The following items from April 29 may emerge to become significant factors impacting geomarket developments in Africa:
Angola: A quartet of public notices were released: the Lourenço administration revised its 2019 state budget downwards to reflect a crude oil reference price of $55 per barrel; the government has recovered $4 billion in embezzled assets since the start of 2019; investigations are underway into more politically exposed persons, this time for the possible misuse of a state-guaranteed €750 million intended for public housing projects; the government’s new Cabinda refinery project is on track for launch in 2021.
Significance: One, lowering the budget and its crude oil reference price from $68 per barrel had been under consideration since the beginning of the year (due to soft global oil prices), but the government had been reluctant to make the revision to avoid inflaming socioeconomic stress the Angolan population has been facing. Additionally, the Lourenço administration wanted to avoid a downgraded budget so as to thwart criticisms of underperformance that are heard from political rivals in the ruling Popular Movement for the Liberation of Angola party. Two, the announcement that $4 billion in embezzled assets have been recovered since the start of the year is intended to demonstrate the government holds itself to account for good governance reforms initiated by theLourenço administration. Thirdly, embezzlement cases are now underway involving essentially all the key lieutenants to former President José Eduardo dos Santos. Fourthly, bringing the 60,000 barrel per day Cabinda oil refinery to operational status by 2022 will help to alleviate the costly allocation of scarce foreign exchange toward the import of refined petroleum products, in addition to demonstrating material development to the citizens of restless exclave province. Put together, the quartet of public notices compel the Lourenço administration to be successful in the political and economic reforms it has initiated so as to survive the controversy and unpopularity it faces.
Burkina Faso: Three security incidents in three days: five primary school teachers were killed in the southeast Koulpelogo province; six congregants including the pastor were killed following services in the northern Soum province; public bus passengers were robbed at gunpoint while traveling in the country’s center-west.
Significance: The three separate security incidents since April 26 exhibit the geographic dispersion of attacks by armed gunmen that Burkina Faso faces. In addition to terrorizing the local population, the theft of cash and valuables from civilian travelers enables suspected Islamist militants to sustain operations. The tempo of security incidents undoubtedly increases pressure on the government of President Roch Kaboré to demonstrate it can enhance security in the country. Should the government, in fact, be negotiating to dissuade Al Qaeda in the Islamic Maghreb or its proxies from operating in Burkina Faso, the message has not been embraced yet.
Kenya: President Uhuru Kenyatta came away from the Second Belt and Road Initiative Forum not obtaining funding from Chinese lenders to extend the construction of the standard gauge railway project from Naivasha to the Ugandan border.
Significance: The lack of Chinese funding for the Naivasha to Kisumu section means Kenya’s standard gauge railway project will not proceed beyond linking the port of Mombasa with Nairobi and Naivasha. Kenyan government debt levels, as well as concerns for the profitability of the standard gauge railway, likely informed the Chinese decision to deny the roughly $3.6 billion funding request. The outcome is not all adverse: the Chinese countered and offered to upgrade Kenya’s and Uganda’s existing meter-gauge railway. Additionally, by not proceeding to construct the standard gauge railway from the Indian Ocean port of Mombasa to the Great Lakes region of central Africa, Beijing counters critics that it is financing and building a monopoly of robust global supply chain infrastructure.
Nigeria: Two expatriates were kidnapped and two instances of crude oil pipeline-related force majeure have been declared in the country’s oil-producing Niger Delta region.
Significance: The kidnapping of expatriate oil workers (reportedly a British and a Canadian) are not unusual in the Niger Delta, though there has not a pattern of recent occurrences. Incidents involving crude oil pipelines requiring force majeure clauses to be declared are not irregular either. The combination of developments, however, following the completion of general elections in Nigeria, raises concern that an organized campaign to destabilize the oil-producing region is being re-launched. The absence of claims of responsibility by credible militants, however, reduces the likelihood that a new Niger Delta insurgency is underway. Instead, the security incidents are likely motivated by criminal intent.