Print version Email to a friend

FACTBOX-Key political risks to watch in Africa in 2011

Tue, 21 Dec 2010 14:18 GMT

Source: reuters // Reuters

To read this as a pfd, http://r.reuters.com/hag23r

By Peter Apps, Political Risk Correspondent

LONDON, Dec 21 (Reuters) - Elections in Nigeria, domestic politics in South Africa, Uganda, Madagascar, Egypt and Congo will all be in focus in Africa in 2011, together with conflict risks in Sudan and Ivory Coast and broader corruption issues.

Below are the key political risks to watch:

For other regions, click here [ID:nRISK]

NIGERIA PRESIDENTIAL RACE

Nigeria's April 9 presidential race remains wide open with the ruling party divided over its candidate. Government spending is on the rise and the threat of unrest hangs over the oil-producing Niger Delta.

The ruling People's Democratic Party has seen its candidate comfortably win every leadership contest since the end of military rule more than a decade ago, but President Goodluck Jonathan faces challenges to secure the nomination.

Jonathan is a contentious candidate because of the ruling party pact that power should rotate every two terms between the largely Muslim north and mostly Christian south. He is a southerner who inherited the presidency earlier this year after the death of the northerner Umaru Yar'Adua, who died partway through his first term.

The key vote will be the presidential primaries with voting dominated by Nigeria's powerful governors. Meanwhile, analysts expect government spending to rise in the run-up to the vote while the political uncertainty adds an effective brake to policy-making.

What to watch:

-- The presidential primaries. Does Jonathan win enough support or do powerful northern politicians succeed in their bid to pitch former vice president Atiku Abubakar as a "consensus candidate" to challenge him? Investors want clarity, not confusion.

-- The passage of the key petroleum bill. Foreign oil firms are holding back investment until it passes, but it is unclear if this will happen before the election.

-- Is there an uptick in unrest in the oil-producing Delta? The military has had the upper hand since last year but ethnic or religious rhetoric could inflame matters during campaigning, and some worry about an uptick in attacks.

SOUTH AFRICA'S POLITICS

After the success of the 2010 World Cup, South African politics has largely retreated from investors' radar but could return in 2011, especially as politicians prepare for local government elections in the first half of next year.

President Jacob Zuma's African National Congress government could face renewed labour unrest and anger amongst poor blacks over shoddy public services, feeding demands for more public spending that could unnerve investors.

A series of mining scandals involving companies with close family ties to Zuma as well as proposed measures to curb the media have posed awkward questions about his presidency, with some accusing him of cronyism.

The ANC Youth League continues to push for nationalisation of mines despite everybody from the miners union to mine owners dismissing it as ludicrous; but the ANC has so far stopped short of slapping the youth league down.

What to watch:

-- Any signs of growing discontent at the ANC in local polls. Little in the way of policy changes seen ahead of the next ANC national conference in 2012 but investors and others will be looking for clues in advance.

-- The ANC appears to be watering down proposals for media reform, but the reporting of more dodgy deals by the -- sometimes inaccurate -- press could poison the atmosphere once again.

POTENTIAL NEW CONFLICTS

The number of conflicts in sub-Saharan Africa has dropped sharply since the late 1990s, but rising political tensions in several more volatile states could spill over into violence during 2011.

Sudan is due to hold a referendum on potential independence for its oil-rich south on Jan. 9, promised in a 2005 peace deal that ended decades of North-South civil war. The referendum already faces legal challenges and could well be postponed -- although that could spark a furious reaction from southerners who would see it as a northern plot to keep control of their oil.

Analysts say it is in neither side's interest to return to conflict, but do not rule it out.

Cocoa-rich Ivory Coast also looks to be teetering on the brink of conflict after disputed November elections that left both former president Laurnt Gbagbo and Alassane Outtara claiming victory. Forces loyal to rival claimants battled in the capital Abidjan briefly and there seems little sign of willingness to compromise on either side.

Some also worry of a return to violence in Kenya after post-election troubles three years ago, with concerns the naming of suspects by the International Criminal Court could destabilise the country.

Meanwhile, violence continues in Somalia and the eastern Democratic Republic of Congo, both conflicts that have dragged in neighbouring countries from time to time.

What to watch:

-- Does the referendum in Sudan take place, and what is its outcome? Do outside powers -- particularly China, which is a major investor in Sudan -- exert pressure for calm?

-- If violence does escalate in Sudan and Ivory Coast, do investors take that as a signal that Africa may be more dangerous than they had recently thought?

-- Do Islamist militants based in Somalia mount new attacks in nearby countries similar to blasts in the Ugandan capital Kampala?

CORRUPTION AND RESOURCES

Africa had been widely praised for making progress on human rights, democracy and corruption over the past decade -- but some data suggest it has fallen back in the last year. The Mo Ibrahim Foundation warned in October that while access to economic activity continued to increase, for the first time its survey showed a decline in governance.

Rising corruption would be a particular worry for companies moving in to take advantage of natural resources, with several countries including Ghana, Uganda, possibly Sierra Leone and others beginning oil exploration or production.

Emerging powers particularly China have dramatically upped investment and aid in Africa in the last half decade. They are welcomed by most but with some accusing them of operating with lower governance standards.

Firms operating in Africa also face a tighter regulatory environment at home, with Britain's bribery act in particular -- entering law next year -- seen forcing firms to tighten their procedures just as they face rival Chinese and other firms.

What to watch:

-- How well is Ghana seen to handle its oil revenues? Until now, the West African country has won itself a good reputation for transparency but politicians are still divided over how to use revenue from its Jubilee Field. Any perceptions of deepening corruption would take the shine off what had been seen as one of Africa's leading success stories.

-- What happens to the Mo Ibrahim and other indicators next year should indicate whether the 2010 results were a glitch -- as some suggest -- or part of a wider trend.

-- How well enforced is the new UK bribery act and other Western anticorruption legislation? Do firms complain it puts them at a competitive disadvantage?