SIM REPORT: East & Southern Africa

issue 01, 25 september 2019

MOZAMBIQUE: Peace agreement at risk as violence escalates ahead of general elections in October

On 15 October, Mozambique will hold its first general election since RENAMO, a rebel movement-turned-political-party, agreed to a ceasefire in May 2017 following four years of attacks targeting commercial transport and the security forces. A peace agreement signed by RENAMO’s new leader, Ossufo Momade, on 1 August 2019 formally ended two years of negotiations. However, divisions within RENAMO – which have led to the formation of a dissident faction that opposes the peace agreement – and attempts by the FRELIMO-controlled authorities and the ruling party’s supporters to frustrate the opposition parties’ campaigning. Such attempts risk fuelling anger and suspicion against the government and FRELIMO, potentially providing new fertile recruiting ground for RENAMO Military Junta and motivate the group to retake up arms.

Mounting security threats

RENAMO dissident faction reiterates threat of disrupting campaign through armed attacks

The self-declared RENAMO Military Junta (RMJ), a dissident faction of RENAMO, has threatened to intensify attacks unless the government suspends campaigning for the 15 October general election. RMJ’s self-declared leader, Mariano Nhongo, on 23 September reiterated his threats made in August and claimed responsibility for two attacks in early September on vehicles in Sofala province.

Reports of violence targeting RENAMO and its supporters.

There have been a series of violent activities by FRELIMO members against RENAMO supporters, but police have not intervened. These have included intimidation, assaults and mob violence, and vandalism against commercial property in the provinces of Nampula, Tete, and Zambezia. When police and military have intervened, they have been suspended.

On 10 September, FRELIMO and RENAMO  supporters met on the Mucombedzi bridge in Macossa district, Manica province; Francisco Patricio, the senior police officer on duty, allowed RENAMO priority. His actions led to his removal from his position and transfer to the provincial capital, Chimoio.

The promise by police to ensure security escorts for all parties during the campaign has not been respected for some delegates of opposition parties RENAMO and MDM. There have also been allegations that RENAMO supporters in Tambara district, Manica, had been abducted.

Media organisations and election observers are also being targeted in such acts

Accredited correspondents and election observers have also faced attempts by the security forces and FRELIMO supporters to intimidate them and frustrate their work. There have been at least three reported incidents of arrests by police, and intimidation by FRELIMO supporters who accuse the three correspondents of being spies for RENAMO; police in Tambara district in Manica province and Chigubo district in Gaza have ordered the correspondents not to cover events organised by FRELIMO.

Centro de Integridade Pública, the local chapter affiliated with Transparency International, has reported that 70 of its correspondents spread across 23 districts of Nampula province.

 

Reported security incidents since 1 September

Date

District

Province

Details

04-Sep-19

Gorongosa-Nhamatanda

Sofala

Militants opened fire on at least four vehicles that were travelling between the two districts.

10-Sep-19

Macossa

Manica

FRELIMO and RENAMO parades met on the Mucombedzi bridge in the district. At the time, Francisco Particio, the senior officer on the scene, gave RENAMO’s caravan priority to cross. Frelimo supporters accused him of serving RENAMO interests. He has been suspended since.

14-Sep-19

Gurúè

Zambezia

A RENAMO supporter was brutally beaten by two police officers on his way back from campaign activities, allegedly for not carrying his ID card. Walking without an ID card is not a crime in Mozambique.

17-Sep-19

Mutarara

Tete

Two RENAMO supporters were injured and evacuated to Inhangoma Health Post for hospital care after being beaten by Frelimo supporters during the election campaign. The police witnessed the assaults but did apparently not intervene.

18-Sep-19

Balama

Cabo Delgado

Police officers escorting a FRELIMO caravan in the village of Mualia witnessed a case of aggression by FRELIMO sympathisers against a RENAMO supporter at his business, which displayed RENAMO posers, but did not intervene.

18-Sep-19

Macomia

Cabo Delgado

Unidentified insurgents launched an assault on Quiterajo, a village in Macomia. The assault lasted between 1900 to 0400 on 19 September. Six people were killed and 10 more abducted. The attackers demand is that no one should live there, which increases the likelihood of the elections not taking place there at all, potentially affecting three of the 82 seats in Cabo Delgado's provincial assembly.

18-Sep-19

Malema

Nampula

Unidentified assailants destroyed the home of a RENAMO supporter while he was participating in a RENAMO campaign.

18-Sep-19

Rapale

Nampula

RENAMO district delegate Manuel dos Santo claimed FRELIMO supporters threatened and intimidated RENAMO members and supporters and prevented them from putting up posters.

 

Analysis

The potential for the peace agreement between RENAMO and FRELIMO collapsing in the three-month outlook has increased since campaigning began on 1 September. Previous bouts of violence by RENAMO were fuelled by allegations of widespread voter fraud by FRELIMO. In the latest wave of RENAMO attacks, which began in April 2013, RENAMO militants attacked a police station in Muxungue, Sofala province.

Disagreement over the results in the October 2014 provincial elections fuelled an escalation of attacks on commercial transport in  Manica, Sofala, and Tete provinces. RENAMO’s then-leader who died in May 2018, Afonso Dhlakama, claimed his party had won in six central and northern provinces, but official results allowed FRELIMO candidates to take office there. He accused FRELIMO of rigging the elections in its own favour. Similar dynamics are now apparent in Gaza, Manica, Nampula, Sofala, Tete, and Zambezia. Besides Gaza, all these provinces were claimed by Dhlakama.

The latest series of attacks, ostensibly sanctioned by FRELIMO and the security forces, along with reports of fraud during the voter registration phase of the poll is almost certainly likely to continue to fuel and very likely escalate politically motivated violence during and after the election on 15 October. In that case, the authorities are likely to postpone or suspend the poll in the worst-affected areas, which will foment further grievances towards the government. In turn, this could push some sections of the RENAMO party towards Nhongo’s RMJ, and a renewal of hostilities in aforementioned provinces.

 

KENYA & SOMALIA: Maritime border dispute escalates bilateral tensions

Rift over troubled waters

Kenya and Somalia are engaged in a legal dispute over the demarcation of their maritime border. The case will be heard at the UN’s International Court of Justice, based in The Hague, Netherlands, 4-8 November. The ICJ ruling will give either country legal ground to claim significant untapped offshore oil and gas reserves. The exact extent of these reserves as exploration activities have been difficult due to three decades of civil war and hostilities in Somalia, but geologists estimate it could be on par with those held by the Gulf states because of geological similarities of both regions. For Kenya, an unfavourable ruling could mean the country loses 26 per cent of its exclusive economic zone

Escalating bilateral tensions

Bilateral diplomatic tensions that escalated in February 2019, have continued with retaliatory  actions by both Kenya and Somalia.

· In February, Kenya recalled its ambassador to Somalia and expelled Somalia’s envoy in Nairobi

· In May, Kenya suspended direct flights from Somalia to Nairobi, and denied entry to three senior Somali

· In June, Kenya closed its land border with Somalia in Lamu

· Kenya’s parliament is seeking to force the government to apply more pressure, for instance by increasing its naval deployment to Lamu which straddles the disputed area.

Growing contract risks

A leaked document in June showed that Somalia was auctioning off oil blocks to foreign investors, despite the pending ICJ hearings. This comes after years of disagreement between the Federal Government of Somalia (FGS) – the central government – and the Federal Member States (FMS) about who is responsible for managing its natural resources.

Security paradox and legal uncertainty

The growing antagonism between the two countries presents the most serious security risks to Somalia, where a contingent of the Kenya Defence Forces (KDF) is supporting the African Union Mission to Somalia (AMISOM) in its fight against non-state armed group al-Shabaab. Kenya has threatened to withdraw its AMISOM support, a move that would seriously weaken the multinational force’s capabilities. While al-Shabaab has repeatedly threatened attacks in Kenya due to the country’s contribution to AMISOM, it is unclear if the militant group would try to destabilise Kenya if KDF withdraws.

Conversely, it is doubtful that Kenya would make good on its threat, at least initially, as this would leave a security vacuum in areas of southern Somalia where the KDF is deployed. Should the KDF withdraw, that is likely to lead to a breakdown in security provisions in its area of operations, likely escalating the threat of terrorism in Kenya and piracy off Somalia’s south-eastern coast.

By the same token, should the ICJ rule in favour of Somalia, this will significantly expand that country’s territorial waters and exclusive economic zone. It is doubtful that the country’s poorly maintained naval force will be able to adequately secure maritime shipping along its coast. Currently, a multinational naval force deployed in the Indian Ocean near the Gulf of Aden provides a security buffer, but plans to reduce its deployed commitments there signals longer-term threats to maritime security. Relatedly, due to a likely perception of deteriorating security off Somalia’s southern coast, the Kenyan navy is likely to increase patrols near the disputed maritime zone which raises the risk of interception, detention, and seizures of foreign assets, including vessels and personnel.

In addition, the ICJ ruling will elevate contract risks to prospective international oil companies that have tendered for contracts or signed memoranda of understanding (MOUs) with either Kenyan or Somali authorities. Even if the ICJ rules in Somalia’s favour, disagreement between the FGS and its FMSs over who is owns Somalia’s maritime resources means that the contract risk will remain elevated over one- to two-year outlook. This presents strategic challenges to IOCs during the same timeframe.

 

TANZANIA: Ninety-day ultimatum to banks to set up data centres raises short-term compliance risks

What’s at stake?

In a circular on 23 August, Bank of Tanzania – the central bank – gave banks and financial service providers (FSPs) 90 days to establish primary and secondary data centres in-country and communicate the precise location of the data storage facilities to the authorities. The policy is intended to limit data replication to ‘End of Day’ processing – the bankable day cut-off point. Failure to comply will make affected actors liable to fines of TZS5 billion (USD2.18 million).

The circular is part of broader efforts by the government of President John Magufuli to improve governance of its financial sector and reduce its vulnerabilities to money laundering and terrorist financing. It also underpins the increasingly complex regulatory environment multijurisdictional banks and FSPs need to navigate amid growing demands globally for data localisation.

Toughening stance

Although multiple circulars requiring banks to establish their data centres in-country have been issued since 2014, there has been little punitive action by the government this far. However, the 90-day ultimatum signals a toughening stance by the BoT. This was highlighted in the circular which expressed ‘serious concern’ that most of the banks and FSPs had not provided a true position of their primary and secondary data centres.

Two banks – National Bank of Commerce which is largely owned by South Africa-based Absa Group, and Diamond Trust Bank Tanzania Ltd – have been fined TZS1 billion each since July for failing to comply with the BoT’s requirements, which were first announced in 2014.

It is unclear if the affected organisations will need to set up their own in-house data centres or if they will be allowed to outsource the management and protection of data to third-party colocation providers. The latter option appears more likely given the oversupply of data centre capacity in Dar es Salaam, the commercial hub.

However, as highlighted in a series of reports by public organisations and private companies, the cyber-threats in Tanzania are growing and are increasingly homegrown. In total, they cost companies an estimated USD85 million in lost revenue. The main vulnerability is companies, particularly medium-sized companies’, minimal or inexistent investment in cyber-defences. This means that global banks and FSPs are likely to be vulnerable to a broadly weak cyber-security ecosystem in Tanzania.  t

 

Chronology – September 2019

CORRUPTION RISK

KENYA

3 September 2019

Why Over 1000 Corruption Cases Are Bound To Fall Due To Secret Searches.

More than 1000 corruption cases are bound to collapse after a ruling by the judges yesterday that outlawed secret searches during investigations. Going by the ruling, the cases will lack merit and be considered illegal as the evidence and investigations collected were through secret search warrants.

Source: KDRTV

A2 Global comments:  The ruling is likely to seriously limit anti-corruption prosecutors’ ability to carry out investigations and improve the likelihood of convictions of corrupt acts and practices. Ultimately, it will increase perceptions of corruption in the country which elevates reputational risks to companies operating in the country.    

POLITICAL RISK

SOUTH AFRICA

2 September 2019

South African fuel prices inch up in September after rand slide

The retail price of petrol in South Africa will rise by 0.7% from Sept. 4, while the price of wholesale diesel will increase by 1.8 percent, the energy department said on Monday.

Source: Reuters

A2 Global comments:  The rising fuel prices underscore South Africa’s continued fragile economic outlook and vulnerability to exogenous shocks. Increased tensions in the Gulf, epitomised by recent attacks on Saudi oil facilities, mean price volatility will be a flashpoint risk to businesses in the next six months. 

TANZANIA

1 September 2019

Tanzania ratifies toxin weapons convention

Tanzania has finally ratified the UN Biological and Toxin Weapons Convention (BWC), despite being among the first to sign it when it was introduced in 1972.  The BWC is the first multilateral disbarment treaty banning the uncontrolled production of an entire category of weapons.

Source: The Citizen

A2 Global comments:  The development will change little on the ground in Tanzania, which is not a major weapons producer. Furthermore, several signatories have complained about the lack of formal verification regime.

ZAMBIA & DRC

The China price 

Producing 70% of the world's cobalt, an essential component of electric car batteries and mobile phones, Africa's Copperbelt is in the midst of a sweeping transformation. Seeking to expand their access to the metal, China's mining companies are eyeing the potential sale of assets such as Vedanta's Konkola Copper Mines (KCM) in Zambia and Glencore's mothballed Mutanda mine in Congo-Kinshasa.

Source: Africa Confidential

A2 Global comments:  The trend was underlined by Indian mining conglomerate’s failure in mid-August to prevent liquidation of KCM, a joint venture with the government. Furthermore, China’s continued aggressive investment in strategic infrastructure, such as rail, roads, and ports in East Africa serve to further Beijing’s interests in the region and establish a monopolistic position with regards to the mining and trade in cobalt.  

 

 

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