Head of Africa forecasting at Exclusive Analysis, Natznet Tesfay, examines some of the defining policy trends to watch over the next month.
South Africa: As front runner, President Jacob Zuma is likely to face Vice President Kgalema Motlanthe and Human Settlements Minister Tokyo Sexwale, in his bid for re-election as President of the ruling African National Congress (ANC). Whoever wins the election to be held at the ANC's conference at Manguang in December 2012 will also be the ANC's presidential candidate for (and likely victor of) the 2014 national elections. We assess that President Zuma would face a difficult re-election process within the ANC if Sexwale, the weakest candidate, chooses to endorse Motlanthe.
Nationalisation of mining, steel production and the petro-chemicals is likely to be the most significant policy debate ahead of and during the Manguang conference. But there is little likelihood that nationalisation will be implemented in the next five years due to a lack of senior political support for it. The influential ANC youth league is in favour, but none of the ANC's leadership candidates have come out in its support. COSATU (the umbrella body for the unions, the ANC's key ally and potential kingmaker), is split on the issue with its largest union of mineworkers in favour but the second largest union of metalworkers against. Moreover, the ANC will be unwilling to forego a sizeable tax base in exchange for strategic ownership and instead will seek higher revenue via export, local content and local price constraints.
Nationalisation is likely to be used for political gain should no clear winner emerge in the early stages of the conference. Candidates are likely to obfuscate their stance on nationalisation to gain support of key constituencies. President Zuma could use the nationalisation debate to distract attention from corruption investigations that are hanging over him and to secure the support of allies in doing so.
Therefore, the succession debate and its aftermath are likely to mean uncertainty for companies. It is also likely to mean delays in the development of coal and iron ore mining projects. And the uncertainty is increasingly likely to trigger Anglo American's withdrawal from the platinum mining sector in South Africa.
Democratic Republic of Congo: On 15 July 2012, the International Conference on the Great Lakes Region (CIRGL) agreed to deploy a joint African Union and CIRGL force along the DRC/Rwanda border to combat the M23 rebellion, which is mostly Tutsi and ex-CNDP (National Congress for the Defence of the People) fighters, in Kivu Provinces. However, such military deployment is unlikely to be successful in quelling the rebellion. The risk of intense fighting in both North and South Kivu is likely to increase, with the additional risk of fighting spreading into Ituri Province, posing a high risk of attack on NGOs, cargo, mining and oil interests.
Although M23 has demanded payment of ex-CNDP fighters integrated into the Congolese military (FARDC), we assess their uprising is more likely in reaction to the Congolese government's attempt to dismantle CNDP command structures within the FARDC. Despite Rwandan protests to the contrary, we assess UN allegations of Rwandan support to M23 to be credible, considering M23's fighting capability from its inception in April 2012.
Both Rwanda and the CNDP have interests in retaining control over mineral resources in Eastern Congo, particularly of coltan mining and associated customs duties, which are estimated to amount to up to $1 million per week.
Having attacked Rugari, 30 km North of Goma, on 14 July, M23 are now likely to be with 20km of Goma. Increased fighting would increase the risk of collateral injury to NGO workers and damage to cargo in Rutshuru, Masisi, Walikale and Lubero in North Kivu and Shabunda and Kalehe in South Kivu.
Mali: On 12 July 2012, the Movement for Unity and Jihad in West Africa (MUJAO) militant group announced the release of three of seven Algerian diplomats held hostage in Mali since April 2012, following an undisclosed deal. A week earlier, MUJAO released three Europeans kidnapped in Tindouf, Algeria, on 23 October 2011 in return for an $18 million ransom and the release of a MUJAO member held in Mauritania.
MUJAO, Ansar al-Din and al-Qaeda in the Islamic Maghreb (AQIM) seized control of northern Mali from Tuareg rebels in May 2012. The remaining hostages means Algeria is unlikely to react to this situation on its southern border by launching an overt military intervention into Mali, something which would raise risks of IED attacks on oil facilities in southern Algeria.
Pressure is mounting for a military intervention into northern Mali led by the Economic Community of West African States (ECOWAS). This however is unlikely to occur until at least end of 2012. The formation of a unity government to rule in the wake of the March 2012 coup is unlikely before the end of August, after which a UN Security Council mandate will be sought. ECOWAS would then need up to 90 days to actually deploy a force. In the meantime, Mali-based jihadists are likely to focus on consolidating their territorial control in the north; this stretches to approximately Mopti, 450 kilometres north east of the capital Bamako. Commercial assets at risk in the north include uranium mining and oil exploration.
While a delay in external military intervention decreases the risk of targeted attacks on government assets in Bamako, it also allows jihadists time to build capability for attacks outside Mali once an intervention eventually occurs. The main targets would be southern Algeria and those countries contributing troops to an ECOWAS force.
Ghana: The NDC's nomination of John Mahama, a Christian ethnic Gonja from the predominately Muslim north, as its party leader and presidential candidate will likely swing votes in favour of the opposition NPP. In order to secure victory in December, Mahama, will have to garner support from the Akan majority (45%) based in the south.
Ahead of the December elections, Mahama is highly likely to ensure policy continuity, but concerns over fiscal discipline will probably arise as Mahama increases fiscal spending further to garner support from key NDC leaders, southern powerbrokers, including chiefs and the wider population. Beyond the one-month outlook, if the cedi depreciation continues, the Bank of Ghana is likely to restrict foreign exchange transactions for telecoms firms and banks in order to stabilise the currency.
A President Mahama victory in the December elections will likely reduce contract revision risks, especially in the oil and gas sector. We assess that President Mahama is unlikely to review contracts approved by his predecessor as he has been involved and active in the government's decisions particularly in the last two years when President Mills' health was deteriorating.
Amid accusations of rampant corruption within the NDC government from opposition and civil society groups, a change in government would likely raise risks of probes against NDC officials and in the construction sector, such as the $1.5 billion STX housing deal, as well as in the energy sector. Given the NDC's close relationship with the Chinese government and investors, the NPP would probably scrutinise Chinese mining and oil concessions that have been awarded. Mahama, while vice president, was central in negotiating $14 billion of Chinese oil-backed loans, of which $3 billion was approved by parliament and due for disbursement by the end of 2012.