Resource Dependence in Africa (with some thoughts on Mozambique)

Source: The World Bank

Source: The World Bank. Click on image to enlarge  

This map shows resource rents as a share of GDP for the period 2009-2013. Note that the colouring on the map is about to change, with the Indian Ocean east coast getting some of the hydrocarbon action that has hitherto been a preserve of the Atlantic coast and a couple of landlocked states like Chad, Sudan and South Sudan (The biggest change in West Africa will most likely be in Guinea once the mining of its high grade iron ore in the Simandou Mountains gets going. A few contractual and logistical hurdles still stand in the way of the mega mining project).

The eastern African states of Kenya, Uganda, Tanzania and Mozambique are about to get a shade or more redder. Kenya and Uganda will start producing oil between 2016-17. Tanzania and Mozambique have massive amounts of natural gas, with Mozambique having recently climbed to top four in the world with a capacity to meet total global demand for more than two years.

As you may have guessed Mozambique is by far the country to watch out for as far as the ongoing eastern African resource bonanza is concerned. The country will continue to see a rapid rise in coal production, ultimately producing an estimated 42 million tons in 2017. Mozambique’s Gold production is also expected to more than triple by 2017 relative to its 2011 level. Estimates suggest that based on the full capacity exploitation of coal and gas alone the Mozambican economy could rise to become SSA’s third or fourth largest (after Nigeria, South Africa and (or ahead of) Angola). Going by the 2012 GDP figures from the Bank, that would be a change from US$14 billion to about $114 billion.

Have you enrolled in Portuguese classes yet?

As Mozambique gets wealthier in the next five years at a vertiginous pace, it will be interesting to see if it will go the Angola way. Both are former Portuguese colonies that had drawn out civil wars. Both tried to have democratic elections but then the ruling parties managed to completely vanquish the opposition. And both continue to be ruled by overwhelmingly dominant parties that appear to have consolidated power.

My hunch is that Mozambique is different, as FRELIMO is less of a one man show than is the MPLA. Indeed FRELIMO just selected a successor to Guebuza, the Defense Minister Filipe Nyusi (Nyusi’s background in engineering and the railway sector should prove useful for the development of the country’s coal industry).

The Tanzanian model of dominant/hegemonic party with term limits appears to have spread south. And that is a good thing. The other African country that appears to be embracing this model is Ethiopia (I think I can now say that the Zenawi succession was smooth and that Desalegn, also an engineer, is credibly term limtied).

Kampala, Kigali and Yaounde should borrow a leaf from these guys (that is, as a second best strategy given that their respective leaders do not seem to be into the idea of competitive politics).

For more on the politics and management of natural resources in Africa see here, here and here.

Kenyan negotiations enter critical stage

The Annan led team trying to reestablish sanity in Kenya will from tomorrow start looking at the most contentious issues thus far – the issues of the alleged election fraud, land, economic disparity and constitutional reform to limit the powers of the president. This is expected to be the most critical stage of the negotiations because most of the violence that has visited Kenya over the last month was caused either directly or indirectly by one or a combination of the above factors.

The government side has indicated that it will not compromise on the matter of Kibaki having been elected even as the ODM continues to insist that the election was stolen by the Kibaki camp. Today (Wednesday, 5th) both sets of negotiators held meetings with their respective principals to brief them on the goings on in Serena. Annan, who has been joined by former Tanzanian president Mkapa and Mandela’s wife Graca Machel, expressed optimism over the talks. His sentiments were echoed by both Ruto and Kilonzo of ODM and PNU-ODM-Kenya respectively.

Meanwhile the central bank governor issued a statement saying that the Kenyan economy is expected to fail to meet the projected annual growth of 5% for the year 2008. This he attributed to the adverse effect the recent violence has had on production, consumption and investor confidence. The private sector estimates that more than 400,000 Kenyans will lose their jobs if the situation does not improve soon. This would be bad for a country with unemployment rate that is approaching the high forties.

Kenyan leaders ought to know that the last thing they need is even more angry, hungry and jobless young people in the streets.