Africa: the search for justice
African opposition to the International Criminal Court threatens an important legal recourse available to the continent’s human-rights victims
By Annelie Rozeboom
Some 122 states have ratified the Rome Statute that established the International Criminal Court (ICC) in 2002, among them 34 African countries. However, two cases against current African leaders have focused attention on growing criticism that the court has an apparently exclusive focus on Africa. In one case, in March 2011, the ICC charged Kenyan president Uhuru Kenyatta for instigating election violence in 2007. The court dropped the charges in December 2014 when the prosecutor and judges accused the Kenyan government of failing to cooperate with it in good faith. In the other case the court issued an arrest warrant in 2009, and again in 2010, for the Sudanese president, Omar al-Bashir, on charges of genocide, crimes against humanity and war crimes. However, it has since failed to detain him for trial. Last June, he was allowed to leave South Africa, a signatory to the Rome Statute, hours before the country’s High Court ordered his arrest.
While still facing the prospect of trial in The Hague, in October 2013 Mr Kenyatta attacked the ICC in a speech to the African Union (AU), saying the ICC had become “a toy of declining imperial powers”. Mr Bashir, in a 2009 interview, said that the ICC was a “tool to terrorise countries that the West think are disobedient”. And the ANC, South Africa’s ruling party, in a statement on the day Mr Bashir was allowed to abscond from the country, said that the ICC was “no longer useful for the purposes for which it was intended”. African opposition to the ICC is coalescing around the argument that the court represents the interests of other countries. “The ICC’s sharpest critics claim that international criminal law does not apply to the powerful, only the weak—hence the focus on Africa, the new court’s ‘laboratory’,” writes Terence McNamee in a 2014 discussion paper on “The ICC and Africa”, published by the Johannesburg-based Brenthurst Foundation.
But the ICC prosecutor, Fatou Bensouda argues that most of the cases the court is presently trying were in fact referred to it by African countries. “These referrals are basically the countries requesting the ICC to intervene,” she said in a recent BBC interview, adding that the debate about the ICC’s focus on Africa deflected attention from the fact that each of the cases it was trying involved victims. Meanwhile, the AU has moved to extend the jurisdiction of existing courts on the continent to try people accused of serious international crimes. “Expanding the mandate of the African Court of Justice and Human Rights… would help us promote finding African solutions to African problems,” the South African president, Jacob Zuma told the National Assembly last year. Other moves in this direction include the establishment by Uganda and Kenya—both members of the AU—of international crimes divisions of their High Courts, says Mr MacNamee.
In June 2014, the AU extended the African Court’s jurisdiction to include individual liability for serious crimes committed in violation of international law—while at the same time excluding sitting heads of state and senior government officials from the court’s jurisdiction. Given these African challenges to its credibility and jurisdiction, can the ICC establish itself as an undisputed world court? One view is that the ICC simply needs more time to establish itself, Jacqueline McAllister argues in an August 2015 article in Foreign Affairs. In her view, the International Criminal Tribunal for the former Yugoslavia (ICTY) established in 1993—now in the process of shutting down—is an example. Though it had no police powers and operated in active war zones, it eventually secured the arrests of the region’s most notorious leaders—Radovan Karadzic, a Serbian politician, and Ratko Mladic and Zdravko Tolimir, two Bosnian Serb military commanders.
They were charged with a range of crimes, including genocide and crimes against humanity. In 2012, Mr Tolimir was sentenced to life imprisonment, which was confirmed in 2015. The trials of the other two accused continue. Some commentators argue that the ICC must demonstrate success in bringing non-African perpetrators of serious crimes to trial and in achieving convictions against them. The court is currently conducting preliminary examinations in a number of situations outside of Africa, including war crimes and other abuses allegedly committed by the Taliban in Afghanistan, as well as the alleged torture or ill treatment of conflict-related detainees by US armed forces there in the period between 2003 and 2008. Similar investigations are ongoing in Georgia, Guinea, Columbia and Honduras.
The prosecutor has also reopened the preliminary examination of the responsibility of United Kingdom officials for war crimes involving systematic detainee abuse in Iraq from 2003 until 2008. Similar investigations are ongoing in Georgia, Guinea, Columbia and Honduras. The prosecutor has also reopened the preliminary examination of the responsibility of United Kingdom officials for war crimes involving systematic detainee abuse in Iraq from 2003 until 2008. Whether these investigations will make it to trial is an open question. “Each case stands on its own legal merits,” says Professor David Crane, Chief Prosecutor of the Special Court for Sierra Leone from April 2002 until July 2005. In cases where a suspected serious international criminal is a citizen of a country that is not a signatory of the Rome Statute, the court must obtain a referral from the UN Security Council. But if it were to seek to indict Syria’s president, Bashar al-Assad, for instance, it would be dependent on the politics of the permanent, veto-wielding powers, such as Mr Assad’s Russian and Chinese allies.
“The ICC is often blamed for practice that is really a result of Security Council action or lack thereof,” says Elise Keppler, associate director of the International Justice Program at Human Rights Watch. Other commentators argue that the ICC will only be able to bring its power to bear on African, and indeed other perpetrators of serious crimes around the world, if it is given the ability to sanction member states. “There must be defined repercussions for states that refuse to cooperate with the ICC’s requests,” writes Gwen P. Barnes in a 2011 article in the Fordham International Law Journal. To be more effective, the ICC would need to amend the Rome Statute to make it possible to suspend or, in extreme cases, expel member states when they fail to cooperate with the court, Ms Barnes argues. These measures would likely cause the member states to think twice before breaching the Rome Statute, she writes. But Niels Blokker, a professor of international institutional law at Leiden University thinks the proposal is unrealistic.
“Amending the statute is a very complex procedure. It’s a logical thought that countries that do not comply should be thrown out, but what would that achieve? The whole purpose of the Rome Statute is to fight against impunity. For this to happen, you need to be able to continue the dialogue with countries, and you won’t achieve this by suspending or expelling them.” Every international organisation struggles with members who don’t comply with the rules, says Professor Blokker. “It’s the big dilemma of international cooperation. At the United Nations there is the possibility to suspend or expel members, but this has never been done. When you do this, you take away your influence over the country. In the end, it’s not the ICC that should discipline countries that don’t comply. The member states will have to discipline each other.” Meanwhile, some critics argue that the African move to put suspects of serious international crimes on trial on the continent is not without its problems.
International legal and human rights NGO Avocats Sans Frontières (Lawyers without Borders) says that the move may be “a technical manoeuvre to oust the jurisdiction of the ICC”. A wider mandate for the African Court is likely to result in competing jurisdictions and a duplication of the work of the ICC, it argues in a July 2012 paper. The AU’s insistence on excluding sitting heads of state from the jurisdiction of the African Court has also been severely criticised. At the time, some 140 African civil society organisations and international organisations signed a declaration against it. “The AU is obligated to ensure that accountability mechanisms have a basis to succeed and [to ensure that the court’s jurisdiction is not used] as a subterfuge for a political agenda,” Professor Crane says. “No one is above the law, not even the ‘good old boys club’ of African leaders.”
In the meantime, the ICC continues to deal with current cases, including this year’s trials of Bosco Ntaganda, accused of war crimes in the Democratic Republic of Congo, and Laurent Gbagbo, a former president of Côte d’Ivoire accused of crimes against humanity. It recently showed its teeth by putting Congolese politician Jean- Pierre Bemba, his lawyer and three others on trial for “corruptly influencing witnesses by giving them money and instructions to provide false testimony, presenting false evidence and giving false testimony in the courtroom”, according to an ICC press release about the case. The ICC is also considering referring Mr Kenyatta’s case to the signatories of the Rome Statute, or to the UN, because of Kenya’s failure to cooperate, possibly with the aim of imposing sanctions. In October the ANC indicated that it was considering withdrawing South Africa from the Rome Statute. In the same month, the country asked the ICC for more time to formulate its response to the court’s request for an explanation of its handling of Mr Bashir. The ICC has given South Africa until December 31st 2015 to respond. These issues suggest that there is a long way to go before the ICC achieves worldwide, and especially African credibility.
DRC: hasty electoral reforms
Decentralisation threatens to create more instability in this central African country
President Joseph Kabila © Helene C. Stikkel
by François Misser
On March 2nd 2015, President Joseph Kabila promulgated a law creating 15 new provinces, bringing the total to 26 as against 11. Five provinces remain as they were: the capital Kinshasa and its hinterland, Bas-Congo, North and South Kivu and Maniema. The other six provinces have been split up to create several much smaller ones.
The reform was considerably delayed. Article 2 of the constitution, adopted by referendum in December 2005 and in force from February 2006, lists all the 26 provinces. But nearly five years had elapsed since the constitutional deadline set for the creation of the new provinces expired in 2010.
The reform makes sense in many ways. The average size of the former provinces was considerable—about the size of the UK. The distance between some provincial capitals and their boundaries was enormous. Lubumbashi, the capital of the former Katanga province, was over 900 km from the border of neighbouring South Kivu, and the journey could take several days, even during the dry season, owing to the poor state of the road network.
But the reform was carried out in haste. Analysts suspected that Mr Kabila’s sudden decision to introduce the new law was aimed at justifying a postponement of the elections that would allow him to extend his term in office. According to the constitution, a president can only rule for two terms, and Mr Kabila’s second term will end in November 2016. Moreover, these critics argue that the creation of new provinces presents the country with a fait accompli and that the need for appropriate funding for the decentralisation would compete with the need to finance national elections.
In March 2015, Moïse Katumbi, the governor of the former province of Katanga told Radio France Internationale that the 2015 budget did not include funding for the creation of the new provinces. The Independent National Electoral Commission (CENI) has estimated the cost of the elections, due to be held between October 2015 and November 2016, at $1.15 billion.
Another speculation is that Mr Kabila saw an opportunity to get rid of Mr Katumbi, a political rival. Mr Katumbi is thought to have presidential aspirations, but his term in office expired in June as a consequence of the March law.
Other factors indicate that the Congolese authorities may have put the cart before the horse. Article 175 of the constitution stipulates that 40% of tax revenues must go to the provinces, but it has not been implemented, nor has the government drafted and approved a decree to implement it. Only 3% of the national budget that was supposed to be allocated to the provinces was spent in 2014 and most investment projects were not implemented. The 21 new provinces (as well as the other five) will lack the financial means necessary for genuine decentralisation. This factor alone is creating considerable frustration.
In the richer provinces of Bas-Congo and Katanga (the engine of the DRC’s economy), secessionist movements are on the rise. Katanga is the largest contributor of revenues from extractive industries to the country, and contributes $1.043 billion or 68% of total tax revenues, including all extractive industries revenues and royalties from the oil and mining industries.
But the province only received $88.4m, or 5.84% of the revenues that should have been transferred to the provinces from the national treasury, according to a report by the Extractive Industries Transparency Initiative (EITI) published in late December 2014. The current system (which does not respect Article 175 of the constitution) means that the tax administration collects the taxes and transfers the money to the central state, which redistributes only a fraction of this amount to the provinces.
Similar grievances are expressed in North Kivu. In October 2014, its governor, Julien Paluku, told UN-sponsored Radio Okapi that his province gets $600,000 per month from the central state, not the roughly $5m it should receive according to the constitution.
The sudden creation of new provinces appears to have weakened rather than strengthened provincial government. Haut-Katanga is the only new province with the skills, instruments and infrastructure needed to collect taxes. Its administration in the capital, Lubumbashi, continues to collect revenues from mining corporations. Elsewhere, new provincial tax departments still need offices, furniture and access to electricity.
Some new provinces lack administration buildings and offices. In Boende, the capital of the new Tshuapa province, the post office building now accommodates the provincial parliament, while the homes of public administration officials have become offices for the new provincial ministries. Last July, the central government told the officials who lived there to move out immediately or face expulsion.
In Nord Ubangi province, the parliament is being hosted temporarily in a motel at Gbadolite. Kenge, which used to be in Bandundu province, but is now the capital of the new Kwango province, lacks roads suitable for motor vehicles, a drinking water system and electricity. In Kasai Oriental province, civil servants went on strike in August 2015, saying their salaries had not been paid in July.
The governors and parliaments of all 21 new provinces should have been in place on August 12th, 120 days after the appointment of special committees whose task was to prepare the installation of the new provinces. As a temporary measure, reported Radio Okapi on July 30th, the parliaments of the former six provinces would be split into 21 parliaments until the provincial elections, which were originally to have taken place in 2012, but rescheduled for October 25th. The provisional offices of these new parliaments were set up in Katanga by the former elected MPs at the end of July
But the government then froze the power of the provincial parliaments in the 21 new provinces. On September 3rd, the prime minister, Augustin Matata Ponyo told the Constitutional Court the government did not have the money for governors’ elections or the installation of the new provinces. On September 8th the Constitutional Court ordered the government to take “exceptional transitional measures” to ensure order, security and the continuity of public services in the new provinces until governors and provincial governments were in place. But the Constitutional Court’s decision gave the government considerable latitude.
On October 1st, the minister of the interior, Évariste Boshab, suspended the parliaments of the 21 new provinces. In Tshuapa province, police were deployed around the parliament building in Boende to prevent MPs, who had been elected in 2006 as part of the larger former Équateur province, from accessing it. Provincial elections, which were supposed to take place on October 25th, were postponed indefinitely.
On October 29th, Mr Kabila appointed “special commissioners” to run the provinces. His justification was the above-mentioned decision by the country’s highest court, calling for “exceptional transitional measures” after the court estimated that “force majeure” and lack of funds prevented the CENI from organising the provincial and local elections as scheduled. Uncertainty prevails on the duration of the mandate of these special commissioners. The CENI did not stipulate a new date for the provincial elections.
Senator Jacques Djoli, of the opposition Movement of Liberation of Congo (MLC), says the appointment of special commissioners is “unconstitutional”. According to Article 80 of the constitution, governors must be elected by provincial MPs. But the move is no surprise. In recent years Mr Kabila has sought to gain total control over the country’s governors.
On January 20th 2011, Article 198 of the constitution, which stipulated that governors could only be dismissed by provincial assemblies, was amended. Currently, president has the power to dismiss governors by decree after consultation with the government and the speakers of the national assembly and the senate.
The former minister of defence, Charles Mwando Simba, who joined the opposition in September, says Mr Kabila opposed the election of governors because he was aware that his own candidates would not be elected by provincial MPs. Over the last few months, leaders of the seven parties of the ruling coalition, including Mr Simba’s, have defected because they oppose Mr Kabila’s bid to run for a third term in 2016, which is not possible under the present constitution.
Another major problem, stressed by Mr Simba, is that the government has created an odd situation with two systems: one in which the five unchanged provinces are still ruled according to the constitution by governors and provincial parliaments, and another in which the 21 new provinces are ruled by the new special commissioners.
The special commissioners will face many problems, including their perceived lack of credibility as political appointees. Among other things, they will have to deal with a backlog of cases of bad governance. According to Le Soft International a news outlet based in Paris, Brussels and Kinshasa, the minister of the interior has identified several embezzlement cases involving retrocession funds, or money collected by the tax authorities and redistributed by the central state.
International donors in Kinshasa are concerned that, without the appropriate resources and checks and balances, decentralisation will fail, or worse, that it will create new layers of corruption.
Angola: local elections
The MPLA government has promised decentralisation many times, but is afraid of losing power
A street in Barra do Dande, a town in north-west Angola © Creative Commons
by Louise Redvers
In April 2015 the Angolan capital Luanda hosted the inaugural “President José Eduardo dos Santos” African Mayor Awards. Three prizes, named after Angola’s president of 36 years, were awarded to cities in Ghana, Tanzania and Cabo Verde, respectively, for their achievements in local government.
The event was organised by United Cities and Local Governments–Africa (UCLG-A), which has offices in Sandton, South Africa, and is supported by the Angolan government and the IC Publications Group, a company with publishing interests in Africa. But the judging panel, which included representatives from UN Habitat and UCLG–A, appears to have overlooked a glaring irony: Angola has no locally elected officials.
“That event was just about looking good on the international stage,” Raul Danda, parliamentary leader of Angola’s main opposition party, the National Union for the Total Independence of Angola (UNITA), told Africa in Fact. “It’s just another example of our government putting on a show for the outside world in order to conceal the reality of the country.”
Angola has held two general elections since its three-decade civil war ended in 2002, but no local elections. Opposition parties, including UNITA, civil society activists and governance experts want local polls, believing they will lead to more accountability at the municipal and provincial levels, as well as improving service delivery and budget management.
Oil-rich Angola has enjoyed an economic boom since the end of the civil war, but little of this wealth has trickled down to ordinary citizens. The United Nations’ 2015 Human Development Index ranks the country, sub-Saharan Africa’s third-largest economy after Nigeria and South Africa, at 149 out of 188 countries.
Buoyed by billion-dollar credit lines from China and Brazil, the Angolan government has prioritised big-ticket infrastructure projects, including roads, airports and football stadiums, over local programmes in education, healthcare and economic development. Meanwhile, millions live in slum-like conditions without access to basic services like water and electricity. Average life expectancy is just 51.9, and one in six children die before they reach their fifth birthday.
“There is a need for a feedback mechanism: people don’t have an outlet for their grievances, processes are weak and service demands are ignored,” says Paula Roque, an Angolan analyst at the University of Oxford. “This is stirring up a lot of dissatisfaction, particularly in the provinces, which feel very disconnected from Luanda, where all the decisions are taken.”
Angelo Kapwatcha, president of the Regional Forum for University Development (FORDU), who has been part of civil society campaigns around promoting local elections, added: “Local elections would mean real participatory democracy in a country, wh[ile] at the moment all important and significant decisions are left to the president and the central government.”
“There are a number of minority groups in Angola, like the Khoisan hunters and nomadic cattle famers, who are largely excluded from society,” he added. “Local elections would be an excellent opportunity for them to claim some of their fundamental rights, such as education, healthcare and birth registration.”
Opposition parties—which collectively hold just 45 out of the 220 seats in the national parliament—see local elections as potential leverage to tackle the hegemony of the Popular Movement for the Liberation of Angola (MPLA), which has governed the country since its independence from Portugal in 1975.
In the 2012 elections UNITA polled well in several of Luanda’s more densely populated neighbourhoods, such as Cacacuo and Viana, as well as in central provinces such as Huambo and Bie, where dissatisfaction with the government is high. In Luanda, UNITA got some of its candidates into parliament when it scored 24.7% of the vote as against the MPLA’s 59.3%, and its Luanda-list MPs were elected to parliament. The party believes it could win control of several local councils, given the opportunity to take part in free and fair local elections.
Local administrations, made up of three strands: community, municipal and province, currently have little autonomy. They follow orders and budget directives as set out by Luanda. Moreover, nearly all staff posts and the majority of leadership positions at community and municipality level in Angola are held by MPLA members. Provincial governors are hand-picked by the president, and in most cases they are also the first secretary of the MPLA in that province.
“You have a very politicised local government which is very party-orientated,”
explained Aslak Orre, a senior researcher at Norway’s Chr. Michelsen Institute (CMI), who has written several papers on local government, or the lack of it, in Angola. “Local administrations tend more to the needs of the ruling party than to the welfare and service needs of the people in their constituencies.”
Angola’s 2010 constitution sets out the institutional framework for local elections, known as autarquia in Portuguese, the official language. The framework stipulates a local assembly whose members are elected by “free and direct local elections” and an executive chosen by the president of the autarquia.
The government has indicated several times since 2010 that it planned to introduce local elections but in each case deadlines have come and gone—the most recent in 2015. Few Angolans expect local polls to take place before the next general election, due to be held in 2017.
“There is a lot of talk about local elections,” said Mr Danda of UNITA. “But it is all just to make people think the government is serious about having them. In reality, they don’t want them because they are worried [that they] will reduce their power.”
In his 2014 State of the Nation address, President Dos Santos said the country needed the “right conditions” for local elections, listing the need for new territorial boundaries, governance systems and financing structures. In his address in November this year he said local elections would take place “at the right time”.
Even if local elections were to take place before the 2017 general elections, there are concerns that they might not involve a significant devolution of power to the local level. “How much power will municipal officials really have if the president continues to appoint the provincial governors?” asked Ms Roque.
One option being floated by the government is to test the new local election system in provinces with the highest capacity, or availability of staff to manage the elections and good transport networks, rather than those in more rural and under-developed areas. But UNITA says this would focus on MPLA strongholds, and create more opportunities for vote-fixing. The opposition party says the government’s ministry of territorial administration is spearheading the preparation for the autarquias, rather than the National Electoral Commission, which has cross-party membership and is therefore more likely to be able to provide checks and balances than a government-led team.
Analysts agree, however, that the introduction of local elections will not solve all the country’s problems. “If you can improve accountability you would hope to improve the performance of local officials and the services they provide,” says Mr Orre. “But decentralisation is not a magic wand that will instantly fix problems.”
Soren Kirk Jensen, an associate fellow of the Africa Programme at London’s Chatham House who has studied decentralisation projects in Angola, agrees.
“Angola is extremely top-down in the way projects are decided upon and it would benefit from a more bottom-up approach,” he said. “But you do have to be very careful how you decentralise spending to ensure you also build in proper control and accountability, otherwise you risk just decentralising corruption.”
Local elections alone will not be enough to achieve fully accountable local government, he says. “You need to have informed and active citizen engagement to know how to hold [governments] to account.”
In a handful of municipalities, churches have been working with local communities to train people to monitor public projects, and in 2007 Angola passed the Local Administration Law, which led to the creation of citizen councils (CACS)—social committees designed to support municipal administrations in their decision-making processes.
It has since initiated the Municipal Programme for Rural Integration and Development and Combating Poverty (PMIDRCP), a programme aimed at empowering local officials to plan, commission and pay for local government projects from a small annual budget allocation from central government.
One advantage is that the PMIDRCP involves local officials in planning for their communities, says Mr Jensen. But the challenge remains to ensure that projects are completed on time and on budget. Government projects in Angola do not often meet these criteria due to a mixture of poor management, weak human and technical capacity and corrupt officials.
However, the World Bank and other organisations have been critical of CACS branches around the country. Meetings were held irregularly, they found, while rules of membership were unclear. They also found that the overall impact and reach of the committees has been limited, or conditioned by existing political structures.
“When CACS were first introduced they were seen as an important start for local democracy,” says Mr Orre. “But they haven’t been prioritised by the government. A lot of people are now asking whether the CACS are a way station on the road to democratic local governance, or simply a detour.”
“There is a lot of discussion about the autarqias,” he said, “But there isn’t lot of substance to what is being said. Ministers tend to make generalised statements about how important local elections are, but they don’t make commitments about when they will be held.”
Grassroots opinion of the Angolan elite and its way of holding onto power is even more acerbic. Playing with an official slogan, popular Angolan rapper MCK, in the lyrics of his song O país do Pai Banana (The country of Father Banana) wryly observes: “They’ve transformed Angola into ‘a country of the future’. We’ll leave everything until tomorrow, don’t you think?”
A law aimed at forcing local majority ownership of firms runs into economic reality and hardline nationalism at the same time
By Owen Gagare
The Zimbabwean government has apparently bowed to pressure by effecting changes to its controversial Indigenisation and Economic Empowerment Act, which compels non-indigenous investors to cede at least 51% of the shares in their companies to black Zimbabweans, but the furor and confusion around the legislation shows no sign of abating. After months of haggling, on January 4th this year Finance and Economic Development Minister Patrick Chinamasa and Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao agreed to introduce changes to the Act. The turnaround was seen as an acknowledgment of the need to stimulate foreign direct investment (FDI), but has since been attacked by other members of the ruling party. Despite his apparent agreement to changes in indigenisation regulations, Mr Zhuwao has continued pushing for a hardline stance. On March 23rd he announced that the cabinet had passed a resolution to cancel the licences of non-compliant companies.
“Business has continued to disregard Zimbabwe’s indigenisation laws, as if daring our president and his government to do something about their contemptuous behaviour,” he said. The indigenisation law was enacted in 2007 ahead of the 2008 national elections, when the ruling party, ZANU-PF, turned to populist policies to shore up its waning support. At the time, the Zimbabwean economy was ravaged by hyperinflation, which peaked at 79.6 billion percent in November 2008, according to Professor Steve Hanke, an expert on exchange rate regimes at Johns Hopkins University, Baltimore. The government said it wanted to economically empower indigenous Zimbabweans by ensuring they acquired controlling stakes in foreign companies. Economists, business organisations and diplomats accredited to Zimbabwe questioned the policy, which they blamed for low investment levels in the country as compared to other countries in the region. According to the United Nations Conference on Trade and Development (UNCTAD), Zimbabwe recorded $545m in FDI in 2014.
By comparison, South Africa recorded FDI inflows of US$5.7 billion, Mozambique US$4.9 billion and Zambia US$2.4 billion. Nevertheless, ahead of the 2013 elections, the party again based its campaign on the idea of indigenisation, under the theme “indigenise, empower, develop and create employment”. It gained a controversial win at the polls, but businesses have resisted the regulations, which have proved an obstacle to new investment. The amendments to the Act will maintain a 51/49% ratio of local/foreign ownership for resource-based sectors of the economy such as mining, as well as other resources, including water, air, soil, animals and vegetation. However, non-compliant companies will no longer be threatened with seizure or closure, but will instead be required to pay an “indigenisation compliance levy” as a tradeoff for non-compliance, with a cap of 10% of gross turnover.
The new regulations will allow foreigners to own a controlling stake in companies operating in the non-resources sectors of the economy— including manufacturing, financial services, tourism, construction and energy—for up to 20 years, which may be extended. Previously the Act stipulated that a non-indigenous person could hold a majority share for five years from the date of commencing business. The regulations also make it easier for companies to comply with the legislation by awarding “empowerment credits” to companies that ensure “value addition, skills development and vocational training”, as well as socioeconomic development initiatives that include “enterprise development”, “preferential procurement” and the building of houses for workers. Under the new amendments, companies have until March 31st 2016 to submit their indigenisation plans to the Zimbabwe Investment Authority. Critics say the recent amendments change little, given that companies will still be expected to cede 51% of their shares.
“The fundamental principles remain unchanged and [the amendments] won’t remove the impediments to both domestic and international investors,” Eddie Cross, an economist, legislator and economic advisor to opposition leader Morgan Tsvangirai, told Africa in Fact. “The 10% levy will cripple every company in the country if implemented.” John Robertson, an independent economic analyst based in Harare, says the government should focus on creating an enabling environment that is conducive for both local and international investors. “Indigenisation should be a natural process, not something that is driven by the threat of punishment,” he said. “The amendments [make] everything worse. The new 10% requirement will destroy already existing companies and discourage new investors.” Zimbabwe National Chamber of Commerce chief executive Christopher Mugaga, also an economist, suggests that the term “indigenisation” is itself a problem. “It implies majority ownership by local or indigenous people, even if cosmetic changes are applied,” he told Africa in Fact.
Zimbabwe National Chamber of Commerce chief executive Christopher Mugaga, also an economist, suggests that the term “indigenisation” is itself a problem. “It implies majority ownership by local or indigenous people, even if cosmetic changes are applied,” he told Africa in Fact. Writing in Zimbabwe Independent, a privately owned business weekly, Sternford Moyo, a corporate lawyer who also sits on various boards, called for a balance between the country’s need to stimulate investment and its need to ensure that communities benefit from it. The requirement that investors relinquish a controlling share in their investments is simply unrealistic, he said. “No right-thinking person will feel happy to invest his or her money and immediately lose control over the investment.” Zimbabwe was experiencing serious liquidity problems, he argued. The country’s economic environment was not conducive to sellers obtaining value for their investments, as demonstrated by a recent collapse in the value of securities listed on the Zimbabwe Stock Exchange (ZSE). (On December 31st 2015, the ZSE’s market capitalisation plunged to $3 billion from $4.3 billion in January of that year.)
A law that made it compulsory to dispose of shares in such an environment, said Mr Moyo, would be inherently unfair. The government’s attempts to develop empowerment legislation should not focus on shareholdings in existing entities, he added, questioning the logic of the government’s approach to resources, particular in mining. “One cannot have mining companies buying [the right to mine] a mineral in exchange for their shares and at the same time paying royalties for extracting a resource they will have paid for with their shares.” Like other commentators, Mr Moyo was also critical of the proposed empowerment levy, which would be impossible for most corporates to carry, and would in any case be virtually unenforceable given an environment in which no money was available to purchase shares. He called for further amendments to the Act. “Investors need confidence that they will be allowed to control and benefit from their investments,” he concluded. Currently Zimbabwe is experiencing a crippling liquidity crunch that has resulted in company closures and high unemployment.
Zimbabwe Congress of Trade Unions secretary general Japhet Moyo told Africa In Fact that 95% of Zimbabweans were not formally employed, with only 5% in formal employment, due to massive job losses. Zimbabwe‘s public debt is around $8.4 billion, according to the 2015 Mid-Term Fiscal Policy Review presented to parliament in August 2015 by Mr Chinamasa. Since his appointment in 2013, Mr Chinamasa has worked hard to reengage key institutions such as the IMF and the World Bank in an effort to create conditions that attract new finance from international lenders. Under the terms of a new programme, negotiated by Mr Chinamasa, the IMF has resumed its monitoring of the country, which includes evaluating the implementation of the country’s economic programmes. As part of this, the government has committed itself to clarifying and amending its indigenisation law. However, Mr Chinamasa has drawn flak from hardline ministers who view the amendments as an admission that the ruling party has failed to implement the programme and thus that it won the 2013 election on empty promises, according to senior ZANU-PF officials who spoke to Africa In Fact in confidence.
These ministers believe that amending the regulations will hurt the ruling party ahead of the 2018 elections. Mr Chinamasa announced changes to the indigenisation law on December 24th last year. On Christmas Day he was roundly criticised by the empowerment minister, Mr Zhuwao, who accused him of “treachery” for suggesting that the indigenisation legislation should be amended. Mr Zhuwao was supported by Higher Education Minister Jonathan Moyo, who tweeted that Mr Chinamasa was “out of order”. Although the indigenisation law is yet to be amended, Mr Zhuwao’s March announcement regarding the cancellation of the licences of noncompliant businesses has added further confusion and uncertainty to Zimabwe’s business environment.
Sub-Saharan Africa: on the periphery
Political violence often means that those countries that most need investment are least likely to get it
By Brian Klaas
Conflict in Africa can result in economic devastation that lingers on far beyond the last crack of gunfire, because aid and trade matter more to the continent’s economic growth than they do to others. The loss of international partners—and foreign direct investment in particular— can drain an African country of its economic lifeblood for years after a coup d’état or a civil war. International ventures are naturally risk averse, and foreign investment is inherently volatile. For investors in Paris, Beijing, London, or New York, nothing seems quite so risky in Africa as a group of men in uniform taking power, or rebels in convoys headed toward the capital. Uncertainty is a surefire way to steer international capital elsewhere— either to another corner of Africa, or to another region altogether. However, not all volatility is created equal. The damage wrought by political violence—and the degree to which foreign direct investment flees bullets and bloodshed—is largely dictated by international responses to unconstitutional power grabs, coups and civil wars.
A country’s geo-strategic importance, particularly as regards economic interdependence and security, is a critical determinant of whether violence and volatility will lead to a devastating loss of foreign direct investment and a prolonged economic recession. Certain types of countries suffer more from conflict than others. The current scholarly consensus is that middle-income democracies, for example, suffer more economic fallout from coups than do poor authoritarian states. In short: comparatively richer democracies have more to lose from an autocratic military takeover than poor authoritarian states. For the latter class of countries, by contrast, a coup can sometimes even improve the economic outlook. But these findings overlook a key variable that accounts for significant variation in the economic trajectories of post-conflict nations: how the international community—and Western governments in particular—respond to conflict. This factor is particularly salient in the 21st century, since the international community has, at least rhetorically, affirmed a strong norm against coups and civil wars.
Since the end of the Cold War, international norms have shifted to uniformly oppose unconstitutional, and particularly violent transfers of power. This also became a regional norm in writing, as African Union’s main prohibition against “unconstitutional change of government” was codified in the Lomé Declaration in July 2000. African countries that experience coups are likely to face regional and international isolation. In research recently conducted for One Earth Future, an anti-conflict think tank based in Denver, Colorado, Jay Ulfelder and this author found evidence that the reactions of Western governments to conflict in other countries can create self-fulfilling economic prophecies. In some cases at least, there is evidence that the economic fortunes of a country after a coup, civil war, or an unconstitutional change of government may be largely dictated by international actors— particularly major powers in the West. Western governments may choose to isolate a country that has succumbed to a military takeover or a rebellion.
Isolation reduces international support for an illegitimate regime or an illegitimate rebel group that has taken power. Such isolation is based on the presumption that governments installed by unconstitutional means will find it hard to find allies or investors. In turn, prospective coup plotters or rebels may be deterred. But reinforcing the anti-conflict message with diplomatic and financial isolation comes at a cost: the economy concerned is likely to experience a severe downturn. On the other hand, Western governments can take a “business as usual” approach. They may use scathing rhetoric and call for a return to civilian government or to an end to a rebellion while not pursuing meaningful policy shifts with regard to the country concerned—be it aid, trade, or foreign direct investment. In such cases they may determine that a severance of ties is out of the question for short-term security reasons, or because they favour stability over a competing concern for democracy. In these cases, an economy is less likely to be affected. These diplomatic responses are not random.
They are carefully constructed with reference to geopolitics. Unfortunately, sub-Saharan Africa is in the geopolitical periphery. As a result, some countries outside of the region may receive more favourable diplomatic treatment in the wake of political violence, thereby ensuring continuity or even an increase in foreign direct investment. Government signals provide an important cue to investors, particularly when sanctions are involved—as they often are—with post-conflict, and particularly, post-coup governments. For example, an obscure and rarely enforced 1961 law explicitly forbids the US government from providing “any assistance to any country whose duly elected head of government is deposed by a military coup or decree”. In practice, however, the law is selectively applied. The military takeover in Egypt in 2013 was surely a textbook example of a coup d’état. Yet, challenged on this, a US State Department spokesperson said that the 1961 law did not require a “formal determination” as to whether a coup had taken place in Egypt, and that it was not in national interest to make such a determination.
US foreign direct investment to Egypt actually increased by 17% between 2013 and 2014, from $4.1 billion to $4.8 billion. Sub-Saharan Africa rarely gets this kind of treatment. The continent is home to far fewer Western geo-strategic priorities—with the exception, perhaps, of anti-terrorism cooperation in the Sahel region. Recent scholarship has shown that perceptions of African stability need to be built up over many years, but can be destroyed by a single event, such as a coup or a civil war; and government responses regularly prime FDI responses. Also, the reputational risks to Western firms of doing business in a place that is diplomatically isolated often cause firms to look elsewhere. However, international responses to African conflict can be comparatively less damaging if the country concerned serves Western economic interests in some way. Côte d’Ivoire’s 2010-11 post-election civil war, in which about 3,000 people died, created immense uncertainty. The country had just emerged from another civil war, so a pattern of political violence existed.
Yet foreign direct investment fell by only 16% after the conflict, and rebounded quickly. Why? Well, Côte d’Ivoire produces 40% of the world’s cocoa. Americans and Europeans want cheap chocolate, whether there’s a civil war or not. Foreign investors respond to African conflict in the same way they make investment decisions more generally: their decisions are based on their perceptions of future returns. When investors put their money into a country that is closely intertwined with Western interests, or the interests of a major global power such as China, then they are more likely to be insulated from capital flight after an episode of political violence. The US is more willing to stick to its diplomatic commitments with Egypt, or other perceived lynchpins of geopolitical security, even if that has economic consequences, than with a country like Madagascar. Being on the international periphery, as most of sub-Saharan Africa is, virtually ensures that political conflict will drive international investment elsewhere.
In addition, unlike Chinese firms, Western businesses are extremely hesitant to do business in regimes that are being routinely condemned for human rights abuses, undemocratic governance, and political violence This creates a Catch-22 effect: those countries that are least well equipped to weather the storm of conflict are more likely to lose foreign investment, while countries that have sufficiently strong international partners are more likely to continue to receive investment. Africa, the most conflict-prone continent, is often punished most harshly by international investors when volatility strikes.