September 28, 2017

Africa Digest by Pramit Pal Chaudhuri 


Mr. Pramit Pal Chaudhuri 
Distinguished Fellow, Ananta  Aspen Centre 
 Foreign Editor, The Hindustan Times                                                                                             SEPTEMBER 2017 | VOL 01 ISSUE 04| MONTHLY HIGHLIGHTS

• India and Japan Move towards Growth Corridor

• South Africa’ s Gupta Brothers Scandal 

• Togo’s Inadvertent Internet Experiment

 

 

India and Japan Move towards Growth Corridor    

India and Japan moved towards officially breaking ground for the proposed Asia Africa Growth Corridor during Japanese Prime Minister Shinzo Abe’s state visit to India. In their joint statement issued on 14th  September, the two governments spoke of working together to build connectivity in the Indo-Pacific and Africa. The statement said the two sides “welcomed the efforts to explore the development of industrial corridors and industrial network for the growth of Asia and Africa, which will benefit various stakeholders in the Indo-Pacific region including Africa.” This explicitly makes African connectivity as a strategic priority for both countries. 

The Asia-Africa Growth Corridor, according to Indian and Japanese officials, will initially see the setting up of modern port facilities and special economic zones at two points: Nakala in Mozambique and Mombasa in Kenya. Broadly, the idea is to create an ecosystem at these two nodes that is attractive to Japanese and Indian manufacturers and traders. This investment will then generate commercial links to markets around the Indian Ocean, but with a preference for the Indian littoral and the Bay of Bengal area. 

The idea seems to be to build infrastructure to help firm up these business linkages as they organically branch out from Nakala and Mombasa into the hinterland and to other parts along the East African coast. While present plans envisage a long-term budget of $40 billion with about three-quarters being provided by Japan, the plan is to make the corridor’s development as market-driven as possible. 

The growth corridor would require not merely physical infrastructure but also customs harmonisation, regulatory reforms and skills development for local labour. India’s Foreign Secretary Dr S. Jaishankar, in a speech on 25th August, emphasized that the corridor would require “a strong sense of local ownership that can only happen with consultative project designing, transfer of technology and encouragement of skills.” Japanese officials stress that the corridor must be built and financed in a manner that is substantially different from the way China, for example, is using debt to construct its Maritime Silk Road and other components of the Belt Road Initiative. 

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South Africa's Gupta Brothers Scandal   

A slowly spreading scandal involving an Indian-origin business family continues to damage the reputation of South African President Jacob Zuma, the ruling African National Congress and has now begun to stain a number of major international companies. The global accountancy major, KPMG, purged the top management of its South Africa after evidence it had facilitated the crony business relationship between Zuma’s family and the Guptas. South African Finance Minister Malusi Gigaba has called for an investigation into KPMG’s actions.

The Guptas are three Indian-born brothers whose meteoric rise in South Africa has closely paralleled the political career of Zuma. 

With official inquiries into the scandal seemingly stalled, the opposition has turned its attention to businesses which it believes were involved in the Zuma-Gupta dealings. A number of other firms including McKinsey, Bell Pottinger and SAP now face investigation or are carrying internal probes into their South African office’s culpability. 

South Africans are often astonished when they find few people in India have ever heard of Atul, Ajay and Rajesh Gupta, three brothers born in Saharanpur who came to South Africa in 1993. They began by selling goods from the boot of a car but today their Sahara Group – unconnected to the Indian financial firm of the same name – has a turnover of over $20 million with interests in mining, transport and media. Their personal wealth is considerable: Atul Gupta’s personal wealth was listed in 2016 by Who Owns Whom as $ 773 million.  

Their notoriety in South Africa derives more from the fact that company’s directors and employees have included Zuma’s son, daughter and one of the president’s wives. This, in turn, feeds into evidence that the Gupta won lucrative business deals because of high-level political lobbying. 

The “Zupta” relationship goes back a decade when Zuma’s son began working for the Guptas. The online news site AmaBhunagane, using over 100,000 emails leaked under the hashtag #GuptaLeaks, has since exposed what the opposition parties argue is a crony structure of rigged government contracts, kickbacks and money laundering which helped enrich both Guptas and Zumas. The Guptas are said to have been influential enough to have had a finance minister removed in 2015. Public anger at their influence exploded after the brothers used an air force base to ferry guests to a 2013 family wedding. 

Zuma, who recently survived a no confidence motion in Parliament partly motivated by the Gupta scandal, and the Guptas have denied any wrongdoing. No government agency or judicial inquiry has arrested or prosecuted anyone but it is assumed Pretoria has blocked or stalled many of these efforts. 

The opposition has turned to filing cases against firms like KPMG, on the basis of the leaked emails. A number of firms, including the Bank of Baroda, announced last year they would no longer be doing business with Gupta-owned companies. 

There is evidence that the Gupta brothers have transferred some portion of their wealth overseas. The brothers said last year that they would wind up their South African business operations by the end of 2016 “in the best interests of our business, the country and our colleagues.” So far, this has not happened. #GuptaLeaks documents indicate they have bought a luxury home in Dubai for Zuma, leading to speculation this could become the South African leader’s getaway in case the scandal engulfs his reign. 

Togo's Inadvertent Internet Experiment 

The West African state of Togo shutdown its internet on 5th September for a week. The government wished to stop youth from mobilizing online to hold protests against the reining Gnassingbe family. But the result also provided the world an experiment in what a society would do if it suddenly lost the internet.

Local and foreign media reported that the country, where WhatsApp is ubiquitous, experienced a more attentive civilian workforce, a rise in old-fashioned social interaction such as conversations in bars and walks in parks, and a drop in sexual activity among the young as online seduction was replaced by the more expensive business of actually paying for flowers, drinks and meals. There was also a surge in the purchase of books and printed reading material.

The Gnassingbe family have ruled Togo for over 50 years. Since August they have been facing a revived opposition over the country’s stagnant economy and the ruling family’s reluctance to surrender power. The internet closure was designed to preempt a new round of protests planned for September.

The ban, however, is reported to have been counterproductive. The sudden loss of WhatsApp has led to far greater political awareness among a previously apathetic youth. Large business, whose operations were largely cloud-based, saw all of its activities come to a standstill during the week of the ban and has now become more vocally anti-government. 

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