ARC’s Leonard Mbulle-Nziege analyses recent events in Guinea…

Guinea’s latest military junta, which took power in a bloodless coup on 5 September, has lifted a curfew on mining areas in a bid to allay concern about the country’s all-important mining industry. Mining companies such as South Africa’s AngloGold Ashanti, China’s Chalco and Singapore’s TOP International Holding all reported on 7 September that they were operating normally despite the coup.

Groupement des Forces Spéciales (GPS) (special forces) commander Col. Mamady Doumbouya has taken control of the presidential palace, deposed and imprisoned President Alpha Condé (2010-2021), fired the previous government and seized their passports. In a television address on 5 September, Doumbouya dissolved the Assemblée Nationale (national assembly) and suspended the constitution. The military junta will rule through a transitional body called the Comité National du Rassemblement et du Développement (CNRD).

Despite Doumbaya’s assurances that mining sector activities will not be disrupted, the suspension of the constitution creates the risk to mining companies that the CNRD will do as previous military regimes have done, notably scrutinise, review, re-assess or attempt to tweak existing agreements in the mining sector. Mining, notably bauxite, is a significant source of exports, revenue and employment, contributing roughly 90% of export revenue and 25% of GDP. The risk of the CNRD reviewing existing agreements is likely to increase as the international community and its financing institutions respond to the coup. The longer the CNRD’s “transition” to civilian rule – the international community’s likely requirement –  the higher the risk that donors will suspend funding to Guinea, increasing the pressure on the junta to raise funds at home.

There is strong precedent in Guinea for review of mining deals. Former president Condé investigated mining deals that the previous military junta leader, Captain Moussa Dadis Camara (2008-2009), ratified immediately after Camara assumed power in December 2008. The most notable outcome of these investigations was Condé’s decision to strip Brazil-based Vale S.A and Guernsey registered BSG Resources of their rights to the Simandou iron ore deposit in 2014. Doumbouya is known to have links to Mali’s new military junta and may follow its lead.  In November 2020, Mali’s miltary announced a review of all mining contracts attributed during the previous presidency.

Guinea’s leading bauxite producer, Société Minière de Boké (SMB), a subsidiary of China-Singaporean consortium SMB Winning, was awarded the $15 billion concession to develop blocks 1 and 2 of the Simandou iron ore deposit in November 2019. SMB chairman Fadi Wazni is reportedly a key Condé supporter and close associate of the former president’s son, Mohamed Condé, who has served as an intermediary for various mining interests.  Guinea-based civil society organisation, Colléctif pour la Transition en Guinée (CTG), has lodged a complaint in France against Condé junior and former defence minister Mohamed Diané over the “disappearance” of €171m ($201.6m) in several transactions between Condé junior, Diané, SMB and France’s Alliance Minière Responsble (AMR).

The latest military intervention brings to a humiliating end the rule of Guinea’s only president to have come to power through democratic, multi-party elections since independence from France in 1958.  Despite the regressive step and the business uncertainty it brings, the intervention is not yet unpopular domestically. Alpha Condé was returned to power for an unpopular third term in October 2020, having altered the constitution to do so. His third-term electoral bid prompted mass protests in which security forces killed several people, while ten people died in post-election violence.

Events such as the routing of Senegal’s Abdoulaye Wade (2000-2012), the scuttling of Burkina Faso’s Blaise Compaoré (1987-2014) and most recently the military ouster in 2020 of Mali’s President Ibrahim Boubacar Keïta (2013-2020) show that West Africa’s voters do not tolerate engineered third terms, and sons or close relatives doing deals on the presidential coat tails. The CNRD has tapped into this disgruntlement and claims it intends to appoint a government of national unity that will include members of civil society and the opposition. Whatever the make-up of the government, businesses operating in Guinea face at least 18 months of political upset, economic decline  and uncertainty.

Get in touch today to subscribe to ARC Briefing Guinea:

About ARC Briefing:

ARC Briefing is ARC’s essential business information service.

Companies at any stage in their Africa expansion, whether building or communicating an Africa strategy, investing directly, expanding current operations, financing other investors, doing the legal leg-work or researching the Africa growth trend, need ARC Briefing.

ARC Briefing is an information service keeping you:

  • -Up to date with Country Chronologies of business-critical events
  • -In the know via Country Briefings on political, economic, business and operating trends. Written in-country, ARC experts analyse and comment
  • -Ahead with Country Planner which details future elections, budgets, regulatory changes etc.

President Buhari signs into law the Petroleum Industry Bill…

Nigeria Monthly Briefing Summary: President Muhammadu Buhari (2015-present) signs into law the Petroleum Industry Bill (PIB). Niger Delta region stakeholders criticise presidential approval of the PIB, citing failures that will impact regional development and inflame separatist sentiments. Justice Binta Nyako adjourns until October the trial of Indigenous People of Biafra (IPOB) leader Nnamdi Kanu after he fails to appear in court on 26 July. Unidentified gunmen attack a convoy transporting contractors to a Shell Petroleum Development Company (SPDC) site in Imo state, killing one police officer and six employees. The Abuja Court of Appeal overturns a 2019 ruling confiscating the Oil Mineral Lease 11 (OML11) field licence from SPDC and transferring it to the state-owned Nigeria National Petroleum Corporation (NPPC). United Kingdom (UK)-national and former London Stock Exchange (LSE)-listed Glencore oil trader Antony Stimler pleads guilty to charges of money laundering and violating the United States (US) Foreign Corrupt Practices Act (FCPA) by bribing NPPC officials. The Central Bank of Nigeria (CBN) (central bank) Monetary Policy Committee (MPC) maintains the Monetary Policy Rate (MPR) at 11.5% citing a fall in headline and food inflation. CBN governor Godwin Emefiele bans the sale of foreign exchange to Bureaux de Change (BDCs) due to fraud concerns. Information and culture minister Lai Mohammed returns from a trip to the US, strongly denying that Nigeria is a failed state.

Download the full August briefing here.

About ARC Briefing:

ARC Briefing is ARC’s essential business information service.

Companies at any stage in their Africa expansion, whether building or communicating an Africa strategy, investing directly, expanding current operations, financing other investors, doing the legal leg-work or researching the Africa growth trend, need ARC Briefing.

ARC Briefing is an information service keeping you:

  • -Up to date with Country Chronologies of business-critical events
  • -In the know via Country Briefings on political, economic, business and operating trends. Written in-country, ARC experts analyse and comment
  • -Ahead with Country Planner which details future elections, budgets, regulatory changes etc.

Nigeria remains on a managed float amid economic turmoil

Amidst skyrocketing inflation, cries for policymakers to harmonise the multiple exchange rates into a single market-reflective rate are not being heard, further weakening investor confidence and endangering stability in Nigeria. Investors are now waiting anxiously for 24 May when the Central Bank of Nigeria (CBN) is expected to revisit the liberalisation of foreign exchange. 

Management of foreign exchange policy continues to create tension between the Central Bank of Nigeria (CBN) and the finance ministry. In March, the finance ministry and the CBN issued conflicting statements regarding changes to foreign exchange policy. Finance minister Zainab Ahmed informed reporters on 22 March that Nigeria would adopt a new system and flexible exchange-rate policy for official transactions, the Nafex rate. Vice president Yemi Osinbajo confirmed the adoption of a unified flexible exchange rate for federal payments at a Chatham House meeting on 23 March. International media reported Osinbajo’s statements, triggering a positive reaction from financial markets, where Nigeria’s favouring of a stronger naira has come under increasing criticism.  

Domestic and international business and the international institutions alike are clamouring for liberalisation. The International Monetary Fund (IMF) made exchange rate liberalisation the sole condition when it approved $3.4 billion in Covid-19 emergency support in April 2020.  A year later, the World Trade Organisation (WTO) – now under the stewardship of Nigeria’s own Ngozi Okonjo-Iweala – has raised Nigeria’s foreign exchange management as a concern for the country’s manufacturing, exports and imports.

Despite pressure from the finance ministry, and growing external pressure, CBN governor Godwin Emefiele has denied any plans to adopt a new foreign exchange management policy and the central bank’s Monetary Policy Committee (MPC) missed another opportunity to announce quick win reforms on 23 March.

The CBN’s intransigence in the face of domestic and international pressure has raised questions about the CBN’s lack of transparency in foreign exchange management. It also highlights the continued weakness of the country’s economic management. Disagreement between the federal government and the central bank is further affirmation of Ahmed’s reputation as “paymaster general” for her perceived lack of power as finance minister. Weakness extends to further embarrassment for vice-president Osinbajo, who was speaking to an international audience on policy reform to enable economic recovery from the Covid-19 fallout. 

Central Bank adds sugar and wheat importers to forex restriction list… 

As if to embed its intransigence, the CBN on 16 April added sugar and wheat importers to its foreign exchange (FX) restriction list with immediate effect.The central bank introduced the FX restriction list in 2015 when it banned companies from using US dollars to import items the CBN deemed could be produced in Nigeria.According to a CBN post on Twitter“Sugar and wheat to go into our FX restriction list. We must work together to produce these items in Nigeria rather than import them.” 

Adding sugar and wheat to the list will immediately boost the incomes of the few local producers and distributors of sugar and wheat but will add to inflation pressures. Nigeria is a net importer of food and adding to the list of restrictions will artificially limit supply and increase food prices further and exacerbate food insecurity. Inflation and food insecurity added to Covi-19-related unemployment is a potent political mix. A local response is expected, and the restriction has prompted widespread concern by national and international stakeholders. It is not clear if reaction will sway the policy makers. 

while double digit inflation eats into domestic incomes

Failure to act on the exchange rate will do little to improve the overall economic picture. Liberalisation would produce a short-term shock devaluation as the currency finds its actual value. But existing measures limiting the supply of goods are equally having an inflationary impact. Inflation has now reached into the high teens for most of the Covid-19 year. Ratings agency Fitch forecasts that inflation will average 16% in 2021 and decline to 13.4% in 2022. Sub-Saharan Africa’s average pre-Covid inflation rate was 8.5%.

Persistent, double-digit inflation and a sustained low oil price have exacerbated the shortage of US dollars, raising more questions – this time about Nigeria’s debt management. Nigeria’s balance of payments gap peaked at $14 billion in 2020. The oil sector continues to account for almost 90% of foreign exchange earnings, leaving limited room to manoeuvre.  Zainab Ahmed confirmed that oil prices were $10 per barrel above projected prices for the 2021 budget, which has allowed for some recovery and a little government flexibility. The 2021 budget requires $6.14 billion to be raised from foreign sources. Debt Management Office (DMO) director general Patricia Oniha hopes that Eurobonds will be an important part of that mix and plans to seek advisors to that end. 

Business hopes that liberalisation will come on 24 May are likely to be dashed – again. Weak government, an incoherent economic policy and poor financial management all militate against it despite its being a quick win for investors, manufacturers and exporters alike. The economic management in Nigeria today is reminiscent of that under General Sani Abacha(1993-1998). The only scope for meaningful reform – including currency reform – is only likely to come once President Buhari has left the presidential palace in Aso Rock.  Until then, the general outlook for Nigeria remains bleak.

Get in touch for a full analysis.


UK anti-corruption sanctions and Africa

United Kingdom (UK) foreign secretary Dominic Raab on 26 April announced the imposition of sanctions against 22 individuals, including four from South Africa and one from Sudan, in the first wave of the UK government’s new Global Anti-Corruption Sanctions Regulations regime. The new regime gives UK authorities power to impose visa bans and asset freezes on corrupt foreign officials and their related entities without going through the local authorities and courts, and means London– based global banks holding accounts held by sanctioned individuals can be sanctioned. 

What remains unclear is what assets these individuals have under the UK jurisdiction and how stringently UK regulatory and enforcement bodies act upon the formidable new measures. That said, Raab’s announcement indicates that the UK, which has long been a favoured destination for corrupt African leaders and their business acolytes, is taking a strong stance against impunity. 

Read the full update here

Get in touch for a full analysis.


Engineering news: It’s time to dare to plan anew…

16 April 2021: “A year ago, in the face of the first Covid-19 death in Egypt, I wrote that the time for governments to act was immediately and that the time for corporates to plan for a pandemic was yesterday. The arrival on the continent of millions of doses of vaccines marks a significant change in the continent’s political and economic outlook”…

ARC’s Tara O’Connor examines the impact of a year of Covid-19 in Africa. She believes this is the time for companies to look forward with optimism and plan for the post-Covid world. Read the full article here.


ARC news bulletin

18 March 2021: President John Magufuli has died. After his 19-day absence, Tanzania‘s vice president Samia Suluhu Hassan (2015-present) has assumed control but has yet to be sworn in. 

A 14-day period of mourning has been announced and will disrupt business decisions. Opposition party members have made calls for the vice president to be sworn in immediately.

Download the full news bulletin from ARC’s Tanzania Briefing here.

ARC Briefing is Africa Risk Consulting‘s information service providing country-focused updates from across Africa.


The ARC Insider, Episode 20: Food for Thought –…

For the last episode of the year, Tara and Karen give a whistle-stop tour of current news stories from across Africa. This week’s guest is a dynamic man from the world of food. A former East African Coca-Cola executive voted among the top 100 business leaders in Africa by Forbes Afrique, Peter Njonjo is the founder of Twiga Foods, the Kenya business-to-business food distribution platform which is disrupting the way small store holders in cities like Nairobi access produce from farms, bypassing the middleman and using the latest digital technology to force prices down.


Event: Africa’s anti-corruption drive, 2020 and beyond…

Corruption undermines democratic institutions, slows economic development and contributes to governmental instability. It is no coincidence that the most corrupt countries in the world are also on the Fragile States Index. Many of these countries are in Africa. ARC continues to work with businesses operating in Africa to mitigate the risks posed by corruption and bribery. In 2021, we will be hosting a series of anti-bribery and corruption training events, we look forward to sharing more details on this with you soon. Please get in touch now if you are interested in participating.   

The United Nations General Assembly (UNGA) designates 9 December as International Anti-Corruption Day. It is a day for governments, businesses, civil society and the whole of society to renew our commitment to working together to end the devastating impact of corruption on people’s lives around the world. ARC was pleased to mark this important day by hosting an anti-corruption virtual event. 

The main themes addressed included trends in corporate corruption, exploring the continent’s biggest corruption breakthroughs in 2020 and uncovering what lies ahead in 2021.

Tara was joined in this virtual conversation by Kenya’s former anti- corruption tsar John Githongo and Lord Peter Hain – one of South Africa’s “most potent weapons” in the country’s fight against corruption.

Email us now to receive the full recording.


The ARC Insider, Episode 19: “Getting stuff done” in…

Karen Allen and Tara O’Connor spoke with Maya Famodu, an award-winning entrepreneur venture capitalist. Maya’s talent-spotting led to an early investment in Paystack, now the subject of a $200m buyout by US giant Stripe– the biggest start-up acquisition to date to come out of Nigeria and one which belies the country’s bankruptcy at federal level. Listen to the full episode here & subscribe to The ARC Insider here.


Of death, debt and democracy

By Tara O’Connor for Engineering News, published on 11th December 2020.

As the first year of the plague closes out, a second year threatens a second wave of the Covid-19 pandemic. Africa has seen fewer infections and deaths, but the virus has had other lasting consequences.

The effect on political stability has been acute in several countries, and acute and destabilising in Africa’s largest economy, Nigeria. It is a political truth in Nigeria that, when the oil price falls below $40/lb, its trickle-down economics fail and people’s distress is manifest in unrest. Unsurprising then that a video showing a member of the notorious Special Anti-Robbery Squad (SARS) executing a suspect prompted protests nationwide. What was surprising was the actions of a purportedly civilian government – which was to deploy the military to a peaceful protest. The army opened fire with no warning, killing 56 protesters, in scenes reminiscent of the worst days of military rule, which ended in 1999. Read the full article here.


COMING SOON: The ARC Insider, Episode 17

South Africa moves to lockdown Level 1,  Ivory Coast and Uganda are gearing up for elections and a historic peace deal is signed in Sudan. Karen Allen and Tara O’Connor will be discussing these news stories and others from across the continent.

They are joined by a guest they spoke to at the beginning of the pandemic.  Professor Alex Broadbent – from the University of Johannesburg – argued back in March that a “one size fits all” response to COVID-19 will not work…

Would you like to be notified when the podcast is LIVE? Email us now:

Listen to all episodes of The ARC Insider here.


African Societies Plan for a Post-Pandemic Economic Recovery

ARC’s Director, Tara O’Connor, was recently interviewed for the article “African Societies Plan for a Post-Pandemic Economic Recovery” in The Cairo Review for Global Affairs

“We have seen an accelerated global polarisation. The trade war between the US and China has suddenly globalized. It will mean foreign powers will pay for influence – in debt relief, loans, etc. which is good. But we could see proxy wars, proxy political puppetry of the Cold War resume, which is negative for the economies of Africa,” O’Connor warned.

Read the full piece here: African Societies Plan for a Post-Pandemic Economic Recovery


Africa Risk Consulting: Interview with Lord Hain

The Judicial Commission of Inquiry into Allegations of State Capture – also known as the Zondo Commission – was a public inquiry launched by the government of Cyril Ramaphosa in August 2018. Whilst the initial furore created by the daily revelations of how insidious Zuma’s state capture project was have somewhat calmed down, it is as important as ever to understand why the commission is so critical, not just for South Africa, but across the continent. 

Tara O’Connor caught up with ARC advisor, Lord Hain, on his involvement in the Zondo Commission… 

Lord Hain, thank you for agreeing to speak with us around your commitment this year to combat corruption in South Africa. In particular, we are interested in your involvement in The Judicial Commission of Inquiry into Allegations of State Capture and your report presented to the commission in November 2019. What was the key motivator for your giving evidence to the commission? 

Thanks, Tara, and for the opportunity to discuss the commission and the report presented, which is of the utmost importance to how we move forward in South Africa. As you know, whenever there are large-scale corruption cases in Africa, there is a propensity to ignore the complicity of international actors in the facilitation of money laundering activities, but rather to focus on the domestic changes that are needed in the subject country. The commission is already well aware of the systemic lack of transparency and accountability of South African government bodies that allowed corruption to thrive. Instead I wanted to use the opportunity to make a plea for the international community to acknowledge its own role in the saga. Domestic changes are, of course, needed in South Africa, yet lessons must be learned by international actors who helped and continue to help corrupt individuals enjoy the spoils of their illegality by allowing them to move their ill-gotten gains from South Africa and then sometimes back into the country undetected. It has to be realised that without these players, state capture could not have been as monumentally lucrative to its perpetrators as it so tragically has been. 

You have been particularly vocal about the role played by banks in state capture in South Africa, can you explain why they were a particular focus? 

Yes, I have always been very vocal about this. Simply because I strongly feel that it is the banks who are at the frontline of tackling state capture that have repeatedly failed in their duty to prevent it. Electronic banking remains the simplest and fastest means of transferring funds between people and across borders. It allows criminals to move their money to more convenient and less regulated jurisdictions and it ‘cleans’ the money by mingling it with other funds and disguising its source so that it is easier to spend. As we know, the Guptas used a number of international banks to transfer money around their network and disguise payments. The banks appear to have assisted the Guptas in two ways: first by allowing bank accounts to be opened and in doing so granting access to the bank’s global network; and secondly by allowing the transfer of illicit funds into and out of accounts. 

There were, however, clear warning signs even in publicly available materials that the Guptas’ activities were suspicious and these ‘red flags’ should have been spotted by the banks either much sooner or immediately – including the secretive nature of numerous transactions, unexplained payments to and from third parties and unexplained connections with and movement of monies between jurisdictions. Given that banks ought to have access to customer data and transaction data for all accounts they open and transfers they facilitate, they are well placed to monitor the legitimacy of any and all transactions, in addition to having regulatory and moral responsibilities to recognise and stop illegal money flows. They systematically failed, time and time again in this case. We have to hold them to account, but also must force them to implement more stringent measures going forward. Banks possess the technological and financial clout needed to force change and my advice is that that power should be harnessed to assist regulators to target their often too limited resources. 

What must the banks and private enablers do differently to ensure this is not repeated? 

Data sharing will be critical. There must be an increase in the sharing of data within and between banks, professional enablers and the state, so that there is greater visibility around the risk profile of customers and transactions. I know of course that some sharing of information already occurs, however, it is clearly not effective. These banks have to cease hiding behind confidentiality and work collaboratively and pro-actively to share useful data and intelligence on a confidential basis with South Africa, global regulators and enforcement agencies. 

Understanding who the beneficial owners (BOs) of corporate entities are is integral to enabling banks and professional enablers to understand the background to a transaction so that a proper assessment can be made of whether there is a corruption risk. For them to recognise suspicious customers or transactions, they have to know the identity of the customer and they must be forced to conduct proper and thorough due diligence on EVERY client. I recommended that audits should be conducted by the South African Reserve Bank on all banks in South Africa. These must happen more regularly and without notice and a random sample of due diligence files should be reviewed regularly as part of this. 

Transparency between all parties will also be key to how we move forward. In South Africa, there should be increased transparency around the parties that enter into contracts with state-owned enterprises by creating a BO register. This would help banks and professional enablers to assess the legitimacy of payments from state-owned enterprises to third parties. In order for this to be effective, I suggest the register be updated and verified by an independent body on a monthly basis. 

You have said that there have to be some changes around Black Economic Empowerment (BEE) in South Africa. Are you able to elaborate a bit more on what changes you would like to see? 

The Black Economic Empowerment (BEE) programme is so important to South Africa’s future. And given its importance, it is all the more tragic that it has been wrongly exploited and manipulated by state capture criminals over a protracted period. I have emphasised repeatedly that greater transparency and accountability in this area is essential to ensure that the important and legitimate aims of the BEE programme are not undermined through corrupt manipulation by a few corrupt individuals (such as the Guptas) and their illegal ‘rent seeking’. 

In recent history, contracts with state-owned enterprises have been awarded to enterprises under the BEE initiative that do not have, or intend to obtain, the requisite capability to properly perform those contracts, nor intend to further the aims of the BEE movement. In that regard, there must be increased transparency around whether BEE parties a) have a relevant track record; b) meet basic up-skilling requirements to perform a contract e.g. do hire and train black employees to the number and qualifications required for competency under the contract; and c) satisfactorily perform their contract against contractual key performance indicators including final sign-off on completion. The number of employees retained by businesses claiming to operate as a BEE enterprise should also be recorded, verified and disclosed, as those that exploit the BEE initiative usually create a shell company with very few employees (much fewer than would be needed to fulfil the contract) solely to win the contract. It really is a tragedy how such actions have worked to undermine the necessary objectives of the programme. 

How could this additional transparency be achieved? 

In the form of regular public updates by the state through the Department of Public Enterprises websites and a whistle-blowing hotline for the reporting of breaches 

What lessons can be learned by other African nations from this matter? 

Across the continent, citizens deserve better than the looting and devastation caused by state capture that still occurs. I hope the recommendations, some of which I’ve summarised in this discussion, and all put forward to the commission, are implemented not just in South Africa but are used as guidance to all nations. Key to this is an understanding that fighting corruption requires global action and global co-ordination from a range of stakeholders, including governments, businesses, banks and NGOs. Without this cooperation, the state capture of South Africa or another country will happen again. 

Therefore, throughout Africa, international actors across the public and private sectors must commit their resources to strengthening regulations, improving corporate governance, increasing transparency and coordinating globally to reduce financial crime. Without cross- border cooperation and engagement of the public and private sectors, no country will be emancipated from financial crime.