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Wednesday 01st of August 2018 |
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The IMF shouldn't underwrite China's reckless lending via @bopinion Africa |
In all likelihood, Pakistan will seek a $12 billion bailout from the International Monetary Fund this week, its 12th since the 1980s and the largest one yet. This time, the IMF should think twice: Pakistan's debt crisis isn't the result of an economic shock. It's the result of reckless Chinese lending. Any new aid package will only worsen the risk of similar problems arising elsewhere.
Under its Belt and Road Initiative, China extends lavish loans to support infrastructure projects overseas. The catch is that these deals typically require that the money be spent on Chinese goods, services, and labor, and the repayment terms are generally opaque and often onerous.
Pakistan shows how things can go wrong. China is investing some $62 billion across a range of projects there, including roads, ports, energy plants and business parks. It sounds great -- until you look at the details. One Pakistani concession guarantees Chinese power plants annual returns of up to 34 percent for 30 years, all backed by the government. By comparison, Pakistan's 10-year government bond yields have generally fluctuated between 8 and 9 percent over the past year.
Worse, China is lending in U.S. dollars, so Pakistan must run an increasingly large surplus to repay its loans. Unable to export enough to generate a trade surplus, it has rapidly been depleting its foreign-exchange reserves, thus leading it into the arms of the IMF yet again.
Other recipients of China's largess have come under similar strain. Venezuela secured Chinese loans with oil, then found that it couldn't sell enough additional crude on global markets to generate the hard currency needed to expand production. After Sri Lanka was unable to repay loans, China took a 99-year concession on one of its ports. Malaysia, Myanmar and Nepal are all reconsidering major Chinese investments, and no wonder.
Belt and Road projects are so risky because their rationale is political, not economic. Enshrined in the Communist Party constitution in 2017, the program is a cornerstone of China's plans to expand its influence and soft power globally. Most Belt and Road lending is channeled through state-owned policy banks that are more concerned with advancing foreign-policy goals -- such as winning over new allies -- than with turning a profit.
One result is that credit is often extended with little regard for financial viability or international lending standards. This helps explain why so many of the early Belt and Road recipients have ended up in financial distress. As China expands the program around the world, other projects will almost certainly end in tears.
In considering its aid package, then, the fund should exclude any repayment of Chinese debt or demand an exceptional haircut on it. It must make clear that it distinguishes between commercial projects gone awry and foreign-policy ventures that look an awful lot like a debt trap. If China's leaders want to splurge overseas on dubious projects, that's their business. But the IMF shouldn't have to clean up when things go wrong.
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The Shadow of the Sun Africa |
The Shadow of the Sun (Polish: Heban, literally "Ebony") is a travel memoir by the Polish writer and journalist Ryszard Kapuściński. It was published by Penguin Books in 2001 with the English translation by Klara Glowczewska. Kapuściński spent nearly 30 years in various African countries such as Kenya, Rwanda, Nigeria, Ethiopia and more, detailing his accounts as a white, foreign visitor, of the development of the African states.[1]
Kapuściński's experience in Africa was unique, because he had the opportunity to stay with people of various classes in society, staying with ministers, as well as peasants in rural villages which gave him an honest perspective on what was the current situation of the continent.[2]
The early pages of The Shadow of the Sun, a compendium of further adventures in Africa, find Ryszard Kapuściński in Dar es Salaam in 1962, where he hears that Uganda is about to gain independence. He and a friend, Leo, promptly set off for Kampala via the Serengeti, with its teeming wildlife. "It's all improbable, incredible. As if one were witnessing the birth of the world, that precise moment when the earth and sky already exist, as do water, plants, and wild animals, but not yet Adam and Eve." They have no maps, they're lost, and they're confronted with an enormous herd – "stretching almost to the horizon" – of buffalo. They press on regardless.[1]
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Ryszard Kapuscinski, Africa |
“Our world, seemingly global, is in reality a planet of thousands of the most varied and never intersecting provinces. A trip around the world is a journey from backwater to backwater, each of which considers itself, in its isolation, a shining star. For most people, the real world ends on the threshold of their house, at the edge of their village, or, at the very most, on the border of their valley. That, which is beyond is unreal, unimportant, and even useless, whereas that which we have at our fingertips, in our field of vision, expands until it seems an entire universe, overshadowing all else. Often, the native and the newcomer have difficulty finding a common language, because each looks at the same place through a different lens. The newcomer has a wide-angle lens, which gives him a distant diminished view, although with a long horizon line, while the local always employs a telescopic lens that magnifies the slightest detail.”
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- Ryszard Kapuscinski, The Shadow of the Sun Africa |
“Herein lies the attractiveness of ethnic agitation: its ease and accessibility. The Other is visible, everyone can recognize and remember his image. One doesn’t have to read books, think, discuss: it is enough just to look.”
“Dawn and Dusk - these are the most pleasant hours in Africa. The sun is either not yet scorching, or it is no longer so - it lets you be, lets you live.” ― Ryszard Kapuściński
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Forget collusion. Conspiracy's the watchword in Mueller's filings Law & Politics |
Donald Trump and his circle have long focused on a different buzzword, saying that there was no collusion with Russians, and subsequently that if there was collusion, Trump wasn’t aware of it. Now comes Trump attorney-cum-spokesman Rudy Giuliani. ”I don’t even know if that’s a crime, colluding about Russians,” Giuliani told CNN this week. Trump echoed that in a tweet: “Collusion is not a crime.”
That is at once technically correct and, according to former federal prosecutor Mimi Rocah, beside the point.
“To say there’s no crime of collusion means nothing,” said Rocah. “That label isn’t in the criminal statutes. But that doesn’t matter because the conduct that underlies collusion can be, under certain circumstances, conspiracy to defraud the U.S.”
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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice International Trade |
If volatility spikes, positions are going to be reduced en masse. Or to put it another way and to borrow the lyrics from the Eagles Hotel California:
Mirrors on the ceiling, The pink champagne on ice And she said “We are all just prisoners here, of our own device” Last thing I remember, I was Running for the door I had to find the passage back To the place I was before “Relax,” said the night man, “We are programmed to receive. You can check-out any time you like, But you can never leave! “ What is clear is that we are at the fag-end of this party.
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Congo's Kabila discusses possible successors in private meetings Africa |
Democratic Republic of Congo President Joseph Kabila is meeting members of his ruling coalition to discuss who will be its candidate in presidential elections this year, party and government officials said.
The central African nation is scheduled to hold parliamentary and presidential votes on Dec. 23 that have been delayed since 2016 by the electoral commission’s inability to organize them. While the constitution bars Kabila from seeking a third term, he’s yet to say whether he’ll be a candidate. Attempting to extend his 17-year rule risks destabilizing Africa’s biggest copper and cobalt producer, which hasn’t had a peaceful transfer of power since independence in 1960.
Representatives of about a dozen groups that make up the Common Front for Congo, known as the FCC, were invited individually to Kabila’s farm outside the capital, Kinshasa, for consultations that are ongoing, the officials said Monday. Two said he asked each group to come back to him with a list of four preferred potential presidential candidates.
“We are in deliberation to think about the profile of the candidate,” said Ferdinand Kambere, the deputy permanent secretary of Kabila’s party, the People’s Party for Reconstruction and Democracy. The PPRD is expected to deliver its four names on Tuesday, Kambere said, without saying who it will nominate.
Kabila said July 19 his commitment to the constitution is “unequivocal,” but his persistent refusal to rule himself out of the next election is fueling fears among his opponents and the international community that he plans to change or reinterpret the rules. Several senior allies have said the president has the right to run in December, arguing a modification adopted in 2011 introduced a completely new constitution.
Tryphon Kin-Kiey, a former minister of parliamentary affairs and senior FCC member, said his representatives met Kabila on July 28.
“Lots of groups will name him among the four names,” Kin-Kiey said. “Some groups give four names; others give only one name, the name of Kabila.” Kin-Kiey wasn’t present at the meeting because he was abroad, but was fully briefed on what took place.
Kabila’s deputy chief-of-staff, Jean-Pierre Kambila, said Kabila didn’t request specific names of potential FCC candidates. Instead, “he asked them to reflect on the criteria” that should apply to choosing a candidate, according to Kambila.
Congo Communications Minister Lambert Mende said he was at the president’s farm on Monday and his group had not at that point been asked to prepare a list of names.
Registration for presidential candidates opened last week and the final day to file applications with the country’s electoral commission is Aug. 8.
“The candidate will emerge naturally,” Kambila said. “There are still eight days.”
A poll released Tuesday by New York University’s Congo Research Group found that Katumbi and Felix Tshisekedi, head of Congo’s largest opposition party, would score best in an election -- both securing 19 percent of the vote. Bemba would come third with 17 percent, while only 9 percent of voters would choose Kabila, according to the survey.
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NEW CRG/BERCI POLL: CONGOLESE EXPECT A FLAWED, CONTENTIOUS ELECTION @congoresearch Africa |
We are releasing the poll days before both Bemba and another opposition leader, Moise Katumbi, are expected back in the country from exile. It suggests that :
The December presidential elections will be highly contentious. Sixty-two percent of those polled do not trust the National Independent Electoral Commission (CENI) to carry out free and fair elections, and the same percentage does not have faith that courts will decide electoral disputes fairly. A plurality (45 percent) says that if President Kabila’s candidate wins, they will not accept the results. Around half of the respondents said they would participate in a demonstration if elections are rigged or delayed. In the race for the presidency, the opposition is still far more popular than the ruling coalition. However, Felix Tshisekedi, Jean-Pierre Bemba, and Moise Katumbi are now in a statistical tie at between 17 and 19 percent. Bemba has climbed 16 percent since our November 2017 poll. If the opposition does not unite and the electorate splits its vote, our results indicate that the ruling coalition could win as large a share of the vote as each opposition candidate. Indeed, if all of the potential candidates in President Kabila’s coalition were to run, they would together obtain around 19 percent of the vote (15 percent without Adolphe Muzito). Should the opposition have a common candidate? The question has become all the more important after Bemba’s release; 57 percent of the respondents would like the opposition to unite behind one candidate for the presidential election. Respondents favored Moise Katumbi (28 percent) and Felix Tshisekedi (26 percent), and Bemba (20 percent) for that position. There is widespread approval for the release of Jean-Pierre Bemba from the International Criminal Court, a decision published several weeks before the poll took place. Eighty-three percent thought his acquittal was a good thing, compared with 66 percent who thought his sentence was unfair in the poll we conducted in October 2016. Nonetheless––or perhaps because of his acquittal––a majority of Congolese (68 percent) still have a good opinion of the International Criminal Court (ICC). The campaign for a third term for Kabila is gaining steam. Compared with last February, the number of people who would vote for Kabila has increased slightly from 6 to 9 percent at the national level, and from 21 to 37 percent in the former Province Orientale, his last and only stronghold. Finally, respondents are fairly evenly split on whether elections should be delayed so that the process can be rendered more credible. Thirty-six percent are not in favor of revising the voting register to eliminate irregularities and a similar percentage says it does not want to change the distribution of seats to reflect corrections to the electoral law. Still, despite their impatience, 66 percent of the respondents are not in favor of electronic voting machines.
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ANC resolves to push through amendment to #SouthAfrica constitution to further plan for land seizure without compensation - rand plunges @BBGAFRICA Africa |
South Africa’s ruling party decided to complete a proposed amendment to the nation’s constitution to make it clearer under what conditions land can be expropriated without compensation, prompting the rand to plunge.
This brings the African National Congress closer to the populist Economic Freedom Fighters party, after the ANC said earlier that land redistribution will only be done in a manner that doesn’t harm the economy, agricultural production or food security. In May, the party said the government should test the nation’s current laws on land because it may not be necessary to change the constitution to ensure expropriation without payment.
Proposals to change the constitution has raised concern among some investors that it signaled a shift to a radical land-reform strategy. The rand erased gains against the dollar after Tuesday’s announcement, and was 0.8 percent weaker at 13.3739 at 7:37 a.m. in Johannesburg Wednesday.
While the constitution’s property clause currently allows the state to expropriate land with just and equitable compensation and also expropriate without compensation in the public interest “it has become patently clear that our people want the constitution be more explicit about expropriation of land without compensation, as demonstrated in the public hearings,” President Cyril Ramaphosa said in a televised speech.
The ANC will contest national elections next year in the first ballot since the opposition won control of several key municipalities, including the biggest and richest city, Johannesburg, and the capital, Pretoria, in 2016.
“This is a surprising and premature announcement by the ANC because parliament is still in its review process on changing the constitution,” Lawson Naidoo, executive director of the Council for the Advancement of the South African Constitution, said by phone. “Parliament still has to gather and evaluate the many submissions that have been made. We are in a pre-election phase and the ANC announcement is part of that.”
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@CBKKenya now says shilling does not need @IMFNews guarantee @BD_Africa Kenyan Economy |
The Kenyan economy is well protected against capital outflows and does not need the International Monetary Fund’s (IMF) precautionary credit facility that Kenya could draw in case of distress, Central Bank of Kenya (CBK) Governor Patrick Njoroge says.
Treasury and other State officials are meeting with the IMF staff team this week in a fresh round of review that could see Kenya allowed or denied further access to the standby facility.
But speaking at a news conference in Nairobi on Tuesday, following a Monetary Policy Committee interest rate decision on Monday, Dr Njoroge said the facility would be crucial to provide liquidity to the financial system, if necessary.
However, he added that the country’s external position was strong at the moment, underpinned by strong remittances and exports.
The governor said a “comfortable” level of foreign reserves, which stood at $8.87 billion (Sh891.4 billion), equivalent to 5.92 months of import cover earlier this month, compared to $7.06 billion (Sh709.5 billion) equivalent to 4.73 months of import cover at the beginning of this year, provides another layer of defence against a decline or retreat in capital flows.
“The IMF is in town and they are reviewing our performance. We are confident in terms of our objectives…but at this point, we don’t need the money from that perspective. We have 5.9 months of import cover. We are pretty comfortable in that sense,” he said.
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Diaspora inflows grow to record Sh26.8bn in June @bd_africa Kenyan Economy |
Diaspora remittances rose 72 per cent in June to a record Sh26.8 billion ($266.2 million) compared to a similar month last year, reflecting lower costs of remitting money and the effect of the tax amnesty for remitting assets stashed abroad. Latest data from Central Bank of Kenya (CBK) shows Kenyans living abroad have now sent home a total of Sh138.6 billion in the first six months of the year, up from Sh89.2 billion in the corresponding period in 2017. “The 12-month average inflows to June 2018 sustained an upward trend to $203.9 million ((Sh20.5 billion) from $146.6 million (Sh14.7 billion) in the 12 months to June 2017.” Remittances have helped the shilling appreciate by 2.7 per cent against the greenback this year.
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