Can the Central African Federation survive recent events?

Can the Central African Federation survive recent events?

In the wake of  recent sweeping environmental and political events, member countries of the defunct Central African Federation make painful choices to improve their economic performance. Will a rainbow follow the floods or will the CAF remain in devastated territory?

The floods devastating Malawi, the election of Edgar Lungu as President in Zambia and the elevation of Emmerson Mnangagwa to the Vice Presidency in Zimbabwe hold the potential for a reassessment of economic policies that could lead to a new trajectory of higher sustainable growth.

Malawi and Mozambique

Two weeks after floods first swept across Malawi, some 300,000 people urgently need clean water, food, shelter and medical care in Malawi and Mozambique, which is downstream of the Shire River, the main conduit for the flood waters. Aid groups such as World Vision said immediate funding was needed to provide basics such as food, and water and sanitation to prevent the spread of waterborne diseases including diarrhea, malaria and cholera. The cost of this relief is between $80 million and $100 million.

The rain-induced flooding is unprecedented, so the normal contingency planning was of no use. The scale of the devastation to roads and the consequent ability to get aid to the worst affected areas outstripped the available airborne resources.

The initial flood damage assessment highlights at least 20 major roads needing urgent repairs, while more than 60,000 hectares, affecting 120,000 farmers, are under water with severe livestock losses. The government has appealed for aid and declared several districts disaster areas. The aim is to replant flooded fields with early maturing crops as soon as the flood waters subside.

Experience elsewhere is that the rehabilitated roads and bridges will be rebuilt so that they can better withstand these freak weather conditions that, due to climate change, may increase their frequency from once in a millennium event to once in a decade. It will also allow a reassessment of what crops to plant as the soon-to-be-opened Nacala rail link to Mozambique could result in a move away from the dependency on tobacco, which provides 60% of export earnings, to other cash crops such as fruit and vegetables, that until now did not make economic sense; there was no viable logistics chain to get the produce to overseas or regional markets.

Prior to the floods, the International Monetary Fund projected an economic growth rate of 5.8% for 2015, but this could be halved due to the impact of the floods. Reconstruction and the exploitation of new markets due to the Nacala rail line may however result in 2016 growth in excess of 7% and a sustainably higher growth trajectory in the future beyond that. This will be because Malawi can be integrated into the global supply chain in the same way that other small land-locked countries, such as Lesotho and Rwanda, have been able to overcome their geographical hindrances.


On the other side of the border, newly-elected President Edgar Lungu will also be reassessing Zambia’s dependency on copper and cobalt exports, which provide 70% of export earnings, given the fall in the copper price in January 2015 to six year lows. The so-called non-traditional exports consist mainly of gemstones and tobacco, but Zambia has large untapped hydro-electric potential while the neighboring countries are energy-deficient.

In addition it has other minerals, such as manganese, that have historically been neglected as they lacked the electricity and transport infrastructure because they are not in the Copperbelt. At present, Zambia will more than double its existing generating capacity from the current 1.6 GW to 3.6 GW within the next five years, while national demand will be less than 2 GW, leaving 1.6 GW available for export or for electricity-intensive industries such as aluminium smelting or ferro-alloys.


Across the Zambezi the economic situation is even more desperate, as the policy-induced self-inflicted wounds have seen Zimbabwe’s economy shrink by half since land invasions started in 2000. The best and brightest of Zimbabwe’s human capital have fled to other countries and it is their remittances home that has kept body and soul together among their brethren that have stayed behind. Instead of exploiting its existing manufacturing base, that is only running at a third of capacity, the government has imposed bans on fresh fruit and vegetables imports that could have been turned into value-added products.

It is in this economic quagmire that the optimists believe that the wealthy Emmerson Mnangagwa can, by looking after his own interests, put the economy back on a rational growth path by fast tracking projects in the energy and transport fields. One of those optimists is the Botswana grocer chain Choppies, which is expanding its presence in Zimbabwe, just as others have given up. In October 2013, the company made the decision to enter the Zimbabwean market by purchasing a stake in a supermarket chain that ran 10 retail stores and it has now almost doubled that footprint to 18 stores with a further 12 stores expected to open this year.

Though times seem difficult, one only hopes that the Central African Federation can find a way to surmount their obstacles and rise above the issues that have plagued the institution since its inception.

About Author

Helmo Preuss

Helmo was the chief economist at Oasis Asset Management and former Economics Editor at a real-time financial news service. He holds degrees in Economics, Economic History and Computer Science.