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Africa goes to visit @BarackObama in Washington #AfricaSummit #USAfrica #USAfricaSummit
The White House has invited 50 African heads of state to Washington
next week for the first summit between the US and Africa. As many as
200 prominent US chief executives will be on
the sidelines of the Washington summit, including the bosses of
Walmart and General Electric and comments as long ago as last July
from Ben Rhodes, @rhodes44 [Deputy National Security Advisor for
Strategic Communications & Speechwriting] confirm that the US
Corporate Sector is looking to hard charge into Africa;
''Frankly, we have heard a high demand signal from the US private
sector What we hear from our businesses is that they want to get in
the game in Africa.''
President Obama spent less than a day in Africa during the entire
First term and is evidently playing Catch Up. Being the First
African-American President of the US at a time when the US was seeking
to emerge from a brutal recession, it would have played very poorly
back home if the President was seen to be cavorting on the African
Continent, at that time. Therefore, during his first term, President
Obama was in a Political Trap not of his own making with respect to
Of course, The US Engagement with Africa is being continuously
compared with China's engagement. In 1996 the Chinese committed to a
policy known simply as Going Out and selected Africa as a priority
zone for expansion. China overtook the US as Africa's largest trading
partner in 2009. Trade rose from $10bn in 2000 to $210bn last year.
U.S. trade with Africa, but only in goods, not services, totaled $85
billion in 2013. Services amounted to about another $11 billion.
European trade with Africa reached $137 billion in 2013. China speaks
to $400 billion worth of deals in African construction projects which
have already yielded almost 1,400 miles of railroad track and nearly
2,200 miles of highways. In the space of a decade, as Howard French
points out, one million or more Chinese have emigrated to Africa,
buying up land, establishing businesses, plying just about every
conceivable trade from medicine to farming to prostitution.
"Our goal is not to counter China; our goal is not to contain China,"
President Obama said during a trip to Asia earlier this year.
"On certain levels, we can't or won't compete with China," says the
Fund for Peace's Patricia Taft. "China will continue to eclipse us in
terms of economic interests in Africa."
The U.S. is, however, still preeminent in the political sphere and
that influence, she says, will continue to trump anything China can
Howard French in his book about Sino-Africa says the Chinese see
Africa as an El Dorado, a land of opportunity for one million
migrants. For America, it's a collection of "ungoverned
spaces," "austere locations," and failing states increasingly
dominated by local terror groups poised to become global threats, a
danger zone to be militarily managed through special operators and
proxy armies. "In Africa, terrorists, criminal organizations,
militias, corrupt officials, and pirates continue to exploit
ungoverned and under-governed territory on the continent and its
surrounding waters," reads the Pentagon's 2014 Quadrennial Defense
Review (QDR). "The potential for rapidly developing threats,
particularly in fragile states, including violent public protests and
terrorist attacks, could pose acute challenges to U.S. interests."
I had the following Exchange with a Friend @Hoyawolf on @Twitter.
Hoyawolf @hoyawolf · Energy security and resource access remains the
Achilles heel for rising Asian powers @alykhansatchu This will drive
great power competition
Hoyawolf @hoyawolf · Asian powers positioning to secure upstream
energy sources in East Africa @alykhansatchu Japan, China, and South
Korea leading the way
Hoyawolf @hoyawolf · Conflict between US & China would not be decided
in Straits of Taiwan but from the Straits of Malacca to the Bab el
Retweeted by Hoyawolf Aly-Khan Satchu @alykhansatchu Re Achilles Heel
@hoyawolf "distant blockade operations" and a decisive Naval Advantage
keeps US ahead of the curve.
Hoyawolf @hoyawolf · And over-watching it all from Djibouti is the US
@alykhansatchu no superpower would cede ability to control such
importance sea lanes
Retweeted by Hoyawolf Aly-Khan Satchu @alykhansatchu East #Africa
rising ''may be in the process of becoming a critical nodal point of
the dynamic Indian Ocean world''
The Point is this; The US has an unchallenged Hard Power position and
it is dominant on the Continent via U.S. Africa Command and has an
unchallenged position in its control of the ''sea lanes.'' The World
has become a great deal more adversarial of late look at Ukraine where
NATO is now pressed up right against Putin's face. Look at recent
events in the South China Sea where not too long ago the US flew
nuclear armed B-52s through the ADIZ to make what I felt was a kind of
incontestable message. Come closer to home and note that a side effect
of toppling the Colonel and his Green Book was that China was
essentially ''expelled'' from Libya.
I appreciate that Africa is in a much better place in this new more
multi lateral World. This new multilateral world is much more
advantageous for Africa. It has injected some competition into the
Demand Side of our Equation. But we need to be cognisant of the Hard
Power Disequilibrium because its intact and set to stay intact for
quite a while. With respect to ourselves, I sincerely wish we reset
our relations. The Rhetoric has veiled the following reality.
North America bought 66% of our Eurobond Issues.
More than 50% of our inward remittances come from North America.
We export less than $50m worth of exports to China.
This is a reality that we cannot change and one that needs to better
inform our Foreign Policy and urgently.
Against the Day by Thomas Pynchon P.183
They had reached the top of a steep hill, emerging from a stand of
maples and black walnuts, some of them already old when Europeans
first arrived - the mansion hidden in foliage somewhere below. ''We
all used to come up here in the Winter and bobsled down this thing.
Back then it seemed damned near vertical. And look at that out
there.'' He nodded westward. Through the miles of coalsmoke and salt
haze, Kit could make out a few semivisible towers of the city of New
York, descended upon by radial shafts of late sunlight from behind and
among clouds that seemed almost their own heavenly prototypes, what
photographers called a ''two-minute sky,'' destined rapidly to cloud
over and maybe even start dropping some rain. ''When I came up here by
myself, it was to look at the city- I thought there had to be some
portal into another world..I couldn't imagine any continuous landscape
that would ever lead naturally from where I was to what I was seeing.
Of course, it was Queens, but by the time I had that sorted out, it
was too late, I was possessed by the dream of a passage through an
invisible gate. It could have been a city. It was more a matter of the
invisible taking on substance.''
Instead the attacks are becoming so common that Israeli military claims of "accidental" strikes are no longer credible
Law & Politics
Instead the attacks are becoming so common that Israeli military
claims of "accidental" strikes are no longer credible, and while
Israeli politicians have tried to present the shelters as legitimate
military targets, their constant targeting is fueling international
The United Nations termed the attack a "moral outrage" and a "criminal
act," and the usual Israeli Lobby expressions of fury at UN criticism
are no longer as quick to follow up, nor as shrill.
Even the United States, normally up for whatever Israel feels like
doing, is no longer dancing around such incidents, with the State
Department statement lashing the Israeli attack as "disgraceful" and
reiterating that Israel has to stop attacking civilians.
An Israeli attack on a UN school in Gaza which killed 10 people today
was "a moral outrage and a criminal act", according to the United
Nations Secretary General Ban Ki-moon
"Hamas has changed its doctrine and is using the tunnels as a main
method of operation," said Israel Ziv @nytimes
Israeli troops in Gaza described Hamas gunmen who vanished from one
house, like magicians, and suddenly popped up to fire at them from
another. And while Hamas fighters are able to use the tunnels to
surprise the forces from behind and to attack those in the rear,
Israeli soldiers find themselves having to improvise.
Israeli intelligence eavesdropped on telephone conversations by US
Secretary of State John Kerry. Sources told SPIEGEL the government
then used the information obtained from the calls during negotiations
in the Mideast conflict.
Africa Military Moves by U.S. Reflect Iraq, Afghan Wars
Law & Politics
More than three years after killing Osama bin Laden and claiming that
the core of al-Qaeda had been decimated, the Obama administration is
waging a protracted war with his disciples across north and
sub-Saharan Africa. The enemy isn't a nation or an alliance, but a
diverse, mobile and adaptive collection of groups loosely united by
the goal of overthrowing the region's governments and replacing them
with strict Islamic rule.
Militants returning to the continent after fighting in the Middle East
are linking up with local groups and attacking governments in the
continent already struggling to control their territories, says
retired U.S. Army General Carter Ham, the former head of the U.S.
"Those borders might as well not exist," Ham said of the porous region
abutting Libya, Tunisia, Niger and Algeria. Militants are thriving in
northern Africa's "weak, ungoverned spaces," and more of them are
returning from Syria and Iraq "with battlefield experience and
African governments don't want American combat troops any more than
the U.S. wants to deploy them after losing more than 6,800 lives in
Iraq and Afghanistan. Instead, the U.S. military is training
governments across the continent to confront militant groups.
"The problem is that African states often exist for the elites, and
the military exists also for the purpose of these elites," said
Hussein Solomon, a political studies professor at the University of
the Free State in Bloemfontein, South Africa. "I'm asking for a more
nuanced American engagement in Africa and a more nuanced perspective,
an understanding that the state itself is problematic."
With no realistic alternative, though, the U.S. war against Somali
pirates, Nigerian kidnappers, Libyan militias and nomadic Islamic
extremists remains focused on training and advising African
The American military effort is spearheaded by the U.S. Africa
Command, set up in 2007 and based in Stuttgart, Germany, its distant
location a reflection of sensitivity in Africa toward a large U.S.
military profile. The command has ratcheted up the American military
presence on the continent with about 4,000 U.S. troops, civilians and
contractors at Camp Lemonnier in Djibouti, the only permanent U.S.
military base in Africa.An additional 1,000 or so U.S. troops and
military advisers conduct short-term missions at the invitation of
African nations, often working alongside local forces, Army Lieutenant
Colonel Vanessa Hillman, a Pentagon spokeswoman, said in an e-mail.
She declined to provide a breakdown of U.S. forces by country.
The U.S. provided advisers and reconnaissance drones to aid in efforts
to rescue more than 200 Nigerian schoolgirls kidnapped by Boko Haram
in April as the Twitter hashtag #BringBackOurGirls used by first lady
Michelle Obama went viral online. The schoolgirls still haven't been
One of the primary lessons of Afghanistan and Iraq is that wars
against Islamic extremism can't be won by military means alone, and
U.S. officials say their strategy reflects that. Still, economic aid
fell from 2009 to 2012 as military financing rose, according to the
most recent State Department data available.
In 2009, U.S. economic and other non-military aid for all of Africa
was $10.4 billion, compared with $8.26 billion in military assistance
through the Foreign Military Financing program. In 2012, economic aid
dropped to $8.1 billion while military financing rose to $16.8
The U.S. military's budget for Africa Command peaked at $273.7 million
in 2010. Since then, it's declined to $261.6 million in 2014. For the
coming year, the Pentagon is seeking $244.5 million.
The U.S. military's role in helping African countries battle militancy
and civil wars in the continent is essential because "we have to get
away from the romanticism that these are local squabbles with their
government, and if we accommodate them they might harmlessly leave us
alone," O'Hanlon said. "That may be true for some groups, but not for
A poster displayed along the road shows photograph of the leader of
the militant Islamist group Boko Haram in Nigeria.
US Military in Africa Graphic
Africa is set to deliver a fresh asymmetric shock to the global order,
taking its place as the last great emerging market. Economist
@JavierBlas2 #AfricaSummit @FT series -- US-Africa #oil trade hits
40-year low after #shale revolution http://on.ft.com/WUBqUo
U.S. reconnaissance plane crosses into Sweden to avoid Russians - NY Times
(Reuters) - A U.S. reconnaissance plane crossed into Swedish airspace
last month as it sought to avoid being intercepted by Russian
fighters, the New York Times reported on Sunday, citing U.S. military
The episode occurred on July 18 when Russian aircraft approached an
Air Force RC-135 electronic surveillance plane as it was flying in
what U.S. officials said was international airspace over the Baltic
Sea, the Times said.
Ghana Stock Exchange Composite Index Bloomberg +7.272% 2014
2,301.05 +0.70 +0.03%
Ghana turns to IMF for help FT Subscriber
Ghana will turn to the International Monetary Fund for help after the
west African country's currency plunged roughly 40 per cent this year
against the dollar, making the cedi the worst performing currency in
the world in 2014.
The opening of conversations with the IMF about a rescue is a
volte-face for John Mahama, Ghana's president, who has long insisted
his country would resolve the economic crisis using homegrown
Ghana is the second sub-Saharan African country to turn to the IMF for
help so far this year, after Zambia announced in June it was seeking
talks with the Washington-based multilateral body.
Seth Terkper, Ghana's finance minister, said Mr Mahama had "directed
to open discussion with the IMF" to support Ghana's growth programme.
Speaking to the FT, Mr Terkper said the most immediate concern was to
"to stabilise the cedi and reduce the [fiscal] deficit".
The Ghanian currency has plunged to 3.7 cedi per US dollar, down from
1.9 in January 2013, beating even the war-ravaged Ukrainian hryvnia
and the Syrian pound.
Nearly three years after the start of oil production, which was meant
to further strengthen the country's fiscal position, the public purse
is looking empty. Ghana is battling a double-digit fiscal deficit
after a 75 per cent increase in public salaries over two years.
Inflation is rising rapidly as the cedi plunges.
Ghana ran a fiscal deficit equal to 10.1 per cent of gross domestic
product in 2013. The government has promised to lower the deficit to
8.5 per cent this year, but observers believe it would struggled to
reduce it below 10 per cent.
In its annual review of the Ghanaian economy, the IMF in May warned
that under current policies, the fiscal deficit would stay at about
10.2 per cent this year and 9.3 per cent in 2015, far below the
"We would like to have a complementary plan with the World Bank and
the African Development Bank [on top of the IMF programme] to achieve
our objective to become an upper middle-income economy," Mr Terkper
The Ghanaian request of a bail out is likely to shake some investors,
as Ghana was seen as a model of economic and political development in
the continent. In 2007, Ghana become the first country in sub Saharan
Africa - with the exception of South Africa - to tap the sovereign
bond market, raising $750m through a 10-year bond.
The country has this year repeatedly postponed a return to the hard
currency sovereign bond market. But Mr Terkper said that Ghana was
still planning to issue a $1bn, 10-year bond in the next few weeks.
"The market will take a better view of our policies when we are
talking with IMF. Hopefully, the market and development partners will
have more confidence," he said.
The financial concerns have put pressure on the government of
President Mahama, which stands accused by the opposition of
mishandling the economy. Mahama's party, the National Democratic
Congress, introduced a new public sector salary structure in 2010
designed to motivate workers and improve service delivery. The
government's wage bill consumes roughly 70 per cent of the country's
Look at Ghana where the president @JDMahama claims he is looking for a
'home-grown' solution to a situation of his making and frankly there
isn't one 2 JUNE 2014
@EY_Africa Which countries are emerging as the new #FDI hotspots
in Africa? #AfricaAttractiveness
Already, 1 in every 20 jobs in Africa involves tourism and the travel
The study shows how tourism barely existed in Thailand in the 1960s
and yet now employs 15-20 percent of the country's workforce and how
Cancun, Mexico, grew from an uninhabited peninsula into one of the
most visited resorts in the world in just 35 years. Mozambique has
managed a seemingly impossible transformation of its tourism industry.
International tourist arrivals to the country surged 284 percent
between 2005 and 2011, and the government forecasts that some 4
million tourists will visit Mozambique each year by 2015. In Cabo
Verde, tourism earnings now generate 15 percent of its GDP, and the
sector employs roughly one in five workers.
How did these African countries transform their tourism industries? In
Mozambique, it took legislative reform, the development of a strategic
plan for tourism, and the elimination of unnecessary visas. Cabo Verde
attracted signifi- cant private investment through political and
banking reforms as well as by cre- ating a business-friendly
environment for tour operators and other companies.
Tourism is a powerful vehicle for economic growth and job creation all
over the world. The tourism sector is directly and indirectly
responsible for 8.8 percent of the world's jobs (258 million), 9.1
percent of the world's gross domestic prod- uct (GDP) ($6 trillion),
5.8 percent of the world's exports ($1.1 trillion), and 4.5 percent of
the world's investment ($652 billion) (WTTC 2011). The World Travel &
Tourism Council (WTTC) estimates that 3.8 million jobs (including 2.4
million indirect jobs) could be created by the tourism industry in
Sub- Saharan Africa over the next 10 years (WTTC 2011).
Global international tourist arrivals have been growing steadily at
4-5 percent a year since the 1950s. Between 2009 and 2010, despite the
global financial crisis, international tourist arrivals to Sub-Saharan
Africa increased 8 percent, making this region the second
fastest-growing tourist destination in the world after the Asia
Pacific (UNWTO 2010).
In Egypt, from 1990 to 2005, visitor arrivals grew from 2.9 million to
8.6 million, and by 2010, total international arrivals were just short
of 15 million.
Already more than 10 million people are traveling across international
borders every year within Sub-Saharan Africa for shopping, medical
needs, sports, religious gatherings, business meetings and
conferences, and visits with friends and relatives. For example, 58
percent of all arrivals to Namibia in 2010 were from South Africa and
Angola. Regional arriv- als to South Africa increased 12.8 percent
between 2009 and 2010 (South African Tourism 2010).
From a small base of just 6.4 million visitors in 1990, Sub-Saharan
Africa attracted 30.7 million visitors in 2010. Between 2008 and 2009,
tourist arrivals to Sub-Saharan Africa increased 4.4 percent, while
arrivals worldwide dropped 3.8 percent. Between 2009 and 2010, tourist
arrivals to Sub-Saharan Africa increased 8 percent; the world average
was 6.6 percent. Sub-Saharan Africa was the only region where the
tourism sector grew during the world economic cri- sis, and the sector
is expected to keep growing.
A study by the Natural Resources Consultative Forum found that a
$250,000 investment in the tourism sector in Zambia generates 182
full-time formal jobs. This is nearly 40 percent more than the same
investment in agriculture and over 50 percent more than in mining.
Zanzibar's President Dr. Ali Mohamed Shein has predicted that 50
percent of the island's population will be involved in tourism
activities by 2020.
There are already 5.3 million direct tourism jobs across Sub-Saharan
Africa (WTTC 2012). By 2021, the WTTC forecasts 6.7 million direct
tourism jobs in Sub-Saharan Africa. As travel and tourism touch all
sectors of the econ- omy, their indirect employment effects are almost
three times as large. The WTTC calculates that the total direct and
indirect impact of tourism in Sub- Saharan Africa is 12.8 million
jobs. In 2021 more than 16 million people are expected to be employed
directly or indirectly as a result of travel and tourism (WTTC 2012).
Sub-Saharan Africa has a large pool of young workers and more than 10
million new job seekers every year (World Bank 2010b).
Tourism is one of the key industries driving the change. From a small
base of just 6.7 million visitors in 1990, Sub-Saharan Africa
attracted 33.1 million visitors in 2011 (UNWTO 2012). Tourism
contributed $33.5 billion to the economies of Sub-Saharan Africa,
accounting for 2.7 percent of the region's GDP
The global tourism sector is vast and growing. In 2010, 935 million
tourists traveled internationally. They spent $339 billion directly in
emerging econo- mies. The total global export income from tourism was
over $1 trillion. The average annual growth of international tourist
arrivals was 4.1 percent from 1995 to 2010 (UNWTO 2010). The total
direct, indirect, and induced impact of travel and tourism on global
GDP in 2011 was an estimated $6.3 trillion, with 255 million jobs in
the sector, $743 billion in investments, and $1.2 trillion in exports.
Tourism's contribution in 2011 represented 9 percent of global GDP, 1
in 12 jobs, 5 percent of investment, and 5 percent of exports. In
2012, although growth was lower than originally anticipated, tourism
contributed 2.8 percent of global GDP.
Despite the impediments, the accommodation sector in Sub-Saharan
Africa is expanding rapidly. Accor, InterContinental Hotel Group,
Rezidor Hotel Group, which operates the Radisson Blu chain, and
Starwood are among those looking to capitalize on the continent's need
to expand its underdeveloped hotel industry. In the last four years,
Rezidor alone has added 33 hotels to its operations on the African
continent. Among projects in the planning stage are a $40 million
upscale Radisson Blu hotel in the Mozambican capital of Maputo and a
120-room, $42 million lodge in South Africa's Kruger National Park,
both expected to open in 2013.5
Investment in Angolan Banking May Prove a Crippling Deal for Portugal For Banco Espírito Santo, Questions Over Angolan Subsidiary @nytimes
LISBON -- For Portugal, the oil-producing Angola provided a lifeline
during a euro debt crisis that weakened its economy so much that the
country had to negotiate an international bailout in 2011.
For the troubled Portuguese financial institution Banco Espírito
Santo, however, Angola has turned out to be a crippling investment,
one that could require the government in Lisbon to do damage control
with the government in Luanda.
Banco Espírito Santo allowed its subsidiary in Angola, which is a
former Portuguese colony, to hand out at least 5.7 billion euros, or
about $7.7 billion, in loans. That amount is equivalent to 220 percent
of the subsidiary's deposits, whereas banks generally lend less than
100 percent of deposits. The Portuguese parent appears to be in no
position to retrieve those loans without the support of the Angolan
The bank's problems come as Portugal's most powerful family business
empire is crumbling on all sides. Among other issues, regulators and
prosecutors are investigating the possibility of accounting fraud and
abuse of privileged information in Portugal as well as Luxembourg and
other offshore centers used by the family group.
But for Banco Espírito Santo and the Espírito Santo family that owns
it, another "big question mark is Angola, because it's really not
clear what went wrong there," said Rui Bárbara, an asset manager at
Banco Carregosa, a private Portuguese bank.
Analysts expect Banco Espírito Santo to report a first-half loss on
Wednesday that could significantly erode or even wipe out its capital
cushion of EURO 2.1 billion, which would then require the bank to find
more funds. The bank's shares fell about 8 percent on Tuesday after
the publication Expresso said the bank would report a loss of about EURO 3
billion, which would be the largest loss reported by any Portuguese
After the Expresso report, Portugal's central bank issued a statement
saying it was confident that private investors, rather than public
money, could be used to cover any capital shortfall.
Just how deep a wound the Angola subsidiary, Banco Espírito Santo
Angola, or BESA, could inflict should become clearer when the bank
reports its results. In December, the Angolan state provided EURO 4.2
billion in guarantees to BESA, which is majority-owned by the
Portuguese bank. The guarantees did not raise alarm bells at the time,
and Angola has never explained why they were needed.
This month, José de Lima Massano, governor of Angola's central bank,
told lawmakers that there were unspecified problems with the Angola
subsidiary's loan portfolio, but that they were not sufficient to
threaten the country's financial system.
Banco Espírito Santo opened BESA in 2002, under the stewardship of
Álvaro Sobrinho, an Angolan businessman. In the process, the
Portuguese bank not only got a foothold in fast-growing Angola but
also built up ties to the government of José Eduardo dos Santos, who
has been president of Angola for 35 years.
Continue reading the main story
Two years after BESA was founded, Geni, an investment company founded
by officials with ties to the dos Santos government, took a 19 percent
stake in the Angolan bank.
In October 2012, however, BESA announced that Mr. Sobrinho would step
down as chief executive after a decade at the helm.
Mr. Sobrinho said by email that he left BESA to "devote my attention
to areas I have long been passionate about, including African-led
investment projects and development programs."
Still, Mr. Sobrinho then became executive chairman of Banco Valor,
another Angolan bank. One of his other financial sector investments is
Akoya, a Swiss asset management company that has been targeted by
prosecutors. That investigation is part of a money laundering case
that led to the arrest last week of Ricardo Espírito Santo Silva
Salgado, the family patriarch, a week after he stepped down as
executive chairman of the Portuguese lender.
The case was opened in 2011, but Mr. Salgado's recent arrest could
indicate that prosecutors are now also intent on re-examining the
Espírito Santo family's Angolan connections. Mr. Salgado, who was
released after posting bail of EURO 3 million, has denied wrongdoing and
has not been charged with a crime.
The near collapse of the Espírito Santo group has exposed a convoluted
corporate structure in which industrial assets were propped up by the
family's bank. That has led some Portuguese analysts and publications
to speculate that a similar situation occurred at BESA, in which the
strategy might have been used to issue questionable loans to Mr.
Sobrinho and others close to Mr. dos Santos.
Such suspicions are politically delicate in Lisbon because Mr.
Sobrinho joined an Angolan investment drive into Portugal, led by
Isabel dos Santos, the president's daughter, who has indirect holdings
in BPI, a Portuguese bank; NOS, a telecommunications company; and
Galp, an oil company.
Mr. Sobrinho's own portfolio includes stakes in Sporting Lisbon, a
soccer club, as well as in Portuguese news media assets like the
publications Sol and Correio da Manhã and Jornal de Negócios, a
Mr. Sobrinho said he never used BESA to finance his other investments.
"The notion that I could access BESA money or act alone is absolutely
untrue," he said. "The only payments I received from BESA were my
salaries and my bonus."
Mr. Sobrinho said BESA's balance sheet weakened in line with "a
broader trend for nonperforming loans to be on the rise in Angola."
The decision by Banco Espírito Santo to provide more credit to BESA,
even after its loan book started to balloon, was "a 100 percent
decision taken by their board," Mr. Sobrinho said.
Over all, BESA borrowed EURO 3.2 billion from its Portuguese parent,
according to BESA's accounts, which then helped to inflate its own
Banco Espírito Santo did not respond to emails requesting comment on
BESA. A spokeswoman for Ms. dos Santos said she had no shares in
either BESA or Geni, its state-linked shareholder.
Rui Ramos, a Portuguese political analyst, suggested that the problems
at BESA, while still unclear, probably stemmed from Mr. Salgado, the
family patriarch, losing control of the management of his Angolan
subsidiary, which instead "decided to declare independence and pursue
its own ambitions."
Still, Mr. Ramos said he expected that both governments would ensure
BESA would not damage a bilateral relationship that is "certainly the
closest since 1975," when Angola declared independence.
Angola has become an important export market for Portugal as tens of
thousands of Portuguese left their crisis-hit country to find work in
Angola. In return, Angolan investors went on a buying spree in
Portugal, bringing oil money to help keep afloat indebted Portuguese
The Angolan state is now expected to take control of BESA, to
safeguard a bank that has about a fifth of the country's banking
assets, at a time when Angola's economy has also cooled from the
double-digit growth it posted until 2009. Angola's economy grew 5
percent last year.
At this stage, Mr. Bárbara, the Portuguese asset manager, suggested
the best case for Banco Espírito Santo would be to write off its
equity investment in Angola, worth EURO 680 million at the end of 2013,
but somehow also recover BESA's loans.
BESA closed its 2013 fiscal year with EURO 5.7 billion of loans and EURO 2.6
billion of deposits -- a gap of more than EURO 3 billion that, according to
analysts, helps explain why the Angolan state offered EURO 4.2 billion in
guarantees in December.
In a recent report, the Royal Bank of Scotland said the lending risk
for Banco Espírito Santo was twofold: It would need to write down EURO 1.5
billion of bad loans not covered by the guarantees, or the guarantees,
signed for 18 months, would not be renewed by Angola.
António Samagaio, a university lecturer in auditing and accounting who
has studied BESA's accounts, noted that KPMG, the auditor used by the
Espírito Santos, cautioned about some aspects of BESA's business,
including its loan provisions, when the auditor cleared the bank's
2011 accounts, and that it was somehow ignored.
"It seems clear to me that the board and BESA shareholders could have
attacked early the problems about loan quality," Mr. Samagaio said.
The government is boosting spending on security after decades of "severe underinvestment" and wants to work more closely with the international community to help defeat the threat posed by terrorism
He rejected calls by opposition leader Raila Odinga for the withdrawal
of Kenyan forces from Somalia because he said it may lead to an
onslaught similar to the one by Boko Haram militants in northeast
"It is those types of actions, pulling out of Somalia, that can
ultimately result in a Boko Haram-type of environment in Kenya,"
Kenyatta said. "That is what we are determined to ensure doesn't
The raids in Kenya have scared off tourists, who contribute more than
$1 billion to Kenya's foreign-currency earnings, the second largest
after tea exports. Arrivals of holidaymakers fell 18 percent to 1.4
million last year.
The World Bank in June lowered its forecast for Kenya's economic
growth this year and next to 4.7 percent, from as much as 5.2 percent,
partly because of the decline in tourist arrivals. Fitch Ratings said
on July 25 that "rising security challenges from terrorist attacks
could contain future growth" as it affirmed the country's B+ credit
"Kenya will be prepared to work together with Amisom and the United
Nations as a whole and play her part whatever it may entail, because
the quicker we deal with this issue of al-Shabaab, the quicker we
bring stability to Somalia, the quicker we bring security to Kenya,"
EABL taps spirits to recoup revenue lost in Keg price rise @BD_Africa
An investor presentation by Diageo chief executive Ivan Menezes
indicated the decision to use spirits to target the low-end is based
on doubts that the Treasury would review its decision to raise taxes
on Senator Keg.
"Senator's performance in Kenya was impacted by the excise duty levied
in October. I don't expect any material improvement here until we lap
the duty increase this October and the brand will have a new base,"
said Mr Menezes' presentation.
Senator Keg had a tax exempt status since 2004 when it was introduced
in the market as an alternative to illicit alcoholic but the Treasury
imposed a tax in 2013 to raise revenues and enhance tax equity.
EABL says the taxes have resulted in some 5,000 Senator Keg retail
outlets shutting down. Operations at its Ruaraka plant have also been
scaled down and some 100 staff laid off. But the brewer is still
banking on the segment using other products.
"In East Africa we're using Jebel Gold to reach value-conscious
consumers. Accelerating the launch of the brand helped offset some of
the weakness on Senator Keg as we rolled it out using our bespoke
Senator route to consumers in Kenya," said Mr Menezes.
EABL is expected to release its full-year results next week.
EABL share price data here