Items of Interest: June 6

A kidnapping in Ghana, offshore oil explorations in Somalia, state-owned enterprise reform in South Africa, and Belarus-Zimbabwe trade are actions from June 6 that may emerge to become significant factors impacting geomarket developments in Africa.

Ghana, Canada: The kidnapping in Kumasi of two young Canadian female volunteers is an anomaly and potentially worrisome geographic expansion of Islamist militancy kidnappings in West Africa.

Significance: Kidnappings of Westerner expatriates is not uncommon in West Africa but largely found in countries of the Sahel sub-region, notably Burkina Faso, Mali, and Niger. Ghana has not been subject to the threat of kidnappings (or other attacks) by Islamist militants in the region, though the same was said for the Republic of Bénin until two French tourists on safari in the Pendjari National Park were kidnapped on May 1 (the two Frenchmen, along with an American and a South Korean, were recovered in Burkina Faso on May 9 in a rescue operation led by French military forces). The kidnapping of the two female Canadians may be a local area criminal incident, though as days go on with no word of their release, the likelihood that the kidnapping was orchestrated by Al Qaeda in the Islamic Maghreb for a ransom or hostage exchange increases. The Kumasi area of southwestern Ghana is home to the country’s significant gold mining sector whose personnel will now be placed under heightened security precautions until the motivation for the kidnapping of the Canadian volunteers is determined.

Somalia, Kenya: The Somali federal government wants international oil companies to begin exploration activities from January 1, 2020.

Significance: The Somali federal government is believed proceeding with an offshore oil block licensing round that it hopes to conclude in September that include blocks in maritime waters whose sovereignty is disputed by Kenya. Until an out of court settlement (preferred by Kenya) or an International Court of Justice ruling (preferred by Somalia) determines the sovereignty of the disputed maritime demarcation between the neighboring countries there is not likely to be a substantial investment accord for at least five of the fifteen prospective blocks up for auction. In addition to considerable national insecurity as well as good governance concerns, significant political tensions between Kenya and Somalia will likely impede the successful auctioning of the remaining ten oil blocks in southern and central Somali offshore basins not facing a sovereign dispute.  

South Africa: President Cyril Ramaphosa met with the executive leadership of twenty state-owned enterprises.

Significance: The meeting was to discuss means to achieve growth and development and comes in the days following the resignations of the chief executives of the state-owned electricity utility company Eskom and the state-owned South African Airways. Parastatals in South Africa have historically performed the role as supplier of critical services to the state when foreign supplies were unavailable (notably during apartheid). In more recent years, state-owned enterprises evolved with an additional role as a means of employment generation to compensate for insufficient job growth in the country’s private sector. Poor service delivery and significant financial losses incurred by many state-owned enterprises have pressured the Ramaphosa administration to restructure the parastatals, though doing so in a manner that results in large-scale job losses is a significant political risk for the recently reelected president.  On the other hand, providing ongoing bailouts to loss-making state-owned enterprises is a significant economic risk to the South African government and could jeopardize its remaining investment-grade sovereign rating.

Zimbabwe, Belarus: Deputy Minister of Lands, Agriculture, Water, Climate and Rural Resettlement Vangelis Haritatos will travel to Belarus to effect the implementation of a commercial agriculture financing agreement.

Significance: Haritatos will travel to Belarus in the coming days to ensure a $100 million financing agreement results in the delivery of mechanized farming implements to Zimbabwe. The trade between Zimbabwe and Belarus follows a visit by President Emmerson Mnangagwa to Minsk in January where he signed agreements for logistics and transportation cooperation, though projects to implement the accords have not yet materialized. While the Mnangagwa administration has promoted foreign investment opportunities to a wide global audience, the Zimbabwean government has largely gained traction only with companies from Belarus, China, and Russia, as well as lending facilities by the African Export Import Bank. Western governments and companies have certainly investigated opportunities for doing business in Zimbabwe, but acquiring official financial assistance is constrained as long as sanctions remain in place on Zimbabwean officials. The Zimbabwean government is repealing controversial legislation that will ameliorate the foreign relations environment for sanctions to be lifted, though sustained pro-human rights behavior will need to be observed in the Mnangagwa administration first. 

Read the full analysis:

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email