Botswana has a long-held reputation as a stand-out example of political and economic stability on the continent, which has seen its economy grow at an average of 5% over the past decade. Its reputation has begun to show cracks as former president Ian Khama and his chosen successor president Mokgweetsi Masisi lock horns in a battle which has implicated African Rainbow Minerals executive chairman Patrice Motsepe and his sister Bridgette Radebe, executive chairperson of Mmakau Mining. Botswana’s Sunday Standard accused them of supporting a regime change by meeting with Khama and giving financial support to former foreign affairs minister Pelonomi Venson-Moitoi to overthrow Masisi as leader of the Botswana Democratic Party – allegations denied by Motsepe. Khama, who has resigned from the party, accused Masisi of autocratic rule and threatening Botswana’s reputation and its future. Botswana has consistently demonstrated stability and economic growth, albeit with some reliance on the diamond industry. African Development Bank (AfDB) figures show that real GDP growth was an estimated 4.2% in 2018, boosted by the recovery in mining and expansion of non-mining activities such as agriculture and downstream diamond industries. The AfDB forecasts real GDP growth of 3.8% in 2019 and 4.1% in 2020, largely due to increased demand for diamonds, which account for 75% of exports. Focus Economics said Botswana’s economy appeared to lose momentum in the first quarter following “an upbeat, extractives-led” growth in the fourth quarter of 2018. “Despite heavy mining-sector activity and fast-growing tourism, fixed investment looks poised for a breather”, it said, although it still expects economic growth of 4.1% in 2019. Botswana has made efforts to diversify its economy. The AfDB said non-mining sectors would benefit from structural reforms, including amendments to immigration law to improve processing of work and residence permits and steps to encourage domestic manufacturers. In 2013 Botswana got De Beers to move its Global Sightholder Sales to the country and a Who Owns Whom report on the manufacture of jewellery points to the partnership between the government and De Beers for a set amount of rough diamonds to be allocated to locally-based cutting and polishing companies. Since the government invited cutting and polishing companies to set up factories on the condition that they transfer skills to locals, more than 20 international sightholders (purchasers of bulk rough diamonds) have been licensed and a number of businesses in the supply chain, such as logistics, security, catering and construction have developed, providing opportunities for entrepreneurs, the Who Owns Whom report said. But politics may be threatening the status quo.
Egypt’s economy grew 5.3% in the fiscal year to June 2018 from 4.2% in 2017 as the country continued its recovery through painful years of reforms, largely prompted by conditions of a US$12bn International Monetary Fund (IMF) loan. The 2016 floating of the Egyptian pound saw it immediately devalue by 50%, while inflation soared and import prices became prohibitive. At the same time, the government introduced value-added tax and withdrew fuel and food subsidies. These tough measures have seen the economy stabilise. Finance minister Mohamed Maait said recently that the budget deficit fell below 10% for the first time since 2011. Inflation has come down from over 30% in 2017 to 12.7% in January. Foreign reserves rose from less than $15bn in late 2016 to $44bn and the IMF is expecting growth of 5.5% in 2019. Standard Chartered recently said Egypt’s economy is set to become the world’s seventh largest economy in 2030, bigger than Russia and Japan. But the economy has structural constraints. Bloomberg said Egypt is a net food and fuel importer and depends on imports for essential production inputs. A Who Owns Whom report on the wholesale and retail of food in Egypt said 20% of Egypt’s import bill is spent on food. The country’s food retail sector is dominated by independent small grocers, kiosks and market stalls which account for 98% of the nearly 119,000 stores, but only 80% of food retail sales volumes. These traditional retailers are increasingly losing share to the growing formal sector, which makes up the remaining 2% of the market, but 20% of sales. Major players, which include France’s Carrefour in partnership with UAE-based Majid Al Futtaim, Turkish retailer BIM, Egypt’s Mansour group and the UAE’s Abraaj group are growing their investments and their footprints. According to the Who Owns Whom report, recovery in this sector will be aided by new laws to modernise and reduce barriers for international companies investing and operating in the country. These laws aim to expand economic growth, increase domestic production and exports, boost foreign investment and boost employment, the report said. But there are some red flags. The Washington institute said Egypt has failed to meet some of the IMF benchmarks and has deficits in terms of worker productivity, industry competitiveness, mismatched worker skills, and economies of scale. Foreign direct investment fell from US$7.93bn in fiscal 2017 to US$7.72bn in 2018 while foreign debt rose, indicating Egypt’s reliance on imports, and, possibly, IMF loans, is far from over.
The December 30 2018 election in the Democratic Republic of Congo (DRC), which was widely acknowledged to have been rigged, declared Felix Tshisekedi as the winner over Martin Fayulu, who got the most votes. It is understood that Tshisekedi’s election was the result of a deal made with former president Joseph Kabila, whose rule since 2001 was characterised by conflict, corruption, authoritarian rule and human rights abuses. The DRC remains the African country with possibly the greatest untapped potential – with great mineral wealth but an underdeveloped economy and an impoverished nation. The African Development Bank said real GDP growth was an estimated 4.0% in 2018, up from 3.7% in 2017, due to higher commodity prices and increased mining production. It expected growth of 4.5% in 2019 and 4.6% in 2020. Mining was expected to be the key driver of growth, while the outlook could be positively affected by firm commodity prices, positive election results (including acceptance of the results), progress in the security situation in the conflict-ridden central and eastern parts of the country, control of the Ebola epidemic, “and a start to diversification in the fabric of production”. The mining sector accounts for 99% of the value of exports, 34% of total government revenue, and two GDP points. But diversifying the economy requires some improvement in the infrastructure deficit and a more facilitative business environment. The DRC ranks 184 out of 190 countries on the World Bank’s Doing Business 2019 report. The DRC’s National Strategic Development Plan aims for it to become a middle-income country by 2022, mainly through transformation of the agricultural sector. Economic transformation includes the massive Inga hydro-electric power plant, where South Africa has committed to buying 2,500 MW and possibly a further 2,500 MW in Inga 3, which many believe to be uneconomical, as well as paying for a 1,600km transmission line from the DRC to South Africa. Despite calls for action following the election result, SADC, South Africa, the EU and US have not voiced concerns over the election outcome. The EU had extended sanctions on a number of officials just prior to the election while the US had imposed sanctions in June last year. Tshisekedi is reported to have called for sanctions to be lifted. The Institute for Security Studies said many may argue that potential voices of objection chose stability over war. “But the Congolese people chose change over the status quo, and the regional, continental and international response deprived them of that change.”
Guinea’s mining industry has been one of the main drivers of its economic growth and of the significant increase in mineral exports from the West Africa region. West African countries exported US$16.1bn of minerals in 2017, 26.3% more than in the previous year, largely due to the large increase in exports from Guinea, whose mining sector continues to grow apace. A report by Who Owns Whom on Mining in West Africa indicates that Guinea has 25% of the world’s bauxite reserves and is the world’s third-largest producer of bauxite, from which aluminium is extracted, with output increasing by 43% from 2016. The report said that more than 20 international mining companies have operations in Guinea, which remains largely underexplored. Major companies mining bauxite in Guinea include Aluminum Corporation of China (Chalco), Rusal, Rio Tinto (a shareholder in Compagnie des Bauxites de Guinee) and Metalcorp (whose subsidiary Societe des Bauxites de Guinee is developing a US$1.4bn bauxite mine and an alumina refinery). In May 2018 Guinea approved the development of a bauxite mine, port, railway and power station by China’s TBEA Co at a cost of US$2.9bn with production expected to start in June this year. In Guinea’s gold mining industry, AngloGold Ashanti is among the major gold miners. The BBC reported that “Guinea’s mineral wealth makes it potentially one of Africa’s richest countries, but its people are among the poorest in West Africa.” Guinea’s economy continues to benefit from social and economic reforms, investment in mines, agriculture and infrastructure and the end of the Ebola crisis, the African Development Bank said in its 2018 outlook. Real GDP growth was 6.6% in 2016, an estimated 6.4% in 2017 and will average 6.2% in 2018 and 2019, it said. World Bank GDP figures for Guinea were higher – at 10.5% in 2016 and 8.2% in 2017. Growth has been boosted by significant growth in mining and energy, although agriculture remains the main source of employment, accounting for 52% of employment and 57% of income for rural households. There is, however, upward pressure on inflation, a deepening budget deficit and growing current account deficit with rising imports for mining projects, energy, and transport infrastructure. The Guinean government’s priority investment categories are the promotion of SMMEs, development of non-traditional exports, processing of local natural resources and raw materials, and establishment of activities in less economically developed regions, a US Bureau of Economic and Business Affairs report indicates. It says priority activities include agricultural promotion, commercial farming, fisheries, fertilizer production, preparation and processing of vegetable, animal or mineral products, health and education businesses, tourism facilities and hotel operations, real estate development with social benefit and investment banks or credit institutions. Guinea’s infrastructure remains poor and access to clean water and electricity is sporadic, while implementation of economic stimulus projects is slow and the country is not politically stable, particularly as president Alpha Condé’s term comes to an end in 2020. Recent news that Russia was asking Condé to change the constitution to facilitate his re-election for a third term has caused some concern, as have other incidents of instability.