TAR104

Nigeria The men who would be president

Abubakar Bukola Saraki

Atiku Abubakar

• South Africa: The Malema generation • Angola: Can Lourenço uproot the system?

• Egypt: How Zohr changed the gas game

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w w w.t he a f r ic a r ep o r t .c om

THE AFRICA REPORT

ETHIOPIA

MONTHLY • N° 104 • OCTOBER 2018

The Abiy Moment It’s not just Ethiopia: Abiy’s breakneck reforms will transform the region

JEUNE AFRIQUE MEDIA GROUP INTERNATIONAL EDITION

Algeria 550 DA • Belgium €5.90 • Canada CA$ 7.95 • DR Congo US$ 9 • Denmark 60 DK • DOM 8 € • Ethiopia 130 Birr • France €5.90 • Germany €5.90 • Ghana GH¢ 12 • Italy €5.90 • Kenya KES 700 • Morocco 40 DH • Netherlands €5.90 • Nigeria 800 NGN • Norway NK 70 • Portugal €5.90 • Rwanda RWF 6,000 • Sierra Leone LE 15,000 • South Africa R40 (tax incl.) • Spain €5.90 • Sweden SEK 70 • Switzerland 9.90 FS Tanzania TZS 10,000 • Tunisia 5.4 DT • Uganda UGX 10,000 • UK £4.50 • United States US$ 6.95 • Zambia 48 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA • Euro Zone €5.90

Nigeria The T men who wouldd be president

Abubakar Bukola Saraki

Atiku Abubakar

• Angola: Can Lourenço uproot the system?

• Ethiopia: The Abiy effect • Egypt: How Zohr changed the gas game

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w w w.th e af r ic ar ep o r t . c o m

Nigeria The T men who wouldd be president

Abubakar Bukola Saraki

Atiku Abubakar

• South Africa: The Malema generation • Angola: Can Lourenço uproot the system?

• Egypt: How Zohr changed the gas game

DOING BUSINESS IN AFRICA

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GABON

2019

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w w w.th e af r ic ar ep o r t . c o m

“Only death will stop us”

Land of opportunities The upward trend of its mining, agricultural and agribusiness sectors has set Gabon firmly on the path to growth, as it recovers from the oil crisis. By developing its port and technological infrastructure, it has secured a pivotal position in the sub-region.

Julius Malema is using the youth vote to stay at the top table

ETHIOPIA

The Abiy Moment

THE AFRICA REPORT # 104 - OCTOBER 2018

It’s not just Ethiopia: Abiy’s breakneck reforms will transform the region

JEUNE AFRIQUE MEDIA GROUP

JEUNE AFRIQUE MEDIA GROUP SOUTHERN AFRICA/ZIMBABWE EDITION

INTERNATIONAL EDITION

Algeria 550 DA • Belgium €5.90 • Canada CA$ 7.95 • DR Congo US$ 9 • Denmark 60 DK • DOM 8 € • Ethiopia 130 Birr • France €5.90 • Germany €5.90 • Ghana GH¢ 12 • Italy €5.90 • Kenya KES 700 • Morocco 40 DH • Netherlands €5.90 • Nigeria 800 NGN • Norway NK 70 • Portugal €5.90 • Rwanda RWF 6,000 • Sierra Leone LE 15,000 • South Africa R40 (tax incl.) • Spain €5.90 • Sweden SEK 70 • Switzerland 9.90 FS Tanzania TZS 10,000 • Tunisia 5.4 DT • Uganda UGX 10,000 • UK £4.50 • United States US$ 6.95 • Zambia 48 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA • Euro Zone €5.90

Algeria 550 DA • Belgium €5.90 • Canada CA$ 7.95 • DR Congo US$ 9 • Denmark 60 DK • DOM 8 € • Ethiopia 130 Birr • France €5.90 • Germany €5.90 • Ghana GH¢ 12 • Italy €5.90 • Kenya KES 700 • Morocco 40 DH • Netherlands €5.90 • Nigeria 800 NGN • Norway NK 70 • Portugal €5.90 • Rwanda RWF 6,000 • Sierra Leone LE 15,000 • South Africa R40 (tax incl.) • Spain €5.90 • Sweden SEK 70 • Switzerland 9.90 FS Tanzania TZS 10,000 • Tunisia 5.4 DT • Uganda UGX 10,000 • UK £4.50 • United States US$ 6.95 • Zambia 48 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA • Euro Zone €5.90

FREE with this issue: an INVESTING supplement on GABON. Not to be sold separately

BUSINESS

04 EDITORIAL African internationalism 06 LETTERS 08 THE QUESTION

BRIEFING 10 SIGNPOSTS

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COVER CREDITS: SOUTHERN AFRICA/ZIMBABWE EDITION: MIKE HUTCHINGS/REUTERS; OLAMIKAN GBEMIGA FOR TAR - INTERNATIONAL EDITION: ZACHARIAS ABUBEKER/AFP; OLAMIKAN GBEMIGA FOR TAR

12 PEOPLE 14 INTERNATIONAL 19 CALENDAR 20 TRIBUTE Kofi Atta Annan (1938-2018)

FRONTLINE 24 ETHIOPIA The Abiy effect In just a few months, Ethiopia’s youthful prime minister has brought sweeping changes to the country and the region

34

DOSSIER OIL & GAS

58

ART & LIFE

87 MUSIC Rap against repression

47 ANGOLA Lourenço’s long road The Angolan president still has a long way to go to bring the country out of its economic crisis and attract investors 52 PEOPLE TO WATCH Business leaders looking to buck recent trends 54 ECONOMY Best-laid plans •

78 EGYPT Sisi saved by a gas boom

86 CRAFTS Koforidua bead market in Ghana’s Eastern Region

COUNTRY FOCUS

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74 Keeping it local In Lagos, LADOL’s logistics base and its local suppliers eye huge opportunities as Total’s Egina massive FPSO vessel is deployed in the company’s deep offshore field 130km off the coast of Nigeria

82 SERIES Dust & dreams South Africa’s gritty series, Tjovitjo, set in a Johannesburg township, breaks the mould of TV drama

42 ANANSI

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69 LEADERS Ali Mufuruki, CEO, Infotech Investment Group

72 HANNIBAL

38 NIGERIA The PDP presidential fightback Ahead of the primaries, the leading contenders line up to take on Buhari in 2019

THE AFRICA REPORT

62 MOROCCO Local links in the auto value chain

70 FINANCE Uganda: A bitty bourse

POLITICS 34 SOUTH AFRICA Inside Malema’s revolution Demanding free education for all, radical land reform and an end to corruption, the EFF are winning over the youth.

Next stop, national power?

58 INTERVIEW Abdul Samad Rabiu The Nigerian billionaire and founder of cement and rice conglomerate BUA Group outlines ambitious plans to launch new ventures

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88 LIFESTYLE Ivorian-Lebanese couturier Elie Kuame, and wine-tasting in Cape Town

82

89 TRAVEL Uganda’s Bulago Island 90 DAY IN THE LIFE Oluwaseun Osowobi, founder of STER Initiative, Nigeria

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THE AFRICA REPORT A Jeune Afrique Media Group publication

BY PATRICK SMITH

57‑BIS, RUE D’AUTEUIL – 75016 PARIS – FRANCE TEL: (33) 1 44 30 19 60 – FAX: (33) 1 44 30 19 30 www.theafricareport.com

African internationalism

CHA I R M A N A ND F O UND E R BÉCHIR BEN YAHMED P UB L I S HE R DANIELLE BEN YAHMED publisher@theafricareport.com

T

hey came from across the world to pay a final tribute to Kofi Annan on 13 September.

Honour guards carried Annan’s coffin draped with the national flag – red, gold and green with the emblematic black star – through the streets of Accra, made sombre on this funereal day.

Annan, the first sub-Saharan African UN secretary general, had led the organisation at a time when its purpose was questioned more forcefully than at any time since its founding in 1946. That challenge to the UN, and the wider rulesbased international system, has grown more insistent and shriller.

For UN secretary general Antonio Guterres, Annan embodied the UN spirit: “The world has lost a standard bearer of global cooperation.” Acutely aware of the UN’s shortcomings and failures, Annan was committed to multilateral solutions to global woes. Those aims underpinned the launching of the UN’s Millennium Development Goals in 2000.

Annan’s other groundbreaking UN initiative was getting the 2005 'Responsibility to Protect' resolution, a commitment to protect peoples from crimes against humanity.

Its roots lay in the genocide in Rwanda in 1994 and the massacre in Srebrenica in 1995. In both cases, UN peacekeepers were on the ground. The top UN officials, including Annan, as head of peacekeeping, and Boutros Boutros Ghali, then secretary general, were blamed for inaction. Singling out the top UN officials without recognising that the decisions to withdraw peacekeepers were taken by the five permanent members of the Security Council is disingenuous. Big powers criticise the UN but stop it from acting effectively.

E X E CUT I VE P UB L I S HE R JÉRÔME MILLAN

That ambiguity towards the UN in the 1990s has turned into outright hostility. Four days before Annan’s funeral, US national security adviser John Bolton called for the dismantling of the ICC for daring to consider legal complaints against US soldiers in Afghanistan and Israeli soldiers in the Palestinian territories. The ICC is just the latest target for The goal Bolton and President Donald Trump. seems to Move over WTO, be a system Trump has launched of bilateral a trade war against China and Europe. deals, Also in their sights are without any the World Bank and US participation in outfits tough global such as the AfDB. rules Their goal seems to be a system of bilateral deals, without any cumbersome international rules. An isolationism that could see the end of US participation in the UN system, and most importantly the end of its acceptance of international regulation – on climate change, genetic engineering or artificial intelligence.

It also coincides with some power shifting away from the US and Europe towards Asia. The rise of China is the critical factor.

It is now the third-biggest funder of the UN, so not everyone is giving up on multilateralism.

Annan’s life and work should concentrate the minds of Africa’s internationalists. Whatever the flaws in the global system, trying to make it more accountable and representative is a far better course than joining the race to put the UN and its fellow acronyms on the funeral pyre.

THE AFRICA REPORT

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M A R K E T I NG & D E VE L O P M E NT ALISON KINGSLEY‑HALL E D I T O R I N CHI E F PATRICK SMITH M A NA G I NG E D I T O R NICHOLAS NORBROOK editorial@theafricareport.com A S S O CI AT E E D I T O R MARSHALL VAN VALEN R E S E A R CH & P R O D UCT I O N OHENEBA AMA NTI OSEI RE G IO NA L E D I T O R CRYSTAL ORDERSON (SOUTHERN AFRICA) A RT & L I F E E D I T O R BILLIE ADWOA MCTERNAN S UB - E D I T O R ALISON CULLIFORD P R O O F R E A D I NG KATHLEEN GRAY A RT DI R E CT O R MARC TRENSON DESIGN VALÉRIE OLIVIER (LEAD DESIGNER) SYDONIE GHAYEB CHRISTOPHE CHAUVIN (INFOGRAPHICS) CAMILLE CHAUVIN R E S E A R CH SYLVIE FOURNIER P HO T O G R A P HY CLAIRE VATTEBLED ALICE FOURNIER FRANÇOIS GRIVELET XAVIER ROUSSEAU SALES A JUSTE TITRE Tel: (33) 9 70 75 81 77 contact‑ajt‑sifija@ajustetitres.fr CONTACT FOR SUBSCRIPTION: Webscribe Ltd Unit 4 College Road Business Park College Road North Aston Clinton HP22 5EZ United Kingdom Tel: + 44 (0) 1442 820580 Fax: + 44 (0) 1442 827912 Email: subs@webscribe.co.uk ExpressMag 8275 Avenue Marco Polo Montréal, QC H1E 7K1, Canada T : +1 514 355 3333 1 year subscription (10 issues): All destinations: €39 ‑ $60 ‑ £35 TO ORDER ONLINE: www.theafricareportstore.com A D VE RT I S I NG D I F CO M INTERNATIONAL ADVERTISING AND COMMUNICATION AGENCY 57‑BIS, RUE D’AUTEUIL 75016 PARIS ‑ FRANCE Tel: (33) 1 44 30 19‑60 – Fax: (33) 1 44 30 18 34 advertising@theafricareport.com PRINTER: SIEP 77 ‑ FRANCE N° DE COMMISSION PARITAIRE : 0720 I 86885 Dépôt légal à parution / ISSN 1950‑4810 THE AFRICA REPORT is published by GROUPE JEUNE AFRIQUE

6

BREAKING THE GLASS CEILING, AT HOME AND ABROAD

B

The Nigeria Barometer

• Horn of Africa Ports and power plays • Migration Targeting the transit countries • South Africa Ramaphosa, the boa constrictor

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oth African women in the diaspora and women in Africa can join forces and learn from each other to eradicate the proverbial influential women in business sticky-floor syndrome and shatter the glass ceiling for the generations to come [‘50 influential women in business’, TAR102 July/August 2018].

The success of women in reaching the upper echelons of management on the continent should be a source of encouragement and inspiration for women in the diaspora, who also face unspoken and unacknowledged forms of discrimination. Whilst the conversation in Europe will readily recognise that the glass ceiling is still a reality when it comes to the gender divide, the discourse remains onedimensional. The invisible barrier […] becomes a sticky-floor hazard when race and ethnicity intersect with gender. Recognising that this reality shapes the opportunities and challenges women in the diaspora face at work […] will greatly contribute to creating more inclusive leadership.

Céleste Vogel, Attorney-at-law, Swiss Re, Zurich From left to right: Martine Coffi-Studer, Nadia Fettah, Sola David-Borha, Tabitha Karanja and Maria Ramos

likes to keep as straight as possible between the said stakeholders.

It’s a load of work way heavier and far beyond Anas’s scope. A one-man job this isn’t, in fact, rather a task that would take some comprehensive strategising and well-informed policy-making to properly address.

Sammie Frimpong, Editor-in-chief, thetoughtackle.com

JEUNE AFRIQUE MEDIA GROUP

INTERNATIONAL EDITION

Algeria 550 DA • Belgium €5.90 • Canada CA$ 7.95 • DR Congo US$ 9 • Denmark 60 DK • DOM 8 € • Ethiopia 130 Birr • France €5.90 • Germany €5.90 • Ghana GH¢ 10 • Italy €5.90 • Kenya KES 410 • Morocco 40 DH • Netherlands €5.90 • Nigeria 800 NGN • Norway NK 70 • Portugal €5.90 • Rwanda RWF 6,000 • Sierra Leone LE 15,000 • South Africa R40 (tax incl.) • Spain €5.90 • Sweden SEK 70 • Switzerland 9.90 FS Tanzania TZS 10,000 • Tunisia 5.4 DT • Uganda UGX 10,000 • UK £4.50 • United States US$ 6.95 • Zambia 48 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA • Euro Zone €5.90

FIXING FOOTBALL IS NOT A ONE-MAN JOB

football’s challenges, but it’s only the first of many. Much more effort is needed, especially with respect It didn’t take the stunning 6 June to developing football at the grassroots exposé by ace investigative journalist level, affording African players Anas Aremeyaw Anas to persuade and coaches the technical upgrade anyone that corruption runs through required to compete favourably with the core of African football – though peers from other parts of the world, it does help that the Ghanaian as well as building the capacity of highlighted the canker boldest clubs and domestic championships [‘The Question’, TAR102 July/Aug. 2018]. to attract more lucrative sponsorship And while people implicated should packages. The aforementioned set be dealt with as the laws apply, it of boxes waiting to be ticked is hardly is erroneous to think that such action exhaustive. Generally, greater […]would be all that’s required to give collaboration between governments the African game a clean bill of health. and football associations would Corruption may top the list of African be key, while minding that line FIFA

NIGERIA’S ATTITUDE TO MONOPOLIES Competition is encouraged in every business environment as the control of an economy by a few monopolies leads to stagnated growth [‘Nigeria: Playing Monopoly’, TAR103 Sept. 2018].

Sometimes, however, successful businesses are mistaken for monopolies as in the case of MultiChoice’s DStv, accused of monopolising digital satellite television services as a result of a recent hike in subscription prices.

It is also alleged that the dearth of competition in the pay-TV sector gives DStv the “undue advantage” of preventing other players from entering the market. While this is far from the truth, the absence of anti-monopoly laws in Nigeria feeds into this perception, as does the fact that DStv is a South African brand. Nigeria must break out of this mindset and pass anti-monopoly laws so that the real monopolists, such as in our building industry, stop harming our economy.

Cheta Mwanze, Social commentator, Nigeria

HOW TO GET YOUR COPY OF THE AFRICA REPORT

On sale at your usual outlet. If you experience problems obtaining your copy, please contact your local distributor, as shown below.

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8

At the end of August President Salva Kiir and former vice-president Riek Machar agreed to a truce that maintains many of the principles of the deal in place before South Sudan’s civil war started in 2013

Is the South Sudan powersharing deal bound to fail?

Yes MICHAEL ATIT Journalist, South Sudan

According to the power-sharing deal signed on 30 August between South Sudan’s government and opposition groups, President Salva Kiir will remain president during the 36-month transitional period, while opposition leader Riek Machar will resume his previous post as first vice-president. Salva has repeatedly said he is not ready to work with Riek. Despite this, the mediation team from the Intergovernmental Authority on Development (IGAD) have insisted and forced the two leaders to work together, without drawing lessons from the 2015 agreement which they had already messed up. The deal might also face the challenge of acquiring funds for implementation.

Troika countries – the UK, US and Norway – have said they are not ready to provide any financial assistance to South Sudan’s government if it doesn’t show a real commitment towards the full implementation of the peace agreement. This will be the first in the world ever: a country of nearly 12 million people that is lacking the basic necessities of life is to be governed by a president and five vice-presidents, 35 ministers, 10 deputy ministers and 550 members of parliament. Another factor that might cause the deal to collapse is the unresolved issue of the number of states and their boundaries.

No MARK FATHI MASSOUD Awardwinning author of Law’s Fragile State

In August, South Sudan’s warring political factions took their biggest step toward peace since civil war erupted in 2013. The complicated deal maintains President Salva Kiir’s political authority, brings vice-president Riek Machar back from exile and accommodates other rivals by calling for four additional vice-presidents and 45 ministerial posts. Unlike previous deals, this one has little support beyond its mediators in Uganda and Sudan.

Even if the power-sharing component of the deal falls apart, Juba’s political elites have opened a space from which local peace can emerge. Creating space for indigenous knowledge – including people sympathetic to and critical of the peace talks – is vital to securing a lasting peace. These include educators, elders, journalists, women’s groups, church leaders and activists, who often know how and where conflict emerges before politicians do. According to Amnesty International, however, since 2013 hundreds of state critics have been arbitrarily detained by the National Security Services. As one civil war survivor told me: “In the swamps, they don’t fear the crocodile.

They fear the government [and] army […] the bigger crocodiles they cannot escape.” Creating space for diffuse factions to come together locally creates hope. Over time, strengthening education, knowledge and social ties among South Sudan’s communities may also give South Sudan’s warriors space to put down their own weapons.

The lifespan of the [Agreement] depends on the willingness of the parties to accomplish the work they are supposed to do during the eight-month pre-transitional period.

If the issue of cantonment of forces is well-handled, the agreement will last.

But if the forces are not well cantoned, they can continue violating the ceasefire and the agreement could collapse.

Jale Richard I am not really optimistic […]. The duration of eight months for the formation of the transitional government is too long. Soon, the same game will start of counter accusations on the violation of the cessation of hostility.

We badly need peace, but we don’t trust our leaders.

Lodiong Edward Our hope is let it last, but also to see the other side. I see that the behaviour of our leaders can easily bring problems.

And if the Jieng Council of Elders keeps on advising the president, it will bring problems. Trust among leaders is very important for the implementation of this peace agreement.

Illario Bazia What can I say here? […] As citizens, we need peace, but it depends on our leaders. [...] I think their followers will lack commitment to implement the peace on the ground and it will not last long.

Stephen James Hakim

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Shaping the future of Africa

Save the date 7th edition

KIGALI

25 & 26 March 2019

www.theafricaceoforum.com ORGANIZERS

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ZIMBABWE

constitution is the key thing that it needs to do.” He says his government wants to see reform of public order, privacy and freedom of speech laws before talks will begin in earnest about Zimbabwe’s return to the international Mnangagwa faces fold. That, and Zimbabwe paying off tough choices its debt arrears, could take a long time.

Mnangagwa appointed a new government in September with some younger technocrats (see Hannibal, page 72), but the economic pain is likely to get worse before it gets better.

If Harare is serious about getting help from the World Bank and International Monetary Fund, it is going to have to slash public spending and show that it can live within its means. So far, it looks like Mnangagwa’s team privileges party loyalty over reform quality.

Both Mnangagwa and opposition leader Nelson Chamisa are grappling with their divided bases. Some ruling ZANU-PF backers are critical the administration. The stakes are high: of the prominence of vice-president Harare is counting on billions of dollars Constantino Chiwenga – a retired in investment in platinum-mining general who led the coup against and other projects announced before Mugabe – on Mnangagwa’s team. the elections for it to create jobs and As for Chamisa and the MDC ease the pain of economic reforms.

Alliance, he is no longer assured the Washington was quick to confirm support of the likes of former ministers that it is in no rush to remove sanctions Tendai Biti and Welshman Ncube, or change its opposition to any new who presented a united front in the bailouts or aid programmes. hope of defeating Mnangagwa. The Ambassador Brian Nichols told Voice MDC did worse in the legislatives than of America in September: “Zimbabwe’s in the presidential election, and now progress in building a democracy lacks positions of power from which that respects the tenets of the 2013 to challenge the new government.

PHILIMON BULAWAYO/REUTERS

Cuts in the time of cholera

W

ith his late August inauguration behind him, President Emmerson Mnangagwa has a long list of worries ahead, from tetchy relations with Western governments and a grinding economic crisis to a September cholera outbreak. The July elections closed a chapter on the military coup against former president Robert Mugabe, but the killing of seven protesters and claims of electoral fraud meant that there was little improvement in the way Western governments view

with instability in the streets […] it is necessary that everyone accepts the result ”

POPULATION, ALL AGES, 1950-2100 (billions) 5 4 3 2 1

Estimates Africa Europe

Projections SOURCE: UNITED NATIONS

Free-trade deals and migration are high on the current agenda between Africa and Europe, and are set to be for a very long time as Europe’s population stagnates before falling and Africa’s maintains its rise and rise. With a forecast population of nearly 4.5bn people by 2100, Africa’s demographic growth could be a boon or a burden. It could give Africa tremendous weight in the global economy and vast political influence, providing those people have productive jobs, live in accommodating environments and enjoy good health. To make that happen, African leaders already need to be making policy decisions

“You cannot vote

on how to boost agricultural production, how to turn robotics and artificial intelligence from a threat into a driver of industrialisation, and how to build the health infrastructure to deal with current threats like Ebola and the unknown health challenges to come.

0 1950 1980 2010 2040 2070 2100

FRANCOIS MORI/AP/SIPA

POPULATION THE GREAT DIVIDE

Libya’s Prime Ministter Fayez al-Sarraj says that international pressure to hold elections is misplaced.

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PICTURE OF THE MONTH The FlipFlopi Dhow, made entirely of recycled plastics (including 30,000 flip-flops) by traditional craftsmen

on the island of Lamu, at its launch on 15 September. The crowdfunded dhow will sail from Kenya to Cape Town to spread its #plasticrevolution.

RUSSIA MOSCOW MAKES ITS MOVES IN AFRICA

TANZANIA MOVING FORWARD

RUSSIA’S AFRICAN ARMS TRADE

78%

Algeria

Egypt

Algeria’s share in Russia’s arms exports to Africa

Sudan

Share that Africa represents in Russia’s total arms trade

Ghana

13%

Nigeria

Kenya

NATURAL RESOURCES: RUSSIA’S STATE-OWNED COMPANIES IN AFRICA

17% 11%

Rosneft Oil

China United States

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Alrosa Diamond

Rosatom Civil nuclear

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IS TANZANIA HEADED IN THE RIGHT DIRECTION?

(respondents who said “yes”)

100 Angola

Gazprom Gas

Russia

Libya

Zambia Zimbabwe Botswana

SOURCE: SIPRI AND TAR RESEARCH

39%

When President John Magufuli cracks down on bloggers or makes controversial statements about birth control he sets tongues wagging – but rarely does it hurt his popularity.

In an Afrobarometer poll from 2017 nearly two-thirds of people surveyed said Tanzania is now going in the right direction – compared to a quarter in 2014, under Magufuli’s predecessor, Jakaya Kikwete. The economy continues to grow strongly, with Magufuli touting his anti-corruption credentials and plans for industrialisation.

80

62 %

60 40 20 0

25 %

2014

2017

SOURCE: AFROBAROMETER

Share and source of arms sold on the continent

BAZ RATNER/REUTERS

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24

The Abiy

effect Ethiopia

Ethiopia is changing in the blink of an eye thanks to its new prime minister, Abiy Ahmed.

The Africa Report takes a look at the man and his impact on politics, economics and the wider East African region Tom Gardner in Addis Ababa, William Davison and Nicholas Norbrook

I

n a short few months, Prime Minister Abiy Ahmed has upended the canons of Ethiopian politics, diplomacy and business.

He has closed a prison, opened the economy and ended a war. In his religious oratorical style and his pledges of unity and democracy, he recalls former US president Barack Obama. Through his youth and reforming zeal, he shares similarities with France’s President Emmanuel Macron.

It is hard to point to an African peer.

“Difference is not a curse,” Abiy told parliament during his maiden speech in April of this year. “In argument, solutions will be found.” In a country where the government often put members of the political opposition in jail, this is a revolution. Over the past three years, thousands ofpoliticalopponentsweresilenced;now Abiy has promised free and open competition in elections planned for 2020.

He has a long way to get there, and he needs the cooperation of his peers in the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF).

In the youngest continent, which suffers from having the oldest presidents, a 42-year-old leader is a strong signal. But it is one thing to talk about Africa’s ‘youth bulge’ in the abstract; it is another to actually govern millions of young people. Ethiopia’s youth want to see the new government create jobs, support innovation and foster debate – not just in the capital, Addis Ababa.

Abiy has a chance to tweak the model that took Ethiopia from the famine-hit 1990s to its present-day strength. If he can marry the state-backed development that has delivered high growth to an open and vibrant private sector, he might just create a blueprint for other African countries: one that goes beyond the dead-end of authoritarianism and

MULUGETA AYENE/AP/SIPA

On 23 June, Ethiopians rallied in their thousands to show support for Abiy’s reforms

26 FRONTLINE | ETHIOPIA: THE ABIY EFFECT

HEALING A NATION

This fresh dynamic has helped Eritrea solve its own conflict with Djibouti.

Even the South Sudan peace process has received a lift. Cairo and Khartoum are on board, for now. Suddenly, the possibilities of a genuinely integrated Afro-Gulf region seem alive.

It is at home in Ethiopia, however, that the real possibilities lie. First, in avoiding the politics of fracture that had experts worrying about a Yugoslaviastyle scenario. In asking forgiveness of the families of individuals who were broken by state security forces, Abiy is starting to push the kind of healing seen in South Africa’s post-apartheid Truth and Reconciliation Commission. And second, in restructuring the economy.

It can be hard to fathom how the country has become a juggernaut. In 2017, Ethiopia overtook Kenya as East Africa’s largest economy. Ethiopia’s trajectory takes the breath away. It grew tenfold in less than 15 years, from a gross domestic product of $8bn in 2003 to $80bn in 2015.

By 2020, it should be a $100bn economy, with more than 100 million people.

But Ethiopia’s old model is running out of steam. The opening up of its relatively protected economy could provide the investment needed to reboot it. In so doing, this could reshape the business dynamics of the region for the next decade.

There are potholes to be negotiated: disgruntled elements from the old order, Emirati impetuousness and the rekindling of ethno-nationalist differences, for example. But there is also a chance for real change in Addis Ababa, in the country’s restive Somali region, and N.N. beyond Ethiopia’s borders.

Abiy Ahmed

The path to power

Ethiopia’s first Oromo prime minister rode to high office on a wave of popular discontent. Is he the Machiavellian his rise suggests, or the unifying democrat outlined in his speeches?

P

rime Minister Ahmed Abiy said He later became acting director of the Information Network Security in his first speech to parliament: “Ethiopia is a country of fertile Agency (INSA), the national cyberwomb. It has produced many children security agency he had helped to that strive relentlessly out of a great establish. After leaving the army in spirit of love for the country.” his early 30s, he re-joined the OPDO. He had someone in mind. Soon after He became a member of the federal he became prime minister, Abiy was parliament and then briefly served as revealed as the author of The Stirrup science and technology minister in and the Throne, written in 2016 under the cabinet of former prime minister a pseudonym. The book shows the Hailemariam Desalegn, who resigned in February after long spates of viofuture Ethiopian leader meditating on power – he cites Machiavelli, among lent protests and clashes in Oromia others – and how to acquire it. and other regions.

Abiy certainly has a hard-work BACK TO BASE ethic. The speed and ambition of In 2016, Abiy returned to his home his reforms have caught potential region of Oromia to become regionopponents off guard, not having time to coalesce before the next big change al vice-president. His critics argue is upon them. that during this period he and his Prime Minister Abiy is deeply close colleague, regional president ambitious. His meteoric rise to Lemma Megersa, took advantage of anti-government sentiment in Oromia the summit of the ruling EPRDF to reposition themselves as populists. coalition may have taken outsiders by surprise, but those who knew the Abiy’s supporters argue that both men thrusting 42-year-old from the Oromo genuinely sympathise with the grievPeoples’ Democratic ances of young Oromos, many of whom were Organization (OPDO) flung into prison during were far from shocked.

Hailemariam’s rule. They And former colleagues point to Abiy’s doctorate recall him openly sayEthnic conflicts, in conflict resolution and ing he would become including in West Guji violent extremism from prime minister many and Gedeo, have Addis Ababa University years ago. produced almost 1.4 in 2017 as evidence Abiy had been workmillion new displaced ing his way up the greasy that he cares about the people in the first pole of EPRDF politics six months of 2018 region’s problems. In for decades. He says any case, both he and Lemma became enormously popular he joined the OPDO as a teenager, over the course of 2017, catapulting when it was still a rebel movement them into the spotlight. advancing on Addis Ababa in 1991.

He later joined the national army, In 2018, soon after Hailemariam’s serving under Tigrayan generals and resignation, Abiy was elevated to forming connections with influential chairmanship of the OPDO in order members of the Tigrayan People’s to contest the top job in Addis Ababa.

Liberation Front (TPLF), the most Lemma, who is not a member of the federal parliament, was ineligible. On powerful force in politics from 1991 27 March, Abiy convincingly won an until Abiy took office.

1.4m

SOURCE: IDMC

which offers genuine opportunities for shared growth.

But while there is much to be said for the soft power of example, Abiy is also at the centre of a tectonic shift in hard power intheHornofAfricaandthewiderregion.

Ethiopia holds a key position in East Africa’s 21st-century power dynamics, as competing Gulf powers try to yoke neighbouring Eritrea into proxy wars in Yemen, and China and the US are quietly measuring each other up in Djibouti.

With adept diplomacy, Abiy has defused conflicts with neighbours. For the first time in 20 years, an Ethiopian ship docked at an Eritrean port and regular flights between the two countries have started, all of which was unthinkable a few months ago.

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ETHIOPIA: THE ABIY EFFECT | FRONTLINE 27

internal EPRDF vote to become chairman of the coalition and, by extension, prime minister. Explaining Abiy’s rise to the top, Georgetown University’s Harry Verhoeven comments: “This is a brilliant but highly ruthless operator.”

Tasked with reform: Abiy’s appointees

Since then, two words – democracy and medemer (Amharic for ‘unity’ or, more literally, ‘to add together’) – have become the themes of Abiy’s premiership. If there is one philosophy Abiy professes to be genuinely committed to, it is multiparty democracy. He said clearly: “My dream and interest is to bring real democracy to Ethiopia.”

Despite coming to power on a wave of Oromo ethnic nationalism, his repeated use of the word medemer is an indication that Abiy – a polyglot of Christian and Muslim heritage – wants to be seen as a unifier of Ethiopia’s fractured Fitsum Arega ethnic politics. It also To keep the trains running reveals a distinctly reon time in his office, Abiy has chosen an age-mate, Fitsum ligious rhetorical style, Arega, as chief of staff. Happily setting him apart from enough for investors, Fitsum his predecessors. knows Ethiopia’s private sector Although the EPRDF inside out, having previously headed Ethiopia’s Investment ran a one-party state, Commission. He has become not everyone is supthe gatekeeper for acces portive of the changes Seare Mekonnen Ambachew Mekonnen to the Premier, as well as his Abiy promises. A bomb mouthpiece, using his Twitter Bringing in his own man With stuttering exports, Ethiopia account to deliver Abiy’s views. exploded at a pro-Abiy as military chief of staff was needs to focus its state-driven essential for Abiy. In addition, model on delivery. The rally in Addis Ababa’s Seare Mekonnen is Tigrayan, new minister of industry, Meskel Square on 23 June, which the helping assuage fears in the Ambachew Mekonnen, has government has since linked to former north. Whether he can manage that task. A rising star in the officials. Investigations are ongoing. His the current rising insecurity Amhara ANDM party, Ambachew levels is another question. says that Ethiopia exported ability to manage the security services Brutal attacks in recent weeks $488m in manufacturing goods is being closely watched by observers. on different communities such in 2017/2018, only half of its Lemma remains Abiy’s closest confias the Somalis in the East, and target. His goals are to jumpstart dant and ally. The two are often together on the outskirts of Addis Ababa, electricity production and will test the ability of the army. logistics to make up ground. at official events, even travelling abroad side by side. Lemma is a crucial link to Abiy’s Oromo base. “from the bottom of my heart”, for all listening tour of the country, holding the lives broken on the torturers’ racks.

Another key figure is chief of staff rallies and town-hall-style meetings But, despite Abiy’s liberal and outFitsum Arega, former head of the in key cities and towns – notably in wardly democratic stance, many criticise Ethiopian Investment Commission, the Somali Region, a strong sign that his top-down governing style. All key and now his gatekeeper and de facto he wants to mend fences between the decisions appear to come from the spokesman. An important new appointOromo and Somali communities (see ment points again towards Abiy’s liberal prime minister’s office alone. He makes TAR101, June 2018). leanings: Mamo Mihretu, a HarvardAbiy’s government has shut down the announcements on Twitter through his educated former project manager at chief of staff and rarely speaks to the notorious Maekelawi prison in the capmedia. With so much promised by just ital and launched prosecutions against the World Bank, is now his chief trade some prison officials for their roles in one man, avoiding a cult of personality negotiator and a senior policy adviser. torturing prisoners. In his swearing-in will be Abiy’s next challenge.

Abiy’s inclusive style is not just rhetTom Gardner in Addis Ababa speech as prime minister he apologised oric. Upon taking office, he went on a THE AFRICA REPORT

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SALWAN GEORGES/THE WASHINGTON POST/GETTY IMAGES; ALL RIGHTS RESERVED; FDRE; TWITTER/ EUINETHIOPIA

REAL DEMOCRACY

JIRO OSE/REDUX-REA

28

Could privatising state-owned enterprises prove to be the cash cow Ethiopia needs?

Economy

The state goes to market

A re-jig of Ethiopia’s developmental-state model will create more room for the private sector and bring in much-needed capital

P

SOURCE: IMF

rime Minister Abiy Ahmed’s ecoplants and a vast fertiliser complex, with nomic views were largely a mystery private companies expected to take over. when he took office in April. An “WhathashappenedinEthiopiahasbeen Abiy premiership, it appeared, would remarkable,” Belachew Mekuria, head of the Ethiopian Investment Commission leave the commanding heights of the so(EIC), told The Africa Report before his called ‘developmental state’ untouched.

But in June, he announced plans that resignation on 11 September. “We are, were radical and unexpected. Statein a way, rewriting our developmental owned telecoms, power and the national model in a very significant manner.” airline are all set to open to foreign invesThat is a bold undertaking. Over tors for the first time. Railways, sugar facthe past decade, the government’s tories, industrial parks, hotels and some ETHIOPIA’S RAPID GDP RISE ($bn) manufacturing firms will also be partially or fully privatised. In September, the government lifted restrictions on the 85.66 logistics sector, opening it up for joint 80.87 ventures with foreign companies.

73.15 Abiy has also moved to end the dom64.68 inance of the state-owned Metals and Engineering Corporation (Metec), a 55.51 47.66 military-industrial conglomerate that has 43.13 played a crucial role in many of the coun32.46 31.96 try’s megaprojects over the past decade.

The government cancelled or suspended 29.92 huge contracts for the construction of the GrandEthiopianRenaissanceDam,sugar 2009 10 11 12 13 14 15 16 17 2018

development model has delivered gross domestic product (GDP) growth of around 10% per year – the fastest and most consistent rate in Africa. Poverty fell by a third between 2000 and 2011, according to the World Bank.

The next step, says World Bank Ethiopia director Guangzhe Chen, is the development of a vibrant private sector. “The public investment rate of Ethiopia is the third highest in the world, while the private investment rate is the sixth lowest,” Chen told reporters.

Thatcouldbeaproblem.TheEthiopian People’s Revolutionary Democratic Front’s (EPRDF) ideology has never been static, but mistrust of the private sector runs deep. The state-centred economics of Meles Zenawi, leader of the EPRDF until his death in 2012, have long enjoyed broad-based support among Ethiopian elites, more so than the party’s authoritarian politics. Privatisation, especially of the highly profitable flag carrier, Ethiopian Airlines,isperhapsthemostcontroversial aspect of Abiy’s agenda.

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ETHIOPIA: THE ABIY EFFECT | FRONTLINE 29

Many economists, however, regard In August, Abiy announced that the a degree of liberalisation as necessary.

World Bank had agreed to provide $1bn Ethiopia’s modelincreasingly seems to be in budget support in the coming months, its first since it suspended budgetary running out of steam. Most of the government’s targets look wildly unattainable help after a disputed and violent election in 2005. This came two months after – especially those for manufacturing, the United Arab Emirates pledged to such as 200,000 new jobs per year.

The country needs to raise more than deposit $1bn in Ethiopia’s central bank to ease the foreign-currency shortage. $13bn over the next two years, according Nemera G. Mamo, an to Yinager Dessie, governor of the central bank. The economistatQueenMary’s International Monetary University, London, says he doubts that the reform Fund (IMF) reckons that agenda amounts to a fix for this year growth will slow Ethiopian public debt Ethiopia’s troubled econoto 8.5%, and exports have as a percentage my. “Nothing is clear about barely grown over the of GDP at end 2017. what Abiy is trying to do,” past five years.

Most is in foreign Nemera says. “We are yet Public debt has reached currency, which almost 60% of GDP, most to see what his strategy is.” is in short supply.

In the short term, priof which is in foreign curvatisation is expected to bring in some rency. This year has seen defaults on much-needed foreign exchange, not Chinese loans, and businesses of all least because the government has said stripes have been suffering from an the majority of shares will be offered to acute shortage of hard currency. At the non-Ethiopian investors. Reducing the meeting with business leaders in April, number of new government projects, Abiy warned that without a substantially which it has also promised, may also improved export outlook, the pain might last for another 15 to 20 years. free up scarce capital.

Many of the state-owned enterprises established to achieve the government’s five-year goals – notably the Ethiopian SugarCorporation–aremiredindebtand project delays. Some megaprojects, such as a Chinese-built railway connecting Addis Ababa with Djibouti, are operating under capacity. “There are some serious problemswiththemachineryoftheeconomy,” says Tewodros Gebrewolde of the International Growth Centre.

SOURCE: IMF

57%

But besides Ethio Telecom and Ethiopian Airlines – which for now only plans to sell subsidiary assets such as its hotels, airports and logistic arm – interest may be weak in other areas. Many investors are put off by Ethiopia’s capital controls and Byzantine bureaucracy.

They are also tracking the fate of the Ethiopian-born business baron Sheikh Al Amoudi, who was recently detained in SaudiArabiaoncorruptioncharges.Since Abiy took charge, his company Midroc’s largest gold licence was suspended, and some of his properties in Addis Ababa have been threatened with repossession.

So does an Abiy premiership spell the end of the developmental state? Many Ethiopians argue that what is emerging is fundamentally different to Meles’ vision. But others say the developmental state is simply evolving. “People have forgotten that the state invested in the economy not to stay in it forever,” says Henok Assefa, chief executive of Precise Consult. “Indefinite state ownership was never on the table – but people got used to it.”

Tom Gardner in Addis Ababa

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GIOIA FORSTER/DPA/ABACA

TELCOMS READY TO POUNCE

But previous red lines are being crossed every day in the new Ethiopia. For example, to help assuage Ethiopia Electric Power’s debts the electricity ministry has proposed a fourfold rise in tariffs, now awaiting ratification by the cabinet. The financial sector has seen a mild softening of regulations affecting private banks. And, while the previous central bank leadership considered stock exchanges as akin to legalised gambling, Yinager seems more likely to accelerate changes.

Foreign investors have welcomed Abiy’s announcements. Telecoms operators, in particular, have been enthused by the prospect of a stake in Africa’s last big telecoms monopoly. Germany’s Deutsche Telekom has expressed interest in a joint venture, as have South African groups MTN and Vodacom.

Delays at hydro projects have been blamed on Metec failures

Metec Big shake-up for industrial vanguard ONE OF ABIY’S first decisions in power was to shake up the board of Metec, the militaryindustrial conglomerate that Ethiopia was betting on to be the leading edge of its industrialisation policy.

And Metec was set up to succeed; it was given big budgets

and big contracts in the sugar and electicity sectors. In a nod to best practice from other ‘developmental states’ like South Korea, it had former army officers in charge to avoid corruption from eating into effectiveness.

It didn’t work. General Kinfe Dagnew ‘resigned’

in April, and new industry minister Ambachew Mekonnen was installed as chairman. Three of Metec’s sugar factory contracts have been cancelled and a fertiliser factory is under review.

It will now be split into two parts – defence and commercial.

N.N.

30 FRONTLINE | ETHIOPIA: THE ABIY EFFECT

Politics

Solving a fractured ethnic puzzle

Security and navigating the complex web of ethnic politics will dominate Abiy’s first years in office as he tries to bring unity to the diverse country a leadership challenge improbable.

Instead, the coalition may well fragment further as each party turns to its region.

This is certainly the case for the TPLF, which has refocused at home under the leadership of Debretsion Gebremichael.

Paramount for the TPLF is the case of Eritrea, with many members aghast at the rehabilitation of President Isaias. But both the party and the Tigrayan people are torn, as renewed trade and an end to border militarisation are welcome.

SURGE IN VIOLENCE

groups who are ‘conflict entrepreneurs’.

We have no doubt about that,” said Abiy at his first press conference.

Whether this destabilisation is by design or a function of the dismantlement of the security apparatus is unclear. Abiy has placed his own men at chief of army staff and intelligence; they now need to bring the military to heel. In some

“There are organised groups who are ‘conflict entrepreneurs’.

We have no doubt about that ”

“Our struggle will come to an end only when we create a country where the youth live without fear ”

Prime Minister of Ethiopia Abiy Ahmed

Patriotic Ginbot 7 secretary general Andargachew Tsege

AFRICA LIVE CAPTURE

Across the country, there has been a surge in communal and mob violence, including killings of Tigrayans, as well as likely assassinations. This follows a widespread belief that remnants of the TPLF-led regime are trying to derail Abiy’s reforms. Although there is no hard evidence, there is a likelihood that networks previously controlled by the likes of spy chief Getachew Assefa are causing problems. “There are organised

YONAS TADESSE/AFP

B

y inviting back exiled oppositionists, releasing prisoners and opening the political space for media and civil society, Prime Minister Abiy Ahmed has upended two decades of repressive rule. Celebrations break out during his whistle-stop tours both at home and visiting the diaspora. “This is the most promising opportunity to install a democratic order in Ethiopia, and we should all work together to make it a success”, Oromo opposition leader Leenco Lata tells The Africa Report.

But detectable beneath the euphoria is asteadyrumble.Muchofthiscomesfrom the far north, as the Tigrayan People’s Liberation Front (TPLF) has seen its dominance of the EPRDF evaporate.

The TPLF has even been sidelined as the new prime minister made historic steps towards peace with its fellow Tigrinya speakers across the border in Eritrea.

Abiy’s ascendancy was the first major shock to the TPLF system, but more was to come. He accelerated political amnesties and said that torture had been systemic. Many took this as an official indictment of TPLF rule. The upshot of Abiy’s approach was an undermining of the coalition that he chairs and that has ruled since 1991.

The EPRDF was engineered by the TPLF, which also formed a new military from the fighters who unseated the Derg military regime. The party was influential in erecting a system of federalism based on ethno-linguistic communities and propagating the quasi-Marxist approach of ‘revolutionary democracy’. All of that is now under threat – and Abiy has said he wants elections by 2020, further ratcheting up the tension.

The immediate challenge for Abiy is establishing a consensus within the EPRDF. Given his popular support, he has considerable power, which makes

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After a 2016 brutal crackdown on protesters the Oromo gesture of defiance went viral

ABIY’S OLIVE BRANCH

While Abiy has tackled domestic malcontents,hehasalsoextendedanolivebranch tomostformerenemiesoftheEPRDFand announced his intentions for all groups to participate peacefully in elections in 2020. This has been successful so far, with the return of organisations like Patriotic THE AFRICA REPORT

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Ginbot 7 and OLF splinter groups including Lata’s Oromo Democratic Front, the positive response of the Ogaden National Liberation Front, a Somali insurgency, and the homecomings of high-profile activists like Jawar Mohammed and Tamagn Beyene.

The ambitious Prime Minister seems sincere in his intention to oversee rapid and full democratisation, but the route to get there is tortuous. His most substantive step so far is an ongoing effort to reform a repressive anti-terrorism law and restrictive civil society legislation, along with hazier efforts to improve judicial

ETHIOPIA’S ETHNIC GROUPS (2007 estimates) Oromo Amhara Somali Tigray Sidama Gurage Wolayta Hadiya Afar Gamo Gedeo Silt'e Kafficho other

8.8%

34.4%

1.2% 1.3% 1.3% 1.5% 1.7% 1.7% 2.3%

SOURCE: CIA WORLD FACTBOOK

instances, it seems a relative security vacuum is being exploited, as with recent mobilising by an OLF faction in western Oromia and growing vigilantism. The Sidama people’s renewed push to secede from the Southern Region again suggests that some actors are using the opening to advance their own claims.

Another flashpoint has been Somali Region, whose tyrannical chief administrator, Abdi Mohamed Omar, was backed

by TPLF elements and who was a major protagonist in serious ongoing conflict in the Oromia-Somali borderlands (see TAR101, June 2018). Abiy ordered the military to remove Abdi, in a move many classed as unconstitutional. Somali Region’s newleaderis anactivist, Mustafa Muhamud Omer, which is an indicator of Abiy’s bold and breezy strategy for edging out of this transitional crisis.

ALBIN LOHR-JONES/PACIFIC PRESS/LIGHTROCKET VIA GETTY IMAGES

independence and media freedom. This should allow more of the advocacy and activism needed to create the environment for competitive elections.

A diverse set of parties seem content with the political opening and united in their pleasure at the TPLF’s diminishment. But the enmity between , ; some opposition groups is as strong as their objections to the TPLF/EPRDF system.

Most acute is the argument over identity politics and multinational federalism, which provides autonomy for ethnic communities and erects administrative boundaries between them.

2.5% 4% 6.1% 6.2%

27%

COMPROMISE NEEDED

While ethnic parties like the OLF see it as a vital system for ensuring Oromo autonomy, others such as Berhanu Nega’s Ginbot 7 view it as a segregating tool of the TPLF that was used by that minority’s leaders to divide and rule.

For oppositionist Leenco Lata, there is something of the Cold War’s logic of mutually assured destruction in all the competing views. “If political actors really feel responsible, they have no choice but to negotiate a compromise”, he says, “or else the alternative is a total breakdown of order, which we should try and avoid at all costs.”

Given Abiy’s intention for the EPRDF’s one-party rule to end, these are also relevant questions for the Front’s member parties. To succeed in a competitive environment, Abiy’s Oromo OPDO will have to find a balance between exercising federal power and bringing the country together, all the while outflanking the OLF. Until Abiy and Lemma Megersa’s double act, for example, the party was derided as a pawn of the TPLF. The challengeispossiblygreaterfor the AmharaNationalDemocraticMovement, which is as discredited as the OPDO was before its revival. Its younger leaders are tacking towards a more ethno-nationalist position, a stance that disturbs other Ethiopians. Before the TPLF took charge in the early 1990s, Amharic-speaking elites were viewed as oppressors of the Oromo and other ethnicities.

There is little doubt that the TPLF’s losses mean gains for others and a generally more vibrant, hopeful phase for Ethiopian politics. But the demise of the most powerful party and its authoritarian ways by no means resolves all of the outstanding disputes in a complex, diverse and troubled federation.

William Davison

32 FRONTLINE | ETHIOPIA: THE ABIY EFFECT

“People can air their views about politics freely ” Goitom Gebreluel, adviser at ILPI Centre for African Studies “Abiy has already delivered quite a lot.

He’s already taken very important steps towards neutralising the old security establishment, essentially the TPLF, which is an extraordinary achievement.

It required a great deal of courage to confront that group of people and he did that successfully.

He’s also been able to liberalise a great deal of the political space, which is another important and significant achievement: the fact that people can air their views about politics freely – even the TPLF, which is pretty much still intact and is able to criticise Abiy and his government.

Finally, he’s been able to bring together very divergent and contradictory political forces that we never thought could actually sit together and hammer out deals – such as the OLF, Ginbot 7 and Isaias Afwerki – while even maintaining a role for the TPLF. It’s a very difficult balancing act. There are a lot of things that could have been done better but I don’t think we should underestimate those achievements. Because no one has done that before.

My main criticism is that he seems to be departing from both the revolutionary democracy and the developmental state paradigms of the EPRDF and he’s taken steps towards liberalisation of both the economy and the political sphere — all of which is good – but we don’t have a very coherent, substantive, ideological framework to deal with it now. And in a country like Ethiopia I think that’s important. So the question is: what is the EPRDF under Abiy Ahmed?

We don’t know that yet.”

“His most difficult problem will come from the Oromo ” Hassen Hussein, member of the Oromo Democratic Front “What Abiy has done over the past five months has been remarkable – nothing short of miraculous.

He has infused hope in the populace, helped a lot in reducing tensions between different communities.

He has unified the country in a manner that is

unprecedented. He has shown people the path forward, people are happy with what he is doing.

He has instituted vital and concrete reforms long in demand by the public, and implemented changes that were unthinkable only months ago.

In just six months Abiy Ahmed has made sweeping reforms towards liberalising and unifying his country, but is this progress sustainable? Three Ethiopians reflect on his record so far

Question Is Abiy on the right track?

I see Abiy as someone who has done his homework, as somebody who came to the job fully prepared, with really clear ideas. What he is doing is exactly the things he had been talking about before assuming the position.

However, since transforming Ethiopia takes more than Abiy, in terms of surrounding himself with like-minded people, I think he has a lot of work to do.

Governing Ethiopia has never been easy. There are a lot of voices and a lot of groups, mostly at odds with each other. He is trying to bridge that, and in a divided society making everybody happy is the most

difficult – almost impossible – task. So far he has been able to pull it off, which is an extraordinary achievement.

Some of the problems are structural: it will take a miracle to create employment for this many youth. It will never happen overnight. How do you do that, at the same time as having a highly politicised youth, with demands and grievances?

But for me I think his most difficult problem will come from the Oromo. Years, decades, centuries of builtup grievance: how to meet their demands without alienating his other important coalition partners? I think that will be the most difficult task for Abiy.”

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KARIM SAHIB/AFP

A visit to the Emirates and a peace deal signed

The region An Afro-Gulf renaissance

“It’s time for him to come up with a concrete strategy ”

New agreements with African and Arab neighbours should help Ethiopia better integrate into global trade

T

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he sight of Eritrea’s President – which in February nationalised the Isaias Afwerki all smiles and 800,000-container-a-year Doraleh Port built and operated by the UAE’s DP arm-in-arm with Ethiopia’s Prime Minister Abiy Ahmed in July was a turnWorld – pulls in multiple players. Some 90% of Ethiopian exports and imports ing point. It opens up potential for a new regional dynamic with Arab neighbours transit through Djibouti, while China is also building new ports there. and creates an opportunity to isolate the militants wreaking havoc in Somalia. A The Isaias-Abiy peace also revealed peace dividend – Ethiopia and Eritrea some tough realpolitik. Emirati ruler were in conflict since 1998 – should allow Mohammed bin Zayed is using the governments to prioritise development Eritrean port of Assab to prosecute a war over security, and open new routes to in Yemen, as well as building another global trade for landlocked Ethiopia. port in Somaliland. Bin Zayed was crucial to the Eritrea-Ethiopia mediation, The détente also illustrates the extreme geopolitical pressures that agreeing to inject $3bn into run through the Horn of the Ethiopian economy a Africa. Ethiopia plays a few days before the peace deal was signed. key role in the balance of However it gets there, rival powers. Ever since the Aid and investment Suez Canal was carved out Ethiopia could use the shot in Ethiopia pledged in the arm that diversifyof Egyptian soil in 1869, the

by Abu Dhabi crown Red Sea and Gulf of Aden ing its ports will provide. prince Mohammed Exports have flatlined dehave been a strategic choke bin Zayed, smoothing point for global powers. spite muchhype around an the ground for the Abiy-Isaias peace deal Today,thoseincludeheavyexport-driven renaissance. weights like the US and By diversifying its routes China and a multiplicity of competing through Eritrea, new projects become viable. A port planned by Eritrea in the Gulf players: Turkey and Qatar on one Bay of Anfile will help Danakali to export side, and Saudi Arabia and the United from its $320m Eritrean mining project; Arab Emirates (UAE) on the other. fertiliser giant Yara may also be able to There are billions of dollars at stake, use it for its $700m Ethiopian potash and the slightest missteps could quickly change the dynamic. For example, a mine on the other side of the border.

Nicholas Norbrook dispute between the UAE and Djibouti SOURCE: GOVERNMENT OF ETHIOPIA

“I think the question is whether he is realistic in his approach. He is trying to to bring together very different ideological, ethnic and religious disparities. Much has been invested over the past few decades in those differences, and some have been exploited by political entrepreneurs. But they are also based on genuine political questions: about the way power has been distributed among Ethiopians. So we need to ask whether Abiy’s approach to reconciliation – a very smooth and fluffy, almost pastoral approach – is the right one to employ. I think reconciliation is much-needed, but at the same time he needs to properly use the power of the state to maintain security. If that security is threatened it will immediately jeopardise his project of reconciliation.

He is a very different kind of politician, a very peculiar politician, and that struck the right chord with Ethiopians in all corners. But now the euphoria is dying down and people are waking up to a much ruder reality. I think it’s about time for him to come up with a concrete strategy, if he has one.

In some ways he might be playing it safe for the next couple of years until the election, avoiding tricky questions like the constitution and ethnic federalism.

If he gets elected with a mandate then maybe he will come up with something more definitive. In the meantime he is trying to handle a very complex country, and we need to understand that.”

THE 3 QUESTION PICTURES: ALL RIGHTS RESERVED

Mohammed Girma, lecturer, London School of Theology

$3bn

47

Angola President João Lourenço: some say the country’s cleansing is only skin-deep

Lourenço’s

VLADIMIR ASTAPKOVICH/SPUTNIK/AFP

long road The Angolan president has dealt some big blows to the former ruling family and corrupt chief executives of state-owned entities, but he still has a long way to go to bring the country out of its economic crisis and attract the kind of investors who value transparency and ease of doing business Paulo Guilherme Figueiredo and José Gama in Luanda

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he backbone of Angola’s road system is the LuandaHuambo road. About 550km long, it is an essential route for connecting farms in the centre and south of the country to the capital city’s market.

But what should be a scenic five-hour drive through the country’s heartland is now a wrenching and exhausting 12-hour experience of skirting frequent mid-pavement craters and muddy dirt paths around trees and bushes.

With former President José Eduardo dos Santos handing over his last sliver

48 COUNTRY FOCUS | ANGOL A

of power – the leadership of the ruling Movimento Popular de Libertação de Angola (MPLA) party – in September, newish President João Lourenço has all the control over Angola’s direction. The country is in the midst of an economic crisis, with huge debts to Chinese entities, dropping oil production, skyhigh inflation, creaking infrastructure and the corrupt hangover from the former regime.

A common joke in political circles is that the only two MPLA politicians who were not corrupt are both dead – historical figures Lúcio Lara and Paulo Jorge. Now in charge of the presidency and the ruling party – after replacing Dos Santos as MPLA chief on 8 September – Lourenço is widely expected to drive anti-corruption efforts even deeper. The former minister of defence and MPLA secretary general refers to corruption as a “scourge” and says it discourages private investment. He says the develop­ ment of a productive economy based on agriculture, industry and mines can only be made with private foreign investment (see page 54).

Improving the economy is Lourenço’s top priority. Early this year he told reporters: “We’re going to relaunch fishing and agriculture, and we will open the country to foreign investment.” In May, the government confirmed plans to privatise more than 70 state-owned companies, mostly in the manufacturing sector. Backed by a new law, the government is starting to chase after money it says was taken out of the country illegally, after first giving a grace period for people to invest the money in Angola.

de Andrade, an economics professor at Universidade Católica de Angola, tells The Africa Report: “Lourenço has surrounded himself with the same people as Dos Santos, and I don’t see how their culture could have changed.

They were educated in the Dos Santos model and will not give up old habits of manipulation, influence peddling, stealing from state coffers […]. They pretend they have changed, but they’re wolves in sheep’s clothing.”

But Pinto de Andrade points out that the weakening of the Dos Santos clan has taken place “in an apparently peaceful” manner, and expectations are

Lourenço scored points by taking on Dos Santos’s powerful family. Last year, he won plaudits for sacking Isabel dos Santos from her leadership position at the state oil company, Sonangol, and removed her brother from his position as head of the country’s sovereign wealth fund. The government is now in talks with the International Monetary Fund (IMF), a move that could boost investor confidence by increasing transparency and the oversight of the government’s reform agenda. The IMF predicts that Angola’s gross domestic product will grow by 2.2% this year and 2.4% next year after hitting just 0.7% in 2017.

Critics warn that Lourenço’s reforms so far are only skin deep. Justino Pinto

SOURCES: BP AND UNCTAD

HIGH EXPECTATIONS

10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 -7

still high, both inside and outside the country, that Lourenço could turn the country around.

However, the Dos Santos government’s preference for opaque Chinese deals continues to hurt Angola.

Diplomatic sources put total Chinese financing since 2002 at around $60bn.

Officially, the finance ministry acknowledges that the government currently owes China $23bn. Important details about these finance deals – including interest rates, repayment timetables and the amount of oil exported to China as payment – are unknown outside of small circles in government. A single

ANGOLA’S OIL PRODUCTION AND FOREIGN DIRECT INVESTMENT

9.28

Oil Production - mbpd (left scale) Foreign direct investment - $bn (right scale) 1.92 1.81 1.73 1.75 1.67 1.67

-3.23

-3.02

2010

2011

4.1 1.77

1.76

1.67

2.26

-6.9 2012

-7.12 2013

2014

2015

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ANGOL A | COUNTRY FOCUS 49

SOURCE: IMF

PHOTO12/ALAMY

SOURCE: ANGOLAN GOVERNMENT

Chinese companies. General Hélder are operating poorly, mainly due to the locomotives from China. According to Vieira Dias ‘Kopelipa’, former head of the a government source, problems with president’s military cabinet and one of tracks are slowing traffic. Locomotives the country’s richest men, led the GRN. are limited to 30km per hour in the He is married to one of Dos Santos’s upper section of the CFM, a third of the daughters and has not yet been a target of Lourenço’s anti-corruption drive. speed originally planned. Due to similar problems, the rail trip from Luanda In March, the Portuguese press reto Malanje now takes 12 hours, more vealed that Kopelipa is the subject of than double the time initially expected. money-laundering investigations in The operations of the Lisbon, but he says that three railway companies are all of his transactions currently unsustainable and were for legitimate all have accumulated masbusiness purposes. A sive debts – with revenue corruption trial began in Number of statenot even covering workers’ January in Lisbon against owned companies, wages. An improved CFB former vice-president mostly in the could be used to export Manuel Vicente, but he manufacturing sector, is now an eminence grise ore from the copperbelt in that the government of the Lourenço regime Zambia and the Democratic plans to privatise – serving as an adviser.

Republic of Congo. But, givin the medium term en the current state of the Vicente claims his money railways, the government is considering transfers were for legitimate purposes, and he successfully got his case transtheir partial privatisation, according to the same source. ferred to Angola, where he is assured of a friendlier reception.

NEW-TOWN WOES The fight against corruption has Better known to the average Angolan are been a theme in Lourenço’s many trips the construction problems in Chineseabroad – visiting Berlin, Brussels, Paris, Angola’s poor roads are indicative built neighbourhoods – locally known Johannesburg, among other destinaof a wider infrastructure deficit as centralidades. In these new towns tions. However, in Beijing during the and hamper the transport of goods – namely Sequele, Kilamba Kiaxi and Forum on China-Africa Cooperation in KK5000, all in the outskirts of Luanda – September he merely showed appreciproject, the new Angola International ation for Chinese assistance. apartment residents often complain of water infiltration, poor piping, insufLess has been said and written Airport, which is being built in Luanda

by China International Fund, has cost ficient drainage and warping of walls, about small-scale corruption – ‘gasmore than $6.3bn. And more than a among other problems. osa’ (meaning ‘refreshment’) – which Breaking the government’s bad habdecade after construction started, it is is widespread in Angola. It could be its with China will be difficult, as few anything from the police officer on the not yet completed. beat to the municipal clerk saying he investors have shown an interest in The infrastructure that Angola has can help you out if you help him out. received for its billions of dollars in oil the big infrastructure projects that the revenue has often been of poor quality. economy needs. The presidency-linked Business leaders have other comThe Chinese-reconstructed Caminho Gabinete de Reconstrução Nacional plaints, too. Veteran local business ­ woman Celeste Rola dos Santos is the de Ferro de Luanda (CFL), Caminho de (GRN) – the cabinet of national reconsort of respected investor the governFerro de Benguela (CFB) and Caminho struction – was the linchpin of Luanda’s de Ferro de Moçâmedes (CFM) railways deals with the Chinese government and ment says it would like to see leading the charge in private investment. But she is not at all impressed with the ANGOLA’S GROWTH IN CREDIT TO THE PRIVATE SECTOR country’s prospects. Born to a family AND NON-PERFORMING LOANS of coffee producers, she has owned multiple businesses in Luanda since 28.8 Growth in credit to the private sector (%) 30 the 1970s, from restaurants to furniture NPLs (%) 24.2 22.8 25 factories. Today, her time in Luanda is 19.2 not focused on boardroom meetings 17.6 20 15 but on courtroom cases.

15 11.7 In 2002, she sold half of a construction 8.6 10 13.1 6.8 company but quickly clashed with her 11.6 9.7 new associates, whom she accuses of 2.4 5 1.3 excluding her from the management.

0 For 16 years, the case has been moving 1.1 -5 back and forth in the courts, with rulings -1.8 2010 2011 2012 2013 2014 2015 2016 2017 and appeals going in both directions. A THE AFRICA REPORT

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50 COUNTRY FOCUS | ANGOL A

SOURCE: ANGOLA MINISTRY OF FINANCE

Supreme Court decision is now pending. expensive country”. For start-ups, access to financing is difficult, although the She says justice can be bought in Angola. situation is improving, he says.

“How do you expect people to invest in a country that cannot provide investors According to Silva there has been a with the most basic of things – protection “rebirth of hope” in the past year. He says of their investments?” she asks. that while the “road to social wellbeing is long”, people feel that Some younger entrepreneurs, like Claudio Silva, “if you can bring down an co-founder of Luanda all-powerful dictator, then Nightlife, acknowledge the you can build a brighter country’s shortcomings future.” He concludes: “The Amount the Angolan but are more optimistic. new government is more government currently engaged in tourism and Fresh out of university owes China, according in the US in 2013, he putting in place concrete to official data from the finance ministry launched his lifestyle app, measures,” including easwhich has become popier issuance of entry visas. ular. But the economic crisis has hurt Smartphone use is growing and other young entrepreneurs are launching startyoung people’s discretionary income ups. “Future prospects are excellent, but for eating out or travelling inside the country. The devaluation of the kwanza, I’manoptimist.Takeitwithagrainofsalt.” the lack of foreign currency and Angola’s Other viewpoints provide scepticism import dependency make it “a very about the potential for change. One of

$23bn

the episodes of the Dos Santos era that brought harsher criticism to the regime was the locking up of more than a dozen young people in June 2015. They served more than a year for assembling in a private residence to discuss political reform; according to the authorities, they were planning a coup.

Among this group of intellectuals, rap musicians and artists was journalist Sedrick de Carvalho, who sees his country as freer today than during the Dos Santos era. He says people are reclaiming the right to “protest, petition and even speak out”. But he does not believe in the regime’s ability for renewal, considering the events of the past year, which include the death on 3 September of one of his former cellmates, João Alfredo Dala. Some of the police involved in his detention and torture have since been promoted.

APL MARITIME SERVICES BV/TOTAL

Total announced first oil from Kaombo, Angola’s biggest and deepest offshore project, in July

Sour times for Sonangol OIL ACCOUNTS FOR 95% OF EXPORTS and around 80% of government revenue, so the sector has been President João Lourenço’s top economic priority.

Despite the recent price surge, prospects are bleak. The lack of investment from 2016 onwards ensured a declining trend for Angola’s production.

While prices are now going up, the country’s production is dropping by about 6% per year. Today, it is at around 1.4 million barrels per day,

and well depletion is hitting the country hard.

Luanda hopes that it can make investment more attractive. A new national petroleum agency will take over state-owned oil company Sonangol’s role as regulator over the next two years. The government has put in place a more favourable tax system for so-called marginal fields, while giving companies greater contractual and operational autonomy.

The planned privatisation of Sonangol Exploration and Production, with its stakes in about 20 offshore blocks, is expected to generate revenue of between $2.5bn and $3bn. Greater production from marginal fields could stabilise production by 2025.

A recovery will depend on the discovery of reserves on fields that have already entered or are entering the depletion phase. Norwegian company Equinor has announced its intention

to resume operations in Angola, and oil majors have been quick to react to the new oil-sector framework, seen as encouraging for investment in exploration, especially with oil prices above $75 per barrel.

Deep in debt and technically bankrupt, Sonangol is also trying to make gas profitable.

That could start with the Soyo liquefied natural gas plant, one of the company’s most ruinous investments.

P.G.F. and J.G.

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52 COUNTRY FOCUS | ANGOL A

PEOPLE TO WATCH

Business leaders looking to buck recent trends Bankers, heads of state enterprises and start-up founders are all looking for investors as the economy slowly recovers from oil-fuelled doldrums

Erickson Mvezi Start-up success that’s all in the delivery

HTS RES

ERVED

Mvezi and his co-founders at delivery start-up Tupuca are some of the shining stars in Luanda’s small start-up space. Mvezi and three colleagues founded Tupuca in 2015 as a food delivery service and it has now expanded into the delivery of other goods, promising ‘Anything, anywhere, anytime’.

Tupuca has more than 20,000 customers and won the Angola leg of the Seedstars World start-up competition in 2017. Having raised $200,000 from investors and got the rest of its money from bootstrapping, Mvezi and his team are looking for opportunities to expand in the region.

Carlos Saturnino Toppled and back on top President João Lourenço chose Carlos Saturnino, who is well respected in the oil industry, as a safe pair of hands to turn around state-run oil company Sonangol after the sacking of Isabel dos Santos this year and the recent rout in oil prices. Prior to his elevation

by Lourenço, Saturnino had himself been sacked

by Isabel dos Santo. Saturnino is focusing on improving operations and increasing output. Angola could have a new bidding round before the end of 2019. Reforms of Sonangol, which plays a leading role in generating state revenue, are due to be completed in 2020, when the country aims to have increased daily crude production by 250,000 barrels.

Alcides Horácio Frederico Safeca Tough job, but someone has to do it Alcides Safeca has the tough job of overseeing the turnaround of Angola’s largest bank, the state-run Banco de Poupança e Crédito (BPC). He took up the post in October 2017 in the wave of new leadership under President Lourenço. The banking sector has been hit hard by the downturn in oil prices and a foreign currency shortage, and the BPC announced plans in August to cut costs by sacking employees and closing down some branches. Safeca is a former secretary of state for the budget and will oversee the use of a $325m line of credit from the African Development Bank.

José Manuel Augusto Ganga Júnior Diamond geezer Chief executive of the state-owned diamond company, Endiama, Ganga Júnior occupies a key position in the sector as the government vows to boost production, allow more freedom in diamond sales and remove some of the opacity that has hurt investor interest. Because the government sees diamonds as a strategic sector, all investors have to form joint ventures with Endiama. Endiama is now shopping for investors to take up stakes in licence areas that previously belonged to Isabel dos Santos. He is an Endiama veteran and served a long stint as director general of its Catoca joint venture.

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TOTAL

President of the Confederação Empresarial de Angola (CEA) Francisco Viana is using his position as a business leader to lambast the government's management of the economy, prevalent corruption and the problems in the country’s banking sector. Viana founded the business lobby group CEA in 2017 as a rival to the Associação Industrial de Angola, representing some 20 different business groupings. In June, the CEA held an inaugural national production fair, where Viana criticised the central bank for its failure to stop illicit capital outflows and facilitate access to foreign exchange.

He also regularly takes aim at the country’s ruling class, saying that it uses its position in politics to give itself unfair advantages in business. Some say he has his own political amibitions.

ALL RIG

CEA

Francisco Viana Speaking out for business against corruption

MESSAGE

AGENCY FOR PRIVATE INVESTMENT AND EXPORT PROMOTION AIPEX has defined four key areas as core business: ü

Attract and Promote the Private Investment both national and foreign

ü

Promote the exports and increase the presence of Angolan companies in the international arena

ü

Ensure the legal process for investment proposals

ü

Offer investors institutional support when navigating through public institutions

The new Board of Directors, headed by the President of the Board, Dr. Licínio de Freitas Vaz Contreiras, aim to work to improve the business climate in Angola.

AIPEX is disseminating the New Law for Private Investment approved late 26th of June, (Law No.10/18), to the business community with special attention to national and international stakeholders.

During the month of July a new online system for submission of investment proposals www.aipex.gov.ao SETIP) was launched, enabling investors to submit proposals all over the world at a time of their own convenience. Proposals are also accepted by visiting AIPEX in Luanda.

AIPEX will shortly launch a program with the objective to attract and promote Private Investment in a structured way, countries and sectors have been identified aiming to directly contribute to improvements in the economy.

Clusters and production chains are identified in the program and will be the main focus, in order to for example meet the domestic demand for basic food, such as corn, soybeans, beans, peanuts, roots and tubers (cassava, sweet potatoes and potato), vegetables, the agriculture-agribusiness industry is an important cluster-chain.

AIPEX being the institution promoting exports will also invest in creating a program with focus on how to work with companies already exporting; what can be done to improve and increase their exports? Other issues relevant to address in the new program can be certification requested in markets where to Angolan companies which to export. To mention a few products with export potential coffee, marble and granite, salt, and honey, have been identified.

AIPEX aims to be the ONE-STOP shop for private investment in Angola, alleviating and facilitating for private investors. AIPEX aims to take a more proactive role in identifying needs of investment in the country and matching them with potential investors national or foreigners.

“AIPEX working for the diversification of the Angolan Economy”

KWAME NKRUMAH STREET, nº8/10, Maianga, Luanda-Angola TELF: +244222391434 222331252/ Fax:+244222393381 Geral@aipex.gov.ao/ www.aipex.gov.ao

The government intends to invest in large-scale food production to reduce imports

ECONOMY

Best-laid plans

The government wants to break free from oil dependency, but will it be able to improve electricity, finance and infrastructure enough to break crude’s hold?

F

or Angola to rise above its oiland central bank governor, calls the PND fuelled cycle of booms and busts, “well-elaboratedandalmostunassailable from a theoretical point of view”. The the economy must become more diversified. President João Manuel shortcoming, however, lies in Angola’s Lourenço, who is a retired army general “weak ability to implement” these policy and who received military training in the instruments,“monitorresults,correctany former Soviet Union, says he is the man deviations or introduce the adjustments that the implementation reveals to be to break Angola’s oil curse. He calls himself a reformer along the lines of Deng necessaryorconvenient,” addsJaime,who Xiaoping, the Chinese currentlyheadstheAngolan insurance regulator. Jaime communist leader who tells The Africa Report that transitioned his country without diversification the from a deeply centralised economy will “remain vuland impoverished econ­ invested by Isabel dos nerable to external shocks. omy and laid the ground Santo-backed Sodiba And even when it grows, for the development of in the construction it will not create massive private enterprise. of a state-of-the-art employment.”

Lourenço wants the brewery at Bom Jesus A new law passed in country to attract foreign with a capacity of 144m litres per year investment in agriculture, April of this year should mining and manufacturboost investment and help ing. So, in April of this year, the new govcreate new clusters of economic activity, ernment approved the Plano Nacional Jaime says. Notably, the law removes de Desenvolvimento (PND) 2018-2022, the requirement for foreign investors a 20-page document that sets out its to have an Angolan partner. economic and development strategy Albertina Navemba Felisberto, an economist who previously worked in the over the next four years.

AguinaldoJaime,whodirectedAngola’s department of agriculture, rural development and fisheries, says Lourenço’s foreigninvestmentboardinthelate1990s and has also served as finance minister rhetoric is nothing new and that the

$85m

Movimento Popular de Libertação de Angola (MPLA) government has been talking about diversification since the 2008 financial crisis. She says that reforms would have been much easier during times of high oil prices. Felisberto, who is now a member of parliament representing the União Nacional para a Independência Total de Angola (UNITA) opposition party, argues that the PND is a step in the right direction but that its success “will depend on strengthening fiscal and monetary policy and deep structural reforms”.

FINANCING FOR FARMS

Oneof Lourenço’sfirsttrips outofLuanda as president was to Huambo, in the country’s central highlands, for the opening of the 2017/2018 agricultural campaign.

Lourenço,whoownsafarmthatproduces potatoes and corn, gave assurances that the government will target agriculture in its diversification efforts. Currently, smallholders account for about 80% of cereal production and around 90% of roots and tubers. In May, the government announced that it would offer up more than 5m hectares of arable land for the 2018/2019 agricultural season for THE AFRICA REPORT

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COUNTRY FOCUS | ANGOL A

SOURCE: SODIBA

54

ADVERTORIAL

SFEH active in Angola’s health sector development Having worked alongside local health authorities for over 20 years, executing more than thirty projects in Angola during this period, the SFEH Group continues its commitment to the development of Angolan health infrastructure.

Modern equipment, bringing the intensive care units of these hospitals up to date, has been delivered: intensive care beds, resuscitation carts, multi-parameter resuscitation monitors, intensive care ventilators and infusion pump systems.

In addition, the SFEH Group delivered special vehicles to improve the Ministry of Health’s response resources. These are mainly medically-equipped emergency vehicles and those for carrying out nationwide preventive fumigation campaigns to control the spread of mosquitoes in the fight against vector-borne diseases (malaria, dengue fever and chikungunya).

A partnership approach The supplying of this equipment and vehicles are part of the Angolan government’s health policy reform. The resources of the public health system are being strengthened in order to improve the country’s coverage, in particular through decentralisation of the health care system. The objective is to better meet the needs of patients throughout the country.

A complete range of transport vehicles

› 100 medical ambulances, equipped with monitors, defibrillators and ventilators › 40 refrigerated pharmaceutical transport vehicles › 165 vehicles equipped with systems to carry out preventive fumigation campaigns › 165 logistics vehicles

› 10 CBRN risk control ambulances (Chemical, Biological, Radiological And Nuclear) › 130 transport ambulances › 30 neonatal ambulances equipped with a mobile incubator for the safe transport of newborns › 215 liaison vehicles for country and provincial doctors

The equipment was delivered, installed and put into service by the SFEH Group’s technical teams, in partnership with those of the manufacturers. User training, as well as preventive and curative maintenance, is also provided as part of the contract. Vehicle commissioning and fleet maintenance is integrated into the operation and carried out by the technical teams working for vehicle manufacturers’ local distributors.

This local presence is the best way to comply with the warranty clauses included in the contract and to ensure effective maintenance.

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The SFEH Group has just completed a major operation to strengthen the intensive care services of the six main hospitals in the capital city, Luanda (Américo Boavida, Lucrécia Paim, Do Prenda, Hospital de Oncologia de Luanda, Hospital Pediátrico David Bernardino and Hospital dos Queimados Neves Bendinha).

56 COUNTRY FOCUS | ANGOL A

Trafigura has enjoyed the exclusive right to sell refined oil to Angola and also controls 48.4% of Puma Energy, the owner of the Pumangol petrol stations. Puma is owned in part by Sonangol (30%) and private company Cochan (15%). Cochan is owned by army general Leopoldino ‘Dino’ Fragoso do Nascimento, a former chief of communications for Dos Santos.

AUSTERITY AHEAD?

OLIVIER POLET/REPORTERS-REA

Finance minister Augusto Archer Mangueira announced in August that the government will have the help of the International Monetary Fund (IMF) in its reform and diversification drives. Angola already had IMF technical assistance, and – if approved – Luanda can use the $4.5bn financial package for economic diversification, supporting the fragile banking sector, improving revenue collection and improving social safety nets.

According to former central bank Holding, a company based in the United Arab Emirates that is linked to Isabel governor Jaime, the recourse to foreign financing is insufficient to “mask the dos Santos. Sodiam has also ended serious economic problems” that the privileges granted to Victoria Holding, owned by Isabel and her husband, country is facing. He adds that the crisis Sindika Dokolo. The government is is “reaching alarming and unsustainable proportions, since working on a series of other reforms to make diamond no country or individual mining more attractive to can live, eternally, beyond its means.” international investors.

According to Jaime, the The government has not Size, in carats, government is already sought to stymie all of Isabel of Angola’s 2017 headed for the type of dos Santos’s business activdiamond production, ities, however. In November austeritymeasuresthatthe a 5% increase on 2017, the Sociedade de IMF traditionally backs.

2016. Rough diamond Distribuição de Bebidas de “Inflation is already eating sales in 2017 earned $1.102bn in revenue. into wages, creating imAngola (Sodiba), backed by mense difficulties for our Dos Santos, launched a new $85m brewery to produce Portuguese families and for the management of our beer Sagres and local beer Luandina. companies,whichhavetobearnominally Aiming to open up the economy furhigh interest rates on domestic bank loans. That is, even without the IMF, we ther, state-owned oil company Sonangol ended Trafigura’s effective monopoly on are already experiencing a very difficult fuel imports in March 2018 by hiring two economic, financial and social situation”. new trading and refining companies.

Because of the imbalances of the Angolan economy, the adjustment THE VOLATILE IMPACT OF OIL process will be “even more painful”, says (% change, except where noted) Jaime. In that case, diversification cannot 12 come soon enough. Angola ranked 175th Oil sector 10 out of 190 countries in the World Bank’s Non-oil sector 8 Doing Business rankings, scoring very 6 poorly on issues like enforcing contracts and getting access to electricity and 4 access to credit. That means Lourenço 2 and his team will have to get to work 0 on major infrastructure projects and -2 banking reforms in order to turn the -4 pro-diversification rhetoric into reality.

CUTTING FAMILY TIES

Another priority for the first year of Lourenço’s presidential term is ending monopolies in various sectors, almost all of them linked to the family of former president José Eduardo dos Santos.

Bromangol, owned by José Filomeno ‘Zenú’ dos Santos, has a monopoly on lab tests for imported food. It has been the target of frequent complaints by importers regarding its high prices – around $5,000 for inspecting a single container.

After Angola joined the Kimberley Process diamond certification scheme in 2003, all diamond producers had to sell their diamonds to the Angola Selling Corporation (Ascorp), which also issues diamond certificates. The government has now taken Ascorp, partly owned by Isabel dos Santos (24.5%), out of the picture. In July, state-owned company Sodiam, which is responsible for the country’s diamond trade, also ended a contract for the purchase and sale of rough diamonds with Odyssey

9.44m

SOURCE: ROUGH&POLISHED

large-scale production of cereals, tubers, fruit, vegetables and oilseeds, to reduce imports. The PND’s goals include revitalisinglarge-scalefarmsandpromoting access to financing and insurance for agriculture and livestock, along with rolling out a subsidy for agricultural fuels.

The World Bank signed off on a $130m loan to the Angolan government in order to strengthen agricultural corridors linking the central highlands to Luanda.

SOURCE: IMF

Measures set up to combat illegal and conflict mining had become a source of monopoly money

-6

2010 11

12

13

* Preliminary **Estimated

14

15* 16* 17** 2018*** ***Projected

José Gama in Luanda and Paulo Guilherme Figueiredo

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ADVERTORIAL

EXPERT ADVICE

José DIAS COELHO

Head of EAM & Africa Desks

A new star is ready to shine in Africa – Angola It has been almost one year since Angola has turned

The authorities are now promoting Investments in a

the page of History with the election of a new Pre-

wide range of sectors, like:

sident, Mr. João Lourenço, who is now beginning to

1) alimentation and agriculture,

change the pattern of the country doing very im-

been to improve the credibility of the Country among

2) forest resources, 3) textile, clothing and shoes, 4) hospitality, tourism and leisure, 5) infrastructures in the railway and telecommunications, 6) energy and water distribution, 7) education, training and research,

the International communities and organizations. In

8) health care.

portant reforms, and attracting foreign investment in order to diversify the economy.

Since Mr. Lourenço was elected, his main purpose has

order to achieve this, some measures were taken such

The investments can either be made in cash, with

as: fight the corruption, restructure the institutions,

equipment, technology or human capital. Neverthe-

divulgate the potential of the country traveling around

less, an investor must still bear in mind that Angola is

the world and, more recently, the IMF financial sup-

still not a risk-free investment country and, although

Angola is really a land of opportunities in Africa, and the time to go is now!

port was requested

the return on investment is usually proportional, it’s

on the amount of 4,5

important to be prepared for:

billion USD, under the ditional reforms. This

a) long term investments and to reinvest the profits locally; b) constrains regarding the slowness of the institutions;

is a situation with no

c) Lack of local technical staff.

commitment of ad-

precedents!

In order to facilitate the foreign investments, Angola’s Parliament changed the law of the private investment, concluding with the longstanding obligation of a

We do believe that the next step to attract investments will be the restructuration of the Banking Industry, and the development of the capital markets - that should increase the visibility of the country.

foreign investor to have an Angolan partner - with

Millennium was always bounded to Africa, and esta-

a minimum of 35% stake - in order to open a local

blishing relationships in the Continent was the formula

company. This might seem as a small step, but was

of our success, therefore, with the contribution of

actually a big movement! Currently, any investor is

our local partner Millennium Atlântico, the Group is

able to incorporate a company 100% owned by a

able to help investors to establish and develop their

foreign entity, and no minimum capital is required.

business in Angola.

Purchasing a company or business is now possible, and the incorporation of a Private Equity Fund is also now more feasible, meaning that investors can now have the adequate vehicle to develop their local business.

www.millenniumbp.ch

58

INTERVIE W

Abdul Samad

Rabiu

Founder and chairman, BUA Group

Steel should

COMPANIES & MARKETS 59

By Nicholas Norbrook in Abidjan

A

bdul Samad Rabiu is a good sport. He has just finished being grilled onstage at our annual Africa CEO Forum opening panel, held in Abidjan. With barely time for a sip of water, he agrees for the grilling to continue offstage. Affable, without over-claiming, he lays out his view of how business and politics should work together to move the continent forward.

It is a vision that has evolved over time.

His father, Isyaku Rabiu, was a famous entrepreneur who ran into trouble for dodging duties on rice imports in 1983, following General Muhammadu Buhari’s coup. Today, Buhari is once again in charge, and now Rabiu junior is the famous entrepreneur. Nigeria’s elites are nothing if not narrow.

But Abdul Samad Rabiu is no longer so keen on imports. Instead, he is an evangelist for ’Made in Africa’ as a way to fix the continent’s employment crisis.

“Why is Nigeria importing rice? Why is Nigeria importing sugar? We can do those things,” say Rabiu. “We have a young, teeming population that needs jobs.”

He is not exaggerating about the jobs emergency. Nigeria’s National Bureau of Statistics estimates that youth unemployment is at more than 33% – that is the equivalent of the entire population of the United Kingdom out of work.

The billionaire founder of cement and rice conglomerate BUA Group outlines ambitious plans to expand into new manufacturing lines, but only if the government extends the same support that built fortunes in sugar and cement

ERIC LARRAYADIEU FOR JA

be easy

RABIU TAKES THE REINS

Back in 1983, Abdul Samad Rabiu took over the family business and successfully steered it through a difficult patch. If the duties scandal that undid his father affected him, Rabiu did not show it, setting up his own import business in 1988 called BUA. It included different interests in sugar and rice, steel and iron.

A contract in 1990 to import iron for the state-owned Delta Steel Company – which was paid in finished steel – proved a lucrative boost for Rabiu. He parlayed the earnings into finance, buying a bank, then a peanut-oil mill in Kano in 1995. In 1997, BUA opened a flour-refining factory in Lagos, with a flour mill opened in Kano the following year.

These were the years of military dictatorship, of finding accommodations with generals. There was no disciplined effort by government to enact industrial policy to encourage more sophisticated

NIGERIA SUGAR PRODUCTION CAPACITY IN METRIC TONNES ('000) BUA Sugar

150

750

Sunti Sugar

1,440

Dangote Sugar

Osinbajo, inaugurated BUA’s stateof-the-artcementfactoryextension inOkpella,EdoState,whichhasthe capacity to produce 3m tonnes per annum. In July this year, Osinbajo was back to open the $350m BUA cement plant in Sokoto, which will be able to produce 1.5m tonnes.

A new cement factory is in the pipeline for Ebonyi State.

BUA Group accounts for around 10-15% of the Nigerian cement market. Given the neat overlap between the activities of Dangote Group and those of BUA, it is perhaps not surprising that the two have had skirmishes.

In December 2017, Rabiu asked President Buhari to intervene, saying that Dangote was trying to force his way into limestonemining areas belonging to BUA. PROOF IN THE NUMBERS Rabiu laughs it off: “Some For Rabiu, the proof is in the nummischief-maker approached bers. Back then, Nigeria was proDangote saying he had title to the ducing around 4m tonnes landwherewe wereoperper annum. “Today, we ating. Aliko acquired NIGER have the capacity this ‘fake licence’, to produce over and so we got into discussion. But 40m tonnes,” says Sokoto Rabiu, imagining Aliko is a brother the chaos that and a friend.”

NIGERIA The issue is would take hold if Nigeria’s creaking still in arbitraEdo ports were forced to tion but appears bring in even half that to have been set amount. “It has saved us aside. There are large so much hassle, not to mention limestone deposits in the area, the money we have saved and and Dangote has his own $1bn jobs we have created.” cement factory in Edo State, which began construction in 2016, It has helped him become a so perhaps friction is inevitable. heavyweight player in the cement But perhaps Dangote knows sector. In 2008, BUA Group bought a majority stake in the Edo Cement that it is a threat to have Rabiu in Company,followingaprivatisation the rearview mirror. Rabiu broke round. A decade later, in August Nigeria’s sugar-refining monopoly 2017,Nigeria’svice-president,Yemi in 2008, held by Dangote, opening

a 720,000tn-a-year facility that largely uses sugar from Brazil.

It is unlikely that the rivalry will affect their long-term relationship: they were recently spotted together on a panel exhorting the government to begin a mass housing policy to meet Nigeria’s largeunmetneeds;somethingthat would no doubt give a filip to cement demand, too. Both men have donewellfromgovernmentpolicy.

The administration of President Goodluck Jonathan in 2013, for example, finally activated the BIP scheme for the sugar industry that Obasanjo had proposed in 2004.

BITTERSWEET SECTOR

Both BUA and Dangote Group have access to large swathes of land to grow cane. They – along with the third sugar producer, Flour Mills of Nigeria via their Sunti Sugar subsidiary – have seen less explosive success than in cement. Floods and struggles with host communities have tamped BUA’s $350m Kalambaina cement plant in Sokoto State

BUA GROUP/CCNN

local production. “Everyone was lazy, trading imports took over in the last days of the previous regimes,” says Rabiu.

But when the former military leader turned democrat Olusegun Obasanjo was elected in 1999, his government launched a new scheme known as the Backward Integration Programme (BIP). It created import bans on cement, with the idea that this would encourage local production.

Some sceptics say this is just crony capitalism. The programme handsomely benefited cement magnate Aliko Dangote, leader of Obasanjo’s fundraising committee. Rabiu, too, was a major donor to the then governing People’s Democratic Party.

But it turns out that several governments, from the United States to Japan and South Korea, have successfully used backwards integration tools to kickstart domestic industry.

These work best when governments are disciplined. That may not be the first word that springs to mind when pondering Nigerian administration. Nevertheless: “everybody thought the government was crazy,” Rabiu recalls.

“But they kept on it, they kept confiscating [cement].”

SOURCE: COMPANIES, UNITED CAPITAL RESEARCH (JULY 2018)

60 BUSINESS | COMPANIES & MARKETS

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COMPANIES & MARKETS | BUSINESS 61

From import tsar to manufacturing giant ALINA OLEYNIK, DARA ULLRICH, DEEMAK DAKSINA, ICON 54 FROM THE NOUN PROJECT

down progress. BUA Sugar has invested $300m into developing a 20,000ha site in Lafiagi in Kwara State and has a 50,000ha site at Bassa in Kogi State, too.

The Sunti Golden Sugar Estate offers an instructive example of the sector’s problems. It had aspired to be the exemplar of the sugar masterplan outlined by the Jonathan government, which wanted the country to reach 70% self-sufficiency. This May, Sunti temporarily closed the facility less than 100 days after opening because it could not source enough sugar cane from farmers.

Despite sugar taking the slow lane, the Nigerian government’s drive for economic nationalism continues. This is in part because of the huge pressure that imports are having on exchange rates.

When the oil price crashed in 2015, foreign exchange became scarce, putting all businesses dependent on importing raw or intermediate products under pressure.

Rabiu built a flour mill and a pasta factory in Lagos, but eventually sold all his wheat-based assets to Olam for $275m in a consolidation exercise.

By building its own floating cement terminal, BUA created a cashflow that it was able to channel into the 2008 investment into Edo Cement.

Refining 2,000tn of imported raw sugar a day by 2008, BUA bought Lafiagi Sugar in 2010 for $300m to expand local sugar production.

If steel is indeed the future for the company, it will be via a mooted $1.2bn plant designed and built by Chinese firm Sinoma.

“I’m happy that [for] the businesses we are now in we really don’t need to import or spend a lot of foreign exchange,” says Rabiu, who sold off his wheat-milling interests to Olam for $275m in 2016.

Rabiu is beginning to weigh the upsideinhighervalue-addedmanufacturing, such as steel. “If you mine iron ore, your cost per tonne is $25; you need 3tn of iron ore for a tonne of steel, which sells for, say,

$500 a tonne,” rattles off Rabiu.

“And that is just the basic product. As soon as you go into steel sheets, pipes, valves, you quickly hit $2,000-$3,000 per tonne.”

GOVERNMENT MUST HELP

RABIU’S RISE 4 August 1960 Born in Kano, Nigeria 1983 Took over the family business of his father, Isyaku Rabiu 1988 Set up BUA, a company that imported steel and rice 2005 Launched a sugar refinery and created a flour mill in Lagos March 2006 Established BUA Ports and Terminals, which won a concession at the port in Port Harcourt April 2018 Announced plans to list BUA’s cement operations on the Nigerian stock exchange

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This will not happen in Nigeria without the government. Steel mills require steady and affordable electricity and supportive policy.

“If I were in government,” says Rabiu, “I would look at the $3bn4bn we spend importing steel pipes, find out who was importing them and tell them: ‘Guys, we are stopping those imports. But we will give you five years and help you produce steel in Nigeria fully integrated from iron ore.’ And it’s easy. We did it in cement. We did it in sugar.”

Rabiu might also get into finance. The former chairman of the Bank of Industry has particular views on the state of banking in Nigeria. “Most of these banks are actually just buying [government] bonds for 10% [returns],” he says.

“Someone might have a very good business plan, and it would work, but he can’t find the money.”

Rabiu argues that governments are the only ones who will be able to help entrepreneurs access longterm money at palatable rates.

BUA has started talks with Chinese company Sinoma – which built the Edo cement plant – about building a steel plant. Should that plan come to fruition, it would close a remarkable circle for Rabiu: from steel importer to steel maker.

“How can you call yourself the biggest economy in Africa and not make steel?” he asks.

74

DOSSIER OIL & GAS

Keeping it local Total’s commitment to its Egina project despite uncertainty over the Petroleum Industry Bill could change the narrative on investing in Nigerian deep offshore oil deposits. For LADOL logistics base and its local suppliers the opportunities are huge

By Nicholas Norbrook in Lagos

T

hereisaspecialjoyfor passengers aboard a Lagos water taxi – the freedom of the water, slipping underneath the wretched traffic on the bridge that links Lagos Island to Victoria Island. Before long, the Egina vessel comes into view, a hulking presence. Lit up like a Christmas tree at night, it is bright green by day. Samsung built the bulk of this floating production, storage and offloading (FPSO) unit in South Korea before towing it quayside to the Lagos Deep Offshore Logistics

Base (LADOL) free zone, where we arrive, landlubbers once more.

It is early July, and the final preparations are being made before this 330m-long giant is towed 130km off the coast of Nigeria to Total’s Egina deep offshore field. It departed in late August, and once it is plugged into 44 subsea wells, it will draw up 200,000 barrels per day of crude. That is a million barrels every five days, and some $70m at today’s prices. Egina will add 10-12% to national oil output.

For the scale of engineering done in Nigeria, it is a first. Africa’s

10%

of Nigeria’s total oil production will come from the Egina field SOURCE: TOTAL

largestcranewasdeliveredinmore than 100 containers to the LADOL quay, and Egina is the largest FPSO in Nigeria. And, crucially, around six of the 18 modules that make up the vessel were manufactured in Nigeria by local companies.

Nigerdock, for example, built the helipad. A huge manufacturing facility jointly run by Samsung Heavy Industries and LADOL’s engineeringwing,MegaConstruction Industry, lies perpendicular on the shore by the Egina vessel, almost as big as the ship itself.

This required the vision of L ADOL’s founder, Oladipo Jadesimi. He saw the direction

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of travel of Nigeria’s oil industry, says Jide Jadesimi, his son, now an executive director and head of business development at LADOL. “[Oladipo] saw that Nigeria’s deep offshore would best be serviced out of Lagos,” says Jide. “So he acquired a piece of land inside of Apapa port. And over the last decade, $500m has been invested into the industrial free zone to create Nigeria’s only fully integrated logistics base.” When the oil majors like ExxonMobil, Shell and Total sold off their swamp and shallow-water fields several years ago, they expanded their offshore assets.

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But it also required the advent of Nigeria’s Local Content Act in 2010. This increased the amount of engineering and development of energy projects done in Nigeria.

It was critical, says Jide Jadesimi.

“And it’s about legislation but also enforceability,” he adds, pointing to the work done by Nigeria’s Content Development and Monitoring Board.

TOTAL’S GAMBLE

But projects like Egina are currently scarce because of Nigeria’s failure to pass the reforms of the oft-delayed Petroleum Industry Bill. France’s Total, in effect, took

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The Egina FPSO vessel being fitted out at the LADOL Free Zone in Lagos ahead of its deep offshore deployment

GEORGE OSODI/BLOOMBERG VIA GETTY IMAGES

a gamble on the project without knowing the terms of the new legislation. In so doing, it has changed the narrative that Nigeria is not worth the investment risks, argues Jadesimi, who recounts the number of oil executives from other companies who visited the facility – a unique marketing moment for LADOL as it pitches for new business.

“There are a steady stream of these projects over the next 10-15 years,” says Jadesimi. “The estimates are of around $20bn being spent in Nigeria’s deep offshore.”

These include Shell’s Bonga South West project and Eni’s Zabazaba

76 DOSSIER | OIL & GAS

EDUCATIVE ROLE

LADOL is also seeking to relieve the skills shortage that affects Nigeria’s engineering and constructions sectors. Jadesimi points to the 9% growth estimates for the construction sector and says that the roadblock to achieving that growth is a lack of skilled workers, including carpenters, painters and electricians. “At the moment, we still import a lot of workers to take on those jobs for the majority of the big jobs in construction,” he says.

To meet that need, LADOL is investing $1.5m in its Upskilling Academy within the zone, with a first cohort of 500 students.

the day after the vessel was towed away, Samsung Heavy Industries employees found they were unable to access the worksite.

One energy sector source says that Samsung managers believe they have been “royally ripped off, with extra commissions appearing, and even on rent. LADOL is renting space from the Nigerian Ports Authority at less than a dollar a square metre and then subletting to Samsung at more than 10 times that amount on a 20-year lease.” LADOL executives now appear to be pitching the zone to Chinese investors.

GLOBAL OIL PRICES, LAST 10 YEARS $110 $100 $90 $80 SOURCE: TRADING ECONOMICS

$70 $60 $50 $40 $30

2009

2011

2013

2015

2017

NIGERIA’S CRUDE-OIL PRODUCTION (million bpd) 2.4

WAR OF WORDS

2.2 2.0 1.8 SOURCE: TRADING ECONOMICS

field. Jadesimi also points to other heavy engineering projects that LADOL’s base is set up for, including rails for the Nigerian Railway Corporation and steel bridges for road infrastructure. But the bread and butter of the business plan remains servicing the fleets that work in Nigeria’s offshore oil and gas industry.

The main business unit is LADOL Integrated Logistics Free Zone Enterprise (LILE), “which executes much of the rig-repair work we do,” says Jadesimi.

Companies such as Transocean and Noble use the base for regular maintenance work, with LILE providing manpower and project management. LADOL is building new workshops and chemical storage facilities, in addition to preparing ‘lay down’ areas for the complex drill lines and pipes that subsea work requires.

Jadesimi is most proud of the ‘liquid mud’ plant that LADOL is building, another first for Lagos.

Drilling through rock requires lubrication, and each drilling company has its own requirements for different combinations of drilling fluids. “When there was a downturn in the market, there were lots of redundant assets.

Many of these mud plants got sold off because there was no drilling,” says Jadesimi. “So by investing in the mud plant, LILE is actually relieving a lot of these companies of the capital expenditure [when the cycle returns].”

1.6 1.4 1.2 1.0 2008

2010

2012

2014

LADOL has the ambition to train 5,000 workers per year by 2022.

“There will be oil and gas training, subsea drilling and welding training,” says Jadesimi, who hopes to build the skills component into the company’s push for work in the subregion, attracting students and hopefully contracts from across West Africa.

It will also link into the Lagos State government’s ambitions to improve its own education system. Currently, Lagos State has eight technical and vocational training colleges, “but they are underfunded, the teachers need upskilling, the curricula need to be updated and so on,” explains Jadesimi. “We would set up ‘train the trainer’ programmes within the LADOL Upskilling Academy, and then those trainers would return back to the existing vocational colleges.”

It has not all been smooth sailing for LADOL. Back in 2014, it took its partner Samsung to court, fearing that it was going to be kicked off the Egina contract. And though there was a period of calm while the project was completed,

2016

2018

$1.5m LADOL’s investment in its Upskilling Academy with a goal to train 5,000 workers a year by 2022 SOURCE: LADOL

Samsung officials have attacked LADOL in the local media, telling reporters that they believe the first oil from Egina will be delayed: “Many materials that are supposed to be put into use for the commissioning of Egina have been trapped at LADOL. Our subcontractors cannot also work because they cannot access the dockyard,” an official told Vanguard newspaper.

LADOL management hit back in a statement, saying “Samsung’s dealings in Nigeria in the past four years have been fraught with mischief and reckless disregard for all stakeholders: LADOL as business partners; Nigerian regulators; Nigerian workers and citizens. Samsung has brazenly and persistently flouted Nigerian laws and breached contracts it duly signed with LADOL and its affiliates.”

Nigeria specialist Antony Goldman of Promedia Consulting tells The Africa Report: “It was always a somewhat awkward marriage, and the prospect of a falling out between the partners will only confirm what many in the services industry in Nigeria had anticipated.”

With elections arriving in February 2019, and vice-president Yemi Osinbajo recently visiting the facility, the danger of the affair becoming a political football increases. Those with a stake in burnishing the reputation of Nigeria’s domestic energy industry will have a busy few months.

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DOSSIER | OIL & GAS

PHOTO12/ALAMY

The Western Desert is the focus of a new, $10m exploration deal

EGYPT

Sisi saved by a gas boom

The government’s gas-fired economic plan was a high-stakes gamble that paid off thanks to the Zohr super-giant discovery, leading to hopes of even larger gas fields

T

prospective wells planned in the hestabilityandprosperityof the vast and rapidly grownext 12 months. In mid-August, Eni signed an exploration licence ingpopulationofthelargest Arab state are inseparable from for the Nour prospect, which it the politics, economics and rapexpects to drill before the end of idly changing fortunes of the gas this year. Then, on 15 September, industry.Fromthebeginningofhis thepetroleumministryannounced rule, President Abdel Fattah al-Sisi a $1bn exploration deal with Shell and Malyasia’s Petronas for eight committed his administration to a wells in the West Nile Delta. strategy of state-led development based on the availability of cheap Other major holders of deep labour and energy, despite the fact offshore exploration concessions are BP, which owns three large that he took power at the moment blocks to the west and south of when Egypt lurched from being an exporter to an importer of gas. the Zohr field, and Edison Norge, a Fast-forward five years to the present day and what appeared at EGYPT’S GROWING GAS PRODUCTION the time to be a speculative gambit (bn cubic feet per day) is looking increasingly like a solid 8 bet. On 8 September, the Italian 7 6 major Eni announced that its Zohr 5 super-giant deep offshore gas field 4 had ramped up to 2bn cubic feet 3 per day (bcfpd) one year ahead of 2 schedule, and expected to reach 1 the 2.7bcfpd plateau by mid-2019. 0 Expectations are high that oil 2014 16 18 20 22 24 26 28 30 32 2034 Salamat LNG FSRU companies may discover more WND-Phase 2 Near term developments vast gas fields in the waters of WND - North Alexandria Existing production the Nile Delta with several highly Zohr

subsidiary of France’s EDF Group, which owns three to the east of Zohr. Meanwhile, on dry land Rockhopper, Kuwait Energy and Dover Corporation signed a $10m deal for exploration in the Western Desert in September.

IMPORT-EXPORT SEESAW

SOURCE: GAFFNEY, CLINE AND ASSOCIATES

78

According to gas consultant Mohamed Farghaly, more discoveries are likely. However, “even if there is a discovery in the Mediterranean it will not come onstream for at least another two years,” he says. Underlying the optimistic outlook, there is a degree of uncertainty. If wells are drilled and are successful, Egypt may quickly restore its position as a major gas-exporting country.

But with demand on the rise, new discoveries are also needed to feed the domestic market. Without them, the country will once again become import-dependent.

Bringing the domestic gas industry back to even this point has been far from guaranteed. The military’s controversial

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Shaping the future of Africa

Save the date 7th edition

KIGALI

25 & 26 March 2019

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80 DOSSIER | OIL & GAS

BACK FROM THE BRINK

Amongst other economic cas­ ualties of the gas crisis were international oil companies such as Edison and Dana Gas, and dozens of others whose invoices went unpaid. At the end of 2012, when the government’s foreign currency reserves totalled approximately $14bn, the state-owned Egyptian General Petroleum Corporation’s debts amounted to more than $29.5bn, making it the least solvent of all state institutions.

The gas industry was in reverse and the company’s debts were close to crushing the government.

This had a knock-on effect on high energy consumers such as petrochemicalsandcementplants,

which were forced to close down, and power plants which could not generate electricity.

In early 2019, United Arab Emirates-based Dana Gas hopes to invest $60m in a deep offshore well in the south-eastern corner of the Delta area. However, the investment is conditional. Dana chief executive Patrick AllmanWard tells The Africa Report: “We have made it clear to the government that Dana Gas will need to be paid what it is owed in order for the company to reinvest that money back into Egypt.”

Soon after taking office, Sisi launched his economic plan, backed by multi-billion preferential loans from his Gulf allies and, eventually, support from the International Monetary Fund.

But far from unlinking the economy from gas, Sisi strengthened the connection.

A central pillar of his plan was the construction of a huge fleet of gas-fired power plants that have nearly doubled Egypt’s electricity production capacity. The largest project was the Egyptian Electricity Holding Company’s commitment topurchase14.4GWofgasturbines from Siemens. The contract was signed in Berlin in June 2015 in the presence of both Sisi and German Chancellor Angela Merkel.

Notably, this happened several

months before the Saipem drill ship had even left port to drill the well that proved the Zohr discovery. At the time it was conceived, Sisi’s economic plan was dependent on imported energy, with no obvious means to pay for it.

RAPID TRANSFORMATION

$2bn Damages awarded to UFG in September in an arbitration against Egas SOURCE: UFG

High-energyconsuming plants that were forced to close down are now back in business

AMR ABDALLAH DALSH/REUTERS

overthrow of the government in 2013 took place in parallel withanenergycrisisthatforcedthe Cairo government to shut down its liquefied natural gas export terminals, breaching agreements with partners including Shell and Union Fenosa Gas (UFG). These plants are now close to resuming exports. In early September, the InternationalCentreforSettlement of Investment Disputes awarded UFG $2bn in damages against state-owned Egas. It is likely that Egas will pay the damages in gas, allowing liquefaction to resume for the first time in six years.

The potential for this turning into yet another financial calamity was large. Yet, three years later, gas production is at an all-time high and the Siemens turbines are fully operational. It has been a transformation of stunning rapidity, the centre-piece of which is a single, highly risky deep offshore well, which happened to strike the centre of a vast and previously unknown gas-rich geological structure. Without Eni’s Zohr and the prospect of much more gas to come, the outlook for Egypt would look drastically different.

The pressure is not entirely off. The government is pushing forward with an unpopular programme of subsidy reform. In July, it increased household electricity bills by 21% and those for factories by 42%. At the same time, it is liberalising the gas market with the intentionofallowingmajorindustrial gas consumers to import directly.

In late 2017, a consortium of businessesnamedDolphinusagreedto buy gas from the operator of a pair of large Israeli gas fields. While this may be politically controversial, it is commercially expedient as, even after the recent increases in production, the government cannot guarantee gas supply to major business consumers. The first priority for domestically produced gas is power generation.

Egypt’s future does not lie in a choice between imports and exports. From now on it will do both with the ambition of turning itself into an eastern Mediterranean gas hub through which Cypriot and Israeli gas, and perhaps one day Jordanian and Lebanese gas, might also flow. Talks are ongoing for companies to hook up Cyprus’s Aphrodite field to Egypt’s gas infrastructure, which would greatly strengthen Sisi’s goal of making Egypt a full-service energy hub.

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John Hamilton

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reports 54 country N ° 9 6 • D E C E M B E R 2 017 - J A N U A R Y 2 0 18

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a pelvic exam, which I declined. I didn’t receive any mental counselling either, and it was my roommate at the time who knew to get medication for me from the pharmacy.

My biggest inspiration as a leader is my mother. When I was raped, she was my pillar of trust and support, reminding me of my value. She changed my perspective on sexual violence and told me what I did with my brain, heart and hands was all that mattered.

She taught me to be honest with my failure and successes and with myself. This continues to guide me as a boss, colleague and partner.

KENECHUKWU NWATU FOR TAR

POLICE FAILINGS

Taking a stand Oluwaseun Osowobi is the founder of Stand to End Rape (STER) Initiative, a youth-led organisation providing free support to survivors of gender-based violence in Nigeria

I

’m Lagos-born and partly bred.

Zaria and Ondo State also served as home for a while, with my tight-knit extended family raising me alongside my parents. I’m the first of three siblings, and though I had no qualms showing my brothers who was boss, we’re very close.

They respect me and tell me things they wouldn’t tell my parents.

I’ve always been passionate about ending gender-based violence and child marriage, and pictured myself campaigning against it without knowing in what

capacity. Prior to STER, I dreamt of a career in the ministry of foreign affairs – that or being an actor.

STER started out as a Twitter hashtag in 2013, before morphing into an organisation in 2014. The idea for the initiative originated from the stories survivors shared with me on social media, as well as my own experience. At the time I was violated, I had no idea where to seek help or what to do except go to the police. And that was a complete disaster. They had no rape kits but wanted to conduct

STER operates in Lagos, Abuja and Port Harcourt, offering sex education and self-defence classes to women and children. So far, in the communities we’ve worked with, we’ve managed to dismantle the disturbing belief among men, women and teens that marital rape is a myth and a woman’s attire is an invitation to assault her.

One of the major problems facing STER is police incompetence. There have been instances where we’ve reported cases and they didn’t visit the site of the incident or bashed the survivor with insensitive questions. Other times, they claim not to have the resources to transport the perpetrator from prison to court and expect non-governmental organisations like ours to fund their activities. I’ll admit that there are good police officers, but some are terrible. Another hindrance to our work is the time it takes courts in Nigeria to prosecute sexual assault cases. Currently, plaintiffs wait three to five years for justice, which is discouraging.

One of my grandest desires, besides expanding STER beyond Nigeria, is to change the narrative of rape survivors, where they would be believed and the stain of shame will no longer exist. I dream of a world where women, children and men can co-exist freely without abuse and violence.

Interview by Shayera Dark THE AFRICA REPORT

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