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Monday 20th of November 2017 |
Morning Africa |
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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke
Macro Thoughts
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The sun sets over the beach near the Fort of Sao Sebastiao, the oldest standing fort in sub-Saharan Africa. PHOTOGRAPH BY LUCA LOCATELLI via @NatGeoTravel Africa |
In the sun-drenched waters of the Indian Ocean, a small coral island sits at the mouth of Mossuril Bay, where the waves melt seamlessly into the sky.
Ilha de Moçambique, or the Island of Mozambique, was used as a harbor and trading center by Arab merchants between the 10th and 15th centuries before Portuguese explorer Vasco da Gama landed on the island in 1498 and claimed it for Portugal.
For nearly 400 years, it was the colonial capital of Portuguese East Africa, positioned on the maritime trade routes for gold, spices, and slaves. By 1907, shortly after the collapse of the slave trade, the capital moved to Lourenço Marques and the island’s population rapidly dwindled. This mass exodus protected it from the ravages of modern development during the 20th century—effectively freezing the island in time.
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German Chancellor Angela Merkel declared failure in her bid to form a new government Law & Politics |
German Chancellor Angela Merkel declared failure in her bid to form a new government, throwing the future of Europe’s longest-serving leader into doubt and potentially pointing the world’s fourth-biggest economy toward new elections. The euro fell.
A month of exploratory coalition talks ended in a dramatic collapse just before midnight Sunday in Berlin when the pro-market Free Democratic Party, one of the prospective partners, walked out on a deal that Merkel said had been within reach.
Conclusions
Instability at the beating Heart of the EU Project
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"Top aide describes Mugabe 'munching corn' as Zimbabwe celebrates" FT Law & Politics |
As Zimbabweans poured on to the streets of Harare to celebrate the expected departure of the man who has ruled over them for nearly 40 years, Robert Mugabe sat with a friend, munching corn and reminiscing about old times.
“He was talking about his school days in the 1930s and anthropology and how it impacted on the colonial perception of Africans and their intellect,” said George Charamba, who has been the president’s spokesman and one of his closest advisers for 17 years.
Mr Charamba, who said he spent five hours with Mr Mugabe on Saturday and left him just 20 minutes before talking to the Financial Times, said the 93-year-old liberation hero remained on form in spite of the storms raging around him.
“In the midst of such a highly charged intellectual conversation, we were munching corn,” he said. “Oh my God, he was very upbeat and chatty.”
Unless Mr Mugabe can muster his legendary cunning to wriggle out of what appears a desperate situation, it also supports the view of those who say Mr Mugabe, surrounded by sycophants and increasingly frail, is in denial about what is happening to him.
Mr Charamba insisted that these were “derivative actions” and “fireworks” for the masses. “The principle action, the Hamlet of this drama, is the president and the soldiers,” he said.
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20-NOV-2017 :: The genie is out of the bottle @TheStarKenya Law & Politics |
It is authority that provokes revolution....This occurs when a feeling of impunity takes root among the elite: We are allowed anything, we can do anything. This is a delusion, but it rests on a certain rational foundation. For a while it does indeed look as if they can do whatever they want. Scandal after scandal and illegality after illegality go unpunished. The people remain silent...They are afraid and do not yet feel their own strength. At the same time, they keep a detailed account of the wrongs, which at one particular moment are to be added up. The choice of that moment is the greatest riddle of history. Ryszard Kapuściński Shah of Shahs, P. 106
You will recall that only last year, In a speech before the African Union in 2016, indeed, Mugabe said would remain at the helm “until God says: Come.” What is clear is that an Old Man's mind and political antennae were properly scrambled by an ambitious wife [Gucci Grace], a wife who was always untenable and whose political longevity was entirely correlated to the presence of her Husband.
The fast moving events in Harare will culminate in the dismissal of President Robert Gabriel Mugabe and the re-instatement of the Vice President he fired, Emmerson Mnangagwa. Mr. Mnangagwa aka The Crocodile [“A crocodile patiently waits for his target, pretending to be a rock, At times you think he doesn’t react, or doesn’t have any solution to what is happening. He doesn’t show irritation until the optimal moment and then he strikes. And when he does, he doesn’t miss his target”]. My Friend Herve Gogo rebutted Reuters saying
''The analogy to Ceausescu is misplaced. This isn’t a revolution but just an aggiornamento inside ZANU-PF. & everyone is currently negotiating with Mugabe''
The pictures from Harare on Saturday spoke to a ''People Power'' which is a genie which will be difficult if not impossible to put back in its Bottle.
“It’s like Christmas,” said one marcher, Fred Mubay to Reuters.
He had a warning for whoever takes over Zimbabwe: “If the next leader does the same, we are going to come out again.”
I agree with U.S. Assistant Secretary of State for African Affairs Yamamoto who said “It’s a transition to a new era for Zimbabwe, that’s really what we’re hoping for.”
The Military which launched this decapitation are certainly set to shape the Outcome but now have a Tiger by the Tail. Interestingly, the Military have been walking on linguistic egg shells and side-stepping the word ''coup'' with finesse.
Zimbabwe’s economy has fallen to the 20th biggest in sub-Saharan Africa from 10th when President Robert Mugabe came into power almost four decades ago [Bloomberg]. The Economy has halved in size since 2000. As of October, the country owed lenders including the IMF, World Bank and African Development Bank about $9 billion, according to the finance ministry. Hyperinflation peaked at about 500 billion percent at the end of 2008, according to the International Monetary Fund, leading to the nation abandoning its own currency in favor of a basket of foreign exchange including the South African rand, the dollar, the euro and the pound, as well as so-called bond notes printed by the government. After 2 1/2 years of deflation, consumer prices started rising again in February, driven by a shortage of cash and higher food costs and its difficult to see how another bout of hyper-inflation is avoided.
The dislocation in the Economy is evidenced in the price of BITCOIN which jumped as high as $13,499, almost double the rate at which it trades in international markets, according to prices cited on Golix’s website. Further evidence of economic disequilibrium is seen in the performance of the Stock Market. Before a correction at the end of the week. the Zimbabwe Industrial Index had jumped +390% Year to date and the MSCI Zimbabwe Index +420%. The country's shares are trading at a 475 percent premium to cash, according to an Exotix analysis of Old Mutual data. That difference has to collapse for there to be any chance of Zimbabwe normalising. This difference started to collapse on Friday with the Zimbabwe Stock Exchange dropping $1,5 billion in value and the industrial index shedding 11.32%.
What is clear is that Zimbabwe is entering a New Normal and that in the medium term Zimbabwe has the potential to be one of the fastest growing economies in Africa. The People want to grab that opportunity with both hands. If Zanu-PF want to be part of that new more optimistic Future they need to invite the Opposition into Government, look for a big cash Boost from the international Community in order to stabilise the ''Now''
Zimbabweans have only known one Leader and that Leader is now gone.
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Zimbabweans say Mugabe must quit now, but more talks planned AP Law & Politics |
Giddy with joy and finally free to speak out, vast throngs of demonstrators turned Zimbabwe’s capital into a carnival ground on Saturday in a peaceful outpouring of disdain for President Robert Mugabe and calls for him to quit immediately. Still clinging to his now-powerless post, the longtime leader was scheduled on Sunday to discuss his expected exit with the military command that put him under house arrest.
It was a historic day when the old Zimbabwe, a once-promising African nation with a disintegrating economy and a mood of fear about the consequences of challenging Mugabe, became something new, with a population united, at least temporarily, in its fervor for change and a joyful openness that would have seemed fanciful even a few days ago.
The euphoria, however, will eventually subside, and much depends on the behind-the-scenes maneuvering to get Mugabe to officially resign, jumpstart a new leadership that could seek to be inclusive and reduce perceptions that the military staged a coup against Mugabe. The president was to meet military commanders on Sunday in a second round of talks, state broadcaster ZBC reported.
“The common enemy is Robert Mugabe. That’s for starters,” said 37-year-old Talent Mudzamiri, an opposition supporter who was born soon after Zimbabwe’s independence.
He had a warning for whoever takes over Zimbabwe: “If the next leader does the same, we are going to come out again.”
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"Hubristic arrogance," he told The Globe and Mail. Law & Politics |
"Hubristic arrogance," he told The Globe and Mail. "He was in power so long. He became so comfortable, complacent and over-confident. He's stubborn, and he forgot the nature of the state around him. This is a military state, a state of securocrats. He forgot that he was just a representative of a securocratic state, and it will always dump you if you don't serve it. So they fired him."
Mr. Mugabe's own blunders led to his fall, Mr. Gwede says. "When someone is in power for 37 years, there is the myth of invincibility. And Mugabe himself believed it. He forgot that his rule was based on the security agencies, not the popular will. He showed arrogance, and the military decided that enough was enough. He was aware that something was afoot, but he couldn't stop it."
One of his biggest blunders was to allow his politically inexperienced wife to share his power. "She has an inflated sense of superiority, but she lacks the emotional intelligence to know that you shouldn't insult people in public," Mr. Gwede says. "She seems to revel in the limelight."
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Currency Markets at a Glance WSJ World Currencies |
Euro 1.1733 GERMAN COALITION TALKS COLLAPSE -- OFFICIAL: DOW JONES Dollar Index 93.67 Japan Yen 112.01 Swiss Franc 0.9885 Pound 1.3201 Aussie 0.7554 India Rupee 65.010 South Korea Won 1100.56 Brazil Real 3.2574 Egypt Pound 17.7280 South Africa Rand 14.0327
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13-NOV-2017 :: The capture of a 32-year-old wannabe king and the future price of crude oil Commodities |
In an era of lashings of surplus oil, the crude oil markets had priced ‘’geopolitical’’ risk at close to zero. Since late June, the markets have been re-pricing ‘’geopolitical’’ risk, and, in particular, events in the Kingdom of Saudi Arabia [still the largest single supplier of crude oil to global markets] have led the re-price.
Saudi Arabia and its allies UAE, Bahrain, Kuwait are caught in an ever tightening Shia pincer. The paranoia in the palaces in Saudi Arabia is real and existential. And what is also clear is that Bibi Netanyahu, MBS [the crown prince of Abu Dhabi], Jared Kushner and a Trump carte blanche have all leveraged this existential paranoia to effect not a state capture but a kingdom capture. The Guptas were a precursor for this particular capture.
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Mugabe and Dos Santos: Africa's old men seem, finally, to be fading away Africa |
While there may not be any direct connection between these two events, they suggest some intriguing comparisons. In both countries ruling families seem to have failed to secure themselves in power.
When Mugabe, as leader of the Zimbabwean African National Union-Patriotic Front (Zanu-PF), became ruler of Zimbabwe at independence in April 1980, José Eduardo dos Santos was already President of Angola. He had succeeded to that position after the death of Agostinho Neto in September 1979.
Dos Santos had to deal with external intervention and over two decades of civil war , during which he ruled dictatorially. Mugabe, despite a facade of constitutionalism and regular elections, also became increasingly dictatorial. He abandoned adherence to the rule of law and his country’s economy collapsed. Angola became notorious for the scale of the corruption linked especially to its oil riches. Zimbabwe went from bread-basket to basket-case. With the great majority of the people of both countries living in dire poverty, Dos Santos flew to Europe when he needed medical attention, while Mugabe went to Singapore.
Though Dos Santos was probably as reluctant as Mugabe to give up power, he decided to quit as president of the country and try to retain influence through the ruling party and members of his family. Mugabe tried to impose his wife on his party as his chosen successor and then to cling on to his positions even when the army took effective control of his country.
Given recent developments in Luanda and Harare, it would seem that neither of these two old men have succeeded in securing their family dynasties.
By 2016, suffering health problems that took him to Spain for treatment, Dos Santos announced that he would step down as president of Angola and he approved his Minister of Defence, João Manuel Gonçalves Lourenço as his successor.
Following the victory of the ruling Popular Movement for the Liberation of Angola (MPLA) in the general election held in August this year, Lourenço took over as president in September. But Dos Santos remained president of the MPLA, and clearly expected Lourenço to look after his interests and that of his family, who had become enormously wealthy.
From the action Lourenço has now taken against Dos Santos’ billionaire daughter Isabel, it would seem that he’s becoming his own man. It appears he wishes to distance himself from the Dos Santos family, which for many Angolans is associated with corruption on a vast scale.
The London-educated Isabel has proved herself to be a very capable businesswoman, and though the Angolan economy has been suffering because of low oil-prices, on top of massive corruption, it’s unlikely she was sacked to bring in a better chief executive to run the country’s most important state owned company. There is talk in Luanda that Isabel’s brother, José Filomeno dos Santos, will be relieved of his position as head of the country’s large Sovereign Wealth Fund and that his father, the former president of the country, will be replaced as president of the ruling party, though that may have to wait until a party congress is held.
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African debt servicing costs hit 16-year high Africa |
The governments of major sub-Saharan African nations are more indebted than at any point since 2005, when the IMF and World Bank were writing off tens of billions of US dollars of debt under their heavily indebted poor countries initiative.
Worse still, the cost of servicing this debt has risen to an average of 12.2 per cent of government revenues, up from a low of 5.4 per cent in 2011 and the highest figure since 2001, before the wave of debt forgiveness.
“The long-term forces that are driving up debt are not really under control,” said Jan Friederich, a senior director in the sovereigns and supranationals group at Fitch Ratings. “One of the fundamental issues is relatively weak public financial management in most sovereigns in the region.”
William Jackson, senior emerging market economist at Capital Economics, a consultancy, added: “Generally finances in the emerging world have been improving over the last 15-20 years but sub-Saharan Africa is one region where debt levels have deteriorated. We have warned about the rise in debt across [the region].”
The figures come just weeks after Patrick Njoroge, governor of the central bank of Kenya, warned that a “secular increase” in African public debt has pushed several governments towards a debt-servicing threshold beyond which they should not borrow.
Until recently the IMF had played down such concerns, but in October it said that “a continuation of the elevated pace of debt accumulation seen in 2014-16 would increase public debt to unsustainable levels,” not just among African oil exporters, which have seen their public sector debt double to an average of 45 per cent of gross domestic product since 2010-13, but even in non-resources economies where the rise has been more modest, from 46 per cent of GDP to 59 per cent.
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Unpacking Raila's resistance @Africa_Conf Kenyan Economy |
As the country simmers after its election re-run, churchmen take to diplomacy – and politicians to the street and social media
In an eloquent address to a full auditorium at the Center for Strategic and International Studies (CSIS) in Washington, DC on the morning of 9 November, Raila Odinga, leader of Kenya's opposition National Super Alliance (Nasa), explained for the first time in detail what he had in mind for resolving Kenya's deepening political crisis. He wanted President Uhuru Kenyatta to step down immediately, 'since his tenure legally expired on 1 November' (the date by which the Supreme Court wanted a repeat election held), and demanded that his government be replaced by 'an interim government of shared power between Nasa and Uhuru's Jubilee administration'. This, he said, is because 'Kenya is hurtling towards outright dictatorship… under a reign of terror targeting the electoral commission and the judiciary.'
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N.S.E Today |
News out of the beating heart of the EU Project [Germany] where Madam Merkel is unable to cobble together a Coalition saw the Euro sell off hard in the early hours before staging a snap back. African debt servicing costs have hit a 16-year high. The cost of servicing this debt has risen to an average of 12.2 per cent of government revenues, up from a low of 5.4 per cent in 2011 and the highest figure since 2001, before the wave of debt forgiveness. The figures come just weeks after Patrick Njoroge, governor of the central bank of Kenya, warned that a “secular increase” in African public debt has pushed several governments towards a debt-servicing threshold beyond which they should not borrow. The Supreme Court wielded a [political] Guillotine and President Kenyatta will be sworn in as president Tuesday, Nov. 28. A Further 90 day delay and Election and the attendant uncertainty would have been unconcionable for the markets. I am expecting a ''monster'' Bull run into Year End. Raila Odinga left Kenya on the eve of today's Supreme Court ruling. He is now in Zanzibar according to the New York Times. Ryan Cummings said ''Seems NASA are going to go through with plans to inaugurate Odinga as Kenyan president in a parallel ceremony. Cant see what it will achieve outside of legitimising a state crackdown on actions it could define as treasonous'' The Opposition's asymmetric strategy of tension has run out of road and there needs to be some serious introspection and navel gazing. The Shilling popped momentarily over 104.00 ahead of the Court decision but then predictably rallied to trade firmer at 103.65. The Nairobi All Share surged +1.035% to close at 164.82. The Nairobi NSE20 ramped +49.01 points higher to close at 3779.16 Volume clocked 555.5m with Buyers outpacing Sellers by a wide margin in most counters.
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N.S.E Equities - Agricultural |
Sasini Tea and Coffee rallied +7.00% to close at 26.75.
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N.S.E Equities - Commercial & Services |
Safaricom firmed +0.98% to close at 25.75 and within 3.73% of an all time high. The NASA Boycott strategy was predictably a damp squib and I expect Fresh Life time Highs before Year End. Safaricom traded 3.958m shares and Buyers outpaced Sellers by a Factor of 4 to 1.
TPS Serena Hotels [which is a pure play Beneficiary of todays SCOK decision] improved +0.9% to close at 28.00 on strong volume action of 502,200 shares.
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N.S.E Equities - Finance & Investment |
Equity Bank rallied +3.067% to close at an 11 week high of 42.00 and traded 3.138m shares worth 131.898m. Equity Bank had 3 Buyers for every Seller. KCB Group rallied +3.048% to close at a 7 week high of 42.25 and traded 1.136m shares. Buyers outpaced Sellers by a Factor of 5.5 to 1. Standard Chartered ticked +0.92% firmer to close at 220.00 and traded 105,600 shares. Notwithstanding the recently issued Profits Warning, I expect a meaningful move to 240+
CIC Insurance rallied +8.11% to close at an 11 week high of 6.00 and traded 532,900 shares.
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N.S.E Equities - Industrial & Allied |
EABL closed unchanged at 237.00 and traded 548,300 shares worth 130.483m. EABL was the only share at the Securities Exchange that had more Sellers than Buyers.
KenGen popped +1.744% higher to close at 8.75 and traded 243,900 shares.
Total Kenya rallied +4.123% to close at 25.25 and was trading 26.00 +7.22% at the closing Bell. Total Kenya has served up a mouth-watering +54.76% return in 2017.
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