Kuranga & Associates VC Fund (Update)

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

We are in the process of wrapping up our seed round for our SME Venture Fund for Nigeria. Kuranga and Associates Venture Capital is a new 30 million dollar Venture Capital Fund for Nigeria specializing in Small to Medium-size Enterprises (SMEs). The fund expects to hold its first closing in 2013. SMEs have a vital role to play in developing economies as they account for a large percentage of the overall growth in the economy. For a myriad of reasons it is difficult for international capital investors to access privately owned businesses across Africa. The goal of Kuranga & Associates Venture Capital is to help remove this obstacle and provide international capital for talented African entrepreneurs starting in Nigeria. Kuranga and Associates is currently forming strategic partnerships with individual and institutional investors.

Our target investors and institutional partners seeking high-yielding investments also have a desire to make an impact through socially responsible investing (SRI). The fund targets a capital of $33 million USD (first closing at $18 million USD). Along with our partners, the fund seeks to acquire additional individual and institutional investment commitments. The growth of the SME sector in Nigeria far outpaces the growth found in many of the conventional financial markets. Individual investors that are seeking to diversify their portfolio to include high-yielding investments in Africa should take a close look at our fund. For details contact us by email or phone.

David O. Kuranga; Ph.D. Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Mali Elections… What now?

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Three major candidates have come forward to contest the presidency in Mali’s upcoming election that has been hastily slated for July this year. The main contenders include former Prime Minister Ibrahim Boubacar Keita, former Minister of Finance Soumaila Cisse, and mining engineer Dramane Dembele. There is a strong possibility that another major contender could join the list. The highly contested election undoubtedly signals a fractious political elite that is almost certain to sow deeper divisions within the polity in order to increase their support base. In the backdrop of ongoing violence and instability, it is not clear that the haste to hold elections will restore stability to the political order especially if elections are marred by irregularities.

Of the three leading candidates, 2 are decisively left-of-center, namely  former Prime Minister Ibrahim Boubacar Keita and former Minister of Finance Soumaila Cisse. The two will campaign on populist themes that has been the basis for their political careers. They will also point back to the years of former President Alpha Konare where they both served as key members of his administration. In a contest to see who will secure the populist majority both candidates will aggressively put forth populist policies with nationalist sentiments. Keita and Cisse may likely be neck & neck on the populist front as they were in the 2002 election, however an alliance between the two is a strong possibility to put forth an unbeatable front especially in the second round. The least known of the three candidates is Dramane Dembele, a mining engineer and the candidate from the ruling party of the national assembly and that of the interim President. Being a relative unknown as well as strong criticism of corruption and cronyism within his party will work against his standing with the public. However his young age at 46 may help him secure support from younger Malians. The short time line till the first ballot will also favor the better known Cisse and Keita. Dembele and the ruling party may eventually play the role of kingmakers if their party’s candidate fails to make it to the second round.

What is clear is that the electoral cycle in Mali will be dominated by left-of-center populist candidates who will be under immense pressure to galvanize public support behind their administration should they prevail. Accordingly it is almost inevitable that whoever takes power in Mali will seek to carve out a greater share of the countries national resources and arrest the growing problem of youth unemployment. International investors exposed to Mali will face increasing risk as the election gets closer. This risks will likely grow once the election has been concluded. It is a strong possibility that some of the companies invested in Mali today will not survive the upcoming political transition. Going forward, decision-makers of invested companies need to realize that this is not business as usual, they cannot just wait it out and see what happens. Most firms I have seen are inadequately prepared for what is ahead. They have invested almost no resources in addressing some of the core risks. Risk management is a specialist field that requires additional skilled personnel. In the end, it will cost firms far more to react to risks that it would to guard against them.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Resource Nationalism or Political Risk Management Failure?

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

There is a great deal of concern among commodity investors in Sub Saharan Africa over the supposed wave of resource nationalism that is purportedly spreading across the continent. Decision-makers in many African states are seeking greater returns on their natural resources and are implementing various measures to achieve them. In some states, international investors have faced steeper taxes and fees on resource extraction activities. Other states have created national companies designed to establish joint-ventures with international firms to increase profit-sharing. Increasingly a number of states have actively employed a number of these strategies simultaneously. The trend has led many analysts to declare that there is a wave of resource nationalism that is sweeping across Africa. This has also led to growing concern for the potential risks that investors in African resources are facing.

With all the hype surrounding the policy shifts of decision-makers in a number of African states regarding resource extraction, one of the key conclusions is that it has become a bit more challenging to do business in a number of African territories. On numerous occasions I have listened to various investors griping about how one state or another has shifted in policy adversely impacting the returns of investors. Their next conclusion is that the investment climate in Africa has become more hostile to international investment particularly when it comes to resource extraction. Thus many in investment circles point fingers at African decision-makers, and their increasing appetite to shake-down international commodity investors. The usual talking points are, “look what they are doing to us”. “Why are these leaders taking legal steps to increase the share their governments get for their resources?”

What is most shocking is how nobody really bothers to look closely at the actions, in many instances, inaction of the various corporations themselves. International mining and energy companies spend a lot or resources on high-powered lobbyists and government relations consultants in their home-base countries and all the major developed countries in which they do business. They understand that if they did not do this they would likely face a series of hostile policies and potentially get overlooked in public assistance initiatives and programs. However, almost across the board these same companies do not have a single lobbyist or government relations representative in any of the developing countries in which they do business. Yet, they expect that they will not face hostile policies and get overlooked in public assistance programs. The reason they choose to act so differently when it comes to developing countries is in-part based on their condescending and outdated mindset that treat developing nations as just sources for raw materials and potential markets for their goods.  In today’s Africa, this mindset will cost any investor seeking to tap into the continents resources. Countries in the African region have governments just like any other region of the world. Government officials are falling under greater scrutiny from the public and are forced to be more responsive to public demands. As a result the environment of corruption that international investors where highly complicit in creating, is no longer a reliable way to deal with political decision-makers in Africa.

Countries in Africa have become more politically sophisticated and savvy when it comes to international investors. Further, greater competition for their resources among various emerging economies alongside developed countries now enables them to negotiate deals that are more in-line with global standards. If a company thinks they can invest substantial capital in an African country and not have a single lobbyist or government relations representative to work with that government aside from their pathetically trained compliance staff in headquarters then they should not be at all surprised by what is happening to them. I gave a talk on this very issue about a year ago, see: https://kurangaandassociates.wordpress.com/2012/03/13/md-director-david-kuranga-speaks-at-murdock-symposium/. In this case Chad had a deal with an international consortium for its oil that fell well below international standards. A couple years into the deal, the Chadian government instituted a series of taxes and fees to bring their revenues from oil more in-line with international norms. During the first few years of production, when Chad’s oil royalties were a small fraction of what would be expected, oil production was at its highest. Shortly after they implemented the new tax regime, the consortium began to pump less oil. After the taxes were passed the companies even attempted to “negotiate” a tax-exemption with an official in Chad who did not even have the authority to grant them a tax exemption. They have since began to pull back on their investments in the country, only to be replaced by others.

From a risk management standpoint, the problem is not that there has been some drastic anti-investment sentiment among decision-makers in Africa, but simply that official governing institutions in African societies have become more sophisticated and responsive to their peoples demands. Accordingly if a company is doing business there they cannot employ the outdated strategies used when recognized governing institutions in Africa were just being formed. Doing business in Africa today is not so much different from doing business in other parts of the world. Granted, the climate is different, there is certainly less infrastructure than what would be found in the developed world. Still do not mistake these differences for meaning that investors can ignore and/or payoff regulatory and governing institutions in these societies for pennies. I believe that if there was a wave of political risk management upgrades among commodity investors in Africa the issue of resource nationalism would be insignificant. Certainly companies would have to adjust their stance and approach and perhaps consider making reinvestments as oppose to just extraction and profit repatriation models, but there is no reason why their absolute returns in Africa have to decline. In fact, given the rapid growth found in these countries, their returns should very well also increase if they employed strategies in-line with global standards for dealing with political risks and developed a holistic approach for investment to include profit-making infrastructure and processing beyond just extraction and repatriation. In the example of Chad, Chinese firms have built a refinery and have made deals in Chad without facing any of the issues of the Western-led consortium. Companies that do this will be able to navigate the continent with ease, as the business climate in the African region has never been better.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

US State Department May Have Encouraged Algeria Attack

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

In an effort to undermine regional efforts to militarily remove militants from Northern Mali that largely came out of Libya, the US State Department Deputy Secretary William Burns appointed Algeria as “lead negotiator in Mali”. The move was a diplomatic “slap in the face” to ECOWAS, the West African regional block that already appointed Burkina Faso as the international lead negotiator almost 6 months prior. While the move was seen as an attempt of the US to undermine the urgent regional call for military action that was supported by France, ECOWAS, and the African Union (AU), it may have had a residual impact that we are now seeing today.

The US has long held a stance of refusing to negotiate with terrorist. However in the case of Mali even their leading military official for Africa Carter Ham, said in the case of the terrorists that occupy Northern Mali “Negotiation is the best way”. I earlier criticized this as an attempt by General Carter Ham, AFRICOMs leader to increase the presence of AFRICOM in Africa. Not only has this served to embolden militant groups in Mali that led to their recent attempts to overrun the Capital of Mali altogether they have also turned and struck inside the territory of the US appointed “lead negotiator” as a way of ending the international operation in Mali. The hypocritical actions of the United States to first endorse a policy of negotiating with terrorists and then select their “lead terrorist negotiator” Algeria may have indeed encouraged the attack in Algeria. While recently the State Department spokeswoman Victoria Nuland repeated that “the United States does not negotiate with terrorist” including those that attacked the oil facility in Algeria which led to the killing of dozens of hostages and Algerian forces, in all actuality they already have. In this case their failed attempts to undermine ECOWAS and delay military action may have caused the tragic deaths of more in Algeria including 3 of their own nationals.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director Kuranga & Associates Global Consultancy Phone: 212.363.0936 – Email: david.kuranga@kaglobal.net https://kurangaandassociates.wordpress.com http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Algeria & Investment Risks in West and North Africa

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Due to the ongoing operation, all countries that surround Mali in North and West Africa are now subject to the highest levels of security risk. Every mine, oilfield, and infrastructure investment, especially areas with large numbers of foreign nationals are subject attacks from militants allied to the Mali insurgency that originated out of Libya. The ability of the multinational coalition of forces to contain militants may not reduce the risk significantly as their allies may already be spread throughout the region. All governments in the area will need to spend more resources to combat the threat even as many surrounding countries are being forced to use their limited resources to send troops to Mali. Part of the residual affect is the potential for work stoppage. The aftermath of the siege in Algeria may cause investor in the region to become fearful of making future investments preventing any major expansions in the immediate region. Further the governments in the region may find themselves in a position where they need to raise revenue internally to meet security demands and to fund the mission in Mali. This may impact government services or lead to countries seeking higher rents on investors through taxes and fees. This risk will remain heightened in the region for the rest of the year and possibly well into 2014.

In addition to Algeria, Mauritania is the country that is most at risk. Political instability and increased militancy in neighboring Algeria has demonstrated the potential powder keg that could erupt in Mauritania. Further the Mauritanian President may not survive a major security crisis such as the one that occurred recently in Algeria. It is fully possible that the existing political leadership in Mauritania will not survive the war in Mali. Both countries remain at the highest risk levels. Instability in Mauritania is highly likely especially if the conflict in Mali spills over into their territory. Secondly, the situation in Algeria may deteriorate further as security challenges are still likely on the horizon. Finally, Nigeria, and other West African countries may feel the residual impact of the Mali conflict in some form of heightened instability. The Boko Haram terrorist network in Nigeria is known to have close connections with Mali insurgents. This heightened risk level will not change once the operation in Mali is concluded, it will likely continue long after the conflict has ended. Investors in all surrounding countries must remain vigilant and be mindful that what occurred in Algeria is a sign of what is potentially possible throughout the entire region for the foreseeable future.

David O. Kuranga; Ph.D. Managing Director Kuranga & Associates Global Consultancy Phone: 212.363.0936 – Email: david.kuranga@kaglobal.net https://kurangaandassociates.wordpress.com http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

War in Mali, and so it begins…

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

The war to recapture Northern Mali has begun. The military mission is bolstered by French led Air Strikes that are being conducted from bases in neighboring countries. Further several hundred French troops have already arrived in Bamako along with hundreds if not thousands of troops from several neighboring West African countries. The airstrikes and military mission which has already been approved by ECOWAS, the AU, and most recently the UN Security Council was triggered by the military advances made toward the Mali capital, Bamako, by the armed militants that occupy northern Mali since last April. Despite the fact that regional decision-makers elected to engaged in prolonged negotiations with the militant groups, without a credible military threat on the ground, negotiation appears to have succeeded in little but giving time for militant groups to train equip and plan an offensive on the Malian capital. The actions of the militants is a clear rebuke of the Secretary General of the United Nations, his Special Envoy Romano Prodi, the United States lead Africa military official General Carter Ham, and diplomatic representatives that continued to emphasize that negotiations were the best route to dealing with the crisis. The prolonged negotiations appears to have only made things worse, something that is already being felt by the advanced French military that is now actively engaged in an offensive campaign to dislodge them.

African leaders for long had stressed that military action was inevitable and that the armed forces now in Mali, were there as a result of the NATO-led mission in Libya. Thus they called on the international community to support their efforts to eradicate the militant groups from the West African region. From the onset, France appeared to be the only major international player in support of regional efforts. The United Nations, and the United States advocated a passive approach that involved protracted negotiations, even holding elections while militants still occupied Northern Mali. The military advances recently made by militant groups in Mali proved that these strategies were not only futile and unproductive, they would have potentially led to a catastrophic collapse of Mali at the hands of Libyan-armed militants that were forced from Libya by a NATO-backed bombing campaign. The UN Secretary General and his Special Envoy Romano Prodi have all been proved to be completely out-of-touch with the situation in Mali and have very little credibility at this time as a result of their statements and their now embarrassing attempts at down-playing the urgency of the situation there. The usefulness of Romano Prodi as a UN Special Envoy to Mali going forward will be very limited at best. The United States has also gone on the record as also being out-of-touch with the reality in Mali. The assertions made by a top military official that negotiation with the militants and terrorist was the best policy was among the most outlandish positions. In addition top US Military and US foreign service officials, including their UN Ambassador, and Secretary of State, and Deputy State Secretary, that elections in Mali should be held before a military operation only served to give more time for militants to recruit, train, arm and equip fighters and prepare a campaign to overrun Mali altogether.

Moving forward African troops will do most of the direct engagements of the remaining militants on the ground while the French led air campaign will eliminate many of their bases and hideouts from the air. Many of the newly recruited militants will flee Mali if they have not done so already. Only the battle-hardened fighters will remain. While the campaign may take a few months to complete, predictions that the Northern Mali territory cannot be captured in less than six months will prove to be incorrect. The groups that occupy Northern Mali are comprised of some Malians but also many foreigners. The local populations that remained behind do not support them and will not aid them or provide them cover or support. They have destroyed historic monuments, and terrorized the populations with floggings and amputations and other extreme measures not seen in Mali until recently. Thus they face both a hostile population, international airstrikes, and regional forces that will be pursuing them. It is quite possible that they could be routed from Mali much quicker than they were ousted from Libya.

After the military mission, ECOWAS officials will organize a political reconciliation that will unite Mali and bring the country back to a constitutional order. Above all, both militarily and otherwise, the ECOWAS agenda will prevail and will occur as they have outlined. All other parties that do not support it will be edged-out and potentially disgraced unless they change course. This now includes the United States and the United Nations in this case. Their attempts to undermine the ECOWAS and AU mandated agenda was ill-advised and has and will continue to be shown to be futile and unproductive. As I outline in my book; The Power of Interdependence, just like the EU in Europe, the agenda in Africa is set by African supranational organizations, the AU & ECOWAS being prime examples. International actors need to pay closer attention to this phenomenon in order to avoid missteps like the ones taken by the UN Secretary General and the UN Special Envoy Romano Prodi when they down-played the urgency of the situation, openly disagreeing with ECOWAS. Also the US Ambassador Susan Rice and Secretary of State and Under-Secretary Johnnie Carson and William Burns when they tried to appoint Algeria has lead negotiator instead of working with the ECOWAS appointed negotiators in Burkina Faso, and also advocated holding elections and prolonging negotiations instead of engaging the militant groups military as had been advocated by regional leaders, which ultimately failed and proved to be useless.

The political risks to investors in Mali remain high and contrary to some views that believe the military threat to be the greatest political risk, the transition will bring about greater political risks for investors. Once the transition occurs political risks such as rent-seeking taxes and attempts to carve out greater stakes from mining concessions may indeed occur and may be inevitable. The likelihood of this will increase as Mali stabilizes. Further, neighboring countries like Mauritania and Algeria may also face substantial political risks particularly if fighters in Mali flee into their territory and their security forces are forced to engage them. There may indeed be a regime change in Mauritania and lingering instability in Algeria if this occurs. Investors in all these countries should be mindful of the heightened risks that now exists in all these countries and take appropriate steps to manage them.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director Kuranga & Associates Global Consultancy Phone: 212.363.0936 david.kuranga@kaglobal.net https://kurangaandassociates.wordpress.com http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Mali: Prime Minister Ousted by Military

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

The military junta in Mali, arrested and ousted the countries Prime Minister and his entire government earlier today. The move will be condemned by regional leaders who are already holding emergency talks over the development. Further it will likely serve to hasten the deployment of regional troops that has already been authorized by the regional organizations, ECOWAS an AU. The delay is largely attributed to the UN Security Council that was originally believed to be a supportive partner in the process but has actually delayed intervention already by months. The move by the military junta is also a serious indictment of the UN Secretary General and his special envoy for Mali, Prodi who have recently downplayed the need to act urgently in Mali. France recently called for an urgent resolution authorizing action in Mali. However their ambassador in Bamako had recently softened their proactive stance. Regional troops will soon be in Mali regardless of what the UN Security Council does in New York. Regional leaders will soon have an emergency summit on the matter, after which a concrete decision will be take to move forward. While it believed that the force would not arrive till 2013, it is not possible that forces will arrive before the end of the year.

The military in Mali has been closely watching the development surrounding the intervention force, something that the junta members still serving in the military have resisted. The lack of support shown by the United Nations, including the Secretary General and his special Envoy Prodi, and the United States to the urgent appeals of ECOWAS and the AU likely encouraged them to take this step. Not only did the Secretary General say that military intervention was not a priority he also questioned the comprehensive plan put forth by ECOWAS, ridiculing the only major authority that has kept the military in check in Mali. The United States and its Department of State also sought to undermine ECOWAS by somehow unilaterally appointing Algeria as the “leader” in negotiations in Northern Mali. The lead negotiator, appointed by ECOWAS, is the President of Burkina Faso. He has been effective in gaining concessions from two of the groups operating in Northern Mali. The steps to undermine ECOWAS by the UN and the US will be futile. Algeria will not be the lead negotiator and the Secretary General’s attempts to delay military intervention will also not materialize. The key power in the West African region is ECOWAS, ultimately their agenda as they have prioritized it, will prevail. As this happens all other stakeholders will fall in-line, eventually.

Moving forward, watch closely for ECOWAS decisions as this will indicate the direction of the multilateral mission. For details of the process behind multilateral missions see my book The Power of Interdependence.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director Kuranga & Associates Global Consultancy Phone: 212.363.0936 david.kuranga@kaglobal.net https://kurangaandassociates.wordpress.com http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

US General Says Negotiating with Terrorists is Best Policy

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Directly a result of the improper-planned mission in Libya, half of Mali is under control of Libyan armed extremists and the many foreign fighters that took part in the former Libyan regime. Only part of the NATO alliance that took action in bombing Libya is ready to support action in Mali. Namely, the French Government now led by President Hollande, is taking a very active stance in Mali similar to President Sarkozy in Libya. The key absent parties are the United States and the United Kingdom. The question is, why? Why would the United States, who recently experienced the impact of the North African terror network in Benghazi, be so slow and obstructionist to an intervention in Mali? Especially given that their own troops would not be called to participate. If the US had doubts about the capacity of African troops, then the supportive stance would be to help enhance them with material and financial contributions. Delaying a response only allows for the adversary, the same one responsible for the killings of Americans in Benghazi, to grow stronger, train more cells, generate more revenue from criminal activity, and begin to project throughout the region and the world. United States General Carter Ham noted that the groups occupying Northern Mali, especially AQIM and their affiliates, was growing stronger by the day. Thus he and his colleagues know that delaying makes the task more difficult. He also said that “negotiation is the best way”. In the same speech he noted that AQIM was supplying bombs to Boko Haram in Northern Nigeria as well as financial support and training. Both groups have been officially labeled by the United States government as terrorist organizations. Yet, one of the top Generals said that negotiations with AQIM in Mali was the best way to end the conflict there. Thus he endorsed a policy of negotiating with terrorists.

The hypocrisy of the United States with respect to its response to the crisis in Mali is glaring. Given that it was the US led bombing campaign in Libya that led to fighters based there fleeing into northern Mali with weapons taken out of Libya to do battle in Mali that caused the entire situation in the first place. It is in part the US and its failure in Libya that is responsible for Mali yet they have been delaying, allowing a group that is linked to the killing of officials at their consulate to grow stronger. This is making the work of the African-led efforts resolve it more complex and difficult. It is not clear how far the US has gone to delay intervention. The UN Special Envoy Prodi had talks with key US figures before he was appointed by the UN Secretary General. It is unlikely that they would have approved his nomination had he not supported their now clear agenda to delay intervention and block it by claims of improper planning. The mission in Mali is far better planned, conceived, and organized than the US-led NATO bombing campaign in Libya. Hence why that mission failed to contain the hostile groups or the large supply of weapons that eventually poured into Mali. Given that the US has willing countries to shoulder providing ground support in the form of trained troops that answer to recognized and respected governments, something that was not at all the case in Libya, it is not clear why the US would not also jump on with France and join in to support the effort to clean up their mess. On top of this, a top United States General, Carter Ham, is breaking ranks with decades of US policy and advocating that the best policy is to negotiate with terrorists!

There are a host of questions with respect to the response of the United States in Mali. I for one do not believe that Army General Carter Ham really thinks that the best policy is to negotiate with terrorists. He, like myself is fully aware that even rebels do not negotiate unless there is a credible threat of force. There is clear evidence as that now that the threat of an imminent African-led intervention grows that rebels in Mali are now beginning to concede ground in talks. Even Ansar Dine, an ally of AQIM, recently agreed in principle to respect religious freedom. Ham also knows that negotiating with terrorists serves to encourage them, something that the US has sought to avoid. So why the blatant hypocrisy? What is the US trying to achieve by all this? They too have felt the effect of AQIM leveling attacks on their own officials in the region. Just like France, the US also has every reason to want the threat now posed in northern Mali eliminated. What could the US possibly gain in Africa that would be worth allowing the threat in Mali to grow and strengthen for another year as they have suggested? How could West African instability serve US interests?

There are a few possible answers to this question. One possible outcome of a delay to act decisively in Mali is that regional forces may not be able to fully retake northern Mali with their current resources even with support from France, if they give AQIM a year to build-up as the US, and the UN is now suggesting. Thus they may require substantial resources from the world’s pre-eminent military power. The US has for long been trying to get African countries to agree to host AFRICOM, the US military central command post for Africa which is actually led by General Carter Ham, which today is based in Germany. The fear of sovereignty and a neo-colonial force has led to African leaders resisting US requests to host a large central base. However, since the fiasco in Mali the US has secured the temporary use of bases in Burkina Faso and perhaps other countries in the region. Greater instability in West Africa could go a long way to helping the US military secure its permanent base it has long been seeking. Thus while it is not in the short-term interest of the US to allow AQIM to grow in West Africa, it may indeed support their long-term goal of securing a permanent base for AFRICOM. This would explain the hypocritical stance by US General Ham, in asserting that negotiating with terrorists was the best policy. While he knows that it would not yield any resolution to the crisis, which is why his own government has never engaged in or supported such a strategy, it may indeed serve to enhance the foothold of the US in the region.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Political Risk in Mali and West and North Africa: Update…

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

There is great concern over the security situation in Mali. At present both ECOWAS and the AU have agreed to send up to 5000 troops from African countries to help regain Mali’s territory. The plan enjoys wide support throughout Africa and as it appears even among some parties in Europe who are not keen on seeing an extremist haven involved in criminal activity develop and train equip and spread through North Africa. According to decision-makers that I have spoken to, a lot of the responsibility for what is happening in Mali falls squarely on NATO due to its hastily planned intervention in Libya which was not supported by the AU at the time. Shortly after the NATO led bombing campaign in Libya fighters and weapons caches traveled to Mali to establish a foothold in the North of the country. Had it not been for the failure of the NATO led campaign in Libya to contain post regime fighters from leaving the country with large supplies of weapons the situation in Mali would not be.

Now regional decision-makers are poised to begin to clean-up that mess starting in Mali. They have pledged material resources as well as armed troops to commence the task. It was the view of some African decision-makers that financial support from Western allies responsible for the Libya fiasco, would be forthcoming. Primarily for this reason, they forwarded plans to the UN Security Council to get an international resolution endorsing the steps they had taken and opening up the mission for international support. However, based on the statements made by UN Special Envoy Prodi, and the UN Secretary General himself, ECOWAS and AU decision-makers are now realizing that same UN Security Council that endorsed the intervention in Libya which directly lead to the problem in Mali is not willing to support their efforts to clean things up. The UN Secretary General noted that the UN did not have the resources to support an African-led mission and it was not clear how they intended to finance the operation. The Secretary General and his Envoy have called for more negotiations, even though one of the largest groups occupying northern Mali has never participated in any negotiations and has no intention of doing so. Further its membership appears to be almost entirely foreign, with more and more recruits coming in from territories as far as Pakistan.

African decision-makers in ECOWAS and the AU are sending representatives to the UN to convey the need to act urgently. It was the UN Security Council that requested they provide a clear plan for retaking the territory during the UN General Assembly, something that was never done for Libya. Even after presenting this plan, the prevailing disposition is to wait and allow the groups that refuse to negotiate more time to recruit train and equip fighters making dislodging them that more difficult. However, it is not likely that ECOWAS and AU will entertain more stalling from the international “partners”. Intervention in Mali by a regional force will occur in a matter of weeks. The measure has already been authorized by ECOWAS and the AU. It does not require any UN Security Council approval or authorization and it is fully within the UN Charter for states within the region to act. Indeed, a United States General, said in a statement that groups in Mali were funding and supporting Boko Haram in northern Nigeria, giving that country the full right of self-defense to remove them. In addition the regional arrangements for both ECOWAS and the AU allow for intervention in member states for reasons such as this. Indeed ECOWAS has already intervened in Guinea-Bissau with troops to stabilize that country. The only reason why there has been a delay in Mali was the expectation that countries outside the Africa region would support and take part once the UN Security Council endorsed the ECOWAS and AU authorized mission. The right of regional organizations to intervene in member-states is also part of the UN Charter in Chapter 8 (Article 52) on regional arrangements, thus it is fully within the authority of ECOWAS and the AU to intervene in Mali without any UN Security Council action.

The signaling by the international community that it will not act on Mali will not be accepted by African decision-makers. Regardless of what happens in New York, African troops will be in Mali in a matter of weeks. ECOWAS has already planned on holding a donors conference to raise resources needed to support an intervention, originally it had been planned to hold it after the UN Security Council resolution, but it could be held before even if the UN choses to do nothing. It is not possible to negotiate with parties that do not wish to negotiate. Further armed rebellions are not ended by negotiation unless there is a credible threat of force that would compel a fruitful negotiation, something that has not occurred thus far.

There will be an armed operation in Mali, both the regional countries and Mali itself will be shouldered with the cost of executing it if international partners do not provide support and if they are not effective in raising revenue through their planned donors conference. As this happens, investors in the region should understand that the government in Mali will need resources, thus increase in taxes and fees as happened recently with the Mali gold tax is entirely possible. Further, neighboring countries, Mauritania, Niger, Nigeria, Algeria, Burkina Faso, and Libya could see instability spill over into their territory. Likely many of the fighters will flee north to Mauritania, Algeria, and Libya, as they will blend in better with those populations than they would if they chose to venture south. While regional forces will work to contain and neutralize them, they are fully aware that many of them will flee the fighting as they are dislodged.

As this happens one country to be very watchful of is Mauritania. The president of that country is still suffering from a gunshot wound he sustained from one of his officers in October. As he spends most of his time in France receiving treatment, it is not clear he will be able to hold on to power. He has refused to support any armed role in the conflict in Mali, however should armed fighters enter into his countries territory his army will undoubtedly be drawn in. Should this happen, his government will have to divert more resources to securing their border with Mali and the tenure of his presidency could be cut short. Investors should be mindful that there are substantial political risks in Mauritania moving forward, just as much as Mali if not more. It is entirely possible that there will be a regime change there and the transitional government may tap mining and energy investors there for more revenue as aid flow may be cut in response to a military take-over.

The best case scenario would be for the NATO alliance; that bares full responsibility of the residual effect of their handy work in Libya, to support the African-led mission in Mali. If this happens it will shorten the length of conflict, and potentially enhance the ability of regional countries to round-up weapons caches and the surge of foreign fighters that moved into Mali. Despite this, the regional body is ready to act and will within weeks. This will eventually lead to stability in Mali, perhaps within a year. There may however be some spill-over into neighboring countries. For the time being, Mauritania appears to be at the most risk, followed by Algeria which may see another authoritarian leader in North Africa fall if instability reignites social unrest there. The other reason why Mauritania is at greater risk than Niger and Burkina Faso is because Mauritania is no longer a member of ECOWAS. Had it been, ECOWAS leaders would have sent envoys there to mediate with the military, opposition, and political stakeholders as soon as the president was shot in October, limiting the possibility that he would be overthrown. The details of the process behind regional diplomacy in Africa is detailed in my book, The Power of Interdependence with Palgrave Macmillan Press.

***For the full report contact me by email.***

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/

http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Kuranga & Associates Venture Capital

Kuranga & Associates Global Consultancy
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david.kuranga@kaglobal.net
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