FACTBOX-Key political risks to watch in Africa in 2011

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By Peter Apps, Political Risk Correspondent

LONDON, Dec 21 (BestGrowthStock) – 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?

FACTBOX-Key political risks to watch in Africa in 2011