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.
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
A sprawling IMF-backed privatisation programme creates exceptional opportunities for investors across diverse sectors. State assets selloffs may also be the only course for Angola to reduce its massive public debt burden, to diversify away from the oil sector, and to slip out of an extended recession. Yet tenders and auctions will need careful management, transparency, and accountability to have their desired effect.
On 19 September, Angola’s privatisation programme’s technical group, the so-called ProPriv Programme, announced that 195 companies had been shortlisted for privatisation over the next three years. Most of the country’s state-owned or partially state-owned companies will be divested by next year, while larger state companies such as oil firm Sonangol will sell off key assets by 2022. Most companies and assets will be sold through public tender, with only 17 to be sold through the stock exchange.
The most well-known companies shortlisted for privatisation are state oil company Sonangol, diamond company Endiama, and airline TAAG, as well as banks BCI, BAI, BCGA, and Banco Económico, insurance firm ENSA Seguros, and the Angola Debt and Securities Exchange (Bodiva). Other state asset selloffs are planned in the textile, construction, brewing, agro-processing, and telecommunications sectors. Revenues from the sales are earmarked to bringing down the country’s high debt levels.
Angola’s government and the International Monetary Fund (IMF) are aiming to limit Angola’s government debt to gross domestic product (GDP) ratio to 90 percent. The IMF reported in June that Angola’s public debt stood at 91 percent of GDP in 2018. The country’s debt has increased significantly in recent years due to falling foreign currency oil revenues, which has led to a depreciation of the local kwanza currency and a rise in inflation. The privatisation programme is at the frontline of efforts to curb public debt to below 80 percent of economic output over the next two years.
However, two years into the presidency of João Manuel Gonçalves Lourenço and almost one year into the IMF’s three-year Extended Fund Facility, there remain significant challenges to recovering Angola’s economy, while foreign investors will remain cautious of committing to the privatisations. Nevertheless, the ProPriv Programme creates substantial opportunities for investors, particularly those in the banking sector.
Angola’s government aims to privatise a number of companies later this year, including ENSA-Seguros de Angola S.A., which is Angola’s largest insurance company. The state also seeks to sell its share in the breweries of Cuca, N’gola, and Nocal. Various smaller privatisations have also already been completed earlier in 2019, yet the largest divestments will commence from next year.
In 2020, the government aims to sell off its shares in another large group of state-controlled assets, including some major banks and construction company Mota Engil Angola, in which the Angolan government has a 20 percent stake. The banks prescribed for state divestment are Banco Angolano de Investimentos (BAI), Banco de Comércio e Indústria (BCI), and Caixa Angola.
The state will also sell its interests in mobile phone company Unitel and telecommunications operators Angola Cable, MSTelcom, TVCabo, and NetOne. Two cement companies are lined up for privatisation, namely Nova Cimangola and Secil Lobito, as well as three textile producers: Textang, Satec, and Africa Textile. Other companies shortlisted are bioenergy firm Biocom, agro-communal fund Aldeia Nova, and the Empresa Nacional de Exploração de Aeroportos e Navegação Aérea E.P. (ENANA), which operates Angola’s airports and controls civilian air traffic.
In 2021, the government intends to privatise the Angola Debt and Securities Exchange (Bodiva), downstream fuel distributor and marketer Sonangalp, telecoms firm Angola Telecom, airlines Sonair and TAAG Angola Airlines, and another bank – Banco Económico. TAAG, Angola Cable, Sonair and Banco Económico are some of the few companies that will be sold via the stock exchange, as will firms MSTelcom, ZEE, Multitel, Caixa Angola, and Aldeia Nova. This should give the newly privatised Bodiva a boost from 2021.
In 2022, ProPriv will proceed with the partial privatisation of some of Angola’s largest and most prominent state companies, including state oil company Sonangol, diamond mining firm Endiama, and postal service Correios de Angola. These companies have large assets both within Angola and internationally that may offer some of the most lucrative opportunities for both foreign and domestic investors. Sonangol is by far Angola’s largest company and one of the largest firms within Africa.
Sonangol asset selloffs
Sonangol has published an extensive list of foreign and Angolan commercial interests. The company is set to sell 50 subsidiary companies over the course of three years, as well as other assets. By the end of this year, the state oil giant is expected to dispose of 20 companies and assets. Within Angola, Sonangol also retains stakes in a broad variety of commercial sectors including healthcare, transportation, fuel refining, telecommunications, banking, construction, and mining.
Next year, the assets that are set to be sold off include the company’s subsidiaries in Cape Verde and São Tomé and Príncipe, as well as foreign interests in companies such as Founton (Gibraltar), Sonatide Marine (Cayman Islands), Solo Properties Knightsbridge (UK), Societé Ivoiriense de Raffinage (Cote d’Ivoire), Puma Energy Holdings (Singapore), WTA (France), and Sonandiets Services (Panama). Other foreign assets to be sold off include Portuguese real estate companies Puaça, Diraniproject III and Diraniproject V, in Sonacergy – Serviços e Construções, Sonafurt International Shipping and Atlantis Viagens e Turismo.
Sonangol chairman Sebastião Gaspar Martins retains the lead on the company’s asset selloffs, while working in close collaboration with Minister of State for Economic Coordination, Manuel Nunes Júnior, who oversees the ProPriv Programme. Both men are close confidantes of President Lourenço’s influential economic policy ‘czar’ Manuel Vicente, who is a former chairman of Sonangol and former deputy president. Much of the controversy surrounding the appointment of Gaspar Martins in May has centred on his role as CEO at Angolan junior oil firm Somoil, which was founded by Vicente almost 20 years ago and retains stakes in offshore oil blocks and interests in onshore production permits (See ANGOLA: SONANGOL RESHUFFLE PUTS ANTI-GRAFT CAMPAIGN INTO THE SPOTLIGHT).
Public tenders in the spotlight
Any sign that Sonangol chief Martins seeks to line up the elite to benefit from politically influenced tenders in privatisations would undo much of the economic benefits of the ongoing IMF programme. There are particular concerns that Somoil, which is affiliated to both Martins and Vicente, could improperly benefit from Sonangol asset sales. There is ample precedent that the loyalist network supporting President Lourenço is seeking to capitalise on their new positions of patronage.
In April, the government awarded the country’s fourth telecommunications license to little-known Telstar Telecomunicacoes, which beat 26 local and international firms. The deal triggered broad condemnation, since Telstar has no track record in mobile operations and being incorporated just over a year before the licence tender. The public fall-out earlier this year over the deal was mimicked on social media to such an extent that President Lourenço annulled the tender and ordered a new process. The IMF has also been critical of various other tender processes, including for the planned purchase of new aircraft earlier this year.
Such incidents have raised concern that the government is using President Lourenço’s liberalisation and transparency campaign not only to disarm political opponents, but also to ensure the support of its own favoured network of allies and supporters. Last year, EXX Africa released several analysis briefings and special reports, accurately forecasting such a scenario, raising particular flags over the influence of the new president’s family and the exceptional clout of Manuel Vicente (See SPECIAL REPORT: POLITICAL INFLUENCE AND PATRONAGE IN THE ‘NEW’ ANGOLA).
Manuel Vicente has a known background of opaque deals during his time as chairman of Sonangol and as deputy to then president dos Santos. His family and closest associates control an extensive network of business interests in Angola, Nigeria, Mozambique, and Europe. Many of these commercial interests have been tainted by allegations of corruption or mismanagement through various international probes. There is less publicly known precedent of impropriety on the part of Lourenço, who served as defence minister under dos Santos.
However, in EXX Africa’s publicly released report last year, we raised several questions over his purported role in the acquisition of military equipment during his time as defence minister through the same network of companies and individuals that has been implicated in Mozambique’s ‘hidden debt’ and corruption scandals. So far, the Angolan government has refused to respond to the report and questions remain over the due process over such procurements (See SPECIAL FEATURE: FALL-OUT OVER MOZAMBIQUE DEBT SCANDAL RISKS SPILL-OVER INTO ANGOLA).
The government has highlighted that transparency in tender processes will be a crucial tenet of the upcoming privatisations. The International Finance Corporation (IFC) of the World Bank, the country’s financial sector, business associations, and chambers of commerce are closely monitoring the government’s progress and the implementation of the ProPriv Programme. IMF approval for the release of another tranche of the USD 3.7 billion Extended Credit Facility will also hinge on transparency in the tender process. Angola has already received a total of USD 1.24 billion in less than a year from the Fund. The IMF programme has anchored Angola’s policy framework and shored up confidence in the country’s economy.
However, privatisations alone will not be sufficient to turn around Angola’s shrinking economy. Oil production is expected to continue to decline over the next year. The country has struggled to meet its quota agreed with the Organization of Petroleum Exporting Countries (OPEC) of 1.481 million barrels per day. As older wells deplete, and a lack of investment hampers the drilling of new wells, economic output is set to shrink by 2.6 percent this year and 3.6 percent in 2020. Moderate growth is only expected from 2021 once the economic restructuring and IMF-mandated reforms begin to benefit the broader the economy. Non-oil sectors will provide for the economic recovery, yet this is based on assumptions of improved transparency and accountability in coming years.
Meanwhile, painful reforms demanded by the IMF programme will begin to have their effect. We expect more strikes and protests, including from skilled workers in the cities and public sector employees who are exposed to any economic downturn due to public payroll cuts and high inflation which is expected to hover around 20 percent for the next three years. The IMF is mandating fiscal discipline that includes unpopular measures such as scrapping fuel subsidies and further devaluing the kwanza.
Loyalists of former president dos Santos are capitalising on mounting grievances over the economy and IMF austerity. The government is meanwhile seeking to scapegoat dos Santos loyalists for the economic malaise, claiming acts of economic sabotage lie at the heart of ongoing fuel shortages. This is starting to rip apart the usually unified MPLA ruling party that has ensured Angola’s political stability since the end of the civil war. Local well-placed sources tell us that the party could permanently split unless there is an improvement in the economy and the so-perceived ‘show trials’ of dos Santos family members and associates stop.
SEE COUNTRY OUTLOOK: ANGOLA
The government will capitalise on Robert Mugabe’s legacy to consolidate its authority and establish further control over patronage networks in the banking and agricultural sectors. However, it is failing to make headway on an economic recovery, taming inflation, and restoring power supply. The opposition is set to resume protests and strikes in coming weeks, raising the risk of a complete economic shut-down. Foreign partners, even benevolent ones, will struggle to push through any form of debt relief and a mooted bailout as the crisis deepens.
The latest outbreak of anti-immigrant violence in South Africa has been unusual only because of its timing coinciding with a major investment conference and the potential political motivations behind the attacks on foreigners. EXX Africa investigates the political and economic drivers of such violence, as well as the commercial impact of retaliatory action against South African interests elsewhere in Africa.
Algeria’s ruling general is either preparing to install himself as a strongman-president of an Egyptian-inspired securocratic state or he is seeking to transition political power to a civilian administration that will protect the military’s interests. EXX Africa investigates the probability and implications of both scenarios.
EXX Africa reflects on some of the political and economic challenges facing Africa’s last absolute monarchy, as the small landlocked nation emerges from recent contested elections and finds itself in an economic crisis.
The incoming transitional government will need to address three priorities if it is to last its three-year term: namely seeking prosecution of those held responsible for war crimes and violence against protestors; unravelling Sudan’s ‘deep-state’ of competing power networks that continue to control lucrative assets; and driving a sustained economic recovery, most likely with Gulf financial support.
State-owned enterprises in Africa have a notorious reputation for being mismanaged and for repeatedly requiring financial bailouts. EXX Africa unpacks this notion by looking at some of the best and worst-performing entities across the continent. Our analysis spans from examples in Morocco, Ghana, and Ethiopia to Zambia and South Africa.
Two months out from elections, Mozambique’s government has secured a peace deal with the armed opposition and agreed on debt restructuring with most of its creditors. These are crucial steppingstones as the country seeks massive gas-related investment inflows and a potential new IMF programme. However, an intensifying Islamist insurgency, suspected electoral manipulation, and lack of progress on bringing perpetrators of the hidden loans scandal to account remain key obstacles towards longer term stability.
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