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The Forecast, 2018
The below is a summary of The Forecast: East Africa 2018. If you would like to download the full document for free, just click the button below:
Domestic Politics & Policy
The 2018 political outlook is dominated by President John Magufuli’s continued closing of political space in Tanzania. Further restrictions will be placed on the media. Important legislative changes in this area include the Political Parties Act that will place strong restrictions on opposition activity, and the regulation of online content. Reducing media freedom also means that coverage of extrajudicial killings and police violence against the opposition will be suppressed.
Tanzania will experience a continued threat from Islamic militants. However, most security risks will be internal. Dar es Salaam’s crime levels, have improved under Magufuli’s Administration, and this trend is expected to continue.
The international community has been heavily invested in Tanzania for years, and will be hesitant to damage relations, although relations will cool somewhat over Magufuli’s increasingly authoritarian stance in domestic politics and his belligerent stance on freedom of information and treatment of expatriates.
The government will continue its focus on mega projects in the infrastructure space. The IMF had cautioned the government to postpone large projects until financing is secured, but this is unlikely to significantly slow down Magufuli’s plans. However, the country still has limited capacity to fund projects and overall budget implementation has been slow.
Considerable uncertainty surrounds one of Tanzania’s largest energy sector projects, the Lindi LNG plant with a planned investment volume of US$30 billion.
Tourism has slowed — despite the government’s figures and projections which are inaccurate at best — however this will be one of the few private sector spaces which is not expected to receive a large degree of government intervention.
Domestic Oolitics & Policy
Kenyatta goes into his second term with a weakened mandate. This has implications in two areas:
- The Deputy President William Ruto will need to find new supporters to run for the presidency in 2022. Many of Kenyatta’s supporters are still deeply suspicious of his role in the 2007 violence, and the results of the 26 October 2017 election rerun show that Kenyatta will struggle to deliver the votes from his community.
- Kenyatta’s parliamentary majority will be of less significance than anticipated. Kenya has no established parties with internal party discipline, and MPs are used to extracting bribes and patronage for decisions. Kenyatta’s weakened second term will face a fragmented and fractious parliament, even if the formal opposition limits its participation.
Kenya’s porous northern border and institutional corruption — which has infiltrated the security forces — equates to a sizeable risk that al-Shabaab and its associated groups from Somalia will remain a threat to Garissa and Lamu Counties. The risk of kidnapping and attacks in this region will remain relatively high for next year. Kenyatta is unlikely to address these political grievances head on.
The international community has maintained a studiously neutral stance in the recent election that will translate into implicit support to the Jubilee administration into the next year. While exasperated with Kenya’s corruption, Western governments continue to see Kenya as a key partner in addressing the spill over of radical Islamic terrorism from Somalia, and a partner in containing the fall out of South Sudan’s interminable civil war.
Kenyatta’s new administration needs to address the debt service and financing of the country’s debt that rose significantly during his first term.
There had been some suggestion that Total – who hold oil blocks in both Uganda and Kenya after its recent acquisition of Maersk Oil – would push Kenya to export its oil through the Uganda/Tanzania pipeline as well. However, the Kenyan government will likely resist this because the pipeline is an integral part of the northern part of the country’s development plans
Growth in Kenya’s banking sector has subdued by the interest rate cap signed into law in August 2016. Banks must not charge more than four percentage points above the CBK’s benchmark interest rate, and must also pay a minimum deposit, which significantly lowered the, albeit substantial, spread.
Brazil’s economic ties with China have strengthened considerably over the last two years, and Chinese companies are showing a keen appetite for Brazilian assets in the power sector and for infrastructure as a whole. Bilateral relations are good. There has been little visible engagement with the U.S. since President Donald Trump took power, but there are no areas of serious dispute.
Under Temer, Brazil is less inclined to pursue a nationalist agenda, although left-wing groups remain vocal in their opposition to opening up the oil sector to foreign investors and international oil companies.
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