Tuesday, March 21, 2017

Africa's New Debts

Mozambique is the first major African nation in recent times to become unable to meet obligations to international creditors. In 2012, Mozambique's obligations to its creditors amounted to 40 percent of Gross Domestic Product (GDP), they now total 130 percent. Banks and investment funds were keen to lend Mozambique money believing it would be safe because the country possesses huge reserves of coal and natural gas. Those investors have been left empty-handed.

A decade after the last major debt write-down, African states are again in difficulties.

 The German NGO Erlassjahr.de (Jubilee Germany), which campaigns for debt relief,  has identified as many as 40 African countries which are showing signs of heavy indebtedness.
"This is not surprising because today's economic indicators are telling a story very similar to the situation in the late 1970s and early 1980s which led to the Third World debt crisis," said Jürgen Kaiser, political coordinator at Jubilee Germany. In the wealthy industrialized countries, interest rates are very low, but in Africa investors can fetch returns of between seven and 15 percent.  This leads to large capital flows from the North to the South." 
"The low interest rates encourage countries to take out big loans which they then have difficulty paying back," Kaiser said. The situation becomes particularly precarious when commodity prices fall. This leads to a subsequent decline in tax revenue in economies that are dependent on oil, natural gas, coal or other raw materials.
This latest debt crisis may come as a surprise to some people because numerous developing countries had a large share of their debts written down under the Heavily Indebted Poor Countries (HIPC) Initiative.  However, commentators who were convinced at the time that that this initiative launched by the World Bank, the International Monetary Fund and the G-8 group of leading industrialized nations, including Germany, would solve the developing nations' debts problems turned out to be wrong.
"Mozambique is a very dramatic case. It is the first country to cease repayments in such an abrupt significant manner since HIPC debt relief," said Jürgen Kaiser. "But countries such as Gambia or Ghana, which also have an abundance of natural resources, are in a very critical situation as well. Senegal, which does not have much in the way of natural resoures, is also in difficulties once again," he added. On analyzing World Bank data of African nations' indebtedness with foreign countries, it quickly becomes apparent that a large number of  African economies have recently acquired dramatic levels of new debt. Between 2005 and 2015 - the most recent year for which figure are available - Angola, Ghana, Kenya and South Africa have witnessed a threefold increase in their debt levels. Smaller countries such as Cape Verde also borrowed fresh capital during this time frame.

Monday, March 20, 2017

Nigeria's water crisis

Lagos, Nigeria, is surrounded by an abundance of water, but millions of inhabitants in Africa’s most populous city can’t drink it. The state is not providing water and they’re also not allowing people to fend for themselves to survive.

Water shortages, fueled in part by recurrent drought and violence, has been decimating Nigeria for years. The charity WaterAid has said the water crisis had killed more people across the country than the militant group Boko Haram. While the terrorist group had claimed more than 4,000 lives in 2014, the nonprofit said a lack
of running water had killed more than 70,000. Water has long been a source of tension in Lagos, it added.

The coastal city that’s bordered by a lagoon is in the throes of a water crisis. Only1 in 10 people have access to water that the state utility provides. The rest — some 19 million residents — rely on informal water sources, eitherdrilling their own boreholes to drink from or fetching water from lakes or rivers. Those that can afford it pay exorbitant amounts to local “mai ruwa,” or water vendors, who peddle their wares in often-unsanitary jerry cans, or bottles and cellophane sachets.

Yet, activists say, the Lagos House of Assembly passed legislation last month that could threaten even this last-resort source of drinking water — an imperfect, but critical lifeline for most Lagosians.

Opponents of the Lagos Environment Bill say politicians did not follow due legislative process before it was signed into law on March 1 ― and its final language has still not been made available to the public two weeks after the fact. It could criminalize the private extraction of water, including the drilling of boreholes and purchasing water from private sellers, activists warn.

“One of our rights as citizens is to live, to have good water to drink, good environment,” said Agnes Sessi, president of the African Women Water, Hygiene and Sanitation Network, this month in reaction to the new law. “If government has failed to provide water for us, they do not have the right to take away our efforts to
provide for ourselves. Do they want us to die?” the United Nations issued a strong-worded statement last month condemning the water bill.

“When the State fails to provide adequate access to drinking water, no one should be criminalized or fined for fetching water from lakes, rivers, or any other natural sources,” said Léo Heller, U.N. special rapporteur on the human rights to water and sanitation, on Feb. 27. “The government is taking a step too far by imposing fines of
the equivalent of $310 on ordinary individuals fetching water for survival, when the minimum wage stands at approximately $60.”

As the metropolis ballooned in size over recent decades, growing from an estimated 1.4 million people in 1970 to more than 21 million today, Lagos’ public water system has struggled to keep pace. Pipes, many of them decades old, have rotted through and taps now often run dry.

The two major water treatment plants in the city have fallen into disrepair; workers there have complained of non-functioning pumps, poor power supply and production rates well under capacity. And that only applies to the 10 percent of households in the city that actually receive piped water from the state. For everyone else, finding any means to attain water — unsanitary or not — is an everyday battle. 

In Lagos, 60 percent of Nigerians earn less than $1 a day, yet the country is now home to almost 16,000 millionaires, most of them in Lagos. And the discrepancy is acutely felt when it comes to water, according to Bragg.

Some poorer communities don’t have access to clean water themselves but have pipes running over-ground through their neighborhoods to the more wealthy ones. “The contrast is stark,” he said. “They can’t get water, but there’s water literally passing right by them.”

Buying water from private vendors is a common practice and Lagos residents have called the service a “saving grace,” but it can be inaccessible for the poorest Lagosians. The average family may needs to buy seven or eight jerry cans of water daily, which could cost $50 or more a month, according to a 2016 report from the Environmental Rights Action/Friends of the Earth Nigeria. In Nigeria, the average middle class family income is between $230 and $300 monthly.

The more severe the water shortage, the brisker the business for some water sellers. Abubakar Audu, a long-time mai ruwa, told local paper Eko Trust last year that he sets his price “depending on how desperate the customer is” and whether or not there’s light (blackouts are an everyday occurrence in the city). 

With proper sanitation practically non-existent across Lagos and most residents drinking water from untreated and unreliable sources, the city’s water problems have had a dire impact on public health. Water-borne diseases including cholera, dysentery, as well as typhoid and malaria fever, are a concern. In February last year, 25
children under the age of 6 died in one Lagos community after drinking pathogen-infected water.

Long-term exposure to toxins is also a concern. A 2012 investigation found high concentrations of heavy metals like lead and cadmium at levels far above World Health Organization standards in borehole water samples extracted in Lagos.

The city’s government has precipitated the water crisis in Lagos by years of inaction, according to activists.

For decades, the state has “neglected to invest into the infrastructure,” said Corporate Accountability International’s Bragg. Instead, it has chosen to prioritize the possible privatization of Lagos’ water utility through public-private partnerships — a plan that has repeatedly failed, he added.

“Lagos is very key to the African continent; it is the heart of Nigeria,” he said. “If water privatization is successful in Lagos, it could spread across Nigeria and across Africa. Quality will go down, sanitation will be impacted and the poorest of the poor will not be able to get adequate water.”


Saturday, March 18, 2017

Bullets or Bread?

A proposal for an arms embargo upon South Sudan in December, was rejected by the UN Security Council.

A confidential UN report slams the government of South Sudan for spending more than half its budget on weapons and security as 100,000 people are dying of starvation.   Salva Kiir's government has continued to make arms deals even as a famine was declared in parts of Unity state, where the famine is most acute.
The human misery is the result of famine caused primarily by ever-increasing government attacks in the area. Experts say another 1.1 million are near starvation. In addition, the number of people desperately needing food is expected to hit 5.5 million in the "lean season in July ... if nothing is done to curb the severity and breadth of the food crisis."
The government is compounding the food crisis by blocking access for humanitarian aid workers. Significant population displacement has helped exacerbate the famine.
"The bulk of evidence suggests that the famine in Unity state has resulted from protracted conflict and, in particular, the cumulative toll of repeated military operations undertaken by the government in southern Unity beginning in 2014," according to the report.
"Weapons continue to flow into South Sudan from diverse sources, often with the coordination of neighboring countries," said the report by a panel of experts who also found a "preponderance of evidence (that) shows continued procurement of weapons by the leadership in Juba" for the army, the security services, militias and other "associated forces."
From late March to late October 2016, oil revenues totaled about $243 million, according to calculations from the panel. At least half - "and likely substantially more" - of its budget expenditures are devoted to security issues including arms purchases.

Thursday, March 16, 2017

South Africa's Poor Whites

White colonists and the white ruling class used to skim the riches of South Africa. Black townships became symbols for resistance and poverty. Since he end of apartheid, government policies gave priority in getting jobs and receiving benefits to non-whites. Still more than 11 millon non-white people live in poverty, but there are also thousands of white families living in the slums now.

Wednesday, March 15, 2017

The Global Capitalist

Kenya's super rich in search of a second home are likely to make the investment outside the country with most preferring to buy the residences in Europe, a global realtor says in new findings.
The United Kingdom (UK), according to the 2017 Knight Frank Wealth Report, is the most preferred location by the dollar millionaires.
South Africa features is the second most sought-after place as Mauritius, Spain and United States close the top-five preferred list.

The Man-made Famine

There is a myth in circulation which says that hunger in Africa is a climate phenomenon. It is really a myth, nothing else. Hunger, especially on the Horn of Africa, is man-made. It is the work of politicians and elites. 

When United Nations agencies appeal for aid for Djibouti, Eritrea, Ethiopia, Kenya, South Sudan, Somalia and Uganda, then one cannot but notice that these very countries are governed by corrupt and cynical politicians who have scant regard for democracy. They ride roughshod over human rights and ignite ethnic and religious conflicts to shore up their hold on power.

Somalia? It can no longer be described as a state any more and languishes at the bottom of the global corruption indices. South Sudan? Has oil reserves, but instead of exporting crude, it displaces millions of civilians in an orgy of ethnic violence. Tiny Eritrea? Where there was once hope, there now stands the North Korea of North Africa, hermetically sealed off and governed by a clique that has its finger in the pie of traffickers smuggling people to Europe. Ethiopia is a potentially rich, but depressed country No country illustrates the link between bad governance and hunger more clearly than Ethiopia. The strategically located country on the Horn of Africa is the home of the coffee bean for a very good reason. Two rainy seasons and the Blue Nile could spell record harvests for Africa's second most populous nation. But this doesn't happen. Instead, the country has faced hunger since the 1970s and a flow of departing refugees. More recently, hundreds of demonstrators have been killed and opponents of the regime thrown into jail.

Nobody doubts that there are numerous external factors at work which are exacerbating food insecurity on the Horn of Africa. Climate change and the ensuing degradation of once fertile soil are triggering more disputes over pasture and water supplies. The exodus from rural areas by pastoralists and farmers is causing the cities to burst at the seams. The terror spread by Islamist Stone Age warriors, such as al-Shabab in Somalia, is stopping farmers from cultivating the land. But all these factors - especially in the presence of properly coordinated aid from abroad - could be brought under control, assuming power was in the hands of responsible politicians. But in Africa these days, they can be counted on the fingers of one hand

This current hunger crisis, like previous ones, will pass. The machinery of international aid, a well-established multi-billion dollar industry in the donor countries, has already sprung into action.  Temporary clinics for undernourished children have been set up and high nutrition biscuits are being handed round. But in a few years time, there will be another hunger crisis. And local people, livestock and the soil will have less and less time to recover as the cycles become shorter.

Tuesday, March 14, 2017

South Africa's Immigration

After a wave of anti-immigrant protests, South Africa's Institute for Race Relations has released a report highlighting immigrants' entrepreneurial skills and their sizable contribution to the economy. When xenophobic violence erupted in 2008, in 2015 and earlier this year, it was accompanied by accusations that foreign nationals were taking jobs away from South Africans. The IRR's report shows, however, that that most of the immigrants create their own employment. In addition, the premises for the small convenience stores that immigrants run are generally owned by South Africans - landlords who receive rent. Not all immigrants opt for self-employment. Those looking for jobs have often been able to find them in sectors shunned by South Africans because of poor wages.  But the report says that even those immigrants have been able to improve their situation despite meager incomes. South Africa's immigrants, the report concludes, seem to have adapted well to life in a country with 27 percent unemployment. Unemployment among immigrants stands at around 14.6 percent, which roughly a half to a third of the local rate for the whole population.

IRR's research found that foreign nationals from countries such as Somalia, Pakistan and Bangladesh start up their own businesses on arrival in South Africa. They range from small convenience stores to wholesalers.  Eighty percent of the convenience stores, known as spaza shops, are now owned by foreign nationals. The foreign entrepreneurs keep their profit margins low giving them an edge over the competition. The report says the majority started out with 5,000 rand (357 euros, $380) or less in capital. Within three years, all had doubled the value of their business and 40 percent had amassed 50,000 rand or more. 

Friday, March 10, 2017

Kenya's HNWIs

Kenya’s richest individuals have sunk their money in real estate as they seek to navigate the volatility that has recently characterised other classes of investments. According to the latest Wealth Report by property consultancy Knight Frank and Stanbic Bank, close to a third of the country’s high-net-worth individuals (HNWIs) have allocated their wealth to properties. For another 20 per cent, their wealth is tied to their personal businesses, which range from financial services, agriculture to manufacturing. Investment in equities, bond, cash, precious metals such as gold and silver made up 18 per cent of the super-rich’s investments. 

The report, which was based on the survey of about 900 private bankers and wealth advisers, showed that 9,400 people became multimillionaires (or were worth more than one million US dollars) in 2016, which is an increase from 8,500 in 2015.

“Kenyan HNWIs clearly realise the long-term stability that property investments offer in an otherwise volatile market together with the good returns that the sector has demonstrated in the past,” said Woodhams. Although real estate remains a lucrative class of investment for most high net worth individuals globally, with 24 per cent of the world’s richest persons putting their money in property, Kenyan investors have taken the trend a notch higher. Real estate is touted to be a low-risk investment, and this explains why most of the rich individuals have rushed to put their money in properties. Indeed, most of the super-rich are concerned primarily with wealth preservation and capital growth when making wealth management and investment decisions, according to the Attitudes Survey included in the Knight Frank Wealth Report 2017. Seven out of 10 of Kenya’s wealthiest individuals considered these two factors to be critical when making their investment decisions.

enya’s super rich have also developed a love affair with private jets. However, with nine private jets, they pale in comparison with their peers in South Africa (161), Nigeria (85), Egypt (33), Morocco (29), Angola (27), Democratic Republic of Congo and Namibia both with 13, Gabon (11) and Algeria (10).

Refugees in Africa - The Numbers

There are 5.5 million Africans currently refugees in other countries, while 11 million Africans are displaced within their home countries, the Internal Displacement Monitoring Center (IDMC) reported in January. The United Nations High Commissioner for Refugees says 18 million people living in sub-Saharan Africa are at risk of becoming refugees in the coming year.

Some 16,000 African refugees have crossed from Libya to Italy so far this year, nearly double last year’s figure for the same period. 

Tuesday, March 07, 2017

Fact of the Day

Despite a peace agreement signed in August 2015 to end the conflict across South Sudan, real peace has not reached many corners of the county. Thousands of families are hiding in the swamps of northern South Sudan as tribal violence continues across the country.

The Risks of Charity

A severe drought and crop pests across southern Africa has caused food prices in the region to spike. This has hit Zambia particularly hard, as about 60 percent of Zambians live below the poverty line, according to the World Bank.

In Zambia police said eight people died in the capital Lusaka after a stampede broke out during food handouts. Police spokeswoman Esther Katongo told the press that six women, one man and one boy were killed when tens of thousands turned up.

The event was organized by the Church of Christ as a prayer meeting to be followed by food distribution in the poverty-stricken country. About 35,000 people, mostly from the city's growing slums, came to receive the cornmeal, cooking oil and salt the church was distributing.
After the stampede, police ordered a halt to the handouts. Hundreds, however, remained on the premises hoping the giveaway would resume.
"We cannot afford to buy it, so we come here," a 64-year-old woman said.