Democratic Republic of Congo
DRC parliament votes to end power monopoly
The Senate of the Democratic Republic of Congo (DRC) voted on 15 November 2013 to end the monopoly of state-owned Société Mationale d'Electricité (SNEL), a week after the lower chamber of parliament had voted on the Electricity Sector Liberalisation Bill.
Among other things, the Bill allows for the entry of private operators into the sector. Jean-Pierre Nenyenge, chairman of the Senate's Infrastructure and Territorial Development Committee, said that competition would improve working conditions in the sector and help to bring electricity to DRC's urban, semi-urban, and rural areas. It is currently estimated that only 9% of the DRC population have access to electricity.
SNEL's poor finances have inhibited much-needed investment in the DRC power sector. While the opening-up to private investors will not be a panacea, similar reforms in peer countries have brought tangible results. One example is Ugandan power-distribution company Umeme, which was sold to a consortium of British and South African investors in 2004. Since it took over the distribution business in 2005, the company has reportedly reduced losses from an estimated 38% at the time to around 26% in 2012. While SNEL's strong incumbency position and political ties may deter some players, DRC's strong hydropower potential and demand conditions should attract investment into the power sector.
Gambia breaks off diplomatic relations with Taiwan in likely expectation of greater funding from China
· Gambian president Yahya Jammeh announced on 14 November that he has broken off diplomatic relations with Taiwan with immediate effect for reasons of "strategic national interest". Jammeh's announcement makes Gambia the first country to cut diplomatic ties with Taiwan since President Ma Ying-Jeou took office in 2008 on a platform of strengthening trade and tourism links with China.
· It leaves Taiwan recognised by just 22 countries, including only three in Africa, where it was once supported by a majority of states and responded by pouring in investment. President Ma visited Gambia in 2012 and his country has heavily backed the African country's health, education, agriculture, and infrastructure sectors, most recently funding the USD22-million construction of a 42-kilometre road linking the western part of the tiny country to the capital Banjul.
As is customary with decisions made by the president, there is no explanation of why he has decided to cut ties with a country he formerly called "one of the best friends that Gambia has ever had". It seems highly likely, however, from the reference to strategic national interest that Jammeh is now expecting Gambia to become a beneficiary of the billions of dollars China has been pouring into Africa in recent years.
· Gambia cannot afford to lose Taiwanese support without adequate replacement, as the European Union has withheld USD60 million in development aid until Gambia conducts human-rights reforms, which Jammeh has firmly stated he will not do. Gambia will also lose support from the Commonwealth Fund for Technical Co-Operation after suddenly pulling out of the Commonwealth on 2 October without prior warning.
Ghana reduces payment delay risk with VAT increase, but fiscal pressure remains a factor
Ghana has increased value-added tax (VAT) by 2.5% in a last-minute change to a tax bill passed by Parliament on 15 November 2013, meaning the rate rises to 17.5% including a 2.5% National Health Insurance Scheme levy. The 2.5% increment was proposed as an amendment to the VAT Bill, revising and consolidating the existing law, which had already gone through first, second, and consideration stages in the legislature.
· Proposer Cassiel Forson, the deputy minister of finance, said the increase would not be devoted to consumption, but would go entirely towards supporting the capital development part of the 2014 budget, submitted by Finance Minister Seth Terkper on 19 November. From 2015 onwards, all revenue derived from the increase will go into an infrastructural development fund solely for investment projects.
· The opposition New Patriotic Party described the tax as "robbing Peter to pay Paul" as it came just five days after the government agreed to reduce by one-quarter the 78.9% rise in the electricity tariff in the face of union threats of strike action.
Ghana is under immense pressure to curb its soaring budget deficit, which reached 12.1% of GDP in 2012, and will exceed a target of 9% for 2013. This has necessitated a raft of tax increases, including a 5% fiscal stabilisation levy on the profits of companies in key sectors, and utility tariff rises. Further tax increases are likely, but longer-term damage is being inflicted by non-payment to government contractors.
· Construction of the Atuabo gas plant, critical to the country's energy infrastructure, was held up for months by a payment delay of over USD400 million to contractors. Delays to projects such as this harm Ghana's future tax-collection capabilities. The VAT increase is forecast to raise GHS745 million (USD330 million) in 2014, which will mitigate the prospect of payment delays, but the wide range of projects in hand and ongoing fiscal pressure mean the risk will remain elevated in the one-year outlook.
Expansion of Namibian port opens export opportunities for regional coal, copper producers despite risk of delay
The Namibia Ports Authority (NPA) on 11 November secured a USD338-million African Development Bank (AfDB) loan, which is to be used to triple the capacity of Walvis Bay container terminal, on the coast west of the capital Windhoek.
· The loan follows the opening of a 195-metre-long Panamax floating dock at Walvis. Under the expansion plans, handling capacity will be increased from the current 350,000 containers a year to one million containers a year in 2017. The expansion is due to start in February 2014.
· On 8 November, the NPA awarded the construction contract to China Harbour Engineering Company (CHEC), a subsidiary of Chinese state-owned enterprise China Communications Construction Company (CCCC) Group. Six other bids for the contract were rejected. In July, the AfDB also granted USD2.3 million to the Namibian government to fund the acquisition of new equipment and the training of operators at the Port of Walvis Bay. The Namibian government's National Development Plan aims to establish the country as a regional transport infrastructure hub by 2017.
Within the regional Southern African Development Community (SADC), exports of coal, copper, platinum, and diamonds from landlocked countries such as Botswana, Zambia, Zimbabwe, and the Democratic Republic of Congo (DRC) are likely to benefit from the expansion of Walvis Bay port in the three-year outlook. The two largest economies in SADC, South Africa and Angola, are less likely to use Walvis Bay, as both have their own cargo terminals. Namibia's mineral own exports include uranium, zinc, diamonds, manganese, and copper. The main threat to the project's timeline and feasibility is industrial action from increasingly belligerent labour unions.
· The Mineworkers' Union of Namibia (MUN), in particular, has stepped up industrial action since 2011, increasing the risk of contagion to port worker and construction worker unions. Non-payment risk of the AfDB loan is likely to be low, despite lower mining output in 2013. Most of Namibia's borrowing is on domestic markets, while external liabilities face low risk of servicing problems. IHS classifies Namibia's medium-term sovereign credit rating at investment grade BBB- due to the country's solid liquidity position, modest external debt levels and strong potential for expanding its foreign-exchange earnings.
Disbanding of South Sudan's ruling party highlights president's attempts to consolidate power ahead of 2015 elections
· On 15 November 2013, President Salva Kiir Mayardit announced that as chairman of the ruling Sudan People's Liberation Movement (SPLM), he is dissolving the party's structures. Kiir said the move – which disbanded the SPLM's highest executive body, the Political Bureau, as well as the National Liberation Council – was prompted by the delay of the SPLM's third national convention, originally scheduled for May 2013.
· On 17 November, Information Minister Michael Makuei Lueth criticised media reports for misinterpreting the president's public announcement, explaining that Kiir will disband the SPLM's structures once his initiatives for reorganising the party are under way. The president plans to appoint a special committee to restructure the party from grassroots level. Former vice-president and SPLM deputy chair Riek Machar Teny Dhurgon criticised the president's move as a violation of the party's constitution.
President Kiir's apparent disregard for South Sudan's "liberators" raises the risk of popular backlash, given that most of the SPLM leadership are still revered as war heroes. The president's move also increases the likelihood of the SPLM splintering, with Kiir's opponents, like Machar and Amum, creating rival parties. However, the narrowing of the political space for any opposition increases the risk of violence between rival groups, particularly ahead of the 2015 election. Competition for political influence is likely to be acute within Machar's home area, including the oil-rich Jonglei state, thus posing a risk of disruption to the government's auctioning of oil blocks scheduled for 2014.