Thursday, November 29, 2012

Congo: Kabila in Catch 22 with M23



As reported last week, the DRC’s Eastern city of Goma fell on Tuesday November 20th. 

The next day M23 took Sake, 25 km to the west. Many people now expected this to be the first step in an advance south with the rebels setting their sites on taking Bukavu. But that hasn’t happened (yet). Instead, M23’s military movements turned to the north and the west, consolidating positions in Rutshuru and Masisi.

The FARDC has reorganized itself in Minova, the border town between North and South Kivu. At the moment of writing this article, it seems more likely that if M23 is going to take another town then it will most likely be Beni.

This week all eyes were on Kampala – the venue of the regional summit of the International Conference of the Great Lakes Region. The summit on November 25th ended with an agreement which included the withdrawal of M23 from Goma within 48 hours. This did not happen.

Rwandan interests in Congo are 3 phases

My intention here is not to write another overview of recent Congolese history, nor do I intend to reduce the current situation with M23 simply to its Rwandan dimension. However, it is important to remember the joint military operation Umoja Wetu, which took place in January 2009. In this operation, the Rwandan and Congolese armies aimed at dismantling the FDLR, also hoping to put a seal on the new agreement between Congo and Rwanda and on the integration of the CNDP within the Congolese army (FARDC). As such, the agreement was the beginning of a third phase in the way Rwanda defended its interests in Congo.

Phase one

At first, in the wars of 1996-1997 and 1998-2002, Rwanda defended its economic (and other) interests through a direct and open presence on Congolese territory. As part of a complex and fragile peace process, Rwanda officially withdrew its troops in September 2002. Its main ally, the Rassemblement Congolais pour la Démocratie (RCD), joined the transitional government and participated in the 2006 elections. Their soldiers were also integrated in to the FARDC.

Phase two

At the start of the transitional period (2003-2006) a small part of the RCD’s military (under the command of Laurent Nkunda) did not join the newly integrated army. This was part of a ‘plan B’ to prevent the Congolese Tutsi community losing its political weight and military power in the event that transition, integration or elections did not favour them. This was the start of a second phase, where Rwanda did not have an open and visible presence in Congo, but where it gave military support to the rebel movement to protect its interests and to maintain its impact on Congolese politics.


2008 was a bad year for both Kagame and Kabila. In addition to the difficulties created by the arrest warrants for nearly the entire RPF leadership (except Kagame) by the judges, Bruguière (in France) and Andreu (in Spain), Rwanda was engaged in a painful argument with the EU over the publication of the observation report on the September 2008 legislative elections. 

In December of the same year the UN experts’ report was published, with plenty of detail on Rwandan support for Laurent Nkunda’s CNDP.
Joseph Kabila, powerless, and with his phantom army facing the CNDP backed by Rwanda, had requested military help. The African Union, Southern African Development Community (SADC), European Union and individual countries such as Angola had, among others, considered sending troops, but ultimately nobody came to his aid.

Umoja Wetu was a marriage based neither on love nor common interests, but rather on the lack of other options for both partners. Kabila had become isolated in the face of a humiliating political and military situation, whilst Kagame had few other options as he was confronted with a change in attitude on the part of some of his most loyal international partners who had formerly supported him, almost unconditionally.

Phase 3

With this loveless marriage, the Rwandan policy to defend its interests in Congo entered a third phase, a phase of partnership. The rapprochement between Congo and Rwanda created an opportunity to strengthen regional frameworks and initiatives in the belief that the complementary nature of the countries of the region could be enhanced and shared interests could be developed and contributed to a common identity.

Rwanda would still be able take advantage of the unequal balance in the regional structures between itself as a strong state and Congo, which remained very fragile.

 The exploitation of Congo’s mineral resources also remained crucial for Rwanda’s national budget as well as for the personal wealth of its political and military élite. But, aware of the weakness of the Congolese administration, the feeble steps taken against corruption and the porous nature of the frontiers, Rwanda continued to try to maximize its profits from the exploitation of Congo’s natural resources.

An arranged but stable marriage

But somehow it worked. The east became a bit more stable, even if insecurity did not entirely disappear. With the elections in view, Kagame became Kabila’s most reliable ally. Kabila knew that his army would never be able to maintain the necessary stability in the east of Congo. Kagame seemed to be the only person who could keep the violence in Kivu at a manageable level.

Kagame also needed this good relationship with Kabila to continue in order to prevent military action against his regime taking shape on Congolese soil. That became particularly relevant in March 2010, when General Kayumba Nyamwasa fled via Uganda to South Africa. Kayumba Nyamwasa belonged to the inner circle of Kagame’s regime, a ‘companion de route’ going back many years, and a key player on some of the most important dossiers, including the plundering of Congo.

Very soon after his defection, it became clear that Kayumba, probably with the support of Museveni, made contact with a number of armed groups in Congo to investigate if a broad anti-Kagame coalition could be set up. However, no operational military framework to fight Kagame ever materialized.

The improved relationship between Kagame and Kabila turned out to be advantageous for both men. In December 2010 the CNDP joined the Alliance de la Majorité Présidentielle, Kabila’s political coalition for the elections. In some parts of North Kivu CNDP locked up the political space to keep opposition candidates from campaigning.

But for Kabila there was a price to pay. A lot of the military people in Kivu had difficulty in understanding why and how the CNDP, who for many years were their worst enemies, became their superiors in rank and had gained control over more soldiers, a much bigger area and more mineral resources than ever before.
The civilian population had to face a CNDP which behaved very arrogantly and felt they were above the law. When Vital Kamerhe, former president of Parliament, left Kabila’s party in December 2010 and founded a new opposition party, it was immediately clear that a considerable part of the Kivutian electorate would follow him.

Kabila’s dead end street

Kabila’s unfortunate current position has a lot of similarities with the situation in 2008. His government wasn’t able to convince people in the east of Congo of its capacity or even ambition to tackle the root causes of the conflicts in the region.

His army has no chance against M23 with open support from Rwanda.
Rwandan support to M23 has made it clear that Kabila has lost his most reliable ally since 2009. An important part of the public opinion is certain to disagree with any negotiations and nobody will believe that they could lead to a credible solution and sustainable peace.

But refusing to negotiate will further marginalise him on the regional and international political scene, and will increase the military pressure.
This situation, especially after the fall of Goma, has had a negative impact on the development of the institutions the country has been trying, since 2006, to put back together. It has also humiliated Kabila the man, as well as the office he holds.

Some people I have talked to believe that the main strategy of M23 is to maintain the pressure on Kabila by keeping control on one or more major towns in the east. Despite the deadline to leave Goma, M23 remains in town. Each day this continues Kabila loses a bit of his dignity and credibility as a leader, and people might soon start asking the question, “what’s next?”

So far, the opposition has not given much evidence of possessing a potential alternative leadership. They couldn’t convince before, during and after the presidential and parliamentary elections. It seems unlikely that they would provide the necessary backbone to the nation and the state in the case that the regime collapses.
The army is even more problematic. It is often presented as a heterogeneous, undisciplined, badly trained amalgam of different militia. 

To a great extent this is true, but it also masks a more complex reality.
Broadly, there are three generations within the military leadership:
The elder officers with a Mobutian background, which means that they had proper training and a proper military career. Although they were a part of a kleptocratic regime, they do have a military deontology.

The youngest generation contains the people who followed programmes and training as part of the security sector reform accompanied by several western and African countries. As a group, this generation has potential.
In between those generations, there is a huge group of people who made their career somewhere in the military landscape of a decade and a half of fighting between irregular armed groups, without proper training or ethics.

The scheme is further complicated by regional alliances and interest groups within the army. Parts of the existing armed forces never truly integrated, but kept the loyalties (and sometimes the informal chains of command) they had during or just after the war.

I don’t exclude the possibility that individuals or groups within the army might, at some stage, be attracted by a putsch scenario. But the chances that such an initiative would restore public order and efficiency, end corruption, protect civilians and put the democratic and peace processes back on track is far below zero. It would simply cause an implosion of the country.

Throwing back the peace process several years

Joseph Kabila started 2012 very bleakly by winning a second mandate as president of the third Republic, after controversial elections. He appointed a government with a rather technocrat image, led by Prime Minister Matata Ponyo, who was responsible for some of the macro-economic successes of the previous government, where he served as the Minister of Finance.

This was a good move, and was well accepted by an important part of Congolese and international public opinion. It created a bit of space to solve the problems within and between the majority and the opposition, and it gave people the feeling that the state was been taken care of.

But things have turned out differently. The rebellion of M23, the way Rwanda has supported it and the fact that Goma has been taken, throws the peace process back several years. 

The elections of 2006 and 2011 initiated a slow and gradual evolution where Congolese politics became an area for politicians rather than for soldiers, rebels and warlords. Diplomacy had replaced arms as the main tool to settle problems between countries. All this has been reversed by the recent events in North Kivu. And every day it takes, it affects the credibility of the president and the country’s institutions.

I very much hope that M23 will keep its promise to leave Goma before the end of the week.

Tuesday, November 27, 2012

Sudan And South Sudan: A Civilised Divorce



Presidents Bashir and Kirr of North and South Sudan signed agreements months back strengthening their relations over oil, trade and contested border areas.
Divorce with kids involved is often a painful affair. 

But once the recriminations have been cast and the tears have dried, the two protagonists, it’s hoped, will work together for a common good: providing their children – and themselves – with a stable environment to move on and thrive. And that’s exactly what the slew of landmark cooperation agreements (see them here) just signed between the governments of the ‘Two Sudans’ represents for their respective populations, a year or so on from the birth of South Sudan.


The agreements herald the restart of oil exports, the abrupt halt of which since late January has sent both countries’ economies into the death-roll beloved of Nile crocs – the IMF predicts that Sudan’s economy alone will have shrunk 11 per cent by the end of 2012.

The agreements, however, are much less crude than that, and do not relate to oil alone. For example, an agreement for a demilitarised border zone signals the final act bringing the curtain down on what had been Africa’s longest running civil war, and, in turn, will buttress security across a huge swathe of the continent. Sudan and South Sudan together share borders with nine countries housing a third of Africa’s population. South Sudan President, Salva Kiir, dubbing the accords as “a great day in the history of the region” was not hyperbole.

Even so, several advocacy groups (see here, here and here) have greeted the agreements with scepticism, owing to unresolved border issues.

You’d have been mistaken for thinking those analysts would be happy with any peace deal – no matter how imperfect – following their frequent doom-mongering about an imminent resumption of full-scale war between the two sides.Alas, no.

Nor, crucially, is the cynicism of the advocacy groups shared by those right here in the mix: the value of both the Sudanese and South Sudanese currencies rose considerably on the curb market following the accords and both have continued to strengthen since then.

Unresolved borders are hardly the exclusive domain of the Sudans either – and here they at least stand to be de-fanged as a potential source of armed strife by the aforementioned demilitarised zone. The freshness of the five spots of contention between the Sudan and South Sudan border always meant, too, that all outstanding issues would not get wrapped up as neatly as the U.S. government, in particular, had wished.
But sometimes it pays to kick a can down the road until you find a bin.

Nor are the five places necessarily the straw that many Sudan analysts have predicted will end up breaking the camel’s back. The reverse could easily prove true – Abyei and the other four contentious areas may act as pegs that fasten the tent. They are where Sudan and South Sudan blur, and embody the very culture of intermarriage, trade, and peaceful and mutually beneficial cooperation, envisioned in the ‘soft’ border accords allowing free movement of people and goods.

A case in point: aside from Abyei, care to name the other four disputed places? Precisely. Lost in the noise even in the flashpoint area of Abyei, which for the record is not oil-rich, intermarriage and peaceful coexistence between the Ngok Dinka and Sudan-leaning Misseriya tribe remains widespread.

The accords now leave the Sudanese government freer to focus – as it must – on speeding untrammelled international humanitarian access and achieving peace in the border areas of the Nuba Mountains and Blue Nile state, and redoubling efforts to bring comprehensive peace to Darfur as well. But like any divorce settlement, support from concerned friends has a big role to play in making the new state of affairs viable for all too.
Quick and comprehensive relief on Sudan’s unsustainable foreign debt (set to hit some US$44 billion by end of this year) from its international creditors is thus an urgent imperative; ditto lifting U.S. economic sanctions off Sudan, starting with the thicket tied to its’ politicised and wholly unjustifiable inclusion on the U.S. terrorism list. 

In doing so, the USA, which has devoted more than all others to this corner of the world, would get more slack to concentrate on building-up South Sudan, as it must, and keeping it upright.
Divorce is never bump-free. Change is never easy.

So, the U.S.A. and other key international stakeholders must now help both Sudan and South Sudan move beyond their acrimonious past, adapt swiftly to the new circumstances, and promise of a brighter future for both, heralded by their agreements.

A north-south Sudan peace talks.  He provides strategic counsel to the Government of Sudan and is Managing Director of The Sudan Centre for Strategic Communications, based in Khartoum.

Monday, November 26, 2012

Africans Should Embrace India not China



While there has been a huge focus on China’s involvement in Africa, India’s increasing presence on the continent has not received the same attention. Yet I believe that over the long term, it will be the Indian factor that will play the most significant part in Africa’s growth.

Some analysts attribute India’s increasing footprint in Africa as that nation’s attempt to play catch-up to its giant Asian neighbour. But this ignores the sharp difference in approach between the two emerging market champions. China’s investment is led by the state which funds its companies working in Africa; the Indian charge is led largely by the private sector and to some extent, the Indian Exim Bank which has made some $3.5bn worth of lines of credit available to exporters and importers.

While China’s growth has been masterminded by the state but largely executed by private & semi-private enterprises, India’s own spectacular growth came about when the state exited business.

From independence in 1947 to the era of liberation that began in 1991, the Indian economy was dominated by state-run enterprises. A policy of protectionism, a bewildering raft of regulations and the infamous ‘licence Raj’ which bred corruption on a staggering scale, hamstrung and suffocated Indian enterprise.

India wallowed in poverty and inefficiency; its infrastructure was outdated even by developing world standards. The big change came in 1991 during the administration of Narasimha Rao (with the current Indian PM, Manmohan Singh as the Finance Minister). Against strong political opposition, the government liberalised the economy, allowing entry to competing imports and it ripped away some of the worst bureaucratic tangles.

In the roughly two decades since, India has seen its per capita GDP increase 200 times from independence and emerge as the third-largest economy in purchasing power parity in the world.

More significantly, this period saw the astonishing rise of Indian companies from virtually the bottom of the barrel into global giants like Tata and ArcelorMittal. Before this period, India produced some of the shoddiest goods in the world.

India has come a long way since those days. Faced with competition, Indian entrepreneurs discovered hitherto unsuspected levels of skills within themselves. They also realised that they had a vast pool of qualified engineers which had been turned out by the Indian education system but which was virtually idle.

Free at last to apply their innate entrepreneurial talents and unshackled from the stifling regulations, they discovered that they could not only compete against the best in the world, they could prevail.

India’s new generation entrepreneurial thrust first announced itself in 2000 when the Tata Group purchased Tetley Tea – as much a British icon then as Buckingham Palace. Other companies followed suit in the same manner, acquiring some of the world’s largest companies.

Mittal Steel bought Iscor in South Africa before acquiring Europe’s Arcelor to become the world’s largest steel manufacturer. It has large iron ore mining projects in Algeria. Mauritania, Senegal, Liberia and South Africa. Tata bought Jaguar and Land Rover in the UK and went into ferrochrome production, tea, hotels, vehicle assembly in South Africa and purchased the Magadi soda works in Kenya. Essar is into steel in Zimbabwe and petroleum refining in Kenya.

Kirloskar Brothers has become the most significant providers of industrial pumps and power generators in Africa; Apollo Tyres bought out Dunlop South Africa and pumped $80m to upgrade their plants in Africa; GBOT set up the continent’s first multi-asset digital exchange platform; and, of course, Bharti paid a record $10.7bn to Zain for its African operations.

Ranbaxy Laboratories and Cipla are on their way to becoming pharmaceutical giants on the continent, while Karuturi is now the world’s largest exporter of roses from its farms in Kenya and Ethiopia.

What attracts Indian companies to Africa?“Africa offers us a scale we cannot find in India,” says Sai Karuturi. “Africa is a larger, less crowded, less complicated version of India,” says Luis Cenevis, who runs Apollo Tyres. “We are perfectly comfortable in Africa,” says Shipra Tripathi of Kirloskar Brothers, “We had to overcome worse challenges at home. Africa is not the coming big thing, it is already there now.” Rinsey Ansalam of GBOT says “the question is no longer should one invest in Africa; the question is can you afford not to invest in Africa?”

The Indians plan to stay. We say welcome.

Africa Business: Debt Capital Comes of Age



One of the most striking signs of the African continent’s growing economic maturity is the rapidly growing use of bond issuance. Governments and large companies increasingly use debt capital markets to fund spending plans, thereby promoting sound economic management as a result of close monitoring of their financial affairs by international investors. As sovereign and corporate bonds become more commonplace and African economies continue to strengthen, yields should fall, gradually making bonds a cheaper form of finance.

However, there is still a very long way to go before Africa’s capital markets, in all their forms, rise to the levels of other emerging markets. Nevertheless, South Africa has been admitted to the World Government Bond Index (WGBI) which will allow more foreign institutional investors to dip their toe in the promising African market and provide the country with much-needed funding for its development plan.

We also look at the current parlous state of Nigeria’s capital market and interview the CEO of the Nigerian Stock Exchange on plans to transform the organisation into a 21st century institution.

International financial organisations are certainly leading the way on the use of debt capital markets on the African continent. The African Development Bank (AfDB) has issued bonds denominated in or linked to the Botswana pula, Ghanaian cedi, Kenyan shilling, Nigerian naira, South African rand, Tanzanian shilling, Ugandan shilling and Zambian kwacha. It is also now authorised to issue bonds in more than 15 other African currencies.

For its part, the International Finance Corporation (IFC) has already issued local currency bonds in Morocco, the Western CFA zone and the Central CFA zone. It plans to issue local currency bonds in Kenya and Nigeria, and is in talks over obtaining consent for further bond issues in Botswana, Ghana, Kenya, South Africa, Uganda, and Zambia.

At the start of June, the AfDB and IFC signed an agreement on cross-currency swap transactions to ease bond issuance and lending in African currencies. The AfDB’s vice president for finance, Charles Boamah said: “Promoting the development of local capital markets in Africa is paramount to successful, sustainable economic development. This agreement supports our African Financial Markets Initiative, which aims to further the development of domestic African capital markets, enlarge the investor base, and reduce African countries’ dependence on foreign currency denominated debt.”

East African promise

The governments of Kenya and Uganda were about to launched 10-year bonds. The Central Bank of Kenya hopes to raise KSh5bn ($59m) from the 10-year bonds and a further Ksh4bn ($24.5m) from 91-day and 182-day treasury bills. Its issue of five-year bond was oversubscribed by 104% and raised $35m.

The previous Kenyan 10-year bond issue, in July 2011, is now trading at about 14.2%, slightly above government forecasts. According to figures from the Central Bank of Kenya, government debt increased by $1.4bn in the year to the end of May 2012 and Treasury bonds accounted for $1.1bn of new lending.

Income from the bond, which will be listed on the Nairobi Securities Exchange (NSE), will be used to help fund the government’s newly announced $17.2bn budget, which is the biggest in Kenyan history.

The government justifies the acquisition of debt to fund its activities on the grounds that 34.3% of the budget will be spent on infrastructural projects and education.

NSE performance has improved during the course of this year. A statement from the exchange revealed: “The bond market performance was up by 31% to $553m in May from $435m recorded in April. The best-performing bond this month traded at Ksh225bn ($1.4bn) on a high yield of 16.25% and low yield of 12.20%.”

Kampala too is making use of bond finance, again arguing that investment now will improve the country’s long-term economic prospects. In June, the Bank of Uganda offered USh100bn ($40m) each of ten and three year bonds. A spokesperson for Barclays Bank Uganda said: “We do expect yields to go down in the three-year bonds and we expect them to come out at levels of around 14.9%, roughly where it’s been trading in the secondary market.”

Pretoria on top

Despite the emergence of other bond markets, Pretoria remains the predominant issuer of debt capital in sub-Saharan Africa.

Large South African state-owned or partly state-owned companies are increasingly turning to debt capital in order to secure funding for long-term infrastructural projects. The government is keen for its parastatals to operate on a more commercial basis, meaning that they must look to the markets for finance, rather than to government support.

Telkom aims to invest R18-22bn ($2bn-$2.7bn) on capital projects over the next three years, of which R4-6bn ($483m-725m) will come from debt capital markets. Telkom is the biggest land-line operator on the African continent but recorded a 33% fall in income for financial year 2011–12.

Transnet too is expected to return to the bond markets, particularly because it needs up to R100bn ($12bn) to fund the transformation of the defunct Durban airport into Africa’s biggest container terminal. The AfDB and other international organisations may provide some of the required finance but debt capital markets will certainly make a big contribution.

US firm Citigroup announced in April that it would include South African government bonds in its World Government Bond Index (WGBI) from October onwards.

South Africa is the first African state to be included in the WGBI and the 23rd overall. It could now benefit from increased interest from institutional investors, particularly those who offer WGBI trackers, despite the fact that all three global credit rating agencies have placed South African sovereign debt on a negative outlook. A total of 11 South African bonds with a combined market value of $83bn will be included in the index.

The South African government’s decision over many years not to overstretch its finances in an attempt to fund social improvement projects has been criticised by many within the country. However, the impact of the 2008–12 global economic storm and now its inclusion in the WGBI have demonstrated the value of this strategy.

The South African Treasury reported that its bond market had attracted widespread foreign investment and added: “These inflows have been a direct benefit of prudent fiscal and macro-economic policies that have helped to cushion South Africa against the worst effects of the global financial crisis.”

Citigroup revealed that governments must qualify on three counts for inclusion: a minimum market capitalisation of $50bn, credit worthiness of at least A-/A3 and the absence of any barriers to entry. Even if other African governments achieve the last two criteria, the size requirement may be difficult to overcome.

The global head of index, Ernest Battifarano, said that the decision was “a big milestone for the WGBI as we continue to diversify our coverage. Investors who have not previously considered South Africa may tap into this exciting and developing market”.

Although it is not one of the world’s most buoyant emerging markets, South Africa is regarded as a halfway house between the industrialised and developing worlds. It is also sheltered to a large extent by ongoing economic uncertainty in the Eurozone. In addition, South Africa’s 20-year benchmark bond currently offers an attractive 8.8% yield.

Local governments in South Africa are now also beginning to secure access to funding through debt capital markets. Tshwane Metropolitan Council, which includes Pretoria, planned to issue its first bond to raise R1.5bn ($181m) in June.

Executive mayor Kgosientso Ramokgopa said: “This implies that there will be greater transparency on all policy positions and decisions that the city makes. It will also provide the city with an opportunity to share with investors its long-term plans to achieve financial sustainability and provide much needed services to its citizens. The city is a safe investment. Not only are we saying it ourselves, but this is confirmed by our trading rating agencies, as well as the sustained unqualified audit reports.”

The council believes that recourse to the bond markets will reduce its funding costs in the future. Ramokgopa added: “The city intends to fund, in the medium term, up to R10bn ($1.2bn) from the capital markets. This figure is only a drop in the ocean, given all the backlogs the city has to address in the area of expanding of infrastructure, provision of housing, formalisation of informal settlements and public transport.” It will be interesting to see whether municipalities elsewhere on the continent take the same step as Tshwane.

Africa is Fastest Growing Region For Gold



Despite a 5% fall in South African output, production continent-wide rose more than 3%, leaving the rest of the world in its wake. Investment volumes remain key as the continent’s miners look to expand further. Report by MJ Morgan.

Gold prices remain sustained by continuing uncertainty in the global economy due to a stalling US economy, which may reach for further quantitative easing any time soon, a rudderless Eurozone and stuttering Chinese growth.

But whilst world gold production as a whole is static, Africa’s producers, collectively, continue to steadily increase output. According to Thomson Reuters GFMS, South African production fell by over 4t in the first half 2012, compared to the same period the year before, to 93t as a consequence largely of increased Section 54 safety stoppages and lower mill head grades.

Bucking the trend

Nevertheless continent-wide output expanded by 9t to 297t. Ghana grew fastest, followed by Mali and Sudan as well as more moderate increases elsewhere.

South Africa’s gold miners remain in a bind. Cash costs (of extraction) in South Africa remain the world’s highest at above $900/oz and continue to accelerate relative to prices – even following one of the greatest, decade-long gold price bull runs ever.

Giant producer Gold Fields, for instance, has seen its total cash costs in the country rise from $618/oz in 2007 to $1,360/oz last year.

Average cash costs in the industry as a whole, worldwide, rose 19% to $727/oz, while GFMS estimates that all-in costs (their own, broader metric) now stand at $1,050/oz. In spite of rising prices, rising costs mean that, on a quarterly basis, margins have declined for three consecutive quarters.

South African producers face very strong headwinds at best as costs, particularly in terms of electricity prices and wage demands, significantly exceed the pace of price development.

Given that the country is already the most expensive place in the world to mine gold, circumstances are economically extremely challenging.

Perilous predicament

This is nothing of course compared to the political challenges that face the mining sector in general in South Africa. The deaths of 34 miners on 16th August during the wildcat strike at Lonmin’s Marikana platinum mine, coming two days after the deaths of 10 workers, has shocked the nation like no other event since the end of apartheid.

Activity at Marikana is still hamstrung. An illegal strike at Gold Fields KDC East mine, which employs 12,000 miners, in the first week of September has since been resolved, although trouble has spread to some of the 15,000 workers at KDC West. Some commentators have speculated that the events will lead to a ‘miner spring’ as reaction spreads, stirred by the demagogic Julius Malema, who has been calling for a mining shut-down whilst addressing workers at KDC West. “Leaders of the NUM should know that you can’t act for workers without consulting them, and don’t take workers for granted” Malema told strikers, “If they fail you, you must lead yourself.”

Hitherto, the National Union of Mines (NUM) has held to an informal compact with the government, whereby wages have risen steadily in return for a broadly cooperative workforce. However, with swathes of miners now extremely disaffected with the achievements, or lack of them, by the ANC government, and the NUM, who are seen as in the ruling party’s pocket, the compact has disintegrated. Furthermore, the new, militant union, the Association of Mineworkers and Construction Union (AMCU) has been agitating for wages and conditions to improve much faster and for strike action in support of members demands. How much control they exercise over strikers is not entirely clear and some say their influence is much greater over platinum than gold miners.

West Africa

More positively, lower-cost West Africa is increasingly attracting investment. According to consultants Ernst & Young, the region is a sweet spot for gold investors. Quality deposits and lowering perceptions of political risks have been driving factors. Ghana and Mali are already second and third only to South Africa in terms of African gold production. Output reached 6.7m oz in 2010, some 8% of global output, and is expected to rise to 11m oz by 2015.

Price outlook

Looking at the gold market as a whole, Thomson Reuters GFMS, a highly respected precious metals consultancy, just released its Gold Survey 2012 – Update 1.

It’s a bullish picture, with prices predicted to breach the $1,800/oz level by the end of the year, although without the expectation that last year’s highs over $1,900/oz will be exceeded. The key issue for prices is investment demand. Investment globally in gold in the second half of the year is expected to be in the region of 970t or around $53bn – both record figures.

Philip Klapwijk, Global Head of Metals Analytics at Thomson Reuters GFMS, said “I think we’re on pretty safe ground saying that we’ve already seen the lows for the year and that firmer prices, particularly towards year-end, are on the cards, but we’re also expecting a bumpy ride looking ahead – any intensification of the Eurozone crisis or dashing of hopes for further easing by the Fed and you could easily see the rally derailed for a while”.

Loose monetary policy continues to be a feature of many of the world’s governments as a result of the global economic slowdown. The negative effect this has on fiat currencies, particularly the US dollar, undermines faith in them, raises fears of inflation and the expectation of sustained low interest rates. The perception of gold as a hedge against inflation and uncertainty drives safe haven buying. Given that gold is a non-yielding asset, low interest rates reduce the opportunity cost of holding gold.

Central bank buying

Also of interest to investors is the high and growing level of central bank purchasing – which amounted to 270t in the first half of 2012. GFMS say that the driving force behind these purchases is the desire to diversify their holdings away from the US dollar and observes that the timing of purchases has focused on dips in price, supporting prices. Because the consultancy expects prices to rise, it estimates a lower figure for central bank purchasing for the second half of 220t.

As Klapwijk puts it, “We’ve recently seen how gold can react sharply to any prospect of more QE in the US and we’re fairly confident that some form of easing is more likely than not in the end; we may have seen periodic items of good news on the US economy but that invariably seems followed by bad, and this is all before a probable slowdown in both European and Chinese economic growth. Neither can we ignore its domestic problem of the fiscal cliff, with all the uncertainty and recessionary potential bound up in that”.

Jewellery demand fell 13% in the first half, largely due to falling demand in India, the world’s biggest gold market. The second half is expected to see modest growth in jewellery demand, as rising prices encourage its purchase as a kind of investment. China, the second biggest buyer of gold, has also seen less robust demand. Global mine production is forecast to grow by a modest 24t in the second half, with full year output falling slightly below earlier expectations. The continued lack of producer hedging suggests a bullishness about prices. Scrap sales meanwhile are predicted to remain unchanged.

Whilst South Africa is on the brink of, at best, challenging trading circumstances, and, at worst, a major calamity, producers elsewhere are perfectly placed to capitalise on prices well in excess of production costs.

Kenya: Death of Saitoti & the Election Battle Ahead



The late Prof. George Saitoti - former Finance Minister and a beneficiary of the Goldenberg scam.

The death of George Saitoti in a helicopter crash on June 10th 2012 removed one of the most important players in Kenya’s piranha pool politics. Saitoti served as a senior minister in the presidencies of Daniel arap Moi and Mwai Kibaki for more than 30 years, but he was more of an executive prime minister than a political boss. 

Although he was planning to run for the presidency, his mixed parentage – Kikuyu and Masai – would never have given him unqualified support among the Kikuyu in Kenya’s highly tribalised politics, while the Masai are not numerous enough to be big political players. Although Kenya’s professional classes may have voted for Saitoti, he was not a populist speaker and would have stood no chance against Uhuru Kenyatta for the Kikuyu vote.

 According to Charles Hornsby author of Kenya: a History Since Independence, “Saitoti was simply too reserved, distant, academic, and non-tribal – and he didn’t have the common touch.”
A maths lecturer at Nairobi University who also wrote an influential book on development, he was invited by President Moi to become Finance Minister in 1983.

The end of the Cold War in the late 1990s meant that Britain and other western donors could force multi party democracy on Kenya and also move the economy from a highly regulated state managed model to a free market.

 Structural Adjustment accelerated that process but without the aid needed to support the transition. It was introduced at the same time as the one party state gave way to a multi-party democracy. Ironically, Kenya (the African nation most favoured by the West) was one of the last to introduce a multiparty system. Saitoti was a central figure in implementing both of these fundamental changes.


Multi party democracy meant competition and that meant Harambees to get the Wananchi to vote for the ruling party. Harambees are open air rallies at which the Wananchi – the ordinary people – are persuaded by the Big Men to vote for them. This means Nyama Choma (roasted meat), drink and wads of cash for the people.


But how was KANU, the Kenya African National Union, ruling party since independence, to raise money for Nyama Choma? The answer was Goldenberg – an export promotion scheme whereby anyone who exported gold or diamonds could claim 35 percent of their value as a state subsidy. The joke was that Kenya has very little gold and no diamonds.


Payment for the scheme came under the consolidated fund and therefore did not need parliamentary approval. But it did have to be signed off and Saitoti, as Minister of Finance, did just that. He even extended it. Whilst he may not have actually constructed Goldenberg, Saitoti  implemented it, and almost certainly benefitted from it personally.


Some £2 billion were stolen from the Kenyan state. Most of the money went to individuals, Kamlesh Pattni who founded Goldenberg International, and Gideon Moi, President Daniel arap Moi’s son. In all 487 companies, many set up just for the purpose, collected money from the scam. It was the moment when corruption in Kenya became the norm in big businesses and the upper echelons of state affairs. It was a moment when the corruption tick became almost bigger than the state dog it fed on.


In a subsequent inquiry, Saitoti and Pattni were named as culprits and Pattni was detained for a while. Then the whole affair was quietly dropped. The election had been won, and some of Kenya’s richest politicians, including Moi himself, were now multi-millionaires. No money was returned. Later, some 23 senior judges were forced to resign as a result of their involvement in the scandal. In a strange way the Kenyan state survived.


Throughout all of this Saitoti, as well as other senior Kenyan politicians involved in the scam, were welcomed to London. This was despite a former head of the Africa department of MI6 heading a forensic investigation into where the Goldenberg money had gone. To the British and US governments the strategic and economic importance of Kenya trumped corruption.


Kenya’s senior politicians became so wealthy that politics became a game based on ‘eating’ and ‘feeding’ – stealing and spreading the proceeds around an ethnic support base in return for votes. Appealing to and buying tribal loyalty became the name of the game. Kenya is probably now the most tribally divided nation in Africa. No wonder the 2007 election exploded into such  violence.


Will it happen again?

With two tribalist leaders, Uhuru Kenyaata and William Ruto, facing a trial at The Hague which may start in March 2013, the Kenyan election is wide open. Victory will go to the person who builds an alliance of tribal leaders. One thing is certain: Luo and Kikuyu will be on opposite sides. Raila Odinga, the Luo leader, will run and elements among the Kikuyu will do anything to stop him becoming president.

For a while I thought that in 2008 Kenyans had reached the edge of the cliff and looked down. They wavered and pulled back. The militants were called off by their paymasters. Kofi Annan was on hand to help. Kenyans had seen a future that looked like hell and chose a fudged alliance of enemies instead.

That alliance is now falling apart. The new constitution has recreated a Kenya of 47 counties, whose elected governments will be funded by the state to spend as they wish. 

It is, however, likely that a local politician from the dominant ethnic group in each county will be playing the ethnic card to garner support.


In 2008 the main wars were in Nyanza Province (Luoland) where (Kikuyu) police shot down Luo protesters, around Eldoret where Kikuyu immigrants were burned out of their homes and murdered by Kalenjin, and in Nairobi where battles took place in the poor slum areas between different ethnic groups. If politicians play the ethnic card in the next election, this winner-takes-all war could be fought in most of the new counties between any or all of Kenya’s 40-odd ethnic groups.

Jesus Born in the middle East to change this world



Who is the Christ of Revelation?

Is He just a good man, a wise teacher, a philosopher? Revelation 1:1
says, “The Revelation of Jesus Christ.” Who is this that is being revealed? What does the Bible say about Him?

If He was just a man and John, the author of Revelation made up the whole thing, then while it may be an interesting literary work, there is nothing supernatural about any of it. It all depends on who Christ is. Jesus claimed and indeed  was more than human. In John 6:38, He says – “For I have come down from heaven, not to do My own will, but the will of Him who sent Me.” Jesus said He came down from heaven. 

The Bible points forward to a Christ who is divine; a Christ that we can trust and have complete confidence in – an eternal Christ. John 5:39 says, “You search the Scriptures, for in them you think you have eternal life; and these are they which testify of Me.” The “Scriptures” Christ referred to is what we know as the Old Testament. The Old Testament prophets predicted the coming of the Messiah and specific events in His life. Christ fulfilled those prophecies precisely. In fact, Christ’s life is a life written beforehand. The biography of Jesus was written before He was born.

Prophecies Surrounding Jesus’ Birth

Jesus’ birth place was predicted nearly seven hundred years in advance in the book of Micah 5:2,
“Bethlehem….out of you shall come forth to Me the One to be Ruler in Israel.” Anyone who knows the Christmas story will remember that Mary and Joseph lived in Nazareth. It was a decree of Caesar Agustus that brought them to Bethlehem just in time for Jesus’ birth. Centuries in advance the Bible predicted that Christ would be born in Bethlehem and indeed He was. 

Prophecy pointed forward to exact details of His birth. Isaiah 7:14: “Behold, the virgin shall conceive and bear a Son, and shall call His name Emmanuel.” The virgin birth was part of God’s divine plan.

The Holy Spirit conceived the Christ Child in the womb of Mary. In Luke 1:30, 31, an angel announces His birth – “The angel said to her,….You will be with child and give birth to a son, and you are to give Him the name Jesus.”

Back in the days of the Exodus, Moses wrote in the book of Numbers, 1500 years before Christ – Numbers 24:17: “A Star shall come out of Jacob.” He described this star that would rise in the east and lead the wise men to the very home of the Messiah.Prophecies Surrounding Christ’s Life Prophecies were fulfilled one right after the other in His life. Christ walked among men. He took children and cradled them in His arms. 

He spoke to the poor and gave them words of hope and encouragement. He brought joy and a smile to hearts and lives everywhere. Listen to how Isaiah 6l:1 and 2 prophesies of this 62 Christ – “The LORD has anointed Me to preach good tidings to the poor; He has sent Me to heal the broken hearted.

To proclaim the acceptable year of the LORD, and the day of vengeance of our God; to comfort all who mourn.” Christ’s life fulfilled this prophecy in minute detail.

The reason Jesus worked so many miracles is to demonstrate the reality of His divinity. His miracles
are straight forward evidence that He is divine. They are evidence of the highest magnitude. He touched the eyes of the blind and they were opened. He touched the ears of the deaf and they were unstopped. He healed. He forgave. 

He raised the dead. Jesus, the life giver, is the only one that can resurrect the dead.

Prophecies Surrounding Jesus’ Death

Most of the prophecies of His life were fulfilled in His last moments on earth. Jesus gathered His disciples around Him at the last supper. A prediction made a thousand years in advance by David was fulfilled that very night. Psalm 41:9 says, “Even my close friend, whom I trusted, he who shared my bread, has lifted up his heal against me.” The psalmist David predicted it would be a close friend who would betray Christ. Notice very carefully the accuracy and precision of these prophecies revealing Christ’s trial and betrayal. Zechariah 11:12: “So they weighed out for my wages thirty pieces of silver.”

 Neither 25 nor 35 pieces of silver but the prophecy named the price at 30 pieces of silver 500 years before Christ. Judas betrayed our Lord for exactly 30 pieces of silver. Christ is no common man and the Bible is no common book. Zechariah 11:13… “So I took the thirty pieces of silver and threw them into the house of the LORD for the potter.” Not only the price but the result were predicted and fulfilled exactly. Judas’
conscience so badly condemned him he refused to keep the blood money. 

He returned to the temple and threw the silver coins on the floor. Everybody that sells out Christ cheap finds the thing they betrayed Him for is too heavy to hold. And the Bible says in the book of Acts that Judas hung himself, the rope broke, he fell down, and smashed his body among the rocks. 

What a price to pay for betraying Jesus. The priests recovered the money but they couldn't allow it to be returned to the temple treasury. They used it to buy a field that belonged to a potter. The potter’s field became a cemetery for the non-Jews. Prophecy was fulfilled minutely, specifically, exactly. Why? Christ is more than a good man. He is more than an ethical teacher.

 He is divine.Prophecies of the last twenty-four hours of His life came to a focal point. They focused on His death.
The magnifying glass of prophecy zeroed in on a place called Calvary – a hill called Golgotha. Isaiah 50:6: “I gave My back to those who struck Me, and My cheeks to those who plucked out the beard; I did not hide My face from shame and spitting.” 

The Bible predicted 600 years in advance exactly what took place in Pilate’s courtyard. Christ was whipped on the back, beaten on the head and face, spit upon, mocked and shamed.Psalm 22:16, one thousand years before Christ, predicted: 

“They pierced My feet.” Stoning was the method of capital punishment in Israel for centuries. Crucifixion was introduced about a hundred and fifty years before Christ. It was practiced until the years of Constantine around three hundred twenty years after Christ. Crucifixion was practiced for about a five hundred year window. God in the Bible revealed one thousand years ahead of time exactly how Christ would die.

The Bible gives us confidence that the Christ who died on Calvary’s cross was more than just a good man or philosopher. We cam come with those thousands who have gathered at the foot of the cross. We can confess our sins – our sins too can be forgiven there. There at that cross we can be free from condemnation. We can become a new man, a new woman at that cross.John 11:25 records Jesus words: “I am the resurrection and the life. 

He who believes in Me, though he may die, he shall live.” The empty tomb reveals the divinity of Christ. He has risen. He is alive.

No other figure in history has fulfilled all these predictions, but they are fulfilled in the life of one
individual. If Christ is who the Bible says He is, then indeed, He is the Child born in the Middle East. The Bible predicts one more event in the life of Christ – He is coming again. Since He precisely fulfilled the rest of the prophecies in the Bible, we can be sure of this also

Religion & Diaspora:A Tale of African Migrants




In Europe (and Britain) religion is often thought to be in terminal decline. Yet, the fact is that African Christians and Muslims increasingly occupy a prominent place within the multicultural religious and social landscape of contemporary society.

 Any assessment of religious decline neglects the pivotal role of religion for the African diaspora in these regions; a role that was examined in a conference that took place in London.

The conference “Religion and Diaspora: African Migrants’ Religious Networks in Britain and Europe” –was held at the School of Oriental and African Studies in London on the 24th November 2012 – addressed  the role that religion plays in the African diaspora. 

The event was aimed at gaining a deeper understanding of the polyvalent elements that constitute British and European civic society in the early twenty-first century.

This endeavour is of urgent importance in our contemporary era when the contribution of religion to public life is under increasing scrutiny. Through their religious practice, doctrine and ethics, African Christians and Muslims articulate social visions that address key contemporary issues of sexuality, health, prosperity, political virtue, secularization, and globalization. 

The African diaspora in Britain and Europe, in other words, show us how religious practitioners draw upon religious idioms and practices in order to construct new notions of citizenship – notions of belonging, rights and obligations that often do not fit neatly into the West’s liberal democratic tradition.

Religion, the African Diaspora and the Secularization Debate: One of the most pressing debates in contemporary Britain and Europe focuses on the relationship between the religious and the secular in the public sphere. Recently, the debate has been characterized by a number of high-profile individuals and organizations defending the significance of faith in British society.

What is the contribution of religious communities in the African diaspora to this on-going discussion? What new and traditional forms of media do they draw upon to critique notions of the secular? Do African Christians and Muslims envision the relationship between religious commitment and civic obligation as complementary, conflicting, or falling between these two extremes? 

The African diaspora in Europe hails from countries as diverse as Nigeria,Uganda, Zimbabwe, South Africa and Somalia: how do these national identities intersect with Christian and Muslim piety in order to shape Africans’ practice of citizenship within a diasporic context?

Civic Vision and Discourses of Evil and Healing: Many Christian and Muslim communities practice diverse forms of faith healing, claiming that the causes of sickness and misfortune are spiritual rather than biological-physiological. Equally, many of these believers identify health and healing as evidence of God’s intervention in the secular realm. In what ways does the role that religion plays in diasporic activity in this country, and in Europe more broadly, offer a distinctive vision of public ‘health’, drawing upon idioms of evil, witchcraft and miraculous healings? What are the legal consequences of these practices? In particular, what are the implications of recent high-profile cases of African ‘witchcraft murders’ in Britain?

Sexuality, Gender and Human Rights: African Christians – particularly those who attend Pentecostal churches – and African Muslims are often typed as resistant to modernizing sexual mores.

 We urgently need to move beyond this stereotype to carefully examine the contribution of the African diaspora – both in Britain and in Africa – to current debates around sexuality and gender.

 Religious communities within the diaspora both draw upon and reject idioms of human rights, justice and development; African concepts of patriarchy and normative sexuality are transformed in the context of the diasporic experience and assume new meaning.

 A further factor to consider is the role that international aid organizations – and the financial leverage they exert – play in shaping African notions of sexuality.

African Pentecostals and the Established Church: Many African Christians in Britain attend some type of Pentecostal church – a form of Christianity that stresses the ecstatic, charismatic mode of the Holy Spirit’s work in believers’ lives. 

But at the same time, many of these believers have roots and ongoing links to mainstream Anglican, Catholic and Methodist denominations. 

Further, African Christians do occupy prominent positions within the traditional church establishment; for example, the current Church of England Archbishop of York, John Sentamu, is my fellow Ugandan. So, how does the newer phenomenon of African Pentecostalism in Britain position itself in relation to the older established church?

Do they perceive themselves as reformers, as schismatics, or as loyal descendants? What does the increasing popularity of African Pentecostalism and indeed other forms of faith and religiosity imply for a rapidly changing British religious landscape?  This is a question to which we ought to find answers to.