December 29, 2015 – Public Diplomacy and Regional Stability Initiatives News. Geeska Afrika year end analysis revealed topics that our readers cared about the most over the past year. Clear trends can be traced in what have been the most important stories like trade finance in the Horn of African countries; Somalia, Ethiopia, Eritrea, and Djibouti.
Whether as protection against late payment, terrorism, war or looming political uncertainties such as the up-and-coming elections of Federal republic of Somalia and Djibouti, Ethiopian foreign investment, Eritrean Human trade migrations, and finally insurance increasingly oils the wheels of the Horn of African trade.
The bulk of trade insurance in the region covers commodity shipments coming out of region, and infrastructure including telecoms and power equipment going in to the continent. Ethiopia is the driving seat as the leader for African issuer for Eurobonds. Chinese government sources has told Geeska Afrika reporters that $4 billon worth of Chinese investments has flowed into Ethiopia which brought tens of thousands of Chinese workers into the country. The Ethiopian Gilgel Gibe III hydroelectric power project began power generation in October which shows the thirst for energy in the horn.
Although the latest predictions from economists at the World Trade Organisation (WTO) see global trade growing at just 3.3% this year. Africa’s economic growth prospects of 4.4% in 2015 and 4.7% in 2016 suggest steady trade flows. Economists predict stronger African domestic demand based on private consumption and public investment in infrastructure as well as increasing foreign direct investment. “The sectors which will remain buoyant in the coming months are still construction, agriculture, services and to a lesser extent the manufacturing industry,” predicts Jean-Christophe Battle the Africa manager at Coface, in the French ECA’s latest research note.
One growing area of demand is from African banks expanding their intra-African trade finance operations to meet demand from key clients. The UN puts intra-African trade at around 12% of Africa’s total trade – although it could well be more because of high levels of informal trade and Africa’s porous borders. “We are doing a lot of work with banks to provide financing solutions and mitigate risk for SMEs,” says Benjamin Mugisha, an underwriter at the African Trade Insurance Agency (ATI). “We have supported South African banks lending into Africa and are now doing more business with Nigerian banks wanting to do cross-border transactions too,” says Roderick Barnett, an underwriter at specialist insurer Beazley
Guelleh May Stay on.
Even so, it remains a fragile concept. The presidents of Rwanda and the Democratic Republic of Congo have recently contemplated changing constitutions to give themselves extra time in office. The leaders of Benin, Congo-Brazzaville and Djibouti are also said to be entertaining the same idea. Many take their cue from the leaders of Chad and Uganda, not to mention Zimbabwe, who have managed to postpone retirement indefinitely.
Presidential elections are due to be held in April 2016 and 67-year-old President Ismail Omar Gueleh has given no indication about whether he plans to follow through with his 2011 announcement that he will retire. Meanwhile, the opposition says that it will not support the holding of elections in 2016 if the government does not create an independent national electoral commission that includes members of the opposition.
Djibouti’s central economic challenge is that its role as a military and logistics hub does not create many jobs or lift people out of poverty. The International Monetary Fund (IMF) argues that the authourites urgently need to diversify the economy and estimates that the country has an unemployment rate of 48%. The government has limited means for social spending because funding for new projects is eating into the national budget.
In Need of Support
With a population of 6.3 million, the loss of thousands of young people each month to emigration has led to a dearth of new recruits for domestic checkpoints and border posts, making security measures harder to enforce. The only national benefit from the exodus – financial injections in the form of remittances – is highly unreliable basis for planning. Under heavy sanctions for supporting terrorist movements in the region – a charge that Asmara routinely denies – Eritrea struggles to provide basic survives to its population. Access to food running water and electricity are limited. The government faces ongoing international criticism for using heavy surveillance, jailing journalists and forcing citizens to work in the national service for low wages and indefinite periods.
Mining is the only bright spot for Eritrea’s economy. Economic prospects for ordinary citizen remain grim, with a private sector too weak to absorb young gradates. Eritrea tertiary education system has suffered through restrictive polices and diplomatic isolation, but an international academic conference planned for July 20016 in Asmara – -the first such forum in more than a decade – is a recent example of coordinated grassroots and government efforts to improve the quality of higher education.
The Older Generation stays the Course
Drought and famine were looming threats for eastern Ethiopia after a light rainy season in 2015. According to United Nations agencies, the number of people in need of food aid shot up to more than 4.5 million from the 2.9 million previously projected. The year’s low crop yield will continue to have ripple effects.
Ethiopia can boast significant progress in building roads, opening schools, improvising health care and modernising agriculture practices over the past five years. But it struggled to boost its manufacturing and food processing sectors, despite the government’s vision of turning Ethiopia into a manufacturing hub. Manufacturing accounts for only 4.1 % of gross domestic product, although the wider industrial sector contributes 14.3% as compared to 40.2% for agriculture and 45.5% for services.
Competition for the 2017 Polls
President Uhuru Kenyatta hopes for a second term amid rising doubts about the identity of his running mate. If Kenyatta were to run in the 2017 elections with Ruto as his second in command, the terrain would be clear for Ruto’s ascendency at the end of the second term. Political commentators, however, say this looks very unlikely as would be Ruto’s political survival if he should choose to challenge Kenyatta in the 2017 general elections.
Facing widespread criticism for continuing to tolerate corruption, the government has begun to turn its attention to reducing graft within the security services. Kenyatta stepped up pressure on commissioners and police commanders at the country level to become more accountable for security and to eliminate graft. He acknowledges that those intending to harm Kenya still found it possible to exploit the countries porous borders.
Fighting Against Al-Shabaab
In September, marking a year since the deadly US drone strike against leader Ahmed Godane, Al-Shabaab stormed an AMISOM base about 90km south of Mogadishu, killing at least 12 Uganda soldiers. This highlighted the movement has middle-tier combatants who can take leadership roles. Al- Shabaab is destabilising the country despite being flushed out of the urban strongholds of Mogadishu and Kismayo and parts of southern and central Somalia. The government claims to have liberated 75% of the country, but Kenya and Uganda troops are set to remain deployed under the aegis of AMISOM in Somalia for the foreseeable future, with the increasingly active support of Western countries.
Livestock continues to be Somalia’s main source of cash and earned a record $350m from exports to gulf states in 2014. In its first review of the economy in 25 years, the international monetary Fund said the economy expanded 3.7% in 2014. Somalia’s diplomatic contacts have been expanding. Turkeys President Recap Tayyip Erdogan visited in early 2015 to launch several projects including rebuilding the Mogadishu airport terminal and 200-patient hospital was his second visit and highlights the growing Turkish influence, which includes military training and humanitarian relief efforts.
Disarming the Warlords
After two years of intense civil war the two warring parties, the Sudan People’s Liberation Army (SPLA) and the SPLA in Opposition (SPLA-IO) nationally agreed to a monitored ceasefire and to sharing of government positions over a 30-month transitional period before elections are held in 2018. The government will be under increased pressure to conserver resources in view of its heavy dependence of donors, Un agencies and non-government organisations to provide health care and humanitarian assistance.
For the most part, the international community was united in forcing the warring sides to the table and could yet be ready to support the peace process financially and materially, but neighbouring states seem to prefer following their own different agendas. President Sakva Kiir has managed to retain strong support from Uganda, while rebel leader Riek Machar has benefited from the good will of Ethiopia as well as from alleged material assistance from Sudan. What happens in the months ahead will be a critical test of these countries professed intention to achieve a peaceful resolution of the conflict.
On the Road to Change
With presidential and legislative elections coming round again February and March 2016, Uganda is teetering on the brink of potentially significant change. President Yoweri Museveni hopes to extend his 30-year rule for yet another term, and the opposition parties will be much more confident of making sweeping gains if they can craft a united front.
Regardless of the shape of Uganda’s economy after the elections, major issues lie ahead. Uganda’s huge infrastructure bill has partly contributed to the rise in debt and left the country starring at a widening current account deficit. The countries public debt stood at $7.6 billion by July. The debt to gross domestic product ratio went up to 34% in the previous year. This figure is, however, still below the agreed East African Community (EAC) benchmark of 50%.
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