and air control centre and effectivelyleaving Libya with no internationalflights. The airport came under renewedattack on the 14th. The control towerwas hit, along with an aircraft belong-ing to private Libyan carrier BuraqAirlines.

The United Nations (UN) pulled outdozens of staff from Libya citing securityreasons. Local TV footage suggested theattacking rebels were from the westerncity of Misrata. The former rebel Zintanmilitia is now well established in Tripoli,controlling the airport and military sites.Zintan forces and Misratis had been puton the state payroll in an unsuccessfulbid by the government to secure theircooperation.

Tripoli has seen a surge in kidnappingsbut has been mostly spared the kind ofviolence that has plagued Benghazi(east), however al-Jazeera reported (22/6) that carjacking was becoming majorproblem in the capital with an under-equipped police force working withoutbasic security infrastructure. (Sources asreferenced in text) Weathering the storm

p. 20411

MOZAMBIQUEAid Row Escalates

The country sees swingeing cuts inforeign aid cut due to donor discontent.

The governing Frelimo is engaged in anincreasingly bitter row with foreigndonors over loans and public spending.

Foreign donors have cut aid to Mozam-bique’s government by 11% comparedto 2013 amid concerns over corruption.The group of donors who contribute aiddirectly pledged $275m in aid in June,down from $309m in 2013.

Norway decided to stop its commitmentaltogether, joining Belgium, the Nether-lands and Spain who all pulled out fromdirect budget support recently. Britainand Germany, which together with oth-ers finance about 30% of governmentspending, have cut their budget supportfor 2015.

AFP quoted Italy’s ambassador RobertoVellano as saying “concerns over fiscaltransparency, fighting corruption andother outstanding issues” had led “somepartners to think they could no longerconfirm their participation in this kindof support”.

The latest reduction partly reflected aninternational trend to “decrease thismodality of aid” in light of the globaleconomic downturn, said Vellano. Buthe said a spat between donors and thegovernment in 2013 over a controversialstate-backed bond sale had contributedto donor discontent.

With the advent of the oil and gasbonanza in mind, Maputo has beenborrowing and spending massively withscant regard for what it sees as irksomeforeign demands for probity, account-ability and fiscal discipline, says AfricaConfidential (27/6). Some donors saythose loans are of questionable valueand low transparency – and that muchof the spending does not reflect devel-opment priorities.

Donors had been incensed over the$800m bond to finance the controversialpurchase of a tuna fishing fleet on behalfof a state company. In the wake of thescandal an action plan aimed at improv-ing fiscal transparency has been drawnup.

The government has earned substantialsums from capital gains tax payments byforeign companies buying and sellingoffshore blocks. Yet the income fromliquefied natural gas exports and associ-ated development is still many years off.Budget support will continue to be acrucial source of revenue for publicexpenditure for some time to come. Noone expects income from LNG before2020, even if stagnant coal exportsincrease substantially. Many feel thatthe government had been counting itschickens before they were hatched.

Aid has not dried up completely, how-ever, AFP pointed out (13/6). Somebenefactors are increasing funds to ear-marked sectors such as agriculture andhealth instead of giving it to the govern-ment directly.

Total foreign aid commitments in mid-June came to $560m. (Sources as refer-enced in text)

SOUTH AFRICAContinuing Labour Volatility

Strikes put the economy on the ropes.

The National Union of Metalworkers ofSouth Africa (NUMSA) rejected thelatest pay offer from engineering andsteel sector employers on July 13th,saying black workers were still under-paid, and threatened to intensify its two-week old strike.

NUMSA rejected the employers’ latestoffer of a 10% increase in 2014, 9.5% in2015 and 9.0% in 2016 .Irvin Jim,NUMSA general said the union wouldnot accept anything less than a 10%annual rise over three years at the veryleast.

The Steel and Engineering IndustriesFederation of South Africa (SEIFSA),which represents employers in the sector,said it was disappointed with NUMSA’srejection of what it called its “very goodfinal offer”.

“We have now done everything that wecould possibly have done to end thestrike,” chief executive Kaizer Nya-tsumba said in a statement, adding thatthe SEIFSA leadership had exhausted itsmandate.

The strike in the metals and engineeringsectors by over 200,000 NUMSA mem-bers began just days after a five-monthplatinum mining strike ended. Severalsmaller unions have since joined in.

A continued or wider strike by NUMSAwould put further pressure on SouthAfrica’s economy, which contracted inthe first quarter of the year as thecrippling five-month strike in the plati-num sector hit mining and manufactur-ing output.

The stoppages are having a knock-oneffect on car manufacturing firms, ascomponent suppliers are participating inthe strike. US motor company Ford hassuspended production at one of its plantsand the industrial action has forcedGeneral Motors to close its assemblyplant in Port Elizabeth. Japanese car-maker Toyota plans to follow suitbecause of supply chain problems relatedto the stoppage, Reuters reported (14/7).Mercedes Benz said supply lines to itsassembly factory were reaching “critical”stress levels and an industry body warnedmore car-makers could be forced to haltproduction. BMW has said that nine ofits more than 200 suppliers were hit bythe industrial action and the companyplanned to reduce its production shifts todeal with metal shortages. Other compa-nies affected are construction companiesMurray & Roberts and Aveng Ltd, whichare working on the construction of twomajor power plants for state power utilityEskom.

Separately, about 200 workers downedtools at unlisted Cape Town-based winemaker DGB, demanding a 10% wagehike, union leaders said. DGB is offeringa 7% increase.

Ratings agency Standard & Poor’s cutSouth Africa’s credit rating in June whileFitch put it on negative watch, both citingpoor growth prospects mainly because ofstrikes. Moody’s has warned that thestrike could tip the country’s credit ratinginto junk status and risked paralysing“nearly one third of the manufacturingsector”. It said the strike would damagethe country’s “already deteriorating rep-utation among investors.”

“Continued weak investment, exportsand overall growth will pose seriouschallenges to the government’s effortsto rein in its budget deficit and stabiliseits debt metrics, a credit negative for theeconomically troubled country,” PANA(7/7) cited a Moody’s statement assaying.

A B C

© 2014 John Wiley & Sons Ltd.

June 16th–July 15th 2014 Africa Research Bulletin – 20451

Axel Schimmelpfennig, the InternationalMonetary Fund (IMF) senior represen-tative in South Africa, told Business Dayhe expected the organisation to “revisedown South Africa’s growth outlook for2014, in line with other observers.”

“South Africa needs high and inclusiveprivate sector-led growth to foster jobcreation and reduce income inequality,”Schimmelpfennig said.

The long-running platinum strike for-mally ended on June 24th, almost exactlyfive months after it started, when theAssociation of Mineworkers and Con-struction Union (AMCU) and employerssigned a three–year wage deal. Some20,000 mine workers at a mass meetingin Rustenberg on June 23rd gave theirwholehearted approval to the deal. Thetwo lowest-paid categories will receive anapproximate 13% increase (or R1,000 amonth in cash terms) and higher catego-ries a 7.5–8% rise. However, despiteexpressing satisfaction with the deal,mine workers will need several years toregain the R10.7bn ($1bn) in lost wages.Adding in production losses of R24bn,the strike has cost approximately 1% ofGDP, of which the bulk is unrecoverable.

The settlement will boost mining pro-duction and exports in the second half,and underpin a modest recovery in therand. However, the lengthy periodneeded to restart platinum operationsmeans that the threat of a further strikecontinues to pose downside risks to 2014growth forecasts, according to TheEconomist (24/6)

Lacklustre State-of-Nation Address

President Jacob Zuma’s seventh State ofthe Nation address received a mixedresponse on June 18th with some sayingnothing was new.

Zuma urged mining companies to domore to improve workers’ living condi-tions and fix relations with unions asthe five-month strike had crippled theplatinum belt and hurt economicgrowth.

Zuma acknowledged the country’s stag-nant economy and committed to directpersonal involvement in addressing thechallenges in the troubled mining sector,Pretoria News reported (19/7). However,he did not make any specific reference tothe recent downgrading by rating agen-cies or to the contraction of the economy.Africa Confidential (18/6) said theaddress was a “disappointment”; it putno more flesh on the bones of the term‘radical economic transformation’, offer-ing just a few hints in preference to policydetail. It was up to ANC SecretaryGeneral Gwede Mantashe to elaborate.He hinted that legislative changes on theLabour front could include measures to

ensure that no strike could go on as longas the platinum one had.

Zuma spent more of his speech on theenergy sector, addressed the energyshortages in the country, saying hisgovernment was looking beyond itsborders for energy security. He spokeof developing a ‘sustainable energy’ mixof coal, solar, wind, hydro, gas andnuclear energy. (Sources as referenced intext) Shrinking economy p. 20403

SOUTH SUDANFamine ‘Almost a Certainty’

The economy is another casualty inAfrica’s “worst crisis” as the conflictcauses a food emergency.

Famine will break out within weeksunless there is massive funding for foodaid, relief agencies warned on July 3rd.The United Nations (UN) has around40% of the cash it needs, with a shortfallof over $1bn, with almost four millionpeople in need of aid, and an aid efforthas so far reached half of those in need.The International Committee of the RedCross (ICRC), which has begun its firstair drops of food for two decades, saidthere were already “alarming signs” ofmalnutrition.

The US Agency for International Devel-opment (USAID)’s “complex emer-gency” map shows the whole countryexcept Western Equatoria as at least“stressed” for food security and most ofit at “crisis” or “emergency” level. Thenext category is “catastrophe/famine”and that is likely to be declared in July.“It is almost a certainty,” USAID’sAssistant Administrator for Democracy,Conflict and Humanitarian Assistance,Nancy Lindborg told Africa Confidential(4/7).

Aid group Oxfam said South Sudan was“currently Africa’s worst crisis. “Theworld’s attention is elsewhere as Africa’sworst humanitarian catastrophe des-cends into more misery. We will bestaring into the abyss and fail to averta famine if funds do not start arrivingsoon to help the people of South Sudanat risk of starvation, disease and vio-lence,” said Winnie Byanyima, OxfamInternational chief.

The fighting has displaced more than amillion people, and as farming has beendisrupted there are fears the countrycould slide into famine. Even in thecapital Juba, there are consequences,reports BBC News online (10/7).

“People are not earning money fromwhat they’re doing and the prices ofeverything have increased,” says MikeIsmallah, who works at the KonyoKonyo market in the capital, Juba.

Kau Nak, the South’s charge d’affairesin Khartoum, meanwhile said life-savingaid could move from Sudan to its formerenemy. The two countries signed amemorandum of understanding on July8th for the UN World Food Pro-gramme,WFP to deliver food to north-ern South Sudan.

Departing UN representative HildeJohnson issued a scathing attack onthe country’s leaders, calling them a“self-serving elite” responsible for alooming “man-made famine”. Leadersare sick with “the cancer of corruption”and the country’s billions of dollarsworth of oil are “a curse rather than ablessing”, she said.

In a bid to starve the rebels intosubmission, the government’s SudanPeople’s Liberation Army (SPLA) hasblocked food deliveries to areas held byCommander Riek Machar Teny Dhur-gon’s SPLA in opposition and its alliedmilitias. This is a war crime underinternational law and could attract sanc-tions, which Washington is threateningto expand beyond the Republican GuardCommander, Major General MarialChanuong Yol Mangok, and formerVice-President Riek’s ally, Peter GatdetYaka, says Africa Confidential.

Needless to say, the war is damaging allaspects of life in South Sudan, includingthe economy. Production in UnityState, one of the country’s two oilareas, has all but stopped. The rebelshave said they are targeting the otherarea, in Upper Nile state, home toPaloich and other oilfields. Oil produc-tion is now less than half of the 350,000barrels per day the country was pro-ducing at independence.

This is not enough for South Sudan,”economist Peter Biar Ajak says. “Thefinancial situation is quite precarious.”

Predictions that South Sudan’s econ-omy would grow by 35% in 2014 haveproved to be tragically wide of themark.

Campaign group Global Witness said thegovernment had borrowed the “monu-mental sum” of $1bn in 2014 from oilcompanies to “pay off last year’s debts”,about the same amount the UN isappealing for donors to fund in termsof aid. (Sources as referenced in text)Humanitarian intervention p. 20412

ZIMBABWEFragile Economic Situation

The Finance Minister says currentproblems are not insurmountable.

The International Monetary Fund(IMF) warned on June 23rd that theeconomy remained fragile with a “pre-

A B C

© 2014 John Wiley & Sons Ltd.

20452 – Africa Research Bulletin Policy and Practice