Africa News blog

Uganda votes: oil blessing, oil curse?

That old Africa oil chestnut is being discussed again: is it a blessing or a curse?

When it comes to Uganda, nobody really knows which way to bet yet and its people often shrug their shoulders when asked what impact it will have.

One reason for that, and a cause of concern for some, is the secrecy surrounding the deals the government has struck with the foreign firms in the country and a lack of transparency around much of the planning ahead of production next year.

The Pearl of Africa discovered oil reserves, now estimated by some to be 2.5 million barrel’s worth, in its Albertine rift basin near Democratic Republic of Congo in 2006.

I visited the shores of Lake Albert this week and found some locals had a vague hope things would improve for them when the oil starts pumping, while others said they would hate the oil companies if their lives did not change.

Elections on Feb. 18 will decide whether long-standing President Yoweri Museveni or his bitter rival Kizza Besigye will be the one to oversee the beginnings of a windfall that could haul the country into middle-income status. Foreign oil firms are watching closely — they have had their problems with the strong-headed Museveni but know little about Besigye.

Driving Sudan towards paradise

Back in1978, Sudanese statesman Abel Alier decided he had had enough of negotiating with troublesome locals over a controversial development project. Exasperated at the endless obstacles, he vowed to force it through without an agreement.

“If we have to drive our people to paradise with sticks we will do so for their own good and the good of those who come after us,” he infamously said.

Something similar must have been going through the minds of mediators in recent weeks as they tried to push for an agreement between Sudan’s intractable northern and southern politicians.

Sudan is now just 48 days away from the scheduled start of two referendums — the first on whether the oil-producing south should declare independence, the second on whether the disputed central Abyei region should join north or south.

Time is running out but both sides remain at loggerheads on a list of basic issues. To date, they haven’t even been able to agree on the membership of a commission to organise the Abyei vote — most privately agree it will have to be postponed or canceled.

There were signs of some progress a week ago, on the eve of the Islamic Eid al-Adha holiday, when African Union mediators said both sides reached a framework deal, at least agreeing the form of future negotiations. But politicians returned from their break this weekend, refreshed and ready to restart their war of words.

The “framework agreement” was unsigned and only in principle, they said. Both sides called press conferences accusing each other of breaking peace deals, and intimidating voters. One step forward and several steps back.

Breaking down the walls – Sudan’s oil transparency push

It was a just another seminar on transparency in the oil sector. Seemingly banal.

But this was being held in Khartoum, involving live debates between northern and southern Sudanese officials, a minerals watchdog and the international media, who were allowed free access to publicly grill those who administer what has for years been an incredibly opaque oil industry.

What emerged was surprisingly positive and all walked away feeling that — at least until the Jan. 9, 2011 referendum on southern independence — this was the first step towards finally unpicking all the stitches that have sewn the sector tightly shut to outsiders.

We are “PR stupid” said the newly appointed Minister for Energy from the Sudan People’s Liberation Movement, Lual Deng, who instigated the forum.

He said this to explain the discrepancies in oil production and oil prices uncovered by Global Witness, a non-governmental organisation, whose report “Fuelling Mistrust — the need for transparency in Sudan’s oil sector” provoked the discussion.

These discrepancies include oil prices published by the ministry of finance web site with little clarification of how they had been calculated, even citing barrels of Sudanese oil selling for as little as 15 cents a barrel.

Global Witness also found discrepancies between China’s CNPC, which dominates a Sudanese oil sector dogged by U.S. sanctions, and Sudan’s energy ministry output figures. Those figures were easily explained as the difference between gross production and net of water, gas and solids on Wednesday.

from Global Investing:

Libya: a mixed bag

It has debt levels to die for and huge amounts of oil, but economically it's lagging and political concerns remain.  Speakers at a Libyan trade and investment forum this week saw the North African country as a mixed bag.

Robert Tashima, an editor for Oxford Business Group,  highlighted the country's "elephantine" levels of FX reserves, and the privatisation of 80 companies so far, with telecoms and steel sales slated for this year.

Rory Fyfe, an economist with the Economist Intelligence Unit, said he expected the country's budget to remain in surplus and inflation under control, and pointed to high levels of non-oil growth, but said the economy should be doing better than it is.

Charles Gurdon, managing director of Menas Associates, said in his presentation on politics that the lack of a designated successor to Muammar Gaddafi, who has led Libya for over 40 years, could lead to violence.

Abdulmagid El-Mansuri, chairman of the industry ministry's foreign investment advisory committee, said the country was privatising at a pace and was also allowing joint ventures with international firms, such as soon-to-be-announced joint-venture licenses for foreign banks.

But perhaps indicating the sensitive nature of Libya's political system, he said Gurdon's decision to include pictures of Gaddafi and key family members in his presentation was "completely outrageous".

Juwama vs. the Nile Republic – South Sudan searches for a new name

What’s in a name? An entire cultural and national identity if you are from Sudan’s oil-producing south.

The region of southern Sudan is now less than seven months away from a referendum on whether it should split away to form Africa’s newest country.

One of the biggest unanswered questions hanging over the vote is what the new nation should call itself if, as widely expected, embittered southerners choose to secede.

The easiest option would be to stick to what people call it now — South Sudan or Southern Sudan.

But there are some serious branding issues. Say “Sudan” to most outsides and they will immediately think of a list of nasties — Darfur, the never-ending north-south civil war, military coups, militancy and crippling debt.

A new nation might be grateful for a new name with a clean slate.

Equatoria has a nice ring to it. But that would associate the entire diverse territory with just three of its current states — Western and Eastern Equatoria, together with Central Equatoria, the home of the capital Juba.

One step forward, a few steps back

One of the few positives of Sudan’s elections, dubbed to be the first open vote in 24 years but marred by opposition boycotts and accusations of fraud, was a tiny opening of democratic freedom in Africa’s largest country.

Direct press censorship was lifted from Sudan’s papers and opposition politicians were given an albeit limited platform to address the population through state media.

Still, it seemed for the biggest international observer missions, such as the Carter Center and the European Union, the best they could say about the elections was 1): That they happened and 2): That people were not killing each other for once in this nation devastated by decades of multiple civil wars. (At least not because of the vote anyway).

They all agreed that the crack of democracy opened during the polls must be allowed to continue. And more progressive members of President Omar Hassan al-Bashir’s ruling party agreed. Presidential Adviser Ghazi Salaheddin told me he did not think they could go back on the democratic gains.

But it seems just one month after the vote, Sudan is sliding back to its old ways.

In Darfur, where Bashir is accused by the International Criminal Court of war crimes and crimes against humanity, the Sudanese army took control of West Darfur’s Jabel Moun – which has been a key rebel stronghold pretty much since the conflict began in 2003.

It’s an impressive range of hills making it an ideal base to defend against attack. It’s also an area where the U.N.-African Union peacekeeping mission (UNAMID) has enjoyed little access because of almost constant military clashes and bombing.

Angola broadens its reach

Nigerian, Kenyan and South African banks have been making forays into the rest of the continent in search of growth so it was interesting to see Angola’s biggest bank opening an office in Johannesburg this month.   Banco Africano de Investimentos, Angola’s biggest bank by deposits, sees the office as a launchpad for ventures further afield in the southern African region as well as in business between Angola and South Africa.

Angola’s banking sector has enjoyed huge growth since the country emerged from a three-decade long civil war in 2002 as one of the world’s fastest growing economies thanks to booming oil production and high oil prices.

And as Angola’s economy has grown, so has the OPEC member’s influence as a power within southern Africa, within Africa’s other former Portuguese colonies and within the Gulf of Guinea region that produces most of Africa’s oil.

The interest in BAI’s opening in Johannesburg was itself a sign of how keen companies are to seek deals and investments and establish a presence there.

“You wouldn’t have this sort of crowd if it was a bank from elsewhere in Africa opening up,” commented one foreign financier at the event.

But while Angola expands abroad, it isn’t always as easy for those trying to get a share of Angola’s growth.

Investors complain of frustrating officialdom, corruption, a lack of transparency and astronomical operating costs as well as the difficulties of finding businesses or instruments to invest in despite the money flowing to Angola as a result of the oil.

Sudan’s elections brinkmanship – can the opposition unite?

In a shock unilateral announcement, the leading south Sudanese party, the Sudan People’s Liberation Movement (SPLM), withdrew its presidential candidate, Yasir Arman, and said it would also boycott elections on all levels in  Darfur.

It paved the way for incumbent President Omar Hassan al-Bashir to win the April 11-18 polls. Arman was viewed as his main challenger, with much of south Sudan’s support – about 25 percent of the 16-million strong electorate.

Some in the opposition initially reacted with anger or surprise, because the SPLM had agreed to form a joint position on a likely full boycott of elections in the north with them a day later. But as the decision sank in, the realization is that the ball is now firmly in their court.

The credibility of the elections is hanging in the balance.

But the big question on everyone’s lips is: Will the opposition be able to unite on a joint position ahead of the polls, which are due to begin in just 10 days?

Many Sudanese complain the weak and divided opposition offer little alternative to Bashir’s party.

Can Ghana avoid the oil curse

With a democratic touch rare in a region better known for dictators, Ghana is asking its citizens what it should do with the windfall from oil production due to start later this year.

In a questionnaire entitled “The Use and Management of Oil and Gas Revenues – A Survey of Public Choices” posted on the finance ministry website this week, Ghana says oil-producer nations face three major questions:

a) How much to spend now, and how much to save?

b) How to use what is to be spent now?

c) How should the savings, if any, be managed?

Buy on the Nigeria rumour, sell on the Niger fact

Confusion over the names of two similar-sounding African countries may have helped boosted oil prices to near $80 a barrel this week as traders rushed to buy oil after reports of a military coup.

A Reuters reporter received a flustered phone call from a hedge fund partner who had heard animated discussion in the market about an incident in Nigeria, only to realise that traders had muddled up Africa’s biggest oil producer with its neighbour Niger.

“Markets took off at around the same time a Reuters story came out about gunfire erupting in the Niger capital in an apparent coup bid, mistaken by many as being Nigeria,” said Tom Bentz, analyst at BNP Paribas Commodities.

Reuters first broke news of heavy gunfire and a coup in Niger’s capital, Niamey, on Thursday. Prices jumped to a one-month high of $79.29 a barrel during the day.

While a coup in Nigeria would almost certainly rock crude oil benchmarks, a coup in Niger  — which has yet to produce oil — would almost certainly not, barring linguistic confusion.

Traders said that an oil market version of the game “Chinese whispers” rather than poor geography may have been behind the jump, as some scrambled to call the market amid mounting confusion over the titles of the two countries which share the same first five letters. The fact that Nigeria’s main oil producing region is called the Niger Delta and is an area of political unrest probably also stoked the rumours. A popular trading mantra is “buy the rumour, sell the fact”.

But far from being a costly mistake, the decision to buy oil on the Niger coup was a flash of fortuitous genius for some as oil prices continued rising afterwards to within cents of $80 a barrel on Thursday, spurred by other factors such as tension over Iran’s nuclear programme and a weaker dollar.