Friday, 01 May 2020

On 20 May 2020, Burundians head to the polls to elect a new president. Incumbent Pierre Nkurunziza has promised to step aside after 15 years in office. The ruling party has selected an army general, Evariste Ndayishimiye, as its candidate.

Nkurunziza’s election in 2015 was controversial. It triggered a failed military coup d'etat and a crackdown on opposition. Many journalists and human rights defenders went into exile.

Three years later in 2018 he announced that he would not stand for re-election.

It’s 15 years since Burundi emerged from a 12-year civil war between Hutu and Tutsi ethnic groups. Initially the peace agreement reached between the two groups was hailed as a success. But in the intervening years the country has experienced deterioration in both human rights and economic conditions.

Most observers expect Nkurunziza will peacefully relinquish office after the 2020 poll. But it is unlikely to spell the end of social, political, and economic instability.

While the ruling party remains in power, the expectation is that there will be a further tightening of authoritarian rule and declining living conditions. The ruling party is determined to safeguard its hold on power, even at the cost of a collapsing social order.

Nkurunziza’s legacy

Nkurunziza, a Hutu former rebel leader, was elected by parliament as the president at the end of the 1993-2005 Burundi civil war between Hutu and Tutsi forces. He served a second term in 2010 after re-election by popular vote.

Burundi’s democracy index shows that Nkurunziza and the ruling party (the National Council for the Defence of Democracy–Forces for the Defence of Democracy) became gradually more authoritarian over time, increasingly involved in intimidation of political opponents, electoral fraud and human rights violations.

The constitution of Burundi initially set a two-term presidential limit. But in April 2015, Nkurunziza announced he would seek a third term in office. He based this on a disputed interpretation of the constitution. The country’s high court eventually backed the decision.

Burundi was plunged into political and economic crisis. This was accompanied by increasing authoritarianism in 2015. The subsequent abortive coup and anti-Nkurunziza protests led to violent clashes with the government. Independent media were shut down and many political opponents joined an exodus of over 350,000 Burundians to neighbouring countries.

Amid low voter turnout, Nkurunziza won a third five-year term with about 70% of the vote.

Read more: Beyond political violence in Burundi: an economy in crisis

The end of an era

Nkurunziza’s third term has been marked by heightened authoritarianism and repression, shown by further declines in the democracy index since 2015. In 2019, a UN commission accused the government of orchestrating widespread human rights abuses, including forced recruitment into the ruling party, extortion of goods and funds, executions, arbitrary arrests, torture, and sexual violence.

Many of the atrocities were committed by the ruling party’s youth wing, the Imbonerakure.

The government has muzzled the press and other critics, notoriously banning the BBC for documenting these atrocities. Burundi also became the first country in the world to leave the International Criminal Court.

In May 2018, constitutional amendments allowing Nkurunziza to hold office until 2034 were passed in a referendum tainted by intimidation and fraud. It also concentrated power in the presidency.

Despite this, there are strong incentives for Nkurunziza to step down. Not least, he will receive a series of perks. Burundi’s parliament passed legislation for a presidential retirement package that will see Nkurunziza receive a lump-sum of $530,000, a luxury villa, a salary for the rest of his life, and the title of “Paramount Leader”.

Nkurunziza leaves Burundi isolated and at a precipice. He has alienated the African Union and the United Nations by rejecting special envoys and forbidding human rights investigators from working freely in the country.

What next?

Six candidates have registered for the presidential elections. But the ruling party’s Evariste Ndayishimiye is the near-certain victor following years of the party’s repression and intimidation of political opposition.

Ndayishimiye is already an influential politician. He is the ruling party’s secretary-general, previously served as minister of interior and security, and acted as a key signatory in the Arusha peace settlement that brought the civil war to an end.

But Ndayishimiye is unlikely to open space for political opposition, civil society, and the media. Instead, the ruling party is expected to push for reforms that consolidate a gradual de facto transition to a one-party system.

Agathon Rwasa, a candidate for the National Freedom Council, is the main challenger. A former leader of Hutu rebel group the National Liberation Forces, Rwasa is better known to the electorate than Ndayishimiye, having served as perennial figure in previous elections.

The ethnic question

There are fears that the upcoming election could reignite old Hutu-Tutsi tensions. But set against the broader picture of Burundi’s transition from civil war, the likelihood of large-scale ethnic violence is low.

Burundi’s civil war came to an end through a negotiated settlement that re-engineered state institutions on the basis of ethnic power-sharing across political and military positions. Political parties formed that were not divided along ethnic lines. Indeed, the main adversaries at present are warring Hutu-dominated political groups.

Read more: Burundi edges closer to the abyss in 2016

The power sharing system has been extremely resilient. For example, political opposition to Nkurunziza’s third term transcended ethnic boundaries. Throughout, the military did not divide along ethnic lines. Even the coup plotters included both Hutu and Tutsi members.

The Imbonerakure and the constitutional changes represent a risk to this system, but it is not clear to what extent. The Imbonerakure are not subject to the ethnic quota requirements, so are primarily recruiting ethnic Hutu. Yet both Hutu and Tutsi are suffering from their violence.

Constitutional changes neutered the vice-presidency, typically held by a Tutsi. But ethnic quotas stating government and parliament must be made up of 60% Hutu and 40% Tutsi were maintained. They were also extended to the judiciary.

Adversarial politics and hegemonic power

Violence based on political partisanship is likely to continue. The ruling party will further tighten political space in an attempt to future-proof its grip on power. Façade elections will be held, rigged so that the ruling party wins. And political opposition will face the threat or actuality of violence.

The ruling party may retain power for several years in this fashion. But in the long term it will have to put in place strategies for cementing its power if it is to avoid persistent bouts of destabilising social unrest. It will need to win the hearts and minds of Burundians so that they come to accept that there is no alternative.The Conversation


Thomas Stubbs, Senior Lecturer in International Relations, Royal Holloway and Pamela Abbott, Director of the Centre for Global Development and Professor in the School of Education, University of Aberdeen

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Economy

Access Bank Plc plans to cut salaries to avoid job losses as a lockdown to contain the coronavirus hampers the operations of Nigeria’s biggest lender, according to people with direct knowledge of the matter.

The reductions are expected to start from May unless business conditions improve, said the people, who were briefed on the matter during a conference call and asked not to be identified because they’re not authorized to speak publicly. Some management will get as much as a 40% decrease, they said.

A spokesman for Lagos-based Access Bank declined to comment.

Nigerian banks are facing the threat of rising bad-debt levels as a crash in oil prices and the risk of a naira devaluation coincide with the Covid-19 pandemic that has shuttered businesses.

Access Bank, which acquired rival Diamond Bank Plc last year, had 6,898 permanent staff at the end of 2019, according to a presentation on its website. The acquisition partly contributed to a 31% increase in operating expenses. Personnel, recruitment and training costs account for more than a third of overheads after the deal boosted employee numbers and resulted in “wage harmonization” across the businesses.


- Bloomberg

Published in Bank & Finance

South Africa begins to gradually loosen its strict coronavirus lockdown on Friday, allowing some industries to reopen after five weeks of restrictions that plunged its struggling economy deeper into turmoil.

The lockdown has had a devastating impact on the economy, but a top government adviser on the pandemic said it has slowed transmissions.

"The lockdown has had quite an effect," infectious disease epidemiologist Salim Abdool Karim told AFP.

"We have got quite clear evidence that we have flattened the curve and that the number of cases we are seeing - and the number of infections probably occurring - has declined quite substantially," he said.

The country's number of confirmed infections has risen to 5 647 since 5 March when the first case was detected. It also has recorded Africa's highest Covid-19 death toll, with 103 fatalities.

The economy of Africa's most industrialised nation was already teetering when the lockdown kicked into gear on 27 March to contain the spread of infections.

To combat the economic destruction, the government has adopted a gradual and phased approach to reopen the country from 1 May.

Around 1.5 million workers in selected industries return to work in the next phase under strict health conditions, according to Trade and Industry Minister Ebrahim Patel.

  • Winter clothing, textile and packaging manufacturing are among the industries permitted to reopen factories.
  • Restaurants will also open, but only for takeaway deliveries.
  • Controversial bans on the sale of cigarettes and alcohol will remain in effect.
  • Some outside activities, such as cycling, walking and running will be allowed  - but for just three hours in the morning.
  • Social distancing and wearing masks in public and at workplaces will be mandatory.

Cooperative Governance Minister Nkosazana Dlamini-Zuma warned "companies that breach regulations will be forced to close".

President Cyril Ramaphosa took the decision to stagger the easing of the lockdown restrictions in a bid to strike a balance between protecting public health and the economy.

"Our people need to eat. They need to earn a living," Ramaphosa said.

"Companies need to be able to produce and to trade, they need to generate revenue and keep their employees in employment."

South Africa's economy was in recession and reeling from low growth and high debts before the pandemic arrived.

On Wednesday S&P downgraded the country's credit rating further into junk.

After shrinking in the second half of 2019 due partly to severe rolling power blackouts, "South Africa's already contracting economy will face a further sharp Covid-19-related downturn in 2020," the ratings agency said.

To help cushion companies and individuals, Ramaphosa last week unveiled an unprecedented R500 billion economic stimulus and social relief package, amounting to about 10 percent of the GDP.

Finance Minister Tito Mboweni said the country will seek coronavirus relief aid from the International Monetary Fund and the World Bank, where it is eligible for up to $4.2 billion.


Published in Economy

The recent acquisition by Total of Tullow Oil’s entire interests in the Lake Albert Development Project in Uganda, including the East African Crude Oil Pipeline, marks the beginning of a new chapter for East Africa’s energy industry.

To dissect the deal and discuss its wider implications for the region, the African Energy Chamber organised a webinar with leading regional industry experts, held under the Chatham House Rule.

Featuring key officials and representatives from Stanbic Bank, Standard Bank, Shell, Baker Hughes and the Kenya National Oil Company, the webinar was hosted by Eng. Elizabeth Rogo, Founder & CEO of TSAVO Oilfield Services and President of East Africa at the African Energy Chamber.

Good or bad deal?

Under the agreement announced last week, the overall consideration paid by Total to Tullow will be $575m, with an initial cash payment of $500m at closing and $75m when the partners take the Final Investment Decision (FID) to launch the project. Under the terms of the deal, Total will acquire all of Tullow’s existing 33.3334% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. The Lake Albert project, also called the Tilenga Project, has a production capacity of up to 230,000 bopd, which would propel Uganda in the top 5 of sub-Saharan Africa’s oil producers. In addition, the proposed 60,000 bopd refinery and some of the overarching issues were mentioned.

The deal is a win-win for all stakeholders involved. First, for Total, who ends up acquiring Tullow Oil’s entire interests in the Lake Albert development project for less than $2/barrel. Then, for Tullow Oil, whose debt is rising and who is looking at raising $1bn by selling some of its key assets. The company’s shares rose on the announcement of the deal. Finally, it is a win for Uganda’s oil industry and local jobs. After years of deliberations and debate, the closing of the sale allows the country and oil companies to move the conversation towards FID and practical project’s development. It also sends strong signals to the rest of the region, and Kenya in particular, to do everything possible to unlock their own oil & gas potential.

While visibility on the FID’s timeline remains unclear, the project is very competitive even in a depressed low oil prices environment. The cost per barrel of the integrated Lake Albert Development Project is indeed estimated at around $50. This is explained in part because the country’s hydrocarbons are within shallow deposits which are less drilling intensive and do not need as much casing, tubing and completion work. While Total is following a global trend of drastically cutting expenses in light of the COVID-19 pandemic and the collapse of oil demand and oil prices, the project’s economics make it one of the most likely to get FID in the near future.

A key unanswered question for now is whether CNOOC will exercise its pre-emption rights under the joint operating agreements it has with Tullow Oil and Total as a joint venture partner, like it did in the failed 2019 sale. A scenario under which the Chinese major does exercise once again its pre-emption rights is very likely, and will in fine depend on China’s overall strategy for the wider East Africa region.

Pipeline matters

The moving forward of the Lake Albert Development Project, and its export pipeline, is a major step forward de-risking other potential oil & gas projects in East Africa and making them attractive for investments and financing. Given the current industry dynamics and potential liquidity constraints, participants agreed that a scenario under which two regional pipelines would be laid was becoming more challenging. The size of Uganda and Kenya’s discovered reserves along with the capital and financial muscles of their operators will be factors weighing in which pipeline gets executed.

The EACOP was, however, a matter which participants thought could become contentious for the execution of the overall Lake Albert project, and the development of the region’s oil sector. Key questions remain to be answered, chief amongst them being Tanzania’s business environment and the country’s ability to provide policy certainty on the execution of such a major infrastructure venture. Whether Tanzania decides to stick to an enabling business environment and demonstrate its willingness to comprise with international investors after years of natural resources nationalism remains another unanswered question.

The way the execution of the pipeline evolves will determine a lot of East Africa’s oil industry future. While the original northern route through Kenya was deemed less favourable, a scenario under which Total would consider buying out Tullow Oil’s assets in Kenya, where several significant oil discoveries were made, could potentially re-roll the dice in the region.

Regional content, now

Finally, and more importantly, the expected first oil from Uganda in the coming years should urgently lead to local content preparations not on a national, but a regional level.

Between the two upstream projects of Tilenga (Total) and Kingfisher (CNOOC), the pipeline project and the Uganda oil refinery project, the scale of upcoming projects in Uganda and the neighbouring countries represents billions of dollars of opportunities for local companies.

However, given the under-developed nature of the local hydrocarbons services industry in East Africa, only regional partnerships and joint-ventures can result in maximising such opportunities. As the conversation in Uganda moves towards employability within local communities and ensuring that Uganda’s oil benefits the development of a strong local sector, the region as a whole needs to come together to support regional ventures. Unless companies across East Africa come together and leverage on their respective expertise and experience to work together, there is a fear that upcoming oil and gas projects will ultimately go to foreign contractors and deprive local businesses from tremendous growth opportunities. In this regard, the development of an African regional content is one of the top 10 measures that form Africa’s Common-sense Energy Agenda, released by the African Energy Chamber earlier this week.

In this context, the need to invest in education, training and skills transfer is greater than ever. The success of the region’s oil sector will depend on all stakeholders coming together to bring the East African energy story to investors 

Published in Engineering
  1. Opinions and Analysis


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