Côte d'Ivoire

  • Côte d'Ivoire's Directorate General for Taxes has revealed new revenue targets for 2014 which will be underpinned by, among other initiatives, an increase in tax on the profits of telecoms operators from 25% to 30%.
  • According to the report by Reuters on 5 February, Pascal Abinan, head of the directorate, set the target for 2014 at 1.6 trillion West African CFA francs (USD3.30 billion), up from XOF1.4 trillion (USD2.90 billion) in 2013.
  • Increasing tax receipts is part of President Alassane Ouattara's broader plans to boost government revenue in order to undertake large-scale infrastructure and socio-economic projects ahead of the October 2015 presidential elections.
  • In addition to the proposed increase on profits tax in the telecom sector, telecoms operators will face pressure to invest in government bonds to be launched in the course of the year.
  • The government is also seeking to sell its stakes in 15 companies in various sectors including banking, agriculture and mining, listed on the Bourse Regionale des Valeurs Mobilieres (BRVM), a regional exchange based in the country's capital, Abidjan.
  • Significance 

The risk of tax increases spreading to other sectors such as mining and energy is moderate in comparison to telecom operators, who are often perceived as sitting on a huge pile of cash and disposed towards repatriating profits outside Côte d'Ivoire.

  • Though tax increases risk to the mining and energy sectors are only moderate given the government's interest in attracting more foreign investment and expanding the sector, mining firms are also likely to face pressure to invest in government bonds as a means of retaining some of their profits inside the country.

Democratic Republic of Congo

  • On 22 January 2014, the plenary session of the DRC National Assembly approved the bill for the liberalisation of the power sector, and transmitted it to the head of state for promulgation.
  • Once the law is signed into effect, which is likely to happen by the end of February 2014, it will open the sector up to private investors and free market competition, essentially ending the state electricity company's (Société Nationale d'Electricité: SNEL) de facto monopoly of power generation, transmission, and distribution.
  • Civil society and industry groups in the DRC have long lobbied for the liberalisation of the power sector, criticising SNEL's patchy service delivery record. Only 9% of the national population has access to electricity, with 30% of urban residents and under 1% of rural areas covered.
  • Customers have been increasingly vocal about persistent supply failures. In October and December 2013, local residents and mine workers in Katanga province protested against power outages of several weeks.
  • Alongside power sector liberalisation, the government has planned to rehabilitate degraded infrastructure, including the transmission grid, and to expand the Grand Inga dam project with the aim of enhancing supply to the mining sector and exporting power to its neighbours. By 2025, the government has pledged to provide no less than 60% of the population with access to electricity.
  • The government developed the liberalisation plan based on the premise that competition would improve power generation and delivery.  However, it is unclear if the government plans to sell shares in SNEL. Although the draft bill stipulates that the sites for new hydroelectric and geothermal installations would be classified as an "inalienable public domain", the tendering process for potential suppliers to enter the market and bid for these construction projects has not yet been specified by the authorities.
  • The legislative reform and liberalisation process is likely to have improved investor confidence in the power sector. On 29 October 2013, the government signed an off-take agreement with South Africa for DRC to sell 2,500 MW of a total 4,800 MW from the first phase of the Grand Inga hydropower project.
  • Therefore, delayed construction for the USD12-billion Inga III dam is likely to commence in 2015. In parallel, the World Bank agreed in February 2014 to fund its International Finance Corporation the construction of a 1,000-MW hydropower dam at Sounda in the Kioulou department.
  • Significance

Given the lack of clarity surrounding the bill's implementation, the new legislation is unlikely to improve power generation and supply in the mid-term outlook. The high cost of rehabilitation and vandalism of existing infrastructure, including regular theft of power cables, further undermines development prospects for the DRC's power sector.

Equatorial Guinea

  • Equatorial Guinea has started relocating the executive from the capital Malabo to the country's largest mainland city, Bata, to promote the economic and social development of the Litoral region, government spokesperson Teobaldo Nchaso Matomba announced on 12 February.
  • The planned relocation means authorities have embarked on an 'urban upgrading drive' and since January have begun to forcibly remove the local population from central slum settlements such as Etofili, Ikunde, Mbangan, Ncolombong, Newtown and Ngolo.
  • Equatorial Guinea's only legal opposition party, the Convergence for Social Democracy (Convergencia Para Democracia Social: CPDS), reported that the destruction of the makeshift houses has left residents homeless and has led to a notable rise in violent crime.
  • Due to strict media control, official statistics are unavailable, but independent journalist Samuel Obiang (no relation to President Teodoro Obiang) reported on 6 February that Bata residents could no longer leave their houses after 1900 due to fear of violent crime, highlighting four killings alone in the previous week.
  • Significance

In line with the official media blackout on rising crime, the government has not yet taken specific measures to tackle the crime wave.  The current urban upgrade programme is likely to lead to increasing incidents of police violence against local residents, in turn lowering the threshold for the use of armed violence by criminals against civilian targets in residential neighbourhoods.

  • Most at risk of armed robbery and injury will be mid-level local and expatriate staff of commercial companies across construction, hotels, oil and gas, timber, and banking sectors.


  • The Bank of Ghana (BOG) announced new rules for foreign-exchange and foreign-currency accounts on 4 February. The central bank also gave notice concerning the repatriation of export proceeds, and announced additional operation procedures for foreign-exchange bureaus in Ghana.
  • The BOG's new mode of operation for both foreign-exchange accounts (FEA) and foreign-currency accounts (FCA) mandates:
    • No over-the-counter cash withdrawals unless for travel outside the country, with a USD10,000 limit per traveller (or an equivalent amount in convertible foreign currency and relevant documentation required;
    • No cheque or cheque book issuances;
    • No transfers between foreign-currency-denominated accounts; and
    • No foreign-exchange sales by authorised dealers to credit customer FEA or FCA.
  • For foreign-currency-denominated loans, the BOG now requires banks to convert all undrawn facilities into local currency and not to grant any foreign-currency loans or facilities to customers that are not foreign-exchange earners.
  • Concerning the purchase of foreign exchange to resolve import bills, the BOG requires that such funds be credited to a margin account, which the bank will operate and manage on the importer's behalf for up to 30 days.
  • According to the BOG, these new rules will be used to "streamline the operations of these accounts", "bring about clarity and transparency in their operations", and enforce its previous notices on "the pricing, advertising receipts and payments for goods and services in foreign currency" in the country.
  • The notice also highlighted that that in accordance with the Foreign Exchange Act 2006 and its operational guidelines, all exporters are "to collect and repatriate in full the proceeds of their exports to their local banks within 60 days of shipment". Additionally, banks that receive export proceeds are to convert them into the cedi currency within five days "based on the average Interbank Foreign Exchange Rate prevailing on the day of conversion with a spread not exceeding 200 pips".
  • The BOG also authorised additional operating procedures for foreign-exchange (forex) bureaus in the country after consultations with the Forex Bureau Operators' Association. All forex bureaus are now required to computerise their operations using only BOG-approved software by 30 April and provide electronic receipts, keep electronic records and submit monthly electronic returns to the BOG.
  • Significance

The new rules for foreign-exchange transactions highlight the BOG's strong desire to contain the significant negative pressures facing the cedi currency.

  • The cedi has continued to depreciate strongly against major foreign currencies, falling by 7.8% against the US dollar by the end of January. This comes on top of its 14.6% depreciation against the greenback in 2013, compared with 17.5% in 2012, as reported this month by the Bank of Ghana.
  • The cedi's continued weakness underscores broader foreign-exchange constraints in Ghana, as strong demand for US dollars continues to outpace supply.
  • The BOG's approval on 14 January for local banks to trade the Chinese yuan aimed to ease US dollar demand as an intermediary currency for traders. However, while this could help over the longer term, given Ghana's growing import trade with China – which rose 56.5% to reach USD5.43 billion in 2012 from USD3.47 billion in 2011 – it is unlikely to significantly stem near-term pressures on the cedi.
  • Despite the BOG's announced changes, it is believed that depreciation risks for the cedi will remain strong despite the new rules.


  • Rio Tinto revealed on 5 February at the Mining Indaba conference in South Africa that it has started discussions with a string of potential partners from China and the Middle East to underwrite the development of its Simandou iron ore project, which is estimated to cost up to USD20 billion.
  • The company is seeking a consortium to fund an estimated USD3 billion of equity, to match debt finance for a similar amount to start infrastructure work. This relates to a 650km railway across Guinea from the mine's south-eastern location to a deep-water port, the cost and logistics of which have contributed towards years of delay.
  • Rio is benefitting from a drive by Chinese and Middle Eastern investors to secure stable supplies of raw materials. It has had discussions with Mubadala – Abu Dhabi's investment vehicle – the sovereign wealth funds of Kuwait and Qatar, China Investment Corporation, China Development Bank and other entities. China's Chinalco is already a joint venture partner with Rio in Simandou, holding 44.65% of the project.
  • Significance

The existing Chinese joint venture is likely to motivate Rio to source further investment from other Chinese entities in order to ease logistical challenges. Simandou's infrastructure is still planned to be half-financed by the Guinean government after it committed to making the railway and port part of a national development plan.

  • However, it is now likely that funding generated by Rio will be used to start work while Guinea continues to source its own investment, as newly appointed mining minister Kerfalla Yansané confirmed earlier this month that he expects to see the investment agreement between the two principals signed in the first half of 2014.
  • Production was originally scheduled for 2015 but in September 2013 the company was forced to delay that to 2018. It has not specified when development will start but the new sources of finance mean it is likely to begin by early 2015, starting to bring much-needed foreign exchange and revenue for Guinea.


  • Finance Minister Ngozi Okonjo-Iweala said on 10 February that USD550 million from a USD1-billion Eurobond issued last year would be devoted to ensuring the supply of natural gas for power stations as part of a sweeping privatisation programme.
  • Around USD200 million will be set aside for projects aimed at delivering Nigeria's abundant supplies of natural gas to power stations, rather than flaring enough gas daily for around 20 million households.
  • This figure is likely to be tripled by the contribution of an unnamed private equity group in the United States that has pledged USD2 for every USD1 invested by Nigeria's Sovereign Wealth Fund, which is managing the cash injection. This will primarily address the problem of rotting pipelines – which continue to be sabotaged and vandalised regularly – faced by the new private owners of the 15 formerly state-owned electricity companies that were privatised late last year.
  • The remaining USD350 million will provide liquidity to a bulk trading agency, which will act as an intermediary between generating and distribution companies.
  • Significance

Nigeria has one of the lowest per-capita power outputs globally, with the need for privately-owned generators estimated to add around 40% to the cost of doing business, while gas is flared due to a lack of infrastructure.

  • The government is pouring in the funds needed to make such an ambitious privatisation programme work, and generating major investment opportunities in the process. The new funding is also expected to facilitate the second phase of the privatisation programme, with the government in the process of selling 80% of its stake in 10 generating companies that own gas plants that are complete or nearly finished.
  • Operational challenges will continue to be significant, such as regulatory uncertainty, crumbling infrastructure, and industrial unrest. However, the privatisation programme is sufficiently advanced to avoid significant disruption if President Goodluck Jonathan and the ruling People's Democratic Party lose power at the February 2015 general election, with the process broadly backed by the opposition All Progressives Congress.


  • An agreement to change the composition of Mozambique's National Electoral Commission (Commissão Nacional de Eleições: CNE) was made by the government, led by the ruling party Mozambican Liberation Front (Frente de Libertação de Moçambique: Frelimo), and former rebel movement turned major opposition party, Mozambican National Resistance (Resistência Nacional de Moçambique: Renamo) on 10 February.
  • This had been Renamo's key demand following its turn to violence from March 2013. Since then, the party's armed 'Presidential Guard' – primarily composed of Renamo's veteran fighters from the 1977–94 civil war – has been staging small-scale, hit-and-run attacks on road cargo and security forces in central Mozambique to force the government to make concessions.
  • However, this tactic was met with government intransigence and a low-level military counter-insurgency campaign in central Mozambique. After unsuccessfully boycotting the November 2013 local elections, Renamo resumed negotiations with the government and announced on 28 January that it would take part in the coming 15 October general elections.
  • Significance

Although the compromise on the CNE is an important step to restoring stability and security in Mozambique, Renamo leaders still allege that the government is intent on assassinating their party leader, Afonso Dhlakama, whose whereabouts is still unknown.

  • Renamo's armed veterans are now dispersed in the bush in central Mozambique, with only weak co-ordination between the party's political leadership negotiating in Maputo and hardline veterans around Dhlakama.
  • Accordingly, localised firefights between Renamo groups and Mozambican army and intervention police units are likely to continue, mainly in the central Gorongosa province. Due to the extension of the terrain and the army's limited air surveillance and artillery capacities, an outright military defeat of the Renamo units is unlikely.
  • The risk of death and injury to passenger transport travelling north along the main north-south EN1 highway, as well as road cargo on the same route, remain high.

Sierra Leone

  • Energy Minister Oluniyi Robbin-Coker has stated that Sierra Leone is targeting a transformation of its power sector by signing 12 power production and supply agreements in the next four years to boost capacity from 96 MW to 750 MW.
  • The catastrophic damage to power infrastructure during the 1991–2001 civil war has had a long-term effect, and Sierra Leone's current installed capacity is still 200-MW short of current demand, leaving businesses reliant on costly generators.
  • The situation is starting to improve, with a number of smaller public-private partnerships already under way, many involving companies that are guaranteed main users of the power generated. The most advanced is Addax Energy's 32-MW ethanol plant, which is linked to its giant sugar-cane plantation, but is currently being connected to the national grid, to which it will supply around half of its output.
  • Robbin-Coker said that another 50 MW is expected by 2015 from the first stage of a thermal power plant run by Zambia's Copperbelt Energy, which will increase to 128 MW in four to five years.
  • Significance

The government's confidence in reaching its ambitious target is supported by strong demand from the mining sector, particularly Chinese companies attracted to the major iron ore deposits around Tonkolili.

  • This is driving a likely third successive year of double-digit growth, with a forecasted increase in GDP of 11.5% for 2014.
  • While many smaller projects are in the pipeline, the high target remains heavily dependent on major hydropower schemes, which are expensive and have a long lead time but enjoy low operational costs.
  • The most significant is the second phase of the Bumbuna dam, which concludes a feasibility study in March 2013 on adding 200 MW to the 50-MW of existing capacity by 2017. This should take the country close to meeting its target and provide the steady supply of power needed to attract further mining investment, although its dependence on iron ore means any slump in prices would delay projects and make finance more difficult to source.


  • The Zambian authorities have set a budget deficit target of 6.6% of GDP for 2014 – higher than the deficit target proposed by the International Monetary Fund (IMF) of 5% of GDP in its 2014 country report.
  • Subsidy and pension fund reforms, combined with a temporary freeze on the public-sector wage bill, proposed in the 2014 budget, are encouraging, but will be mitigated by the further narrowing of the tax base and a strong possibility of the government adhering to trade union wage demands.
  • The ongoing weakening of Zambia's fiscal finances could result in a second-round downgrade of the country's credit risk ratings.
  • Already, the government has removed fuel subsidies in 2013, and policies will now shift towards the reduction of fertiliser subsidies.
  • Future tax reforms include raising the value-added tax (VAT) rate by 1% and reducing VAT exemptions, hiking excise taxes, and increasing tax rates on low-tax sectors, amongst others. According to the government, these efforts could bring the budget deficit down to around 3% of GDP by 2018.
  • Virtually all spending categories in the 2013 national budget exceeded approved levels and the risk of a repeat of the 2013 budget overrun in 2014 appears high. The IMF's 2014 country report highlights a few pitfalls in this regard:
    • More aggressive fiscal cuts are needed to bring the fiscal deficit to a sustainable level. A budget deficit of 5% of GDP for 2014 instead of 6.6% would have been preferred by the IMF.
    • Non-tax measures are proposed to increase government revenue flows during 2014 instead of tax changes, including the incorporation of off-book revenue flows, increasing road tolls, and introducing a surcharge on money transfers.
    • Raising the tax-free threshold to ZMK3,000 (USD545) from the current ZMK2,200 will generate a revenue loss of around 1% of GDP and further shrink the already narrow tax base in the economy.
    • Bringing down the government's wage bill is required through a freeze on wage increases and recruitment. However, a real threat exists that the government will adhere to trade union demands in the medium term, and divert from the proposed wage and recruitment policies for 2014–15.
  • Significance

The expansionary fiscal policy, strong household consumption expenditure reflecting the lagged impact of the 1 September 2013 public-sector wage increase, and new mining capacity coming on-stream in the copper industry could easily push Zambia's GDP growth rate up to 8.1% in 2014.

  • However, the loose fiscal policy, which is more a reflection of rising recurrent expenditure and not growth-enhancing infrastructural development, has placed Zambia's fiscal finances under the spotlight. To ensure debt sustainability going forward, the Zambian authorities will have to adopt more conservative external borrowing practices and channel funding towards projects with a high yield of economic return.
  • Much will be achieved to ensure sustainable growth in the medium to long term by channelling government income towards infrastructural bottlenecks, particularly in electricity and transport provision, and addressing other structural factors, of which the most significant include poor health and education standards, high labour costs in the formal sector, and low yields in agriculture – the largest employment provider in the economy, resulting in a medium-term sovereign risk rating downgrade while medium-term growth prospects appear less upbeat under such an outcome.


  • Grindrod Limited and Northwest Rail Company on 3 February signed an agreement to conclude an ongoing feasibility study for the joint construction, operation and maintenance of a USD1-billion railway in Zambia extending from Chingola to Jimbe, near the Angolan border.
  • Construction on the first phase of the railway is due to commence in 2014, subject to completion of a bankable feasibility study. The first phase will connect Chingola to the Kansanshi, Lumwana and Kalumbila copper mines at a cost of USD489 and be aimed at transporting copper ore and finished copper products to South Africa's Durban and Richard's Bay ports and Maputo in Mozambique.
  • The second phase will extend towards the Angolan border near Jimbe to connect the line to the Benguela railway from Lobito to allow Zambia to import oil from Angola, thus reducing dependency on imports from Mozambique and South Africa, and to stimulate new mining activity.
  • Significance

Northwest Rail Company, which received the exclusive concession for the railway in 2006, is owned by former vice-president Enoch Kavindele of the MMD.

  • While pressure from the Zambia Congress of Trade Unions (ZCTU) led to the cancellation of the Zambia Railways and Railway Systems of Zambia concession and cancellation of contracts with Fratelli Locci in 2012, there is no pressure from the ZCTU to cancel this concession as there have been no allegations of tender irregularities.
  • Yet if construction does not begin in 2014 or if allegations of corruption irregularities are made against Northwest Rail Company, the risk of contract cancellation will increase.