The following items from May 14 may emerge to become significant factors impacting geomarket developments in Africa:
Senegal: President Macky Sall signed into law legislation abolishing the post of prime minister.
Significance: The abolishment of the prime ministership is intended by the recently reelected Sall-led government to assert a higher degree of results and accountability not only between the president and cabinet but between the president and the citizenry. Critics accuse Sall of consolidating the presidency’s hold on power by sidelining Senegal’s conventional channel of governance that is through the prime minister. But going into his final term in office and with significant new economic development activity being driven by offshore oil and gas exploration and development, the Senegalese president has been consistent on demanding transparency and accountability from his government and especially ensuring the country maximizes growth opportunities from the emerging hydrocarbons sector.
South Africa: Latest figures indicate that unemployment rose and measured 27.6% in the first quarter.
Significance: The country’s unemployment rate rose from 27.1% at the end of 2018. When including those who have abandoned their participation in the job market, the broad-based unemployment rate rose to 38%. Expanding formal employment has been a difficult challenge and efforts by the Ramaphosa administration have found more form in encouraging the private and public sector to minimize job retrenchment actions. The ruling African National Congress, which won reelection at general elections held on May 8, has by convention inflated the public sector as the means to solve for unemployment, but the government also faces fiscal and populist pressure to reform the public service, to include the functions of state-owned enterprises, to reverse a consequential decline in service delivery efficiency. As long as job growth remains meager, the Ramaphosa administration will remain under African National Congress pressure to subsidize the public service and state-owned enterprises and to continue to impress upon the domestic and foreign private sector to make investments that create jobs.
Tanzania: Negotiations to finance and construct the country’s proposed $10 billion Bagamoyo deepwater port project are ongoing but differences over sovereign guarantees is the likely delay.
Significance: The minister of Works, Transport and Communications responded to the May 13 query by the speaker of the national assembly as to why the Bagamoyo port project has not progressed despite multiple agreements having been signed with foreign agencies, citing unacceptable investor conditions needing to resolve first. It is likely that Chinese (and possibly Omani) lenders who have promoted the project are requiring a sovereign guarantee for expected revenues. Such an approach was successful in neighboring Kenya with the Chinese-backed development of that country’s Mombasa port. China has demonstrated its unwillingness to finance large-scale infrastructure projects of uncertain profitability unless there is a sovereign guarantee attached to Chinese lending. Given the value of the proposed deepwater port (which would act as the terminus for the country’s standard gauge railway that ultimately is intended to connect to central African countries in the Great Lakes region), guaranteeing that magnitude of a foreign currency commitment may exceed the Magufuli administration’s interests. Related, the minister stated that the first 300 kilometer phase of the standard gauge railway should be operational by December.