

EFF Statement on Second Quarter Economic Decline and Recession (04.09.2018)







EXX Africa published a special report on the arms trade in the Horn of Africa.
LONDON, United Kingdom, September 3, 2018 – EXX Africa (EXXAfrica.com) published a special report on the arms trade in the Horn of Africa.
Download the report: bit.ly/2CcF7hr
The trade of illegal weapons implicates senior government officials in Djibouti, which suggests that the Doraleh port terminal, which is now under government control and suffers from porous customs checks, will increasingly be leveraged as an arms trade hub. However, the most significant flows of illegal weapons will continue to be moved in smaller dhows via the fishing communities in the south-east coast and via the Garacad port project.
So far, and over the past few years, the DP World operated Doraleh terminal was not used for arms trafficking. However, local intelligence suggests that the terminal, which is now under government control, may in future be leveraged as a processing center for the illegal arms trade.
There is some evidence that the Doraleh terminal will increasingly be used for the weapons trade. The Chairman of the Djibouti Ports and Free Zone Authority (DPFZA), Aboubaker Omar Hadi, is a close friend of Ali Abdi Aware, who is a three times presidential candidate of Puntland, as well as a very prominent businessman. They are jointly involved in a venture where Aware is personally in charge of former Yemen president Ali Abdallah Saleh’s bank CAC International. This bank is headquartered in Djibouti. Local intelligence suggests that Omar Hade helped with the registration of the bank and owns shares in it (“part of the investment components”). Moreover, Omar Hadi has established a bank branch in Bosaso that can launder money for underground institutions dealing with weapon imports from Yemen, as the bank hails from Yemen originally.
Aware is also very well established in the Guelleh government and he was the one who set up Puntland’s assistance to Djibouti donating 900 camels to Djibouti when it had an armed dispute with its Eritrean rival over the disputed Doumeira Islands. He also helped Djibouti secure an investment commitment for road construction from the Saudi government back in 2009 when late General Adde Muse Hersi was Puntland’s president.
Indeed, the trade in illegal weapons in Djibouti stretches t the highest echelons of the government. Local intelligence confirms that one company, which in the public version of this report will only be names as Company Z, is owned by the Guelleh family and handles arms trade. Company Z only deals with weapons imports into Somalia. Those same weapons are then often distributed to political factions backed by the government.
All this suggests that the Doraleh terminal will start to play a more prominent role in regional arms trafficking. Local intelligence suggests that the main port of Djibouti is not secure and that customs procedures are porous, which facilitates illegal shipments. Yet, since this terminal will remain one of Djibouti’s main import-export hubs, international scrutiny of cargo flows is high here, which will limit the port’s use as a weapons trade center. However, sources say that much of the illegal arms trade does not need to be moved through Djibouti’s main port. It is moved in smaller dhows via the fishing communities in the south-east coast.
Moreover, Djibouti is also now involved in the construction of Garacad Port. Djibouti became following a political disagreement with the Somali government with regards to the Eritrea-Ethiopia-Somalia rapprochement following the meeting between the Somali President and his counterpart Afewerki in Asmara. Djibouti are taking advantage of the Puntland disagreement with the Somali government here over the Garacad port. Prime Minister Hassan recently visited the region and was invited to the grand opening of the Garacad Project but refused to do so as the Somali government recently began the Hobyo port construction plan, only 90 km down the road.
There is a lot of tension between the Somali government and Djibouti over their involvement in this project. Local intelligence suggests that the Somali government is rightly worried about Djibouti using this as a base for moving weapons from the Gulf of Aden into Puntland and then onwards into Somalia proper (see previous comments on support for destabilising factions within Somalia such as al-Shabaab). Also, Garacad is a regional hotspot for weapons shipments landing, as it was pirate territory from 2008 – 2011. Boats disguised as fishing vessels still land there for smuggling purposes.
It is at Garacad that Djibouti plays its heaviest role in regional arms trafficking. The logistics, freight, and construction companies involved in the Garacad Port Project are often owned by senor Djibouti government officials and military officers. Most of the construction materials for the project will be transported overland from Djibouti or shipped to the coast off Garacad. There is ample opportunity here for weapons smuggling. Again, the UN Monitoring Group reports for this region include names of some entities which local intelligence suggests are still accurate.

“African leaders should not turn the continent into a giant collector of donations and loans from wealthy nations—they must find other plausible means to help established their economic security so as to minimize poverty. This incoherent blunder on the mainland must be scrutinized.” – Duop Chak Wuol
As The 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) is scheduled to happen on the 2nd and 3rd December 2018, there is time to remember how the Chinese is operating on the African Continent. The Chinese isn’t coming with empty giving hands of donations or even charity. They come with intent of interests and needs of resources from the continent, by offering loans, serving and building through state owned enterprises (SOE) in various of countries, whether it is roads, ports or railroads are built by Chinese Companies, by Chinese Workers and often on Chinese loans. Therefore, they might end up as Chinese owned enterprises, whose vital for transportation and export of needed minerals and whatnot from the continent.
Instead of coming with loans and direct-aid with strings like Western Powers has done over the last few decades, the Chinese are coming with friendly loans, but the Heads of State should know that the Chinese doesn’t play. They want value for money and expect a return, if it doesn’t they might snatch the new crown-jewel or anticipate to get perks from the state. If that is some sort of trade-off or licenses to extract mineral resources or even minor taxation like toll-roads, where the piece of cash will be sent to Beijing and not the capitol of the country where the road is built. That is how these people operate. They are not in it to play or be giving, but gain advantage and have the upper-hand.
This can be shown by what the State Media in China writes in Xinhua Net wrote today and what a CARI report on the same funds are saying. The Chinese portray the funding as investments on the Continent, as the funds are most likely pushed as loans, which burdens the states and that they have to repay. Loans are not given, but issued because of lack of direct funds to build those infrastructure and investments done. So, what I am saying isn’t mere speculation, but a narrative that has to sink in.
Chinese Investments:
“China’s investments into Africa surged by more than 100 times from 2000 to 2017. In the past three years, annual Chinese direct investment into Africa was about 3 billion dollars on average. By the end of 2017, China’s investments of all kinds into Africa totaled 100 billion dollars, covering almost every country on the continent” (Li Xia – ‘Facts & Figures: China-Africa ties: cooperation for shared future’ 02.09.2018 link: http://www.xinhuanet.com/english/2018-09/02/c_137438845.htm).
Chinese Loans:
“From 2000 to 2017, the Chinese government, banks and contractors extended US $136 billion in loans to African governments and their state-owned enterprises (SOEs). Angola is the top recipient of Chinese loans, with $42.2 billion disbursed over 17 years. Chinese loan finance is varied. Some government loans qualify as “official development aid.” But other Chinese loans are export credits, suppliers’ credits, or commercial, not concessional in nature. China is not Africa’s largest “donor”” (China Africa Research Initiative – ‘DATA: CHINESE LOANS TO AFRICA’ Version 1.1 August 2018).
They might try to conceal the reality, just like make-up is used on the face to fade the age or even marks that shows stress or pimples. However, the Chinese cannot be able to lie about their intent. They would not offer these sums of cash, without expecting a turnover or even profits. The Chinese wouldn’t allow all these billions of US Dollars spent on these nations to be spoiled and lost on the streets of Lome, Harare, Addis Ababa or Nairobi. They anticipate a return on the loans, either straight cash or getting pieces of the built infrastructure to advance the value of the Belt and Road Initiative (BRI).
That the Heads of State in Africa should be concerned as they are getting in debt traps, instead of being in cycle of positive growth, they are getting new loans to pay the old ones. They are using the same creditor to secure new loans on top of the old-debt. That is how it will continue, until a point where they cannot pay the defaulted debt and the Chinese would then come to snatch something of value to recoup the failing debt. Because they don’t want to write-off the big money without having anything in return. That is what the Chinese has done in Sri Lanka and might start elsewhere. There might be soon more control of port in Djibouti or railroad of Kenya, even the Ethiopia-Djibouti railway line too. As they want their value of money.
They might be all smiles and photo-ops in Beijing these days, the smiles and added loans to dozens of countries. The added “investments” and deals struck, but the Chinese will not do so without getting something in return. To think otherwise, is to be naive and think they don’t have an agenda by doing it.
There is nothing like a free-lunch and the people will learn that, the Heads of State will not directly pay the debt, but the states will do so. Maybe not in this decade or next 5 years, but sooner or later. The bill for the coffee and biscuit will come. Than it is all eaten, but tab still has to be cleared. Peace.



I have issues with President Uhuru Kenyatta and Corruption. He has talked so long about battling it. However, nothing of substance happens. There are some political arsonists who is taken out, now and then. But the systems is more of the same. There are parts of judiciary and parts of government that are supposed to work directly against Corruption. Neither does them seem very interested to touch the high-ranking ones and their connected elites. Which eats of the embezzlement, graft, kick-backs and money laundering. This is done at a scale, which isn’t funny.
Why I don’t believe the President isn’t only because of NYS Scandal 1.0 and 2.0, the Ministry of Health tricks, land-grabbing by random individuals within the government or the Eurobond. But because of the report alone, which stated in June 2018, that Kenyatta’s government since 2013 until 2018 the rate of corruption had grown with 240%. That is why I doubt that this man, who is in his second term and final. Really cares about the fight on Corruption. He can lie to Western Media and the BBC. But the reality is that his government is rampant with Grand Corruption and we know it.
Some key quotes from yesterday:
“It is something I am committed to do. It is what I want my legacy to be—the fight against corruption, and transparency, and to ensure that the nation’s resources are used in the manner it should be” (…) “As a government, as an individual, I am committed to this fight. This is an animal, this beast of corruption, is an animal that we intend to slay. What is remaining now is for our independent judiciary to do its job, and give justice for and on behalf of the people of Kenya” (…) “We can even go back to my grandfather, great grandfather. . . What we own, and what we have is known to the public. If there is an instance where someone can say what we have done is not legitimate, say it, and we are ready to face any court” – In an exclusive interview with the BBC Hard Talk’s Zeinab Badawi, President Uhuru Kenyatta” (Patrick Lang’at – ‘Kenyatta: Lifestyle audit can go back to my great grandfather’ 29.08.2018 link: http://www.theeastafrican.co.ke/news/ea/Uhuru-Kenyatta-on-Lifestyle-audit/4552908-4734014-143fnxi/index.html).
I have hard time believing this will be his legacy, the fight against corruption. Especially with his track-record. He is more likely about to tarnish the stability of the Kenyan Shilling and add enough debt to the Chinese. So, they have to trade away vital Mombasa Port or even rent away the whole Standard Gauge Way. As the Belt and Road Initiative (BRI) is made for that sort of transactions. That is if he is careful with his outstanding debts, as the state officials are eating more and more of the tab. This while the president claims to fight the rampant grand corruption.
He is maybe playing like a big-shot on BBC. However, when he comes home, it is back to our time to eat. He can be the king and the fighter abroad, but when he comes home. He will stay cool, only take out the ones who are in his way or to prove to point. The rest will get away with the evident thieving and grand corruption. That is to be expected, the ones who is charged is political motivated and done to take down, the previous power or the ones the Jubilee doesn’t need.
If this was his legacy, all the governing bodies wouldn’t have become worse in his time, but had stopped growing since Kibaki. Alas. That isn’t the case. Peace.

We should be grateful that the Western Uganda and District of Bushenyi get some of the promised factories, that the President has pledged over the years. The promises of Tea-Factories goes back to campaigns in 2004 and I am sure if you dig more back. You could find President Yoweri Kaguta Musveni promising that while it was a British enclave. However, the propaganda from National Resistance Movement (NRM) doesn’t make sense today. Because the numbers game isn’t their strong-suit, that is why they are known for rigging elections, not winning them. Honestly, these numbers doesn’t add up.
“I also toured Swazi Highland Tea Company Limited in Kisingo village, Kyamuhunga Sub-county owned by Africano Bakahwenkyi. The factory produces 50,000kgs of tea daily and employs about 350 staff. I then commissioned Global Village Tea of Hassan Bassajabala. The factory employs 620 workers and produces 20,000kgs of tea per day in a peak season. 60% of the production is got from the out growers while 40% is from the factory’s tea estate. I thank Bakahwenkyi and Bassajabala for understanding and implementing the gospel of wealth creation. Tea production has gone up. From one factory, you can now get the total tonnage of the amount of tea Uganda used to produce when the NRM had just come into power” (Yoweri Kaguta Museveni, 26.08.2018)
Credible numbers:
“In 1988, the government attempted to control tea prices, by doubling producers’ prices to Ush.20 (US$ 0.12) per kilogram, as an incentive to boost production. However, production remained below expectation. 13 ECONOMIC POLICY RESEARCH CENTRE – EPRC Uganda’s Tea Sub-sector: A comparative Review of Trends, Challenges and Coordination Failures For example, the 1989 output of 4,620 tonnes was below 1986 which was 5600 tonnes (NPA, 2007” Economic Policy Research Centre (EPRC) – ‘UGANDA’S TEA SUB-SECTOR: A COMPARATIVE REVIEW OF TRENDS, CHALLENGES AND COORDINATION FAILURES’, P: 12-13, September 2014).
Why I am doing this, is that these factories on top days are production in total 70 tons of tea. That is the words of the President. The total production in 1986 of tea in the whole of the Republic was 5600 tonnes.
If the numbers was peak season and all year from the one factory, that means they would be able to produce 50 tons times 365, which means 17,800 tons. That is more than, well, in 1986. But that is the top production. Which would be a staggering amount, as the numbers of production in total from the Uganda Tea Association was the total production 39,298,960 tons in 2017, that is all over the republic. Not only in Bushenyi district. As the top producing districts aren’t in Bushenyi, but in Kabale and Kanungu districts. Therefore, that Bushenyi would be able from one factory to produce 17000 tons of the total 39,000 tons is a bit of stretch, especially knowing that this isn’t the top producing area. That would mean the top producing areas only stands for 22,000 metric tons of tea, while Bushenyi on the one factory produces about 17,000 metric tons of it. Doesn’t that sound weird?
Why I find these numbers all weird is because on the Mukwano Group Company Profile of 2018, the well established tea producer, which is familiar and has produced tea at an established rate. Have these numbers:
“Buzirasagama, Hiima, Munobwa and Kigumba Tea factories were built with a capacity of 220,000 Green Leaf or 53,000kg Made Tea per day. At Hiima and Kigumba there are two lines of Orthodox Tea manufacturing units with a production capacity of 20,000Kg Green leaf or 4,000 Made Tea per day. Green Tea, which contains high levels of anti-oxidants, is Rwenzori Commodities’ new product produced at the Kigumba factory with a production capacity of 1000Kg green leaf or 250 kg Made Tea per day” (Mukwano Company Group Corporate Profile of 2018).
With that in mind, Mukwano Group and with the amount of made tea when calculating is 53 tons per day times 356 days is equal to 18,868 tons of tea. When taking in account the numbers from Swazi Highland tea, which are 17,800 tons, means those two producers are making 36,668 tons in a year. That means these two companies are having most of the market and no one else. As the Uganda Tea Association numbers cannot have changed that rapidly. Unless, there been a rate of production that the East African or other media houses haven’t captured.
The President is right about the possible production in the factory, that it is larger than when he took power in 1986. But the total production and calculations doesn’t make sense to anyone. Unless, he has given Swazi Highland Tea, the same level of production as the Mukwano Group has already. Would that be true?
I just beg to differ, unless there been an unreported surge in tea production at levels that is beyond me and that last year was fluke. If so, kudos, if not, the 50 tons production at Swazi Highland Tea is a big as Mukwano. Would Mukwano be happy about that?
Peace.

“If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.” – John Maynard Keynes
There are worries about the rising levels of debt the Philippines has to China. That should worry all Filipino. Since, this will be repaid, even as the infrastructure projects under the President is served now. The time for repaying these debts will come. This might be the next one after President Rodrigo Roa Duterte might have to answer for that. But he should be worry himself of the levels he is putting the Republic in, unless he wants important parts of the infrastructure be “given” to the Chinese as a way of repaying the debt like Sri Lanka did.
“The conclusion of an agreement with China to manage the Hambantota port was seen as inevitable after the government buckled under Chinese pressure when the China Communication and Construction Co Ltd, which was building the port city, demanded USD 143 million as compensation for the stalling of the work. The Sri Lankan government was also compelled to renegotiate the Colombo Port city project last year, which had been suspended due to criticism about the Chinese ownership of 20 hectares of freehold land as well as controversy over the project’s possible negative environmental impact” (Smruti S. Pattanaik – ‘New Hambantota Port Deal: China Consolidates its Stakes in Sri Lanka’ 17.08.2017).
This story should be worrying for the Philippines as the rising debt to China will come to roost one day. Duterte has accepted and taken it for his projects, but will it be sustainable. That is something he himself should ask himself and also if they can repay this debt without paying a high price.
Jovito Jose P. Katigbak reported in June 2018 this: “Another issue worth noting is debt sustainability. There are concerns that borrowing heavily from China will lead the country into a debt trap. A 2017 Forbes article contends that the Philippine government debt could swell up to USD 452 billion by 2027, which translates to a debt-to-GDP ratio of 197 percent. The estimated figure is based on an annual 10 percent interest rate on loans levied by the Chinese government, hence tying the Philippines into a “virtual debt bondage”” (CIRSS Commentaries – ‘BRIDGING THE INFRASTRUCTURE INVESTMENT GAP THROUGH FOREIGN AID: A BRIEFER ON CHINESE ODA’ June 2018).
If the Filipino doesn’t get to worried about the amount they are borrowing from China. It isn’t only Sri Lanka who has eaten over more debt than they can swallow and has to repay with other means. There are worry in the Pacific island of Tonga.
As reported from Tonga: “Chinese aid in the Pacific region has increased dramatically in recent years and the country has become the region’s second-largest donor. Tonga’s debt to China has been estimated to be more than $100m by Australia’s Lowy Institute think-tank. The prime minister told local media last week that countries would get together to ask the Chinese government to “forgive their debts”. “To me, that is the only way we can all move forward, if we just can’t pay off our debts,” he added. Beijing has refused to write off loans in the past but has given Tonga an amnesty on repayments” (Simone Rench – ‘Tonga premier to ask China to ‘forgive’ Pacific debts’ 21.08.2018 link: https://www.publicfinanceinternational.org/news/2018/08/tonga-premier-ask-china-forgive-pacific-debts).
We have seen what the Chinese done to the Sri Lankan and Tongan counterparts. Both of instances could be happening to the Philippines. Not that you wish that, but the repayments of the growing debt will happen at one point. Even if there is long grace-period of lower rates on the interests as promised to Manila. You can wonder when the Beijing want to recoup the funds and the debt.
Right now, Duterte has a good relationship with Beijing, but when do they feel they have invested enough in the Build! Build! Build! (BBB) projects and wants profits and returns on the investments?
Because the Chinese will not do this forever. They might act nice at first and investing in infrastructure projects as a part of the Belt and Road Initiative (BRI), but when time goes by and lack of repayment hits the fan. The familiar faces of Beijing will get their value for the money and the sovereignty will be taken away. As a port, a piece of mines or exploration of some sort of industrial output will go directly to Beijing and a state owned company. Since they will get their repayment for all the offered debt to the nation.
That is what Duterte is risking, if it is oil exploration and extraction, mineral resources or even ports that is vital to the business done in the Philippines. Does he wants to risk that for the signature building of the BBB?
Peace.

