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2018: Managing the pace of change in Africa – the year ahead

The success of African governments is increasingly defined by their ability to manage the pace of social and political change. Africa’s burgeoning youth populations are flocking to the cities, embracing new forms of communications and media, and vocally demanding greater accountability from their governments.

Young and aspirational societies are above all hungry for jobs, but they also expect better public services and more evident social justice. This tide of expectation from the grassroots makes change inevitable. But while governments cannot stop it, they can still shape the pace and direction of change.

The African continent today is characterised by two types of nations – those led by reform-minded governments with the political will to deliver on their development strategy and overseeing robust growth driven by their private sectors; and those that resort to window-dressing efforts at reform while clinging to power through a reliance on patronage. In 2018, I anticipate more bumps in the road for African leaders who fail to respond to the clamouring of their young populations. But I also see the emergence of a new generation of leadership, like ours in Botswana, which has grown responsive to the needs and expectations of its citizens.

The new administrations of Cyril Ramaphosa in South Africa, Joao Lourenco in Angola, and Emmerson Mnangagwa in Zimbabwe, while facing notable political and economic challenges, will all strike a more reformist and accountable tone than their predecessors in 2018. I anticipate Ramaphosa will make bold cabinet selections in South Africa to reassure the capital markets, step back from some of President Jacob Zuma’s more controversial recent populist policy interventions, and importantly, push for investigations into some of the alleged graft which has rocked South African politics in recent years.

This will not be an easy task, such is the divided nature of his party and the fragile state of the economy. But he will look to assert his authority and strike a note of change, while upholding aspects of the ANC’s radical economic transformation agenda, which remains so critical to South Africa’s long-term socio-economic rebalancing post-apartheid.

Lourenco is also making waves in Angola as he seeks to assert his authority over the state apparatus and dilute the lingering influence of the dos Santos family, who have dominated Angolan politics for the last three decades. From his new position of growing strength, I anticipate that Lourenco’s reforms will move beyond personnel changes to actually tackle some of the monopolies that thrive in Angola’s heavily politicised business landscape. It remains to be seen however, whether such actions constitute part of a coherent development agenda, or whether they are simply a means of wrestling control of key patronage structures from one faction to another.

In those countries where leaders have sought to push back and resist the forces of change, political risks will increase, as was evidenced recently in Zimbabwe. In perhaps the most prominent example of this dynamic, President Joseph Kabila’s dance around the international community in the DRC will continue to fuel a political and security crisis in 2018 that carries risks of escalation. Kabila will continue to play to the gallery on his commitment to elections, but I see this as a means to detract from his entrenchment in power. This dynamic will continue to foment unrest and violence as the country limps along to an inevitable transition.

Between populism and pragmatism
Linked to this same demographic pressure for reform and progress, governments are having to make tough decisions on how they run their economies, make policy and fund their development plans. With commodity prices still somewhat subdued, donor streams proving unreliable, and China taking a more restrained approach to the continent, in the last two-to-three years African governments have been forced to place a greater focus on economic diversification, debt-raising, fiscal reform, and efforts to broaden the tax base.

Such reforms are much-needed to strengthen the macro-economic sustainability of many countries. But they also carry structural risks, and notable opportunities and risks for business, which need to be carefully evaluated. With regards to structural risk, IMF chief Christine Lagarde in December 2017 sounded the warning bell over resurgent public debt levels in Africa, with external debt in particular vulnerable to foreign currency appreciation noting the likelihood of further interest hikes in the US and Euro-area this year.

After a swathe of debt write-offs in the 2000s with the launch of the Heavily Indebted Poor Countries Initiative (HIPC) in 1996, African debt is again on the rise, with many governments using commercial and conditional borrowing to plug persistent fiscal and budgetary gaps. On a positive note, unlike in previous debt cycles, much of the focus of recent borrowing has been to fund capital spending on infrastructure and developmental projects.

However, many governments have also proven either reluctant or unable to trim the public wage bill, cut back on subsidies and reduce wastage in the system by pioneering robust public-sector reform. This has proven evident in the challenging IMF negotiations around concessional reforms to enable extended credit facilities in countries like Mozambique and Zambia.

While 2018 is unlikely to be the year when the tide turns on African debt, we expect this issue to come increasingly into focus with several bond issuances nearing maturity, and the long-term sustainability of debt in countries like Guinea, Ghana and Kenya being called into question. Fortunately, African governments appear more engaged with the IMF and other lenders than they were during the stubborn debt crises of the 1980s.

But public-sector reforms will prove a bitter pill to swallow, and with governments under pressure to maintain spending and preserve jobs, the debt mountain is more likely to swell than deflate. This issue could well come back to bite, and donors are unlikely to countenance a second bailout along the lines of HIPC, underlining the long-term structural risks this presents if spending is not contained.

On the other hand, the move towards economic diversification – particularly in resource dependent economies – presents huge opportunities to business. These range from reforms and incentives to open untapped or under-productive sectors like mining and agriculture, to the launch of Special Economic Zones or ring-fenced industrial parks like the export-oriented manufacturing hubs being developed in Zambia or Ethiopia. Such moves are unlocking significant potential for both companies and government, with an aligned benefit from wealth and jobs creation, and increased fiscal contributions.

Yet in other areas, fiscal reforms and efforts to broaden the tax base come with risks for business. Internal revenue generation in Africa is lamentably low due to a combination of poor checks and systems, high levels of informality in the economy, low tax rates, and corruption. The drive to address this issue forms an important step to build more sustainable economies.

Yet while improving tax collection systems and broadening the tax base to capture untaxed areas is likely to be a positive move, we are also likely to see a struggle play out between the need for pragmatic fiscal management and the desire to secure easy populist wins which carry political capital. In particular, where tax authorities target the low-hanging fruit of existing tax payers to drive up tax collection, this is likely to carry risks to business and in some instances, have a detrimental effect on economic activity.

In 2018, we are likely to see hikes in excise taxes on consumer goods that are seen to carry health and environmental impact – notably drinks, plastics and tobacco products – and the telecoms sector will also face similar pressures as a perceived cash-cow for government. While environmental and health issues will be used as the rationale, often the real driver of fiscal change will be short-term revenue-raising requirements. And while the foot has been taken off the pedal in terms of resource nationalism in the extractives sector after a wave of fiscal and regulatory reform in the last decade, tax and regulatory enforcement – including stringent sanctions for non-compliance – is likely to remain a feature for this strategic sector, where local content and beneficiation will be the primary government focus.

Businesses will need to be alert to these risks, which can originate domestically or result from contagion stemming from ‘influencer markets’ like South Africa which wield significant regional influence. While the risk of contagion from the more radical forms of policy that has been pursued in recent years in countries like Zimbabwe or even Tanzania is limited by the realities of the political-economy in other markets, tax and regulatory pressures are likely to become a growing challenge for business, requiring robust and proactive engagement to manage the impact on operations and the bottom line.

Marcus Courage, CEO of Africa Practice Group, a pan-African strategy and communications consultancy with offices in London, Gaborone and six other African capitals. www.africapractice. com

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Opinions

Internal party-democracy under pressure

21st June 2022

British novelist, W. Somerset Maugham once opined: “If a nation values anything more than freedom, it will lose its freedom; and the irony of it is that if it is comfort or money that it values more, it will lose that too.”

The truism in these words cannot be underestimated, especially when contextualizing against the political developments in Botswana. We have become a nation that does not value democracy, yet nothing represent freedom more than democracy. In fact, we desire, and value winning power or clinging to power more than anything else, even if it harms the democratic credentials of our political institutions. This is happening across political parties — ruling and opposition.

As far as democracy is concerned, we are regressing. We are becoming worse-off than we were in the past. If not arrested, Botswana will lose its status as among few democratic nations in the Africa. Ironically, Botswana was the first country in Africa to embrace democracy, and has held elections every five years without fail since independence.

We were once viewed as the shining example of Africa. Those accolades are not worth it any more. Young democracies such as South Africa, with strong institutions, deserves to be exalted. Botswana has lost faith in democracy, and we will pay a price for it. It is a slippery slope to dictatorship, which will bring among other excess, assault on civil liberties and human rights violations.

Former President, Festus Mogae once stated that Botswana’s democracy will only become authentic, when a different party, other than the Botswana Democratic Party (BDP) wins elections, and when the President of such party is not from Serowe.

Although many may not publicly care to admit, Mogae’s assertion is true. BDP has over the years projected itself as a dyed-in-the-wool proponent of democracy, but the moment its stay in power became threatened and uncertain, it started behaving in a manner that is at variance with democratic values.  This has been happening over the years now, and the situation is getting worse by the day.

Recently, the BDP party leadership has been preaching compromise and consensus candidates for 2024 general elections. Essentially, the leadership has lost faith in the Bulela Ditswe dispensation, which has been used to selected party candidates for council and parliament since 2003. The leadership is discouraging democracy because they believe primary elections threaten party unity. It is a strange assertion indeed.

Bulela Ditswe was an enrichment of internal party democracy in the sense that it replaced the previous method of selection of candidates known as Committee of 18, in which a branch committee made of 18 people endorsed the representatives. While it is true that political contest can divide, the ruling party should be investing in political education and strengthening in its primary elections processes. Democracy does not come cheap or easy, but it is valuable.

Any unity that we desire so much at the expense of democracy is not true unity. Like W. Somerset Maugham said, democracy would be lost in the process, and ultimately, even the unity that was desired would eventually be lost too. Any solution that sacrifice democracy would not bring any results in the long run, except misery.

We have seen that also in opposition ranks. The Umbrella for Democratic Change (UDC) recently indicated that its incumbent Members of Parliament (MPs) should not be challenged for their seats. While BDP is sacrificing democracy to stay in power, UDC is sacrificing democracy to win power. It is a scary reality given the fact that both parties – ruling and opposition — have embraced this position and believe democracy is the hindrance to their political ambitions.

These current reality points to one thing; our political parties have lost faith in democracy. They desire power more than, the purpose of power itself. It is also a crisis of leadership across the political divide, where we have seen dissenting views being met with persecution. We have seen perverting of political process endorsed by those in echelons of power to manipulate political outcomes in their favour.

Democracy should not be optional, it should be mandatory. Any leader proposing curtailing of democracy should be viewed with suspicion, and his adventures should be rejected before it is too late. Members of political parties, as subscribers of democracy, should collectively rise to the occasion to save their democracy from self-interest that is becoming prevalent among Botswana political parties.

The so-called compromise candidates, only benefits the leadership because it creates comforts for them. But for members, and for the nation, it is causing damage by reversing the gains that have been made over the years. We should reject leaders who only preach democracy in word, but are hesitant to practice it.

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Opinions

The Big Deal About Piracy

21st June 2022
piracy

Piracy of all kinds continues to have a massive impact on the global creative industry and the economies of the countries where it thrives.

One of the biggest misconceptions around piracy is that an individual consumer’s piracy activities, especially in a market the size of Botswana’s, is only a drop in the pool of potential losses to the different sectors of the economy piracy affects.

When someone sitting in Gaborone, Botswana logs onto an illegal site to download King Richard online, they don’t imagine that their one download will do anything to the production house’s pocket or make a dent in the actors’ net worth. At best, the sensitivity towards this illegal pirating activity likely only exists when contemplating going about pirating a local musician’s music or a short film produced locally.

The ripple effects of piracy at whatever scale reach far beyond what the average consumer could ever imagine. Figures released by software security and media technology company, Irdeto, show that users in five major African territories made approximately 17,4 million total visits to the top 10 identified piracy sites on the internet.

The economic impact of this on the creative industry alone soars to between 40 and 97.1 billion dollars, according a 2022 Dataprot study. In addition, they estimate that “illegally streamed copyrighted content consumes 24% of global bandwidth”.

As Botswana’s creative industry remains relatively slight on the scale of comparison to industries such as Nollywood and Nilewood where the creative industry contributes a huge proportion to West and East Africa’s respective GDPs, that does not imply that piracy activities in Botswana do not have a similar impact on our economy and the ability of our creative industry to grow.

When individuals make decisions to illegally consume content via internet streaming sites they believe they are saving money for themselves in the name of enjoying content they desire to consume. Although this is a personal choice that remains the prerogative of the consumer, looking beyond the fact that streaming on illegal content sites is piracy, the ripple effect of this decision also has an endless trail of impact where funds which could be used to grow the local creative industry through increased consumption, and revenue which would otherwise be fed back into Botswana’s economy are being diverted.

“Why can’t our local creative industry grow?” “Why don’t we see more home-grown films and shows in Botswana?” are questions constantly posed by those who consume television content in Botswana. The answer to this lies largely in the fact that Botswana’s local content needs an audience in order for it to grow. It needs support from government and entities which are in a position to fund and help the industry scale greater heights.

Any organisational body willing to support and grow the local creative industry needs to exist and operate in an economy which can support its mandates. Content piracy is a cycle that can only be alleviated when consumers make wiser decisions around what they consume and how.

This goes beyond eradicating piracy activities in so far as television content is concerned. This extends to the importation and trade in counterfeit goods, resale of goods and services not intended for resale across the border, outside its jurisdiction, and more. All of these activities stunt the growth of an economy and make it nearly impossible for industries and sectors to propel themselves to places where they can positively impact society and reinvest into the country’s economy.

So what can be done to turn the tide here in Botswana in order to see our local production houses gain the momentum required to produce more, license more and expand their horizons? While those who enforce the law continue to work towards minimizing piracy activities, it’s imperative that as consumers we work to make their efforts easier by being mindful of how our individual actions play a role in preventing the success of our local creative networks and our economy’s growth.

Whether you are pirating a Hollywood Blockbuster, illegally streaming a popular Motswana artist’s music, or smuggling in an illegal decoder to view content restricted to South Africa only, your actions have an impact on how we as a nation will make our mark on the global landscape with local creative productions. Thembi Legwaila is Corporate Affairs Manager, MultiChoice Botswana

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Opinions

Our Strength is our Unity

18th March 2022
Craig-Cloud

Putin Chose War.  We Remain United with Ukraine.

U.S. Ambassador Craig L. Cloud

This is a dangerous moment for Europe and for freedom-loving people around the world.  By launching his brutal assault on the people of Ukraine, Vladimir Putin has also committed an assault on the principles that uphold global peace and democracy.  But the people of Ukraine are resilient.

They’ve had a democracy for decades, and their bravery is inspiring the world.  The United States, together with our Allies and partners across the globe, will continue to support the Ukrainian people as they defend their country.  By choosing to pay for a war instead of investing in the needs of Russians, Putin’s invasion of Ukraine will be a strategic failure for the Kremlin and ravage the future of the Russian people.

When the history of this era is written, it will show that Putin’s choice to launch an unprovoked, unjust, and premeditated attack left the West more unified and Russia exponentially weaker.

United in Our Response

This will not end well for Vladimir Putin.  Together, the United States and our Allies and partners are taking action to hold Russia accountable.  As a result of unprecedented global sanctions coordination, the United States, the United Kingdom, the European Union, Japan, and Canada have removed selected Russian banks from the SWIFT messaging system and imposed restrictive measures on the Russian Central Bank.

President Biden announced sweeping financial sanctions and stringent export controls that will damage Russia’s economy, financial system, and access to cutting-edge technology.  After Putin began his invasion, the ruble hit its weakest point in history, and the Russian stock market plunged.

Along with the United Kingdom and European Union, the United States imposed sanctions on the architects of this war, including Putin himself.

By moving in close coordination with a powerful coalition of Allies and partners representing more than half of the global economy, we have magnified the impact of our actions to impose maximum costs on Putin and his regime.  In response to Putin’s war of choice, we will limit Russia’s ability to do business in U.S. dollars.

We will stunt Russia’s ability to finance and grow its military.  We will impair Russia’s ability to compete in the global economy.  And we are prepared to do more.

In addition to economic penalties, this week President Biden authorized an additional $1 billion over the $350 million of security assistance he recently approved, and a $650 million in 2021, to immediately help Ukraine defend itself, bringing America’s total security assistance to Ukraine over the past year to $2 billion.

We also stand ready to defend our NATO Allies.  President Biden has coordinated with Allied governments to position thousands of additional forces in Germany and Poland as part of our commitment to NATO’s collective defense.

He authorized the deployment of ground and air forces already stationed in Europe to NATO’s eastern and southeastern flanks:  Estonia, Latvia, Lithuania, Poland, and Romania.  Our Allies have also added their own forces and capabilities to ensure our collective defense.  There should be no doubt about the readiness of the greatest military Alliance in the history of the world:  NATO is more united than ever.

The United States has also coordinated with major oil-producing and consuming countries to underscore our common interest in securing global energy supplies.  We are working with energy companies to surge their capacity to supply energy to the market, particularly as prices increase.

Putin’s Unprovoked and Premeditated War

This was an attack that Vladimir Putin has planned for a long time.  He methodically moved more than 150,000 troops and military equipment to Ukraine’s border.  He moved blood supplies into position and built field hospitals, demonstrating his intentions all along.

He rejected every good-faith effort by the United States and our Allies and partners to address his fabricated security concerns and to avoid needless conflict and human suffering by engaging in diplomacy and dialogue.

Putin executed his playbook exactly as we had warned he would do.  We saw Russia’s proxies increase their shelling in the Donbas.  We saw the Russian government launch cyber-operations against Ukraine.  We saw staged political theater in Moscow and heard outlandish and baseless claims made about Ukraine in an attempt to justify Russia’s aggression.

Russia continues to justify its military aggression by falsely claiming the need to stop “genocide” in Ukraine – despite there being no evidence that genocide was occurring there.  We saw Russia use these tactics before when they invaded Ukraine in 2014 and Georgia in 2008.

And then, at almost the very same moment the United Nations Security Council was meeting to stand up for Ukraine’s sovereignty and forestall disaster, Putin launched his invasion in violation of international law.  Missiles began to rain down, striking historic cities across Ukraine.  Then came air raids, columns of tanks, and battalions of troops, all riding a renewed wave of disinformation and outright lies.

We have been transparent with the world.  We declassified our intelligence about Russia’s plans so there could be no confusion and no cover up.  Putin is the aggressor.  Putin chose this war.  And now his people will bear the consequences of his decision to invest in war rather than in them.

Transatlantic Unity and Resolve Stronger Than Ever

Putin’s goal of dividing the West has failed.  In the face of one of the most significant challenges to European security and democratic ideals since World War II, the United States and our Allies and partners have joined together in solidarity.  We have united, coordinating intensively to engage as one with Russia and Ukraine, provided assistance to Ukraine, developed a broad response, and reaffirmed our commitment to NATO.

Putin has failed to divide us.  Putin has failed to undermine our shared belief in the fundamental right of sovereign nations to choose their destiny and their allies.  And Putin will fail to erase the proud nation of Ukraine.

The next few days, weeks, and months will be incredibly difficult for the people of Ukraine.  Putin has unleashed great suffering on them.  But the Ukrainian people have known 30 years of independence, and they have repeatedly shown they will not tolerate anyone who tries to take their country backwards.

The world is watching this conflict closely, and if Russian forces commit atrocities, we will explore all international mechanisms that could be used to bring those responsible – whether members of the military or their civilian leadership – to account.

Putin’s aggression against Ukraine will cost Russia profoundly, both economically and strategically.  The Russian people deserve better from their government than the immense cost to their future that this invasion has precipitated.

Liberty, democracy, and human dignity are forces far more powerful than fear and oppression.  In the contest between democracy and autocracy, between sovereignty and subjugation, make no mistake:  Freedom will prevail.

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