Items of Interest: June 3

The following items from June 3 may emerge to become significant factors impacting geomarket developments in Africa:

Sierra Leone: The Petroleum Directorate of Sierra Leone has opened an offshore licensing round.

Significance: The government of Sierra Leone’s fourth offshore oil and gas licensing round calls for six months of consultations with oil industry majors and independent oil companies so as to successfully negotiate new exploration activities. The May 31 altercation between police and party members at the headquarters of the country’s opposition All People’s Congress (APC) undermines confidence, however, that the government will possess sufficient continuity as well as legislative and regulatory certainty to provide the medium to long term guarantees supporting meaningful investments by international oil companies interested in the West African country. 

South Africa: The South African Airways chief executive officer resigned effective the end of August. 

Significance: With the reappointment of Tito Mboweni as finance minister and Pravin Gordhan as Public Enterprises minister, the likelihood that the South African government would provide only austere levels of financial support for ailing state owned enterprises (to include the national airline) of a non-strategic nature informed the decision by Vuyani Jarana to resign. The resignation will mean that a new airline recovery plan will be required, and will likely result in job losses in order to rationalize the loss-making public enterprise. The recently concluded elections that resulted in President Civil Ramaphosa being reelected provides a degree of political capital to authorize a modest number of public sector job retrenchments at sub-strategic state owned enterprises. Additionally, by not bailing out South African Airways to the degree wanted by the soon-to-be-former chief executive officer, the South African treasury is preserving its scarce capital for far larger liabilities, notably the national power utility company Eskom, that will require the full attention of Mboweni and Gordhan (as well as Ramaphosa) to successfully restructure. 

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