Items of Interest: June 26

Angola creating a National Agency of Mineral Resources, a Kenya-Somalia maritime jurisdiction hearing, and Kenya and Uganda optimism on standard gauge railway funding by China are actions from June 26 that may emerge to become significant factors impacting geomarket developments in Africa.

Angola: The Angolan government is creating a National Agency of Mineral Resources. 

Significance: Comparable to the National Agency of Petroleum and Gas (ANPG) the Angolan government under President João Lourenço created from the national oil and gas company Sonangol in December 2018, the mineral resources agency will assume the role of concessionaire of licensing while leaving exploration, production, and sales to state-owned mining companies such as Endiama (for diamonds) and Ferrangol (for iron ore). The intent is to elevate transparency, accountability, and foreign investor confidence, and also to reduce the power these parastatals have enjoyed to underwrite commercial interests held by politically exposed Angolan persons. The capture of key institutions of the Angolan economy by members of the former José Eduardo dos Santos government resulted in considerable misspending of public funds the Lourenço administration is struggling to correct for, and also discouraged reinvestment by foreign extractive industry companies wanting to avoid entanglement with politically exposed persons.

Kenya, Somalia: The International Court of Justice will hear the neighboring country’s maritime demarcation dispute September 9-13.

Significance: The government of Somalia filed the maritime demarcation appeal with the International Court of Justice, which the government of Kenya prefers to settle out of court. At stake is sovereignty over disputed Indian Ocean waters that both governments want to license for petroleum and natural gas exploration and production purposes. The maritime demarcation dispute has resulted in broader political tensions between the governments of Kenya and Somalia and has disrupted commercial trade between the neighbors in addition to the Kenyan government threatening to hasten the withdraw of its military forces intervening in Somalia in support of anti-al Shabaab counterterrorism operations. For Somalia a satisfactory resolution could introduce an entirely new channel of foreign investment in an otherwise deeply impoverished state whose existing revenue streams are donor aid, diaspora remittances, and taxes on supply chain infrastructure movements. The potential loss of the several thousand Kenyan Defense Force members intervening in Somalia may offset the commercial gains insofar as the Somali government may not be able to control the territories the Kenyan military is responsible for.

Kenya, Uganda, China: Kenyan and Ugandan officials are optimistic the Chinese government will approve funding for the standard gauge railway intended to link the two African states. 

Significance: China is hosting a coordination meeting to evaluate outcomes from the Forum on China-Africa Cooperation (FOCAC) that took place in Beijing last September 3-4. Ugandan President Yoweri Museveni and Kenyan trade and transport officials are part of the follow-up discussions. Though the Chinese government declined earlier requests by the Kenyan and Ugandan government for additional funding to extend the construction of the standard gauge railway currently being built in Kenya by Chinese contractors and enable the robust railway project to include Uganda, concerns for the project’s profitability and return on investment dissuaded additional Chinese financing. Absent additional sovereign guarantees by the Kenyan and Ugandan governments, Chinese lenders are likely to take a very patient review of the multi-billion dollar project between Kenya and Uganda. Meanwhile, the government of the Democratic Republic of the Congo authorized a feasibility study of Tanzania’s standard gauge railway that President Félix Tshisekedi, during his June 13-14 visit to Dar es Salaam, expressed interest in seeing extend to the Congo via Rwanda. That the Tanzanian government is self-funding the country’s standard gauge railway project avoids the predicament the Kenyan government finds itself in, of wanting to establish a primary regional supply chain corridor but seeing its efforts materially fall short. 

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