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Thursday 25th of July 2019
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Morning Africa |
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Macro Thoughts
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"We sometimes have a flash of understanding that amounts to the insight of genius, and yet it slowly withers, even in our hands - like a flower. The form remains, but the colours and the fragrance are gone." - Robert Musil Africa |
“He is capable of turning everything into anything--snow into skin,
skin into blossoms, blossoms into sugar, sugar into powder, and powder
back into little drifts of snow--for all that matters to him,
apparently, is to make things into what they are not, which is
doubtless proof that he cannot stand being anywhere for long, wherever
he happens to be.” ― Robert Musil
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@realDonaldTrump and @ImranKhanPTI were all smiles when they met earlier this week Law & Politics |
The new bilateral bargain seems to be this: if Islamabad can deliver
Washington an honourable exit from Afghanistan that addresses its main
counterterrorism concerns, the Trump administration will, in turn,
restore military aid and take active steps to expand trade. Against
the backdrop of the intensifying US-China rivalry, Washington’s
relationship with Islamabad is of particular consequence for Beijing,
given the decades-long alliance between China and Pakistan. Repeated
suspensions of US military assistance have pushed Islamabad further
into Beijing’s arms, driving the overall surge in Chinese weapons
exports. From 2008-17, Pakistan was the No 1 buyer of Chinese arms
sales, with its expenditure of about US$6 billion, accounting for 42
per cent of China’s total weapons sales. In Pakistan specifically,
China’s economic assistance, diplomatic support and military aid
offers an alternative to the “unreliable” US, enabling Islamabad’s
deterrence of arch-rival New Delhi and “strategic defiance” of
Washington.However, China may be hedging on its “no strings attached”
approach when it comes to Pakistan. The two countries are now each
other’s top allies and Pakistan’s security and stability are of utmost
importance to China. Beijing’s investment – physical and reputational
– is rapidly expanding via the China-Pakistan Economic Corridor
(CPEC), which is linked to the vast belt and road infrastructure plan.
As a result of irresponsible economic planning by Pakistani
policymakers, though, the CPEC has contributed to a balance of
payments crisis in Pakistan. Beijing has intervened, ramping up
short-term lending to prop up the Pakistani rupee. However, the fact
there was no broader financial bailout from China has compelled
Pakistan to enter yet another programme with the US-dominated
International Monetary Fund, which has pushed it to make some painful
economic reforms.
Conclusions
Gwadar Port and CPEC is China's geopolitical Escape Hatch.
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Mauritius is a country of white coral beaches and low mountains located off the southeast coast of Africa in the Indian Ocean. @qzafrica @Lattif Africa |
Since gaining independence in 1968, the country has been dubbed a
miracle: a stable democracy with a robust economy that provides free
education and healthcare to all its 1.3 million inhabitants. This
middle-income country is often one of the few positive exceptions on
global development indexes for Africa. Yet this success story has long
been shadowed by financial secrecy, with the island state overseeing
legal but questionable processes that have allowed global companies to
siphon millions of tax dollars away from low-income African nations.
The journey to becoming an offshore financial hub started in 1989 as
Mauritius sought to move away from agricultural dependence and
diversify its economy. Positioning itself as a “gateway to Africa,”
officials embarked on a plan to become the jurisdiction of choice for
investors and multinationals seeking to invest in Africa. This plan
was solidified through the enactment of the 1992 Mauritius Offshore
Business Activity Act, which enabled foreign entities to incorporate
companies with limited public disclosure, extremely low or no
taxation, besides high levels of privacy and asset protection.
Mauritius also signed double tax avoidance agreements (DTAA) with 46
states worldwide, 18 of them from Africa. These bilateral agreements
encourage investment by ensuring investors from one country operate in
another without being taxed twice on the same income. But they also
paved the way for abuse, allowing multinationals to shield their
assets and profits from the prying eyes of authorities and the public.
In the three decades since Mauritius turned itself into a desirable
financial hub, the country has been criticized for impoverishing
African governments and widening wealth inequality. Even as the number
of millionaires in the island rapidly grew, the United Nations
Economic Commission on Africa in 2013 censured Port Louis for
deepening the exposure of African states to illicit financial flows.
In 2015, the European Union placed Mauritius on its top 30 tax
blacklist nations; Oxfam listed it as one of the world’s worst tax
havens in 2016; and the 2018 Financial Secrecy Index gave it a 72.3
score out of 100 for enabling questionable tax avoidance maneuvers.
Offshore legal services provider Appleby and accounting firm Deloitte
have both been accused of taking advantage of these lenient tax
measures and advising their clients—including Yale University—on how
to maximize their profits.
The structure of these treaties has also run into legal quagmires,
especially in India, where the government couldn’t collect $2.2
billion from Vodafone’s acquisition of an Indian operating company
through offshore firms including one in Mauritius. In March, Kenya’s
high court ruled that the legal notice that brought the two nations’
joint DTAA into operation had not been laid before parliament as
required by law and was thus invalid.
Despite the assurances, Cobham says “it’s hard to put a number on the
damage that Mauritius individually has done to other African
countries. This is partly a “data problem,” he argues, because “we
still lack detailed numbers on the scale of dividend, interest and
royalty payments that leave other African countries under their
treaties with Mauritius.”
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Sudan military says it thwarts coup attempt, arrests senior officers @Reutersafrica Africa |
Sudan’s military said on Wednesday that it had thwarted a coup attempt
and arrested an unspecified number of senior officers in connection
with a plot to restore the party of ousted President Omar al-Bashir to
power.
The military said in a statement: “The failed attempt aims to abort
your glorious revolution and to return the former National Congress
regime to power, and to disrupt the path before the expected political
solution that aims to establish a civilian state”.
It said the coup attempt involved General Hashim Abdel Mottalib Ahmed,
head of the joint chiefs of staff; a number of high-ranking officers
from the armed forces and the National Intelligence and Security
Service; and leaders of the National Congress Party and the Islamic
Movement party Bashir also headed. Among those detained was General
Bakri Hassan Saleh, who served as first vice president and prime
minister until months before Bashir was ousted, sources close to the
military council said. He was a leading figure in the 1989 coup that
brought Bashir to power and was one of his closest confidants
throughout his 30-year rule.
“These are fabricated attempts by the (Transitional Military Council)
to strengthen their grip on power,” he said.
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