA was previously seen as a party for whites but now has a black leader. The DA is more business friendly. The ANC faces a dilemma on where to position itself. Despite its travails the ANC is likely to win the local elections albeit with a reduced majority. The ANC will postpone any tendentious decisions until after the election.
3. A presidential election is scheduled for August. The incumbent is facing a strong challenge from a candiate known as HH who is supported by other opposition parties. The economy is in the doldrums and this may lead to an opposition candidate winning. It seems wide open. Severe economic difficulties have led to sitting presidents being voted out twice before.
The Kwacha (Zambian currency) is losing value. Copper – a crucial export – has a low world price. This is partly owing to the Chinese economic slowdown.
Unemployment is on the rise. Some people have scapegoated Rwandan immigrants.
4. Mozambique’s economy is in deep trouble. External debt has been revealed to be $9 Bn and not $7 Bn as previously thought. A lot of public money has vanished. The currency is falling in value. Renamo has stepped up its violent campaign particularly in the centre of the country.
Mozambique has a fishing fleet for tuna. The fleet consists of 24 new French-built boats. The EU is a vital market for Mozambique’s tuna. There is some dispute as to whether the boats meet EU standards. If they do not then they country cannot sell its catch to the EU.
A trade deal with the USA has been a fillip for the economy. However, local producers are being driven to the wall.
IMPLICATIONS FOR BUSINESS IN GENERAL
The whole region is likely to experience economic contraction this year. Local currencies will fall in value. The Rand will not tumble as much as the others. Local currencies will probably rise again in August after election results are in.
Rising oil prices are bad news for all countries there except Angola since it is an oil exporter.
IN OTHER NEWS.
Billions of dollars have disappeared from the Zimbabwean state coffers.