Botswana’s ruling party has rid itself of the nationalism, protectionism, and cronyism of the previous administration. It will now seek to liberalise the economy, diversify away from mining sector dependence, and boost development of agricultural southern regions.
Islamist militants are capturing territory in north-central Burkina Faso, while steadily advancing towards the capital. Security forces are increasingly reluctant to engage militants and mutinies are becoming more frequent, while political pressure is mounting on the government. Coup plots abound and street protests will intensify ahead of next year’s elections.
Although Abu Bakr Al Baghdadi played little more than a symbolic role within Islamic State affiliate groups in Africa, his death is likely to achieve the undesired effect of increasing the terrorism threat in many African countries primarily through renewed intent and unchanged capabilities.
Zambia’s finance minister is taking firm steps to stabilise the economy and to resume negotiations with the IMF on a credit facility. However, he will face political pressure to maintain spending levels and miss fiscal deficit targets, while a looming power sector collapse may further undermine the country’s already distressed economy.
Regardless of the outcome of next week’s elections, Botswana faces its most significant political shift in over 50 years. The transition comes just in time as the economy is slowing and pressure is mounting to reform beneficiation policies in the mining sector.
EXXAfrica unpacks the data and trends behind the main insurance policies available to commercial entities in South Africa, debunking popular opinions around strikes and terrorism in particular.
Media reporting and click-bait headlines largely drive popular opinions around the primary security threats facing commercial entities in South Africa. In particular, significant attention is often given to the incidence and impact of strikes, riots, and civil commotion, and more recently, terrorism. Our latest analysis briefing delves into these threats, providing an historical overview of each peril along with a current assessment of the available data to forecast each threat.
Industrial action becomes less frequent but more severe
Strikes or industrial action in South Africa have gained infamy, primarily as a result of major incidents such as the 2010 public and private sector strike that caused 20,674,737 working days to be lost in one year. The year 2010 was characterised by a number of work stoppages in both the public and private sectors. Six country work stoppages across sectors contributed to the high number of workdays lost according to the Department of Labour.
Instances of violence also became more frequent and strikes were more protracted. In 2012, the Marikana ‘Massacre’ involved the deaths of 34 mineworkers. In 2014, a platinum strike involved 70,000 mineworkers and lasted five months. The effectiveness of such incidents and the seeming strike culture in the country is largely as a result of the historical (political) strength of trade unions and the rights afforded to them in the Constitution.
The role that South African labour unions played in the dismantling of Apartheid is well known. As a result of this, trade unions continue to enjoy a privileged position in politics. For example, unions have a voice in the National Economic Development and Labour Council (NEDLAC), which is a statutory body that brings together government, business, and labour unions to find consensus on policies and legislation.
According to the Department of Labour, there are over 180 registered trade unions, representing over three million workers that constitute around 25 percent of the formal workforce in the country. The Constitution further affords these unions the right to call strikes, during which their workers are protected from being dismissed – allowing for extended actions.
However, while South Africa has garnered much international attention for industrial action, studies conducted in the first half of the decade show the nature of strikes in the country is not dissimilar from other emerging economies – such as Brazil and India – and occasionally even developed economies, such as the US. More recently, research conducted by the Mandela Initiative in 2017 shows that the frequency of strikes has actually decreased since 2000 – as demonstrated in ‘Figure 1’.
The Department of Labour attributes this drop to the improvement in labour relations via various legislation. A drop in unionisation rates over the past 20 years has also likely driven this decrease. Unionisation of the workforce peaked in 1997 at 45.2 percent of total employment. At 25 percent today, South Africa is now more on par with developed economies, such as Canada and the UK.
On the other hand, while the frequency of strikes has decreased, research shows that when industrial action does occur, it does so more intensely with a higher number of workdays lost per incident – demonstrated in ‘Figure 2’. This finding is supported by data released by the South African Special Risk Insurance Association (SASRIA). According to its 2018 Integrated Report, in the financial year that ended 31 March 2018, it paid net insurance claims of ZAR 663 million (around USD 45 million) – a 15.5 percent increase on the previous year with a marked increase in claims severity.
Looking more closely at which sectors are most affected in this regard, SASRIA notes that its biggest claims come from strikes and protests relating to service delivery. In terms of strikes, the mining, manufacturing, transport, wholesale or retail trade, construction, and agricultural sectors generally have the highest share of striking workers on average – driving up this impact.
Service delivery protests buck the trend
Data around service delivery protests suggest that such incidents do not just high impact, as indicated by SASRIA above, but are actually occurring more frequently – bucking the industrial action trend. In this regard, SASRIA notes that between 2010 and June 2018, South Africa experienced 1,330 violent service delivery protests spurred on by service delivery failures, corruption, and growing youth unemployment. This situation worsened in 2019 where according to research conducted by Municipal IQ; by June 2019 alone, South Africa had already recorded 140 service delivery protests countrywide, compared to 137 in 2016 and 82 in 2011.
Virtually all of these incidents, according to SASRIA, were exacerbated by criminal elements driving up the propensity for violence, as shown in the recent xenophobic attacks in the country (See SPECIAL REPORT: SOUTH AFRICA ANTI-IMMIGRANT VIOLENCE TRIGGERS AFRICAN RETALIATION). Such service delivery protests predominantly occur in Gauteng and the Western Cape provinces – the two major commercial hubs in the country.
An established history of terrorism
While South Africa has garnered significant global attention for strikes, riots and civil commotion, little focus has been given to the terrorism threat within the country. Despite this, there is a long and dynamic history of such a threat in even post-Apartheid South Africa.
Looking firstly at the domestic threat, ie a homegrown threat, it is worthwhile recalling that South Africa was the site of Islamist bomb attacks in and around Cape Town as recently as the 1990s and 2000s. These incidents carried out by a group known as the People against Gangersterism and Drugs (PAGAD), included targeted attacks against Planet Hollywood at the V&A Waterfront in 1998, a Wynberg synagogue in 1998, and a bagel shop in Seapoint in 2000, among others.
South Africa also has a history of right-wing radicalisation movements, particularly among the Afrikaner community. Attacks in post-Apartheid have been attributed to a group known as the Boeremag in particular and have included a series of nine bomb attacks that exploded over two days in a Johannesburg based township in 2002 and a foiled plot to stage bomb attacks in townships on the eve of the Football World Cup in 2010.
As both PAGAD and Afrikaner radical movements have diminished in South Africa over recent years, the focus has now shifted to the transnational terrorism treat. In this regard, it is well known that South Africa is used as a transit point for global terrorist groups. Various leaks by Al Jazeera in 2015, for example, pointed to this specifically noting that Al Shabaab and Al Qaeda use the country to run training camps and as a ‘cool off’ location. South Africa’s porous borders go a long way to facilitating this (See THREATS TO AFRICAN BORDERS).
Beyond being a transit point, threats have been made against the country itself. Both Al Shabaab and Boko Haram made calls for attacks against South Africa during the outbreak of xenophobic violence in April 2015, for example. Al Shabaab specifically mentioned conducting revenge attacks in the metropolitan centre of Durban. New episodes of xenophobic violence as recently as this year will likely continue to drive intent by these groups to target the country, although the capability will be lacking (See THE THREAT OF ISLAMIST TERRORISM IN SOUTH AFRICA).
Islamic State: Foreign fighters and self radicalised individuals
More recently, the transnational terrorism threat has shifted to the Islamic State (IS) militant group. This focus has in part been driven by the estimated 128 South Africans who moved to the group’s self-declared caliphate in Iraq and Syria during the height of its operations and the subsequent return of around 75 such members by 2018. However, research has shown that the majority of these individuals indicated a willingness to be interviewed by the State Security Agency upon their return. Such willingness demonstrates a noteworthy trend of individuals trying to distance themselves from the group, lessening the threat posed by these returning foreign fighters (See
However, it is important to recall that these individuals reportedly came from “multiple educational backgrounds” suggesting that they were likely self-radicalised as opposed to being part of a direct recruitment campaign, although there has been some evidence of this in Gauteng Province. The prevalence of access to online IS-related websites and social media in South Africa, as well as dire socio-economic environmental conditions further help create an environment for self-radicalisation in the country. As evidence of this, a series of firebomb attacks at Woolworths stores and a mosque attack over 2018 and 2019 were linked to 12 self-radicalised men accused of being aligned with IS.
South Africa’s current involvement in the fight against militant organisations allegedly aligned with IS in the Democratic Republic of Congo and Mozambique has further sparked debate that it may become the target of retaliatory attacks. However, it is our assessment that while this may drive intent by the IS, this threat is most likely to manifest in these conflict areas, targeting the South African Defence Force specifically.
Having reviewed the data around strikes, riots, civil commotion and terrorism in South Africa, it is clear that the threats posed are more nuanced than often presented in the media.
Firstly, it appears that the most prominent civil disturbance threat is posed by service delivery protests by aggrieved communities in major urban centres, as opposed to strikes. This is likely to remain the status quo given the various economic challenges facing the country, particularly the high unemployment rate – officially estimated at 29 percent, and unofficially at 38.5 percent. While these protests predominantly occur in informal settlements, they have the potential to impact commercial operations and indeed the wider economy, as evidenced by SASRIA’s findings in 2018.
Secondly, it is important to reflect on same of the gains when comes to industrial action. The dramatic drop in the incidence of strikes over the last two decades is noteworthy although it is clear that further work needs to be done to contain the severity of strikes when they do occur. However, given that violence is often driven by the infiltration of criminal elements during such incidents, reversing this trend cannot be achieved through legislation or the Department of Labour alone, particularly in light of the high violent crime rate in the country.
Finally, while South Africa has not been the site of major terrorist attacks witnessed in even Western states, the country nevertheless has a history of such incidents. As terrorist groups rise and fall, the current threat is driven predominantly by self-radicalised individuals inspired by global groups, such as Islamic State, as opposed to foreign fighters or established militant organisations in the region.
SEE COUNTRY OUTLOOK: SOUTH-AFRICA
Guinea is at a crossroads between a peaceful political transition or another military intervention. Despite growing resistance from civil groups and opposition parties, President Alpha Condé is determined to go ahead with plans to change the current constitution before the 2020 presidential elections. The threat of regional sanctions and international isolation may still force him to change his mind on mooted third term ambitions.
The government seeks more revenue from the mining sector to provide a quick fix to a distressed economy caused by shrinking development assistance and depreciation of the local currency due to dwindling foreign reserves. Investors face heightened risk of arbitrary changes to the tax regime, contract renegotiation, and demands for repatriation of earnings.
As security conditions across the Sahel continue to rapidly deteriorate, regional and international states have renewed their efforts to support joint counter-terrorism operations. EXX Africa assesses the potential for these efforts to address the current crisis, and the possible outcome for the security outlook across the broader region, including the resurgence of the narcotics trade.
While an alleged coup plot has been overblown by the government for political gain, the incident does put a spotlight on the deployment of politically affiliated militia groups ahead of next year’s elections. Businesses also face heightened risk of contract frustration, tax increases, and discrimination as the government seeks to raise funds for its political campaign.
On 23 September, Information Minister Kojo Oppong Nkrumah announced security forces had thwarted a coup against the government. Most Ghanaians reacted with scepticism to the suggested plot even though the government has seemingly overblown the importance of the incident for political reasons. While EXX Africa assesses that there is a low probability of an unconstitutional transfer of power in Ghana, there is a growing risk of political violence ahead of next year’s elections which has been thrown into the spotlight by this alleged incident.
As Ghana enters a new election cycle, businesses will be exposed to increased risk of commercial disruption due to unrest and rising crime rates, as well as higher political risks such contract frustration, corrupt practices, and changes to taxation. A Ghanaian election year also usually distracts the president and senior civil servants from public administration and economic management, thereby often raising the risk of payment delays to contractors. There is ample precedent for such perils based on previous election cycles.
The alleged coup plot
On 23 September, the Ministry of Information claimed that security forces had foiled a plot to overthrow the government and arrested three people believed to have been amassing makeshift bombs, weapons and computer equipment. The alleged plot was unravelled on 20 September after fifteen months of close surveillance of the activities of the coup plotters, according to the government.
The three alleged coup plotters arrested by security forces are Dr. Frederick Yao Mac-Palm, who owns the Citadel hospital in Accra and is a vocal political activist on social media; Ezor Kafui, a local weapons manufacturer; and Bright Allan Debrah Ofosu. On 25 September, the government made further arrests of some unnamed military officers in addition to the initial three main suspects. The ministry has also published a list of the weapons retrieved during the security operation, including 22 improvised explosive devices, six pistols, a long knife, three smoke grenades, seven mobile phones, and three laptops. The detained military officers are being questioned over their suspected role in procuring these weapons but did not play an active role in the coup plot.
Security experts in Ghana contacted by EXX Africa, including retired military officers, have dismissed the allegation of a coup as implausible given the profile and background of the suspects and the inferiority of weapons and ammunitions seized. The three main suspects have no military training or security-related background. Our sources say these individuals would not have had the capability and resources needed to overrun the first line of defence of Jubilee House (the official residence of the president).
The coup plotters are being defended in court by Victor Adawudu, a staunch member of the main opposition party, the National Democratic Congress (NDC). The NDC has publicly dismissed the claimed coup plot as a ploy by the government to clamp down on opposition supporters and the party’s financial backers ahead of next year’s elections.
We agree that the foiled coup plot has been overblow by the government as part of its broader electioneering strategy to re-elect President Nana Addo Dankwa Akufo-Addo next year. However, the incident does reflect growing concern over increasing risk of political violence around the elections.
Political violence outlook
Electioneering and political machinations are gathering pace in Ghana ahead of the country’s presidential and parliamentary elections in December 2020. Part of the broader strategy of the main opposition NDC party to win the election is to build a coalition against the governing New Patriotic Party (NPP). The NDC is seeking to maintain its momentum through the formation of the Coalition for National Sovereignty (CNS), which comprises nine political parties (including the NDC and the Convention People’s Party) and civil society organisations. The NDC has appointed former president John Mahama as its presidential candidate, which may be a tough sell given Mahama’s poor record of handling Ghana’s economy and his administration’s inability to fight corruption during its tenure.
The opposition CNS coalition is set to focus its campaign rising crime rates and more frequent violence in the country, as well as corruption in the energy sector, alleged abuse of state procurement, a looming banking sector crisis, and the NPP government’s unmet promises of ‘one-district, one-factory’ (building a factory in each district) and ‘one-constituency, one-ambulance’ (providing an ambulance for each constituency). However, the tone of the campaign is often belligerent and regularly ties into deep-seated local grievances in communities, raising the risk of violent unrest.
In January, a by-election in the Ayawaso West Wuogon constituency triggered violence that was orchestrated by both main political parties. The unrest left two people dead and 18 others hospitalised with gunshot wounds. The violence that marred the Ayawaso West Wuogon by-election portends concern over the outcome of the coming elections, where both parties have resolved to win, seemingly at any cost as they deploy youth militia groups.
In the unrest at the Ayawaso West Wuogon by-election, a state security operative publicly slapped NDC parliamentarian Samuel Nettey George. The report of the Commission of Inquiry set up by the government to investigate the Ayawaso West Wuogon electoral violence recommended the dismissal and prosecution of the security operative for assaulting the lawmaker. However, the government rejected the recommendation, which further reinforced the opposition’s perception of the politicisation of state security operatives. Nonetheless, the NPP government is genuinely worried that the NDC is training its militia groups to help win the elections, by applying intimidation tactics.
Our local sources are warning that both main parties are financing and training their affiliated vigilante-style militia groups to intimidate opponents in a bid to ensure electoral victory. This also relates to the background to the alleged coup plot. The arrest of Dr Mac-Palm and his co-conspirators, and the seizure of ammunitions and weapons was an attempt by the government to foil plans by the NDC party to train and arm its vigilante groups, including the notorious Hawks militia group. The opposition has meanwhile accused the government of using state security operatives to attack its supporters and leaders.
State assets for political campaigning
Another key concern in the elections lead-up relates to contract certainty as the government has begun a spree of contract cancellations and asset confiscations in order to fund its campaigning. Various local companies, banks, and their partners are at heightened risk of discrimination and confiscation over the coming year.
On 9 September, President Akufo-Addo inaugurated a nine-member board of the State Interest and Governance Authority (SIGA), which will replace the Divestiture Implementation Committee and the State Enterprises Commission. SIGA is poised to be one of the most important bodies in regulating all state-owned enterprises (SoEs), as well as joint-venture companies (JVCs) with state equity participation. The government holds equity interests in key sectors of the economy including banking, insurance and allied services, mining, engineering, energy, petroleum and gas, and agriculture. The government has identified the entities that fall under SIGA supervision. These entities included 40 SoEs, eight JVCs, eight mining companies, and five regulatory bodies.
The official purpose for the creation of SIGA is to improve the efficiency of SoEs by managing their level of borrowing, ensuring payment of dividends to the state promptly and promoting transparency and accountability. The government acknowledged that only four SoEs, five regulatory bodies, eight JVCs, and eight mining companies had ever submitted audited accounts. Moreover, only nine companies, comprising two SoEs and seven JVCs, paid dividends to the government in 2017, according to the government. In terms of financial loss, SoEs recorded losses of about GH¢1.3billion (USD 240 million) in 2016 and an USD 18 million revenue shortfall in the first half of 2019. These figures indicate the worrying level of institutional corruption at the heart of many SoEs, which have been used as a source of political patronage, as well as funding mechanisms for the governments to finance their political campaigns.
No sooner than SIGA was launched, the administration confiscated the Akwatia diamond mining concession and assets of the Great Consolidated Diamonds Ghana Limited (GCDGL) a subsidiary of Jospong Group of Companies (JGC). The GCDGL, previously state-owned, was taken over by JGC in August 2011. However, in April the government cancelled the agreement on the ground that JGC had failed to meet the terms of the contract. On 18 September, officials of SIGA supported by state security including the military shut down the mines and took over all its assets. The management of JGC is accusing the government of abuse of power.
Other JVCs and state firms privatised by the previous government are at risk of similar heavy-handedness by SIGA in its drive to raise money for the government. The opposition has accused the government of applying selective intervention tactics to target certain businesses for political gain. The opposition has also accused the government of favouritism in selecting banks to bail out during the cleaning-up exercise undertaken by the Bank of Ghana in August 2017. The revocation of the licences of UT and Capital banks that led to their takeover by Ghana Commercial Bank was claimed to be unfair. Other banks that lost their license were UniBank, Beige, Heritage, and GN Bank belonging to Papa Kwesi Nduom, the leader of the opposition Progressive People’s Party.
Whereas the National Investment Bank was also undercapitalised, the central bank allowed the state-owned bank to continue its operations. The four banks that received government bailouts through the Ghana Amalgamated Trust bond were Agricultural Development Bank, OminiBSIC, Universal Merchant Bank, and Prudential banks. All of these were tied to state interests and the NPP ruling party’s backers.
The opposition has also condemned the privatisation of the operations of the Electricity Company of Ghana (ECG) to a private company, the Power Distribution Services (PDS). PDS is expected to invest over USD 580 million in the country’s power sector within the next five years after receiving the assets and operations of ECG on 12 September. There are concerns that PDS does not have the capacity to make the expected investment in Ghana’s power sector. In the event that the opposition wins next year’s elections, the PDS contract would be at risk of being reviewed, if not cancelled.
Furthermore, the reduction of state equity participation in the Aker energy project from about 48 percent to 18 percent has been also condemned by NDC presidential candidate John Mahama, who claims that individuals associated with current Finance Minister Ken Ofori-Atta and his company Databank took part in the renegotiation of the Aker energy deal.
President Nana Akufo-Addo has presided over an economic recovery since coming to power in 2016 and Ghana will again be one of the fastest growing economies in Africa in 2019. He faces a possibly tough re-election contest against the main opposition party candidate, former president John Mahama, in December 2020. In the meantime, the government will seek to fulfil some of the bold and populist pledges it made in the 2026 electoral campaign, including the completion of hundreds of small-scale manufacturing projects across the country. To meet such pledges, the government will source new revenues through tax increases and contract reviews.
With election year fast approaching, businesses are likely to experience fresh tax hikes. In the 2019 Supplementary Budget, the telecoms sector will see an increase in the Communication Service Tax (CST) from 6 percent to 9 per cent effective from 1 October 2019. Telecoms firms have already announced plans to pass on the cost to their customers. The 2020 budget to be announced in November this year is also likely to see tax increase on tobacco and alcohol, as well as VAT.
Meanwhile, there is also heightened risk of corrupt practices affecting commercial interests ahead of the elections. The NPP government is facing mounting allegations of mispricing contracts, cronyism, and fraud, in an apparent continuation of the previous NDC government’s practices. According to some sources, Ghana’s government is losing some USD 2.8 billion per year in revenues due to overpriced contracts and commercial criminality.
In terms of the pre-election security outlook, fierce rivalry between the country’s two main political parties makes violent protests almost inevitable, especially in the lead-up to elections. Politically motivated unrest is likely over corruption allegations and poor socio-economic situations. Hotspots for protests and riots include over-crowded areas of Accra, such as Fadama, Nima, Maamobi, Ayawaso, the Agbogbloshie market and the violence-prone ‘Sodom & Gomorrah’ area close to the central business district.
There are further concerns over violence in areas where illegal mining is rife. During an election year, there is a tendency for a spike in the activity of illegal miners, locally known as galamsey. State security forces are often redeployed from providing security at mining areas to protecting political leaders in election campaigns across the country. The recent crackdown on galamsey including the arrest of 20 Chinese miners on 13 September was an indication that the government is seeking to appease public demand for actions against foreign galamsey.
Furthermore, the failure of the government to prosecute and jail Chinese illegal miners for fear of upsetting the Chinese government has led to civil groups questioning the government’s commitment to fight the scourge. Part of the government’s concern is not to jeopardise the prospect of securing USD 2 billion for the Sinohydro bauxite project.
SEE COUNTRY OUTLOOK: GHANA
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