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Macro Thoughts

“We’re in that bizarro world where you can be a currency manipulator
if you fail to manipulate your currency’’ tweeted @ TonyFratto.

The charge into havens this month has been spurred by flashing
recession indicators, trade-war tit-for-tat and data disappoint-
ments, all amid thin liquidity. Gold is up about 18% this year, while
the yen is the top performer against the dollar across G-10
currencies.
Safe Havens are priced for Armageddon now.

In each of these occasions, the Wizard appears in a different form,
once as a giant head, a beautiful fairy, a ball of fire, and as a
horrible monster. When at last he grants an audience to all of them at
once, he seems to be a disembodied voice. Eventually, it is revealed
that Oz is actually none of these things, but rather an ordinary
conman from Omaha, Nebraska, who has been using elaborate magic tricks
and props to make himself seem “great and powerful”. Last week we
witnessed some ‘’Wizard of Oz’’ level moves in the markets.

Markets and prices exhibit patterns of correlation and essentially my
perspective is that it is the correlation that has exerted a ‘’Pull’’
Effect on US Yields and that therefore the ‘’recessionary’’ Signalling
of the Yield Curve should be discoun- ted. There has been a Strong
‘’Safe Haven’’ Demand develop over the last few sessions which has
lifted Government Bond Prices, Gold and the Yen.


Home Thoughts

The light this morning was perfect and there was enough swell for the
cameras to almost be at surface level at certain moments.

no one leaves home unless
home is the mouth of a shark
you only run for the border
when you see the whole city running as well

your neighbors running faster than you
breath bloody in their throats
the boy you went to school with
who kissed you dizzy behind the old tin factory
is holding a gun bigger than his body
you only leave home
when home won't let you stay.

no one leaves home unless home chases you
fire under feet
hot blood in your belly
it's not something you ever thought of doing
until the blade burnt threats into
your neck
and even then you carried the anthem under
your breath
only tearing up your passport in an airport toilets
sobbing as each mouthful of paper
made it clear that you wouldn't be going back.

you have to understand,
that no one puts their children in a boat
unless the water is safer than the land
no one burns their palms
under trains
beneath carriages
no one spends days and nights in the stomach of a truck
feeding on newspaper unless the miles travelled
means something more than journey.
no one crawls under fences
no one wants to be beaten
pitied

no one chooses refugee camps
or strip searches where your
body is left aching
or prison,
because prison is safer
than a city of fire
and one prison guard
in the night
is better than a truckload
of men who look like your father
no one could take it
no one could stomach it
no one skin would be tough enough

the
go home blacks
refugees
dirty immigrants
asylum seekers
sucking our country dry
niggers with their hands out
they smell strange
savage
messed up their country and now they want
to mess ours up
how do the words
the dirty looks
roll off your backs
maybe because the blow is softer
than a limb torn off

or the words are more tender
than fourteen men between
your legs
or the insults are easier
to swallow
than rubble
than bone
than your child body
in pieces.
i want to go home,
but home is the mouth of a shark
home is the barrel of the gun
and no one would leave home
unless home chased you to the shore
unless home told you
to quicken your legs
leave your clothes behind
crawl through the desert
wade through the oceans
drown
save
be hunger
beg
forget pride
your survival is more important

no one leaves home until home is a sweaty voice in your ear
saying-
leave,
run away from me now
i dont know what i've become
but i know that anywhere
is safer than here

Political Reflections

Despite being invisible for days after shelving his train wreck TV
interviews he is emerging with President Donald Trump as the most
dominant and intriguing figure in the impeachment drama.
The man once feted as America's mayor is looming over events on
Capitol Hill as details of his expansive role in the scandal fill
publicly released witness testimony.
"He was always swirling around somewhere," US Ambassador to the
European Union Gordon Sondland testified, adding that Giuliani's
shadow foreign policy mission in Ukraine got more "insidious" as time
went on.
Giuliani was ubiquitous, on the phone with Ukrainian officials,
inserting himself in US diplomatic meetings, sowing confusion and
exasperation about what he was up to, witnesses said.
Even Secretary of State Mike Pompeo couldn't rein in the President's
man, rolling his eyes when Sondland mentioned him and saying: "Yes,
it's something we have to deal with," according to transcripts of
Sondland's testimony.
"He's a great gentleman. He was a great mayor, one of the greatest,
maybe the greatest mayor in the history of New York," Trump said.
"He's a man that looks for corruption ... I know he's an honorable
man."
But the evidence suggests that the President directly tasked Giuliani
with running an off-the-books operation -- that his personal attorney
used to seek political favors from Kiev.
"He just kept saying: Talk to Rudy, talk to Rudy," Sondland testifed.
Over the course of this year, US diplomats gradually became aware that
Giuliani was now the fulcrum of the action in US-Ukraine relations.
James Baker, the former FBI general counsel, told CNN's Wolf Blitzer
that any argument that Giuliani was not acting at the behest of the
President would not be credible.
"Applying your common sense to that this situation, you would think
that of course the President was acting through Giuliani," Baker said.
"If the use of Giuliani was to create some sort of plausible
deniability like in Iran-Contra, I don't think it works, because it
just doesn't make sense."

Vice President Mike Pence refutes the claim made by an anonymous
former Trump official in his forthcoming book that he considered
invoking the 25th Amendment to remove the president

The noise you hear is pots and pans...Exceptional time for country.
Protests in week 3:

Under the previous leadership, these two were considered “enemies of the state”.

International Markets

Euro 1.1049
Dollar Index 98.131
Japan Yen 109.27
Swiss Franc 0.9946
Pound 1.2811
Aussie 0.6881
India Rupee 71.32
South Korea Won 1156.50
Brazil Real 4.1009
Egypt Pound 16.1346
South Africa Rand 14.7821

Commodities

Canada’s exports cut to less than $1m a month due to disputes over
Huawei arrest, should now rebound towards $1.5bn a year

Emerging Markets

India’s rupee declined the most in Asia, while sovereign bonds and
stocks saw modest losses after Moody’s Investors Services lowered the
nation’s rating outlook to negative citing growth concerns.
The reduction comes at a time when investors have been skeptical about
the government meeting its budget targets amid a slowdown in tax
revenues and September’s surprise $20 billion tax giveaway for
companies.
The rupee weakened 0.4% to 71.2525 per dollar as of 9:55 a.m in Mumbai
after falling to 71.2750, the lowest since Oct. 18. The yield on
benchmark 10-year bonds rose three basis points and the S&P BSE Sensex
index of shares fell 0.2%, halting its record-setting rally.
“It’s fair to say that the currency will face significant brunt from
the news, giving away some of the recent strength and maybe more,”
said Prakash Sakpal, economist at ING Groep NV in Singapore. “I won’t
be surprised if INR spikes back above 72 in coming days.”

Frontier Markets

Sub Saharan Africa

If climate change is the most important matter of common concern
around the world, what comes second? Perhaps nothing close. But by my
lights, the usual looming questions—about the fate of American power
and influence, Brexit, the related viability of the European Union,
and the many uncertainties surrounding the rise of China—seem almost
parochial in comparison to one that gets immeasurably less
international attention: the future of employment in Africa, where
unprecedented demographic transitions are underway. Based on current
projections, the continent’s population of nearly 1.2 billion people
will rise to 2.5 billion by the middle of this century—more than China
and India combined. From there, it becomes harder to predict with any
certainty, but Africa could very well have a staggering 4 billion
people or more by 2100, according to United Nations projections,
meaning that the continent alone would account for more than a third
of the human population. This is at once a topic that lends itself to
lots of fear-mongering and racism as well as disinterest and neglect,
none of which the world can afford. That is because how Africa’s
population evolves, and how the continent’s economies develop, will
affect nearly everything people near and far assume about their lives
today.

Europe—more deeply connected by history to Africa than most Europeans
realize, and positioned right on the continent’s doorstep—will be the
most dramatically affected. But as a new African diaspora swells,
virtually every region of the world will be too. Think of Israel,
which has tried to pay thousands of African migrants to leave the
country, offering plane tickets and $3,500. Think of Latin America,
which has become a surprising migration route for Africans hoping to
reach the United States. Think of faraway China, where an African
community in the hundreds of thousands—estimated to be the largest in
Asia—is centered in the city of Guangzhou. Think of the United States
itself, already home to one of the largest African diasporas in the
world, by virtue of its history of slavery, as well as through more
recent migrations. All will see much larger populations of African
immigrants seeking to build new lives, likely orders of magnitude
more.

Africa’s huge population growth will surely lead to alarmist calls
from outsiders on how to limit this demographic boom. Yet Africans
should not and will not submit to the proposition that they are any
more of a problem than people from any other part of the world,
especially given the history of the slave trade that for centuries
drained the continent of millions of its most able-bodied people to
serve the needs of other countries. People from Africa are as much of
a resource as humans anywhere. Europe today already faces its own
stark demographic challenges, but they are precisely the opposite of
Africa’s. Europe’s crisis is one of falling birth rates—some of the
lowest in the world—and an aging population. This demographic decline
is already leading to shortages in the European labor market and other
economic strains.  Against the current tide of xenophobic populism,
European leaders must find the courage to embrace African immigration
much more actively. Since African migrants will be coming to Europe
one way or another, the smartest approach is a form of enlightened
self-interest that gradually increases immigration levels and works to
welcome more and more African labor and talent into the European
workforce. To succeed, governments and civil society will need to work
to educate Europeans about what is at stake for them, and not make
integration seem merely inevitable, but positive.

But this all comes back to jobs, and for good reason. Employment in
Europe, North America and even further afield will not be enough to
meet the needs of Africa’s burgeoning population. Employment in Africa
is the most urgent challenge, but one that much of the world is
ignoring. Instead, observers and policymakers in both Europe and the
United States get riled up about reports of China’s economic advances
across Africa, or more recently—and even more laughably, given the
size of its economy—Russia’s.

Some commentators also pretend that China is in the process of
industrializing Africa. This is largely a fantasy, and an unhealthy
one, because it makes space for magical thinking about the continent’s
problems and thereby avoids serious focus on the daunting challenges
at hand. Through no real fault of its own, China is mostly an obstacle
to African industrialization. That’s because China industrialized
decades ago and now dominates with overwhelming advantages of scale
most of the sectors that newly industrialized economies, like those in
Africa, seek to enter. African economies trying to follow China’s
lead, therefore, face historically uncommon challenges. Coupled with
another challenge that Africa faces—its severe Balkanization into 54
mostly small states, many of them further handicapped by being
landlocked—the prospects of deep or widespread industrialization
become even more unlikely.

The practical solutions for Africa are threefold. First, agriculture,
not industry, is the key to providing work for the hundreds of
millions of Africans to come. In many African countries, more than 50
percent of the labor force already works in agriculture; in some
states, like Burundi and Burkina Faso, it is more than 80 percent. Yet
Africa has the least productive agriculture of any continent,
according to the World Economic Forum, and at the same time has the
most unexploited productive land.

Every bit of this equation has to change, with the help of every major
foreign partner. Agriculture can become a dramatically larger source
of wealth for the continent and its peoples, one that gives them hope
and reasons for sticking around. “The continent’s best bet is
agriculture—modernizing agriculture,” W. Gyude Moore, a former
Liberian minister of public works, and now a fellow at the Center for
Global Development, told me. “A robust agriculture sector that begins
to trade with other sectors of the economy will be the basis of a
sustainable path to industrialization. It will provide food security
and improve balance of payments, as food imports decline.”

The second pillar is education. Here again, every self-described
African partner should be redoubling its investments, in good measure
for reasons of self-interest. Better education on the continent—from
universal literacy and schooling for girls to vocational training and
higher education—will help the continent modernize, raise incomes and
encourage people to remain in their places of origin by increasing
their wealth. But since vastly greater emigration is inevitable,
education will also help raise the capacities of those who leave the
continent, and make them better able to contribute to where they go.
Already in the United States, it is an underrecognized fact that
Africans have the highest level of education of any immigrant group.

Finally, Africa and its foreign partners must greatly accelerate ways
to remove barriers that still hinder the movement of people, goods and
capital between the continent’s many small and divided markets. There
has been some encouraging news on this front lately with the launch of
the African Continental Free Trade Area, or AfCFTA, an agreement that
aims to create a common market starting next year. Its promise,
however, is already challenged by the reluctance of some of Africa’s
largest economies, such as Nigeria, to live up to the deal’s terms.

Europe, which drew the arbitrary lines that divided much of Africa at
the Berlin Conference of 1884-1885, should take the lead in helping
the continent accelerate and deepen these kinds of economic reforms.
Its own experience in expanding continent-wide trade and economic
ties, culminating with the European Union, makes it an especially apt
partner.

Europe’s political imagination and economic will in forging new
relations with Africa—ones based on belief in their common
destiny—have been flagging since the Cold War. If Europe fails to help
engage the continent in much more transformative ways now, before the
demographic momentum becomes overwhelming, it will have itself to
blame.

Almost 60% of sub-Saharan Africans are younger than 25, compared with
one-third in the U.S. This “youth bulge” could translate into an ample
and energetic workforce. But the benefits accrue only when greater
prosperity reduces fertility rates. If the next generation has fewer
babies than their parents, the proportion of working age people would
rise relative to the number of their dependents -- mainly children and
the elderly -- creating a so-called “demographic dividend.”

The African Development Bank estimates that more than 10 million new
jobs must be created each year just to absorb the number of young
people entering the workforce.

Education. Almost a third of children in sub-Saharan Africa don’t
attend school, and on average just 4% of the population completes
university. The region also struggles to feed its population, with one
in four classified by the UN as malnourished.

Egypt, Ethiopia and Sudan set a Jan. 15 deadline to reach an agreement
on the filling and operation of a giant Ethiopian dam on a Nile
tributary after a U.S.-brokered meeting sought to ease rising
tensions.
The commitment followed the U.S.’s first significant intervention in
the long-running dispute over the Grand Ethiopian Renaissance Dam,
which has put two of Washington’s most prominent African allies at
odds over the use of crucial freshwater supplies.
The U.S. and World Bank will now act as observers at four upcoming
technical meetings between the countries, while their foreign
ministers will return to Washington on Dec. 9 and Jan. 13 to assess
progress, according to a joint statement issued Wednesday.
The latest talks, convened by U.S. Treasury Secretary Steve Mnuchin
and including World Bank President David Malpass, came after Egypt
said negotiations with Ethiopia had reached a deadlock and appealed to
the U.S. and others to mediate.
Ethiopia disputes that description, and says a series of technical
talks were already going ahead.
Tensions have flared recently over the dam on the Blue Nile that’s set
to be Africa’s largest hydropower project when completed.
Egypt and Ethiopia are struggling to reach an agreement on how to fill
the reservoir -- a process crucial to ensuring a reliable flow to
Egypt, which depends on the Nile for almost all its fresh water.
Egypt is urging parties to respect a 1959 pact on water allowances,
which Ethiopia says should be reworked as it belongs to the colonial
era.
President Donald Trump earlier met representatives from the three
countries and tweeted that “the meeting went well and discussions will
continue during the day!”
The White House on Oct. 3 urged the governments to reach a deal that
preserves their individual rights to economic development while
“respecting each other’s Nile water equities.”
If an agreement isn’t reached by the deadline, Egypt, Ethiopia and
Sudan agreed to invoke an article of a 2015 agreement on Nile-sharing
that can lead to them requesting conciliation or mediation, or
referring the matter to heads of state, according to Wednesday’s
statement.
The increased U.S. role is a possible vindication for Egypt, whose
foreign minister, Sameh Shoukry, hailed the “positive results” of
Wednesday’s meeting and the “clear and specific timetable” set.
President Abdel-Fattah El-Sisi has previously thanked Trump for his
efforts in trying to resolve the dispute.
Ethiopian Foreign Ministry spokesman Nebiat Getachew said before the
meeting that his country would “present our stand, that there is a
solution in technical discussion” and the gathering didn’t represent
mediation efforts.
That echoed Prime Minister Abiy Ahmed’s comments at an Oct. 24
Russia-Africa summit that what he called “political” talks wouldn’t
interfere with technical ones already underway.
Construction on the dam is five years behind schedule and likely
significantly over its original 3.4 billion euro ($3.77 billion)
budget. When the government ran short on funding, ordinary Ethiopians
were tapped for donations and civil servants donated parts of their
salaries.
Egypt and Ethiopia, which both have populations of about 100 million
and are the fastest-growing economies in their respective regions,
have officially dismissed any prospect of the dispute triggering a
war.

Selected as a Nobel Peace Laureate, the Prime Minister faces mayhem in
his home region

Prime Minister Abiy Ahmed is pushing to merge all the ruling Ethiopian
Peoples' Revolutionary Democratic Front's regional member
organisations, as well as affiliated ruling parties from other federal
states, into a single unit, dissolving their particular national, or
ethnic, identities. The structure under formation, whose working name
is believed to be the Ethiopian Prosperity Party, would then discard
the EPRDF's Leninist cladding and instead follow Abiy's Medemer
('synergy') theory, a personal philosophy he has enshrined in a book
which he offers as a road-map to Ethiopia's political future. Critics
have called Medemer an ideological mish-mash coated in self-help
evangelism. Supporters assert that the merger, which Abiy wants
completed before the polls set for May, would ensure true
multinational federalism by integrating representatives of the five
peripheral regions into national political decision-making. But that
is not how hold-outs like the Tigray People's Liberation Front,
once-dominant within the EPRDF, see it. The TPLF, lead architects of
the 25-year-old federal system managed by the EPRDF, says now is not
the right time to try and consolidate a coalition. The EPRDF is
currently an alliance only in name, they say. They are afraid that
removing constituent members' regional identities would be the first
step towards ending devolved, ethnic self-rule, which is enshrined in
the constitution. That, says Abiy's office, is mere fear-mongering.

Perhaps more problematic for Abiy than yet another TPLF gripe is the
fact that his dream scheme has already aroused opposition in the most
populous region, Oromia, nominally his home turf. A dispute related to
the issue in late October led to violence there that claimed around 80
lives.

Regional opponents
There may also be popular opposition from the second-largest region,
Amhara, despite formal support for the merger by the ruling EPRDF
Amhara constituent party, the Amhara Democratic Party. Recently
emerged ethnically based opposition groups, like the National Movement
of Amhara, and some which recently returned from exile, such as the
Oromo Liberation Front (OLF), and Somali region's Ogaden National
Liberation Front, already enjoy strong support in their regions. If
the EPRDF fuses into one party, it may not be able to compete with
political opponents who prioritise protection of their communities'
rights and interests over national goals. In febrile Amhara, NaMA may
eventually consider a merger with the ADP, having rejected calls from
Abiy do so in late 2018 in order to re-invigorate Amhara's ruling
party. If this moves ahead, it could widen a rift between hard-line
Amhara nationalists and Abiy-aligned groups within the ADP.
Recent events suggest that the TPLF is unlikely to board the Abiy
train. The ostensibly 'consensus'-based EPRDF Secretariat, headed by
an Amhara politburo member, condemned TPLF criticism of the merger as
misleading and premature and said that unspecified members of the
EPRDF would decide on the process.
Meanwhile, the Abiy-chaired Oromo Democratic Party Central Committee
agreed in October that TPLF's 'Revolutionary Democracy' ideology would
be supplanted by Medemer, although some ODP heavyweights are
reportedly squeamish about the prime minister's merger scheme.
An increasingly spiky Abiy made the doctrinal dispute personal in
October by saying at the launch of the book Medemer, 'If someone is
not satisfied with Medemer idea and has another idea called "Mebazat"
["Multiplied"], let him put down his whisky and write a book.' This
was assumed to be aimed at the loquacious Getachew Reda, a critical
TPLF politburo member, who has also been mulling a book (AC Vol 57 No
24, New faces, old tactics).
Medemer's critics do not just lie in the disgruntled ranks of the
downwardly mobile TPLF. Oromo activist Jawar Mohammed, who runs the
powerful Oromia Media Network, also slammed the merger, which he
thinks could undo the Oromo struggle for autonomy and reduce groups'
bargaining power at the centre. His comments appeared to elicit
another barb from Abiy, who told Ethiopian lawmakers on 22 October
that foreign-owned media – Jawar is a United States passport holder –
needed reining in. We hear that the TPLF likes Jawar's moves and is
quietly opening up communication through intermediaries (AC Vol 59 No
19, Rallies shatter fragile peace).
One upshot was a mêlée at Jawar's house in Addis Ababa the same
evening after an attempt was made to remove his security detail in the
middle of the night. The next morning, Jawar posted that there was a
government plot to facilitate an attack on him. His supporters rushed
to his defence in the capital and onto the streets across Oromia. At
least 86 people were killed, 10 of them security force personnel,
according to Oromia police. Over 200 people were injured and
properties were damaged as Oromo mobs attacked passers-by and local
minorities, while fighting erupted with rival Amhara groups marching
in urban centres such as Adama.
The mayhem showed how deep-rooted ethnic nationalism is and how
removed Abiy is from his own constituency. The Jawar controversy was
the final trigger for protests spurred by anger at Oromia's ruling
party and especially Abiy, as many believe the ODP has finally
abandoned the Oromo people and aligned with Amhara interests. The
Oromia ruling party was despised until Abiy and other professed
reformists joined forces with protestors – and with Amhara coalition
partners – and forced a power shift in the EPRDF last year, but Abiy
has not pursued the protestors' Oromo-centric agenda.

'New chapter'
Demonstrators who support the returned OLF rebels burned Abiy's new
book and chanted that the ODP had escaped its abusive, subordinate
relationship to the TPLF only to abase itself before the ADP. The
Oromo Liberation Army's Central Command, which has split from OLF
leaders in Addis, reported over 10 clashes in western Oromia between 1
and 2 November, claiming to have repulsed 'several advances' by the
military in Najo and Dembi Dollo, which signalled a 'new chapter' in
'the armed struggle'.
The row between Abiy's government and Jawar started after the Oromia
Media Network started reporting aggressively on the situation in
western and southern Oromia, and in Gondar in Amhara region, where
there is sporadic conflict between regional forces and the Qemant
minority, who want greater autonomy. Although Jawar has struggled
against the EPRDF for years, he now worries about the coalition's
dissolution. On 16 October, Jawar said that nationalists in ODP are
becoming 'an endangered species' referring to its tendency to align
with Abiy in the centre. Amhara's government criticised Jawar's media
for reporting the conflict in Gondar, which they say is stoked by the
TPLF backing Qemant militia to destabilise Amhara (AC Vol 60 No 3,
Mountains to climb).
The dark backdrop to the drama of remaking the EPRDF system is the
rising tension between Oromo and Amhara, which could spread into a
sustained conflict if not managed carefully. Currently, anything said
or done against the other has the potential to trigger more deadly
confrontations, such as those that recently took place in Oromia towns
with large Amhara populations, like Bishoftu and Dukem. In one recent
incident, Oromo and their youth groups, known as qeerroo, reacted
angrily to an online video showing Hachalu Hundessa, a well-known
Oromo musician, being harassed by Amharic-speaking people resentful of
the Oromo presence in the capital.

Addis clash
Earlier in October, there was a foretaste of what such confrontation
could mean during a controversy surrounding the Oromo thanksgiving
celebration, Irreecha, which is held in Addis Ababa, which some Oromo
nationalists claim for themselves. On the eve of the festival on 5
October, Oromia's President, Shimelis Abdisa, gave a speech saying
that Oromo had been humiliated by the 'neftegna' system, a form of
subjugation of other nations that is commonly pinned on the Amhara
during Ethiopia's imperial era, but that they had now overcome this
oppression. Amhara activists criticised Shimelis's comment and accused
him of hate speech against Amhara.
Two days after Irreecha, the Baladera Council – a body set up by
Amhara to contest alleged Oromo hegemony in the federal capital –
called a rally in Addis Ababa. The Oromo-led mayoralty denied the
request and the authorities arrested supporters of chairman, Eskinder
Nega, a former political prisoner (AC Vol 60 No 5, Abiy dining
dangerously). Online commentators said the ban on the rally was
illegal and a sign of a new Oromo-led dictatorship. The road from the
federal capital to Amhara capital, Bahir Dar, was blocked by Oromo
youth in North Shewa Zone for two days from 10 October after a rumour
that 200 buses full of Amhara youth militia, fano, were coming to
participate in Eskinder's rally. It is unlikely to be the last such
set-to related to the disputed capital, as Ethiopia's existential
political crisis continues to snowball.
With such set-pieces growing in intensity and frequency the ability of
the government to contain them is being stretched too thin, insiders
are saying, with resources already under strain from the effort to
completely remake the ruling system.

Fortune and the five-year plan

The government is set to propose two new medium-range economic plans
to parliament after the elections slated for May 2020, say sources
with knowledge of work in the Prime Minister's Macroeconomic
Committee, Abiy Ahmed's central economic policy organ. The new five-
and ten-year plans, which are intended to ease conditions for the
private sector, are being drafted by the National Planning Commission.
They are expected to go to parliament next September. Research by the
Seoul-based Korean Development Institute and local counterparts for
the plans began in 2018 under Abiy's predecessor, Hailemariam
Desalegn. Details are scarce but the drafts so far focus on increased
private sector participation in the economy, better access to private
finance, insurance, an opening up of the logistics sector, and plans
to add value to mined minerals instead of solely exporting them to
generate foreign exchange. In agriculture, there will be a focus on
commercial farming, lowland agriculture, and irrigation. Officials
also, in a sign that the 'developmental state' is far from dead, plan
to favour large-scale farming at the expense of smallholder
agriculture.  The twin plans follow the ruling Ethiopian People's
Revolutionary Democratic Front's previous strategic economic plans:
the five-year Growth and Transformation Plans I and II, which
resembled the five-year plans of the former Soviet Union that were
notorious for shifting targets and falsified quota outcomes.  The new
plans are being integrated with a new World Bank-supported programme
called Homegrown Economic Reform. Some economic officials in Addis
Ababa are unhappy with the strings attached to Bank finance, we
understand, a sign that loosening the grip of the state on the economy
is unlikely to be problem-free.  Abiy's term began halfway through GTP
II, which emphasises large-scale infrastructure and export-focused
manufacturing. It is due to expire at the end of this year.  'Some
elements' of the Homegrown programme will be drawn from the new plans,
with yearly and quarterly planning evaluations added, according to a
Macroeconomic Committee source. In the five years of GTP II,
construction has taken the lion's share of Ethiopia's capital. Only
marginal increases in manufacturing took place each year compared to
Kenya and Tanzania, said a source, explaining that Ethiopia's
industrial sector remains in its infancy and requires 'huge attention
to gain export earnings'.

‘’These 90 or so days represent the most consequential arrival of an
African politician on the African stage since Mandela walked out of
prison blinking in the sunlight and constructed his ‘’rainbow
nation’’’’
And whilst he faces a fiendishly  complicated task fending off the
centripetal forces which are tearing Ethiopia apart, the Prime
Minister who has a singular self-belief in his destiny is a Virilian
figure and a c21st African Leader which is a scarce commodity.
“Whoever controls the territory possesses it. Possession of territory
is not primarily about laws and contracts, but first and foremost a
matter of movement and circula- tion.”

“Cowry shells and dollars have value only in our common imagina- tion.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”

The sense of a return to the Mandela spirit in the wake of South
Africa's 32-12 victory over England in the Rugby World Cup final on 2
November has quickly come up against economic realities as harsh as
those in the worst years of the apartheid regime. Centre-stage is the
contradiction between the trade unions' calls for a macro-economic
stimulus – targeted spending to create jobs and growth – and the
treasury's advocacy of micro-economic reforms that would involve
restructuring many of the state-owned enterprises, commercialisation
and privatisation.

The Springboks have revived the much-maligned concept of South Africa
as a rainbow nation with a historic Rugby World Cup championship
victory on Saturday.
Coined by Archbishop Desmond Tutu and championed by former president
Nelson Mandela to describe a post-apartheid dream where people of all
races live and work together in harmony, the rainbow nation lost its
shine over the past two decades.
It has just been given a second chance by Springbok captain Siya
Kolisi, coach Rassie Erasmus and the team who emphasised the idea of
one nation working together after its stunning win over England.

Kenya

The Finance Act 2019, among other provision, repeals section 33b of
the Banking Act that provides for the capping of bank interest rates.

A wider-than-anticipated fiscal deficit may delay renewal of an
International Monetary Fund credit facility for Kenya despite the
state repealing a controversial interest-rate cap, according to
analysts including Eurasia Group.
President Uhuru Kenyatta Thursday signed the 2019 Finance Bill,
scrapping three-year-old rules that required banks to limit interest
on loans at four percentage points above the benchmark rate, which cut
credit to businesses.
That’s partly in line with recommendations to remove the cap and
pursue fiscal consolidation that the IMF urged Kenya to do during
talks for an insurance-type loan to be tapped when hit by certain
economic shocks.
Resumption of the facility may be further delayed after revenue
shortfalls forced Kenya to revise its 2019-20 fiscal-deficit forecast
to 6.2% of gross domestic product from an earlier 5.9%.
“An agreement is now only likely by the end of next year,” the New
York-based risk-analysis group said in a note Thursday, changing its
estimate for a deal by the end of 2019. Previously, “we underestimated
the fiscal slippages.”
Under conditions for a previous $1.5 billion arrangement that expired
in 2018, Kenya was required to reduce its fiscal gap to about 3% of
GDP by 2022. The deficit widened to 7.7% in the year through June,
above a target of 6.8%.
The removal of the cap will unlock credit to businesses and consumers,
but won’t grant Kenya an IMF program in the near term, according to
Goldman Sachs Group Inc.
“A programme hinges primarily on Kenya’s fiscal trajectory, and
specifically the ability of the Kenyan authorities to commit to deeper
revenue consolidation,” Goldman Sachs said in an emailed note.
The government’s decision last month to shift Kenya’s debt limit to 9
trillion shillings ($86 billion), rather than have it as a percentage
of GDP, has also raised concern that the state plans to ramp up
borrowing. Debt stands at almost 60% of GDP, higher than the 50%
threshold.
Yields on Kenya’s 2024 Eurobonds are down 310 basis points this year
to 5.22%, while the return on 30-year bonds has dropped 209 basis
points to 7.72% by 4:13 p.m in Nairobi, according to data compiled by
Bloomberg.
“Until last month, Kenyatta was averse to expending precious political
capital to repeal the cap,” Eurasia said. Yet given the fiscal
slippage, “Kenyatta needed a quick win to show that his administration
was serious about addressing IMF concerns.”
Under conditions for a previous $1.5 billion arrangement that expired
in 2018, Kenya was required to reduce its fiscal gap to about 3% of
GDP by 2022. The deficit widened to 7.7% in the year through June,
above a target of 6.8%.

“We are having a good source of dollars mostly from the banking stocks
on the stock exchange,” said a senior trader from one commercial bank.

@KCBGroup +40.85% @KeEquityBank +39.89% @NCBABankKenya +32.73%
@HFGroupKE +32.49% @StanbicKE +21.21% @Barclays_Kenya +19.18%
@Coopbankenya +10.84% @StanChartKE +8.10% @DTBKenya -23.48%