Africa Digest - August 2019

India's Mozambique Gas Investment Cleared

A consortium of Indian firms and their partners in late June made the final decision to invest $ 20 billion to build a liquid natural gas terminal in Mozambique for the Rovuma Offshore Area 1 gasfield. Indian firms hold 26% share in the investment. The first gas shipments are expected in 36 to 48 months from now. Rovuma has over 2 trillion cubic metres  of gas, equivalent to roughly 70 years of India’s present annual gas consumption. The terminal will consist of two LNG trains with a total capacity of 12.88 million tonnes per annum. 

The Indian firms’ roughly $ 5 billion share of the investment will make it the single largest Indian investment in Africa. 

On June 4th a group that included India’s home, external affairs, finance and petroleum ministers met to clear the investment before its expected approval by the cabinet committee on economic affairs. Including a six per cent share that it owns jointly with Oil India, ONGC Videsh has a 16% share. Bharat Petroleum controls an additional 10% through a subsidiary. The lead partner in the venture will be Total, thanks to a sell-off by the original promoter Anadarko.

The final investment decision announcement noted 86% of the terminal’s capacity was already committed in long-term contracts to clients in Japan, Indonesia, France and China.

However, India looks set to end its long-standing investment in the Greater Nile Oil Project in Sudan. ONGC Videsh bought a quarter share of the Sudanese oilfield in 2003. However, the Sudanese government has not paid for oil it is lifting since 2011. In May, ONGC and the other foreign partners, China’s CNPC and Malaysia’s Petronas, formally told the Sudanese government of their intention to exit from the oilfield. The three foreign firms own 95% of the firm. ONGC Videsh’s August financial statements set aside about Rs 6 billion to cover the losses. 

The project had come under international scrutiny because of Sudanese human rights issues. Security reasons led to the oilfield being shut down for five years. Khartoum in the meantime declined to extend the company’s license after it expired in 2016. Production resumed only this year. Sudan was taken to an arbitration tribunal earlier this year over its arrears. 

Mozambique's President Filipe Nyusi signed energy and security agreements with Russian's Vladimir Putin early in August as part of its continued attempt to woo more foreign investors in the run up to its signing a peace agreement with the domestic Renamo insurgency. Despite the strong Soviet support for the Mozambican anti-colonial insurgents that today rule the country, Nyusi was the first leader to visit Moscow in two decades. Bilateral trade between the two countries was $115 million in 2018.


Ghana, the Gold Coast Again

Ghana is the biggest gold producer in Africa, officially over taking South Africa last year. The West African state mined 4.8 million ounces of the yellow metal as compared to South Africa’s 4.2 million, capping a trend that had been evident for some years. 

Fifteenth century European traders who encountered the coastal area of Ghana dubbed the region the Gold Coast because of the wealth of its local kingdoms, notably the Asante. When it became a British colony it carried the name Gold Coast until independence. South Africa officially has six times more gold reserves than Ghana. But regulatory policies and labour issues have increasingly made mining companies reluctant to invest there. West African countries, led by Ghana, are now seen as the future of gold mining in the continent. 

Even the South African Public Investment Corporation, the country’s $ 150-billion pension fund, has said it preferred mining investments in West Africa. Lebohang Sekhokoane, the Fund’s mining analyst, was quoted as saying he saw long-term investment potential in low-cost deposits in Mali, Burkina Faso, Guinea and Ivory Coast.


African States Rated for Fiscal Flexibility

Moody’s recently rated African countries on the basis of their ability to absorb potential negative economic and financing shocks through increased spending. Rwanda, Cameroon and Cote d’Ivoire were rated as having high levels of flexibility when it came to government spending. Namibia, Mauritius, South Africa and Ghana, however, have 80 per cent of their budgets committed to mandatory spending. Namibia and Ghana have additional financial risk because of the weakness of their government’s finances. Moody’s said they would struggle to consolidate their budgets and stabilise debt in the case of an external economic shock. 

David Rogovic, the report's co-author, said, “Expenditure cuts are often less complex to implement quickly than revenue-raising measures…The credit risks associated with lack of spending flexibility are most pronounced where it coincides with higher debt burdens and for those whose fiscal metrics are more vulnerable to shocks."

The president of the Africa Development Bank, Akinwumi Adesina, said his organisation would be reviewing growth prospects for Africa in light of increased external risks. The bank presently forecasts growth of 4 per cent in 2018 and 4.1 per cent in 2019. “You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the US and China. All these things can combine to slow global growth, with implications for African countries,” he said. Africa needed to trade more with each other and add value to their agricultural production to buffer themselves against global uncertainty, said Adesina. The trade war was particularly concerning as it could mean a drop in Chinese demand for African exports and less Chinese investment in the continent.


Angola's Mammoth Privatisation Drive

Oil-rich Angola will launch one of the biggest privatisation drives ever carried out in Africa later this year. The ambitious plan will cover 190 state-owned enterprises including 32 major firms and will last until 2022. Angola’s debt equals to 80% of its GDP, double the rate five years ago. Slumping oil prices have put pressure on its finances.

The Privatisation Programme, or ProPriv, will encompass the country’s ports, airlines, banks, insurance firms, medical centres, some of the energy assets of the state-owned oil and firm Sonangol, among other government holdings. Some of the firms will be sold off by public tenders, others will be offered through stock market auctions. 

Chinese firms, already well ensconced in Angola, are expected to be major beneficiaries. For example, the government plans to sell its stakes in two joint ventures Sonangol has with China International Fund. The Fund is expected to be a major player in the privatisation programme because of its large footprint in the Angolan oil and gas industry. Many of Sonangol’s overseas assets will also be put on the block.


Visas for Chinese Made Easier


Chinese nationals can now arrive in 27 African countries without applying for a visa beforehand, says a study on Chinese migration to Africa. The numbers of Chinese staying in Africa is difficult to ascertain but the Migration Policy Institute estimates them to be between one to two million. There is also no clear link between visitor numbers and the degree of Chinese investment in the country concerned. The primary reason for increased Chinese movement seemed to be an overall improvement in bilateral relations that included more flights, easier visa rules and greater tourist interest. 

The countries with the easiest visa rules for Chinese are concentrated in a band along the Indian Ocean coast running from Somalia south to Mozambique with a smaller concentration along the northeast coast between Morocco and Guinea. South Africa, Angola, Madagascar, Nigeria, and Mauritius are among the countries with particularly large Chinese communities.

The report say that while labour migrants constitute the largest single group of Chinese migrants, they are otherwise “diverse in their provincial origin, their length of stay, socioeconomic class, occupation, and age.” 

South Africa granting of 10-year multiple-entry BRICS visas proved especially beneficiary to China and the diaspora there now numbers nearly a half-million. Indians were among the four countries which received a similar benefit. Many African countries take a lax view of Chinese visa infringements. For example, a 2015 estimate suggested one-third of Chinese nationals overstayed their visa in Zambia without consequence.

Saudi Arabia’s attempts to replace foreign workers with local labour has been economically especially damaging to Ethiopia. Over the past two years, Saudi Arabia has arrested, deported or fined for overstaying three million migrants, many of them illegal. The bulk of these migrants are from Ethiopia and Yemen. A report say increased numbers of unemployed visible in the streets of Addis Ababa and elsewhere are being linked to the return of Ethiopian workers from the Persian Gulf. There are no clear numbers, but hundreds of thousands are believed to have returned to Ethiopia as a fallout of the new policies. Saudi Arabia has committed to invest $ 2 billion aid and investment in part to help Ethiopia overcome the social and economic consequences. But the economic fallout will pose another challenge for the reformist Ethiopian president, Abiy Ahmed, as he faces elections in a few years’ time. 

An All-Party Parliamentary Group in Britain issued a report confirming Africans are twice as likely to be denied a visa as applicants from Asia and West Asia and over six times more likely than an applicant from North America. Rejection rates for Africans, between 2016-2018, were 27 per cent as compared to 11 per cent for Asians.


Huawei Spying Scandal

Huawei, the controversial Chinese telecom firm, was accused of helping officials in Uganda and Zambia to spy on their political opponents. 

The Wall Street Journal article detailed how Huawei technicians helped Zambian security officers to get access to social media accounts of the opposition. Among other acts, the Chinese firm helped Zambian officials to spy on opposition bloggers running a news website critical of President Edgar Lungu. In Uganda, Huawei helped the government crack the encryption of chat groups organised by Bobi Wine, a musician and opposition parliamentarian. In addition, concerts by Wine were disrupted by spyware provided by Huawei. 

Huawei and the governments of Zambia and Uganda issued separate denials of the story. A Ugandan presidential spokesman denied the claim, adding “Why spy on Bobi Wine?” Huawei’s spokesperson complained that “The publication of these false statements has and will continue to damage Huawei’s reputation and business interests across the globe.”


Nigeria Set to be Polio-free

On August 21, Nigeria marked three years since it has reported a case of polio. With this milestone, Nigeria should be designated polio-free by the World Health Organisation in a few months. If the disease is officially declared gone in Nigeria, the entire continent of Africa has a good chance of being declared polio-free by 2020. 

Even seven years ago, Nigeria accounted for half of all polio cases in the world and was, along with Afghanistan and Pakistan, one of the three countries where polio was treated as a threat by the WHO. Nigeria is now set to be removed from this list. Nigeria has reached this point thanks to the concerted efforts of a broad array of vaccine advocates, including northern Nigeria’s traditional and religious leaders, a network of 20,000 women who have stepped up to take the oral form of the vaccine door to door, and polio survivors themselves.

In another breakthrough, Ethiopia planted more than 353 million seedlings in a week last month, easily breaking the world record set by India in its 2017 mass reforestation drive when it planted over 300,000. Prime Minister Abiy Ahmed joined soldiers, workers and students across the country in the planting and is party of Ahmed’s Green Legacy Project. Ethiopia plans to plant 4 billion trees by the end of this year’s rainy season and rollback a century’s loss of almost 85 per cent of the country’s forest cover.


South Asian Drug Behind Africa's Opioid Crisis

While the opioid crisis in the United States is garnering attention, Africa is home to a similar problem of widespread addiction to an over-the-counter opioid drug called tramadol. While tramadol is relatively mild, an illegal variant going under similar sounding names like Tramal but mixed with hashish and other toxic substances is becoming a major social problem in many parts of Africa and West Asia.
According to most reports, is manufactured in India and Pakistan, trafficked to hubs in Nigeria, Ghana and Egypt before being smuggled to the rest of the continent. Favourite intermediary areas are regions where terrorist or insurgency groups operate and, therefore, there is minimal control. The degree of abuse in many parts of Africa is remarkable. One study showed that 50 per cent of the adults in the Cameroonian city of Garoua are tramadol users. The United Nations says African terrorist groups are also involved in the trade to help finance their activities. One reports says refugees fleeing Boko Haram have taken to using illicit tramadol to handle their trauma.

The Indian government placed tramadol under controls in April 2018 but has yet to address the issue of production of its more dangerous derivative products.

"Reports, quoting Indian police, say that illegal tramadol is smuggling into India from Pakistan, especially across the Punjab border."


More Direct Flights to Africa

Air connectivity between India and Africa improved with the launch of three new air services. Air Tanzania introduced a three times a week flight between Mumbai and Dar es Salaam in July. Air India announced its intention to resume Mumbai-Nairobi flights in September. Ethiopian Airlines will start a service between Addis Ababa and Bengaluru from October. Direct flights between India and Africa remain rare with 80 per cent of traffic going via hubs in other parts of the world. There are direct flights between India and only seven African countries.


Remembering Africa's Goan Diaspora

Both the British and Portuguese empires recruited Goans to help administer their colonies in Africa. Other Goans simply migrated to places like Mozambique to seek work. Many of the Portuguese-speaking African countries but even the Anglophone East African states continue to have small groups of Indian-origin with roots going back to Goa. 

A review in the Mint newspaper recently looked at a set of books on some prominent African Goans and the experiences of that community that have been translated into English for the first time. Aquino de Braganca was a prominent member of the freedom movement in Mozambique and died in the 1986 airplane accident that claimed the life of independent Mozambique’s first president, Samora Machel. Nelson Mandela was among those who hailed de Braganca’s role in the anti-colonial movement, saying he “prepared the ground”. Another Goan-origin anti-colonialist was Pio Gama Pinto who campaigned for Kenyan independence. More tragic was the case of Sita Valles, a Goan-origin but Angolan-born communist campaigner for independence who was eventually murdered during a 1977 internal purge by Angola’s communist regime.




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About the Author

Pramit Pal Chaudhury

Pramit Pal Chaudhuri, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta Aspen Centre

Pramit Pal Chaudhuri writes on political, security, and economic issues. He previously wrote for the Statesman and the Telegraph in Calcutta. He served on the National Security Advisory Board of the Indian government from 2011-2015. Among other affiliations, he is a member of the Asia Society Global Council, the Aspen Institute Italia, the International Institute of Strategic Studies, and the Mont Pelerin Society. Pramit is also a senior associate of Rhodium Group, New York City, advisor to the Bower Group Asia in India, a member of the Council on Emerging Markets, Washington, DC, and a delegate for the Confederation of Indian Industry-Aspen Strategy Group Indo-U.S. Strategic Dialogue and the Ananta Aspen Strategic Dialogues with Japan, China and Israel. Born in 1964, he has visited over fifty countries on five continents. Mr. Pal Chaudhuri is a history graduate from Cornell University.