Items of Interest: May 7

The following items from May 7 may emerge to become significant factors impacting geomarket developments in Africa:

Angola: President João Lourenço convened his ministers of Mineral Resources and Petroleum, Finance, as well as central bank and state-owned energy company officials to address the country’s extreme shortage of refined petroleum products.

Significance: The scarcity of foreign currency, combined with competing demands in the allocation of scarce foreign currency, contributed to the shortage of gasoline in the country. The shortages of both foreign currency and refined petroleum products adds to socioeconomic pressure on the Lourenço administration to demonstrate gains from controversial economic reforms it has enacted, and will likely translate into policy and governance assurances that projects to expand the existing Luanda refinery and to construct new refineries in Cabinda and at Lobito will proceed and be under accountable political management.

Eritrea: Foreign Minister Osman Saleh and Presidential Advisor Yemane Gebreab are on a three day official visit to China.

Significance: The two senior Eritrean officials are the country’s primary interlocutors for foreign relations, generally travel together, and often travel in preparation for a subsequent visit by President Isaias Afewerki. The agenda for the Eritrean visit with the Chinese government likely includes pressing for Chinese economic support in the context of Eritrea’s state of peace with neighboring Ethiopia, which would mean commitments to expand the use of and make improvements to Eritrean road, rail, and maritime infrastructure that connect to Ethiopia. Additionally, the Eritrean government likely wants to facilitate a greater development of the country’s copper-zinc mining complex that China’s Zijin Mining Group acquired in 2018. Lastly, while Eritrea will participate in the Tokyo International Conference on African Development that the Japanese government will host from August 28-30, the Eritrean government is demonstrating that it retains non-alignment amid multiple pressing national and foreign policy priorities.   

South Africa: It is the final day of campaigning before general elections take place on May 8.

Significance: Opinion polling continues to place the African National Congress (ANC) in a majority, albeit reduced, victory, winning roughly 50-55% of the vote, down from 62% the ruling party obtained in 2014. The balance of parliamentary seats will largely be held by the centrist Democratic Alliance and the far-left Economic Freedom Fighters. The margin of victory, which is more at risk at the provincial level, will determine the extent to which the African National Congress will need to govern in coalition with rival parties. The diverse nature of South Africa’s ruling party means that policy priorities for the reelected-to-be Ramaphosa administration will include reformist measures intended to raise operating efficiencies at state-owned enterprises alongside programs that assert greater state involvement in the country’s political economy. In other words, there will be no mandate to reduce the commanding position of the African National Congress-led government over the political economy in favor of the private sector.

Tanzania: Swala Oil and Gas declared force majeure citing the government’s unclear process of reviewing of production sharing agreements.

Significance: The oil and gas company had a drilling program planned for its Kilosa-Kilombero property in Tanzania but halted it, citing the government’s adverse legislative and regulatory approval environment. The review of production sharing agreements conforms to the Magufuli administration imperative of asserting greater government control over the country’s mineral resources – of wanting to assert a greater government stake in the proceeds of extractive industries – which has also been extended to mining sector operations in the country. The adverse operating environment has discouraged foreign investment in Tanzania’s extractive industries sector, which in turn has compelled the Tanzanian government to self-finance national economic development projects of strategic priority, to include the country’s standard gauge railway as well as the Stiegler’s Gorge hydroelectric power plant. 

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